Four Point Garage Ltd v Carter

[1985] 3 All ER 12

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Between: Four Point Garage Ltd
And: Carter

Court:

Judge: Simon Brown J

Subject References:
Sale of goods
Passing of property
Vendor retaining property in goods
Disposition by buyer after sale
Buyer never in possession of goods
Buyer selling goods on to sub-purchaser
Seller delivering goods to sub-purchaser at request of buyer
Contract for sale of car
Contract reserving seller's title to car until car paid for
Buyer reselling car to sub-purchaser
Seller delivering car direct to sub-purchaser
Buyer going into liquidation before paying seller for car
Whether seller entitled to recover vehicle under reservation of title clause in contract
Whether reservation of title clause preventing passing of title to bona fide sub-purchaser
Whether delivery of goods direct to sub-purchaser by seller passing good title to sub-purchaser
Whether seller delivering car to sub-purchaser as deemed agent of buyer

Legislative References:
Sale of Goods Act 1979 - s 25

Case References:
Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd - [1976] 2 All ER 552; [1976] 1 WLR 676, CA
Heyman v Flewker - (1863) 13 CBNS 519; 143 ER 205
Ruben (E & S) Ltd v Faire Bros & Co Ltd - [1949] 1 All ER 215; [1949] 1 KB 254

Judgment date: 9 November 1984

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ORDER

The defendant agreed to purchase a particular make and model of car from the third party, which was a car dealer, and paid the full purchase price to the third party before taking possession. At the time the third party did not have the particular make and model in stock but it arranged to purchase it from the plaintiff, who was also a car dealer. At the request of the third party the plaintiff delivered the car direct to the defendant, and did so in the belief that the car had merely been leased to him since it was unaware that the third party was a car dealer which bought and sold cars. The defendant on his part was unaware of the existence of the plaintiff and believed that delivery had been made by the third party. The contract of sale between the plaintiff and the third party contained a retention of title clause under which title in the car remained with the plaintiff until the car had been fully paid for. The third party subsequently went into liquidation without paying the plaintiff for the car. The plaintiff brought an action against the defendant seeking a declaration that it owned the car, contending that the retention of title clause prevented a good title being passed from the plaintiff to the third party and thus prevented the third party from passing on good title to the defendant, and that, since the third party had never obtained possession of the car and had not delivered it to the defendant, the defendant could not rely on s 25 ^[F1] of the Sale of Goods Act 1979, which provided that where a buyer agreed to purchase goods from a seller and obtained possession of those goods with the seller's consent and then transferred or delivered the goods to a sub-purchaser who received them in good faith the sub-purchaser thereby received good title.

Held:

(1) For the purposes of s 25 of the 1979 Act there was no distinction between a delivery of goods direct to a sub-purchaser by the seller and a delivery of goods by the seller to a buyer who then delivered the goods to the sub-purchaser. In either case there was an effective delivery of goods to the sub-purchaser for the purpose of passing title to the sub-purchaser under s 25, since in the case of delivery direct to the sub-purchaser by the seller the buyer was deemed to take constructive delivery of the goods and the seller was deemed to act as the buyer's agent when making delivery to the sub-purchaser. Accordingly, the fact that the third party never obtained good title to the car from the plaintiff did not prevent good title passing under s 25 to the defendant as sub-purchaser when the car was delivered to him by the plaintiff (see p 15 b to e and j and p 16 h j, post); E & S Ruben Ltd v Faire Bros & Co Ltd [1949] 1 All ER 215 applied.

(2) The retention of title clause in the contract between the plaintiff and the third party was insufficient, as between two commercial car dealers, to preclude the implication of a term authorising the third party to resell the goods to a sub-purchaser, provided that such resale was in the ordinary course of business and that the third party had not been aware that the plaintiff believed otherwise. Accordingly, the fact that the plaintiff had erroneously believed that the third party had merely leased the car to the defendant did not prevent good title in the car passing to the defendant. Judgment would therefore be given for the defendant (see p 16 f to j, post) Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 2 All ER 552 followed.

Notes:

For retention of title clauses in contracts for the sale of goods, see 41 Halsbury's Laws (4th edn) paras 707, 731.

For disposition of goods in possession of seller or buyer affecting an equitable right, see ibid paras 750-752.

For the Sale of Goods Act 1979, s 25, see 49 Halsbury's Statutes (3rd edn) 1126.

Action

By a writ dated 23 October 1984 the plaintiffs, Four Point Garage Ltd, sought as against the defendant, William Carter, a declaration that it was the owner of and entitled to possession of a Ford Escort motor vehicle. The facts are set out in the judgment.