Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676 is a UK insolvency law

UK insolvency law

United Kingdom insolvency law deals with the insolvency of firms and individuals in the United Kingdom. The important statutes are the Insolvency Act 1986, as amended by the Enterprise Act 2002, as well as the Company Director Disqualification Act 1986 and the Companies Act 2006.Insolvency is a...

 case, concerning a quasi-security interest

Security interest

A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets...

 in a company's assets and priority of creditors in a company winding up.

Facts

Aluminium Industrie Vaasen BV was a Dutch supplier of aluminium foil. Romalpa Aluminium Ltd processed it in their factory. In the contract of sale, it said that ownership of the foil would only be transferred to Romalpa when the purchase price had been paid in full and products made from the foil should be kept by the buyers as bailees (the contract referring to the Dutch expression ‘fiduciary owners’) separately from other stock on AIV’s behalf as ‘surety’ for the rest of the price. But it also said Romalpa had the power to sell the manufactured articles in the course of business. When such sales took place, this would be deemed to be as an agent for AIV. Romalpa went insolvent, and the receiver and manager of the bank wanted the aluminium to be declared as being under its floating charge. AlV contended that its contract was effect to retain title to the goods, and so it did not need to share them with other creditors in the liquidation.

High Court

Mocatta J held the retention of title clause was effective. Aluminium Industrie Vaasen was still the owner, and could trace the price due to them into the proceeds of sale of the finished goods, ahead of Romalpa’s unsecured and secured creditors. He said the clause contained ‘unusual and fairly elaborate provisions’ which showed ‘the intention to create a fiduciary relationship to which the [tracing] principle stated in Re Hallett’s Estate (1880) 13 Ch D 696 applies.’ To the argument that this avoided the statutory regime in (what is now) the Companies Act 2006

Companies Act 2006

The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...

section 860(7)(g) which requires registration of charges on book debts, the answer was that ‘if the property in the foil never passed to the defendants with the result that the proceeds of sub-sales belonged in equity to the plaintiffs, s [860] had no application.’