Vaughan and Others v Barlow Clowes International Ltd and Others

JurisdictionEngland & Wales
Judgment Date17 July 1992
Date17 July 1992
CourtCourt of Appeal (Civil Division)

Court of Appeal

Before Lord Justice Dillon, Lord Justice Woolf and Lord Justice Leggatt

Vaughan and Others
and
Barlow Clowes International Ltd and Others

Company - Barlow Clowes investments - Clayton's case not applicable

Sums held in common fund

Sums invested in Barlow Clowes International Ltd (BCI) Portfolio Nos 28 and 68 were part of a common fund and therefore the remaining assets would be held on trust for all unpaid investors pari passu rateably in proportion to the amounts due to them and the rule in Clayton's CaseENR ((1816) 1 Mer 572) would not apply.

The Court of Appeal so held in allowing an appeal by Mr G C Robson on behalf of various investors in BCI against an order of Mr Justice Peter Gibson that assets held in specified investment accounts were held on trust for investors who upon the application of the rule in Clayton's Case could be shown to be entitled to trace into such sums.

Judgment was given in July but not released for publication until the conclusion of criminal proceedings against those involved in the management of Barlow Clowes.

Mr Robert Walker, QC and Mr David Unwin for Mr Robson; Mr Michael Hart, QC and Mr Michael Nield for Chiltington Ltd, on behalf of investors opposing the appeal; Mr Mark Lucraft for the Serious Fraud Office.

LORD JUSTICE DILLON said that the rule in Clayton's Case provided that when sums were mixed in a bank account as a result of a series of deposits the money was regarded as having being withdrawn in the same order as it had been deposited.

It was submitted for the appellant that all investors who contributed to the two portfolios were contributing to common funds in which all investors were to participate and that by analogy with Re British Red Cross Balkan FundELR([1914] 2 Ch 419) and Re Hobourn Aero Components Ltd Air Raid Distress FundELR([1946] Ch 86), Clayton's Case should not apply.

It was therefore necessary to consider the basis on which investors contributed to the portfolios.

The wording on the application forms seemed to be compatible with investment in a scheme of the nature of a unit trust in gilts and not merely with investment on the basis that earmarked investments would be held for the sole account of the investor.

What was envisaged was some form of common fund in which all investors would in some way participate.

Moneys which had been contributed for investment but which had not been invested by the time BCI went into liquidation were to be regarded as the uninvested part of the...

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56 cases
  • Russell-Cooke Trust Company v Prentis
    • United Kingdom
    • Chancery Division
    • 4 November 2002
    ...J. Schmidt & Co. ex parte Feuerbach (1923) 298F 314 at 316, referred to by both Woolf L.J. and Leggatt L.J. in Barlow Clowes International Ltd (in liquidation) v Vaughan & Ors. [1992] 4 All E.R. 22 CA. The dictum was commenting on how a depleted fund had to be divided between claimants and,......
  • W & R Murrogh, Re v Pearson and Others
    • Ireland
    • High Court
    • 6 May 2003
    ...Republic of Ireland, paragraph 20.13). Similar criticisms were made in Barlow Clowes International Limited (in liquidation) v. Vaughan (1992) 4 All ER 22 where the Court of Appeal held that the rule need only be applied when it is convenient to do so and when its application can be said to ......
  • Ahmad Hamad Algosaibi and Brothers Company (“AHAB”) v Saad Investments Company Ltd (in Official Liquidation) (“SICL”) and Others
    • Cayman Islands
    • Grand Court (Cayman Islands)
    • 31 May 2018
    ...should) that tracing is concerned with property rights, not debts. 2076 Barlow Clowes International Ltd (in liquidation) v Vaughan [1992] 4 All ER 22, 28b-c {R1/19/7}, per Dillon LJ (Court of 2077 Barlow Clowes International Ltd (in liquidation) v Vaughan [1992] 4 All ER 22, 44d {R1/19/23......
  • Re W. & R Morrogh
    • Ireland
    • High Court
    • 6 May 2003
    ...Stock Exchange Ltd. and others, Notice Parties Cases mentioned in this report:- Barlow Clowes International Ltd. (in liq.) v. Vaughan [1992] 4 All E.R. 22; [1992] B.C.L.C. 910. Birch v. Cropper (1889) 14 App. Cas. 525. Boscawen v. Bajwa [1996] 1 W.L.R. 328; [1995] 4 All E.R. 769. Devaynes v......
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1 firm's commentaries
  • Who Owns A Bribe?
    • Jersey
    • Mondaq Jersey
    • 9 December 2014
    ...of Brazil v Durant Intl Corp [2013] JCA 071, at para 69. 27 (1816) 35 ER 767. 28 See Barlow Clowes Intl Ltd (in liquidation) v Vaughan [1992] 4 All ER 22, itself an 29 Ibid; Russell-Cooke Trust Co v Prentis [2002] EWHC 2227 (Ch). 30 Commerzbank AG v IMB Morgan plc [2004] EWHC 2771 (Ch). 31 ......
11 books & journal articles
  • Table of cases
    • Canada
    • Irwin Books Bank and Customer Law in Canada. Second Edition
    • 19 June 2013
    ...[2006] 1 All E.R. 333 (P.C.) ..................................................... 230 Barlow Clowes International Ltd. v. Vaughan, [1992] 4 All E.R. 22 (C.A.) .......................................................................... 259 Barnes v. Addy, [1874] L.R. 9 Ch. App. 244 (H.L.).........
  • Table of cases
    • Canada
    • Irwin Books Personal Property Security Law - Third Edition
    • 26 July 2022
    ...[1891] 2 Ch 72 ........................................................................747 Barlow Clowes International Ltd v Vaughan, [1992] 4 All ER 22 (CA) .............627 Barous (Re) (1983), 29 Sask R 6, 3 PPSAC 61, [1983] SJ No 601 (QB) ............... 405 Barry v Bank of Ottawa (1908)......
  • Bank Accounts
    • Canada
    • Irwin Books Bank and Customer Law in Canada. Second Edition
    • 19 June 2013
    ...Bank of Canada (1994), 119 D.L.R. (4th) 669 (B.C.C.A.). This was finally clarified in Barlow Clowes International Ltd. v. Vaughan , [1992] 4 All E.R. 22 (C.A.). See also Russell-Cooke Trust Co. v. Prentis , [2003] 2 All E.R. 478 (Ch. D.). Compare Law Society of Upper Canada v. Toronto-Domin......
  • CLAIMS FOR INTEREST IN WINDING UP AND BANKRUPTCY
    • Singapore
    • Singapore Academy of Law Journal No. 1997, December 1997
    • 1 December 1997
    ...accrues. 69 Re City Securities Pte, supra, note 5, at 625I—626A. 70 (1816) 1 Her 529. 71 Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22. 72 S 94(3) BA. 73 Re Jessel Securities Ltd, supra, note 5, at 22j—23b, explaining the decision in Re Lascelles[1940] Ch 79. Contrast Ex part......
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