Griffith & Anor, Re [1998] ScotCS 65 (13 November 1998)

Griffith & Anor, Re [1998] ScotCS 65 (13 November 1998)

The letters of consent issued by Royal Bank of Scotland and Bass Brewers Ltd constituted written consent to the creation of the standard securities in favour of Bank of Ireland and Argyll Enterprise, but did not constitute or effect any alteration of the ranking of the floating charges. The negative pledge clauses in the floating charges remained effective, and the statutory priority conferred by section 464(1A) of the Companies Act 1985 was not displaced. No instrument of alteration was executed or registered as required by section 466. Therefore, the standard securities did not obtain priority over the floating charges by virtue of the letters of consent.

Citation
[1998] ScotCS 65
Parties
Petitioner / Joint Receiver: David Campbell Griffith; Petitioner / Joint Receiver: Roger Arthur Powdrill; Company (subject of Receivership): Lewis Lloyd Holdings Ltd; First Respondent / Chargeholder: Royal Bank of Scotland plc; Second Respondent / Chargeholder: Bass Brewers Ltd (trading as Tennent Caledonian Breweries); Third Respondent / Security Holder: Bank of Ireland; Fourth Respondent / Security Holder: Argyll and Islands Enterprise Company
Jurisdiction
Scotland
Judgment Date
13 November 1998
Procedural Posture
Petition for Directions (insolvency/receivership) / First Instance Judgment / Directions Issued
Outcome
Petition for directions granted; court answers the three questions posed in the negative.
Legal Topics
Floating Charges, Fixed Securities, Ranking of Securities, Negative Pledge Clauses, Receivership, Companies Act 1985, Insolvency Act 1986, Standard Securities, Instrument of Alteration
Insolvency Law Banking and Finance Law Property Law Floating Charges Fixed Securities Ranking of Securities Negative Pledge Clauses Receivership +4 more

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Parties

David Campbell Griffith

Petitioner / Joint Receiver

Roger Arthur Powdrill

Petitioner / Joint Receiver

Lewis Lloyd Holdings Ltd

Company (subject of Receivership)

Royal Bank of Scotland plc

First Respondent / Chargeholder

Bass Brewers Ltd (trading as Tennent Caledonian Breweries)

Second Respondent / Chargeholder

Bank of Ireland

Third Respondent / Security Holder

Argyll and Islands Enterprise Company

Fourth Respondent / Security Holder

Procedural Posture

Petition for Directions (insolvency/receivership) / First Instance Judgment / Directions Issued

Legal Issues

  1. 1 What is the legal effect of the letters of consent issued by Royal Bank of Scotland and Bass Brewers Ltd?
  2. 2 Do the letters of consent affect the ranking of the Royal Bank and Bass floating charges relative to the standard securities in favour of Bank of Ireland and Argyll Enterprise?
  3. 3 Did the letters of consent give priority to the Bank of Ireland and Argyll Enterprise securities over the Royal Bank and Bass charges?

Ratio Decidendi

The letters of consent issued by Royal Bank of Scotland and Bass Brewers Ltd constituted written consent to the creation of the standard securities in favour of Bank of Ireland and Argyll Enterprise, but did not constitute or effect any alteration of the ranking of the floating charges. The negative pledge clauses in the floating charges remained effective, and the statutory priority conferred by section 464(1A) of the Companies Act 1985 was not displaced. No instrument of alteration was executed or registered as required by section 466. Therefore, the standard securities did not obtain priority over the floating charges by virtue of the letters of consent.

Court Disposition

Petition for directions granted; court answers the three questions posed in the negative.

Orders

  • The letters of consent had no effect as regards the ranking of the Royal Bank and Bass floating charges relative to the standard securities in favour of Bank of Ireland and Argyll Enterprise.
  • The letters of consent did not give priority to the Bank of Ireland and Argyll Enterprise securities over the Royal Bank and Bass charges.