Online Catering Ltd v Acton & Anor

The Bills of Sale Act 1878 and Bills of Sale Act 1882 apply to individuals, not incorporated companies. A contractual right to take possession of goods as security for a debt may fall within the statutory definition of a bill of sale, but that does not bring a company within those Acts. If a company’s security is registrable under Part XII of the Companies Act 1985, non-registration makes it void only against the specified insolvency office-holders and creditors, not between the contracting parties. A right to take and retain goods without a power of sale may be a possessory lien rather than a charge. Distress-for-rent rules do not regulate seizure by a repairer from a customer.

Online Catering Ltd operated delivery vehicles and engaged Drakeglen Ltd, trading as Metropolitan Fleet Services, to repair them. Following unpaid repair invoices, Drakeglen took two vehicles by falsely representing that they were being removed for repair and retained them under contractual terms allowing recovery of goods equal to unpaid sums.

The Central London County Court dismissed Online’s claim. The Recorder held that the agreement was a bill of sale but remained enforceable between the parties despite non-registration. Permission to appeal was limited to whether the agreement was a bill of sale and unenforceable for non-registration. Online also sought permission on arguments concerning distress and the trial judge’s factual findings. The central issue was whether the Bills of Sale Act 1878 and Bills of Sale Act 1882 applied to a company.

1. Disposition. The Court unanimously refused permission on the three additional grounds and dismissed the appeal. Ward LJ gave the leading judgment. Lady Justice Smith agreed with both judgments. Rimer LJ agreed with the result and added concurring reasons.
2. The arguments based on distress for rent had no application to a repairer-customer relationship, since there was no landlord and tenant relationship and no rent debt. The Recorder’s credibility findings and his finding that the contractual terms were incorporated were properly open to him and disclosed no real prospect of success on appeal.
3. Under section 4 of the Bills of Sale Act 1878, a licence to take possession of personal chattels as security for a debt falls within the statutory definition of a bill of sale. The unpaid debt and the agreement to release the vehicles on payment meant that clause 28(b) fell within that definition if the Act applied.
4. The decisive conclusion was that the Bills of Sale Acts applied only to individuals, not companies. Ward LJ relied on the statutory mischief, the language referring to an individual’s residence, occupation and apparent possession, and the separate company-registration regime. He considered Read v Joannon (1890) 25 Q.B.D. 300, In Re: Standard Manufacturing Company [1891] 1 Ch. 627, Great Northern Railway Company v Cole Co-operative Society [1896] 1 Ch. 187, Clark v Balm, Hill & Co [1908] 1 K.B. 667 and N.V. Slavenburg’s Bank v Intercontinental Natural Resources Ltd [1980] 1 W.L.R. 1076. Rimer LJ found Lloyd J’s reasoning in Slavenburg’s Bank wholly convincing and agreed that the Acts applied only to individuals.
5. Ward LJ declined to decide whether clause 28(b) created a charge. If it did, non-registration under Part XII of the Companies Act 1985 would make the security void under section 395 only against the liquidator, administrator or a creditor, not between the contracting parties. Rimer LJ doubted that a charge existed because Drakeglen had no right to sell the goods or obtain a judicial sale. He distinguished Smith (Administrator of Coslett Contractors) Ltd v Bridgend County Borough Council [2002] 1 A.C. 336, where an express power of sale existed.
6. It was unnecessary to decide the hypothetical consequences for an individual grantor under the Bills of Sale Acts. The Court nevertheless indicated that an unregistered security bill would have the statutory consequences described in section 8 of the 1878 Act and section 8 of the 1882 Act. Ward LJ also noted, without deciding, that obtaining possession by deceit might raise a separate issue even where a contractual right to possession existed.

• Court of Appeal (Civil Division)—The appeal was dismissed and permission was refused on the additional grounds: [2010] EWCA Civ 58.
• Central London County Court—On 4 November 2008 the Recorder dismissed the claim and granted permission to appeal on the single bill-of-sale issue.