The bank had received and paid substantial sums from the company before the petition for insolvency had been presented, and had discharged the director’s charge on his house. The liquidator sought restitution under the Act. The bank replied that it had acted already in such a way as to put its own position at risk, and that the claim in restitution should be denied.
Held: The court was required to try to achieve equal payment pari passsu of the debts. The bank was entitled to an order validating payments it had made prior to presentation. For payments made subsequently, the defence of restitution might be available according to the facts of the case allowing for good and bad faith. Here the alleged change of position resulted form the bank’s own act, not on any assessment of the validity of the credits.
Judges:
Nicholas Warren QC
Citations:
Times 08-Jul-2003, Gazette 31-Jul-2003
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Dextra Bank and Trust Company Limited v Bank of Jamaica PC 26-Nov-2001
(Jamaica) A cheque was drawn which was used as part a complex financial arrangement intended to purchase foreign currency to work around Jamaica’s foreign exchange control regulations. It was asserted that by presenting the cheque used in the . .
Cited – Bank of Ireland v Hollicourt (Contracts) Limited CA 20-Oct-2000
A bank continued to pay on cheques presented to it against the company’s bank account even after the presentation of a petition for bankruptcy. The liquidator sought recovery of the amounts paid from the bank as well as the payees. It was held that . .
Cited – Re S A and D Wright Ltd, Denney v John Hudson and Co Ltd CA 1992
Fox LJ said: ‘A disposition carried out in good faith in the ordinary course of business at a time when the parties were unaware that a petition had been presented would usually be validated by the court unless there is ground for thinking that the . .
Cited – In re Gray’s Inn Construction Co Ltd CA 1980
After the presentation of a petition for the winding up of the company moneys were paid in and out of the company’s bank account which was overdrawn. The liquidator issued a summons for a declaration that the amounts credited and/or debited to the . .
Cited – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
Lists of cited by and citing cases may be incomplete.
Equity, Insolvency
Updated: 17 July 2022; Ref: scu.184532
