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GAZETTE
JULY-AUGUST 1980
RECENT IRISH CASES
CONTRACT — RESERVATION
OF TITLE
The effect of reservation of title
clauses in contracts for the sale of
goods must be considered in the light
of the intentions of the parties as
shown by the provisions of the whole
agreement and each case rests on its
own facts and the nature of the
transaction.
The Plaintiffs sold a refrigerating
machine to the first Defendant for a
price which was to be paid by four
instalments
during
the
period
commencing with the placing of the
order and ending shortly after the
machine was
in situ
and ready for
operation. The contract contained
(inter alia)
the following clauses:—
(1) "Until all sums due to the Seller
have been fully paid to it, the
plant, machinery and materials
supplied by the Seller herein shall
remain the Seller's personal
property and retain its character
as such no matter in what
manner affixed or attached to
any structure. If the Buyer fails
fully to perform this contract, the
unpaid portion of the purchase
price shall, at the option of the
Seller, become immediately due
and payable without notice,
together with all reasonable legal
or collection agency fees incurred
in the collection thereof'.
(3) "In case of default, the Seller
reserves the right to enter upon
the premises where the materials
are located and take possession
of and remove the same, if so
elects. In the event of such
removal the Seller may retain all
payments made therefor as
compensation for the use of the
materials."
The facts, which were not in
dispute, were that the machine was
installed and operational but that
approximately 25% of the purchase
monies remained outstanding when
the second Defendant was appointed
Receiver over the property of the first
Defendant.
The Plaintiff claimed that the
machine was still its property and
demanded its return or payment in
full of the monies outstanding. The
Defendants argued that the property
in the goods passed either on delivery
or once user commenced and that the
reservation of title clause (above
quoted) was only effective to create a
charge or some other kind of security
on the machine for the purchase
price, and as such ought to have been
registered under Section 99 of the
Companies Act, 1963. As it was not
so registered, the Defendants claimed
that the clause was void as against
the Receiver and creditors of the first
Defendant.
The High Court (McWilliam J.)
had considered the effect of a number
of such clauses in the previous case
of
Stokes
McKiernan
Limited
(December 1978 unreported) where
the Court had been referred to and
relied on the earlier decision in the
case of
Aluminium Industries B.V.
v.
Rompala Ltd.
[ 1976] 1 WLR 676 but
that unfortunately at that time
(December 1978) the full judgement
of Slade J. in re
Bond Worth Limited
[1979] 3 All ER 919 had not then
been delivered. The High Court
considered that in the
Bond Worth
case, the wording of the clause in
question (in fact similar to the
wording of one of the clauses in the
Stokes McKiernan
case) and the
nature of the transaction as a whole
did appear to create only an equitable
charge over the goods in question for
the purchase price. The clause in the
Bond Worth
case was as follows:—
"The risk in the goods passes to
the buyer upon delivery, but
equitable and beneficial ownership
shall remain with us until full
payment has been received (each
order being considered as a whole)
or until prior resale, in which case
our beneficial entitlement shall
attach to the proceeds of resale or
to the claim for such proceeds."
The clause in the Romalpa case was
similar to that in the present case in
that the entire property in the goods
was expressed, although in a different
form, to be retained by the vendor
until all that was owing had been
paid. The clause was as follows:—
"The ownership of the material to
be delivered to A.I.V. will only be
transferred to purchaser when he
has met all that is owing to A.I.V.,
no matter on what grounds."
McWilliam J. had held in the
Stokes
McKiernan
case (December 1978)
adopting the view expressed in the
Romalpa
case that a clause such as
condition (1) in the present case was
effective to retain the property in the
goods in the vendor even though the
goods were in the possession of the
purchaser.
Held:
(per McWilliam J.) that
in the present case, the clause and
nature of the transaction appeared
to be more similar to that in the
Romalpa
case, but that the
wording of the clauses and the
construction of the intentions of
the
contracting
parties
as
evidenced by the contract as a
whole must be considered and
each case must stand on its own
facts. The parties to a contract
could agree to any terms they
wished and the Court would have
to decide what
was their
intentions. The clause in the
present case was clear, in that
there was only one article sold, the
resale of which was most unlikely
to have been contemplated by
either the vendor or purchaser,
and accordingly the Plaintiff had
retained the property in the
refrigerating
machine
until
payment was made in full.
Frigoscandia (Contracting) Limited
v. Continental Irish Meat Limited
and Lawrence Crowley
— High
Court (McWilliam J.) — 25 April
1979 — Unreported.
CONTRACT
Specialist roofing contractors liable
for damages arising from their failure
to provide an effective waterproofing
of a roof within a reasonable time.
The specialist roof contractors had a
duty to provide for and insist on any
special precautions in the design of
the basic roof structure that they
required for their specialist form of
roofing insulation.
In 1974 the Plaintiffs were in the
course of constructing a shopping
centre in Dundalk. The Defendants,
who
described
themselves
as
specialists and licencees in the Shell
Monoform system of roofing and re-
roofing quoted for roofing in the
shopping centre. The quotation was
accepted on behalf of the Plaintiffs by
their Architect on 2 April 1974
subject to the fact that the
Defendants commenced work on 24
September, 1974, at which time the