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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?

Best

Andrew

Andrew Tettenborn MA LLB
Bracton Professor of Law

Tel: 01392-263189 / +44-392-263189 (international)
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