Dealer absconds with money but buyer still gets Merc

His name will be registered in place of current owner as payment made in good faith: Court

A motorist who paid $103,000 for a Mercedes C180K to a dealer, who then absconded without handing the money to the registered owner, will get to keep the car after a court ruled he had acted in good faith.

District Judge Loo Ngan Chor ordered that buyer Kau Joo Guan's name be registered with the Land Transport Authority as sought, in place of the current owner, One Motor.

One Motor had bought the car from another second-hand car dealer, Mr Kwek Seow Hui, in June 2013. But it resold the car to Mr Kwek a month later for him to find a buyer, on the understanding that it would be paid when one was found. Mr Kwek himself hoped to make a commission from the finance company, should the buyer take a loan.

Mr Kwek promised to transfer ownership to Mr Kau in August 2013 after the car was sold, but this was not done. Instead he absconded and LTA records showed One Motor remained the registered owner. Mr Kau then sued to have himself registered as the owner.

DJ Loo, in written grounds released on Monday, referred to the relevant laws from the Sale of Goods Act as well as the Factors Act, which held that where a middleman is in possession of the goods with the owner's consent and sells them "to a third person who acts in good faith and without notice of the owner's rights, the owner of the goods is taken to have authorised the sale".

He noted there were six other cars of One Motor dealt with by Mr Kwek in the same way but Mr Kau was not aware of the arrangement between Mr Kwek and One Motor in relation to the car he was buying.

The judge found that Mr Kau, represented by lawyer Lim Joo Toon, had acted in good faith, as his dealings with Mr Kwek "were nothing more or less than those of an honest buyer of a used car".

"When a second-hand car buyer walks into a dealer's shop to view cars, the last thing he expects is that the dealer has no right to sell the cars on display," the judge wrote. "Otherwise, why would these cars be in his shop in the first place? This is the common sense of brick-and-mortar second-hand car sales."

The judge added that it was "for men of commerce such as (One Motor), and others who provide finance for car dealers, in the same trade, knowing their co-dealers and alive to its pitfalls, to organise their ways of doing business so that they do not become traps for the unwary car buyer."

The judge ordered One Motor to pay $200 in nominal damages to Mr Kau, in addition to $16,000 in costs, along with disbursements.

A version of this article appeared in the print edition of The Straits Times on December 16, 2015, with the headline 'Dealer absconds with money but buyer still gets Merc'. Print Edition | Subscribe