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New case on retaking Protected Goods

In regulated Hire-Purchase and conditional sale (but not Lease or Hire Agreements) section 90 of the Consumer Credit Act 1974 (“CCA”) provides that once one-third of the total price of the goods has been paid for, the goods become ‘protected’ and the Financier is not entitled to recover possession without a Court Order except where the debtor gives his genuine consent.

Section 90 does not merely preclude repossession directly from the debtor; it also encompasses repossession from a third party holding the goods as the debtor’s agent or bailee. Over the years a number of court decisions have leaned heavily in favour of debtors and confirmed that the section is intended to protect them and penalise Financiers, much as was the position under the Hire Purchase Act 1965. At the other extreme, it has been held that the section does not apply where the debtor has plainly abandoned the goods, for example by leaving a vehicle in need of repair in a public place (such as a car park) or even in the hands of a third party where it is clear that he has no intention of recovering them.

Section 91 of the CCA sets out the very severe consequences for a Financier who repossesses protected goods without the debtor’s consent, contrary to s 90:

“If goods are recovered by the creditor in contravention of section 90 —

(a)  the regulated agreement, if not previous terminated, shall terminate, and

(b)  the debtor shall be released from all liability under the agreement, and shall be entitled to recover from the creditor all sums paid by the debtor under the agreement”.

These consequences ensue whether the Financier repossesses all the goods comprised in the regulated Agreement or only some of them. In addition, any security will be lost and any future liabilities under linked transactions will be discharged. Subsequent return of the goods to the debtor by the Financier does not have the effect of reviving the Agreement. In addition to the statutory consequences in s 91, such conduct may be in contravention of the various requirements imposed by the FCA Handbook at CONC 7 in relation to arrears, default and recovery and is also conduct that may be taken into account by the court under the unfair relationship provisions in CCA s.140A(1)(b).

An interesting question on the nature and scope of s.90 arose recently in the High Court decision of Santander Consumer (UK) Plc v Chaudhry [2024] EWHC 170 (KB).

Here a vehicle on Hire purchase had been seized by the police while being driven by the debtor’s brother, who was disqualified from driving and uninsured. The vehicle was impounded and Santander took possession of the vehicle from the vehicle recovery company. The debtor then requested the return of the vehicle. Santander stated that the vehicle was being held in its safe custody and distinguished between such action and repossession. The debtor claimed that she had paid over one-third of the vehicle’s value and that she was entitled to repayment under CCA s.91. She denied having breached the Agreement and said that the vehicle should not have been taken without a court order. Santander did not return the vehicle and then (after the event) served a CCA s.87 default notice on the debtor.

At trial in the County court the judge found that the debtor’s brother had been driving the vehicle with her consent and that she had lied to Santander and to the court regarding those circumstances. He found that the debtor had breached successive clauses of the agreement, having in effect sub-bailed the vehicle to her brother. Clause 4.4 provided that she would “not use or let anyone use the goods illegally” and would “keep the goods in your possession and under your control”. Clause 4.5 provided that she would “not allow the goods to be seized or removed by the Police under a statutory power” and that such seizure or removal would be treated as a breach of the Agreement. It further provided that, in the event of seizure or removal, Santander could take the vehicle into safe custody. The judge found that property in the vehicle remained with Santander. He found that, for the purposes of s.90, recovery of possession had been from the police and not from the debtor, and that retention of the vehicle following her requests for its return also did not constitute Santander taking possession of the vehicle from her. The judge concluded that s.90 was therefore not applicable. The vehicle was ordered to be delivered up to Santander, which was effectively an order declaring that Santander was entitled to possession. The debtor was also ordered to pay Santander £18,132 as termination damages for breach of contract.

On appeal to the High Court the judge upheld the decision of the County court judge:

“In my judgment, when the Police lawfully seize and retain goods, pursuant to a statutory power, this has the effect of suspending a debtor’s right to possession of hired goods, for the period of such exercise. During that period, the debtor could not bring a claim of conversion against the Police for the wrongful detention of the vehicle.

The question which arises is what happens when the Police permit a person to remove a vehicle from the custody of the Police. At that point, is the Financier in effect removing the property from the debtor? In my judgment, this is not what is occurring. The Financier is removing the vehicle from the Police having satisfied the Police [that it is entitled to possession]

The argument of the [debtor] is in effect that at the point that the Police is handing over a vehicle, there is a scintilla temporis (a split moment in time) when the goods are released to the person who as between the Financier and the debtor, has the legal right to possession. That is artificial. In plain terms, the Police permitted the Financier to remove the vehicle from the custody of the Police. The Police did not hold the vehicle as bailee for the debtor. There was therefore no recovery of possession of the goods from the debtor.

The grammatical meaning of section 90 favours [Santander’s] interpretation. Once the goods ceased to be with the [debtor] or the [debtor’s] agent or bailee, there was not a recovery of possession from the debtor.

I do not accept the submission that this interpretation would drive a coach and horses through the protection afforded by section 90. Once the debtor is not in possession of the vehicle, there will be many circumstances where the Financier would wish to recover the vehicle for safe keeping. An example would be where the Financier found that the goods had been stolen by a thief. Another would be where the vehicle had been stolen whilst the customer was away on holiday, and the owner wished to prevent the vehicle from being destroyed”.


This is a welcome decision which applies common sense to an area of the CCA which has become quite technical in recent years, with numerous challenges to Financiers’ repossessions and attempts to engage the draconian consequences of s.91.

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