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In This Case Morritt Vc, At First Instance, Made It Explicitly Clear That ...

In this case Morritt VC, at first instance, made it explicitly clear that Siebe Gorman is not good law:
‘Siebe Gorman has stood for 25 years with little criticism. It is suggested that most bank's standard forms are drafted on the assumption that Siebe Gorman was correctly decided and that thousands of liquidations have been conducted on the same assumption It is with the greatest hesitation and reluctance that I differ from the conclusion of Slade J in Siebe Gorman. Nevertheless I am convinced that it is wrong'
The House of Lords, despite an overturning in the Court of Appeal, upheld the initial decision. Lord Hope rejected the rationale of Slade J. in that he felt that a deposit of funds in the bank of the creditor didn't provide sufficient control particularly because it didn't square with general banking principles. He relied on the banking case of Lipkin Gorman v Karpnale Ltd that established clearly that whilst money deposited with a bank is their money, they are under an obligation to repay it on demand. Lord Hope made it explicit, as did Morritt VC that ‘the proper course is for the Siebe Gorman decision to be overruled'.
The importance of these decisions is of more general effect than the specific focus of book debts. The case of In Re Cosslett (Contractors) Ltd. showed that the fixed / floating jurisprudence, above, could be applied to analogous situations. in that case it was a charge over plant and machinery on a building site which the chargor had a fairly wide discretion to remove from the site. This decision followed Brightlife and is in line with Agnew and Spectrum. The case-law has greatly fleshed out the exact dimensions of a floating charge.
Legislative Impact
The foregoing only briefly mentioned the Preferential Payments in Bankruptcy (Amendment) Act 1897 however the importance of legislative intervention over the twentieth and twenty-first centuries has largely driven much of the litigation that the foregoing has reviewed. It is therefore apt to briefly analyse the progress of the legislation and its interpretation in the courts because of the large impact. However, in order to get a full picture we have to go back a few years to 1883.
The Companies Act 1883 at section 4 was the first statute to create a group of corporate constituents who were to be preferred, i.e. rank ahead of other creditors. The Act provided that the expenses of administration were to be reserved but after that it was the duty of the liquidator to disburse all ‘unpaid wages and salaries of clerks, servants, labourers and workmen' before all other debts. Those preferential creditors were to rank equally and the assets were to be apportioned rateably between them. The Preferential Payments in Bankruptcy Act 1888 widened that preferential group to include the Crown in the form of due rates and taxes.

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