Angove Pty Ltd v Bailey & Anor

An agency relationship is determined from the substance of the parties’ agreement and the circumstances of the particular transaction. A commercial agent may undertake a direct obligation to pay the principal and may be a del credere agent without ceasing to be an agent. Authority to collect payments ends on termination unless preserved by express agreement. Money received after termination is held on trust for the payer. However, money collected before termination does not become the principal’s beneficial property merely because the recipient was an agent. The question is the parties’ objectively assessed intention, having regard to the commercial structure, the timing and specificity of the obligation to account, any segregation arrangements, and the effect of a proprietary analysis on insolvency.

Angove, an Australian wine producer, appointed D & D Wines International Limited as its UK agent and distributor under an agency and distribution agreement. D & D entered administration, the agreement was terminated, and joint liquidators were appointed.

The dispute concerned sums payable for wine supplied to Direct Wines Limited and PLB Group Limited, together with A$14,430 paid to D & D before termination. Angove claimed that D & D acted as its agent, that the sums were held on trust, and that the A$14,430 could be set off against commission. The liquidators contended that D & D was a buyer and seller, or that its obligations were personal only. The court determined the status of the fund and the pre-termination payment.

1. Agency. The agreement contemplated two principal categories of transaction: sales by D & D as Angove’s agent, for which commission was payable, and sales to D & D on its own account, for which commission was not payable. The language of the agreement was relevant but not determinative. The true character of each transaction had to be established from its surrounding facts. A direct obligation on an agent to pay the principal did not prevent an agency relationship. The court applied the approach identified in Teheran - Europe Co. Ltd v S.T. Belton (Tractors) Ltd [1968] 2 WLR 523.
2. The DWL and PLB transactions were agency transactions. The agreed commission, the negotiations with the customers, the shipping documents, the identification of the customers as buyers, and the absence of objection by D & D were inconsistent with purchases by D & D for its own account.
3. Termination and the fund. Any obligation or authority to collect payment ended on termination. The agreement did not preserve that obligation. Payments made after termination were therefore held on trust for the payers, DWL and PLB, and the fund was payable to Angove rather than forming part of the company’s estate.
4. Pre-termination payment. The court applied the principles summarised in Pearson and others v Lehman Brothers Finance SA [2010] EWHC 2914 (Ch). The question whether collected money belonged beneficially to Angove depended on the parties’ objectively assessed intention. The fixed time for accounting, absence of an express segregation obligation, commission deduction mechanism, credit-note structure, and potentially illogical insolvency consequences indicated a personal obligation to account, not a proprietary interest.
5. The fund was payable to Angove in its entirety. Angove had no beneficial entitlement to the A$14,430 paid before termination. The court noted that this conclusion did not determine the applicability of Rule 4.90(3) of the Insolvency Rules, which had not been argued.