Highbury Pension Fund Management Company & Anor v Zirfin Investments Ltd & Ors

Highbury Pension Fund Management Company & Anor v Zirfin Investments Ltd & Ors

The doctrine of marshalling, including the exception to the common debtor rule where a principal and surety relationship exists, applies in this case. Highbury and Cezanne are entitled to participate in the security constituted by the Affiliates’ Charges when (but only when) all sums due to Barclays secured by those...

Source-derived case information.

Parties
Claimant: Highbury Pension Fund Management Company (A Liberian Company); Claimant: Cezanne Trading (A BVI Company); Defendant: Zirfin Investments Limited; Defendant: Golden Bay Securities; Defendant: Mandarin International Holdings Corporation; Defendant: Columbia Overseas Trading SA; Defendant: Cantala Securities Corporation; Defendant: Barclays Bank Plc; Defendant: The Serious Fraud Office; Defendant: Achilleas Michalis Kallakis
Jurisdiction
England and Wales
Judgment Date
14 February 2013
Procedural Posture
Civil (chancery Division) / Judgment on Application Regarding Marshalling and Subrogation of Securities
Outcome
Declaration granted in favour of Highbury and Cezanne, subject to terms to be agreed or determined.
Legal Topics
Marshalling of Securities, Subrogation, Guarantees, Restraint Orders, Proceeds of Crime Act, Priority of Charges
Equity Banking and Finance Insolvency Criminal Law (proceeds of Crime) Marshalling of Securities Subrogation Guarantees Restraint Orders +2 more

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Summary, issues, holding and outcome

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Parties

Highbury Pension Fund Management Company (A Liberian Company)

Claimant

Cezanne Trading (A BVI Company)

Claimant

Zirfin Investments Limited

Defendant

Golden Bay Securities

Defendant

Mandarin International Holdings Corporation

Defendant

Columbia Overseas Trading SA

Defendant

Cantala Securities Corporation

Defendant

Barclays Bank Plc

Defendant

The Serious Fraud Office

Defendant

Achilleas Michalis Kallakis

Defendant

Procedural Posture

Civil (chancery Division) / Judgment on Application Regarding Marshalling and Subrogation of Securities

Legal Issues

  1. 1 Whether the doctrine of marshalling permits marshalling of securities held over property not belonging to the common debtor
  2. 2 Whether a creditor of a guarantor is entitled to marshal or be subrogated to securities granted to another creditor of the guarantor by the primary debtor
  3. 3 Whether such claim to marshalling or subrogation takes precedence over prohibitions in a Restraint Order under POCA

Ratio Decidendi

The doctrine of marshalling, including the exception to the common debtor rule where a principal and surety relationship exists, applies in this case. Highbury and Cezanne are entitled to participate in the security constituted by the Affiliates’ Charges when (but only when) all sums due to Barclays secured by those charges have been paid, unless all relevant parties agree otherwise. The right to marshal does not give Highbury greater rights than Zirfin itself would have had, and the operation of the Restraint Order under POCA does not deprive Highbury of its interest as a secured creditor.

Court Disposition

Declaration granted in favour of Highbury and Cezanne, subject to terms to be agreed or determined.

Orders

  • Highbury and Cezanne are entitled to participate in the security constituted by the Affiliates’ Charges when (but only when) all sums due to Barclays secured by those charges have been paid, unless all relevant parties agree otherwise.
  • No immediate right to enforce Affiliates’ Charges; participation is contingent on full repayment to Barclays.