A company owed two separate companies, Rolled Steel and Scottish Sheet Steel. Rolled Steel owed Scottish Sheet Steel £400,000 in debts. Scottish Sheet Steel is a steel stockholder and owed £800,000 to the British Steel Corporation. British Steel Corporation asked for a charge on land that Rolled Steel owned to guarantee Scottish Sheet Steel’s debts. During liquidation the land was sold for £1.2 million but paid out on costs. The liquidator challenged the validity of the debenture and the guarantee as where Rolled Steel had ancillary power to give security debts and guarantees, they did this for unlawful purposes as it was on behalf of another company.