PASSING OF PROPERTY IN THE GOODS

Siebe Gorman & Co Ltd v Barclays Bank Ltd Also known as: Siebe Gorman & Co Ltd v RH McDonald Ltd (Ch D) Chancery Division 26 May 1978
Where Reported
SummaryCases
CitedLegislation
CitedHistory of the CaseCitations to the CaseCase Comments

Where Reported [1979] 2 Lloyd's Rep. 142 Summary Subject: Banking and finance Keywords: Bills of Exchange; Book debts; Equity of redemption; Fixedcharges Catchphrases: Assignment; priority of bank over proceeds

Abstract: In January 1971 D1 executed in favour of D2, a bank, a debenture,cl. 3 of which provided, inter alia, "[D1] as beneficial owner hereby chargeswith payment or discharge of all monies and liabilities hereby covenanted to bepaid or discharged by [D1] by way of first fixed charge all book debts andother debts now and from time to time due or owing to [D1]", and cl. 5 of whichprovided, inter alia, "During the continuance of this security [D1] shall payinto [D1's] account with [D2] all monies which it may receive in respect of thebook debts and other debts hereby charged and shall not without the priorconsent of [D2] in writing purport to charge or assign the same in favour ofany other person and shall if called upon to do so by [D2] execute a legalassignment of such book debts and other debts to [D2]." By March 1972 D1 had asubstantial overdraft with D2, and also owed GBP 8,707.64 to P. As a result ofa meeting on March 24, 1972, between D1, D2 and P, it was agreed that D1 wouldassign to P certain bills of exchange held by D2, and whose total value wasnearly GBP 8,500. At the meeting, D2 did not produce a copy of the debenture,but pointed out that the assignment could only be executed subject to D2'scharge on the bills, and indicated that once the overdraft was eliminated therewas no reason why D2 should not release their charge on the bills. On the sameday, a deed of assignment of the bills from D1 to P was executed, and notice ofit given to D2. On April 18, 1972, when D1's overdraft stood at GBP 49.51, theproceeds of one of the bills was paid into D1's account, and between then andJuly the proceeds of other of the bills were collected by D2 and paid into D1'saccount. P claimed the proceeds received by D2 upon collection of the bills. Summary: Held, that (1) on the facts, by March 24, 1972, P had notice of the existence of the debenture, and the provisions of cl. 3, but had no notice of the provisions of cl. 5 until June 30, 1972; (2) the bills were book debts within ordinary legal terminology and within the meaning of the debenture; (3) the debenture conferred on D2 a specific charge in equity on all future debts to D1, and D2; rights attached in equity to the proceeds of the bills as soon as they were paid, subject to P's rights as assignees of the bills; (4) the provisions of cl. 5 amounted to a restriction on D1's right to deal with their equity of redemption under a specific charge of book debts; and although valid as between D1 and D2, they were special provisions which P would not necessarily have expected to find in a mortgage creating a specific charge on future book debts, and of which they had no notice on the date when they took their assignment of the bills; (5) since the deed of assignment effected an outright assignment, and was not intended to reserve to D1 an equity of redemption, the assignment was not registrable as a charge on the book debts under the Companies Act 1948 s. 95 ; (6) since P were entitled to assume that D1 had an equity of redemption in the bills which they could dispose of in the ordinary way and D2 had failed to ensure that P had full knowledge of cl. 5 before they took their assignment, they were also entitled to assume, having taken the assignment and given D2 notice of it, that D2 could no longer enlarge the scope of the debenture by making the bills stand as cover for fresh advantages made by them to D1 (Deeley v Lloyds Bank Ltd [1912] A.C. 756 applied; Clayton's Case [1814-23] All E.R. Rep. 1 applied); (7) D2 could not apply the proceeds of the bills in reduction of D1's indebtedness arising exclusively from credit given by D2 to D1 after receipt of the notice of assignment; and P were entitled to priority over D2 in respect of the proceeds of the bills save as to a sum of GBP 49.51 being the balance of D1's indebtedness at the date when D2 received notice of the assignment.Judge: Slade, J. Cases CitedClayton's Case, [1814-23] All E.R. Rep. 1; 35 E.R. 781; (1816) 1 Mer. 572 (0)Deeley v Lloyds Bank Ltd, [1912] A.C. 756 (HL) Legislation CitedCompanies Act 1948 s. 101Companies Act 1948 s. 105Companies Act 1948 s. 95Companies Act 1948 s. 95(2)(c)Companies Act 1948 s. 95(2)(e)Companies Act 1948 s. 95(6)Law of Property Act 1925 (c.20) s. 136Law of Property Act 1925 (c.20) s. 199(1)(ii) History of the Case Negative Indirect HistoryDistinguished by Brightlife Ltd, Re, [1987] Ch. 200; [1987] 2 W.L.R. 197; [1986] 3 All E.R. 673; (1986) 2 B.C.C. 99359; [1986] P.C.C. 435; (1987) 84 L.S.G. 653; (1987) 131 S.J. 132 (Ch D (Companies Ct))Doubted by Spectrum Plus Ltd (In Liquidation), Re, [2004] EWHC 9; [2004] 2 W.L.R. 783; [2004] 1 All E.R. 981; [2004] B.C.C. 51; [2004] 1 B.C.L.C. 335; (2004) 154 N.L.J. 93; Times, January 23, 2004 (Ch D (Companies Ct))Overruled by Spectrum Plus Ltd (In Liquidation), Re, [2005] UKHL 41; [2005] 2 A.C. 680; [2005] 3 W.L.R. 58; [2005] 4 All E.R. 209; [2005] 2 Lloyd's Rep. 275; [2005] B.C.C. 694; [2005] 2 B.C.L.C. 269; (2005) 155 N.L.J. 1045; Times, July 1, 2005; Independent, July 6, 2005 (HL) Citations to the CaseApplied by Brumark Investments Ltd, Re, [2001] UKPC 28; [2001] 2 A.C. 710; [2001] 3 W.L.R. 454; [2001] Lloyd's Rep. Bank. 251; [2001] B.C.C. 259; [2001] 2 B.C.L.C. 188; Independent, July 16, 2001; Daily Telegraph, June 12, 2001 (PC (NZ))Considered by CIL Realisations Ltd (In Liquidation), Re, [2001] B.C.C. 300; [2000] 2 B.C.L.C. 361 (Ch D) Company (No.005009 of 1987) Ex p. Copp, Re, (1988) 4 B.C.C. 424; [1989] B.C.L.C. 13 (Ch D (Companies Ct)) Quicksons (South & West) Ltd v Katz (No.2), [2004] EWHC 2443; [2005] B.C.C. 138; [2006] 1 B.C.L.C. 9; [2004] B.P.I.R. 1139 (Ch D (Companies Ct)) Spectrum Plus Ltd (In Liquidation), Re, [2004] EWCA Civ 670; [2004] Ch. 337; [2004] 3 W.L.R. 503; [2004] 4 All E.R. 995; [2004] B.C.C. 660; [2005] 2 B.C.L.C. 30; (2004) 101(23) L.S.G. 32; (2004) 154 N.L.J. 890; (2004) 148 S.J.L.B. 694; Times, June 4, 2004; Independent, June 8, 2004 (CA (Civ Div)) William Gaskell Group Ltd v Highley, [1993] B.C.C. 200; [1994] 1 B.C.L.C. 197 (Ch D) Case CommentsBook debts; Corporate insolvency; Corporate personality; Fixed charges;Purchase of own shares; Subsidiary companies; Tax planning. Company law update(April) S.J. 2005, 149(16), 471-472Banking; Book debts; Fixed charges; Floating charges. Charges over book debts:a reply J.B.L. 1995, Sep., 433-471,Banks; Book debts; Corporate insolvency; Debentures; Fixed charges; Floatingcharges; Overdrafts; Secured creditors. Spectrum Plus: legal and practicalimplications. I.C.C.L.R. 2006, 17(2), 78-79Agreements; Book debts; Conduct; Corporate insolvency; Debentures; Floatingcharges. The cuckoo in the nest of corporate insolvency: some aspects of theSpectrum case. J.B.L. 2006, Jan, 22-51Book debts; Commercial law; Debentures; Fixed charges; Floating charges;Jurisprudence; Precedent. Prospective overruling and the fixed-floating chargedebate. L.Q.R. 2006, 122(Jan), 20-25Banks; Book debts; Corporate insolvency; Fixed charges; Floating charges.Security for lending - book debts. J.I.B.L.R. 2005, 20(12), N118-120Book debts; Corporate insolvency; Debentures; Fixed charges; Floating charges;Priorities. The Spectrum Plus case. I.C.C.L.R. 2005, 16(10), 405-410Bank accounts; Book debts; Debentures; Fixed charges; Floating charges;Liquidation; Priorities. Spectrum Plus: House of Lords decision - a cloud witha silver lining? Insolv. Int. 2005, 18(8), 113-118Book debts; Debentures; Fixed charges; Floating charges. The Spectrum decision:bad news for banks. J.I.B.L.R. 2005, 20(10), 482-487Book debts; Debentures; Fixed charges; Floating charges; Liquidation;Priorities. Charges over book debts: the Spectrum case in the Court of Appeal.J.B.L. 2004, Nov, 581-616Book debts; Corporate insolvency; Fixed charges; Floating charges; Priorities.Charge over book debts: Siebe Gorman revisited. I.C.C.L.R. 2004, 15(11),327-333Bank accounts; Book debts; Corporate insolvency; Debentures; Fixed charges;Floating charges; Priorities. Fixed or floating? Siebe Gorman post-Brumark.Comp. Law. 2004, 25(11), 331-336Book debts; Corporate finance; Debentures; Fixed charges; Floating charges;Security. Fixed charges and recycling of proceeds of receivables. L.Q.R. 2004,120(Oct), 533-541Book debts; Debentures; Fixed charges; Floating charges; Liquidation;Priorities. Spectrum - the burden of uncertainty for insolvency practitioners.Insolv. Int. 2004, 17(8), 116-118Book debts; Corporate insolvency; Fixed charges; Floating charges; Priorities.The continuing conundrum of floating securities over book debts. S.L.T. 2004,20, 121-125Banks; Book debts; Corporate insolvency; Fixed charges; Floating charges;Priorities. Fixed charges over book debts: Spectrum. Insolv. Int. 2004, 17(3),33-39Corporate insolvency; Debentures; Fixed charges; Floating charges; Insolvencypractitioners; Preferential creditors; Priorities. Brumark: where are we now?Insolv. Int. 2003, 16(3), 19-21Book debts; Corporate insolvency; Fixed charges; Floating charges; New Zealand;Priorities. Fixed charges over book debts after Brumark. Insolv. Int. 2001,14(7), 49-54Book debts; Fixed charges; Floating charges. Charges over book debts: a reply.J.B.L. 1995, Sep, 433-471Book debts; Charges; Creditors; Priorities. Fixed charges on book debts -puzzles and perils. Insolv. Int. 1995, 8(4), 25-28Book debts; Charges; Drafting. Re New Bullas Trading Limited: where to fromhere? J.I.B.L. 1994, 9(5), 183-185Book debts; Fixed charges. Fixed charges over book debts. J.B.L. 1987, Jan,18-29Book debts; Fixed charges. Fixed charges on future book debts. Comp. Law. 1987,8(1), 3-11Book debts; Corporate insolvency; Debentures; Fixed charges; Floating charges.Spectrum Plus in the House of Lords: the victory of substance over form inpersonal property... J.C.L.S. 2006, 6(2), 447-466Banks; Book debts; Corporate insolvency; Debentures; Fixed charges; Floatingcharges. Spectrum Plus and book debts: the final chapter? Web J.C.L.I. 2006, 1,InternetFixed charges; Floating charges; Ireland; Public policy. Developments in fixedand floating charges: legal principles, policy issues and implications for...C.L. Pract. 2006, 13(2), 46-59Book debts; Debentures; Fixed charges; Floating charges. Company law / charges:book debts and Spectrum Plus: the end? National Westminster Bank Plc. v... LawTeach. 2006, 40(1), 81-90Banks; Book debts; Corporate insolvency; Fixed charges; Floating charges;Priorities. Floating charges over book debts. K.C.L.J. 2005, 16, 347-356Banks; Book debts; Corporate insolvency; Debentures; Fixed charges; Floatingcharges. Charges over book debts: the end of an era. L.M.C.L.Q. 2005, 4(Nov),440-446Banks; Book debts; Corporate insolvency; Debentures; Fixed charges; Floatingcharges. The end of fixed charges on book debts? Bus. L.R. 2005, 26(10),246-247Book debts; Corporate insolvency; Judgments and orders; Retrospective effect.Tension in the court. E.G. 2005, 0544, 128Book debts; Corporate insolvency; Debentures; Fixed charges; Floating charges;Priorities. Spectrum: what next for creditors and lenders? I.H.L. 2005,134(Oct), 37-40Banks; Book debts; Corporate insolvency; Debentures; Fixed charges; Floatingcharges; Preferential creditors. The Spectrum Plus case. C.S.R. 2005, 29(11),86-87Book debts; Debentures; Fixed charges; Floating charges. The Spectrum decision.Recovery 2005, Aut, 30-31Book debts; Corporate insolvency; Debentures; Fixed charges; Floating charges.Siebe Gorman overruled - retrospective effect of the overrule applied by theHouse of Lords. F. & C.L. 2005, Jul/Aug, 1-3Banks; Book debts; Debentures; Equitable set off; Fixed charges; Floatingcharges; Set off. Full Spectrum. S.J. 2005, 149(35), 1069-1070,1072Banks; Book debts; Corporate insolvency; Debentures; Fixed charges; Floatingcharges. Charges over book debts - whether charge fixed or floating - proceedsof book debts to be paid into... C.L. Pract. 2005, 12(7), 190Banks; Book debts; Debentures; Fixed charges; Floating charges; Liquidation;Priorities. Fixed and floating charges after Spectrum. N.L.J. 2005, 155(7191),1309-1310Book debts; Fixed charges; Mistake of law; Risk. Spectrum Plus: mistake andlimitation. I.L. & P. 2005, 21(4), 127-129Banks; Book debts; Fixed charges; Floating charges; Insolvency practitioners.Fixed charge on present and future book debts: the House of Lords has the finalword. I.L. & P. 2005, 21(4), 123-126Book debts; Fixed charges. Life after Spectrum. I.L. & P. 2005, 21(4), 109- 110Book debts; Debentures; Fixed charges; Floating charges. Fixed charges on bookdebts: the House of Lords ends the debate on the correctness of Siebe Gorman.I.L. & P. 2005, 21(4), 133-135Banks; Book debts; Debentures; Fixed charges; Floating charges; Priorities. WhySpectrum Plus is bad news for banks. I.F.L. Rev. 2005, 24(8), 19-21Book debts; Debentures; Fixed charges; Floating charges; Liquidation;Priorities. Charges over book debts. P.L.C. 2005, 16(7), 79Banks; Book debts; Debentures; Fixed charges; Floating charges; Liquidation;Priorities. Charges on book debts: a wasted opportunity? P.L.C. 2005, 16(7),6-7Administration; Bank accounts; Bankruptcy; Book debts; Debentures; Fixedcharges; Fraudulent trading; Insolvent partnerships; Matrimonial home; Set off.Insolvency update (July). S.J. 2005, 149(27), 829,831Book debts; Corporate insolvency; Debentures; Expenses; Fixed charges; Floatingcharges. Floating charges: all adrift? C.L.J. 2004, 63(3), 560-564Book debts; Debentures; Fixed charges; Floating charges; Priorities. SpectrumPlus: a critique. K.C.L.J. 2004, 15, 409-417Book debts; Fixed charges. Fixed charges over book debts. M.L.R. 2004, 67(6),1007-1011Book debts; Debentures; Fixed charges; Floating charges; Priorities. WhereSpectrum Plus leaves book debt charges. I.F.L. Rev. 2004, 23(8), 35-37Book debts; Corporate insolvency; Debentures; Fixed charges; Floating charges.A further decision on security over book debts. F. & C.L. 2004, Feb, 1-2Book debts; Debentures; Fixed charges; Floating charges; Liquidation;Priorities. Legal update. Recovery 2004, Aut, 8-9Bank accounts; Book debts; Corporate insolvency; Debentures; Fixed charges;Floating charges. Fixed charge book debts. C.S.R. 2004, 28(8), 62END OF DOCUMENT © 2007 Thomson/West. No Claim to Orig. US Gov. Works.