Re Curtain Dream plc
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| Re Curtain Dream plc | |
|---|---|
 | |
| Court | High Court |
| Full case name | Re Curtain Dream plc |
| Decided | 9 March 1990 |
| Citation | [1990] BCLC 925 |
| Court membership | |
| Judge sitting | Knox J |
| Keywords | |
Re Curtain Dream plc [1990] BCLC 925 is a judicial decision of the English courts in relation to recharacterisation. It held that where a transaction was documented in a certain way to mask the true nature of the transaction, the court could disregard the mask and construe the transaction as it was intended to be in truth. The court held that properly construed the transaction in question was a mortgage which was void against a liquidator for non-registration.[1]
Curtain Dream plc was a fabric company. It was indebted to Barclays Bank who had taken security over all of the company's assets. Subsequently, the company entered into a financing arrangement with Churchill Merchanting Ltd. Under that arrangement the company would sell all of its stock in trade to Churchill. Churchill would then sell that stock back to the company on retention of title terms, such that the stock remained the property of Churchill until the company sold it to a third party. The company would then use the proceeds of sale to pay Churchill the original purchase price plus accrued interest.[2] The fabric itself remained at all times in the company's warehouse and never moved.[3]
The company failed and Barclays appointed receivers. The receivers then brought an application challenging the financing arrangements with Churchill, alleging that in reality it amounted to a mortgage, and that the mortgage was not enforceable because it had not been registered as required by section 395 of the Companies Act 1985.