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GAZETTE
JUNE/JULY 1976
RECENT IRISH CASES
The ownership of the goods remains
with German vendors even though
they are in the physical possession
of two Irish purchasing companies
as no sale is deemed to have taken
place.
Interview Ltd.
is an Irish Com-
pany carrying on the retail trade of
selling refrigerators and similar
domestic electrical goods (known
technically as "white goods"), and
television and radio sets (known
technically as "brown goods"). In-
terview had an authorised share
capital of 1,500,000 shares of £1.00
each of which 1,150,000 had been
issued. In September, 1971, Inter-
view had given a debenture to
Ulster Bank Ltd. as security for its
debts.
On 29th June, 1972, the
Ulster Bank appointed Mr. Milliken
as receiver of the undertaking, pro-
perty and assets of Interview. On
11th April, 1973, Interview passed
a resolution that the company be
wound up voluntarily.
The next company concerned is
Electrical Industries of Ireland Ltd.
(hereafter
called
E.I.I.)
which
manufactured and imported all sorts
of electrical goods in Dunleer, Co.
Louth. Interview owned one third
of the issued share capital of E.I.I.
The third company is
Irish Elec-
tronic and Appliance
Co. Ltd.
(I.E.A.C.), incorporated in February
1972, which had an issued share
capital of £2.00 This was a wholly
owned subsidiary of Interview in
order to carry on wholesale business
in electrical goods. Interview sold
the goods to I.E.A.C. for the pur-
poses of resale to outlets and com-
panies. The effective management of
these companies was carried on by
Mr. McCourt.
The fourth company is the Ger-
man
Allgemeine
Elecktricitaets
Gesellschaft
Telefunken (A.E.G/
which manufactures electrical goodi
on a very large scale and which
sells goods outside Germany on
printed terms known as "terms for
deliveries abroad".
The fifth company is Telefunken
Fernsch und Rundfunk G.M.B.H
("Telefunken") which is a wholly
owned subsidiary of A.E.G.
It
carries on the business of manu-
facturing and exporting television
and radio sets and other electrical
goods.
In June. 1970, negotiations took
place in Hanover between represen-
tatives of A.E.G. and E.I.I., as E.I.I,
wished to be appointed sole agents
in the Republic by A.E.G. for the
import and distribution of "brown
goods". The terms of the agree-
ment were set out in a letter ot
28th October, 1970, from A.E.G. to
E.I.I., whereby E.I.I, were to try
their best to promote sales of the
electrical goods of A.E.G. Al-
though normally A.E.G. deal only
in "white goods", the contract re-
lated solely to "brown goods" with
the trade mark Telefunken. As re-
gards the "terms for deliveries
abroad", apart from German Law
being the law applicable, Clause 15
sets out terms relating to preser-
vation of ownership. It stated that
normally the product supplied shall
remain the property of the supplier
until all debts arising have been
paid in full by the purchaser.
On 10th February, 1972, there
were further discussions in Hanover
between Interview and Telefunken.
The net effect of this agreement is
that henceforth Interview, as well
as E.I.I. was to be made a party
to the agreement of June 1970. In
March, 1972, a representative of
the German companies visited Ire-
land.
As a result of discussions
E.I.I, transferred to Interview the
goods originally sold by E.I.I, to
them, and a purchase price of
£205,935 was debited to Interview's
account. The goods transferred by
E.I.I. to Interview had been stored
at Dunleer warehouse. In order to
give effect to the transfer, it was
agreed that the E.I.I, warehouse
would be leased to Interview from
1st May, 1972 at a rent of £5,268.
The lease was made on 17th May,
1972, for a term of 21 years. On
28th April, 1972, Telefunken wrote
to Interview confirming these ar-
rangements. It was stressed that
Interview would be an active part-
ner in importing and distributing
Telefunken products within the
agreement, and that the German
merchandise would be imported
and distributed by Interview's sub-
sidiary "I.E.A.C." I.E.A.C. were
merely considered by the Germans
as importing agents for Interview.
A German lawyer gave evidence
as to the German Law on the sub-
ject. Briefly if it is agreed that the
passing of the title will take place
only on payment of the goods, then
the ownership of title of the goods
remains in the vendor. The clause
about "Reservation of Ownership"
is a common; one in German con-
tacts and there is known as a "cur-
rent accounts clause". The effect of
it under German Law is that the
supplier rmains the owner, even
though the goods have passed to
the purchaser. The purchaser is en-
titled to retain the goods until the
vendor can prove delay in payment.
The vendor may only obtain the
goods back by serving a notice of
rescission. When the goods are in
the custody of the purchaser,
though the title to them is in the
vendor, the effect of a sale by the
purchaser is governed, under Ger-
man Law, by the
Lex Rei Sitae
which in this case is Irish law. In
Irish law, the effect was that the
two German companies, A.E.G.
and Telefunken, remained owners
of the goods; accordingly E.I.I, had
custody of the goods for the pur-
poses of Section 9 of the Factors
Act 1889 (which provides that de-
livery of goods under any sale to
a person receiving them in good
faith and without notice of any
right of the original seller shall have
the same effect as if the person
making such sale were the original
mercantile agent), and Section 25
(2) of the Sale of Goods Act 1893
which is more or less to the same
effect. Accordingly a purchaser in
good faith from E.I.I, or Interview
of the German goods which they
had in their possession acquired the
property in them.
It is quite clear that there was
no sale in March, 1972, by E.I.I, to
Interview of the goods valued at
£105,935. E.I.I, could not agree to
transfer the property in the goods
delivered by the German companies
because they did not have it. Inter-
view cannot rely on the Factors Act
1889 or the Sale of Goods Act 1893
to validate the transaction as a sale,
because they did not receive the
goods in good faith, and they had
notice of the original sellers, the
German companies. Accordingly
here there was a transfer of posses-
sion and custody of the goods,
which were always the property of
the German companies.
Further-
more the appointment of a receiver
is an equitable assignment of what
the company owns; it is not a sale.
Accordingly at all times ownership
of the goods remain in the German
companies.
Re Interview Ltd. — Application of
Milliken
— Kenny J. — unreported
7th March, 1975.
CUSTODY
The parents of a child resident in
Africa are entitled to its custody,
despite the fact that before her mar-
riage, the mother had signed an
adoption consent form which had
transferred the custody of the child
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