Screwed by finance company and dodgy dealer....
Discussion
10 Pence Short said:
Put it another way. You have £14k tied up in finance. Do you a) release the asset to a third party, allowing them to sell it before you have cleared the £14k or b) Wait until you have the funds in your account and the finance cleared before releasing the asset.
It's more about common sense than anything else.
Hindsight, very powerful tool.It's more about common sense than anything else.
Honestly, the garage had been around for decades, huge organisation, the OP really can't beat himself up for trusting them.
maser_spyder said:
Honestly, the garage had been around for decades, huge organisation, the OP really can't beat himself up for trusting them.
It's no different from handing over a cheque or cash for the deposit - no way would I do that, it's not always obvious that a business is on the brink. For years I've always paid the deposit on a credit card.H_Kan said:
No idea how much it would cost, but could you not consider personal action against the directors of the garage. It would appear that they continued to trade whilst insolvent.
Not sure on the specifics of this, I'm sure somebody can elaborate.
I did company as an option at barrister school (Bar Vocational Course)Not sure on the specifics of this, I'm sure somebody can elaborate.
It'd be Insolvency Act Section 213 or Section 214 - Fraudulent trading or Wrongful Trading.
Fraudulent Trading is where a company continues to trade with the intention of defrauding creditors. It requires that a person in a managerial position was involved in, assisted and benefitted from an offending business. It requires that actual dishonesty is shown.
Section 213 Insolvency Act is shown below:
213.— Fraudulent trading.
(1) If in the course of the winding up of a company it appears that any business of the company
has been carried on with intent to defraud creditors of the company or creditors of any other person,
or for any fraudulent purpose, the following has effect.
(2) The court, on the application of the liquidator may declare that any persons who were knowingly
parties to the carrying on of the business in the manner above-mentioned are to be liable to make
such contributions (if any) to the company's assets as the court thinks proper.
Wrongful Trading occurs when, upon liquidation, the court finds that before a company was liquidated a director knew or should have known that there was no reasonable prospect of the company avoiding liquidation, but that it continued to trade. No order will be made if the director did every step he ought to take to minimise losses.
Section 214 Insolvency Act 1986 is shown below:
214.— Wrongful trading.
(1) Subject to subsection (3) below, if in the course of the winding up of a company it appears that
subsection (2) of this section applies in relation to a person who is or has been a director of the
company, the court, on the application of the liquidator, may declare that that person is to be liable
to make such contribution (if any) to the company's assets as the court thinks proper.
(2) This subsection applies in relation to a person if—
(a) the company has gone into insolvent liquidation,
(b) at some time before the commencement of the winding up of the company, that person
knew or ought to have concluded that there was no reasonable prospect that the company
would avoid going into insolvent liquidation, and
(c) that person was a director of the company at that time;
but the court shall not make a declaration under this section in any case where the time
mentioned in paragraph (b) above was before 28th April 1986.
(3) The court shall not make a declaration under this section with respect to any person if it is
satisfied that after the condition specified in subsection (2)(b) was first satisfied in relation to him
that person took every step with a view to minimising the potential loss to the company's creditors
as (assuming him to have known that there was no reasonable prospect that the company would
avoid going into insolvent liquidation) he ought to have taken.
(4) For the purposes of subsections (2) and (3), the facts which a director of a company ought to
know or ascertain, the conclusions which he ought to reach and the steps which he ought to take
are those which would be known or ascertained, or reached or taken, by a reasonably diligent person
having both—
(a) the general knowledge, skill and experience that may reasonably be expected of a
person carrying out the same functions as are carried out by that director in relation to the
company, and
(b) the general knowledge, skill and experience that that director has.
(5) The reference in subsection (4) to the functions carried out in relation to a company by a director
of the company includes any functions which he does not carry out but which have been entrusted
to him.
(6) For the purposes of this section a company goes into insolvent liquidation if it goes into
liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities
and the expenses of the winding up.
(7) In this section “director” includes a shadow director.
(8) This section is without prejudice to section 213.
M5 Mark said:
The finance company told me they would sort this out. But they did nothing, the car "disappeared" and was later found to be sold to someone else, innocently they claim. The bank did vehicle checks and knew where the car was the whole time and didn;t tell me or try to retrieve it.
Was in court today and the judge who was very helpful chap took total sympathy for the situation even telling the banks they should not charge interest or costs, but I was still liable for 14k on the previous car. So no car at all and still have to pay for it. I still think they were negligent by making no effort at any stage to reclaim the car but hey, unless you know 100% the finance is settled and the banks say it is settled NEVER part with a car in PX.....
It looks like you may be able to sue the finance company in some manner.Was in court today and the judge who was very helpful chap took total sympathy for the situation even telling the banks they should not charge interest or costs, but I was still liable for 14k on the previous car. So no car at all and still have to pay for it. I still think they were negligent by making no effort at any stage to reclaim the car but hey, unless you know 100% the finance is settled and the banks say it is settled NEVER part with a car in PX.....
They gave a promise they'd sort it out.
They did nothing.
You suffered loss.
I'm guessing it would be tort, or possibly negligent mis-statement, promissory estoppel/detrimental reliance... thoughts of other PH'ers on an action against the finance company?
Edited by TomJS on Saturday 12th June 14:58
M5 Mark said:
Was in court today and the judge who was very helpful chap took total sympathy for the situation even telling the banks they should not charge interest or costs, but I was still liable for 14k on the previous car.
Did you get much of a chance to present your side or was the hearing really about the finance company recovering their debt?Deva Link said:
TomJS said:
It'd be Insolvency Act Section 213 or Section 214 - Fraudulent trading or Wrongful Trading.
Such cases are pretty rare aren't they? AIUI, it's extememly difficult to prove fraudualent or wrongful trading.I think the problem is that the test - containing subjective and objective criteria - gives a fair bit of wiggle room even of itself. Also all directors think the best - or are entitled (ish) to think the best - of a given situation. No-one wants to admit that they cannot turn a company around, and in many examples there has been a prospect of recovery. A good example being a big contract that might come in, that the economy may improve etc. In addition hindsight is a wonderful thing, so it has the added element that you'd be trying to decide on a situation that MAY have looked differently at the time - and benefit of the doubt must be given.
There's also the seriously difficult matter of when the company was insolvent, and when it should have ceased trading. Drawing a line in the sand is not straightforward, as I understand it.
Tom, I don't think intent would be that difficult to prove, in the couple of weeks before going under it would be obvious a company is going down the pan. The fact they did similar to a few other customers would add credence to this. Unless they also dealt in fleet sales etc, there is no way they could legitimately expect an order which would change the inevitable outcome.
In any case, this course of action depends on if the directors have any assets.
10ps, I understand what you are saying and it seems logical enough in hindsight. However as was said earlier, the OP and relatives had dealt happily with this place in the past and it appears it was a well known place.
I'm not generally a sympathetic person, nor do I suffer fools however in this case I really don't think the OP should beat himself up about it. Unless he'd been stung like this before, I don't think it's fair to expect that he'd be wary of taking a cheque from an established dealer.
In any case, this course of action depends on if the directors have any assets.
10ps, I understand what you are saying and it seems logical enough in hindsight. However as was said earlier, the OP and relatives had dealt happily with this place in the past and it appears it was a well known place.
I'm not generally a sympathetic person, nor do I suffer fools however in this case I really don't think the OP should beat himself up about it. Unless he'd been stung like this before, I don't think it's fair to expect that he'd be wary of taking a cheque from an established dealer.
Well the director has plenty of assets including his house he resides in being worth well into seven figures.
It was the 2nd car I bought from them, combined with the fact they had there been a very long time I didn;t see anything wrong with repeating the process I had used previously with them and many other dealers. Yup hinesight is indeed a wonderful thing!
Thanks for the info TOMJS I will try and look into this. I don;t think it should eb too difficult to prove intent to defraud. I am told, not sure how accurate the info is, but told he is under investigation from the fraud squad.
It was the 2nd car I bought from them, combined with the fact they had there been a very long time I didn;t see anything wrong with repeating the process I had used previously with them and many other dealers. Yup hinesight is indeed a wonderful thing!
Thanks for the info TOMJS I will try and look into this. I don;t think it should eb too difficult to prove intent to defraud. I am told, not sure how accurate the info is, but told he is under investigation from the fraud squad.
H_Kan said:
Tom, I don't think intent would be that difficult to prove, in the couple of weeks before going under it would be obvious a company is going down the pan. The fact they did similar to a few other customers would add credence to this. Unless they also dealt in fleet sales etc, there is no way they could legitimately expect an order which would change the inevitable outcome.
I disagree. The question to be asked is whether the company should have ceased trading sooner, and whether the directors knew it was bankrupt prior to the point it DID cease trading. You will then have to put forward a different date by which it was bankrupt, with no hope of recovery, from the one they liquidated.Consider in this situation. The assets of a company would be worth more in a normal selling market to a firesale. So in normal trading conditions they would be able to meet their liabilities; but in a receivership situation they may well not be able to do so. Thus this date that you need to define becomes ever more difficult to identify. A director could say he expected to get X for his assets but that as he got X-Y the company defaulted on creditors. The question then is whether valuation X was reasonable.
You could add into the mix that this garage could have been part of the bigger picture - part of a larger entity. Thanks to the moderators removing its name, we have no idea. Many subsidiaries of larger companies are categorically bankrupt. But as they continue to receive support from their parent company, so are not deemed insolvent. In a similar vein, if the bank continued to support the garage, it would continue to be solvent for longer. Banks don't tend to back surefire losers, but equally if a firm has assets and might trade out of difficulties, a secured loan is quite possible.
What surprises me is that OP has got nothing. On liquidation IIRC the assets the company has left are doled out as follows: liquidation costs, preferred creditors (taxman, 4 months salary for employees etc) unsecured creditors, shareholders. In short the liquidation covered only costs and secured creditors. That or OP or his finance company should have been pressing the administrators to pay out his share of the proceeds.
10 Pence Short said:
Put it another way. You have £14k tied up in finance. Do you a) release the asset to a third party, allowing them to sell it before you have cleared the £14k or b) Wait until you have the funds in your account and the finance cleared before releasing the asset.
It's more about common sense than anything else.
At a guess, I'd suspect that most people would trust somebody of the likes of David Haytons, Jim Waltons, Lloyds or Evans Halshaw if they released a cheque, and the customer had no inkling of any financial difficulties.It's more about common sense than anything else.
It is this trust which the OP came here to warn us about.
Mill Wheel said:
10 Pence Short said:
Put it another way. You have £14k tied up in finance. Do you a) release the asset to a third party, allowing them to sell it before you have cleared the £14k or b) Wait until you have the funds in your account and the finance cleared before releasing the asset.
It's more about common sense than anything else.
At a guess, I'd suspect that most people would trust somebody of the likes of David Haytons, Jim Waltons, Lloyds or Evans Halshaw if they released a cheque, and the customer had no inkling of any financial difficulties.It's more about common sense than anything else.
It is this trust which the OP came here to warn us about.
It had been family owned for decades prior, and they had only just sold up a couple of years before.
I wouldn't have thought twice about trusting them.
In fact, my old man was shocked when they disappeared. Imagine going to John Lewis one day and the doors were locked and it had all gone pop.
Mill Wheel said:
10 Pence Short said:
Put it another way. You have £14k tied up in finance. Do you a) release the asset to a third party, allowing them to sell it before you have cleared the £14k or b) Wait until you have the funds in your account and the finance cleared before releasing the asset.
It's more about common sense than anything else.
At a guess, I'd suspect that most people would trust somebody of the likes of David Haytons, Jim Waltons, Lloyds or Evans Halshaw if they released a cheque, and the customer had no inkling of any financial difficulties.It's more about common sense than anything else.
It is this trust which the OP came here to warn us about.
I've worked in equipment leasing for a long period of time and one of the golden rules is that as long as the finance agreement stands the asset is not 'yours' and you must not sell it. Even if the loan is not tied to the asset the same principles stand to protect yourself and, to allow a garage to assume title of the goods when there is money still owed on it, is foolish in my opinion.
Yes, hindsight is great, but for the sake of what, 3 days to clear a cheque, is it really worth a £12k punt?
10 Pence Short said:
Oh, and just to add, I personally wouldn't do business with David Hayton. If he won't do business with people unless they've bought a car from him, he's probably not the most sensible person in the world.
That sounds like he didn't want to do business with you - because you bought a vehicle elsewhere? 
I remember you had trouble over a water cooler - is that the reason you are so much more cautious than most?
IIRC there is often a sticker on some leased goods which states that they remain the property of the owner (until paid for).
TomJS said:
What surprises me is that OP has got nothing. On liquidation IIRC the assets the company has left are doled out as follows: liquidation costs, preferred creditors (taxman, 4 months salary for employees etc) unsecured creditors, shareholders. In short the liquidation covered only costs and secured creditors. That or OP or his finance company should have been pressing the administrators to pay out his share of the proceeds.
That's why I asked what the court hearing was about.Sounds like nobody did anything, and then the finance company chased the OP in court for the debt. At that point it's not within the remit of court to examine the rights and wrongs - their role is to issue judgement against the OP for the debt.
Mill Wheel said:
10 Pence Short said:
Oh, and just to add, I personally wouldn't do business with David Hayton. If he won't do business with people unless they've bought a car from him, he's probably not the most sensible person in the world.
That sounds like he didn't want to do business with you - because you bought a vehicle elsewhere? I remember you had trouble over a water cooler - is that the reason you are so much more cautious than most?
IIRC there is often a sticker on some leased goods which states that they remain the property of the owner (until paid for).
I've had people I wouldn't trust come up trumps and do me huge favours, I've had people (and garages) who I trusted absolutely try and do the dirty on me. Luckily my being 'cautious' about it prevented me from needing to start an understandably unhappy thread in SP&L.
The OP has been genuinely unlucky in his timing and I have a huge amount of sympathy for him but, and there is a but, the pain of the situation could have been avoided. I obviously don't know all the ins and outs but from what the OP has said so far County Court scrutiny has agreed that he still bears the responsibility of the outstanding money.
maser_spyder said:
Mill Wheel said:
10 Pence Short said:
Put it another way. You have £14k tied up in finance. Do you a) release the asset to a third party, allowing them to sell it before you have cleared the £14k or b) Wait until you have the funds in your account and the finance cleared before releasing the asset.
It's more about common sense than anything else.
At a guess, I'd suspect that most people would trust somebody of the likes of David Haytons, Jim Waltons, Lloyds or Evans Halshaw if they released a cheque, and the customer had no inkling of any financial difficulties.It's more about common sense than anything else.
It is this trust which the OP came here to warn us about.
It had been family owned for decades prior, and they had only just sold up a couple of years before.
I wouldn't have thought twice about trusting them.
In fact, my old man was shocked when they disappeared. Imagine going to John Lewis one day and the doors were locked and it had all gone pop.
On a side note to answer other peoples questions, the car "dissapeared" before the receivers arrived to claim goods, showing clear intent to commit fraud by selling it on to another person through a family member!
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