Romalpa (1976)

 

Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd (1976)

 

The plaintiffs, a Dutch company which manufactured aluminium foil in Holland, sold quantities of foil to the defendant, an English company carrying on business in England. Clause 13 of the general selling terms and conditions which governed the individual contracts provided -

 

'The ownership of the material to be delivered by [the plaintiff] will only be transferred to [the defendant] when [they have] met all that is owing to [the plaintiff]. Until the date of payment [the defendant could be required] to store this material in such a way that it is clearly the property of [the plaintiff].'

 

Clause 13 then continued with elaborate provisions to deal with cases in which, after delivery, the foil had been mixed with other material by the defendant for the purpose of creating new 'objects'. The clause provided that in those circumstances the ownership of any such objects was to be transferred to the plaintiff as 'surety' for 'full payment' and until full payment had been made the defendant was to keep the mixed goods for the plaintiff as 'fiduciary owner'. The defendant was also given an express power of sale over such 'mixed' goods on condition that, so long as the defendant had not fully discharged their indebtedness to the plaintiff, they were, on request, to assign to the plaintiff the benefit of any claim against sub purchasers. Subsequently the defendant got into serious financial difficulties and a receiver was appointed by the debenture holders. At the date of his appointment the defendant was indebted to the plaintiff for over £122,000. Following his appointment, the receiver certified that £35,152 was held by him representing the proceeds of sale of unmixed aluminium foil supplied by the plaintiff to the defendant and sold by the latter to third parties. The plaintiff claimed that, by virtue of cl 13 of the general conditions, they were entitled to that sum in priority to the secured and unsecured creditors.

 

Held In order to give effect to the obvious purpose of cl 13, that clause was to be construed as conferring on the defendant a power to sell unmixed foil and also as imposing on them an obligation to account to the plaintiff for the proceeds of sale unness and until all moneys owing from the defendant to the plaintiff had been paid. Although, so far as sub purchasers were concerned, the defendant sold the unmixed foil as principal, so far as the plaintiff was concerned, the foil was the plaintiff's property which the defendant was selling as agent for the plaintiff to whom, by virtue of their fiduciary relationship as agent and bailee, they remained fully accountable. It followed therefore that the plaintiff was entitled to trace the proceeds of sale of the unmixed foil and to recover them in priority to the secured and unsecured creditors.