Societe General SA v Lloyds TSB Bank Plc & Anor [1999] ScotCS 221 (17 September 1999)

Societe General SA v Lloyds TSB Bank Plc & Anor [1999] ScotCS 221 (17 September 1999)

The court held that the two securities granted in December 1995 were not qualified or restricted by the prior facility letters or course of dealing. There was no express or implied agreement to restrict the securities to the overdraft facility, and the formal deeds, expressed as 'all sums' securities, superseded any prior arrangements. The pursuers failed to establish a contractual link or intention to incorporate the restrictive clause from the facility letters into the securities. The supersession rule in Scots law precluded the use of prior agreements to qualify the comprehensive terms of the security deeds.

Citation
[1999] ScotCS 221
Parties
Pursuers and Reclaimers: Societe General S. A.; First Defenders and Respondents: Lloyds TSB Bank plc; Second Defenders: Oakstead Garages Limited
Jurisdiction
Scotland
Judgment Date
17 September 1999
Procedural Posture
Reclaiming Motion (appeal) / Inner House, Court of Session, Post Proof, Appeal Against Lord Ordinary's Interlocutor
Outcome
Reclaiming motion refused; interlocutor of the Lord Ordinary adhered to.
Legal Topics
Interpretation of Security Documents, Supersession Rule in Scots Law, Scope of Security for Debt, Incorporation of Prior Agreements Into Formal Deeds
Banking Law Contract Law Property Law Secured Transactions Interpretation of Security Documents Supersession Rule in Scots Law Scope of Security for Debt Incorporation of Prior Agreements Into Formal Deeds

Case Brief

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Parties

Societe General S. A.

Pursuers and Reclaimers

Lloyds TSB Bank plc

First Defenders and Respondents

Oakstead Garages Limited

Second Defenders

Procedural Posture

Reclaiming Motion (appeal) / Inner House, Court of Session, Post Proof, Appeal Against Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Whether two standard securities granted by Oakstead Garages Limited to Lloyds TSB Bank plc were qualified by prior contractual agreement to secure only specific obligations under an overdraft facility, or whether they secured all sums due by the debtor to the bank.
  2. 2 Whether prior agreements or course of dealing can qualify or restrict the scope of formal security deeds under Scots law.

Ratio Decidendi

The court held that the two securities granted in December 1995 were not qualified or restricted by the prior facility letters or course of dealing. There was no express or implied agreement to restrict the securities to the overdraft facility, and the formal deeds, expressed as 'all sums' securities, superseded any prior arrangements. The pursuers failed to establish a contractual link or intention to incorporate the restrictive clause from the facility letters into the securities. The supersession rule in Scots law precluded the use of prior agreements to qualify the comprehensive terms of the security deeds.

Court Disposition

Reclaiming motion refused; interlocutor of the Lord Ordinary adhered to.

Orders

  • Declarator sought by pursuers refused.
  • Two standard securities held to secure all sums due, not restricted to overdraft facility.