Re Bond Worth Ltd
A clause retaining equitable and beneficial ownership in goods sold, while legal title passed to the buyer, created a floating charge which was void for lack of registration.
Facts
Monsanto sold a fibre called Acrilan to Bond Worth, a carpet manufacturer, which used it to make carpets. The contract provided that the equitable and beneficial ownership of the fibre would remain with Monsanto until it was paid for, and would extend to any products made from it and their proceeds. Bond Worth went into receivership, owing Monsanto money. The question was whether Monsanto had a valid security over the fibre, carpets and proceeds.
Legal principle
Slade J held that the clause created a floating charge, which was void because it had not been registered. Since legal title had passed to Bond Worth, the retention of equitable ownership could only take effect as a charge granted back by the buyer to the seller. The charge was floating, because Bond Worth was free to use the fibre and sell the carpets in the ordinary course of business. The clause therefore did not give Monsanto priority over the receivers.
Related cases on retention of title clauses
- Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676
- Re Andrabell Ltd [1984] 3 All ER 407
- Armour v Thyssen Edelstahlwerke AG [1991] 2 AC 339
- Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25
- Clough Mill Ltd v Martin [1985] 1 WLR 111
- Compaq Computer Ltd v Abercorn Group Ltd [1991] BCC 484
- E Pfeiffer Weinkellerei-Weineinkauf GmbH & Co v Arbuthnot Factors Ltd [1988] 1 WLR 150
- FG Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2013] EWCA Civ 1232, [2014] 1 WLR 2365
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