''Re Peachdart Ltd''

984 Year 984 ( CMLXXXIV) was a leap year starting on Tuesday of the Julian calendar. Events By place Europe * Spring – German boy-king Otto III (4 years old) is seized by the deposed Henry II, Duke of Bavaria ("the Wrangler"), wh ...

Ch 131 is a judicial decision relating to retention of title clauses, and the extent to which the vendor of a raw material can seek to assert title to goods into which those raw materials are subsequently worked. The court held that seeking to assert title to the subsequently worked goods had the effect of creating an

equitable charge In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the '' collateral'') which enables the creditor to have recourse to the property if the debtor defaults in mak ...

, which was void for non-registration under the Companies Act.

Facts

The company, Peachdart Ltd, carried on the business of manufacturing leather handbags. The company had granted a debenture to

Barclays Bank Barclays PLC (, occasionally ) is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services ...

which contained a

floating charge In finance, a floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of ...

over all of the company's assets. That floating charge was duly registered under the

Companies Act 1948 The Companies Act 1948 ( 11 & 12 Geo. 6. c. 38) was an Act of the Parliament of the United Kingdom, which regulated UK company law. Its descendant is the Companies Act 2006. Cases decided under this Act *'' Bushell v Faith'' 970AC 1099 *'' Sc ...

. Freudenberg Leather Co Ltd supplied substantially all of the leather used by the company. The leather was sold under contracts of sale which included a retention of title clause. That clause provided not only did title to the leather remain vested in Freudenberg after delivery up until they time that they were paid, but that Freudenberg could trace their title into any goods into which the leather was worked. The company began to experience financial difficulties, and on 10 August 1981 Barclays Bank appointed receivers. A dispute then arose as to which creditor had better title to the leather - Barclays Bank under the floating charge, or Freudenberg under the retention of title clause. The receivers challenged the clause on the basis that the power to trace title into subsequent products meant that the arrangement was effectively an equitable charge, which was

void Void may refer to: Science, engineering, and technology * Void (astronomy), the spaces between galaxy filaments that contain no galaxies * Void (composites), a pore that remains unoccupied in a composite material * Void, synonym for vacuum, a s ...

for non-registration.

Decision

The case came before

Vinelott J Sir John Evelyn Vincent Vinelott (15 October 1923 – 22 May 2006) was a leading barrister at the Chancery bar and an English High Court judge in the Chancery Division from 1978 to 1994. Biography He was born in Gillingham, Kent, and studied ...

. The parties acknowledged that these issues had come before the courts several times, most notably in the leading cases of ''

Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd ''Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd''

976 Year 976 ( CMLXXVI) was a leap year starting on Saturday of the Julian calendar. Events By place Byzantine Empire * January 10 – Emperor John I Tzimiskes dies at Constantinople, after returning from a second campaign against ...

1 WLR 676 is a landmark UK insolvency law case, concerning a quasi-security interest in a company's assets and priority of creditors in a company winding up. Facts Aluminium Indu ...

1 WLR 676, ''

Re Bond Worth Ltd ''Re Bond Worth Ltd'' 980Ch 228 is a UK insolvency law case, concerning retention of title clauses. Facts Bond Worth Ltd was a carpet manufacturing company. It bought man-made fibres from Monsanto Ltd and used them to make carpets. The conditions ...

980 Year 980 ( CMLXXX) was a leap year starting on Thursday of the Julian calendar. Events By place Europe * Peace is concluded between Emperor Otto II (the Red) and King Lothair III (or Lothair IV) at Margut, ending the Franco-Germa ...

Ch 228 and '' Borden (UK) Ltd v Scottish Timber Products Ltd''

981 Year 981 ( CMLXXXI) was a common year starting on Saturday of the Julian calendar. Events By place Europe * Spring – Emperor Otto II (the Red) leads the imperial court to Rome, making the city his imperial capital, and receiv ...

Ch 25. However counsel for Freudenberg sought to distinguish those cases, arguing that in the case of a leather handbag, the leather was still readily identifiable. It had simply been cut and restitched, but clearly not been destroyed by the process. Vinelott J rejected that argument. He held that at law the manufacturing process essentially created a new species of property, and that an attempt to trace title into that property took effect as an

, and accordingly, that provision in the contract of sale was void for non-registration under the mandatory statutory provisions applicable to company charges.

Authority

this case is still accepted as authoritative.

Footnotes

{{DEFAULTSORT:Peachdart, Re United Kingdom insolvency case law 1984 in United Kingdom case law Barclays litigation