administrators have rejected my claim of retention over the goods

ekim654 · May 31, 2009

Hi
Can anybody help
i am a sole trader just been caught out by a company going into administration.

administrators have rejected my claim of retention over the goods

i wish to challenge this rejection

Letter sent 13th May

I note that you have rejected my claim for the retention of title to the railings I supplied and fitted to the retaining wall of 74 - on the following points. I also note your somewhat dubious advice that it is a "offence to issue proceedings against a company in administration without leave of the court.
You reject my claim on the grounds that if the railings are removed holes will remain in the wall therefore you have to conclude that the railings have been incorporated.
You reject my claim on the grounds that I failed to provide sufficient documentation to confirm that a retention of title clause was incorporated into my contract with -
You reject my claim on the grounds that I failed to provide sufficient documentation to confirm that the goods could not have been supplied by another source.
With reference to point (1) The goods are still identifiable, they are in their original form, and they are capable of being removed and returned. A judgement referred to a buyer who bought engines and incorporated them into generating sets. This incorporation did not alter the engines. They were still identifiable and could be unbolted and removed. In this particular case it was decided that both incorporated and unincorporated engines could be recovered.
May I bring to your attention; the holes that would remain in the wall if the railings were removed would be holes that are the result of the fixing processes and not the result of damage caused by the removal process.
May I further point out that these holes could be filled or even the bricks containing the holes could be replaced leaving no trace of the removal process.
In any event as we discussed over the phone I am willing to remove the railings by ether of two other methods that don't involve leaving holes in the wall. The first being cutting the post at the base (no contact with the wall). The second being only the removal of the bolted panels (again no contact with the wall).
With reference to point (2) may I bring to your attention that in the first instance there was a verbal agreement endorsed by the acceptance of my Order number 10021.
My letter dated the 24th February 2006 included a copy of my Order number 10021 which clearly states GOODS REMAIN THE PROPERTY OF - - UNTIL PAYMENT IS RECIVED. This Order was generated on the 8th January 2009 by the issue of - order number FM766.
May I also bring to your attention my letter dated the 11th March 2009
On the 15th November 2008 I was approached by P J- resident warden P J who asked if I would provide a quote for railings to be fitted to a retaining wall on the property of Mr and Mrs-
Terms and conditions were discussed at this meeting ( I stated that I required no deposit and would not request payment until the work was done to their satisfaction, but I would require payment in full as soon as they were satisfied the work was complete. P J- pointed out that payment in full could only be made by head office on the production of an invoice and that work could not commence without a order number being issued. I agreed to this on condition that the goods remained my property until full payment was received.)
I consider these agreements where endorsed on the acceptance of my quote by - on the 17th November 2008 and further endorsed on the 8th January 2009 by the issue of their order number FM766 and confirmed the Order dated the 8th January 2009 (copy was enclosed with my letter to you dated the 24th February 2009)
The goods were delivered, and the installation work completed on the 31st January 2009 with a Invoice dated the 31st January 2009 issued for payment (copy was enclosed with my letter to you dated the 24th February 2009)
With reference to point (3) may I bring to your attention that I have supplied you with a copy of Order number 10021 and a copy of Invoice number 10019. The copy of Order number 10021 contains --s order number FM766 which relates directly to the railings fitted to a retaining wall on the property of Mr and Mrs--. The copy of Invoice number 10019 clearly refers to 24mt railings 74-. This invoice was in the words of P J the Park Warden rubber stamped indicating that work was satisfactory and completed before he passed it on to head office for payment. I have also provided a photo showing these railing fitter to the property of Mr and Mrs
There are no other railings on or near to 74-
The railing I supplied are unique, handmade and could not be supplied by another source.
The railing I supplied are still identifiable, they are in their original form, and they are capable of being removed and returned.
You have been supplied with a copy of a letter from - verifying this.

After seeking further advice and you are aware I claim retention of title for the railings fitter to the retaining wall of 74 (my letter dated the 24th February 2009). If the goods are disposed of without my permission I will hold you personally liable.

This issue has dragged on long enough. I have done everything I can to have this issue resolved, I am of the opinion you havn't done everything you could to resolve this issue.
I give you 14 days notice to ether agree to the return of the goods, agree a settlement over these goods or give me permission to apply to the courts for a resolution regarding this issue. Please note that if you do nether I will apply to the courts for their permission to seek a resolution to this issue.

Administrators reply

I refer to your letter of 13 May 2009 and acknowledge safe receipt of same,
As previously advised, this matter has been referred to our solicitors, Walker Morris, who will revert to you directly in due course.
With regard to your intention to issue proceedings against the Company, the Joint Administrators recommend that you take independent legal advice in this respect.

My reply

After seeking further advice and you are aware I claim retention of title for the railings fitter to the retaining wall of 74 - (my letter dated the 24th February 2009). If the goods are disposed of without my permission I will hold you personally liable.
This issue has dragged on long enough. I have done everything I can to have this issue resolved, I am of the opinion you haven't done everything you could to resolve this issue.
I gave you 14 days notice (my letter 13th May 2009) to ether agree to the return of the goods, agree a settlement over these goods or give me permission to apply to the courts for a resolution regarding this issue.
Please note that if you do nether by the end of the notice I will apply to the courts for their permission to seek a resolution to this issue.

Solicitors reply

We refer to your correspondence with our clients, the joint administrators of the Company, in relation to your claim for retention of title on railings fitted to the retaining wall of 74 L

We have seen an order (number 10021) dated 8 January 2009 addressed to the Company relating to the provision by you of 24 meter railings for installation at 74 L. We have not seen any evidence to confirm whether this order was sent to the Company and as such please provide us with a copy of any fax header or covering letter under cover of which the order was sent.

We note your comments to our clients regarding the identification of the railings and whether they can be removed from the property. Irrespective of this however, it is our assertion that the railings have now become part of the fabric of the property and as such the are now a fixture of the property rather than a fitting and title in them has passed.

The letter send in response,

You state that it is your assertion that the railings have now become part of the fabric of the property and as such they are now a fixture of the property rather than a fitting and title in them has passed.

I wish to inform you that the railings is a collective description of a number of individual items fitted together, of which only the five tubes of epoxy resin has changed state and would be deemed to be incorporated into the wall. It may be argued that the twelve posts attached directly to the wall with the epoxy resin, are now a fixture, but the posts are still identifiable, they are in their original form, and they are capable of being removed and returned. The eleven panels fitted between the posts are not attached to the wall, they are not a fixture of the property, they are fittings, they are still identifiable, they are in their original form, and they are capable of being removed and returned. The forty two stainless steel nuts, bolts and washers are fittings, they are still identifiable, they are in their original form, and they are capable of being removed and returned. I would insist that I have a valid retention of title and as we have failed to agree on this issue I request you agree a settlement over these goods or give me permission to apply to the courts for a resolution regarding this issue.

I am informed by your client that these railings have been sold as part of the Company assets without prior notification or my permission. You are aware I claim retention of title for the railings fitter to the retaining wall of 74 and if the goods are disposed of without my permission I would hold your client personally liable,
I now look to your client to agree a settlement over these goods or give me permission to apply to the courts for a resolution regarding this issue.
This issue has dragged on long enough. I have done everything I can to have this issue resolved, I am of the opinion you haven't done everything you could to resolve this issue. Please note that if you do nether I will apply to the courts for their permission to seek a resolution to this issue.

Can anyone help how do i proceed.

Chris Ashdown · May 31, 2009

I would just remove them on Friday night, leave the wall in a good state and let them take you to court if needbe

ekim654 · May 31, 2009

hi
thanks but slightly more complicated by the fact that the company is a luxury home development and the Railings are fitted to one of the properties on the development. the people now occupying the property are good people who have offered to pay something to cover my cost of material if all else fails.
i just don't want the administrator to fob me off because of a lack of knowledge or funds.

Geoff T · Jun 1, 2009

Hi,

You've got some good stuff in here, as far as I can see, a lot of what they're throwing at you is just "smoke and mirrors", but don't be downhearted! I think you're basic premise is correct, but - if you haven't already - I would really suggest getting legal advice at this point!

While you're basic legal point is correct - the railings are not a fixture of the property. I believe you could cite Borden (UK) Ltd v Scottish Timber Products Ltd (1981) as an example - this has now moved on too far to just resolve yourself.

If you wish, I can recommend someone who I has always done the business for me...

Regards, Geoff

ekim654 · Jun 2, 2009

hi Geoff
tried the solicitor root, they all ask the same initial question "Howe much is involved" as soon as i say £1665.00 they all say small claims court can't recover cost.
of the few that where willing to talk further, would only give general advice.
for an opinion on my personal case it would involve charges. all quoted charges of £180.00 per hour plus with no initial free assessment.
hence my posting hear.
i am looking for genuine honest opinions from those who have a knowledge of the small claims procedures because i cant get my head round sum of the legal jargon.
its a pity to loose out on Justice simply because of costs and a lack of knowledge of the legal system.

thanks your opinions are very welcome

ekim654 · Jun 2, 2009

Hi

letter to administrators solicitors

appreciate your views

With reference to your letter dated the 22nd May 2009 ------ ------ ------ in administration. Order number 10021 was generated on the 08/01/2009 as a result of ----- ------ the resident park warden issuing their order number FM766. It was posted, to----- ----- ---, ----- ----- ---on or about the 09/01/2009 to confirm receipt of their order. There was no covering letter.

You state that it is your assertion "that the railings have now become part of the fabric of the property and as such they are now a fixture of the property rather than a fitting and title in them has passed"

I wish to inform you that "the railings" is a collective description of a number of individual items fitted together, (five tubes of epoxy resin, twelve posts, eleven panels, forty two M10 stainless steel nuts, forty two M10 stainless steel bolts, and forty two M10 stainless steel washers) of which only the five tubes of epoxy resin has changed state and could be deemed to be incorporated into the wall. It may be argued that the twelve posts attached directly to the wall with the epoxy resin, are now a fixture, but the posts are still identifiable, they are in their original form, and they are capable of being removed and returned. The eleven panels fitted between the posts are not attached to the wall, they are not a fixture of the property, they are bolt on fittings, they are still identifiable, they are in their original form, and they are capable of being removed and returned. The forty two stainless steel nuts, bolts and washers are also fittings, they are still identifiable, they are in their original form, and they are capable of being removed and returned. I would insist that I have a valid retention of title.

I am informed by your client that these railings have been sold as part of the Company assets without prior notification or my permission. You are aware I claim retention of title for the railings fitter to the retaining wall of---- -----. Will you confirm, and provide documentation proving when and who purchased the railings, i.e. that they were specifically included and itemised within the sale of the Company assets.

This issue has dragged on long enough. I have done everything I can to have this issue resolved, I am of the opinion your client haven't done everything they could to resolve this issue, either agree to the return of the goods, agree a settlement over these goods or give me permission to apply to the courts for a resolution regarding this issue.

yorkshirejames · Jun 2, 2009

I certainly agree that you are in the right - however I expect you've spent so much time on this issue (and will spend so much more time) that it isn't worth it.

What is your desired outcome? Are you looking for the administrators to write to you to say that you have permission to recover the railings? And presumably in that case you would go to the property and say to the current occupier that you will either be removing the railings or they can pay for them?

If the current occupier will give you some money, then I suggest you take that and move on.

ekim654 · Jun 2, 2009

hi yorkshirejames
you are probably right but hate to rollover without a fight, these people seem to expect small business throwing in the towel without much of a fight. i think there may be some money there from the sale of the assets.

yorkshirejames · Jun 2, 2009

ekim654 said:
i think there may be some money there from the sale of the assets.

Don't bet on it. Insolvency Practitioners' fees come out first, then employees/bank....

Happy2Help · Jun 2, 2009

yorkshirejames said:
I certainly agree that you are in the right - however I expect you've spent so much time on this issue (and will spend so much more time) that it isn't worth it.

What is your desired outcome? Are you looking for the administrators to write to you to say that you have permission to recover the railings? And presumably in that case you would go to the property and say to the current occupier that you will either be removing the railings or they can pay for them?

If the current occupier will give you some money, then I suggest you take that and move on.

Keep fighting fella, administrators will make your claim as difficult as possible, if you have the relevant paperwork (goods remain the property of xxxx until paid in full on your invoices, delivery notes, order ack and labelling on the rails you will have full claim! send copy paper work etc
Good luck and again keep fighting the buggers !!

Geoff T · Jun 2, 2009

Hi - a question just occurred! In all of this, you have registered a proof of debt form with the administrators for your unpaid invoice haven't you?

If you have, I think you've got them by proverbial short + curlies! I'll need to check my law texts when I get home this evening, but if you can let me know I'll do some research soon as I get in - Adminitrators + Lawyers like this bunch need to lose a pag or two, this is just a case of them taking the...!

regards
Geoff

ekim654 · Jun 2, 2009

Geoff T said:
Hi - a question just occurred! In all of this, you have registered a proof of debt form with the administrators for your unpaid invoice haven't you?

If you have, I think you've got them by proverbial short + curlies! I'll need to check my law texts when I get home this evening, but if you can let me know I'll do some research soon as I get in - Adminitrators + Lawyers like this bunch need to lose a pag or two, this is just a case of them taking the...!

regards
Geoff

Hi Geoff

Yes i have registered a proof of debt form with the administrators for the unpaid invoice along with copies of all relevant paper work etc.

Geoff T · Jun 2, 2009

good - OK, try this one...

Ask both the Lawyers and Administrators - in writing, preferably email (and make sure you require - and keep - the read receipts) - to justify how they allowed items to be sold when they KNEW that the item in question was NOT a part of the company's assets - it's not having been paid for? They would have known this from the proof of debt form you have provided - and can prove existed! If by email require a formal response within 24 hours from your communication, if by snail mail I'd suggest giving 7day notice for response...

regards, Geoff

ekim654 · Jun 2, 2009

hi Geoff
will get onto it now
will post replies if/when received

thanks
ekim

maxine · Jun 2, 2009

Good luck and great advice from Geoff

Talk to a solicitor to see if you can pay for a strong and specific legal letter to the administrators and then follow up either with formal request for mediation or debt claim as the quicker you get to enforcement the better. If you go to small claims you can add on around £80 onto your claim to cover "reasonable debt recovery fees".

Alternatively you might be able to suggest mediation where you and the administrators each pay half the fee each initially with the losing party agreeing to pay the others fees. This might be a good idea as there are areas of law regarding damage through removal of goods covered by ROT clauses.

ekim654 · Jun 2, 2009

proposed letter to administrator and solicitors (no e-mail address for administrators)

anything to add or omit views welcome

With reference to the railings fitter to the retaining wall of 74 Lakeland View.
You have informed me that these railings have been sold as part of "the Company" assets without prior notification or my permission.
Will you confirm, and provide documentation proving when and who purchased the railings, i.e. that they were specifically included and itemised within the sale of the Company assets.
Will you also justify how you allowed the railings to be sold when you knew I claim retention of title for the railings fitted to the retaining wall of 74 Lakeland View and you knew that the items in question were not a part of the company's assets (not having been paid for) you would have known this from the proof of debt I provided to you as request.
I require a formal response to these requests within 7 days from receipt of this letter.

Yours sincerely

maxine · Jun 2, 2009

Hiya

I really do think the main view of the solicitors reply letter mentioned in your first post is this bit...

"It is our assertion that the railings have now become part of the fabric of the property and as such the are now a fixture of the property rather than a fitting and title in them has passed."

This is why I would encourage you to take some proper legal advice if you can. Can you perhaps talk with Federation of Small Businesses? Or Chambers of Commerce solicitors?

I know you don't want to spend much money but it could be worthwhile at this stage.

Not sure why you want to know who purchased them and when as this may take your correspondence off on a tangent as all you really want is to recover your losses and get paid what you are due.

PS - You might be able to get a fax number for Administrators as quicker than snail mail

Geoff T · Jun 3, 2009

I agree with Maxine

ekim, the main point of this is not who has now paid for them, but the fact that the railings were sold without the sellers having good title to them.

I was going to mention this any way, but nows a good time. I would say something like this:

"Please can you confirm in writing how the sale of goods - to which neither the company, nor the administrators, had obtained good title by paying in full, and knowing that I had a reservation of title claim in operation at the time of the sale - was undertaken.

It is my belief that the sale of a company asset, which was not in reality an asset, is in contravention of Section 12(i) of the Sale of Goods Act 1979 (as amended). As consideration for the railings has not been given by the Company, they have never obtained good title to the railings. As such they cannot be considered a company asset, and should not have been included in the sale.

Your claim that the railings now form "part of the fabric of the building" is clearly erroneous, and is refuted. The railings can be easily removed, without any detriment to the building, as has been highlighted in my previous communications.

In order to resolve this matter in as reasonable manner as possible, I am prepared to accept either of the following solutions:

1. Immediate payment of the balance due to me as shown in the proof of debt form.
2. Written acceptance and agreement to my Retention of Title claim, with a date when I can attend the site and remove my goods.

I request that you confirm in writing your intention and proposal to resolve this matter within seven days of the date of this letter"

See how that plays out, and Ekim - word of advice - I think if you want to pursue this further then you really do need proper legal advice, if it's bugging you that much, then £100 or so to decide what to do once and for all might be worth it?

Gotta go - worktime! -Regards
Geoff

ekim654 · Jun 3, 2009

Hi Maxine

appreciate your views have spoken to three different solicitors one of whom specialised in business law. All expressed that in general i had a good case but to give a professional opinion would involve proper investigation attracting the appropriate fees. These fees would quickly erode any money recoverable (if any money was recoverable) making it a nonstarter,
It is my intentions to push these issues as far as possible with as little cost as possible and with help who knows we my win.

thanks ekim654

ekim654 · Jun 3, 2009

Hi Geoff T

many thanks your suggestions are precisely what I'm looking for ( i just do not have the same way with words as you have) i will revise my letters to administrators and solicitors accordingly.

thanks again ekim654

maxine · Jun 4, 2009

ekim654 said:
Hi Maxine

appreciate your views have spoken to three different solicitors one of whom specialised in business law. All expressed that in general i had a good case but to give a professional opinion would involve proper investigation attracting the appropriate fees. These fees would quickly erode any money recoverable (if any money was recoverable) making it a nonstarter,
It is my intentions to push these issues as far as possible with as little cost as possible and with help who knows we my win.

thanks ekim654

OK, understand there is money up front but that was why I suggested a 50/50 with the administrators to see if they were integral to the fixture now. Perhaps another alternative is for you to get a quote from a specialist yourself (usually £100 approx) so that you can submit that report with your letter to the administrators proving that they were not available for re-sale as an asset and the ROT claim should be with held. Do you know anyone who would do this as a favour? friend of a friend perhaps? It would need to be someone with this specialist profession through. Quite often solicitors will recommend someone who you can approach directly as it is the people they use and it might be all you need to conclude this matter as the administrators will see the report would be used in court.

Geoff T · Jun 4, 2009

well reminded Maxine, couple of options for you here from another post somewhere else:

[FONT=Verdana, MS Sans Serif, Arial]There is a Premium Rate Line called:
"The Legal Advice Line" controlled by a firm called Infogenie.

The number is: 09066 664411; and they are open between 08:20 to 22:00. The rate was £1.50 per minuete but don't know how much now.

The important thing is that you are put through to a Solicitor who specialises in the area you need. That filtration is done through a voice activated Menu, and you press the button relating to the area of law you require advice (Divorce, Contract etc.) In certain situations that call may be upgraded to a Silks.

There is a similar organisation called: The Law Line, which works on a premium line rate: 0870 789 6060, and have a web-site: www.lawmedia.org[/FONT]

there was also a website that allowed you find legal advice, based on location and area of law involved - that's on an email at another location, so will dig out when I get to work location on Monday.

Regards
Geoff

ekim654 · Jun 4, 2009

Hi Geoff

Hi Maxine

Appreciate your views have tried a number of these Legal Advice Lines. This one "Business and Commercial Solicitors UK" was the most useful they really made the effort and arranged a solicitor who specialised in business to speak to, but could only give general advice to give a professional opinion would involve proper investigation and attract the appropriate fees.
Taking account of all the advice I have had, and all the information I have read so far, I believe I have a case. But the problem would appear to be: all cases are different, only a judge can decide whether the railings are incorporated or not and weather they are returnable or not. I would be willing to have this decided in county court but here lies the problem; I am not allowed by law to instigate legal action against a company in administration without the express permission of the administrators (which they will not give to me, maybe because they know they are in the wrong ) or the permission of the court. Now for me to request permission of the court to instigate legal action against the company I would need to present a properly worded case. This is where I need help and advice ideally from a specialist solicitor which I cannot afford and the administrators know it. But if the administrators belive I have sound professional advice maybe they will fold (the money they could spend defending this case would be totally disproportionate to the money owed) see where I'm coming from.

thanks

ekim654

maxine · Jun 4, 2009

Ekim654

Don't know about Geoff but I am all out of ideas for you to go any further without spending any money.

The problem is that Administrators have wide powers and courts pretty much trust them to act in the best interest with integrity and know their stuff with Retention of Title clauses. It would be difficult but not impossible to challenge them it is just that courts will trust that Administrators have made the right decisions to avoid court action.

The options available to you are probably along the lines of

* Pay for specialist report and send with covering letter to administrators in the hope they will reconsider. Use it to escalate within the firm ie; to senior partner who will hopefully take the view that it will cost more money to keep writing to you than to revoke the decision (hopeful)
* Use the report to attach to "your properly worded case" which can just simply say that you claim X amount for reasons supported in attached in report
* Try phoning around to see if anyone can put you in touch with people to help - trading standards, BERR/OFT, there may be some local business offering charitable services in the community that you might be able to take advantage of and phone your local county court and ask their advice as they may put you in touch with other parties who could help. Some construction solicitors hold construction club type events where you might be able to present your question (hopeful)
* If you are a sole trader see if you have legal policies covering all types of legal representation ie; car insurance policies, home insurance policies etc.
* If you qualify for business link vouchers you may be able to spend them on consultancy and professional services with a local solicitor. Don't forget to see if chambers of commerce can help as thier membership provides legal representation (so I am told, but I dont know about any exclusions)

At least if you get some quotes for a specialist report at this stage you will be able to make a commercial decision on whether to take it any further and spend money to challenge the decision or just consider writing it off.

It might be worth considering credit insurance for some jobs in future

Good luck and let us know how it goes.

I will also post your question on the credit today forum and see if any credit managers on there have got any bright ideas

Geoff T · Jun 6, 2009

Hi,

'fraid I'm "all out" too, and agree with Maxine's advice.

I also think you've got a case, and if it's commercially viable to continue with this, then you will have to invest some cash in getting specialist legal advice and help.

I agree the administrators may fold when confronted by the facts in the correct way, but for that you need help, and it's beyond me I'm afraid. I don't think a "MacKenzie Friend" would help much in this situation, and you need to look at someone better qualified if you want to pursue this.

Sorry I couldn't be more help! Best of luck with this, and please do let us know how you get on.

Regards,
Geoff

Chris Ashdown · Jun 6, 2009

I know it's a matter of princible, but now you are just wasting your time and efforts, you need to sit back and think things through and move on

Take the money the new owner has offered and put all your efforts into getting new business

Anthony Reeves · Jun 9, 2009

I may be able to help on this one.
I successfully acted for a company against the Administrators for Woolworths. The company got the goods back.

Get in touch if you need help.

Anthony Reeves
Pinniger Finch & Co, Solicitors
01373 823791

carolann · Jun 13, 2009

hi can sombody advise
we have had our business closed down due to our suply pipe being smashed by local farmer
we have had to engage in civil litigation we took out membership with FSB
with legal cover against litigation costs
abby legal the insuras have declined the claim on the grounds that costs were unquantifiable
we objected they then seid that it was contamination and regected the claim again
we have had the same problem with our business insurance with alianz
they say its polution its not coverd we had to close the business for a year
and our losses have been 30.00 in income whilst still paying all busuness costs plus loans
is there anywere apart from fos that we can get help
thanks carol:|

Anthony Reeves · Jun 13, 2009

Hi there.
I may be able to help.
Get in touch and I'll have an initial chat with you see what I can do.

Anthony Reeves
Pinniger Finch & Co Solicitors
01373 823791

justintime · Jun 14, 2009

I dont know if this is an option elkim, but are you able to take the administrators to small claims, based on the fact that they sold your equipment as an asset when you had levied a retention claim.

In other words the administrators, not the company in administration

Anthony Reeves · Jun 14, 2009

In order to give a supplier the best protection, the supplier should have an all monies retention of title clause which provides that the supplier retains title to all goods it has supplied until all monies owing to the supplier have been paid in full. This contrasts with a simple retention of title clause which only provides for the supplier to retain title to the goods supplied until those particular goods have been paid for.

Should a suppliers customer go into administration the supplier should, as soon as it becomes aware of the administration, notify the administrator of its retention of title claim. If the administrator then sells or otherwise deals with those goods, the administrator can be held personally liable to the supplier. Notification should therefore ensure that the suppliers goods are not dealt with. If an administrator wants to sell the goods, the administrator must get the consent of the supplier or apply to court for an order under paragraph 7.2 of Schedule B1 to the Insolvency Act 1986 and pay the market value to the supplier.

Once the supplier has notified the administrator of its claim, the administrator will consider if the retention of title clause is valid and seek evidence that the clause was incorporated into the contract between supplier and customer.

If the administrators delay in considering the retention of title claim or in allowing the supplier to collect its stock, an application under paragraph 43 of Schedule B1 of the Insolvency Act 1986 for delivery up and/or under section 4 of the Torts (Interference with Goods) Act 1977 should be considered whereby the Court decides the validity of the ROT.

In short, if a Company is in Adminstrationthen, to enforce the ROT you either have to have the consent of the Administrator or you need the permission of the Court. This would not be small claims matter.

Anthony Reeves
Pinniger Finch & Co Solicitors

The Resolver · Jun 15, 2009

As it is outside of the Small Claims Court jurisidiction, there wil be a practical issue of the proportionality of the amount of legal costs to be incurred as against the claim (£1664). It is clearly disproportionate to risk the several thousand pounds required to defend the case against the payment of £1664. He will be unwise , if you can , as appears possible from what you have said, show a reasonable case, to reject a reasonable offer. The same applies to you of course in being prepared to accept something less than the full amount if it avoids you having to throw some more good money after this dispute.

Regular readers here will know what I am comningto next. PUT AN OFFER IN WRITING TO MEDIATE!

This is classic case of a real live issue of law and evidence but which would cost far too much compared to the amount in dispute and so is ideal for mediation.

If the administrator refuses he will be at risk that he will be required to pay your legal costs if it goes to court and even though you lose. So the offer itself sharpens even further the edge of the sword facing him.

I , or a member of my panel of mediators, can undertake this very quickly (within a week or so if he co-operates) at very low cost, compared to litigation, by undertaking it wholly online at our bespoke facility at www.themediationroom.com

Email me at [email protected] with your phone number to discuss further.

dylanmarlais · Jun 15, 2009

Is your retention of title clause a part of the contract?
It is not as easy as it seems to prove that you terms have in fact been incorporated into the contract. It all has to do with the precise contracting steps. A slight slip up might mean that you did not contract on your terms.

Can you remove the goods?
This depends on all the facts of the particular case. As you have identified, it may not be worth pursuing given the amount of money involved.

Next step?
This appears to be a matter of priniciple for you: there is no phrase that a lawyer likes hearing more!

As a matter of commercial reality, it may be better, given the amount at stake, to put it down to experience.

In future?
If you are interested, I have produced a recent article on retention of title. I have set it out below - if you have the time to read it!

Could you get your goods back if your customer becomes insolvent?
By Michael Twomey

In the first quarter of 2009, there were an alarming 4,941 liquidations in England and Wales, an increase of 56% on the same period a year ago. According to research by the Credit Management Research Centre at Leeds University Business School, 40,000 companies will suffer a similar fate by the end of the year. In the midst of the recession, many suppliers and buyers of goods and services will therefore need to pay extra attention to the terms of contracts that they are entering into.

Consider the following common situation with which you may well be only too familiar: a supplier delivers goods to a customer who shortly afterwards, goes into administration. Can the supplier recover the goods?

In 2007, a leading computer manufacture, Evesham Technology, went into administration owing nearly £7 million. A couple of months earlier, Viewsonic had supplied ten thousand monitors on credit to Evesham, worth around £300,000. As an unsecured creditor, Viewsonic was likely to receive little or nothing. However, it was able to recover the goods because it fortunately had a Retention of Title clause (ROT) in its terms and conditions and was also able to prove that its terms applied to the contract.

Retention of Title clause
The usual legal position is that ownership (or title) in goods passes from the seller to the buyer on delivery. This means that if the buyer goes into liquidation, the liquidator will sell the goods to raise funds to pay out to the companys creditors, with the bank usually being paid first!

A ROT clause alters the usual position with the result that the supplier continues to own the goods until they are paid for. The supplier is therefore now in a position to ask the receiver to return the goods.

However, it is not enough to have a ROT clause in your standard terms and conditions. Firstly, you must be able to prove that the contract was made on your terms and not on the buyers terms. This is sometimes easier said than done, as explained below. Secondly, you must be able to identify the goods. If you cannot do so, you will not be able to recover them.

Whose terms apply?
In the case of P4 Ltd v Unite Integrated Solutions Plx [2006]), a supplier of emergency lighting systems, P4 Ltd, supplied light fittings to a mechanical and electrical contractor. When the contractor became insolvent, still owing the money for the goods, P4 claimed that it was entitled to recover the goods under the ROT clause in its terms and conditions.

The matter went to court where the judge decided that the contract between P4 and the buyer was not made subject to P4s terms. P4 had sent a quotation to the buyer stating that the contract would be subject to the terms and conditions as set out on the back of the quote. Unfortunately, only the top page of the quotation was faxed, with nothing on the back!

Another company, MGB Electrical Ltd, a wholesale distributor specialising in hazardous area equipment, had supplied goods in similar circumstances. When its customer went into receivership, MGB wrote to the receiver, pointing out that it had retained title over goods that it had recently delivered. Grace Tipson, the managing director, of MGB said The receiver simply refused to allow us to recover the goods until we were able to convince him that our terms and conditions applied to the contract. Even then, we had to prove to him that we could identify our goods. Fortunately, MGB had followed its procedures when entering the contract and had ensured that its terms had applied. It had also taken steps to ensure that the buyer had kept its goods separately stored and labeled.

Is Retention of Title effective?

Even if suppliers can establish that their terms and conditions contained an ROT clause, there are other considerations that can hamper its effectiveness:

The goods may no longer be identifiable as they may have been used in a manufacturing process. If they can still be identified, they can be removed but only if no damage is caused, as otherwise it can result in a court case against the supplier with costly consequences! Your ROT clause should also give you a right to enter the buyers premises in order to recover your goods.

If the supplier has supplied several consignments of goods over a period of time, and has received some part payment from the buyer, it may be difficult to establish which goods have been paid for and which have not. An all monies clause, which provides that ownership does not pass until all monies owed to the supplier have been paid, may prove effective in this case.

Unfortunately, if the goods have been sold on, then your ROT clause is likely to be wholly ineffective and you will be left with an unsecured claim against the buyer.

So What Should You Do?

Below are some Practical Tips:
· Make sure that your terms and conditions contain an effective ROT clause.
· If your terms and conditions have not been reviewed recently, then seek some legal advice to ensure that they include an effective ROT clause. For example, do they require the buyer to store the goods separately with a licence for you to enter the premises to inspect them?
· Make sure that you will be able to identify your goods. In the case of MGB (see above) sales staff would go into the warehouse with labels to attach to the goods.
· Remember, your clause will only be incorporated into the contract if the contract was made on your terms and conditions. It is vital, therefore, to train your staff in simple, key elements of practical Contract Law. It is easy to get it right. But equally easy to slip up with very costly consequences.

Michael Twomey is a Director and principal trainer at Legal & Commercial, a provider of training in business and law. For further information, visit the website of legalandcommercial

Anthony Reeves · Jun 15, 2009

Although mediation has its role to play in certain circumstances, from my experience the Administrators are not going to give way unless they know you are serious about legal action.

Anthony Reeves
Pinniger Finch & Co, Solicitors

carolann · Jun 15, 2009

do you mean the brokers that sold us both the legal and business in insurance
thanks
carol

dylanmarlais · Jun 15, 2009

Carol Ann - is that question meant for me? No, I am not an insurer. I cannot put a link to a website here so it is www space legalandcommercial dot com.

But the website is merely trying to sell the notion that if businesses get some basic training in fundamental contract law then a lot of problems can be avoided. I actually really believe this. It is surprising how many companies do not contract on their written standard terms even though they think they do.

So do not bother looking at the website unless you want a sales pitch.

The Resolver · Jun 15, 2009

Sure, he may not agree if he is totally convinced its all a bluff but he will never know for sure, when faced with a threat to issue combined with a request to mediate, that he is not going to risk an adverse costs order. Proceedings become more of a problem for him (because of the costs risk) following a refusal to mediate even if taken out without a solicitor.

At the end of the day, if he refuses, then nothing has been lost over what is the situation at present.

misty blaze · Nov 20, 2009

I have been reading this thread from Ekim654 in June 09 and have learnt a lot which I will be incorporating into our contracts, so thank you all. Problem is there is no update as to how this matter was resolved. Can Ekim654 update the situation or does anyone else know? It's like leaving a soap halfway through! Cheers

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