Equilift Ltd
| Jurisdiction | England & Wales |
| Judge | Judge Purle QC |
| Judgment Date | 27 November 2009 |
| Neutral Citation | [2009] EWHC 3104 (Ch) |
| Date | 27 November 2009 |
| Court | Chancery Division |
[2009] EWHC 3104 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Priory Courts,
33, Bull Street,
Birmingham B4 6DS
His Honour Judge Purle QC
(sitting as a High Court Judge)
Mr Mohammed Zaman QC (instructed by Hammonds Llp) for the Liquidators
There Was No Other Representation
The. Applicants are the Joint Liquidators of Equilift Limited (“the Company”), which was a supplier and installer of stair-lifts. They were formerly appointed Joint Administrators on 12 th December 2008.
The Liquidators have identified possible proprietary claims relating to bank accounts under their control. If those potential claims are valid, the result will be that the relevant bank balances are not, strictly speaking, held by them as Liquidators, but as trustees for the persons beneficially entitled.
The matter originally came before me for directions with a view to the joinder of representative parties.
In very broad outline, what happened was that the Company for some time operated 4 accounts, known as Main Account Detail, Main Account Pooling, Deposit (Advances) and Deposit Account Pooling. The first 2 and the last 2 were linked, in that payments were made from the one to the other for the purpose of earning interest. Main Account Detail and Deposit (Advances) were current accounts, the other 2 were interest bearing.
The idea was that customer deposits and other payments would be held in reserve until work for the customer was complete, though this information was not (unless anyone asked) in general communicated to the customer.
Before 1 st October 2008, only consumer deposits were treated in this way, and there were other differences in the way the accounts were operated before and after that date. After 1 st October 2008, other deposits, stage payments and prepayments in respect of service contracts were included in the arrangements. However, the arrangements were operated rather loosely. Some deposits and prepayments were paid into one account, some into another (including the main current account). A balance was struck on a monthly (later weekly) basis by reference to work done in relation to sums previously paid, and deposits, stage payments and prepayments which had by then been earned. The balance on reconciliation was transferred from one account to another, though there was no attempt to differentiate between customers’ monies and the Company's monies, e.g., by paying sums both ways. There was payment one way only, according to the balance struck. In addition, the Company drew down from the deposits, stage payments and prepayments sums sufficient to enable it to carry on business. In short, the monies were there to be treated as the Company's own, though a degree of self-discipline was introduced to comply with what the Company understood was “best practice”, with the apparent aim of protecting customers from the risk of insolvency.
These facts, which are developed more fully in evidence, give rise to potential arguments of some complexity with different interested classes of potential beneficiaries (if there ever was a trust). As there were 4 accounts which received the payments in question, and 3 classes of customer (relating to consumer sales, trade sales and service contracts) there are a number of classes of potential beneficiaries. Additionally, individual customers may be able to point to features peculiar to themselves. Difficult question of tracing may also arise to the extent that trust monies (if that is what they were) moved from one account to another, or were absorbed in the regular reconciliation process.
8. Ordinarily, where there is real doubt over whether a liquidator is holding monies as liquidator or as trustee, the Court will join the necessary parties (and, where there are a large number of them, representatives of recognised classes of potential beneficiaries) so that the matter may be resolved conclusively. Either way, the liquidator will usually be entitled to his costs out of the property (whatever its character). Often, but not always, the representative parties will be likewise entitled in respect of their costs, and a pre-emptive costs order will sometimes be made so as to ensure their effective participation. Nevertheless, it has to be borne in mind that any claim to treat what is ostensibly the Company's property as someone else's is, from the Company's perspective, hostile litigation, as to which the normal costs order is that the losing party pays.
The proper approach of the Court to costs was considered by Sir Nicholas Browne-Wilkinson VC (as he then was) in Re Westdock Realisations Ltd and Another [1988] BCLC 354 at 359–360. He said this:—
“If a trustee, liquidator of receiver, or any other person in a neutral capacity is holding moneys which belong to others but it is not known who is beneficially entitled, the court frequently makes orders that the costs of determining who is beneficially entitled to those moneys are to be paid out of the moneys held. The ordinary order for costs in the case of an express trust fund is one example. In addition, orders are frequently made in the Companies Court where there are issues as to beneficial ownership that the costs come out of the fund: see for example Re Exchange Securities & Commodities Ltd (No 2) [1985] BCLC 392 and the remarks of Nourse J in Re First Guarantee Trust Co Ltd ( unreported) 14 February 1985. It is in my judgment much too late to put forward a contention that there is no jurisdiction to make such order. However, of course, in considering whether such an order should be made the fact that in one event the fund will be held not to belong to the liquidators is a most relevant matter to take into account…
… After hearing the argument I am satisfied that there is no fixed practice relating to all cases. I am also satisfied that there cannot be any practice applicable as a rule of thumb to all types of cases. The range of summonses which can be issued and are heard raise such a wide range of issues that there can be no fixed rule. However, in my judgment the proper...
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Pravin Patel v Barlows Solicitors (A Firm)
...Ltd, above. However, each case will depend upon its own individual circumstances: see, by way of example, Re Equilift Ltd [2009] EWHC 3104 (Ch), [2010] B.P.I.R. 290 In my judgment, the discretion in Berkeley Applegate should be exercised by a court, having regard to the following non-exhau......