Bank Of Ireland v Bass Brewers Ltd & Ors [2000] ScotCS 234 (23 August 2000)

Bank Of Ireland v Bass Brewers Ltd & Ors [2000] ScotCS 234 (23 August 2000)

On a proper construction of section 464 of the Companies Act 1985 and the Bass negative pledge, rectification of the Bass consent to expressly permit a prior ranking security means the Bank of Ireland security does not contravene the negative pledge and retains its statutory priority over the Bass floating charge. Section 464(1A) does not automatically deprive a subsequent security of priority unless it is created in breach of the negative pledge. No instrument of alteration is required where the charge holder consents to the priority.

Citation
[2000] ScotCS 234
Parties
Pursuer: The Governor and Company of the Bank of Ireland; Defender: Bass Brewers Limited
Jurisdiction
Scotland
Judgment Date
23 August 2000
Procedural Posture
Rectification Action (court of Session, Outer House) / Judgment After Proof Before Answer, Following Debate and Joint Minute
Outcome
Rectification granted; decree in terms of the first conclusion of the summons; defenders' pleas repelled.
Legal Topics
Rectification of Documents, Ranking of Securities, Floating Charges, Negative Pledge Clauses, Consent and Waiver, Interpretation of Companies Act 1985
Company Law Insolvency Law Property Law Rectification of Documents Ranking of Securities Floating Charges Negative Pledge Clauses Consent and Waiver +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 6 Party arguments 2
Sign in to unlock

Parties

The Governor and Company of the Bank of Ireland

Pursuer

Bass Brewers Limited

Defender

Procedural Posture

Rectification Action (court of Session, Outer House) / Judgment After Proof Before Answer, Following Debate and Joint Minute

Legal Issues

  1. 1 Whether rectification of the Bass consent letter would confer priority of ranking on the Bank of Ireland's standard security over the Bass floating charge under sections 464 and 466 of the Companies Act 1985
  2. 2 Proper construction of section 464(1A) and (3) of the Companies Act 1985
  3. 3 Proper construction of the negative pledge in the Bass floating charge

Ratio Decidendi

On a proper construction of section 464 of the Companies Act 1985 and the Bass negative pledge, rectification of the Bass consent to expressly permit a prior ranking security means the Bank of Ireland security does not contravene the negative pledge and retains its statutory priority over the Bass floating charge. Section 464(1A) does not automatically deprive a subsequent security of priority unless it is created in breach of the negative pledge. No instrument of alteration is required where the charge holder consents to the priority.

Court Disposition

Rectification granted; decree in terms of the first conclusion of the summons; defenders' pleas repelled.

Orders

  • Rectification of the Bass consent letter to include 'prior ranking' as sought by the pursuers.
  • Decree granted in favour of the pursuers' first conclusion.