Romalpa Clauses Case Analysis

Romalpa Clauses: Dawn of the Dead!?
An Analysis of the Position of ‘Proceeds of Sub Sale Clauses’ Following Wilson v Holt
Romalpa - briefly heralded as the case giving efficacy to retention of title when a seller sought to claim rights to proceeds of resale held by the buyer - was quickly put to death and buried by a torrent of English decisions intent on confining the decision to its own facts. The widely accepted view over the course of the next 35 years would be that ‘retention of title’ (ROT) clauses which allowed a seller to trace proceeds of the sub-sale of products in the hands of the buyer, amounted to a registerable charge over the buyer's book debts which would be void unless registered. However the recent English Court of Appeal

Notably In Tatung (UK) Ltd v Galex Telesure Ltd, Phillips J commented that he thought the seller's interest in Romalpa was also a charge, the case therefore being wrongly decided. While that may very well be the case, the more common view amongst the judiciary was that the decision turned on its own facts and began a process of restricting Romalpa and interpreting the decision as narrowly as possible. This is evident from cases such as Pfeiffer, Re Weldtech Equipment Ltd7 and Tatung (UK) where the claims to proceeds of resale were held to be void as an unregistered charge. __________ described the case of Compaq Computer Ltd v The Abercom Group Ltd1 as driving ‘one more highly polished nail into the coffin of the Romalpa case.2’ to the extent that claiming proceeds of resale, the nub of the Romalpa case, proved to be a damp squib. The case featured an extensive ROT clause, similar to the one found in Romalpa, although there was an additional reference to a period of credit. _______ J held the ROT was a charge, void for

Courts were keen to distinguish later cases on various grounds, for example; different arrangements were in place or Romalpa was said to have special features such as counsel for the buyer's concession that his client owed fiduciary obligations to the seller. The belief that Romalpa was wrongly decided and was dead and buried also gained traction. Such considerations led some to conclude the disownment of Romalpa ‘sub-sale’ clauses would continue well in the future without abating.
It is therefore understandable that the recent Court of Appeal decision in Wilson v Holt in which a majority ruled a sub-sale retention clause did not amount to a charge but rather created an agency relationship between the buyer and seller, came as a shock to many. However, as this paper will go on to outline, it is likely the decision was wrongly decided and should be overturned by the House of Lords.
Proceeds of Sub Sale Clauses under Wilson v