Revenue and Customs v Royal Bank of Scotland Plc [2007] EWCA Civ 1262 (29 November 2007)

Revenue and Customs v Royal Bank of Scotland Plc [2007] EWCA Civ 1262 (29 November 2007)

RBS, by receiving sums pursuant to arrangements that were in substance the realisation of its security over assets subject to a floating charge, 'took possession' for the purposes of s.196 Companies Act 1985 and s.175 Insolvency Act 1986, and thus those sums were subject to the statutory obligation to pay preferential debts. Sums received under later assignments, after release of the charge, were not so subject.

Citation
[2007] EWCA Civ 1262
Parties
Claimant/respondent: Her Majesty's Commissioners for Revenue and Customs; Defendant/appellant: Royal Bank of Scotland PLC
Jurisdiction
England and Wales
Judgment Date
29 November 2007
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From High Court Preliminary Issue Determination
Outcome
Appeal dismissed in substance; cross-appeal dismissed; declarations set aside; preliminary issue answered in favour of Commissioners that there is a real prospect of establishing statutory application.
Legal Topics
Floating Charges, Preferential Debts, Debenture Holders' Rights, Insolvency Act 1986 S.175, Companies Act 1985 S.196, Fixed Vs Floating Charge, Priority of Creditors
Insolvency Law Banking and Finance Law Company Law Floating Charges Preferential Debts Debenture Holders' Rights Insolvency Act 1986 S.175 Companies Act 1985 S.196 +2 more

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Parties

Her Majesty's Commissioners for Revenue and Customs

Claimant/respondent

Royal Bank of Scotland PLC

Defendant/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From High Court Preliminary Issue Determination

Legal Issues

  1. 1 Whether RBS, as debenture holder, 'took possession' of property subject to a floating charge for the purposes of s.196 Companies Act 1985 and s.175 Insolvency Act 1986
  2. 2 Whether sums received by RBS from sale proceeds and deferred consideration were subject to preferential creditor claims
  3. 3 Whether RBS was entitled to retain sums received under assignments after release of charge

Ratio Decidendi

RBS, by receiving sums pursuant to arrangements that were in substance the realisation of its security over assets subject to a floating charge, 'took possession' for the purposes of s.196 Companies Act 1985 and s.175 Insolvency Act 1986, and thus those sums were subject to the statutory obligation to pay preferential debts. Sums received under later assignments, after release of the charge, were not so subject.

Court Disposition

Appeal dismissed in substance; cross-appeal dismissed; declarations set aside; preliminary issue answered in favour of Commissioners that there is a real prospect of establishing statutory application.

Orders

  • Declarations made by the judge set aside.
  • Answer to preliminary issue: real prospect that s.196 Companies Act 1985 and s.175 Insolvency Act 1986 apply to the facts.