Bona Fide Purchaser Does Not Always Obtain Title

Another case involving the sale of diesel generators to Nigeria and retention of title.

Mr Pollak agreed to buy from Eagle Power five generating sets which were then being held at the Bournemouth premises of J P Morgan. The generating sets were duly paid for and transferred under the supervision of Mr Pollak to Eagle Power's premises in West Bromwich. Eagle Power agreed to sell two of those generating sets to Mr Fadallah in Nigeria. Mr Fadallah paid for them by 17 August 2001; it was agreed that property passed to Mr Fadallah, constructive delivery of the generating sets having taken place. Only on 30 August 2011 did Mr Pollak raise an invoice selling the two generators to Eagle, but doing so under a reservation of title clause. In due course Eagle went into liquidation without having paid Mr Pollak and without having actually delivered the generating sets to Mr Fadallah. The question arose as to whether the goods belonged to Mr Fadallah or to Mr Pollak. Mr Fadallah raised many arguments based on the Sale of Goods Act.

The High Court (Richard Seymour QC) rejected all the arguments:

1. Eagle was not the owner of the generating sets when it sold them to Mr Fadallah, and therefore Section 21(1) of the SGA prima facie applied - the buyer acquires no better title to goods than the seller where goods are sold by a person who is not their owner and who does not sell them under the authority or with the consent of the owner. At the time of the sale to Mr Fadallah, Mr Pollak had given no consent. Mr Fadallah therefore had to find other provisions of the SGA which might provide that title passed to him.

2. Intention to pass title and retention of title. Mr Fadallah argued that under Sections 17 & 18 of the SGA, title passes when the contract said it does, and that when title passed from Mr Pollak to Eagle, that "fed" the title of Mr Fadallah. The complete answer to that was that the contract for the purchase back of the two generators by Eagle from Pollak was subject to Pollak's terms, and they contained a retention of title clause. So, Eagle never received title and could not therefore pass title, even belatedly, to Mr Fadallah.

3. Mercantile agent. Mr Fadallah argued that Eagle was a mercantile agent of Mr Pollak - Section 2(1) of the Factors Act provides that where a mercantile agent is, with the consent of the owner, in possession of goods, any sale made by him and acting in the ordinary course of business as a mercantile agent will be valid...