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United Kingdom House of Lords Decisions |
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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Houldsworth and Another v. The Yorkshire Woolcombers' Association, Ltd, and Illingworth [1904] UKHL 486 (01 July 1904) URL: http://www.bailii.org/uk/cases/UKHL/1904/42SLR0486.html Cite as: 42 ScotLR 486, [1904] UKHL 486 |
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Page: 486↓
(Before the
( On Appeal From The Court Of Appeal In England.)
Subject_Company — companies Act 1900 (63 and 64 Vict. cap. 48), sec. 14 (1) (d) — “floating Charge.”
The Companies Act 1900, sec. 14 (1), enacts—“Every mortgage or charge created by a company after the commencement of this Act, and being … ( d) a floating charge on the undertaking or property of the company, shall, so far as any security on the company's property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company, unless filed with the registrar for registration in manner required by this Act within twenty-one days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured.”
A company, incorporated under the Companies Acts, on the narrative that its bank account had been overdrawn, that it would from time to time require further advances, and that its guarantors had requested to be relieved of their liability, assigned to a trustee for the guarantors, subject to redemption on discharge of the guarantors from all liability, “all and singular the book and other debts now owing to the ‘company,’ and also all and singular the book and other debts which may at any time during the continuance of this security become owing to the company (but not including uncalled capital of the company), and the full benefit of all the securities for the said present and future book and other debts.” The trustee was empowered at any time to give notice of the assignment to the
Page: 487↓
debtors, to receive the debts, or appoint a receiver of them, or to exercise the statutory power of sale, but was not to be answerable for permitting the company to receive and deal with the debts as if there were no security. The deed provided that the trustee, on a written request by a majority of the guarantors, should give notice of the assignment to the company's debtors for the time being, but otherwise it was not to be incumbent on him to take any proceedings. The deed did not contain any express provision against taking possession. The security was not filed for registration in the manner required by the Companies Act 1900, sec. 14 (1) ( d). Held that the security was a “floating charge” within the meaning of the Companies Act 1900, sec. 14 (1) ( d), and, not being registered as therein required, was void against creditors.
The Yorkshire Woolcombers' Association, Limited, incorporated under the Companies Acts, by a trust deed dated the 23rd April 1900, conveyed to trustees, upon trust to secure debenture stock about to be issued, certain property, and charged in favour of the trustees, by way of floating security, all its other property and assets, both present and future, but not including capital for the time being uncalled. The debenture stock was in due course issued.
The Association became indebted to a bank on its current account, and its overdraft was guaranteed by certain firms and persons. These parties having requested to be relieved of their liability, and the bank having refused further advances, an arrangement was come to whereby the guarantors increased their guarantees to the bank, and took from the Association a security granted to Illingworth as trustee on their behalf over the books and other debts then due or to become due to the Association. The material provisions of this security are set forth in the rubric ( supra). The security was not filed with the registrar for registration in the manner required by the Companies Act 1890, sec. 4 (1) ( d).
On November 24th 1902 Houldsworth and another, as trustees for the debenture—holders, raised an action against the Association to enforce their security, and in it there was appointed a receiver of the property, assets, and undertaking of the Association subject to this trust. On the 21st December Illingworth, as trustee for the guarantors to the bank, appointed a receiver of all the book and other debts com prised in his security, and his receiver on the same day informed the debtor of the security and required from them payment of the debts. By agreement between the two receivers provision was made for the collection of the book and other debts, &c., now claimed by both, and the depositing of the money so collected in an account in their joint names.
On the 6th March Illingworth served a notice of motion in the action, whereby he asked an order for the money deposited in the receivers' joint names to be paid to him or his receiver, and for liberty to his receiver to collect what debts of the Association still remained outstanding.
The Judge ( Farwell, J.) dismissed the action, and on appeal his decision was affirmed by the Court of Appeal ( Vaughan Williams, Romer, and Cozens Hardy, L.JJ.)
Illingworth appealed.
At the conclusion of the appellants' argument their Lordships gave judgment.
Page: 488↓
Appeal dismissed.
Counsel for the Plaintiffs and Respondents— Upjohn, K.C.— Montgomery. Agent— George Prenam.
Counsel for the Appellant— Neville, K.C.— E. P. Hewitt. Agents— Leslie & Hardy.
