As part of his engagement with problems of credit and security (including, for example, set-off, and, more recently, the use of electronic and non-fungible tokens and their derivatives), Louis Doyle KC maintains a keen interest in the related doctrines of marshalling and subrogation, areas which were to the fore when he appeared on behalf of the successful applicant, Lady Lynne Morrison, in Re Dent (in administration) [2016] EWHC 2650, [2017] Ch 422, [2017] 3 WLR 198, a case extending to the inter-relationship between those two doctrines, security created under the Agricultural Credits Act 1928, partnerships and bankruptcy. (The judgment opens – inaccurately, unfortunately! – with Norris J commenting that the case is concerned with the taking of security over a dog).
Louis was delighted therefore to be invited by the editors of Butterworths’ Journal of International Business & Financial Law to contribute a piece on the decision of the Victorian Supreme Court of Australia in Callisi Pty Ltd v Sterling & Freeman Advisory Pty Ltd [2023] VSC 300 which considers the developing concept of so-called marshalling by apportionment. That doctrine (or sub-doctrine) is concerned with a first-ranking secured creditor with security over multiple assets, and, below that creditor, two (or more) equally ranking secured creditors with respective interests in one or other of those multiple assets. Very briefly, marshalling by apportionment governs equity’s intrusion in ameliorating the susceptibility of the lower-ranking security interests to the potential consequences of the superior creditor seeking to realise its security, on a whim or otherwise, in one or more of the assets to which those lower-ranking creditors would otherwise have recourse.
Marshalling by apportionment has yet to feature in any significant way in the domestic courts – there is no reference to it, for example, in the latest edition of Paget’s Law of Banking – but it seems inevitable enough that suitable facts and parties ready and able for the fight over the priority of their respective security rights will find themselves sooner or later at the door of the equitable jurisdiction of the High Court of England and Wales.
To view a copy of the article, which appeared in the December 2024 issue of JIBFL, please click here: https://www.jibfl.co.uk/articles/marshalling-by-apportionment-a-developing-doctrine
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