Lloyd's Maritime and Commercial Law Quarterly
REGISTRATION OF RETENTION OF TITLE CLAUSES UNDER S. 395 OF THE COMPANIES ACT 1985
E. Pfeiffer Weinkellerei-Weineinkauf G.m.b.H. & Co. v. Arbuthnot Factors Ltd.
Eleven years on from the landmark decision of the Court of Appeal in Aluminium Industrie Vaassen B.V. v. Romalpa Aluminium Ltd.
1 the case of E. Pfeiffer Weinkellerei-Weineinkauf G.m.b.H. & Co. v. Arbuthnot Factors Ltd.
2 has again examined the effect of a retention of title clause in a commercial sale contract and held that it created a charge over book debts which was void for want of registration under s. 95 of the Companies Act 1948 (now s. 395 of the Companies Act 1985).
The facts
The plaintiff (“Pfeiffer”), a German company which carried on business as a wine exporter, sold wine to an English importer on terms which included a “property reservation clause”. That clause provided inter alia that the goods remained Pfeiffer’s property until they had been paid for but it permitted the importer to sell the goods in the course of his business. The contract also provided that
All claims that [the importer] gets from the sale … with all rights including his profit amounting to his obligation towards [Pfeiffer], will be passed on to [Pfeiffer]. On demand the [importer] is obliged to notify the assignment of the claim to give [Pfeiffer] in written [sic] all necessary information concerning the assertion of [Pfeiffer’s] claims …. In case of cash sales, the money that has come from a third person immediately becomes [Pfeiffer’s] …, this money has to be separated from other money, it must be booked correspondingly, and must be administered until called for.
The importer sub-sold the wine on credit terms and then entered into a factoring agreement by which it agreed to assign to Arbuthnot Factors Ltd. (the defendant, “Arbuthnot”), absolutely debts owed to the importer by sub-purchasers. It also warranted that “no reservation of title by any third party will apply to all or any part of the goods sold” by the importer. Assignments were made pursuant to the agreement and notified to the sub-purchasers, and Arbuthnot thereby acquired legal title to the debts assigned, by virtue of s. 136 (1) of the Law of Property Act 1925. The sub-purchasers paid Arbuthnot in accordance with the terms of the notice of assignment.
The importer failed to pay Pfeiffer all the sums due to it, so Pfeiffer brought an action in which it claimed: (a) to be the beneficial owner of the proceeds of each sub-sale; and (b) that Arbuthnot’s title to the debts assigned under the factoring agreement was subordinate to Pfeiffer’s prior equitable title. Pfeiffer therefore sought an order that Arbuthnot account to it for, and pay over, the moneys received under the assignments made pursuant to the factoring agreement. Arbuthnot’s defence was that (a) any interest which Pfeiffer had in the proceeds of the subsales was in the nature of a charge on the importer’s property which was void for
1. [1976] 1 W.L.R. 676.
2. [1988] 1 W.L.R. 150. The writer gratefully acknowledges the assistance derived in writing this Comment from R. M. Goode’s Proprietary Rights and Insolvency Sales Transactions (1985).
141