Buchler v Talbot
Buchler v Talbot | |
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Court | House of Lords |
Full case name | Re Leyland DAF Ltd or Buchler v Talbot |
Decided | 4 March 2004 |
Citations | [2004] AC 298 [2004] UKHL 9 [2004] 2 WLR 582 [2004] BCC 214 |
Case history | |
Prior action | [2002] EWCA Civ 228 |
Court membership | |
Judges sitting | Lord Nicholls of Birkenhead Lord Hoffmann Lord Millett Lord Rodger of Earlsferry Lord Walker of Gestingthorpe |
Case opinions | |
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Keywords | |
Priority, administration expenses |
Buchler v Talbot [2004] UKHL 9 is a
Facts
In 1992,
Judgment
The House of Lords held there was no priority for the liquidator’s expenses, and that Re Barleycorn Enterprises Ltd was wrongly decided. Lord Nicholls gave the first judgment, saying that section 175(2)(b) and its predecessors had never authorised liquidators’ costs and expenses.
29. ‘When a floating charge crystallises, it becomes a fixed charge attaching to all the assets of the company which fall within its terms. Thereafter the assets subject to the floating charge form a separate fund in which the debenture holder has a proprietary interest. For the purposes of paying off the secured debt, it is his fund. The company has only an equity of redemption; the right to retransfer of the assets when the debt secured by the floating charge has been paid off. It is this equity of redemption which forms part of the fund held on trust for the company's creditors which arises upon a winding up.’
Lord Millett gave the longest judgment, where he referred to Re Barleycorn Enterprises Ltd and why it had been mistaken.
67. ‘It may be observed in passing that this ruling was exclusively at the expense of the preferential creditors. On any view the bank was due to receive nothing by virtue of its security. The Court of Appeal's decision had the result that a statute passed for the benefit of the company's workers could well benefit the liquidator (by enabling him to recoup his expenses of administering one fund by taking them out of another for the administration of which he was not responsible) without benefiting the workers at all. A curiosity of the case is that there would have been no answer to the accountants' claim if they had persuaded the bank to release its security, which was worthless. But the bank would no doubt have refused to do so, since it was also the largest single preferred creditor.
Lord Rodger and Lord Walker agreed.
Subsequent legislation
Very shortly after the decision was handed down it was reversed by legislation under English law. Section 176ZA of the
See also
- UK labour law
- UK insolvency law