(Court of Appeal, Patten, Lewison and Sharp
LJJ, 07 March 2014)
Where an agent was entitled to collect monies,
moneys paid to it after its insolvency were available for agent’s creditors
generally and were not held on trust for the payor for transmission to the
A company, D&D Wines, was the agent and
distributor for the respondent, Angove. The agency agreement between Angove and
D&D provided that Angove would, in respect of each sale, send an invoice to
D&D for the price which named the end-purchaser as consignee. Angove would
also issue a credit note which represented D&D’s commission. D&D would
collect the moneys from the end-purchaser and pay to Angove the sum due under
Angove’s invoice less the amount of the credit note. The termination clause in
the agreement provided that termination of the agreement would not affect the
accrued rights or remedies of either party. Shortly after D&D entered
administration, Angove terminated the agency. Shortly thereafter D&D
received substantial moneys from two end-customers.
The first instance judge held that because the
agency agreement had been terminated at the time D&D received those moneys
it had no right to them. The moneys were held on trust for the end-customers
and were payable to Angove on their behalf.
The Court of Appeal
rejected this analysis. On the true construction of the agency agreement
D&D’s right to collect moneys from the end-customers for past sales
survived the termination of the agency. The Court of Appeal also rejected
Angove’s submission that there arose a constructive trust of the moneys because
it was unconscionable for D&D’s liquidators to get the benefit of receiving
the moneys but not be obliged to meet D&D’s obligations to Angove. Patten
LJ said that it was hard to see how it could be unconscionable to receive
payment under a subsisting contract notwithstanding the supervening insolvency.
This case was distinguishable from Neste
Oy v Lloyds Bank  2 Lloyd’s Rep 658 since in that case the payment
held subject to a constructive trust had been essentially gratuitous.