Rights in Security Flashcards
Types of security?
> personal e.g. cautionary
> real e.g. asset
- proper
- improper
Albatown v Credential Group
- parasitic nature of security
- standard security unenforceable where secured obligations had been extinguished
Hewitt v Williamson. What case endorsed this view?
- creditor granting security over an asset belonging to a third party was treated as caution
- Smith v Bank of Scotland
What was removed by Mercantile Law (S) Act?
“discussion and division”
- must now be supplanted by agreement
- discussion = co-cautioner pro rate share of debt only where all cautioners asked
- division = cautioner only pays where all reasonable steps taken to enforce debt against principal
RBS v Rankin
- example of non-operative misrepresentation which will not strike down a cautionary obligation
- cannot escape liabiltiy through turning blind eye to financial position of debtor
Young v Clydesdale Bank
- creditor has general duty of good faith
- reliance only at time information sought
- cannot rely on silence to cover position
- cautioner must investifate own position
Royal Bank v Greenshield
- principal failed to discharge debt
- cautioner resisted action for payment
- Held: no general duty of disclosure
Barclays Bank v OBrien
- requirement in certain relationships for notice of acquiring legal advice
- creditor must have actual or constructive notice of particularly close relationship
- bank should send notice to gain independent advice
Smith v Bank of Scotland
- general duty of cautioner is to make necessary enquiries of own interest
- BS had not suggested independent legal advice
- BS had constructive notice of misrepresentation made by S’s husband
- S’s appeal against action for reduction allowed
Braithwaite v Bank of Scotland
- related to assignation of shares
- transaction could not be reduced, steps not fulfilled:
- breach of duty of good faith
- actionable wrong
RBS v Wilson
- additional requirement of gratuitous obligation
- independent legal advice alone is sufficient
- calling up notice must be used to enforce heritable security if sale is desired remedy
RBS v Etridge
- quality of advice is also required in relation to independent legal advice
- e.g. face to face meeting
- this approach was rejected by Sco court in RBS v Wilson
Veitch v National Bank
- fluctuating amount subject to liability ceilings
- payable amount is ascribed to both guaranteed part of debt and non-guaranteed part of debt
Mackinnon
“double ranking”
- cannot rank for same debt twice on insolvency
Hamilton v Western Bank
Pledge
- creditor retains possession otherwise security lost
- must fulfill publicity principle
- delivery
Armour v Thyssen
- retention of title clause in SoG is an improper security
Tay Valley Joinery v CF Financial Services
- trust used to hold debts
- security as part of invoice discounting arrangement
- improper security
Carse v Coppen
- floating charge did not comply with registration of Sco property law
- repugnant with principles of Scots law
NCB v Telford
- floating charges confer no real right prior to attachment
Forth and Clyde Construction Co v Trinity Timber
- floating charge attaches to incorporeal moveables as if it were assignation in security
Sharp v Thomson
- heritable property: floating charge attaches as if it were a standard security
AIB Finance Ltd v Bank of Scotland
- floating charge and standard security granted on same day
- negative pledge clause included
- floating charge ranks ahead
- standard security is only created when registered in land register
MacMillan v T Leith Developments Ltd
- charge is postponed to effectually exectuted diligence
- executed if not struck down by s24 of 2016 Act
- inhibition cannot be within 60 days of liquidation
Tay Valley Joinery
- Held: floating charge would not attach to property held in trust
- floating charge limited to general patrimony
