Vaughan and Others v Barlow Clowes International Ltd and Others
| Jurisdiction | England & Wales |
| Judgment Date | 17 July 1992 |
| Date | 17 July 1992 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Dillon, Lord Justice Woolf and Lord Justice Leggatt
Company - Barlow Clowes investments - Clayton's case not applicable
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that when sums were mixed in a bank account as a result of a series of deposits the money was regarded as having being withdrawn in the same order as it had been deposited.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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Table of cases
...[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)......
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