An ‘all sums’ clause is sometimes referred to as an ‘all monies’ clause or a ‘current account’ clause. In such a clause the supplier will stipulate that the title to the goods supplied under any contract with the insolvent will not pass until all sums due under any contracts have been paid. Where the official receiver is satisfied that such a clause exists, he will not need to ensure that the goods being claimed relate to an unpaid invoice as the supplier may have a valid claim to any goods which he supplied which are still with the insolvent at the date of the liquidation or bankruptcy (Aluminium Industrie Vaassen BV v Romalpa Aluminium Limited  2 All ER 552 and Armour and another v Thyssen Edelstahlwerke AG  3 All ER 481). The supplier will not have a claim to goods which were contracted for on a date prior to there being a nil balance or a balance in favour of the supplier on the insolvent’s account. The reason for this is that the title of those goods will have passed to the insolvent at the time that no monies were due to the supplier. An ‘all sums’ clause does not always constitute the creation of a charge (Clough Mill Limited v Martin  1 WLR 111) but once such a clause attempts to recover the proceeds of sub-sales then it will do and so should be registered (Compaq Computer Limited v Abercorn Group Limited  BCC 484) (see also paragraphs 63.26 to 63.28). However, even if the clause is not registered it may still be valid as regards unused or unsold goods which the official receiver recovers.
63.26 Right to trace proceeds of sale
(amended August 2012)
Where a supplier tries to claim the proceeds of sale of goods which were received by the insolvent and mixed with the insolvent’s money prior to the insolvency, then the supplier needs to show that he had a fiduciary relationship with the insolvent (or that the proceeds of the sale were subject to a charge on book debts that has been registered). A fiduciary relationship is one where the insolvent holds the goods and any proceeds of sale for the benefit of the supplier and must account to the supplier for any sale proceeds. A fiduciary relationship will not arise in a contract for sale unless there is specific agreement between the parties creating one. It is necessary to look closely at the relationship that existed between the parties and not merely the labels attached to the relationship in the contractual documentation. It may be that the actions of the parties are inconsistent with a fiduciary relationship so that it should be inferred that the relationship has not been established. An example of this is the giving of a fixed period of credit (see (f) below). The official receiver should satisfy himself that all of the following terms (as well as those matters referred to in paragraph 63.13 (a) to (d)) were part of the contract before agreeing to pass the sale proceeds of the goods to the supplier:-
If there was a fiduciary relationship, it is likely that there will not be a charge created (Re: Andrabell Limited  3 All ER 407). Generally, where the contract allows the insolvent to treat either the goods supplied under it, the products incorporating goods supplied, or the proceeds of sale of either of these as his own, it is unlikely that a fiduciary relationship will exist. If there is no fiduciary relationship, a clause seeking to claim the proceeds of sale may create a charge which would be void (against the liquidator or trustee as per section 874 of the Companies Act 2006) if not registered in accordance with section 860 of the Companies Act 2006, for a company or the Bills of Sale Act 1878, for an individual (see also paragraphs 63.28 and 63.29). Alternatively it may be avoided by the trustee as a general assignment of book debts. Therefore the official receiver should exercise care in deciding whether the above matters have been established by the supplier. If the official receiver is in doubt then he should consult Technical Section.
A charge may be expressly created by a company or individual but it is more usual for the granting of a charge to be implied from the terms of the contract to supply goods. Specific examples are given in paragraph 63.30. Where the official receiver has considered the circumstances of the case and is unclear whether or not a charge has been created he should consult Technical Section at HQ London. Registration of a charge is necessary for both companies and individuals if the supplier’s claim is to be valid (see paragraphs 63.28 and 63.29).
63.28 Registration of clause which is a charge (companies only)
(amended August 2012)
In the case of a company; if a charge has been created by the clause, particulars and the charge instrument must be delivered to the Registrar of Companies within 21 days of creation (although the court may allow registration out of time) if the clause is to be valid against the liquidator. Where the official receiver encounters a registered clause he should check the timing of the registration and consider its priority with any other charges, before accepting the supplier’s claim.
Notes: [ss 860, 870 and 873 CA 2006]
A bill of sale will be created where an individual transfers personal chattels to another but retains possession of those chattels. A bill of sale should be registered under the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882. It should be noted that a bill of sale over future acquired chattels may be void (see paragraph 63.19). Where the official receiver considers that a bill of sale should have been registered, he may make a search by writing to: The Chief Clerk, Filing and Record Department, Royal Courts of Justice, The Strand, London WC2A 2LL for which a charge of £2 per name will be made. Full details of the name, address and occupation of the bankrupt should be given. In urgent cases official receivers may wish to have a personal inspection of the Register made. The Register is kept in Room 81 of the Royal Courts of Justice and a charge of 5p per name is made for personal inspection. These fees should be charged to the bankrupt’s estate (and a debit balance may be incurred for this purpose, if necessary). Where the official receiver encounters a registered bill of sale, he should check its validity by ensuring that the bill of sale:-
(a) is in the format of the Schedule to the Bills of Sale Act (1878) Amendment Act 1882 (see annex 2 to this chapter), where it is a security bill under Section 9 of that Act (ie. personal chattels were transferred to the supplier to secure the bankrupt’s indebtedness);
Where the official receiver does encounter a validly registered clause he should also consider its priority with any other charges before accepting the supplier’s claim.
Examples of the circumstances where a charge will be created in favour of the supplier are where the clause:-
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