The defendant leased a vehicle from the creditor, a consumer finance company, pursuant to a conditional sale agreement. By clause 4.4 of the agreement the defendant was not permitted to use or let anyone use the goods illegally and agreed to keep the vehicle in her possession and under her control. By clause 4.5 the defendant agreed not to allow the goods to be seized or removed by the police under a statutory power and agreed that such a seizure would be treated as a breach of the agreement with the result that the creditor might “take the goods into safe custody”. The police subsequently seized and impounded the vehicle while it was being driven by the defendant’s brother without insurance and without a valid licence. The creditor was alerted and took possession of the vehicle from a storage company used by the police. It refused the defendant’s requests for the return of the vehicle and, having ultimately concluded that she was in breach of clauses 4.4 and 4.5 of the sale agreement, served her with a default notice terminating the agreement without returning the vehicle. The defendant, who had paid more than one third of the total price of the vehicle by the time it was repossessed, resisted proceedings brought by the creditor for breach of contract on the grounds that, pursuant to section 90 of the Consumer Credit Act 1974, it had been prohibited from recovering possession of the leased vehicle without an order of the court and she was thereby released from any liability and entitled under section 91 to recover all sums previously paid under the agreement. Having found that the defendant had knowingly permitted her uninsured brother to drive the vehicle without a valid licence and had thereby breached the agreement, the judge concluded that the exercise by the police of the statutory power to seize and retain the vehicle meant that the defendant’s possessory rights to the vehicle were suspended, that the creditor had consequently recovered possession of the vehicle from the police or their bailee, not from the defendant, and that there had therefore been no recovery of “possession of the goods from the debtor” as required by section 90 of the 1974 Act. The judge further found that the retention of the vehicle by the creditor after the defendant’s requests for its return did not amount to a separate recovery of possession from the defendant, because the recovery of possession had already taken place.
On appeal by the defendant—
Held, appeal dismissed. (1) Section 90 did not preclude any repossession of goods by a creditor but only the recovery of possession of the goods “from the debtor” and allowed for the many circumstances where, when the debtor was not in possession of the goods, a creditor might wish to recover them for safe keeping. Although the exercise by the police of a statutory power to seize and retain goods had the effect of suspending a debtor’s rights to the possession of hired goods for the period involved, it did not vest in the police any rights of possession but rather meant that the debtor had no immediate right to possession of those goods. Nor were the police holding the goods with the permission of, or as bailee for, the debtor. Further, where a creditor subsequently removed of the goods from the custody of the police or their bailee, having satisfied the police as to their ownership pursuant to the relevant statutory requirements, there was no moment of time between release of the goods by the police and the point of recovery by the creditor when the debtor resumed the right to possession or was so entitled. It followed that such recovery did not constitute a recovery of possession of the goods “from the debtor” within the meaning of section 90 of the Consumer Credit Act 1974. Therefore, once the hired vehicle had ceased to be in the possession of the defendant, her agent or bailee, and the police permitted the creditor to remove the vehicle on being satisfied of its ownership, the recovery of possession was from the police or their bailee and not from the defendant, and there had therefore been no breach of section 90 of the 1974 Act (paras 31–36, 39).
Thomas Brennan-Banks (instructed by Joanna Connolly Solicitors, Liverpool) for the creditor.
Simon Popplewell (instructed by DWF LLP) for the debtor.