The “Romalpa” Prayer Unheard Gebrueder Buehler AG v Peter Chi Man Kwong1

• Author: FRANCIS TSENG CHENG KUANG
• Citation: (1989) 1 SAcLJ 124
• Date: 01 December 1989
• Published date: 01 December 1989

One device commonly resorted to by sellers to protect themselves where the purchase price is not paid till after delivery of the goods is a stipulation in the contract of sale that the property in the goods is not to pass until the full contract price has been received by the seller. Such a clause has come to be commonly known by the name of one of the parties to a case in which it was successfully pleaded —Aluminium Industrie Vaassen B.V. v Romalpa Aluminium Ltd2 (hence the term “Romalpa clause”). The raison d’etre for having such a clause in a contract generally is to put the buyer at liberty to deal with the goods in some way pending payment in full to the seller, whilst preserving the sellers title to the goods at the same time. The ability of the seller to retain his title would depend on whether the goods are extricable after the buyer has dealt with them. If the goods are not mixed with anything else, or if they are extricable, the nemo dat principle would apply to purchasers from the buyer.

Where the goods are mixed with other chattels, such as in a manufacturing process, the question that would be asked is whether those goods, on being so mixed, have ceased to exist as such. In order to determine this, the Court will look at whether the goods are still identifiable or whether they have lost their identity.3 Where the goods are affixed to land, however, this question becomes irrelevant.4 The seller’s retention of the title is dependent, in such cases, on whether the attachment of the goods to the land has been such as to render those goods fixtures. If the goods are fixtures, the maxim “quicquid plantatur solo, solo cedit” (“whatever is affixed to the soil belongs to the soil”) applies. The goods will be regarded by common law as part of the land, and the seller will lose whatever title he had, even if a “Romalpa clause” had been inserted in the contract of sale.

In the Gebrueder Buehler case,5 Thean J. in the court of first instance found that “there was physical annexation of the Equipment to the land and the

annexation was for the better enjoyment of the factory.” The Court of Appeal was “….. loath ….. to Interfere with those findings, particularly since those findings were, to a large extent, based on the judge’s inspection of the plant in operation.”6 In this case7, the sellers, not having been paid the full purchase price, filed an originating summons against the receivers and managers of the buyer (a company) appointed by a bank, pursuant to two deeds of debentures, seeking, inter alia, the determination of the question whether the sellers retained all their rights, title and interest in the equipment by virtue of the retention of title clause in the contracts of sale. Thean J. found in favour of the receivers.

In affirming the judgement of Thean J., Wee C.J. in the Court of Appeal cited what A.L. Smith L.J. had to say in Hobson v Gorringe8: “How a de facto fixture becomes not a fixture or is not a fixture as regards a purchaser of land for value without notice by reason of some bargain between the affixers we do not understand, nor has any authority to support this contention been adduced.” The Court of Appeal held that “…. these rules as to affixation of chattels owned by a third person to land owned by a company are general in character and equally, affect a seller of chattels sole on terms that the seller shall remain the owner of the chattels until they are paid for. The appellants cannot, therefore, pray in aid the retention of title clause as preventing the company from annexing the equipment in a manner which made it a fixture.”9

Once a finding of fact that the goods have become fixtures has been made, the law...