The rogue then sold the car to Mr Norman Hudson, who had no knowledge that the vehicle belonged to Shogun Finance and was subject to an apparent hire purchase agreement.

Mr Hudson relied on section 27 of the Hire Purchase Act 1964, which creates a statutory exception to the common law principle that "nemo dat quod non habet" (nobody can pass better title than he has), since a non-trade buyer of a car who buys in good faith from a hirer under a hire purchase agreement becomes the owner.

The face-to-face exemption established by Phillips v Brooks Ltd did not apply because the seller was not the dealer but the finance company.

This approach fits comfortably with the intention of Parliament in enacting the limited statutory exceptions to the proprietary principle of nemo dat quod non habet.

Such a distinction has been labelled "artificial and unfair"[5] to third parties, who bear the entire loss if, at least in the instant case, it is argued that Shogun Finance Ltd had far better means to uncover the rogue's fraud than the independent purchaser;[6] in any case, the original seller is usually in the better position to protect and insure against such risks.