Source: All England Reporter
Publisher Citation: [2016] All ER (D) 18 (Nov)
Neutral Citation: [2016] EWHC 2650 (Ch)
Court: Chancery Division, Leeds District Registry

Norris J

Representation Hugh Jory QC (instructed by Gordons LLP) for the joint administrators.
  Graham Sellers (instructed by Walker Morris) for the trustees.
  Louis Doyle (instructed under the Direct Access Scheme) for M.
Judgment Dates: 26 October 2016


Equity - Marshalling - Charge - Subrogation - Unjust enrichment - Partnership operating haulage business and farming business - Bank having two securities in support of lending to partnership (agricultural charge and third party legal charges over 'Penrith' farms) - Fourth respondent (M) having right to resort to one security (in respect of Penrith farms) in support of lending to partnership, to company connected to partners and to partners personally - Bank electing to look to Penrith farms for repayment of partnership indebtedness - Applicants joint administrators of partnership seeking to make distribution and applying to court for directions - Whether proceeds of assets within scope of agricultural charge should be made available to M as a result of marshalling, or to trustees in bankruptcy of partners (trustees) as result of subrogation - Whether trustees having claim based on unjust enrichment - , , - Insolvent Partnerships Order 1994, .

The Case

Equity Marshalling. The Chancery Division ruled on an application by the joint liquidators of a partnership (in administration) for directions, under para63 of SchB1 to the . The court held, among other things, that the fourth respondent, who had loaned money to the partnership, was entitled to claim the proceeds of assets subject to an agricultural charge by the application of the principle of 'marshalling' and to prove as an unsecured creditor in the administration for any shortfall, in circumstances where a bank had had the right to resort to two securities in support of its lending to the partnership and where the fourth respondent had had a right to resort to one security in support of her lending to the partnership, a company connected to the partners and to the partners personally. The court further held that the trustees in bankruptcy of the partners did not have a claim based on unjust enrichment and were not entitled to claim in the administration of the partnership by operation of the doctrine of subrogation.

Practice Areas

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