Moriarty & Ors v Various Customers of BA Peters Plc (In Administration)

A trust over money requires certainty of intention, objects and subject matter. Payment into a designated client account may establish a trust, but money paid into an overdrawn account cannot be traced into other assets. Later payments into a trust account do not automatically replenish money previously misapplied; an actual intention to impose the trust is required.

Customers whose money was lost in the company’s current account were unsecured creditors and could not impound unrelated surplus funds. Where a contract separately priced undelivered extras, the price of those extras was not due. Title to goods could pass despite insolvency, and the court could declare ownership and order delivery up. A dealer agreement may imply authority to sell goods before paying the manufacturer, enabling title to pass to a sub-purchaser.

The joint administrators of BA Peters plc sought directions concerning customer deposits, boats and sale proceeds held after the company entered administration. The application concerned direct sales by the company as principal, brokerage sales in which it acted as stakeholder, and vessels supplied through manufacturers and dealers.

The court considered whether money in the client account was held on trust, whether customers whose payments had entered the company’s current account could claim against later surplus funds, whether a purchaser had obtained title to a partly completed vessel, and whether title to part-exchange goods had passed. It also considered competing claims concerning vessels sold through the company’s dealership arrangements.

1. Trusts and tracing. The court accepted that a trust requires certainty of intention, objects and subject matter. Money in the client account was held on trust where the evidence showed that the account balance exceeded the sums attributable to the relevant customers. Money paid into an overdrawn current account ceased to exist as a traceable fund, so affected customers had no proprietary claim.
2. Later payments into the client account did not replenish money previously misapplied. Following James Roscoe (Bolton) Limited v Winder, an intention to substitute the later money is required. No such intention existed for the euro-account transfers or the unidentified surplus. The customers therefore remained unsecured creditors. The proposed right to impound unrelated money was rejected because no trust fund belonging to them remained; that result was consistent with Bishopsgate Investment Limited v Homan.
3. Brokerage transactions. Deposits held as stakeholder were held for the party entitled under the transaction. Delay alone did not establish rescission. The court inferred rescission in the case where the purchaser had expressly withdrawn and the seller had taken no steps to complete, directing repayment of the deposit.
4. Direct sales and title. Under the contract for the Head vessel, separately priced undelivered extras were not payable. The contract was not entire, and the purchaser’s ownership therefore passed once all sums actually due had been paid. Where property had passed, an order for delivery up could be made despite the seller’s insolvency.
5. Title to the part-exchange vessel had not passed because the contractual payment of the part-exchange allowance had never been credited in the company’s books. Under the dealership agreement with Sealine, authority to sell before payment was implied from the commercial purpose of the agreement despite an express denial of agency. Title consequently passed to Burton Waters Marina Limited when it paid in full. The later private arrangement concerning retained title had no effect and, alternatively, would have been void for common mistake.
6. The court made the declarations and payment directions stated in the judgment, including repayment of the Tereina deposit and declarations of ownership for the Head and Burton Waters vessels. Further directions were reserved concerning Sealine’s claim to sale proceeds and any outstanding matters. The reasonable costs of the parties were provisionally directed to be paid from the company’s assets.

First instance decision. No earlier appellate decision is stated in the judgment.