In adopting a narrow interpretation of the the meaning of the phrase ‘dispose of’ in the context of the Hire Purchase Act 1964, the High Court has ruled that a transport company that accepted a truck from a debtor in lieu of payment did not acquire good title to the vehicle. The transaction did not amount to a disposition as it did not involve cash changing hands, the court ruled.
The transport company had argued that, having acquired the vehicle in settlement of debts, it should be viewed as an ‘innocent purchaser’ of the vehicle, having been unaware that it was subject to a hire purchase agreement. It was submitted that the company was therefore entitled to protection under section 27 of the Act.
However, upholding a claim by the hire purchase provider to take possession of the vehicle, the court ruled that the phrase ‘disposed of’, contained within section 29 of the Act, should be interpreted as requiring the passing of monetary consideration between purchaser and debtor.
Noting that section 29 was designed to protect honest purchasers against the full rigour of the general rule that a purchaser cannot obtain a better title to a chattel than that possessed by the seller; the court ruled that the meaning of the phrase should not be stretched to embrace less conventional transactions that did not involve exchange of money.