Cattles Plc v Welcome Financial Services Ltd & Ors

Cattles Plc v Welcome Financial Services Ltd & Ors

Clause 6 of the Guarantee prohibits Cattles from making any claim against Welcome, including for inter-company debt, in competition with or priority to the Bank until all obligations to the Bank are discharged; the Cherry v Boultbee right is contractually excluded by clause 6 and clause 15.7, but the Bank may only waive clause 15.7, not clause 6.

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
Civil / Judgment
Outcome
Judgment for the Second Defendant (RBS) on the Clause 6 point; contingent issues do not arise unless appealed.
Legal Topics
Guarantees, Subordination Clauses, Cherry V Boultbee Rule, Inter Company Debt, Liquidation, Administration
Insolvency Contract Law Banking Law Guarantees Subordination Clauses Cherry V Boultbee Rule Inter Company Debt Liquidation +1 more

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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

Civil / Judgment

Legal Issues

  1. 1 Whether clause 6 of the Guarantee prohibits Cattles from making claims against Welcome for inter-company debt until all obligations to RBS are discharged
  2. 2 Whether the right of quasi-retainer under Cherry v Boultbee applies in liquidation or administration
  3. 3 Whether contractual provisions exclude the Cherry v Boultbee right

Ratio Decidendi

Clause 6 of the Guarantee prohibits Cattles from making any claim against Welcome, including for inter-company debt, in competition with or priority to the Bank until all obligations to the Bank are discharged; the Cherry v Boultbee right is contractually excluded by clause 6 and clause 15.7, but the Bank may only waive clause 15.7, not clause 6.

Court Disposition

Judgment for the Second Defendant (RBS) on the Clause 6 point; contingent issues do not arise unless appealed.

Orders

  • Cattles is prohibited from making claims against Welcome for inter-company debt in competition with or priority to the Bank until all obligations to the Bank are discharged.
  • The Cherry v Boultbee right is excluded by contract; the Bank may waive clause 15.7 but not clause 6.