United Dominions Trust (Ir) Ltd v Shannon Caravans Ltd

• Jurisdiction: Ireland
• Judge: GRIFFIN J.
• Judgment Date: 18 March 1976
• Neutral Citation: [1976] IESC 2
• Court: Supreme Court
• Docket Number: AFFIRMING HIGH-20.2.75,[1972 No. 1477]
• Date: 18 March 1976

UNITED DOMINIONS TRUST (IR) LTD v. SHANNON CARAVANS LTD

UNITED DOMINIONS TRUST (IRELAND) LTD.

v.

SHANNON CARAVANS LTD.

[1976] IESC 2

AFFIRMING HIGH-20.2.75

(97-1975)

THE SUPREME COURT

1 JUDGMENT delivered on the 18th day of March 1976 by GRIFFIN J. (nem diss)

2 The business of Shannon Foods Ltd, was mobile catering. They sold ready-to-eat food from caravans. In 1971 they bought a mobile caravan from an English firm. They needed some £3,300 to pay for that caravan and for the cost of fitting it out. To obtain such a sum, they approached the plaintiffs, who are a hire purchase finance company. The plaintiffs" representative, Mr. Hanley, who dealt with them, on learning that Shannon Foods Ltd, were already the owners of the caravan, pointed out that the plaintiffs could not provide hire purchase financing for a purchase that had already taken place. He decided, however, on his own initiative and without reference to his superiors, to circumvent that difficulty in the following way. He informed Shannon Foods Ltd, that to obtain a sum of £3,300 from the plaintiffs it would be necessary to have a hire purchase agreement, to put a "cash price" of £5000 on the caravan, to provide for a deposit of £1,670, and to have the transaction processed through a dealer in caravans.

3 He arranged with the defendants, who are a company that equips and sells caravans, to become a party to the transaction, to invoice the caravan to the plaintiffs, and thus to represent to the plaintiffs that they were the owners of this mobile caravan. This was quite false. The owners were Shannon Foods Ltd. It was a collusive arrangement between Shannon Foods Ltd., the defendants, and Mr. Hanley for the purpose of enabling Shannon Foods Ltd. to obtain the finance required by them. Mr. Hanley did not disclose the truth about the ownership of the caravan or the nature of the transaction to those in his company who were charged with accepting or rejecting new business û which he was not û and if he had done so his superiors would not have authorized or approved of the transaction and the plaintiffs" involvement would never have arisen.

4 The defendants, in pursuance of what Mr. Hanley had arranged, invoiced the caravan to the plaintiffs. The price was given on the invoice as £3,300, being a cost price of £5,000 less a deposit of £1,670. This invoice was a false representation in every respect. It falsely conveyed that the defendants were the owners of the caravan, that they were selling it for £5,000, and that they had got a deposit of £1,670 leaving a balance of £3,330. The truth was that at-no time had the defendants any ownership in or possession of or anything whatever to do with the caravan. They were merely sending this invoice to the plaintiffs at Mr. Hanley's request so that a hire purchase agreement could be arranged and entered into between the plaintiffs and Shannon Foods Ltd.

5 The executives who dealt with new business on behalf of the plaintiffs, believing the invoice to be genuine, sent a cheque for £3,330 to the defendants in payment of the price of the caravan. The defendants paid over the entire of this sum to Shannon Foods Ltd. so that there was, for them, no gain in the transaction. Doubtless they then considered that that was the end of the matter as far as they were concerned. Meanwhile, the plaintiffs, believing that the defendants had given them a good title to the caravan, entered into a hire purchase agreement with Shannon Foods Ltd. whereby Shannon Foods Ltd. were to but the caravan from them by paying 36 monthly instalments of £114.70 and a final payment of £2 under the "option to purchase" clause. Despite the fact that the plaintiffs were unaware that Shannon Foods Ltd. were already the owners of the caravan, things would probably have worked out to the financial satisfaction of all concerned but for the fact that Shannon Foods Ltd. went into liquidation after paying 8 monthly instalments amounting to £917.60, leaving a balance of £3,236.06 due by them for instalments and interest. No further payments were forthcoming from the liquidator nor was the liquidator prepared to deliver the caravan to the plaintiffs on demand by them, as he took the stand that the caravan had been purchased by Shannon Foods Ltd. and was not at any time the subject of a bona fide Hire Purchase agreement.

6 When the plaintiffs ascertained the true position, they accepted the liquidator's contention and looked to the defendants to recover their loss....