Citation(s) [1904] AC 355 | ||
Prior action(s) [1903] 2 Ch 284, known in the Court of Appeal as Re Yorkshire Woolcombers Association Court Court of Appeal of England and Wales Similar Re Brumark Investme, Re Spectrum Plus Ltd, National Provincial Bank v C, British India Steam Na, British Eagle Internatio | ||
Illingworth v Houldsworth or Re Yorkshire Woolcombers Association [1904] AC 355 is a UK insolvency law case, concerning the taking of a security interest over a company's assets with a floating charge. In the Court of Appeal Romer LJ held that a key to a floating charge, as opposed to a fixed charge was that the company can carry on its business with assets subject to the charge.
Contents
Facts
The Yorkshire Woolcombers Association Ltd had borrowed money from various guarantors, and in a trust deed of 23 April 1900, it said it was giving a floating charge to the guarantors to secure the money. Further guarantees were given to the guarantor's bank, the Bradford District Bank Ltd, and the guarantors were pressing for repayment. With debts still outstanding, the Association organised a further deal on 25 October 1902. Mr Frederick Illingworth, on behalf of the guarantors, agreed with the Association to have a charge over the company's book debts. It called this an "indemnity and specific security", and said that being assigned were “all and singular the book and other debts now owing to the association, and also all and singular the book and other debts which may at any time during the continuance of this security become owing to the association (but not including uncalled capital of the association), and the full benefit of all the securities for the said present and future book and other debts”. On 21 November 1902, Mr Illingworth appointed a receiver to call in the book debts (a large sum, amounting to £71,000). Receivers of the other creditors were quickly appointed on 25 November, and contended that the deed from 25 October 1902 was void, because it was not registered, as floating charges were meant to be, under the Companies Act 1900 section 14(1) (now CA 2006 section 860).
Court of Appeal
The Court of Appeal held that the charge in question was floating, and so was void because it was not registered. Vaughan Williams LJ gave the first judgment. Romer LJ said a charge is "floating" if it (1) is a charge on present and future assets (2) the class of assets changes in the ordinary course of business, and (3) the company can deal with the assets in business as usual.
House of Lords
The House of Lords affirmed Romer LJ's decision. Earl of Halsbury LC held the following.
Lord MacNaghten agreed.
Lord James and Lord Lindley concurred.