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GAZETTE
JULY/AUGUST
19
BOOK REVIEWS
Bank
Security
Documents
by J.R.
Lingard.
Butterworths, 1985. 367pp. Stg.£30.00
In recent years, when preparing security documents
for a creditor the practitioner has had to have at the
forefront of his mind the very distinct possibility that
the security will be enforced by the creditor, or will be
used by the creditor to recover monies following the
appointment of a liquidator to the debtor. A mistake in
a security document, whether through an oversight or
insufficient knowledge can indeed be extremely costly to
a practitioner.
The text of
Bank Security Documents
under the
authorship of James Lingard, a leading London
practitioner, is admirably set out allowing easy and
pleasant reading.
The book is divided into four parts, the first of which
deals with searches, Memorandum and Articles of
Association, minutes, registration formalities, facility
letters, guarantees and commercial benefit to
guarantors as well as pitfalls such as fraudulent
preference and retention of title. The second part covers
in detail the covenant to pay and other covenants, fixed
and floating charges, enforcement provisions and
syndication clauses. In the third part there is a detailed
chapter on guarantees as well as ample treatment of
land, shares, life policies and deposits; pledges and trust
receipts are covered particularly well. The fourth part,
which amounts to nearly 100 pages, sets out ten
precedent security documents. Apart from the legal
charge of freeholds and leaseholds, very little
amendment is required to the remaining nine security
documents to make them suitable to this jurisdiction.
Specialised securities relating to agriculture, ships and
aircraft are not dealt with.
The author, being the practitioner that he is, has not
except in a few instances mentioned case law from other
common law jurisdictions — perhaps a reflection on
how a matter would be dealt with by an English Court.
It does mean though that the Irish reader must bear in
mind among others the decisions in
Industrial
Development Authority
-v-
Moran
[1978] IR 159,
Lombard & Ulster Banking (Ireland) Limited
-v-
Amurec Limited (In Liquidation)
[1978] 112 ILTR 1,
Northern Bank Finance Corporation Limited-v-
Quinn
(8 Nov. 1979 unrep.),
Welch
-v-
Bowmaker (Ireland)
Limited
[1980] IR 251,
Crowley -v- Northern Bank
Finance Corporation Limited
[1981] IR 353,
Ulster
Investment Bank Limited
-v-
Euro Estates Limited and
Drumkill Limited
[1982] ILRM 641 and the numerous
Irish decisions on retention of title.
In his preface the author points out that many
important issues in security remain undecided partly due
to the reluctance of parties to incur the cost of going to
Court. This might include, for example, fixed charges
over machinery. On this the author suggests that a fixed
charge over machinery that would be regarded as a fixed
asset rather than a current one can be created if the
security contains a covenant precluding the mortgagor
from disposing of the machinery without the
mortgagee's prior written consent as well as a covenant
to keep the machinery in good repair. It is interesting to
note that Ireland could be considered a step ahead of
England in at least one aspect as the author remarks in
his preface that "Banks have recovered large sums from
fixed charges over book debts, but preferential creditors
(even the Inland Revenue) have made no serious
challenge."
There are numerous words of advice and warning to
practitioners, for example, in chapter 1 a point which
can be overlooked easily — "some poorly drafted
memoranda do not give adequate power to charge in
support of a guarantee," or in chapter 3 where reference
is made to the case of
Esberger & Sons Limited -v-
Capital & Counties Bank
[1913] 2 Ch. in which a
company deposited with a bank an undated charge
which was dated some months later and registered by
the bank; the security was held to be void as it had not
been registered within 21 days of execution and delivery
to the bank.
The author has drawn on his experience to write a
really practical and worthwhile book, without
burdening the reader with a mass of case law. Cases
though are used to illustrate in a most lucid fashion
particular points of current interest, such as commercial
benefit for a guarantor and automatic crystallisation
clauses.
Although the author deals with the law applicable
only to England, the differences in the application of
the laws of England and Ireland for debentures and
charges are minimal (even though the legislation itself is
different). This book is not only recommended, if not
essential, reading for practitioners who prepare and
advise on facility letters, debentures, charges and
guarantees, but it should prove very beneficial to
practitioners called upon to advise persons giving such
security. Although this publication may not contain all
the answers to security problems, practitioners who
purchase it will not be disappointed either by its content
or style.
William Johnston
•
Irish Law Reports Monthly 1980. Round Hall Press,
1986. £75.00.
The Round Hall Press (with its editor, Bart D. Daly
and its Editorial Advisors and Board) are to be
complimented on producing this selection of previously
unreported cases for 1980 (to be cited as "[1980]
I.L.R.M.").
Among the thirty-five cases included are:—
- Colgan
-v-
Connolly Construction
Company
(extent of the liability in negligence of a builder of
a house to an ultimate subsequent purchaser).
- Portland Estates
-v-
Limerick Corporation
(the
date of valuation of land for the purpose of
compensation for compulsory acquisition).
- Wall
-v-
Hegarty
(the duty of care owed by a
solicitor to a prospective beneficiary under a
Will).
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