Clydesdale Bank Plc v Spencer [2001] ScotCS 118 (18 May 2001)

Clydesdale Bank Plc v Spencer [2001] ScotCS 118 (18 May 2001)

If a floating charge holder is materially involved in a scheme with the receiver to dispose of assets at an undervalue to a company in which the charge holder has an interest, the charge holder cannot in good faith enforce guarantees for the deficiency resulting from such under-realisation. The defenders' averments, if proved, constitute a relevant defence to enforcement of the guarantees.

Citation
[2001] ScotCS 118
Parties
Pursuer: Clydesdale Bank Plc; Defender: Gavin Thomas Spencer; Defender: Thomas Spencer
Jurisdiction
Scotland
Judgment Date
18 May 2001
Procedural Posture
Commercial Action (enforcement of Guarantees) / Debate on Relevancy and Specification; Interlocutory (pre Proof)
Outcome
Proof before answer allowed; preliminary pleas not repelled; cases put out By Order for further procedure.
Legal Topics
Guarantees and Indemnities, Duties of Receivers, Floating Charges, Good Faith in Enforcement, Sale of Assets at Undervalue, Specification of Pleadings
Banking and Finance Law Insolvency Law Contract Law Guarantees and Indemnities Duties of Receivers Floating Charges Good Faith in Enforcement Sale of Assets at Undervalue +1 more

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Parties

Clydesdale Bank Plc

Pursuer

Gavin Thomas Spencer

Defender

Thomas Spencer

Defender

Procedural Posture

Commercial Action (enforcement of Guarantees) / Debate on Relevancy and Specification; Interlocutory (pre Proof)

Legal Issues

  1. 1 Whether the pursuer (bank) is entitled to enforce guarantees against the defenders given allegations of under-realisation of assets by a receiver in which the pursuer had an interest.
  2. 2 Whether the defenders' averments regarding the pursuer's involvement in the receivership and alleged undervalue sales are relevant and sufficiently specific to constitute a defence.
  3. 3 Whether the pursuer's pleadings are sufficient in the face of the defenders' allegations.

Ratio Decidendi

If a floating charge holder is materially involved in a scheme with the receiver to dispose of assets at an undervalue to a company in which the charge holder has an interest, the charge holder cannot in good faith enforce guarantees for the deficiency resulting from such under-realisation. The defenders' averments, if proved, constitute a relevant defence to enforcement of the guarantees.

Court Disposition

Proof before answer allowed; preliminary pleas not repelled; cases put out By Order for further procedure.

Orders

  • Proof before answer allowed in both actions with preliminary pleas extant.
  • Cases put out By Order to allow pursuers to consider amendment and for further procedural steps.