Re Kayford Ltd
| Jurisdiction | England & Wales |
| Date | 1975 |
| Year | 1975 |
| Court | Chancery Division |
Company - Winding up - Trust for customers - Company receiving money from customers with orders - Separate bank account opened to deposit money for undelivered goods - Voluntary liquidation - Whether sufficient manifestation of intention to create trust for customers
Customers of the company, which carried on a mail order business, either paid the full price for the goods in advance, or paid a deposit. By November 1972 the company's chief suppliers got into difficulties and went into liquidation. The company could not meet the orders. The company was advised by its accountants to open a separate bank account (to be called a “Customers' Trust Deposit Account”) and to pay into it moneys received from customers for goods not delivered to them, withdrawing the moneys only if the goods were later delivered. The object of the arrangement was that if the company had to go into liquidation the moneys in the deposit account could and would be refunded to those customers who could not be supplied with the goods they had ordered. The company accepted the advice but instead paid the moneys into a dormant deposit account in the company's name, only in December ensuring that the account bore the name suggested by the accountants. In December 1972 the company went into voluntary liquidation.
On the liquidator's summons seeking to determine whether the moneys formed part of the general assets of the company or whether they were held on trust for the customers in proportion to the amounts paid by them: —
Held, that as the property concerned was pure personalty writing, though desirable, was nor an essential to create a trust; that two of the three certainties of a trust (namely, the subject matter of the trust, the beneficial interests therein and the beneficiaries) were clear, and the third certainty, that of words, was satisfied by what in the circumstances was a sufficient manifestation of an intention to create a trust; and that the moneys were accordingly held in trust for those customers who had paid for goods not delivered by the company.
Per curiam. Different considerations may perhaps arise in relation to trade creditors; but here the court is concerned only with members of the public. In cases concerning the public, where money in advance is being paid to a company in return for the future supply of goods or services, it is an entirely proper and honourable thing for a company to start to pay the money into a trust account as soon as there begin to be doubts as to the company's ability to fulfil its obligations to deliver the goods or provide the services (post, p. 282E–G).
The following case is referred to in the judgment:
Nanwa Gold Mines Ltd., In re[
The following additional case was cited in argument:
Quistclose Investments Ltd. v. Rolls Razors Ltd. (In Liquidation)[
SUMMONS
On October 10, 1973, the joint liquidators in the voluntary liquidation of Kayford Ltd., Arthur William Wainwright and David Alexander Wild, issued a summons against...
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Property of the Bankrupt
...(Ont HCJ). 131 Re Ontario Worldair Ltd (1983), 45 CBR (NS) 116 (Ont HCJ), aff’d (1983), 8 CBR (NS) 112 (Ont CA). 132 Re Kayford Ltd , [1975] 1 All ER 604. 133 Re London Wine Co (Shippers) Ltd (1975), [1986] PCC 121; Re Goldcorp Exchange Ltd , [1995] 1 AC 74 (PC). But see Hunter v Moss , [19......
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Equity, Trust and Restitution
...of the commercial context.” The cases considered and followed by the Court of Appeal included Henry v Hammond[1913] KB 515, Re Kayford[1975] 1 All ER 604, Neste Oy v Lloyds Bank[1983] 2 Lloyd”s Rep 658, Re Holiday Promotions (Europe)[1996] 2 BCLC 618 and Walker v Corboy(1990) 19 NSWLR 382. ......
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...Moreover, that responsibilityis unique. No other private party can assert authority over the administration26 Re Kayford Ltd [1975] 1 All ER 604.27 SIS Act, s 19(3) requires that either the trustee be a corporation or that the governing rules mustprovide that the sole or primary purpose of ......
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...Worldair Ltd. (1983), 45 C.B.R. (N.S.) 116 (Ont. H.C.J.), aff’d (1983), 8 C.B.R. (N.S.) 112 (Ont. C.A.). 102 Re Kayford Ltd. , [1975] 1 All E.R. 604. Bankruptcy and Insolvency law 98 The subject matter of the trust must be adequately defined. Sometimes there is a problem in identifiability ......