Bailey v Angove's Pty Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lady Justice Sharp,Lord Justice Lewison |
| Judgment Date | 07 March 2014 |
| Neutral Citation | [2014] EWCA Civ 215 |
| Docket Number | Case No: A2/2013/0617 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 March 2014 |
[2014] EWCA Civ 215
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
HHJ PELLING QC
IN THE MATTER OF D & D WINES INTERNATIONAL LIMITED (IN CREDITORS' VOLUNTARY LIQUIDATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Lord Justice Lewison
and
Lady Justice Sharp
Case No: A2/2013/0617
Mr Jamie Riley (instructed by Shoosmiths LLP) for the Appellants
Mr Nicholas Craig (instructed by APP Law Solicitors) for the Respondent
Hearing date: 14 February 2014
The principal issue on this appeal is whether the respondent, Angove's Pty Limited ("Angove"), is entitled to payment of the sums of A$570,843.22 and A$302,773.86 plus accrued interest which are currently held in escrow pending the outcome of this litigation pursuant to a revised undertaking between the joint liquidators of D & D Wines International Limited ("D&D") and Angove dated 26 July 2012.
These monies were paid by two third-party customers, Direct Wines Limited ("DWL") and PLB Group Limited ("PLB"), for wine supplied to them by Angove through D&D which acted as its "sole agent and distributor" for the UK under the terms of an Agency and Distribution Agreement ("ADA") dated 18 November 2011. This amended and replaced (with effect from 1 December 2011) an earlier agreement of 21 December 1990 which was itself amended with effect from 1 January 2006.
On 21 April 2012 D&D was placed in administration and on 23 April Angove gave written notice to D&D under clause 36(b) of the ADA terminating the agreement with immediate effect. The notice also expressly terminated D&D's authority to collect any further payments from DWL and PLB. The notice had the effect of terminating D&D's appointment as Angove's sole agent and distributor and clause 37 of the ADA provided that:
"37. Upon termination of this Agreement for any reason whatsoever:
(a) each party must pay to the other all money owing up to and including the date of termination in respect of the sale of Products and Angove PBPs and/or commission thereon, without any deduction, withholding or set-off for any reason whatsoever;
(b) Angove will have the right to purchase (and D&D is obliged to sell) any current stock of Products or Angove PBPs then in the hands of D&D which D&D has paid for, at a price equal to "net landed cost".
For the purposes of this sub-clause, "net landed cost" means the aggregate of the Net Selling Price paid by D&D plus any freight and insurance charges and duties paid by D&D in respect of such stock. D&D will ship the same at the direction of Angove FIS to the warehouse nominated by Angove in the Territory. D&D warrants, and shall procure, that any re acquired stock will on its re-delivery be in all respects in the same condition as that in which it was delivered to D&D by Angove;
(c) D&D must promptly deliver to Angove, or at its direction, all point of sale and promotional brochures, displays, banners and other related materials and information in its possession or control; and
(d) Angove will not be obliged, from the date of termination, to fill any orders placed by D&D on its own account which have not yet been delivered to D&D; and
(e) D&D must cease any and all use of Angove's IP Rights.
Termination of this Agreement does not affect the accrued rights or remedies of either party. Obligations expressed to arise or continue on or after termination of this Agreement survive its termination."
With the exception of a sum of A$14,430 which I will come to, all of the money in the escrow accounts represents payments made for wine by DWL and PLB after the ADA had been terminated by the notice of 23 April. The A$570,843.32 received from DWL was paid into an account with the administrators who gave undertakings that any monies collected would be held in their general client account " Pending the resolution of the matters in issue between [Angove] and the Administrators". The monies are not to be released except with the consent of Angove or in accordance with an order of the court which determines the ownership of the funds. After D&D was placed in voluntary liquidation the DWL monies were transferred to the joint liquidators and are held by them in an escrow account on similar terms. The liquidators' undertaking of 26 July 2012 contemplated that the A$302,773.86 subsequently paid by PLB would be held in the same escrow account. But these monies were in the event paid directly to Angove. Angove then arranged for them to be held in an escrow account opened by its solicitors for that purpose on the same terms as the 26 July undertaking. They are not therefore to be released except by agreement or in accordance with an order of the court. In these circumstances the liquidators of D&D have been content that they should remain in the solicitors' account pending the outcome of the litigation.
In order to decide who was entitled to payment of these monies, Angove issued an application for directions pursuant to s.112 of the Insolvency Act 1986. The principal issue raised on the application was whether the payments by DWL and PLB made after the termination of the ADA were held on trust for Angove or were monies payable to D&D and therefore part of the estate of the insolvent company available for distribution amongst its general creditors. This issue was formulated in the application as being dependent on whether the contractual arrangements under the ADA created a trust in respect of any monies received by D&D as agent or merely rendered it liable to account contractually to Angove for what it had received after payment of its commission and any other deductible expenses. But the issue was argued before the judge (HH Judge Pelling QC sitting as a deputy judge of the Chancery Division) on the basis that the termination of the ADA brought to an end any right which D&D otherwise had to receive the purchase monies from DWL and PLB with the consequence that the monies held in the escrow account can now only belong to the payers and be payable at their direction to Angove.
The one exception to this is in relation to the sum of A$14,430 in the account which represents payments made prior to the termination of the ADA. In respect of this money, Angove seeks to set it off against D&D's claims for commission on the sales of wine to DWL and PLB represented by the monies in the escrow account. But this depends upon them establishing that the A$14,430 paid to D&D during the currency of the ADA was held for Angove on trust. It was therefore only in relation to this sum that the trust issue formulated in the s.112 application remained relevant.
Part of the argument before the judge centred on whether the effect of the ADA and the invoices and other documentation which it generated was to create a single contract of sale between Angove and the UK purchasers such as DWL and PLB in respect of each order for wine placed through D&D or a chain of two separate contracts of sale: the first between Angove and D&D; the second between D&D and the end purchasers. If the correct analysis was that D&D had contracted with DWL and PLB as principal and that Angove had no contract at all with the UK purchasers then it was, I think, common ground that Angove's termination of the ADA would not prevent the liquidators of D&D from obtaining payment of what was contractually due to the company and that the monies when collected formed part of the insolvent estate and were not held on trust for Angove. Angove, like any other creditor of D&D, would be reduced to proving in the liquidation for the monies due to it under its contracts with D&D.
The dispute about whether there were one or two contracts which came into existence whenever wine was ordered from Angove through D&D stems from the machinery in the ADA for the payment of D&D's commission. It is therefore useful at this stage by way of explanation to set out the provisions in the ADA which bear on this point.
Under clause 2 of the ADA:
"Angove confirms that from the Effective Date D&D shall be its sole agent and distributor for the sale:
(a) of all Products exported by Angove, or by any company or entity wholly owned by Angove, to customers in the Off Trade and the On Trade; and
(b) of all PBPs exported by Angove, or by any company or entity wholly owned by Angove, to customers in the On Trade, provided that D&D's appointment under this sub-clause 2(b) shall be limited to supplying Angove PBPs to Matthew Clark for onward distribution in the On Trade, on and subject to the terms and conditions of this Agreement."
The ADA applies both to sales made to D&D as agent for Angove (which we are concerned with on this appeal) and sales made to D&D on its own account. In relation to the former, clause 10 provides:
"Where sales of Products or Angove PBPs are made by D&D as agent for Angove, the Terms and Conditions of Sale set out as Annexure A to this Agreement, and as amended by Angove from time to time, shall apply to such sales. Angove shall be responsible for communicating the Terms and Conditions of Sale to such customers, and for determining the timing of such notification. Failure by a customer to agree to the Terms and Conditions of Sale does not constitute a breach of this Agreement by D&D, provided that Angove shall be entitled to decline to deal with any such customer without liability to D&D."
The terms and conditions of sale set out in Annexure A...
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