HL Deb 23 October 1985 vol 467 cc1250-1

215A The Lord Bruce of Donington to move, That this House do disagree with the Commons in their Amendment Aft) 215, but propose the following amendment in lieu thereof:

215B Page 70, lien 1, leave out ("supplied, to") and insert ("or services supplied, to or for")

Lord Bruce of Donington

My Lords, I beg to move that the House do disagree with the Commons in their Amendment No. 215, but propose Amendment No. 215B in lieu thereof. This amendment has been made in order to assist in the clarification of a particular subsection of Clause 87 in Bill No. 127. Bill No 127, which is the Bill which has come from the Commons, says at Clause 87(1): Subject to the provisions of this section a floating charge on the company's undertaking of property created within the tolerance period is invalid except to the extent of the aggregate of—

  1. (a) the value of so much of the consideration for the creation of the charge as consists of money paid, or goods supplied".
Amendment No. 215, moved by the noble Lord, inserts the word "services". The amendment that I seek to make is an endeavour to help the noble Lord in clarifying the position further because it does not deal with amounts paid for or on behalf of the company. Payment of a cheque by a bank is not a payment to a customer; it is for a customer.

The amendment is essentially not to prejudice the floating charge given normally to secure current cheque accounts. That is the reason for the insertion, in substitution for the words in the original Bill, and in the amendment, of the words "or services supplied, to or for". Having clarified that position, I hope that the noble Lord will see the force of it and will see his way to accept the amendment.

Moved, That this House do disagree with the Commons in Amendment No. 215 and propose Amendment No. 215B in lieu thereof.—(Lord Bruce of Donington.)

The Deputy Speaker

My Lords, the Question is that the House do disagree with the Commons in their Amendment No. 215 and do propose Amendment No. 215B in lieu thereof.

11.15 p.m.

Lord Lucas of Chilworth

My Lords, it has been established in the 1965 case of the Yeovil Glove Company Ltd. and Thomas Mortimer Ltd. that, where a company instructs a third party to make a payment to a creditor of the company, then the payment is deemed to have been paid to the company. The provisions of Clause 87 in no way alter the existing legislation and our initial view was, in the light of case law, that there was no need to deal with the matter in the clause. We have, however, reconsidered the position in the light of the noble Lord's amendment and now conclude that there is no overriding objection to specifying the position in the statute.

I regret, however, that I am not able to accept the noble Lord's amendment, because to include it would suggest that we are in some way seeking to change the existing case law by going further and providing that any payment made for the company, even where it is not made to extinguish an existing debt of the company, will constitute good consideration. We do not think it desirable to go this far, and I am not really sure that the noble Lord in fact intended it to do so. I would ask the noble Lord to withdraw his amendment and accept instead the Government Amendments 221A to 221D inclusive.