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Well on a first look it's wrong, for all the reasons Andrew Tettenborn suggests, isn't it? From the point of view of the preferential creditors they should have an action against the liquidator. Kevin Garnett QC giving judgment goes into the question and suggests that preferential creditors have a claim against a receiver for failing to pay them first before the floating chargee [para 20]. By parity the preferentials have a claim against the liquidator. This seems reasonable enough to me. The liquidator has a statutory duty and has failed (on the face of it) to carry it out. Whether the preferentials have a claim against NatWest is the big question. NatWest is clearly enriched. There has clearly been a mistake. Yet the preferential creditors never had the money. Further they were only ever owed the money. They have to say that were it not for the mistake (breach of duty) of the liquidators they would have been paid. Kevin Garnett, I think, hints this might work in para 20. Shades of interceptive subtraction ...

It seems needlessly complicated to me. Intuitively we want to let the liquidator sue, and then sort it out.

Duncan

Dr Duncan Sheehan
Postgraduate Admissions Officer
Norwich Law School
University of East Anglia
Norwich NR4 7TJ
United Kingdom

-----Original Message-----
From: Enrichment - Restitution & Unjust Enrichment Legal Issues On Behalf Of Andrew Tettenborn
Sent: Tuesday, May 11, 2004 11:29 AM
Subject: [RDG:] "at the expense of" - again

Hi all:

A slightly rum decision on "at the expense of" in the ChD: Re BHT (UK) Ltd [2004] EWHC 201.

Natwest took a charge over the book-debts of BHT, which duly went belly-up in 1992. The liquidator made distributions ahead of the pref creds to Natwest on the assumption that the charge was fixed. As a result of Brumark [2001] 2 AC 710, it then appeared that the charge was probably a floater, not a fixed charge. Could the liquidator recover the payments from Natwest on the basis of mistake or some other form of UE? No, says the Dep Judge. The defunct company, if it recovered, would have to hand over the sums to the pref creds: it had therefore suffered no loss, and the enrichment wasn't at its expense.

Can this be right? On the logic of this decision, it seems to follow that if the only effective creditor of a company is a pref cred, no liquidator could ever recover in UE in respect of the company's funds wrongfully paid away. Or am I missing something?