1964 (6) TMI 38

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.... the bank manager to the company's secretary on the day that the wages account was opened would, as counsel for the bank admitted, have been appropriate and effective only if the current account had been then in credit. His Lordship continued :] The bank's entire proof as a creditor is in a much larger amount but upon this summons I am only concerned with the question of what part of the debt is preferential. The liquidator's grounds for rejecting the bank's preferential claim, except as regards the sum of GBP7,886 6s. 1d., are as follows : "(1) That your wages account separately maintained in accordance with express arrangements made with the company is the only account on which monies have been drawn by the company for the purpose of p....

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....the company. In other words, there was no payment by the company to the bank. The effect of the cheques as drawn and handed over in accordance with the arrangement made between the bank and the company was not to discharge any part of the company's indebtedness on wages account but merely to transfer a part of this indebtedness to a different account, namely, current account. This transfer in account could not, I think, operate to alter the character of the indebtedness-i.e., as being an advance made for the purpose of paying wages. It follows that this original indebtedness still subsists and qualifies for priority under section 319(4). I was referred in this connection to Paton v. Inland Revenue Commissioners [1938] A.C. 341 ; 54 T.L.R....

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....heeler for the liquidators contends that each cheque drawn on the current account operated to discharge a corresponding part of the original indebtedness on the wages account, bringing into existence an entirely new debt which could not properly be described as an advance for the purpose of paying wages. For the reasons which I have given I do not think that it is right to say that new debts were thus brought into existence in substitution for the original debts; but I should add that even if this were so I am by no means persuaded that the new debts should themselves be regarded as something other than advances for the purpose of paying wages. On the basis that the transfers from current account to wages account were, indeed, repayments....

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....] Ch. 528; [1962] 3 W.L.R. 900 ; [1962] 3 All. E.R. 400 ; [1963] 33 Comp. Cas. 76, where Plowman J. said [1963] Ch. 528, 543 ; [1963] 33 Comp. Cas. 76, 88: "No authority was cited for the proposition that Clayton's case (supra) cannot be applied to borrowing on each of a number of concurrent accounts and I can see no reason why the existence of more than one account should of itself prevent the application of Clayton's case (supra) to each account separately." I respectfully agree with that statement. That decision has subsequently been affirmed by the Court of Appeal [1963] 3 W.L.R. 406 ; [1964] 2 All. E.R. 849 ; [1964] 34 Comp. Cas. 847 , C.A. I have not seen the judgment but I am told that there is nothing in the judgment which conflicts....