GRANADA GROUP LTD v THE LAW DEBENTURE PENSION TRUST CORPORATION PLC  EWCA Civ 1289
The Court of Appeal has upheld the decision of Andrews J in the High Court that a charge granted by Granada Group Limited over gilts to Law Debenture as trustee to secure Granada’s promise to pay ‘top-up’ retirement benefits to its executive directors was not voidable under s 322 CA 1985 (now s 195 CA 2006) for being in breach of s 320 CA1985 (now s 190 CA 2006) due to lack of shareholder approval.
Granada accepted that the directors did not, as beneficiaries under the trust of Granada’s promise to pay the ‘top-up’ benefits and to provide security, acquire a beneficial proprietary interest in the gilts or the charge over the gilts. However, Granada argued that the directors nevertheless acquired either an “interest in” the gilts or the charge, because they obtained an economic or financial interest or advantage pursuant to the arrangement or, alternatively, their right to compel the trustee to perform the trusts gave them a “right over” the gilts or charge, such that the extended definition of non-cash asset in s. 739(2) CA 1985 (now s. 1163(2) CA 2006) was satisfied. Both these arguments were firmly rejected by Lewison LJ, with whom the other members of the Court of Appeal agreed.
For a discussion of this case see Mary Stokes’ case comment,
MARY STOKES, led by Paul Newman QC, acted for The Law Debenture Pension Trust Corporation plc, the successful trustee.