Shogun Finance Ltd v Hudson

Ratio Decidendi

Hechos

A rogue went to a car dealer and agreed to buy a car on hire purchase, fraudulently posing as a Mr Patel and using Mr Patel's genuine (stolen) driving licence. The finance company, Shogun Finance, checked 'Mr Patel's' details, approved the hire purchase, and the written agreement was made in the name of Mr Patel. The rogue took the car and sold it to Mr Hudson, an innocent private purchaser, before disappearing. When the fraud came to light, Shogun Finance claimed the car (or its value) from Hudson, and the question was whether Hudson had obtained good title.

Resumen de la sentencia

The House of Lords held, by a 3–2 majority, that Mr Hudson had not obtained title to the car and had to return it (or its value) to Shogun Finance. Because the hire purchase agreement was in writing and named Mr Patel as the hirer, its terms were construed as identifying the hirer as the real Mr Patel, with whom the finance company intended to contract; the rogue was not a party to it, so the agreement was void for mistake as to identity and the rogue never became a hirer or acquired any title or right to sell the car. Applying the nemo dat quod non habet principle, and holding that the statutory protection in the Hire-Purchase Act 1964 for a private purchaser from a 'debtor' did not apply because the rogue was not the debtor under the agreement, the majority concluded that Hudson took no title. The majority (Lords Hobhouse, Phillips, and Walker) distinguished a written contract from a face-to-face dealing, where there is a presumption that the seller intends to deal with the person physically present. Lords Nicholls and Millett dissented, favouring a rule that would protect the innocent third-party purchaser. Shogun is the leading, though controversial, authority on mistake as to identity in written contracts.

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