new zeland Car hire business to pay heavy price for client's alleged fraud

[jnelsoninjax]

A small hire car company is to have one of its vehicles seized after an alleged fraudster registered it in his name to secure a large loan.

Despite being innocent in the matter, Green Cars Ltd, which runs Green Rental and the Battery Clinic in Otahuhu, has to give up its 2011 Toyota Prius because the man they hired it to, Vincente Lopez, used it as collateral to get a $46,000 loan from Pioneer Finance - a loan he defaulted on.

Being the losing party in a High Court hearing, Green Cars must also pay court costs.

The family business's manager, David Phan, was baffled by the decision.

"This guy's hired the vehicle, he's changed the registration to his name then waltzed down to the finance company and got finance on it.

"Now [Pioneer] has come after us trying to get the vehicle saying it's theirs."

The vehicle had not been registered with the Personal Property Securities Register (PPSR), which was introduced in 2002 to give owners a better chance of recovering a debt should their debtor default. Phan had not been aware of the register until now.

"So if anyone gets wronged like us - even fraudulently so - you still lose the vehicle."

In her decision, Justice Christine Gordon said that in registering the vehicle in his name, Lopez did indeed have rights to the Prius. The agreement he'd entered into with Pioneer Finance was enforceable against a third party, she found.

Lopez initially secured a loan for $46,489 using a property he owned in Tokoroa and three cars as collateral.

He then decided to sell the Tokoroa property, telling Pioneer he would repay $25,000 and put up two more cars, including the Prius.

When Pioneer discovered that Lopez had "sold" the cars and that registration of the Prius had been transferred to Green Cars it went about repossessing them.

Phan told the court he had no idea the car had been used to secure a loan until a Pioneer agent turned up at his work.

He said Lopez had hired the Prius from July 2014 to January 2015 and again from January 2015 to January 2016. Green Cars recovered it after he failed to meet his payments.

Pioneer submitted that ownership of the vehicle was "irrelevant to the outcome of the application" as Lopez had "rights in the collateral" for the Prius, the decision said.

Because Lopez had the car for over a year, the judge rejected Green Cars' submission that the hire agreement was a "licence" rather than a "lease" and therefore Pioneer's right to the vehicle was enforceable under the Personal Property Securities Act.

"All that the applicants need prove is that they gave value to the borrowers; that Mr Lopez had rights in the Prius; and that the security agreement is enforceable against third parties," Justice Gordon said.

"Each of these requirements is clearly satisfied on the evidence before the court."

None of the parties had any idea what had happened to Lopez.

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