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TMI Blog1966 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to be the sum used for wages for which the bank is entitled to priority if it is entitled to any priority at all. The liquidator denies that it is, and his argument, in a nutshell, is set out in his solicitors' letter dated May 7, 1965. In that letter, after referring to section 319 (4), they say :. "It is, therefore, essential to the bank's right of priority that the money was advanced for the purpose of being paid to a servant on account of wages. There is no doubt that the company drew money for this purpose, but the test is whether the bank had this purpose in making the advance. The bank have so far produced no evidence to the liquidator that the sum in respect of which they claim priority was advanced to the company for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the remainder to "Wages". The details of the manner in which payment was required were written on the backs of the cheques, and on every occasion the bank manager or his assistant declined to honour the cheque until he was satisfied that a payment or payments substantially equal to or exceeding the amount for which the cheque was drawn would shortly be paid in. The bank lodged a proof in the winding up for the money said to have been advanced to the company for the purpose of paying wages, that proof was rejected by the liquidator and the bank appealed. It is, I think, instructive to see what the arguments of counsel were in that case. Mr. Philip Sykes, for the National Provincial Bank, argued as follows [1950] Ch 561, 563 564 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictionary and Stroud's Judicial Dictionary (2nd ed.)]. The bank had a purely commercial basis in making these advances : they were not made for the 'purpose' of paying wages. The bank may have expected that, in the ordinary course of business, some of the money which they advanced would be spent on wages ; but they had no real 'purpose' , in making the advance, that it should be so spent." Wynn-Parry J.'s judgment, so far as it deals with the point with which I am concerned, is as follows. He said Ibid. 565 : "It is to be observed, in regard to sub-section (4), that there is no obligation upon the person seeking to rank as a preferential creditor to show that the money advanced for the purposes specified paragraph ( a ) and ( b ) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test as a halfway house between, on the one hand, an agreement or arrangement (which In re Primrose ( Builders ) Ltd. [1950] Ch 561 decided was unnecessary) and, on the other, the view that the bank makes an advance for a purpose whenever it knows the customer's purpose in drawing the money in question. He submits that the existence of the arrangement for drawing money at Alston is wholly irrelevant to the problem in issue, and that the problem would have been exactly the same if the money had been drawn at Newcastle. He distinguishes In re Primrose ( Builders ) Ltd. [1950] Ch 561 on the ground that there, unlike the present case, the facts satisfied the "discretion" test since, as I have already indicated, on every occasion on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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