National Westminster Bank Plc v Spectrum Plus Ltd. & Ors

National Westminster Bank Plc v Spectrum Plus Ltd. & Ors

The debenture in question, which required book debts to be paid into the company's account with the bank but allowed the company to use the proceeds in the ordinary course of business, did not create a fixed charge but a floating charge. However, the Court of Appeal was bound by its own precedent in Re New Bullas Trading Ltd and could not depart from it, despite the Privy Council's disapproval in Agnew. The appeal was allowed, upholding the Siebe Gorman interpretation for the time being.

Parties
Appellant: National Westminster Bank PLC; First Respondent: Spectrum Plus Ltd; Other Respondents: Commissioners of Inland Revenue and HM Customs and Excise and the Treasury Solicitors
Jurisdiction
England and Wales
Judgment Date
12 July 2004
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From Chancery Division, Companies Court
Outcome
Appeal allowed
Legal Topics
Fixed and Floating Charges, Book Debts, Debentures, Precedent, Security Interests
Insolvency Law Banking Law Company Law Fixed and Floating Charges Book Debts Debentures Precedent Security Interests

Case Brief

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Parties

National Westminster Bank PLC

Appellant

Spectrum Plus Ltd

First Respondent

Commissioners of Inland Revenue and HM Customs and Excise and the Treasury Solicitors

Other Respondents

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From Chancery Division, Companies Court

Legal Issues

  1. 1 Whether a debenture over book debts creates a fixed or floating charge when the chargor is free to use the proceeds in the ordinary course of business
  2. 2 Whether the Court of Appeal is bound by its own precedent in Re New Bullas Trading Ltd
  3. 3 Proper construction and effect of the Siebe Gorman decision

Ratio Decidendi

The debenture in question, which required book debts to be paid into the company's account with the bank but allowed the company to use the proceeds in the ordinary course of business, did not create a fixed charge but a floating charge. However, the Court of Appeal was bound by its own precedent in Re New Bullas Trading Ltd and could not depart from it, despite the Privy Council's disapproval in Agnew. The appeal was allowed, upholding the Siebe Gorman interpretation for the time being.

Court Disposition

Appeal allowed

Orders

  • The appeal is allowed; the debenture is held to create a fixed charge over book debts under current binding precedent.