Lloyd's Maritime and Commercial Law Quarterly
DISPOSITIONS TO RECIPIENTS IN GOOD FAITH
The Saetta
In Forsythe International (UK) Ltd. v. Silver Shipping Co. Ltd. (The Saetta)1 bunkers were supplied to a vessel under a contract between the vessel’s charterers as purchasers and the plaintiffs as suppliers. The contract contained a reservation of title clause under which the plaintiffs retained title until payment of all monies due to them. The charterers defaulted in paying hire. Accordingly, the owners of the vessel withdrew it. A conflict as to title to the bunkers then arose as between the owners and the unpaid plaintiffs. The latter claimed the value of the bunkers from the owners on the basis of conversion. It was not disputed that the owners were at the time of withdrawal of the vessel unaware of the existence of the reservation of title agreement between the charterers and the plaintiffs; but it was equally undisputed that they were aware that the bunkers had not been paid for. However, they claimed good title under the Sale of Goods Act 1979, s. 25(1): i.e., that the charterers were “buyers in possession” from which they, the owners, had taken the bunkers in good faith and without notice of the defect of title.
Having determined, unexceptionably, that the charterers were buyers in possession, the real issue was whether there had been “… a delivery or transfer by [the buyer in possession] … to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods … “. Clarke, J., held that: “… there must be some voluntary act by the buyers in possession amounting to delivery, although it need not amount to an act of physical delivery of the goods. Mere inaction would not … be sufficient.”2 He concluded that:3
The transfer of possession from the charterers to the owners was not … achieved by any act or even acquiescence on the part of the charterers. It was achieved by the exercise of the owners of their right to terminate the charterparty for non-payment of hire.
However, there must be more substance to the requirement of a “disposition” under s. 25(1) than merely a consensual transfer. This question was addressed by the Court of Appeal in Worcester Works Finance Co. Ltd. v. Cooden Engineering Co. Ltd.4 There a rogue purchased a car from the respondents, paying by a cheque which was subsequently dishonoured. In the interim, however, he had purported to sell the car to the appellants but had retained possession under a hire-purchase
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