Cattles Plc v Welcome Financial Services Ltd & Ors [2009] EWHC 3027 (Ch) (14 December 2009)

Cattles Plc v Welcome Financial Services Ltd & Ors [2009] EWHC 3027 (Ch) (14 December 2009)

Clause 6 of the Guarantee prohibits Cattles from making any claim against Welcome, including inter-company debt, in competition with or in priority to the Bank until all obligations to RBS are discharged. The right of quasi-retainer under Cherry v Boultbee is excluded by contract, but RBS cannot waive clause 6 without Cattles' consent; it can waive clause 15.7 of the Facility Agreement.

Citation
[2009] EWHC 3027 (Ch)
Parties
Claimant: Cattles Plc; First Defendant: Welcome Financial Services Ltd; Second Defendant: The Royal Bank of Scotland Plc; Third Defendant: Party A
Jurisdiction
England and Wales
Judgment Date
14 December 2009
Procedural Posture
Part 8 Claim (construction of Contractual Obligations) / Judgment After Hearing
Outcome
Claim determined in favour of RBS on the Clause 6 point; contingent issues do not arise.
Legal Topics
Guarantees, Subordination Clauses, Quasi Retainer, Cherry V Boultbee Rule, Interpretation of Contracts
Insolvency Contract Law Banking Law Guarantees Subordination Clauses Quasi Retainer Cherry V Boultbee Rule Interpretation of Contracts

Case Brief

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Parties

Cattles Plc

Claimant

Welcome Financial Services Ltd

First Defendant

The Royal Bank of Scotland Plc

Second Defendant

Party A

Third Defendant

Procedural Posture

Part 8 Claim (construction of Contractual Obligations) / Judgment After Hearing

Legal Issues

  1. 1 Whether clause 6 of the Guarantee prohibits Cattles from claiming inter-company debt against Welcome until all obligations to RBS are discharged
  2. 2 Whether the right of quasi-retainer under Cherry v Boultbee applies and is excluded by contract
  3. 3 Whether RBS can waive contractual restrictions

Ratio Decidendi

Clause 6 of the Guarantee prohibits Cattles from making any claim against Welcome, including inter-company debt, in competition with or in priority to the Bank until all obligations to RBS are discharged. The right of quasi-retainer under Cherry v Boultbee is excluded by contract, but RBS cannot waive clause 6 without Cattles' consent; it can waive clause 15.7 of the Facility Agreement.

Court Disposition

Claim determined in favour of RBS on the Clause 6 point; contingent issues do not arise.

Orders

  • Cattles is prohibited from making claims against Welcome for inter-company debt in competition with the Bank until all obligations to RBS are discharged.
  • The right of quasi-retainer under Cherry v Boultbee is excluded by contract; RBS cannot waive clause 6 without Cattles' consent but can waive clause 15.7 of the Facility Agreement.