Citation(s) [1980] Ch 228 | ||
Re Bond Worth Ltd [1980] Ch 228 is a UK insolvency law case, concerning retention of title clauses.
Contents
Facts
Bond Worth Ltd was a carpet manufacturing company. It bought man-made fibres from Monsanto Ltd and used them to make carpets. The conditions of sale included a "retention of title" clause. Bond Worth Ltd went into receivership when a large sum of money was owing to Monsanto Ltd under various contracts containing the "title" clause. Monsanto Ltd notified the receiver of their claim. The receivers contested whether the retention of title clause was valid.
On the joint receivers' summons for determination of the claim, held, that (1) the clause though referring to "equitable and beneficial ownership" did not create a bare trust for the benefit of the sellers, but a floating equitable charge in favour of the sellers ( ); (2) such a floating charge was created by the buyer company and therefore registerable; it was void if not registered.
Judgment
Slade J held the clause, which referred to "equitable and beneficial ownership", did not create a bare trust for Monsanto's benefit, rather than a floating equitable charge. This followed from Coburn v Collins and Illingworth v Houldsworth was applied. while Aluminium Industrie Vaassen BV v Romalpa Aluminium was distinguished. Because the floating charge was created by the buyer company and therefore registrable, it was void because it was not registered. A floating charge ‘remains unattached to any particular property and leaves the company with a licence to deal with, and even sell, the assets falling within its ambit in the ordinary course of business, as if the charge had not been given, until… it is said to ‘crystallise’.’