The Gazette 1992

GAZETTE

APRIL 1992

An argument can be made that the proviso "cash paid to the company" should be narrowed as far as possible. Unfortunately Barron J's reading would not so much narrow the proviso as change its meaning and also change the law. As suggested above "cash p a i d" implies the normal rules of loan and repayment; to alter that meaning goes far beyond any restrictions previously imposed on the meaning of a proviso. If as Barron J suggests the proviso in its ordinary meaning undermines the overall effect of Section 288, it must be taken that the legislature intended this. It is a very old rule of construction that if the general words and the proviso conflict, the proviso must prevail, as it, so to speak, has the last word. 40 Rule against futility Finally, Barron J might have invoked what may be called the rule against futility. His view that the proviso read in its natural meaning would thwart the intention of the legislature was shared by Harman LJ in Yeovil Glove Company. Was he then entitled to find that the proviso must be given a meaning other than the usual, to make Section 288 workable? The limits of the "Rule against Futility" were set out by Lord Shaw in Shannon Realities Ltd. -v- Ville de St. Michel": "Where the words of a statute are clear they must of course be followed; but in their Lordships opinion where alternative constructions are equally open that alternative is to be chosen which will be consistent with the smooth working of the system which the statute purports to be regulating; and that alternative is to be rejected which will introduce uncertainty friction or confusion into the working of the system". 42 TVvo difficulties arise in applying this rule to Section 288. In the first place, in the writer's view, the words of the proviso are clear, which as the passage above shows, excludes any rule except that of literal intrepretation. Secondly, even if the proviso is ambiguous, so that a rule of " smoo th working" would

8. At page 12 of his unreported judgment. 9. See Station Motors Ltd. -v- A.LB. [1985] I.R. 756; Re Primrose Builders Ltd. [1950] Ch. 561. 10. Leach -v- R [1912] A.C. 305; 11. Including Rules of Procedure - see In Re East London Railway Company (1890) 24 Q.B.D. 507. 12. Re Fitzgerald supra. 13. [1964] I.R. 1. 14. (1925) 4 Legal Decisions Affecting Bankers p.3, [1965] 1 Ch 186 (Note). 15. [1965] 1 Ch. 148. 16. See the remarks of McCarthy J in " Irish Shell -v- Elm Motors [1984] I.R. 200 at 225 to 227 on the view of Costello J. in the Court below (page 212). 17. [1964] I.R. 1 at 13 to 14. 18. His grasp of the relevant law seems to have been rather shaky but this may be explained by the judgment apparently being ex tempore. 19. Reported at [1963] Ch 528. 20. In Re Sherry (1884) 25 Ch. D 692; Deeley -v- Lloyds Bank Ltd. [1912] A.C. 756. 21. [1965] 1 Ch. 148 at 172 to 173. 22. [1985] I.R. 756. 23. [1950] Ch. 561. 24. [1985] I.R. 756 at 765. 25. See Paget on Banking (10th Edition) at pages 242 to 243. 26. See In Re Fitzgerald [1925] 1 I.R. 39, 42. 27. See in particular Leach -v- R. [1912] A.C. 305. 28. See Burge -v- Ashley and Smith Ltd. [1900] 1 Q.B. 744. 29. As to necessary implications, see In Re East London Railway Company (1890) 24 Q.B.D. 507. 30. The amended wording inserted by Section 136 of the 1990 Act reads "Money actually advanced or paid or the actual price or value of goods or services sold or supplied". 31. (1867) L.R. 1 C.C.R. 90. 32. (1867) L.R. 1 C.C.R. 90 at 95. 33. (1584) 3 Co. Rep. 7A. 34. Ibid. 35. Notably Re Columbian Fire Proofing Company [1910] 2 Ch. 120. 36. See page 15 of his Judgement. 37. Re Tabrisky, ex parte the Board of TYade [1947] Ch.565. 38. [1910] P. 57. 39. [1910] P. 57 at 125. 40. See Attorney General -v- Chelsea Water Works Co. (1731) 1 Fitzg 195. 41. [1924] A.C. 185. 42.[1924] A.C. 185 at 192/193. 43. See Nokes -v- Doncaster Amalgamated Collieries Ltd. [1940] A.C. 1014 at 1022 per Viscount Simon L.C. Christopher Doyle, BL. •

normally be allowable, there is no precedent for applying such a rule in a manner which would change the Common Law. Although it has been suggested 43 that a court chosing between alternatives may choose a meaning which alters the law, it is suggested that it should be very slow to do so. Conclusion One must conclude, however reluctantly, that the earlier decisions were right and that there is no ground for reading the Section 288 proviso in a way which excludes the rule in Clayton's case. It is understood that Barron J's judgement is under appeal. Should the Supreme Court reverse him on the plaintiff's entitlement to the benefit of the proviso, it will undesirable the literal reading of the proviso may be, there are insufficient grounds for applying any other rule of intrepretation and any reform must be left to legislation. "One must conclude, however reluctantly, that the earlier decisions were right and that there is no ground for reading the Section 288 proviso in a way which excludes the rule in Clayton's case." be forced to construe it. One would suggest that however NOTES 1. Barron J. 1 February, 1991, Unreported. 2. Devaynes -v- Noble, Clayton's case (1816) 1 Mer 572. 3. Re Thomas Mortimer (1925) 4 Legal Decisions Affecting Bankers p.3, [1965] 1 Ch.186 (Note). 4. Re Yeovil Glove Company (1965) 1 Ch. 148. 5. Re Daniel Murphy [1965] I.R. 1. 6. It is unlikely that the altered wording affects the point at issue here however. 7. In Re Daniel Murphy the difference was about £4,700; in Re Thomas Mortimer it appears that about £51,000 was at stake.

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