Be Aware – July 2023

This month, the IGA Legal Team provides an update on challenges to sales commission claims,  discusses indirect discrimination, and highlights some aspects of the law around buying and selling cars which later turn out to be stolen.

MILS 100% Success in Sales Commission Claims

Since the 2021 FCA rule changes regarding sales commissions, a major headache for RMI members who have brokered finance agreements as part of a vehicle sale has been the extremely high number of solicitors and claims management firms seeking to prosecute civil claims for return of commissions earned during the sale of vehicle finance.

In a series of previous articles, we detailed the arguments/issues involved and provided template responses for the most common types of these claims (see NFDA newsletters 08 October 2021 and 15 October 2021). Over the last two years we have put these templates into practice for several RMI members and provided advice and assistance to members defending themselves in the Courts.

We are proud to say that to date we have not only dissuaded a number of claimants from bringing cases but also successfully defended all claims moving to litigation in which we have been involved.

There remains however a great deal of uncertainty over the issue, and despite over two years of legal argument we are still unaware of any precedent from a higher court that settles this matter once and for all.

In the absence of such a precedent all cases remain a question of fact for individual Courts to decide based on the facts and arguments presented on the day. However, it is noticeable that Courts are increasingly willing to subject claimants to rigorous testing of any claims, and with the right arguments there is a better than even chance of successful defence.

Members can greatly help themselves by maintaining copies of all documents; particularly any IDD or disclosure documents detailing which financial services are provided, what limitations apply, what fees will be paid and what commission (if any) will be paid.

Indirect Discrimination

In the case of Boohene and others v Royal Parks Ltd. the Employment Tribunal (ET) was asked to consider  a case of indirect Race discrimination. Did a tribunal err in applying too narrow a pool for comparison in an indirect discrimination claim when it included all direct employees but only one group of outsourced workers?

In the case in question, the Claimants were employed by a third party to work on its toilet and cleaning services contract with the respondent. Their minimum rates of pay were set below London Living Wage (“LLW”); this contrasted with the respondent’s direct employees, who were office-based and had a level of pay higher than LLW. The employment tribunal found that the respondent had committed to ensuring that the minimum pay of its direct employees would not fall below LLW but had decided not to accept the option of LLW as the minimum pay rate on the toilet and cleaning contract.

The Claimants brought claims of indirect race discrimination in respect of their treatment as contract workers as compared to the respondent’s direct employees. The tribunal upheld these complaints as falling within the definition of indirect discrimination under section 19 Equality Act 2010, rendered unlawful by reason of section 41. The respondent appealed.

In this case, the Respondent had a policy of paying its staff a minimum rate of the London living wage (LLW). However, when it contracted out is toilet cleaning services it decided against the option of LLW as the minimum pay rate on the toilet and cleaning contract and instead accepted a bid which was based on staff being paid lower than LLW.

The Claimants, who worked for the contractor, brought claims of indirect discrimination, arguing that applying a lower minimum level of pay to outsourced workers compared with those who were directly employed was discriminatory on the grounds of race as those who were employed by the contractor were more likely to come from black and minority ethnic (BAME) backgrounds.

The tribunal compared those who were directly employed by the Respondent and those employed by the contractor and found that it placed those from BAME backgrounds at a particular disadvantage and that it could not be justified. The tribunal upheld the complaint as definition of indirect discrimination under section 19 Equality Act 2010, (“the EqA”).

This was appealed to the Employment Appeals tribunal (EAT)

In its decision the EAT confirmed that where an employer set the terms of pay when contracting out services, then it and not the contractor makes the pay decision. It was therefore permissible to compare those employees directly employed with those employed under the contract. However, the tribunal was wrong to only consider those employees contracted to clean the toilets (who were disproportionately BAME), and should have instead considered all subcontracted employees.

In Conclusion

This case highlights that the tribunal can take a wide approach when considering who is discriminating. Employers should be very careful when setting contractual terms for any subcontractors or bidding processes, particularly where that they would not apply the same terms to their own staff.

It also highlights the importance of how groups to be compared are defined. It is not appropriate to pick and choose a group that is not truly representative. skews the results.

In some aspects this case is unusual. Not only did the employer set a beneficial policy of the LLW for its employees and then set a lower rate when contracting out services, it was unfortunate that those who were employed by the contractor were more likely to come from BAME backgrounds.

Stolen Vehicles

“I took a car in part exchange, now the police have contacted me and told me the car was stolen and have seized the vehicle.  What can I do”

You first need to know more about the allegations, particularly, was the vehicle taken without the permission of the owner or did the owner intend to sell the vehicle but were mistaken or mislead as to who the purchaser was.

Is the vehicle stolen?

Where a vehicle is taken without the permission of the owner then the thief will have no legal title to the vehicle despite having possession of it. With a few exceptions you cannot receive a better title than the person selling you the vehicle. Therefore, you have no title to the vehicle and will lose it. If you have already sold the vehicle you will have to reimburse the buyer any funds paid and you will be liable to compensation for any losses.

Did the previous owner intend to sell the vehicle?

Fraud is something different. Where the owner of a car intends to sell a vehicle and pass legal title but the payment details used are fraudulent then title to the vehicle will pass to the ‘fraudster’ unless and until the true owner takes steps to cancel the contract, e.g. by reporting it to the police etc… If you buy the vehicle during this period for a fair price and without knowledge of any fraud, then you will gain legal title to the vehicle even after the fraud is discovered. You will not have to return the car. You will also pass title to any subsequent owner should you have sold it.

The best option remains to avoid the situation where possible. If the vehicle has recently changed owners, you should satisfy yourself why it is now being sold. Sufficient identification details should be kept so that you can satisfy yourself of the identity of the person selling the car, their address and that this corresponds to the banking details and the registered owner’s details.

Conclusion

It is always difficult when cars are stolen. Who ends up with the vehicle is heavily dependent on the facts of each case. The legal situation can be complex and any advice will need to be tailored to any one situation. In the event you do get caught out, as an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance that can help to simplify the problem.

General Note

Don’t forget, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

Motor Industry Legal Services

Motor Industry Legal Services (MILS) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.