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You are here: BAILII >> Databases >> The Law Commission >> REGISTRATION OF SECURITY INTERESTS: COMPANY CHARGES AND PROPERTY OTHER THAN LAND (A Consultation Paper) [2002] EWLC 164(8) (14 June 2002) URL: http://www.bailii.org/ew/other/EWLC/2002/164(8).html Cite as: [2002] EWLC 164(8) |
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security interests created by non-corporate debtors and registration
8.1 In Parts I-VII of this Consultation Paper we considered a notice-filing system for corporate debtors. In Parts VIII-XI we move to consider the second aspect of our reference, and deal with security and security interests over property other than land created by non-corporate debtors.[1] As we noted in Part I, this Consultation Paper has divided the treatment of corporate and non-corporate debtors for two main reasons.
8.5 In contrast to our consideration of corporate debtors, for which our terms of reference were to consider charges of all types, the terms of reference for individuals and non-corporate debtors exclude security interests over land. This reflects similar limitations in the UCC and in the legislation of Saskatchewan and New Zealand[2] and also the fact that there already exist registration schemes for security over land.[3] There has been no call for security over land to be brought within any system for registration of other security interests created by non-corporate debtors.[4]
8.6 We limit the detailed explanation in this Part to non-possessory security. A non-corporate debtor may pledge goods or documents of title just as can a company.[5] We refer readers to the explanation given in Part II.[6]
8.7 The rules of validity and registration of mortgages and charges over goods by non-corporate debtors are mainly governed by statute, principally the Bills of Sale Act 1878 (the ‘1878 Act’) and the Bills of Sale Act (1878) Amendment Act 1882 (the ‘1882 Act’).[7] The statutory provisions are complex and have been the subject of much criticism.[8] Curiously they apply to the document - the bill of sale - rather than the transaction itself, so a purely oral agreement for an equitable mortgage or charge over personal property is outside the scope of this legislation.[9]
8.8 The Bills of Sale Acts set out a scheme for the formal validity and the registration of certain bills of sale, and prescribe what can be severe consequences for failure to comply with the statutory requirements.[10] The purposes behind the 1878 Act and the 1882 Act were different. The 1878 Act was designed to prevent the rights of creditors from being affected by secret dispositions of property by persons remaining in possession of that property.[11] The purpose of the 1882 Act was to prevent people being entrapped into signing complicated documents which they might not understand, and so being subject to the enforcement of harsh and unreasonable provisions.[12] We will see that non-compliance with the requirements of each Act has different consequences: under the 1878 Act the bill is void as against the creditors or their representatives, under the 1882 Act the bill of sale is void also as between the parties.[13]
8.9 The 1878 Act applies to every bill of sale whereby the holder or grantee has power[14] to seize or take possession of any personal chattels comprised in or made subject to such a bill of sale.[15] Although both the 1878 Act and the 1882 Act apply to bills of sale given by way of security for the payment of money (known as ‘security bills’[16]), the 1882 Act does not apply to bills given otherwise than by way of security for the payment of money (known as ‘absolute bills’[17]).[18]
8.10 The 1882 Act is to be construed as one with the 1878 Act so far as is consistent with the tenor of the 1882 Act, but enactments contained in the 1878 Act which are inconsistent with the 1882 Act are repealed.[19]
8.11 Section 4 of the 1878 Act provides a detailed list of what the expression “bill of sale” covers, including assignments, transfers and declarations of trust without transfer. It also includes any agreement conferring a right in equity to, or a charge or security on, any personal chattels.[20] The 1878 Act also provides that certain instruments are deemed to be bills of sale of any personal chattels which may be seized or taken under powers of distress under powers given by the instrument.[21] The 1882 Act states that “bill of sale” has the same meaning for the 1882 Act as it does for the 1878 Act (save that the 1882 Act does not apply to such bills given otherwise than by way of security for the payment of money).[22]
8.12 However, section 4 of the 1878 Act also expressly excludes a number of transactions, including documents relating to assignments for the benefit of the creditors; transfers or assignments of any ship or vessel; transfers of goods in the ordinary course of business; bills of sale of goods in foreign parts or at sea; bills of lading; warrants or orders for the delivery of goods, and other documents used in the ordinary course of business as proof of the possession or control of goods.[23]
8.13 Section 1 of the Bills of Sale Act 1890[24] additionally provides that:
An instrument charging or creating any security on or declaring trusts of imported goods given or executed at any time prior to their deposit in a warehouse, factory, or store, or to their being reshipped for export, or delivered to a purchaser not being the person giving or executing such instrument, shall not be deemed a bill of sale within the meaning of the Bills of Sale Acts 1878 and 1882.[25]
8.14 The phrase “personal chattel” is used several times in both the 1878 Act and the 1882 Act. Section 4 of the 1878 Act provides a definition that covers goods, furniture, and other articles that can be transferred completely by delivery, but does not include interests connected with land, shares or interests in the stock,
funds or securities of any government, or in the capital or property of companies, or choses in action.[26]
8.15 Personal chattels assigned under a security bill are not liable to be seized or taken possession of by the grantee except in certain specified situations, including the grantor’s default in payment or performance of any necessary covenant or agreement.[27] The other specified causes are the bankruptcy of the grantor, or her suffering the chattels to be distrained for rent, rates or taxes; the grantor fraudulently removing the goods (or suffering to be removed) from the premises; failure by the grantor, without reasonable excuse, to produce to the grantee (following written demand) her last receipts for rent, rates and taxes; or if execution has been levied against the grantor’s chattels under any judgment at law.[28]
8.16 Following seizure or possession on the above grounds, the grantor has five days to apply to the High Court, and if satisfied that by payment of money or otherwise the cause for the seizure or possession no longer exists, the judge can restrain the grantee from removing or selling the chattels, or may make such other order as may seem just.[29] In order to prevent circumvention of this provision by a grantee forcing an early sale, all personal chattels seized or taken possession of under any bill of sale must remain on the premises where they were seized or taken possession of, and are not be removed or sold until after five clear days from the day of seizure or possession.[30]
8.18 The 1878 Act does not set out a detailed form for an absolute bill of sale. However, there are a number of requirements that must be complied with. In addition to the requirement of attestation and registration,[31] section 8 of the 1878 Act requires that every absolute bill of sale[32] must set out the consideration for which it was given. Failure to do this renders the bill void as against all trustees or assignees of the estate of the person whose chattels are comprised in the bill (in relation to bankruptcy or insolvency law), or under any assignment for the benefit of the creditors of that person. It is also rendered void as against any person executing a court-authorised seizure of any chattels comprised in the bill.[33] However, the absolute bill is not avoided as between grantor and grantee.
8.19 A security bill is subject to strict requirements as to its form. Such a bill must be made in accordance with[34] the form in the schedule to the 1882 Act,[35] and the execution of such bills must be attested by one or more credible witnesses (who are not party to the bill).[36] In summary, the form in the schedule requires that the bill of sale must state:
(1) the date of the bill of sale,
(2) the names of the grantor and grantee,
(3) the consideration,[37] which must be at least £30 or the bill is void,[38]
(4) an acknowledgement of the receipt of that consideration,
(5) an assignment by one party to the other (and her executors, administrators and assigns) of the chattels described in a schedule annexed to the bill of sale,[39]
(6) that the assignment be by way of security for the payment of a specified sum of money, together with interest at a specified agreed rate,
(7) that the grantor agrees and declares that she will pay the grantee the principal sum together with interest at a stipulated time or times,
(8) any other terms as to “insurance, payment of rent or otherwise” that the parties may have agreed to for the maintenance or defeasance of the security, and
(9) a provision that the chattels assigned by the bill are not liable to seizure or possession by the grantee for any cause other than those specified in section 7 of the 1882 Act.
Failure to comply with these requirements renders the bill void.[40] The security bill must be by deed signed by the grantor in the presence of a witness, whose name and address and description must be included.[41]
8.20 The schedule required to be annexed to, or written on, the bill of sale must contain an inventory of the personal chattels comprised in the bill. The bill will be effective only in respect of the personal chattels specifically described, and will be void, except as against the grantor, in respect of personal chattels not specifically described.[42] In addition, the personal chattels described in the schedule must be ones of which the grantor was the true owner at the time of the execution of the bill, otherwise the bill will be void, except as against the grantor, in respect of such personal chattels.[43] This provision prevents ‘after-acquired’ property being covered by a security bill for personal chattels (and hence generally prevents floating charges being granted by non-corporate debtors).[44]
8.21 There are requirements set out in the Bills of Sale Acts to register bills of sale. The registration schemes differ slightly between absolute and security bills. It should be noted that a bill that is registered may still be void if it has failed to comply with the formal requirements for validity.[45]
8.22 The registrar[46] is required to keep a register and to enter the name, residence and occupation of the grantor, together with other particulars set out in Schedule 2 to the 1882 Act.[47] The registrar has certain duties concerning transmission of entries to county courts.[48]
8.23 In respect of absolute bills, office copies or extracts of the bill and any affidavits can be obtained by any person, upon payment of a fee.[49] For security bills, a person is entitled to search the register and to inspect, examine and make extracts[50] from any such bill without having to make a written application or having to specify any particulars in reference thereto, on payment of a fee.[51]
8.24 For absolute bills, under the 1878 Act, the requirements for registration are set out in section 10.[52] These are that:
(1) the execution of every bill must be attested by a solicitor, and such attestation must state that before execution of the bill the effect of it has been explained to the grantor by that solicitor,[53]
(2) certain documents are required to be presented to, and filed with,[54] the registrar within seven clear days after the making or giving of the bill. The documents concerned are:
(a) the bill, together with every schedule annexed or inventory referred to therein,
(b) a true copy of the bill, schedule or inventory, and of the attestation of execution,
(c) an affidavit of the time of such bill being made or given, and of its due execution and attestation, and a description of the residence and occupation of the person making or giving the bill[55] and of every attesting witness,[56]
(d) in the case of a bill made or given subject to any defeasance or condition, or declaration of trust not contained in the body thereof, the defeasance, condition or declaration is deemed to be part of the bill, and is required to be written on the same paper therewith before the registration, and is required to be set out in the copy filed. Failure to do this will render the registration void.[57]
A transfer or assignment of a registered bill does not need to be registered.
8.25 The registration of a bill of sale has to be renewed once at least every five years, failing which the registration becomes void.[58]
8.27 Every bill of sale must be duly attested and registered under the 1878 Act within seven clear days after the execution of the bill,[59] and it must “truly set forth the consideration for which it was given”.[60] Failure to do this renders the bill void in respect of the personal chattels comprised within it.
8.28 The requirements for registration of a security bill[61] are that:
(1) the execution of every bill of sale by the grantor is to be attested by one or more credible witnesses, not being party to the bill,[62]
(2) the following documents must be presented to, and some filed with,[63] the registrar within seven clear days after the making or giving of the bill:[64]
(a) the attested bill, together with every schedule annexed or inventory referred to,[65]
(b) a true copy of the bill, schedule or inventory, and of the attestation,
(c) an affidavit of the time of the bill being made or given, and of its due execution and attestation, and a description of the residence and occupation of the person making or giving the bill[66] (and of every attesting witness),[67]
(d) in the case of a bill made or given subject to any defeasance or condition, or declaration of trust not contained in the body thereof, the same requirements as for an absolute bill as noted above.[68]
8.29 A transfer or assignment of a registered bill does not need to be registered, and the same renewal provisions relating to absolute bills apply to security bills.[69]
8.30 A judge of the High Court may order (on such terms and conditions as thought fit) that the time for registration be extended or that there be rectification of an omission or mis-statement of the name, residence or occupation of any person. The omission to register or the omission or mis-statement of the name, residence or occupation must have been accidental or due to inadvertence.[70]
8.31 Where the debt for which the bill was made or given has been discharged, the registrar may order a memorandum of satisfaction to be written upon any registered copy of a bill of sale.[71]
8.32 As we noted earlier, failure to attest and register an absolute bill does not avoid the bill as between grantor and grantee, although it does render it void as against all trustees or assignees of the estate of the person whose chattels are comprised in the bill (in relation to bankruptcy or insolvency law), or under any assignment for the benefit of the creditors of that person. In addition, it is rendered void against a person executing a court-authorised seizure of any chattels comprised in the bill.[72]
8.33 A failure to attest and register a security bill in accordance with the requirements of the 1878 Act and the 1882 Act renders the bill void in respect of the personal chattels comprised therein.[73]
8.35 Security interests created by non-corporate debtors over aircraft and ships are exempt from the Bills of Sale Acts but must be registered in the appropriate specialist register.[74]
8.36 A non-corporate debtor may create security over intangible property such as book debts, including future book debts. Intangible property is not within the Bills of Sale Acts, so that assignment of particular debts or debts coming due under particular contracts need not be registered.[75] However, a general assignment by a person in business of existing or future book debts is registrable as if it were a bill of sale. If it is not registered the assignment is void against the trustee in bankruptcy as regards any debts not already paid.[76]
8.37 The assignment is filed in a separate register of assignments of book debts. Assignment of debts by way of security is perfected by notice to the debtor, and priority will depend on the date of notice to the debtor save that a person who took her assignment with actual or constructive notice of an earlier assignment cannot gain priority by giving notice first.[77]
8.38 We note that it is possible for a debtor to create a fixed charge over its book debts, provided that the chargee maintains control over the payments received as well as the debts before they are paid.[78] If the debtor assigns all its book debts in this way, then the assignment will be registrable as explained above. However if the assignment is limited in some way it fall outside the provisions of the Insolvency Act 1986, section 344. There will be no easy way for subsequent creditors to discover the existence of the charge. Nor, apparently, does registration of a general assignment of book debts secure priority.[79]
8.39 Security interests created by non-corporate debtors over intellectual property rights must be registered in the appropriate specialist register: the rules for registration and priority are the same as for corporate debtors.[80]
8.40 The restrictive nature of the Bills of Sale Acts has been overcome by the provision of specific legislation in the case of farmers.[81] Leaving aside legislation that relates more to charges over land (which are outside the scope of this aspect of our Consultation Paper), the Agricultural Credits Act 1928 (the ‘1928 Act’) provides that a farmer can, by a written instrument, create a charge in favour of a bank on her farming stock and other agricultural assets.[82] Such charges are known as “agricultural charges”, and may be fixed, floating or both a fixed and a floating charge. Agricultural charges are not deemed to be bills of sale, and take effect notwithstanding anything in the Bills of Sale Acts.[83]
8.41 The 1928 Act sets out certain rights and obligations in the case of fixed and floating charges. In the case of a fixed charge, the chargee bank has the right to seize the charged property upon the happening of any event specified in the charge as one that authorises the seizure, and has the right (where such possession is taken) to sell the property by auction after five clear days.[84] The bank also has the obligation to apply the proceeds of sale to discharge the secured liability and to pay any surplus to the farmer.[85] A fixed charge does not prevent the farmer selling the charged property, but she is obliged to pay the bank the proceeds in respect of any sale of the charged property or money received under certain insurance payments (except insofar as the charge or bank allows otherwise).[86]
8.42 A floating charge:
shall have the like effect as if the charge had been created by a duly registered debenture issued by a company.[87]
However, the charge will become a fixed one on the occurrence of certain events specified in the 1928 Act.[88] As with a fixed charge, the farmer is obliged to pay over sale or insurance money received (but not where the money received is used by the farmer to purchase farming stock which becomes subject to the charge).[89]
8.43 Unlike a ‘normal’ floating charge, the 1928 Act provides that where the agricultural charge is a floating one, any subsequent fixed agricultural charge or a bill of sale comprising property in the floating charge that is purportedly created is void as respects that property, so long as the floating charge remains in force.[90]
8.44 The 1928 Act provides that every agricultural charge must be registered within seven clear days after its execution, failing which it is void as against any person other than the farmer.[91] The Land Registrar is required to keep a register of agricultural charges. Registration is deemed to constitute actual notice of the charge, except for the purposes of further advances being made, where the original charge is made for securing a current account or further advances and the other agricultural charge was not registered at the time the first charge was created or when the last search was made by the bank.[92] The priority of agricultural charges is governed by the times at which they are registered under the 1928 Act.[93] However, specific priority is given in relation to an agricultural charge comprising growing crops as against an earlier mortgage of the land.[94]
8.46 We discussed quasi-security transactions in some detail earlier, in Parts VI and VII of this Consultation Paper. The basic transactions used are available just as much to non-corporate debtors and their creditors as they are to companies, and no separate discussion is required save for one thing. This is that many such agreements entered into by debtors who are individuals (including partnerships and other non-corporate bodies[95]) will be regulated by the Consumer Credit Act 1974. This Act, which was passed as a result of the recommendations of the Crowther report, has a major impact on contracts such as hire-purchase and conditional sale. However, the impact is mainly on the rights as between the parties; the Act has little to say about the effect of such contracts on third parties such as purchasers, other secured parties or creditors, which is the prime concern of most of this Consultation Paper. We may therefore deal with it very briefly at this stage. We will return to some of the provisions of the Consumer Credit Act 1974, notably those in Parts VII (Default and Termination) and VIII (Security), when we consider partial codification of the law of security in Part XI and Appendix B of this Consultation Paper.
8.47 The one effect of the Consumer Credit Act 1974 that we need to consider at this stage is in fact contained not in that Act but in the Sale of Goods Act 1979. It concerns a purchaser of goods from a person who herself has agreed to buy them under a regulated conditional sale. In general a buyer who has obtained possession of goods under an agreement to sell but who is not yet owner of the goods has power to pass title to a person who takes the goods under a sale, pledge or other disposition in good faith and without notice of the rights of the original seller, provided that the sale is made in circumstances that, were the first buyer a mercantile agent, would be within her ordinary course of business.[96] In contrast, the hirer under a hire-purchase agreement cannot pass good title to a buyer.[97] However, if the conditional sale agreement is a “consumer credit agreement” within the meaning of the Consumer Credit Act 1974, the buyer does not have the power to pass title - in other words, the buyer is treated in the same way as a hirer.[98] A “consumer credit agreement” is a “personal credit agreement” (that is, a credit agreement between a creditor and an individual debtor) by which the creditor provides the debtor with credit not exceeding £25,000.[99]
8.48 We have referred in Part VI to assignments of book debts and other receivables by corporate debtors by way of security. Equally, non-corporate debtors may dispose of receivables outright as a way of raising money, for example under a factoring or block discounting agreement. For reasons given in Part VI, there is a good case for treating such ‘sales’ as security devices. An outright assignment of book debts would require registration as a bill of sale were it ‘general’,[100] but we understand that factoring and block discounting agreements usually apply to only selected receivables and thus will not require registration.
8.49 We saw in Part VI that contracts for the supply of goods frequently contain retention of title clauses that go further than allowing the supplier to retake the goods supplied if they have not been paid for. The clause may apply to ‘all monies due’ or may purport to give the supplier rights over new or mixed goods created from the goods supplied or to the proceeds of sale. An ‘all monies’ clause does not turn it into a charge and thus it will be valid against a company without registration.[101] Extended clauses are in practice unlikely to be effective against a company: the courts have usually held clauses that give a right to new or mixed goods, or to proceeds, to be charges.[102]
8.50 Whether such clauses are more likely to be more effective against an individual is unclear. This is because the debtor has express or implied authority to dispose of the goods. Thus the charges must be floating. It is very doubtful whether an individual can validly create such a charge. It is the prohibition on non-corporate debtors creating bills of sale over property they do not yet own that is normally thought to prevent them creating floating charges,[103] and in the case of new or mixed goods the goods are the debtor’s property by the relevant time. In any event, however, the charge would have to be registered as a bill of sale, which would not be practical.
8.51 A charge over the proceeds of goods supplied created by a non-corporate debtor in favour of the supplier might, it seems, be a valid assignment by way of security, providing it conforms with the statutory form.[104]
[1]We noted in Part I that we use this phrase to cover both unincorporated businesses and individuals.
[2]Hence the Commonwealth Acts are usually entitled ‘Personal Property Security Act’.
[3]See above, paras 2.51-2.52.
[4]Company charges over land are at present registrable; but see above, paras 4.199 ff.
[5]A pledge via a transfer of constructive possession by written attornment would be within the Bills of Sale Acts: see R Goode, Commercial Law (2nd ed 1995) p 1027 and Halsbury’s Laws vol 4(1) para 621.
[6]See above, paras 2.6-2.7.
[7]Together cited as the Bills of Sale Acts 1878 and 1882: see the 1882 Act, s 1. The Bills of Sale Act 1890 and the Bills of Sale Act 1891 add minor provisions to these Acts. (We refer to these various statutes collectively as the ‘Bills of Sale Acts’.) The Bills of Sale Acts operate against a background of the common law. The 1882 Act does not apply to securities created by companies, although we have noted earlier that a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale is, if created by a company, a registrable charges under the Companies Act 1985, s 396(1)(c). See above, para 2.26.
[8]See below, Part IX.
[9]A purely oral agreement would seem risky for the creditor because it might be hard to prove, though whether this risk is greater than the risk of invalidity through failure to comply with the complex requirements of the Bills of Sale Acts must be a moot point.
[10]A registration requirement was introduced by the Bills of Sale Act 1854, which was subsequently replaced by the 1878 Act. For a detailed consideration of the law relating to bills of sale, see Halsbury’s Laws vol 4(1).
[11]A similar purpose to the registration scheme introduced for company charges: see above, para 2.20.
[12]See The Manchester, Sheffield, and Lincolnshire Railway v North Central Wagon Company (1888) 13 App Cas 554, 559-560. See also Thomas v Kelly and Baker (1888) 13 App Cas 506, 513 and Charlesworth v Mills [1892] 231, 234. For a short explanation of why the earlier Bills of Sale legislation came about, see Cookson v Swire and Lees (1884) 9 App Cas 653, 664-666.
[13]See below, paras 8.19 and 8.33.
[14]With or without notice and either immediately or in the future.
[15]1878 Act, s 3.
[16]Or sometimes ‘conditional bills’.
[17]The 1882 Act has no application to debentures issued by a company and secured upon its capital stock, goods, chattels or effects. Cf the Companies Act 1985, s 396.
[18]1882 Act, s 3. Note that the 1882 Act applies to security for the payment of money: a security given to secure the performance of a non-monetary obligation would only be covered by the 1878 Act.
[19]1882 Act, s 15.
[20]For the meaning of “personal chattels” see below, para 8.14.
[21]1878 Act, s 6.
[22]1882 Act, s 3.
[23]The 1878 Act, s 4 provides that: “The expression ‘bill of sale’ shall include bills of sale, assignments, transfers, declarations of trust without transfer, inventories of goods with receipt thereto attached, or receipts for purchase moneys of goods, and other assurances of personal chattels, and also powers of attorney, authorities, or licenses to take possession of personal chattels as security for any debt, and also any agreement, whether intended or not to be followed by the execution of any other instrument, by which a right in equity to any personal chattels, or to any charge or security thereon, shall be conferred, but shall not include the following documents; that is to say, assignments for the benefit of the creditors of the person making or giving the same, marriage settlements, transfers or assignments of any ship or vessel or any share thereof, transfers of goods in the ordinary course of business of any trade or calling, bills of sale of goods in foreign parts or at sea, bills of lading, India warrants, warehouse-keepers’ certificates, warrants or orders for the delivery of goods, or any other documents used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or by delivery, the possessor of such document to transfer or receive goods thereby represented.” India Warrants are now obsolete. For a detailed examination of all the above exceptions, see Halsbury’s Laws vol 4(1) paras 637-642.
[24]As substituted by the Bills of Sale Act 1891, s 1.
[25]We have noted that there should be similar exceptions from any new legislation: see above, para 5.40.
[26]The 1878 Act, s 4 provides that it includes: “goods, furniture, and other articles capable of complete transfer by delivery, and (when separately assigned or charged) fixtures and growing crops, but shall not include chattel interests in real estate, nor fixtures (except trade machinery as hereinafter defined), when assigned together with a freehold or leasehold interest in any land or building to which they are affixed, nor growing crops when assigned together with any interest in the land on which they grow, nor shares or interests in the stock, funds or securities of any government, or in the capital or property of incorporated or joint stock companies, nor choses in action, nor any stock or produce upon any farm or lands which by virtue of any covenant or agreement or of the custom of the country ought not to be removed from any farm where the same are at the time of making or giving of such bill of sale.”
[27]See the 1882 Act, s 7. This does not include a
security bill where the bill is given for the payment of money under a regulated
agreement under the Consumer Credit Act 1974,
s 87(1) (unless the restriction under s 88(2) of that Act has ceased to apply
to the bill, or, by virtue of s 89, the default is treated as not having
occurred): see the 1882 Act, s 7A.
[28]See the 1882 Act, ss 7(1)-(5).
[29]1882 Act, s 7.
[30]1882 Act, s 13. See, eg, Johnson v Diprose [1893] 1 QB 512.
[31]See below, para 8.24.
[32]The section has been repealed so far as security bills are concerned by the 1882 Act, s 15.
[33]1878 Act, s 8.
[34]It is sufficient if the bill of sale is “substantially in accordance with, and does not depart from, the prescribed form in any material respect”: see Thomas v Kelly and Baker (1888) 13 App Cas 506, 516, per Lord Fitzgerald.
[35]1882 Act, s 9.
[36]1882 Act, s 10.
[37]In addition to it being mentioned in the schedule, the 1882 Act, s 8 requires that the bill must “truly set forth the consideration” for which it was given.
[38]See the 1882 Act, s 12.
[39]See below, para 8.20.
[40]This means void absolutely, and not just against all but the grantor: see Thomas v Kelly and Baker (1888) 13 App Cas 506, 509. Cf the 1882 Act, ss 4 and 5.
[41]The original requirement that the bill also be sealed was abolished by the Law of Property (Miscellaneous Provisions) Act 1989, s 1.
[42]See the 1882 Act, s 4. There are certain limited exceptions to this, including fixtures, plant and trade machinery substituted for like materials described in the schedule: see the 1882 Act, s 6.
[43]See the 1882 Act, s 4.
[44]See, eg, Thomas v Kelly and Baker (1888) 13 App Cas 506, where a purported assignment of future-acquired chattels resulted in the bill being held to be void. Cf Tailby v The Official Receiver (1888) 13 App Cas 523, where an assignment of future book debts, being a chose in action and therefore not registrable as a bill of sale, was effective. However, it seems that the effect of this section is not limited purely to ‘after-acquired’ property. In Tuck v Southern Counties Deposit Bank (1889) 42 Ch D 471 the Court of Appeal held by a majority that the wording of the section would cover after-acquired chattels, but also covered chattels that had been the subject to an earlier but unregistered absolute bill of sale. Though the earlier bill was invalid against third parties it was not void against the grantor, who therefore was no longer owner of the chattels at the time she granted the second, security bill. As a result the second bill was also void against all persons except the grantor.
[45]See above, paras 8.17-8.20.
[46]The 1878 Act, s 13 provides that the Masters of the Queen’s Bench Division of the High Court shall be the registrar, with any one Master performing all or any of the registrar’s duties. The register is kept at the Royal Courts of Justice in London.
[47]1882 Act, s 12.
[48]In the case of security bills, where the affidavit of attestation (see below, para 8.28) describes the residence of the maker as being outside the London insolvency district, or where the chattels listed in the bill of sale are so described, the registrar is required, within three clear days after registration, to transmit an abstract of the contents of the bill of sale to the county court registrar where such places are situated: see the 1882 Act, s 11. Details on what must be sent to the County Court registrar and the filing requirements of that registrar can be found in the Bills of Sale (Local Registration) Rules, SI 1960 No 2326. The abstract is to be filed by that registrar, and the registered abstract can be examined and copied in the same way as the main register.
[49]1878 Act, s 16.
[50]Extracts are limited to the dates of execution, registration, renewal of registration, and satisfaction; to the names, addresses and occupations of the parties, and to any further prescribed particulars. Given this restriction, it may be a point of argument as to whether the provisions of the 1882 Act, s 16 have repealed - for security bills - the entitlement under the 1878 Act, s 16 to have an (unrestricted) office copy or extract of any bill or affidavit. This may just be the result of infelicitous drafting, as may be the apparent effect that searching the register can only be done in respect of security bills (the 1882 Act not applying to absolute bills). However, this point is probably of limited academic interest only.
[51]1882 Act, s 16.
[52]However, it is to be noted that there are differences when a security bill is concerned: see below, para 8.26.
[53]Cf below, para 8.28 for the attestation requirement in relation to security bills.
[54]According to the wording of the Act, “in like manner as a warrant of attorney in any personal action given by a trader is now by law required to be filed”. See also Rules of the Supreme Court, Order 95.
[55]Where the bill is made or given by any person under or in the execution of any process, then a description of the residence and occupation of the person against whom such process was issued must be given instead: 1878 Act, s 10(2).
[56]It is the copy of the bill, rather than the original, and the affidavit that are filed.
[57]See the 1878 Act, s 10(3).
[58]Renewal is effected by filing an affidavit in a form set out in Schedule A to the 1878 Act: see the 1878 Act, s 11.
[59]Or, if it is executed outside England, within seven clear days after the time at which it would in the ordinary course of post arrive in England if posted immediately after execution of the bill.
[60]1882 Act, s 8.
[61]Which must be made in accordance with the form in the Schedule annexed to the 1882 Act: see ibid, s 9.
[62]Cf above, para 8.19.
[63]See above, para 8.24 n 54.
[64]For an example of an unsuccessful challenge to the validity of a bill based on allegedly defective particulars, see Simmons, trading as the Discount Bank of London v Woodward and Heseltine [1892] AC 100.
[65]See the 1882 Act, s 4 for the requirement to have a schedule containing an inventory of the personal chattels.
[66]See above, para 8.24 n 55.
[67]See above, para 8.24 n 56.
[68]See above, para 8.24.
[69]See above, para 8.25.
[70]See the 1878 Act, s 14. Cf the wider power to amend the register of company charges, where the power exists to rectify an omission or mis-statement of “any particular”, rather than just the name, residence or occupation of any person. See above, para 2.29.
[71]See the 1878 Act, s 15.
[72]1878 Act, s 8. See above, para 8.18.
[73]1882 Act, s 8. As noted earlier, failure to comply with the other formal requirements will result in the bill being void.
[74]See the Mortgaging of Aircraft Order 1972, art 16(1), and for ships see the 1878 Act, s 4. For the specialist registers, see above, paras 2.49 ff.
[75]Tailby v The Official Receiver (1888) 13 App Cas 523.
[76]Insolvency Act 1986, s 344.
[77]Under the rule in Dearle v Hall (1828) 3 Russ 1.
[78]See above, para 2.18.
[79]The Insolvency Act 1986, s 344(4) provides that: “For the purposes of registration under the Act of 1878 an assignment of book debts is to be treated as if it were a bill of sale given otherwise than by way of security for the payment of a sum of money; and the provisions of that Act with respect to the registration of bills of sale apply accordingly with such necessary modifications as may be made by rules under that Act.” That does not address the question of priority.
[80]See above, para 2.55.
[81]Although bills of sale in respect of crops and fixtures can be granted: see the 1882 Act, s 6.
[82]1928 Act, s 5(1). The definition of “farmer” in the 1928 Act excludes incorporated companies or societies, and “farming stock” is widely defined to include crops (whether growing or severed from the land), livestock (including its produce and progeny) and agricultural vehicles and machinery: see ibid, s 5(7).
[83]1928 Act, s 8(1).
[84]However, the sale can be by private treaty and earlier than five days where the charge provides for this.
[85]1928 Act, s 6(1).
[86]1928 Act, s 6(2).
[87]1928 Act, s 7(1).
[88]These are the bankruptcy or death of the farmer, the dissolution of the partnership (where the charged property is partnership property), or a written notice by the bank on the happening of an event which by virtue of the charge allows the bank to give such notice: see the 1928 Act, s 7(1)(a).
[89]1928 Act, s 7(1)(b). A farmer who, with intent to defraud the bank, fails to comply with the obligations for paying over the required money, or who removes from his or her holding any of the charged property commits a criminal offence: ibid, s 11(1).
[90]1928 Act, s 8(3).
[91]1928 Act, s 9(1). The time can be extended by the High Court on proof that the omission to register was accidental or due to inadvertence.
[92]1928 Act, s 9(8).
[93]1928 Act, s 8(2).
[94]1928 Act, s 8(6).
[95]Consumer Credit Act 1974, s 189.
[96]Sale of Goods Act 1979, s 25(1). See Newtons of Wembley Ltd v Williams [1965] 1 QB 560, a decision that has been strongly criticised: see R Goode, Commercial Law (2nd ed 1995) p 475.
[97]Helby v Matthews [1895] AC 471.
[98]Sale of Goods Act 1979, s 25(2).
[99] Consumer Credit Act 1974, ss 8(1) and (2).
[100]See above, para 8.36.
[101]See above, para 6.18.
[102]See above, paras 6.19-6.20.
[103]See above, para 8.20.
[104]See Halsbury’s Laws vol 4(1) para 724.
