Failing
to register its personal property security interest in a Toyota Prius cost
Green Cars Ltd when a customer fraudulently mortgaged the vehicle to a finance
company when refinancing a $46,000 loan.
Green Cars owns a fleet
of hybrid cars. They are leased on
fixed-term hires. Green Cars was conned
by Vicente Lopez who used one of its Prius hire vehicles as security when
reorganising his business finances. Mr
Lopez re-registered the vehicle in his own name and then passed it off as his
own car. In May 2015, the finance
company registered its interest in the car on the personal property securities
register; an electronic database giving public notice of loans outstanding on
cars and other personal property.
The High Court was told
Mr Lopez had hired a Prius from Green Cars for a series of medium term loan
periods. Only when the finance company
turned up at its yard to repossess the fraudulently mortgaged Prius did Green
Cars learn of the fraud. Its challenge
to the finance company’s rights failed.
The law relating to loans secured over personal property does not
concentrate on legal ownership; it looks to see who has apparent ownership. Green Cars was the legal owner, but Mr Lopez
was the apparent owner. The finance
company lent money on the security of Mr Lopez’ apparent ownership of the car
and publicly registered its security interest.
It had first claim over the Prius.
Pioneer
Finance Ltd v. Green Cars Ltd – High Court (14.11.17)
17.151