John Mackintosh and Sons Ltd v Baker's Bargain Stores (Seaford) Ltd 3 All ER 412
(Judgment by: Browne J) Court:
Judgment date: 18 August 1965
The way in which the problem arises is this. The defendants are quite prepared, without prejudice to their position at the trial to give some undertaking or submit to some injunction until the trial to protect the plaintiffs against resale of their goods at prices lower than the plaintiffs' list prices; but the problem is to limit that injunction so that it will not include as prohibited transactions those which are excluded by sub-s (2) of s 25 of the Restrictive Trade Practices Act, 1956. I confess that I am very much tempted to do what Pennycuick J did in the authority cited to me, EMI Records Ltd, v Morris, and simply follow the wording of sub-s (2) of s 25 of the statute, leaving it to the parties to work it out if any further problem arises. However, both parties tell me that one particular problem is likely to arise in the near future and ask me deal with it now, to avoid having to come back here. The particular problem is this. Subsection (1) of s 25 reads:
"Where goods are sold by a supplier subject to a condition as to the price at which those goods may be resold, either generally or by or to a specified class or person, that condition may, subject to the provisions of this section, be enforced by the supplier against any person not party to the sale who subsequently acquires the goods with notice of the condition as if he had been party thereto."
Counsel for the defendants points out that sub-s (1) represents a very drastic departure from the previous common law rule, and invited me to approach the construction of this section on some sort of presumption that it was intended to make the minimum of alteration in the common law. I do not feel able to adopt that approach. I think that it is a wrong approach to an Act of Parliament, and it is my duty to approach this Act simply as a matter of construction of the statute, applying the usual principles applicable in construing statutes. The subsection directly relevant to the problem in this case is s 25(2) which is as follows:
"A condition shall be enforceable by virtue of this section--(a) in respect of the resale of any goods by a person who acquires those goods otherwise than for the purpose of resale in the course of business, or by any person who acquires them, whether immediately or not, from such a person; (b) in respect of the resale of any goods pursuant to an order of any court, or by way of execution or distress, or by any person who acquires them, whether immediately or not, after such resale."
The only other provision of the Act to which I need refer is the interpretation s 36(1), which provides:
"In this Act the following expressions have the meanings hereby respectively assigned to them, that is to say: ... 'supply' includes supply by way of lease or hire, and 'acquire' shall be construed accordingly."
It will be observed that that section is in that form, following the expression "In this Act"--which must mean anywhere they occur in this Act; and it is not in the common form "unless the context otherwise requires".
The immediate question in this case is what is the position when the defendants buy goods from a company which is in liquidation? Counsel for the plaintiffs says that that is not a resale of the goods by a person who "acquires ... otherwise than for the purpose of resale in the course of business", because, so he says, the liquidator does not "acquire" the goods at all. He says that they remain the property of the company; and assuming that the company is a company whose purposes include the resale of goods in the course of its business, s 25(2)(a) does not apply. The sale is a sale by the company, and not by the liquidator, who may never acquire the goods.
Counsel for the defendants says one ought in this Act to give the word "acquire" a wide meaning; that one should treat the liquidator as acquiring the goods of the company of which he has been appointed liquidator; that when he resells them, he is reselling them "otherwise than ... in the course of business", because he is simply selling them to wind up the company; and that, therefore, the sale by the liquidator is not a resale to which the Act applies.
The position of the liquidator appears from various provisions of the Companies Act, 1948, to which I have been referred. Under s 243(1):
"Where a winding-up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be, shall take into his custody or under his control all the property and things in action to which the company is or appears to be entitled."
By s 244:
"Where a company is being wound up by the court, the court may on the application of the liquidator by order direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest in the liquidator by his official name, and thereupon the property to which the order relates shall vest accordingly, and the liquidator may, after giving such indemnity, if any, as the court may direct, bring or defend in his official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding-up the company and recovering its property."
Under s 245(1) the liquidator has power to do certain things with the sanction of the court or a committee of inspection. Subsection (2) provides that:
"The liquidator in a winding-up by the court shall have power--(a) to sell the real and personal property and things in action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company or sell the same in parcels ... "
And by s 303(1)(b) the liquidator in a voluntary winding-up may, without sanction, exercise any of the other powers given in a winding-up by the court, power of sale not being one of the excepted powers which can only be exercised by the liquidator in a voluntary winding-up with sanction. There is a note in Buckley on the Companies Acts (13th Edn) at p 513, which says that
"winding-up, whether voluntary or by the court, does not effect a cessio bonorum, as does bankruptcy, but the company's property remains vested in it as before."
So although the liquidator has custody and control of the goods which had previously belonged to the company, he does not, except where an order has been made under s 244, become the owner of the goods. The company remains all the time entitled to the ownership of the goods. Counsel for the plaintiffs says that the word "acquire" in s 25(2)(a) of the Restrictive Trade Practices Act, 1956, means "acquire title". Counsel for the defendant says that it ought to be given a wider meaning, and should include at any rate anyone rightfully in possession of goods for the purpose of selling them.
I have come to the conclusion that counsel for the plaintiffs' submission as to the meaning of "acquire" in this section is correct. I am not able to get very much help from the dictionary meanings of the word. The question is: what does it mean in the context of this section? It is clear that s 25(1) is dealing with a case where goods are sold first of all by a supplier to a buyer, subject to a condition, and are then resold by that buyer to someone else; and the object and effect of the subsection is that the condition and price subject to which they have originally been sold to the first buyer shall be enforceable against the person who has bought them from the original buyer on the resale. So, in considering s 25(1), the words "any person not party to the sale", that is, a person other than the original buyer, "who subsequently acquires the goods", must be intended to refer to someone to whom the goods have been resold by the original buyer, and, therefore, in that subsection, the person "acquiring" the goods is a person who has acquired title by purchase. In my view, one must give the same meaning to the word "acquires" in the phrase a person who "acquires" goods in sub-s (2) as the word has in sub-s (1); and that view is reinforced by the definition section, by which "acquire" is to be construed as including acquisition by way of lease or hire. Although it may be a little unusual to think of cases where goods acquired by way of lease or hire would be resold, there might be such cases; and in any event I think that definition indicates that throughout this Act the word "acquire" would (apart from the definition section) have the meaning of "acquire ownership", for otherwise it would not be necessary to extend it to include other types of "acquisition" by way of lease or hire.
In my opinion, therefore, a liquidator who does not acquire the ownership of goods but merely has them in his custody or under his control is not a person who "acquires" the goods within sub-s (2)(a) and cannot, therefore, be "a person who acquires those goods otherwise than for the purpose of resale in the course of business". It follows that a resale by a liquidator is not excluded from the operation of the Act or the injunction by sub-s (2)(a).
So far as s 25(2)(b) is concerned, it is clear that, on any view, a resale by a liquidator in a voluntary winding-up could not be excluded by that provision; but counsel for the defendants says that a resale by the liquidator in a winding-up by the court is a resale pursuant to an order of the court, because it is pursuant to the original winding-up order made by the court. I find myself unable to accept this view. It seems to me altogether too remote. As counsel for the plaintiffs points out, there are many cases in which there may be a resale by the court. Instances are referred to in 34 Halsbury's Laws of England (3rd Edn) at p 13, para 17, where there may be a sale by the court; and, as counsel for the plaintiffs points out, there are cases where there may be a sale by way of execution or distress. I have come to the conclusion, therefore, that a resale by a liquidator of a company in liquidation is not protected by sub-s (2)(b), except in the case where the goods have been vested in the liquidator pursuant to s 244 of the Companies Act, 1948. I hope that, this decision having been given, the parties will be able to draft the wording of the injunction [F1] in such a way as to embody both the concessions which each party has been good enough to make, and also the result of my decision.
The terms drafted for the injunction were as follows: "That the defendants may be restrained until judgment in this action or further order, whether by themselves, their servants or agents or otherwise, from reselling by retail any goods manufactured and sold by the plaintiffs at prices other than the retail prices specified in the plaintiffs' price list in force at the date of such resale, so however that the injunction shall not extend (a) to the resale by the defendants of any goods acquired by them (i) otherwise than for the purpose of resale in the course of business, or (ii) whether immediately or not, from a person (including a trustee in bankruptcy) who had acquired them otherwise than for the purpose of resale in the course of business; or (b) to the resale of any goods pursuant to an order of any court, or by way of execution or distress or to any goods acquired by the defendants, whether immediately or not after such resale. The injunction shall extend to the resale by the defendants of any goods acquired by them whether immediately or not as the result of a sale by order of a receiver or a liquidator, except a liquidator in whom property has been vested under s 244 of the Companies Act, 1948."