The Lawyer Clive Robertson
www.healys.com +44 (0)7768 997439
Two similar classic car legal cases highlight the differences between UK and US consumer law
IT’S 9:30AM. I AM IN A SITTING room in Chiddingfold, Surrey, UK, when the phone rings; a call from Australia, then a call from New Zealand. I am now motivated to pay the asking price of £24,000, having barely looked at the car under discussion. Provenance and matching numbers don’t really hold sway in 1999. Subsequent research shows that AC Ace chassis no. AE 36 appears to be noteworthy, having been a Works team car campaigned by Ken Rudd in the 1955 RAC Rally. Fast-forward some 17 years, when a friend calls to tell me VPG 600 is now in the JD Classics showroom in Mayfair, London. Apart from the registration, all but nothing remains of my long-sold AC. The car on display is quite simply magnificent – as it should be at something over £500,000. In November 2022, a 1950 XK120 is put up for auction, the car having been raced extensively by Le Mans hero Duncan Hamilton. The brochure states that the Jaguar had been sold in 2014 by JD Classics for £1,250,000. Clearly by the mid-2010s, JD Classics had claimed a pre-eminent place in the market, for both the quality of its work and the sale values achieved. The AC and the Jaguar figures were each well in excess of twice the market norm. JD Classics had achieved the pinnacle, reaching those buyers who would pay for perfection at any price. Much of what happened next has been reported, but in essence one Michael Tuke introduced himself to Derek Hood, then principal and sole owner of JD Classics (it is now under new ownership). So trusting was Tuke of Hood’s reputation that he invested many millions upon a handshake. Tuke had assumed that Hood was acting on his behalf. However, it turned out that Hood was acquiring vehicles for himself, then selling them on to Tuke – thereby deceitfully achieving an
204
Magneto
undisclosed profit. Tuke subsequently issued a claim against Hood, which was successful to the tune of £4.2m for actual losses and a further £9m for loss of investment opportunity. In making the award, the Court looked at how it could put Tuke back in a position as if he had never even met Hood in the first place. English law only allows loss of actual damages. By comparison, the US can and does award punitive damages. Then Hood, instead of retreating to obscurity, appealed the level of damages. The Court did not find his arguments ‘appealing’, however, describing him as a “mendacious witness” who had endeavoured to mislead by fabricating evidence. Law scholars will say that it’s rare to find comparable, contemporary cases in different jurisdictions, although fate can intervene. Earlier this year, Magneto’s website reported a story about the US case of Bill Oesterle vs The Healey Werks Corp. The facts of this case bore a striking resemblance to the Hood situation. Bill bought a 1960s Maserati Ghibli for $16k, which he asked Healey Werks boss Craig Hillinger to restore. The work was scheduled to take up to 24 months and cost $200k. In fact, four years expired, with a $1m-plus bill. The claim also cited the purchase of a rare Austin-Healey 100M, which Hillinger had suggested should be a joint project with Oesterle at a cost of $50k, with a further $10k required for assembly. On release in 2021, it
‘It seems the US legislature is more inclined to disincentivise the would-be fraudster than that in the UK’
transpired that the car wasn’t a 100M. A final $130k bill was then presented; the car was never assembled. Oesterle also funded the purchase of a Healey Silverstone at $160k. Minor works were needed, following which the Healey would be sold and the profit shared. Hillinger sold the car without consent and pocketed $160k. When the matter was heard in the Iowa Third Circuit, the judge found in favour of Oesterle and ordered The Healey Werks Corp to pay $7.2m in damages, plus attorney’s fees and court costs. The judge tripled the actual losses of $2.4 because the defendant “wilfully and wantonly” violated Oesterle’s rights. So while Hood had committed transgressions to the tune of £13.2m, Hillinger was somewhat less diligent in his actions, ‘only’ defrauding his customer of a relatively minor sum. It seems the US legislature is more inclined to disincentivise the wouldbe fraudster than that in the UK. Why – given the Hood case and the funds invested in the historic car industry worldwide – is the issue of regime change, in terms of punitive damage, not on the agenda in Great Britain? Contract law in the US also looks
to protect the consumer at the point of contact with the particular workshop or repair facility. The jauntily named Iowa Motor Vehicle Services Trade Practices Act states, inter alia, that the customer must authorise repairs and servicing requirements, in writing, before the commencement of works, as well as being provided with a written or oral estimate for repairs or estimates with a value in excess of $50. Most notably, the bill delivered must not exceed the estimate by more than ten percent. In the UK, the individual must rely upon general consumer or contract legislation. Work for the UK specialist trade and lobby groups? The last word from Bill Oesterle: “It is a difficult process to find authentic parts and materials, and to find credible people with the expertise to properly restore these beautiful machines. Often that means you have to trust people across the country, or even the world, on what they say they have and what they can do. I would hate to know other collectors have been treated this way.” Clive is a solicitor and consultant with London law firm Healys LLP. Contact clive.robertson@healys.com.
ALAMY
BELOW Hood was found to be a “mendacious witness” during proceedings against his firm JD Classics.
