This is a surprisingly complex area of law and your question requires a detailed and comprehensive answer especially as we believe you are probably a victim of an attempted fraud by the garage owner.

The starting principle is this: The seller of a car cannot pass better title (ownership) than he himself has. So if you steal a car and sell it, the principle is the original owner is entitled to it back.

The courts are rigorous in enforcing this principle and in most cases it overrides all other arguments.

This is known in legal terms as the nemo dat rule from the Latin nemo dat quod non habet. It is not necessary to perpetuate the lawyerly mist of Latin so we will call it the best title rule.

In your case that would mean the garage owner has the best title and is entitled to the car back.

However, there are a number of specific exceptions which must be considered and it is likely that these may assist you. After considering the exceptions there is one more important point on insurance of the vehicle which we will return to.

The Exceptions

There are 7 exceptions to the best title rule:
 
1.    Estoppel - more Latin sorry. Estoppel is a principle based on fairness and almost means what it says - the courts will stop a person succeeding in their claim. In practical terms this means that the garage owner could be stopped from claiming better title if it can be shown that his conduct should fairly prevent him from asserting his best title. This is also referred to as "coming to equity with clean hands" in other words if you want to assert a claim you must only expect the court to assist you if you have acted fairly and honestly.
In your case you may struggle to prove any guilt on the part of the garage owner but you can certainly raise suspicion. Also the fact that he took three months to report the car as stolen would arguably prevent him from now asserting his rights - why did he not do so before? Arguably the 'fairest' result is now to let the garage owner and the seller sort this out between them.
 
2.    Seller has voidable title - This is where the seller has title but it is defective in some way and the original owner has not yet voided the original contract. This is probably your best argument. Unless the garage owner can show he had voided the contract then you can walk away with the car. This depends upon the communication between the seller and the garage and we would need to see the garage owner's response to this before being certain but if the garage owner thinks he is cleverly pulling a scam with the seller this will trip them up.
 
3.    Seller in possession - This is where the seller sells the car to A but does not deliver it. He then sells to B. Provided B is an innocent party then B wins and A must sue the seller. We do not think this affects you.
 
4.    Buyer in possession - This is where the buyer sells on the vehicle. Provided the purchaser buys in good faith then they take best title. It is a very common mistake to think that this may assist - it does not. This exception still requires the sale to be with the consent of the original owner (the garage) and if you could prove that you would be able to prove fraud.
 
5.    Agents with consent - This protect buyers if they purchase from an agent of the seller and the seller later claims they were not the agent - this does not affect you.
 
6.    Hire Purchase - Provided the purchase buys in good faith and without notice of any Hire Purchase they take best title and the HP company must pursue the seller.
 
7.    Power of Re-Sale - Which is to protect liquidators and pawnbrokers which does not affect you.
 

Insurance

We presume you insured the vehicle before driving it away - possibly before paying over the monies. There are some Insurance Ombudsman decisions which confirm that provided you had taken all necessary precautions, and it seems you have, then if you cannot succeed with the arguments above you could successfully claim the vehicle has been stolen from you.
 
In summary we believe you can defeat the general rule and keep the car under exceptions 1 & 2 above but if that fails you can claim on your insurance.

I will make enquiries with our carscams.co.uk Scamchecker team which has strong links with Autotrader and Ebay security to see whether there is any pattern to this.
 
With regard to your own case, if the amount in dispute is over £5000 or you have legal expense insurance we can appoint a lawyer to assist.
 
We trust this helps and that you found the information comprehensive and useful.

We answer questions on any legal matter so please tell anyone else who you think might benefit from our free assistance.

Important! Ask your own free questions... Questions are answered accurately at the time they are posted but the law can change or your circumstances may differ in an important but not obvious way from those mentioned. For fast, free and up-to-date personal legal advice direct to your inbox about your own individual case ask Law Answers your own free legal question.