Fraudster posing as person named on stolen driving licence and purporting to enter hire purchase agreement - fraudster not 'debtor' under agreement - not able to pass title to innocent purchaser

Shogun Finance Ltd v Hudson: HL (Lord Nicholls of Birkenhead, Lord Hobhouse of Woodborough, Lord Millett, Lord Phillips of Worth Matravers and Lord Walker of Gestingthorpe): 19 November 2003

A fraudster who proposed to buy a car on hire purchase produced a stolen driving licence to the dealer as proof of his identity.

Having completed a satisfactory credit check of the person named on the licence the claimant hire purchase company approved the sale and the dealer allowed the fraudster, who signed the hire purchase agreement in the name of the person named on the driving licence, to take possession.

The following day the defendant bought the car in good faith from the fraudster.

The claimant brought an action against him for, among other things, damages for conversion; the defendant claimed to have acquired title to the car under sections 27(1)(2) and 29(4) of the Hire-Purchase Act 1964 as substituted by the Consumer Credit Act 1974.

The judge gave judgment for the claimant.

The Court of Appeal by a majority [2001] EWCA Civ 1000; [2002] QB 834 dismissed the defendant's appeal.

He appealed.

Jeremy Cousins QC, Nicholas George and Jeremy Richmond (instructed by Bird Wilford & Sale, Loughborough) for the defendant; AG Bompas QC and Sunil Iyer (instructed by Sechiari Clark & Mitchell) for the claimant.

Held, dismissing the appeal (Lord Nicholls of Birkenhead and Lord Millett dissenting), that since under section 21(1) of the Sale of Goods Act 1971 title to the car had at all material times been in the claimant the defendant could have acquired title to it only under section 27 of the 1964 Act; that under the written hire-purchase agreement the hirer was the person named on the driving licence and oral evidence could not be adduced to contradict the terms of the agreement so as to show that the true hirer had been the fraudster; that in any event there had been no consensus ad idem between the fraudster and the claimant; and that, accordingly, the fraudster had not been the 'debtor' under the agreement within the meaning of section 29(4) of the 1964 Act and the defendant had not acquired title to it.

(WLR)