GEORGE COHEN (W.A.) LTD. v. COMET CONSTRUCTION CO., LTD.; GHANA COMMERCIAL BANK (CLAIMANTS)
1966
HIGH COURT
GHANA
CORAM
- EDUSEI J
Areas of Law
- Company Law
- Property Law
1966
HIGH COURT
GHANA
CORAM
AI Generated Summary
The dispute revolves around whether execution creditors or claimants hold priority over certain chattels under a debenture agreement. The judgment favors the claimants, Ghana Commercial Bank, based on established legal principles that prioritize debenture holders' rights over execution creditors.
JUDGMENT OF EDUSEI J.
The facts of this interpleader suit are briefly these. In June 1964 George Cohen (W.A.) Ltd. recovered judgment in the High Court against the Comet Construction Co., Ltd. for a certain sum of money. In January 1965, not having received payment, the judgment creditors issued a writ of fi. fa. against the chattels of the judgment debtors as disclosed in exhibit C. The chattels referred to in exhibit C are (a) one only Morris pick-up No. SG 3554 and (b) one only Morris tipper truck No. SG 1059, and the sale was to take place on 6 July 1966. When this fact of seizure came to the knowledge of the Ghana Commercial Bank, the claimants herein, they interpleaded asserting that by virtue of exhibit A, a debenture, dated 1 February 1963, the said chattels disclosed in exhibit C among other property of the execution debtors were secured to them.
Both counsel agreed that the facts in this interpleader suit were indisputable and the only question of law to be decided by this court is whether the execution creditors or the claimants have prior claim to the chattels stated in exhibit C.
This question compels me to examine the exact nature of the rights of the holders of such a debenture. That the debenture, if valid, [p.779] undoubtedly creates a charge on the assets of the company is now well established ever since: see Re Standard Manufacturing Co.1 and Re Opera Ltd.2 These cases decide that such charges prevail as against an execution creditor if the debenture is valid.
It will be observed that the chattels mentioned in exhibit C come under category 4 of paragraph (4) of exhibit A and are a floating charge. And, what is a floating charge? A floating charge which is quite distinct from a specific charge does not fasten on any definite property but is an equitable charge on property which is constantly changing, for example, stock-in-trade: see Charlesworth's Company Law (7th ed.), p. 242. Also in Gower's Company Law (2nd ed.) at p. 390 it is stated that a floating charge imposes a charge on property present and future and it allows the company to continue to deal with that property in the ordinary course of business. However, if the debenture holder, on the happening of some event stated in the debenture takes steps to have the floating charge crystallised the charge then becomes a specific or fixed charge. Crystallisation takes place, among other things, when a receiver is appointed, and in such circumstances the company, and in this case, t