THE HIGH COURT
			1997 No.  138 COS
IN THE MATTER OF VALLEY ICE CREAM (IRELAND) LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990

Judgment of Mr. Justice McCracken delivered on the 22nd day of July 1998

	This is a motion by the Official Liquidator of Valley Ice Cream (Ireland) Limited (hereinafter called "the Company") for a determination as to whether a document dated 26th September, 1995 which was called a Composite Guarantee and Debenture (hereinafter called "the Debenture") and is made between, inter alia, the Company of the one part and Master Foods Limited (hereinafter called "Master Foods") of the other part creates a fixed or floating charge over certain leased assets to which it relates.  There is also a claim for an order directing Master Foods to provide the Official Liquidator and the Company with full and precise particulars of the present location of each of the leased fridges listed in the sixth schedule to the said document.
	The background to this motion may be stated shortly.  At the end of 1994 the Company, and certain associated companies, were indebted to Master Foods for a sum in the region of £500,000.  It was anticipated that this indebtedness would more than double by the end of the summer of 1995.  This indebtedness was in respect of goods supplied by Master Foods, and in order to secure the indebtedness, the Company and its associated companies agreed to provide the security set out in the debenture.
	The relevant clauses of the debenture are as follows:-

	"3.1	As continuing security for the payment and discharge of the secured obligations each company as beneficial owner and registered owner or as the person entitled to be registered as owner as the case may be:-

			'(a)	by way of fixed charge ASSIGNS unto Master Foods all plant, machinery and equipment, details of which are contained under its name in the Third Schedule together with all replacements thereof, additions, improvements and accessories thereto together with the full benefit of the insurance on same subject to the proviso for redemption contained in clause 3.6
				.............

			(e)  by way of first floating charge CHARGES unto Master Foods all its undertaking, property, assets, rights and goodwill whatsoever and wheresoever both present and future.'

	5.4	Valley Ireland hereby irrevocably undertakes to the company forthwith upon expiration or earlier termination of each lease to execute, or procure the execution of, a mortgage over the equipment to which the lease relates in the form attached hereto in the Fifth Schedule."

	The equipment referred to in clause 5.4 is listed in the sixth schedule, and consists of some vehicles and a very large number of freezers located in various shops throughout the State.  It is common case that these vehicles and freezers were held by the Company under leases whereby at the expiration of each lease the Company would be entitled to purchase the goods for a nominal figure.
	The fifth schedule to the document contains a draft deed which is expressed to be supplementary to the Debenture and recites that, as further security for its obligations under that document, the Company has agreed to mortgage or charge machinery defined therein in favour of Master Foods.  It contains a charging clause as follows:-

	"As continuing security for the payment of the Secured Obligations the Company as beneficial owner and registered owner or as the person entitled to be registered as owner as the case may be hereby assigns unto Master Foods the machinery, together with all replacements thereof, additions, improvements and accessories thereto together with the full benefit of insurances on same subject to the proviso for redemption contained in the Composite Guarantee and Debenture."

	It is common case that there are a number of vehicles and freezers which come within clause 5.4 of the debenture, and in respect of which no mortgage in the form set out in the fifth schedule, or indeed in any other form, was executed by the Company in favour of Master Foods.  Master Foods claim, nevertheless, that by virtue of the debenture itself they have a fixed equitable charge over these goods, while the Liquidator maintains that the most that Master Foods has is a floating charge, which does not give them any security in the event of the winding up of the Company.  There is, thus, a very net point as to whether the effect of clause 5.4 is to create an equitable fixed charge over the relevant goods.
	There is one further factual matter which is relied upon by the Liquidator, namely that the form 47 filed in the Companies Office pursuant to section 99 of the Companies Act, 1963 includes among the particulars of the property charged:-

	"An irrevocable undertaking to execute, procure the execution of a mortgage over the equipment in the form attached in the first schedule to the debenture forthwith upon expiration or earlier termination of each lease to which the equipment is subject (as hereinafter defined)."

	The reference to the mortgage being in the form in the first schedule to the debenture is clearly wrong, as the draft mortgage is contained in the fifth schedule to the debenture.  It is suggested that this is misleading, as any creditor looking at the file in the Companies Office would not realise or understand the form of the mortgage to be executed.  In my view, this is not relevant, as what is registered is the fact that there is an irrevocable undertaking to procure the execution of a mortgage over the equipment, and the equipment is clearly set out in the form 47.  What section 99 requires to be registered is particulars of the charge, not the form which the charge is to take.  In my view, it is quite clear from what was registered that there was a charge in the form of an irrevocable undertaking to execute a mortgage over this equipment, and that satisfies section 99.
	Clause 5.4 clearly creates a legal and binding obligation on the Company to execute a mortgage as soon as any lease of equipment expires or terminates.  It does not, and cannot, of itself create a legal mortgage over the equipment, as the equipment is not an asset of the Company at the time of the execution of the debenture.  However, at the moment that the lease of any one piece of equipment terminates or expires, there is no doubt that Master Foods would be entitled to obtain an immediate order of specific performance to enforce the execution of a legal charge or mortgage.  Furthermore, the form of the charge as set out in the fifth schedule to the debenture quite clearly is intended to create a fixed charge over the goods, as it specifically assigns the goods and the benefit of any insurance thereon.  I think it is beyond doubt that the clear intention of this document is that there will be a fixed charge on the specific goods as soon as the document is executed.  The only question, therefore, is whether an irrevocable agreement to grant such a fixed charge does of itself create an equitable fixed charge.
	In my view, the law on this is quite clear.  I can do no better than to quote from Fisher & Lightwoods Law of Mortgages (10th Edition) at page 12 where, under the heading "Equitable Mortgages", it is stated:-

	"Generally, the essence of any transaction by way of mortgage is that a debtor confers upon his creditor a proprietary interest in property of the debtor, or undertakes in a binding manner to do so, by the realisation or appropriation of which the creditor can procure the discharge of the debtor's liability to him, and that the proprietary interest is redeemable, or the obligation to create it is defeasible, in the event of the debtor discharging his liability.  If there has been no legal transfer of a proprietary interest but merely a binding undertaking to confer such an interest, that obligation, if specifically enforceable, will confer a proprietary interest in the subject matter in equity.  An equitable mortgage is a contract which operates as a security and is enforceable under the equitable jurisdiction of the court.  The court carries it into effect either by giving the creditor immediately the appropriate remedies, or by compelling the debtor to execute a security in accordance with the contract.  It is applicable to all property of which a legal mortgage can be made, even where statute provides, as, for example, in the case of ships, a particular method for passing the legal property therein."

	The first part of this statement of the law is taken verbatim from the judgment of Buckley J. in Swiss Bank Corporation -v- Lloyds Bank Limited [1980] 2 All E.R. 419 at page 426.
	In the present case, there has not been a legal transfer of a proprietary interest, but there has been a binding undertaking to confer such an interest, which undertaking is specifically enforceable.  I think it is entirely in keeping with the principles governing the creation of a fixed charge that such a charge should be created under these circumstances.  The essence of a fixed charge is that property is irrevocably set aside in such a way that the creditor can have recourse to it to satisfy his debt.  The clear intention of clause 5.4 was that, as each of the items came into the ownership of the Company, it would immediately be subject to a legal charge in favour of Master Foods, which was to be implemented by the execution of a deed.  It is a well known maxim of equity, which is frequently enforced, that equity regards as being done that which ought to be done, and it is for this reason that the undertaking contained in clause 5.4 would be specifically enforceable.  It must also be a consequence of the truth of this maxim that, while a legal charge may not have been created, equity will regard a charge as having been created because it ought to have been created under the terms of clause 5.4.  That charge must be a fixed charge, as what clause 5.4 contemplates clearly as a fixed charge.  Accordingly, I will grant a declaration that the debenture creates a fixed charge in equity over the leased assets to which it refers.
	With regard to the second relief claimed, Master Foods have effectively acknowledged that they must cooperate fully with the Liquidator in identifying the whereabouts of the various freezers, and it seems to me that they have attempted to do so to the best of their ability.  I do not think it is necessary at this stage to make a specific order, but I will give liberty to apply in relation to this relief.