Angela Robertson: Case puts spotlight on personal bar in consumer rights claims
Angela Robertson, an associate within the dispute, resolution & litigation team at Shoosmiths, discusses the outcome of an appeal on a hire purchase motor finance agreement in the case of Alan King v Black Horse Limited and Park’s (Ayr) Limited.
The Sheriff Appeal Court in Edinburgh has recently (January 2023) decided an appeal on whether a hirer under a hire purchase agreement is entitled to rely upon their rejection of a motor vehicle where it has been used after the alleged rejection.
Background and First Instance
Mr King entered into a hire purchase agreement with Black Horse Limited in June 2019. The vehicle was supplied by Park’s Ayr Limited who were brought into the action as a Third Party. In October 2020, Mr King sent Black Horse an email rejecting the vehicle under section 9 of the Consumer Rights Act 2015. He alleged that the vehicle was defective. Despite rejecting the vehicle, Mr King continued to tax and insure the vehicle until November 2021. Further, the vehicle was driven to an additional 6,231 miles between the date of rejection and November 2021. This was a matter of agreement between parties.
At First instance, Kilmarnock Sheriff Court found in Black Horse’s favour, on the basis that Mr King had continued to use the vehicle after he had purportedly rejected it. It was Black Horse’s position that Mr King was personally barred from rejecting the vehicle due to his continued post-rejection usage. The Sheriff granted Black Horse’s motion for summary decree.
Mr King brought an appeal before the Sheriff Appeal Court. He argued that if the consumer is unable to continue to use the vehicle, a considerable burden will be created and they would be disincentivised from pursuing litigation against finance providers. Whilst it was argued that the consumer is unfairly burdened, Mr King further stated that there is no risk to the trader as the consumer requires to have motor insurance in place. Consequently, there was protection against damage or destruction of the asset.
The Sheriff Appeal Court held that use of goods after rejection is prohibited on the basis that it may injure or affect the goods saleable quality. The fact that the vehicle was insured did not affect this risk. To allow post-rejection usage “would be a very strange theory of law” and where there is ongoing litigation “the goods must be treated as if in neutral custody.” The court opined that the Consumer Rights Act 2015 supports this concept.
The Sheriff Appeal Court determined that Mr King was barred from rejecting the vehicle by a line of common law authority that there should be no post-rejection use of vehicles. The appeal was refused by the Sheriff Appeal Court and it was found that the Sheriff was correct to grant summary decree in the first instance. Mr King was found liable to Black Horse for the expenses of the appeal process.
Although not a surprising outcome, this finding sets a clear and binding precedent that consumers are barred from using vehicles after they have rejected them under the Consumer Rights Act. It is an argument that is frequently presented by consumers in these types of claims. Moving forward, it will be a question that finance providers and third-party dealers should be asking post-rejection.
The writer understands that Mr King is seeking permission to appeal to the Inner House of the Court of Session.
Angela Robertson is an associate at Shoosmiths