A court appeal that has overturned a previous Pendragon Motor Group conviction on a supposedly misleading used car advert could spell an end to “irrational prejudice against ex-business use vehicles” and help prevent damage to residual values, say experts.

The fleet and remarketing industry said the ruling in the Pendragon court appeal could spell an end to “irrational prejudice against ex-business use vehicles”

The original case last October saw Pendragon, parent firm of the Evans Halshaw dealership, taken to court by Middlesbrough Council’s Trading Standard and fined £134k for failing to inform a customer that a vehicle’s ‘one registered keeper’ was a car rental company. The District Judge said at the time that the advert was misleading the average consumer, who should properly informed about what the ‘one registered keeper’ phrase means.

However, an appeal led by Pendragon has now seen a judge at Teesside Crown Court quash the conviction, saying that the ex-business use of the car would have had no effect on the car’s value.

A spokesperson for Pendragon said: “We are delighted that having succeeded with our appeal, the conviction has been quashed. We would like to thank our legal team led by Jonathan Kirk QC, and Geldards LLP and also thank the independent expert, Dean Bowkett. We are extremely pleased that the Judge remarked that the Courts exist to protect consumers against bad bargains where the playing-field is not level, and not irrational prejudice against ex-business use vehicles whose values are entirely unaffected. As a leading and reputable retailer, we will continue to take our legal obligations very seriously and treat our customers fairly.”

The ruling has been welcomed by the fleet and remarketing industry as it comes some 18 months after the Advertising Standards Agency (ASA) caused controversy when it ruled that adverts for two Alfa Romeo Giuliettas, bought by dealer group Glyn Hopkin from Fiat Chrysler Automobiles UK (FCA), and sold online via the carmaker’s used vehicle site, were misleading as they said the vehicles had one previous owner but did not highlight that they were ex-fleet vehicles.

Speaking at the time, industry expert Dean Bowkett had warned that it could create a two-tier used car market as well as a “litigation tsunami”, with legal firm Harcus Sinclair having announced plans to bring a class action alleging mis-selling on behalf of consumers who purchased second-hand vehicles but were not informed about the vehicle’s previous use by the manufacturer or dealer they purchased from.

However, according to Bowkett, this week’s appeal – while not being legally binding in terms of setting a precedent – carries a lot of weight should the ASA try to put ex-fleet vehicles in a negative light again.

He continued: “From my perspective I would like to add that I am pleased common sense prevailed in this case and I was delighted to have been able to advise the court on the factors which really influence the car market. The rationale used to demonise some previous user types purely by the nature of their trade is seriously flawed. A vehicle can be “thrashed” or well-maintained irrespective of whether the previous owner was privately owned or fleet owned and whether it had one or multiple users. Ownership and the mechanical and physical condition are not mutually exclusive and being able to highlight this in this case was important for the matter in hand but the wider industry.

“Consumers need protecting from bad practice and being misled but to try to legislate based on a prejudiced view helps nobody and can even lead to incorrect commercial decisions being made.”

A BVRLA spokesperson also welcomed the news: “We welcome the clarification that this judgment has provided, which supports our message that a vehicle’s value should not be affected by the fact that it was previously owned by a particular type of business. The rental and leasing sector is a key provider of high-quality, young, used vehicles that have been properly maintained and regularly checked during their previous life.”

And the Vehicle Remarketing Association (VRA) said the ruling made sense. Sam Watkins, chair at the VRA, said: “There is no logical reason for discriminating against a car or van because it has been previously owned by a business  and, indeed, these vehicles are generally maintained to a higher standard than privately owned examples.

“While the decision does not set legal precedent, it probably does signal that the potential flood of claims that the industry feared may be heading our way is now less likely to happen. Many people who work in the remarketing sector are probably letting out sighs of relief, and rightly so.

“At a point in time when the industry is facing many unknown factors, ranging from Brexit to WLTP, this was one more potentially serious worry. Now, hopefully, it can be set to one side for the time being, although we await the further comments of legal experts with interest.