The appellants were a Northern Irish company, which had entered liquidation, and the liquidator of that company. The respondent was a finance house. The company entered into a ‘block discounting’ agreement, which involved assigning customer credit sale debts in blocks to the finance house in return for a lump sum payment. The arrangement was based upon a trading agreement, as a form of master agreement, governing all subsequent individual transactions for the sale of each block of debts.
Held: Lord Wilberforce considered whether certain assignment of book debts were in substance absolute assignments by way of sale or assignments by way of charge and would be void against a liquidator for non-registration under the Companies Act. He said: ‘My Lords, the fact that the transaction consisted essentially in the provision of finance and the similarity in result between a loan and a sale, to all of which I have drawn attention, gives to the appellants’ arguments an undoubted force. It is only possible, in fact, to decide whether they are correct by paying close regard to what the precise contractual arrangements between them and the respondents were.’ and ‘it has to be appreciated that block discounting is essentially a method of providing finance. Commercially and in its economic result, it may not differ from lending money at interest: the ‘discounting charge’, which represents the finance house’s profit, is stated in term of so much per cent per annum, which percentage is no doubt based upon current interest rates. Legally, however, there is no doubt that discounting is not treated as the lending of money and that the asset discounted is not considered as the subject of a charge.’
Lord Wilberforce, Lord Scarman
[1992] BCLC 609
England and Wales
Cited by:
Cited – Dutton and Another v Davis and Another CA 4-May-2006
The appellant had transferred his property with the intention that it should be subject to a right on his part to repurchase it. He now said the sale was in practice merely a charge.
Held: The appeal failed. The legal nature of the transaction . .
Cited – Humber Oil Terminals Trustee Ltd v Associated British Ports CA 10-May-2012
The tenant appealed against a finding that the landlord was entitled to resist renewal of its lease under the 1954 Act challenging the stated intention of the landlord to occupy the premises for its own business purposes. It said that the proposed . .
Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.242532
