(New Zealand) The court noted a greater reluctance in Australia and Ireland than in England to accept the creation of a fixed charge over present and future book debts.
Tompkins J said:’ a requirement to pay the proceeds of the book debts into the company’s account without any restriction on how the company may use those proceeds does not give effective possession of those proceeds to the Bank. It does not, without more, fasten the charge onto those proceeds. Supercool was free to deal with those proceeds except in the two respects stated, unless and until the BNZ intervened in a manner that would effectively inhibit that freedom. This conclusion is entirely consistent with the circumstances as they existed at the time the debenture was entered into. Supercool was about to take over part of the business of the old Supercool company. It was the clear intention of Supercool and the BNZ that Supercool was then going to trade in the normal way in the course of which it would acquire book and other debts and would be using the proceeds of those debts in the normal course of its business. If it were not able to do so freely, it would not be able to trade. And the BNZ was well aware that that was what Supercool was about to do – the whole object of the finance facility was to enable Supercool to commence business. There was no intervention by the Bank that in any way restricted this freedom to carry on its business until the Bank appointed the receiver on 10 March 1992. It follows that the charge over the book and other debts was a floating charge until it crystallised on that date. It also follows that, for the reasons I have expressed, I do not follow the decision of Slade J in Siebe Gorman.’
Tompkins J
[1994] 3 NZLR 300
England and Wales
Citing:
Not Followed – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .
Cited – In re Yorkshire Woolcombers Association Ltd CA 2-Jan-1903
Nature of Company’s Debenture Charge
The court considered the nature of a debenture charge. Romer LJ said: ‘I certainly do not intend to attempt to give an exact definition of the term ‘floating charge’, nor am I prepared to say that there will not be a floating charge within the . .
Cited – Illingworth v Houldsworth HL 1904
A clause in a floating charge allowing a company to continue to trade in the assets charged: ‘contemplates not only that it should carry with it the book debts which were then existing, but it contemplates also the possibility of those book debts . .
Cited – In Re Keenan Bros Ltd 1986
(Supreme Court of the Republic of Ireland) A debenture conferred a fixed charge on book debts. It specifically provided that withdrawals from the account to which the proceeds of the book debts had to be credited might only be made with the prior . .
Cited by:
Approved – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .
Approved – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Commonwealth, Banking
Updated: 15 December 2021; Ref: scu.191966