Background
A vehicle, subject to a Conditional Sale Agreement, was seized by the Police. It had been driven by a third party (related to the customer) without insurance or valid driving licence.
The customer was in breach of the finance agreement by allowing the vehicle to be used illegally. The Lender sought to repossess the vehicle in the first instance in order to prevent it from being destroyed (as are the powers of the Police).
The Lender, acting without a Court Order or the customer's consent, took possession of the vehicle. It was taken from the Police compound and when asked by the customer to return it, the Lender refused.
In court proceedings, the customer argued that the Lender (represented by DWF) had breached s.90 of the Consumer Credit Act 1974 ("the Act"). It was said that repossession from the Police was, in fact, a repossession from the 'debtor' for the purposes of s.90. As a consequence, the customer claimed all of her payments back from the Lender having paid more than a third of the total amount payable under the finance agreement. The effect of breaching s.90 is that the customer is entitled to all payments made under the agreement, including any deposit.
The decision
In the County Court, the Court held that repossession was not from the 'debtor' at all and, furthermore, the subsequent refusal to return it to the customer was not a further 'repossession' from the customer.
The customer appealed to the High Court. The High Court has rejected the appeal and has cemented the decision that recovery from the Police is not a recovery from the debtor. Therefore, s.90 does not apply to those instances. This decision is now binding on any County Court claim on this issue.
The effect
This is now the leading authority on repossession from the Police. DWF have been very clear in advising their motor finance clients on this issue since the inception of Crushwatch; that there is no breach of s.90 of the Act if repossession is from the Police without a Court Order. However, Lenders are reminded of the need to carefully review their entire Crushwatch process to ensure it remains compliant and resistant to any claims under s.90 of the Act.
