TMI Blog1936 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... not a charge, or was something different from a charge. In a case to which our attention was called Saunderson and Co. v. Clark where a matter of this kind came up for decision before Lush, J., that learned Judge pointed out what was also pointed out in Tailby v. Official Receiver, that the question involved is one of substance and not merely one in reference to the form of the document. Before dealing with the question, I think I ought to state how this question arises between these parties.(His Lordship then stated the facts and continued): there were three separate sub-contracts entered into by Ashby Warner and Co., with the head contractor. On the second contract, moneys were due within a certain period after the delivery of the materials upon the site, and, moneys having become due upon bills, the bills were not met. Before these transactions had arisen, the debenture holder had insisted upon her right to enforce her debenture, and Mr. Simmons, the respondent was, upon that made receiver for the debenture holder. Messrs. Ashby Warner Co., wrote to the company before the appointment of the receiver "As per your request to our representative Mr. John E. Blakeborou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same time to give him a letter of Assignment addressed to the solicitor of the London County Council for the sum of 536 19s. 11d." So that what they are asking for is not security for the payment of the money due to them, but an assignment addressed to the solicitor of the London County Council for the sum of 536 19s. 11d. In view of the correspondence, the National Heating Company on July 14 wrote declining an assignment for 536 19s. 11d. and expressing their willingness to give an assignment in respect of the 338 19s. 11d., the amount due on the second contract. They then go on to say: "This charge clears our account in connection with Lambeth Hospital with the exception of your invoice for 98 10s. which my directors have asked me to hold over for a few days for the following reasons. There has been nothing drawn from the London County Council during July for account of Lambeth Hospital and there is more likelihood of your being paid the sum of 338 9s. 11d. in to during July than if we made the charge for the total of your account. Furthermore there is a strong possibility of fresh capital being put into our business in the course of the next few days, and once this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st dated cheque. Now a postdated cheque, until the time has come when it has to be met, is payment; it is not a security at all. It is in fact a payment for the time being and the debt has gone when that cheque is drawn, unless, the cheque not having been met, the rule of common law prevails, that the debt revives on failure to meet the cheque. Those being the facts, we have to consider what is the position, first of all at common law, and secondly in equity. At common law a clear distinction has been drawn between a security and an assignment but the common law failed to recognise that any common law rights could be created by an order for payment of a sum out of a larger sum. It was not regarded at common law either as a security or as an assignment. But equity, which now prevails in all Courts did justice to the party who obtained an assignment of part of a larger sum by holding that that assignment gave him an equitable claim on the fund when the fund came into existence. Following the principles stated by Lush, J., in Saunderson Co. v. Clark it seems to me that the Divisional Court were clearly right holding that this was not a case of the giving of a security at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter and having regard to the surrounding circumstances, I am satisfied the learned Judges were right in saying this was not a charge and was therefore not avoided by the provisions of Section 79 because it had not been registered. That disposes of the main question in this case, which is the one I have attempted to describe. I have come to the conclusion that the learned Judges in the Divisional Court were right in the view they took and, so far as that point is concerned, the appeal will be dismissed. But another point was raised to this effect, that an order ought not to be made in favour of the receiver for the whole amount of the 338, but that there should be a set off against that of the 301 which was the expense the contractor was put to in order to complete that which he would have completed by Messrs. Ashby Warner Co., if the transaction had gone through and if the head contractor had not, by parting with his business to the receiver, requdiated liability to the sub-contractor. I speak with some hesitation on a question of that sort, which depends upon matters of equity, but we have had an opportunity of discussing the question with Greene, L.J., and kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction, a right against a company which was proved to be insolvent. Therefore, so far as I am concerned, it seems to me clear beyond question that this document was not a hypothecation, but was intended to be an absolute assignment up to the amount specified in satisfaction of that part of the debt. On that assumption, the appellant's second argument on the section is to this effect: that in the case of book debts, a charge within the meaning of the section includes an equitable assignment of part of a book debt that is to say it includes an abolute equitable assignment and is not confined to assignments by way of hypothecation. Why he should confine that proposition to book debts and not extend it to all the other items of property mentioned in the section in respect of which the word "charge" is used, I for one, am unable to follow. The proposition involves this, that the word "charge" in this section is used in a sense which covers any equitable assignment of an interest in a fund consisting of book debts. Let me see what that means. It means that if a person, being a creditor in respect of book debts, creates in respect of those debts an equitable interest in a third perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of charges which fall under the section, one of the matters to be entered is the amount secured by the charge. I need not carry the matter any further, but if judicial opinion is required it will be found in the judgment of Romer, L.J., in the case of Inglefield, Ltd., In re. The passage begins 101 L.J. Ch. at p. 371; (1933 Ch. at p. 27). I do not cite it, but the learned Judge, in dealing with a case which it was alleged fell under the section, draws a distinction between transactions of sale which do not fall under the section and transactions of mortgage or charge which do, and he examines the characteristics of the latter class as distinguished from the former class, and shows exactly what the line of demarcation is. It is clear that the learned Judge was dealing there with what is really the subject-matter of this section, and although the case with which he contrasts mortgage or charge is a case of sale, the reasoning applies to every case of an absolute assignment, by which I mean a non-hypothecation assignment, whether it be by way of sale for cash, or whether it be made in consideration of the release of a debt, or in consideration of the transfer of property, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sub-contractors are to give credit for the amount which the receiver has expended in that way. I myself have endeavoured to understand on what principle such an equity could be said to be based, and I am afraid that I have been unable to understand it. It is to be observed, when the circumstances of this case are looked at, that the receiver was taking up this attitude. He was saying: 'The document written to the London County Council was written without authority of the board of directors of the company, and I repudiate it: and what is more, I propose to go on and get this contract finished, and I am preparing to do so, and inviting the sub-contractors to tender for the work. If any inference is to be drawn from the correspondence and from the attitude of the receiver disclosed therein, it appears to me to be this, that the receiver thought it was good business to take up that attitude and, as he was repudiating the letter of assignment and going on with the work, the inference I should draw would be that he was not doing it out of kindness to the sub-contractors so that they could get payment, but he was doing it because he thought it was good business, and very good business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork, he is perfectly entitled, if he is so advised, to bring such an action. Whether he would succeed upon it is another matter, having regard to the correspondence which took place. However, I say nothing about that, because, whether or not the receiver in the name of the company, has got a claim in damages for breach of contract in respect of non-completion of the works by the subcontractors, it seems to me quite impossible to suggest that there is any reason why the sub-contractors' assignment which they took, and took for value at the time, should not be given its full effect. It cannot alter the nature of that document; it cannot go to the rights of the sub-contractors under it, and if there be any cross claim in damages for breach of contract, it is not one which can be given effect to in these proceedings. I think I have done justice to both points as put by each counsel for the appellant. If there be any difference between them, my view is that on neither ground is there any right in the receiver to claim to have credit in account for the expense to which he was put in respect of the work: nor is he entitled to say that the sub-contractors are not entitled to payment, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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