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TMI Blog1933 (1) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... business men. I therefore come to examine the facts which are before us relating to this transaction. We find those facts in three affidavits. The first is an affidavit of Mr. Tipper himself, and he, in paragraphs 5 and 6, tells the story: "The company carried on the business of hardware merchants, and after I had acquired shares in it, the firm of Arthur Tipper, of which I, together with Fred Taylor and my son Harry Tipper, both of whom are respondents to this summons, are the partners, supplied it with large quantities of goods. According to the usual credit terms in this class of trade, goods supplied in one month should be paid for in the course of the ensuing month, but, notwithstanding this, between June, 1931, and February, 1932, Messrs. Arthur Tipper supplied to the company goods to the total value of 2,386 11s. 10d., against which they received payments only to the amount of 432 7s. 10d., leaving a balance of 1,954 4s. outstanding on February 29, 1932." Then he says : "In the latter part of March, 1932, the company's financial position was difficult, though not, as I thought, desperate; I was confident that if further money were provided it will overcome its difficulti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be paid, and that if this amount were paid Arthur Tipper should continue to supply goods on credit to the company, in order to keep the business of the company going." Now it is important to observe that Eve, J., has found that there was no fraudulent preference in the present case by the' payment of the 1,954 to Arthur Tipper. That was an alternative case which was presented by the liquidator. He has therefore found, and indeed in express terms has said, that it was a case to which the word "fraud" could not be attached. This is therefore to be looked at as an ordinary transaction between business men, based on sound business views, and, after reading, those paragraphs, what is the summary of the position? It is this: (1) that the company's business was worth saying; (2) that in order to continue its business it must still have goods supplied to it; (3) that Arthur Tipper were the firm from which further goods could be obtained on credit; and (4) that if that credit were to be obtained, and if Arthur Tipper should continue to supply goods on credit, in order to keep the business of the company going, it was right that the debt then owing, down to the end of February, to Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of a debt then outstanding, whereby they were able to secure the continuance of supplies from Arthur Tipper, the firm. With regard to the rest, there is no question that it is a payment in cash, but it does not seem right to separate the transaction into two parts. It was all one transaction- 3,000 would enable the company to go on, one important limb that being a continuation of the supply of goods on credit from Arthur Tipper. That, to my mind, on an examination of the facts from that point of view, is sufficient to answer the claim now made by the liquidator; but it is said that two cases show that the interpretation that I have suggested for this section is not a valid one. The first is a case which case before Parker, J., as he then was, Orleans Motor Co., In re; Symth v. The Company [1911].80 LJ Ch. 477; 2Ch. 41. To my mind that case must be examined in relation to the facts which were before the learned Judge. It was a case in which certain cheques passed through the company's hands, but were never part of the company's assets to do what it liked with, since the company was under an obligation to hand them to the bank in discharge of an overdraft. The debentur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany for the purpose of meeting a liability already incurred, if that were cash paid to the company, then the security stands good, in spite of the observation or criticism which may be passed upon the particular intrepretation of Parker, J.'s, words. For these reasons I have come to the conclusion that we are not able to accept Eve, J.'s, decision, and the order will be that the application of the liquidator to have it declared that the debenture was invalid to the extent of 1954 be dismissed. Slesser, L. J. I am of the same opinion. The question which has here to be considered is whether the 1,954 4s., part of the 3000 on which the floating charge was granted, was in respect of any cash paid to the company, because, to the amount of any cash paid to the company, by section 266 of the Companies Act, 1929, the floating charge may be valid, notwithstanding that it might otherwise be invalid in that it had been created within six months of the commencement of the winding-up. Now attempts have been made to give some strict legal limitation to the words "to the amount of any cash paid to the company." Astbury, J,, in the case of Hayman, Christy and Lilly, Ltd., In re; Chris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of a past debt, the result of which would have been, if it was good and the security was good, that the unsecured debt of the Tipper partnership would have been converted into a secured debt in the hands of Mr. Tipper." I understand, and I follow what the learned Judge indicates when he speaks of it not being a payment to the company if it were a case of returning to the lender a portion of the money he had paid; but here as he points out, the person who is owed the money is the Tipper partnership; not the lender, but three persons the nature of whose holdings we are not told, Mr. Tipper senior, Mr. Tipper junior and a Mr. Fred Taylor, a different firm from Mr. Tipper himself. It is not a case, on the evidence, of a transaction to return the money to the lender. But apart from that I cannot for myself read into the section the limitation that money cannot in any circumstances be cash paid to the company if it be in discharge of an antecedent debt. It may or may not be. It appears to me that, reading the language, one has to consider whether there was cash paid to the company a substantial payment of cash and, excluding the limitation which Eve, J., has imposed upon himself, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he money paid by the lender does not, in my opinion, cease to be cash paid to the company merely by reason of the imposition of that condition. There are, of course, certain considerations for the issue of a debenture which plainly do not amount to payments in cash. Where, for instance, an existing creditor of a company takes a debenture from the company to secure the amount of his debt on the terms that he shall not immediately press for payment of his debt, or where he takes a debenture for the amount of his debt on the terms that the debt itself is to be extinguished, obviously no cash passes from the debenture holder, the lender, to the company. If in such a case the lender goes through the form of drawing a cheque in favour of the company for the amount of his debt, on the terms that the company shall forthwith itself hand to him in exchange a cheque for the same amount, in one sense it might be said there has been a payment in cash; that is to say, that in form there has been a payment in cash. But in such a case there has not been a payment in cash if one looks at the substance, and not at the form, and in considering whether there has been a payment in cash within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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