Singer & Friedlander Commercial Finance Ltd v Thomas

Reference: [2003] EWHC 861 (QB)

Court: Queen's Bench Division

Judge: HH Judge Anthony Thompson QC

Date of judgment: 11 Apr 2003

Summary: Commercial law – hire purchase – personal guarantee - chattel mortgage

Instructing Solicitors: Hammonds


The claimant, which lent money to companies to help them finance the acquisition of substantial assets, agreed to purchase and let on hire to British Creameries Ltd, of which the defendant was chairman and a substantial shareholder, cheese packing machinery costing in excess of £250,000. Payment of the hire charges by British Creameries to the claimant was to be secured by a chattel mortgage on some of the other machinery owned by the company. However, since that machinery was the subject of charges by Lloyds TSB and other parties and British Creameries was anxious to obtain the packaging machinery as quickly as possible, the defendant gave a personal guarantee to the claimant which it was agreed would lapse as soon as the chattel mortgage was “in place”. The machinery was purchased by the claimant and delivered to British Creameries.


Whether the chattel mortgage was put “in place” and the defendant’s personal guarantee lapsed when the claimant’s then solicitors registered it or whether it would only have been “in place” when the necessary releases in respect of the other charges had been obtained.


That the chattel mortgage was “in place” when the claimant’s then solicitors registered it. The words “in place” were to be given their ordinary meaning as set out in the Oxford English Dictionary, namely “in the original or proper position; suitable or appropriate position”. The claimant’s deeds of release and priority may not have ever been put in place, but the chattel mortgage was. The defendant’s guarantee therefore lapsed when the chattel mortgage was registered.


The claimant’s, or its then solicitors’ decision to register the chattel mortgage before it had been made fully effective was a very dangerous one. Its position could have been properly protected if sufficient care with the documentation had been taken.