Decision
The main decision of the court was delivered by Bridge LJ.
Nigel Cyprian Bridge, Baron Bridge of Harwich, PC was a British judge, who served as Lord of Appeal in Ordinary between 1980 and 1992. A leading appellate judge, Bridge is also remembered for having presided over the Birmingham Six trial.
He considered carefully the earlier decision of Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676 in relation to retention of title, and the decision in Re Hallett's Estate (1880) 13 Ch D 696 in relation to the right to trace.
Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676 is a UK insolvency law case, concerning a quasi-security interest in a company's assets and priority of creditors in a company winding up.
Re Hallett’s Estate (1880) 13 Ch D 696 is an English trusts law case, concerning asset tracing.
Tracing is a legal process, not a remedy, by which a claimant demonstrates what has happened to his/her property, identifies its proceeds and those persons who have handled or received them, and asks the court to award a proprietary remedy in respect of the property, or an asset substituted for the original property or its proceeds. Tracing allows transmission of legal claims from the original assets to either the proceeds of sale of the assets or new substituted assets.
He held that the process of working the resin destroyed that product, and the title of any person which was vested in it. Accordingly, the title which was retained under the agreement was extinguished. He went on to elaborate:
| “ | The lesson to be learned from these conclusions is a simple one. If the seller of goods to a manufacturer, who knows that his goods are to be used in the manufacturing process before they are paid for wishes to reserve to himself an effective security for the payment of the price, he cannot rely on a simple reservation of title clause such as that relied upon by the plaintiffs. If he wishes to acquire rights over the finished product, he can only do so by express contractual stipulation. [5] | ” |
Buckley LJ and Templeman LJ gave short concurring judgments. They added in their judgment that acquiring title in the worked product would generally result in the interest being treated as an equitable charge, which would be void if not properly registered under the Companies Act 1948 (now the Companies Act 2006).
Sir Denys Burton Buckley, MBE was an English barrister and judge, rising to become a Lord Justice of Appeal.
Sydney William Templeman, Baron Templeman, MBE, PC was a British judge. He served as a Lord of Appeal in Ordinary from 1982 to 1995.
The Companies Act 1948 was an Act of the Parliament of the United Kingdom, which regulated UK company law. Its descendent is the Companies Act 2006.
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