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Fixed and Floating Charges

Published online by Cambridge University Press:  21 November 2001

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Extract

The Privy Council decision in Agnew v. Inland Revenue Commissioner [2001] B.C.C. 252 (on appeal from the New Zealand Court of Appeal in Re Brumark Investments Ltd.) decides that where a charge over the uncollected book debts of a company leaves the company free to collect and then to use the proceeds for its own benefit in the ordinary course of business, the charge is inevitably a floating charge and not a fixed charge, whatever the debenture might say. The court’s reason for this, in short, was that it makes no commercial sense to separate a book debt from its proceeds and so, if the company can use the proceeds at will, then the charge on the debt itself must be a floating charge.

Type
Case and Comment
Copyright
Copyright © Cambridge Law Journal and Contributors 2001

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