Car finance company fails in legal bid to have customer jailed over failure to pay instalments

The pursuers Moneybarn No 1 had agreed with the defender Steven Bell that he would purchase a car for a specified sum, but he did not pay a number of instalments and had not returned the car.

The pursuers sought to have him appear at the bar of court and thereafter to be apprehended and imprisoned for a period of up to six months, but Sheriff Daniel Kelly QC said there was “no justification” for the application as the company had already obtained a warrant to search for and deliver the car to them.

The court heard that the parties entered into a conditional sale agreement in which the defender agreed to purchase a car for £18,244, of which credit amounted to £9,389.

But in October 2014 the pursuers served a default notice on the defender after he failed to make a number of payments.

The following month the agreement was terminated by the pursuers, at which point the pursuers calculated that there was a further £11,109 due in respect of the balance of instalments payable under the agreement.

The pursuers sought payment of that amount as well as delivery of the car. Failing delivery, the company sought payment of a further £8,200, which they estimated to be value of the car on the termination date, plus expenses.

After various stages of procedure, on 27 June 2016 the defender was ordained to deliver the car to the pursuers, but he failed to comply with the interlocutor.

Officers of court were granted warrant to search for and take possession of the car and to deliver it to the pursuers.

On 1 August 2016 the pursuers lodged a minute seeking that the defender be appointed to appear in court to explain his failure to deliver the car.

The crave was granted and the case was continued to a procedural hearing on 14 September 2016, but no date was set for the defender’s appearance.

At the procedural hearing and in the absence of the defender, the solicitor for the pursuers made an oral motion seeking that crave 3 of the minute be granted, which was for warrant to apprehend and imprison the defender for a period not exceeding six months or to make such other order as appeared to the court to be just and equitable.

The application was made under section 1 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940, which provides that no one may be apprehended or imprisoned on account of his or her failure to comply with a decree ad factum praestandum except in accordance with those provisions.

The court may, on an application by someone in right of such a decree, if it is satisfied that the person against whom such decree was granted was “wilfully refusing to comply” with the decree, grant warrant for his or her imprisonment for any period not exceeding six months.

Refusing the motion, the sheriff explained that while the section empowered the court to impose a sanction in relation to a decree to perform a certain act, it retained a discretion and civil imprisonment for such matters was now “likely to be rare”.

In a written note, Sheriff Kelly said: “There might be instances where a sentence of imprisonment would be appropriate as an effective sanction in respect of certain decrees to perform acts but nothing was advanced to justify such a step in these circumstances.

“The conditional sale agreement has a number of aspects which are of the nature of a civil debt and in Scotland since 1880, with certain exceptions such as for aliment, no person may be apprehended or imprisoned on account of such a debt: Debtors (Scotland) Act 1880, section 4.

“The retention of title to the car by the finance company does provide the pursuers with the right to seek an order for its delivery. However, solely because the agreement encompasses the possibility of obtaining an order ad factum praestandum, which does retain the possibility of imprisonment, would not generally in my view warrant the imprisonment of one of the parties to it at the behest of the other.

“The arguments which led to the abolition of imprisonment for non-payment of civil debt in the nineteenth century are likely to be equally valid and apt today in relation to a conditional sale agreement. A number of such applications are increasingly beginning to emerge.

“However, while many customers might relish the opportunity to acquire a new car, few would expect that experience to lead to their imprisonment on the application of the finance company.”

He added: “The parties have entered into an agreement which specifies the sum which they have agreed should be paid by the defender to the pursuers. The remaining balance of the specified sum is £11,109 and as the pursuers seek this in Crave 1 they do not need a separate order to that effect in terms of section 1(2) of the 1940 Act. Although the pursuers also seek the value of the car, they would have to explain why they should be entitled to that in addition to the contractual amount.

“They hold a warrant to search for and deliver the car to the pursuers. The pursuers, therefore, have either already obtained or sought those orders which, in terms of section 1(2), may be made in lieu of granting warrant for imprisonment, making the grant of it even more untenable. There being no justification advanced for granting crave 3, it was refused.”