In all honesty, be greatful you talking about a 500 quid car. It could be MUCH worse, so drop any kind of court proceedings, really is NOT worth it.
Any system is ripe for errors, the best you can do is get a decent check done, make sure paperwork is sent out and that YOU have done the check and it is in your name. This will go some way to help a claim.
As said, some salvage cars are shipped out quick before they are entered into the hpi list, and so in this case it would really be difficult to claim.
If you want to recoop, then don't px, sell private as a recorded car, I understood your trying to part ex it to a garage?? always going to give you less.
Still bad news though mate,