Here is the story…
James faced financial problem and could not continue the repayment of the installments of his car. In order to avoid his car from being repossessed and be auctioned off cheaply by the finance company, James, then sold his car to John cheaply with a condition that John has to continue the repayment of the remaining installments to the finance company. John was very pleased to have the car because it was a good new car, yet, been sold cheaply by James to him. Relevant transfer forms were pre-signed by both James and John and the transfer could not be effected pending repayments of all installments due to the finance company. Three months later on, John defaulted and did not continue paying on behalf of James the remaining installments to the finance company.
The finance company then issued a demand letter to James to pay the installments due to the company. This then was also followed by a notice to repossess the car by the finance company to James. John could not be traced and the car was also gone with him. James was very desperate as James also could not pay. Further, James also thought that it was not right for him to continue payment as he no more was in possession of the car. James ignored the notice. Some months later, James received a summons from the finance company to go to court.
HA! HA! CAR WAS USED IN ROBBERY
Pending the hearing of the case against him in court, James later on was queried by the police because the car had been spotted in a robbery. James was seen around the vicinity of the robbery at a coffee shop just before the robbery took place and he was again spotted near to the place of robbery after the heist was over with a man. James was arrested and after spending a few nights in “police hotel”, James was released on bail pending completion of police investigation into the robbery case.
James started to blame the police. James said there was no reason to arrest him in the first place because the car was not with him. James said the police should investigate the case properly and should trace John to find out as to who could have committed the robbery. Friends and colleagues later came to know about him being arrested by the police and many tried to keep a distance from him. James was very embarrassed by the situation.
More trouble later on came. James later on learnt from a newspaper that John was involved in an accident and was killed. John was on the wrong side of the lane and collided with an oncoming kancil car, killing two passengers in it. The finance company later on learnt that the car had been sold by James to John and certain papers had been signed between them and the transfer of the car to John was pending. The estate of the two passengers in the kancil car then made claims against James as registered owner of the car.
The insurance company also came to know about this claim. Under the law, since the car was insured, the insurance company has to pay for the damages caused to the estate of the two passengers who were killed in the kancil car. But, will the insurance pay?
What were the problems faced by James in all these?
James can face the following problems…
- James could be ordered by the court to pay for the remaining unpaid purchase price of the car plus interests and legal costs…very costly. If James refuses to pay, the finance company may go for execution against his property. It will incur big loss to James because James’ properties could be auctioned off cheaply. Further, James may be made to pay many other costs;
- If James could not pay, refuses or neglects to pay upon the court order served to him, James may be made a bankrupt by the finance company;
- James could be charged in court for the robbery and he has to answer for the robbery. If James fails to dislodge the robbery charge against him, James will be in jail for long term to come… James has to get a good lawyer and a good lawyer will not be cheap for robbery cases. Would James settle for an inexperienced lawyer who may come cheaply?
- The insurance company will not pay for the damages on his behalf as claimed by the estate of the two passengers and will argue that the sale of the car to John by James was an unlawful transaction;
- James could also be charged for a criminal offence of disposing the motorcar under the Hire Purchase Act 1967.
So think and don’t simply dispose of your car without the consent of the finance company if your car still has installments to be paid. Any transactions to sell the car without the consent of the finance company will be illegal under the Hire Purchase Act 1967. Your insurance company will also dispute insurance coverage once it has been disposed to someone else. When faced in such a situation, get a competent and skillful lawyer to protect your interest as if anything goes wrong, it will be very messy and costly.