A creditor can create, for good consideration an equitable charge over book debts which will attach to them as soon as they come into existence.
Lord Macnaghten said: ‘It was admitted by the learned counsel for the respondent, that a trader may assign his future book debts in a specified business. Why should the line be drawn there? Between men of full age and competent understanding ought there to be any limit to the freedom of contract but that imposed by positive law or dictated by considerations of morality or public policy? The limit proposed is purely arbitrary, and I think meaningless and unreasonable.’ Future property, possibilities, and expectancies are all assignable in equity for value.
(1888) 13 App Cas 523
England and Wales
Cited – 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 . .
Applied – 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 – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .
Cited – 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 . .
Cited – In re Ellenborough, Towry Law v Burne ChD 1903
The court declined to give effect to a voluntary disposition of a mere expectancy. Buckley J said: ‘It cannot be and is not disputed that if the deed had been for value the trustees could have enforced it. If value be given, it is immaterial what is . .
Cited – Re Erskine 1948 Trust ChD 29-Mar-2012
The trust was created in 1948, and provided gifts over, which had now failed. The court considered the construction of the term ‘stautory next of kin’. The possible beneficiaries claimed through being adopted, arguing that at the date of the last . .
Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.191956