A feature of English insolvency law is the low ranking of unsecured creditors on the liquidation of their debtors.1 In an attempt to circumvent this problem, trade creditors have sought greater security, and absolute title financing is an aspect of this trend.2 Commercial instruments providing for this are different from security instruments simpliciter, as the latter involve the grant or transfer by the debtor of a “security interest” such as a pledge, mortgage, lien or charge which may require registration under s. 95 of the Companies Act 1948. Absolute title financing, on the other hand, envisages either a retention of title or the transfer of absolute property to the creditor as distinct from the grant of a jus in re aliena.

Over the last 10 years there has been a series of reported decisions, beginning with Aluminium Industrie Vaassen N.V. v. Romalpa Aluminium Ltd.,3 which considered a “proprietary solution” to credit and security problems involving retention of title clauses, the intent of which was to ensure a proprietary claim enforceable against the assets of the buyer/debtor on insolvency. These cases were considered in an earlier article.4 The efficacy or otherwise of such clauses have been the source of great debate and the discovery of a valid form elusive. Indeed, this area of law was described by Staughton, J., in Hendy Lennox (Industrial Engines) Ltd. v. Grahame Puttick Ltd.,5 the most recent case in point, as being a “maze if not a minefield”. It may be that the case-law dealing with retention of title clauses is symptomatic of 20th century developments in commercial law generally, which have been characterized by Professor Goode6 as being: