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Whose Goods Are They Anyway?
Simon Rainey QC, Barrister, Quadrant Chambers, London, UKThe recent decision of the Court of Appeal in The Res Cogitans as to the ineffectiveness, if not the complete irrelevance, of a standard species of retention of title provision under a contract for the supply of marine bunkers where the bunkers are subsequently consumed by physical use in the vessel’s main engines prompts a reconsideration of some basic principles of the law of personal property in the context of such provisions. The simple principle that if goods are supplied to another and are then used so as to cease to exist, then no question of title in the goods (whether purportedly 'retained' or otherwise) can thereafter arise seems to have come as a surprise to some. The ramifications of that principle go further than mere retention of title, and as the decision shows, lead to the difficulty of characterising a contract in which title (if any) in the goods supplied by 'seller' to 'buyer' is not to pass until some time after their prior consumption and simultaneous destruction by the 'buyer' as a contract for the sale of goods at all. These questions are considered elsewhere in this issue.
The simple molecular destruction of the goods owned by A and sold to B subject to a retention of title clause by their outright consumption or other destruction by B (or by a third party or some external event) and the subsequent impossibility of the existence of any title to the goods on the part of either A or B is, despite the apparent surprise, a straightforward situation. One cannot retain what no longer exists; crude, boilerplate type, retention of title clauses cannot circumvent the ineluctable, however much a 'commercial' construction is resorted to. The lesson should have been learnt much earlier from cases such as Borden (U.K.) Ltd. v Scottish Timber Products Ltd.
More difficult (and hence analytically more interesting) is the situation where the goods of A are combined in some way with the goods of B and continue to exist in some molecular form but now exist in some altered physical state or one in which they have become indissolubly merged with B’s goods: this was the situation considered in part in Borden. In what circumstances will the retention of title provision stipulated for by A operate? How are the goods and title of A to be regarded for the purposes of the insolvency of A (or, for that matter, of the insolvency of B)? Does it make a difference to the result if the combination or merger was performed by A or by B? Or, if performed by B, does the result depend on whether it was carried out with A’s consent or wrongfully by B?
These questions give rise to the fascinating and virtually unique resort by English common lawyers in the context of judgment enforcement, freezing order relief and insolvency, to principles of Roman law to assist in the task of working out who has title (and title to what) in such a case.
Mixing and joinder
It is convenient first to distinguish two broad classes of combination or merger: (i) the first are the mixing cases where goods belonging to different owners are mixed together; (ii) the second are the joinder cases where the goods of one owner are joined with or to the goods of another owner so as either to incorporate those other goods or to be incorporated within them.
The mixing cases
Roman law in this context distinguished between two types of intermixture: commixtio (the mixing together of separable but indistinguishable constituents such as sheep, bales or coins) and confusio (the mixing together of inseparable constituents such as the same or different wines). English law has broadly (although not always consistently) adopted the same distinction: see e.g. Indian Oil Corporation Ltd. v Greenstone Shipping S.A. (The 'Ypatianna') and Glencore International AG v Metro Trading International, both summarising the earlier cases (going back to 1594).
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