Moriarty & Anor v Various Customers of BA Peters plc (in administration)

A dealer agreement may confer implied authority on a dealer to sell goods as the manufacturer’s agent before the manufacturer has been paid, where that authority is necessary to give effect to the agreement’s commercial purpose. A purported retention-of-title arrangement does not necessarily reverse title already acquired by a sub-purchaser. A direct delivery to a sub-purchaser will not constitute delivery to the buyer where the manufacturer delivered only under a separate arrangement reserving title. A contractual right described as a security interest in resale proceeds may create an unregistered charge rather than a fiduciary arrangement permitting tracing.

The judgment concerned the administration of BA Peters plc and the competing claims to a boat and to £194,953.65 paid into the company’s client account. The court had previously held that Burton Waters Marina Limited acquired title to the boat when it paid the company in full. Sealine International, the manufacturer, later sought to challenge that conclusion and to be joined to the proceedings. The remaining issue was whether Sealine could claim the sale proceeds under its dealer agreement or trace them into the client account.

1. The court had jurisdiction under Insolvency Rule 7.47(1) to review its previous order, but that jurisdiction had to be exercised extremely cautiously. In the absence of obvious injustice, review should generally be confined to changed circumstances or fresh evidence casting doubt on the previous decision. No such basis was established.
2. The dealer agreement required the company to sell Sealine products and contemplated sub-sales before payment to Sealine. It therefore necessarily conferred authority to sell in the ordinary course of business as Sealine’s agent, notwithstanding the clause denying agency. The contrary construction would defeat the commercial purpose of the agreement. Title passed to Burton Waters when it paid the company in full.
3. Section 25(1) of the Sale of Goods Act 1979 did not provide the basis for the result. The direct delivery arrangement was distinguishable from Four Point Garage Limited v Carter: Sealine released the boat only after receiving written confirmation that it retained title, and did not deliver as the company’s agent.
4. The subsequent email recorded an understanding that Sealine retained title but did not create an agreement retransferring title. If it did, the agreement would be void for common mistake under Bell v Lever Brothers and Great Peace Shipping Ltd v Tsarlines Salvage (International) Ltd.
5. The clause expressly creating a security interest in products and resale proceeds created an unregistered charge. The agency relationship and resulting obligation to account did not overcome that characterisation. Sealine was therefore a general creditor and could not trace its claim into the client account.
6. Sealine was joined to the application. It was awarded its costs, limited to the issue concerning ownership of the proceeds.