Morris and Others v Agrichemicals Ltd and Others
| Jurisdiction | England & Wales |
| Judgment Date | 30 October 1997 |
| Date | 30 October 1997 |
| Court | House of Lords |
House of Lords
Before Lord Goff of Chieveley, Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead and Lord Hutton
Insolvency - bank loan secured on deposit account - no right of set-off
An agreement between a bank and a depositor to secure a loan by the bank to a company, which created a charge in favour of the bank over the deposit and provided that the deposit would be repayable only if all liabilities of the principal debtor had been discharged, but did not impose personal liability on the depositor was effective security, and would not, on the bank's insolvency, trigger mandatory set-off under rule 4.90 of the Insolvency Rules (SI 1986 No 1925) since there was no mutuality between the depositor and the bank.
The House of Lords so held in dismissing appeals by:
1 Rayners Enterprises Inc, the principal debtor, and Mohammed Jessa, the depositor, and
2 Agrichemicals Ltd, Bishopswood Estates, Eurofert Ltd, Solai Holdings Ltd, Solai Services Ltd, Tradeworth Ltd, the principal depositors, and Societe Generale de Gestion et Services SA against the order of the Court of Appeal (Lord Justice Rose, Lord Justice Saville and Lord Justice Millett) (The Times January 8, 1996); In re Bank of Credit and Commerce International SA (No 8)ELR ([1996] Ch 245)) upholding the decision of Mr Justice Rattee (In re Bank of Credit and Commerce International SATLRELR (The Times March 22, 1994; (1995) Ch 46)) that the four joint liquidators of Bank Credit and Commerce International SA, Christopher Morris, John Richards, Stephen Akers and Nicholas Lyle, were entitled to recover the full amount of loans made to Rayners Enterprises Inc and to the Solai group without being required under rule 4.90 of the 1986 Rules to set off the loans against deposits charged to the bank by Mr Jessa and by Societe General to secure the respective loans.
Mr John McDonnell, QC, for the first appellants; Mr Christopher Carr, QC, and Mr Michael Todd, QC, for the second appellants; Mr Michael Crystal, QC, and Mr Robin Dicker for the liquidators.
LORD HOFFMANN said that the bank had made loans to Rayners Enterprises Ltd and the Solai Group. The loans were secured by Mr Jessa and Societe General respectively, both of whom had made deposits with the bank.
Each security document purported (1) to grant the bank a proprietary...
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