Equitable Security Interests: Their Creation and Priority

Abstract

Fraud, so it seems, never goes out of fashion. The United Bank of Kuwait plc advanced monies to Mr Sahib, and when the monies were not duly repaid, the Bank took proceedings to recover the debt due to it; it obtained judgment against Mr Sahib, and sought to enforce that judgment by obtaining a charging order over Mr Sahib's beneficial interests in two freehold properties in Hampstead. The beneficial interests existed behind statutory trusts for sale, and the trustees for sale of both properties were Mr Sahib and his wife, Mrs Hashim. In due course, charging orders were obtained and then made absolute. At this point, there arose a dispute between the United Bank of Kuwait and the Société Générate Alsacienne de Banque SA (‘Sogenal’). Sogenal claimed that it held an equitable mortgage over the interests which were the subject of the charging order, that its mortgages were created before the charging orders obtained by the United Bank of Kuwait, and that its mortgages consequently ranked in priority to the Bank's charging orders. This dispute as to priorities formed the subject of Chadwick J's decision in United Bank of Kuwait plc v Sahib.

Citation

Nolan, R. (1995), "Equitable Security Interests: Their Creation and Priority", Journal of Financial Crime, Vol. 3 No. 1, pp. 65-68. https://doi.org/10.1108/eb025674