Re Spectrum Plus: Difference between revisions

Line 48:

:“In my opinion the company’s ''continuing contractual right'' to draw out sums equivalent to the amounts paid in is wholly destructive of the argument that there was a fixed charge over the uncollected proceeds because the account into which the proceeds were to be paid was blocked.”

'''Lord Scott of Foscote''': <br>

:“But the intention of the parties that the charge over [[book debts]] created and fortified in this way would be a fixed charge has to take account also of Romer LJ’s third characteristic of a [[floating charge]], namely, that ''until some further step by way of intervention is taken by the chargee the chargor company can use the assets in question for its normal business purposes and, in using them, remove them from the security''.”

:“But the intention of the parties that the charge over [[book debts]] created and fortified in this way would be a fixed charge has to take account also of Romer LJ’s third characteristic of a [[floating charge]], namely, that ''until some further step by way of intervention is taken by the chargee the chargor company can use the assets in question for its normal business purposes and, in using them, remove them from the security''<ref>Emphasis added.</ref>.” [...]

:“Romer LJ’s first two characteristics, although typical of a [[floating charge]], were not distinctive of it. They were not necessarily inconsistent with a fixed charge. ''It was the third characteristic, Lord Millett said, which was the hallmark of a floating charge and distinguished it from a fixed charge''<ref>Emphasis added.</ref>.

:“I respectfully agree. Indeed if a security has Romer LJ’s third characteristic I am inclined to think that it qualifies as a [[floating charge]], and cannot be a [[fixed charge]], whatever may be its other characteristics.”

Here’s a kicker hypothetical [[obiter dicta]]:

:“Suppose, for example, a case where an express assignment of a specific debt by way of security were accompanied by a provision that reserved to the assignor the right, terminable by written notice from the assignee, to collect the debt and to use the proceeds for its (the assignor’s) business purposes, i.e., a right, terminable on notice, for the assignor to withdraw the proceeds of the debt from the security. This security would, in my opinion, be a floating security notwithstanding the express assignment. The assigned debt would be specific and ascertained but its status as a security would not. ''Unless and until the right of the assignor to collect and deal with the proceeds were terminated, the security would retain its floating characteristic''.”

This hypothetical example assumes the chargor can withdraw all the assets from the account in the meantime. But what if the withdrawal is conditional on substitution with other assets?

===Ruling===

Re Spectrum Plus: Difference between revisions

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