Lee Antony Manning & Ors v 2 Four 6 Marketing Limited & Ors (Re Festicket Ltd (in Administration))

Whether an agent holds sale proceeds on trust depends on the parties’ objectively ascertained intention from the agreement and relevant surrounding circumstances. Agency and accounting obligations may support a trust, but they do not establish one automatically. Relevant factors include segregation, the period for which money may be retained, restrictions on its use, provisions for payment and accounting, and the commercial context. No single factor is necessarily decisive. Where an agreement permits an agent to retain substantial sums for lengthy periods, contains no segregation requirement or restriction on use, and provides no entitlement to interest, the relationship is more appropriately characterised as debtor and creditor.

The joint administrators of Festicket Ltd sought directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986. The preliminary issue concerned whether ticket-sale proceeds received by Festicket as agent for event promoters were held on trust under the company’s pre-July 2022 or post-July 2022 standard Ticket Sales Agent Agreement.

The agreements provided for accounting and staged remittance of net revenue, permitted deductions and advances, and stated that title to tickets did not pass to Festicket. They contained no express trust provision, segregation requirement or restriction on the use of retained proceeds. The central issue was whether, properly construed, the agreements created any trust of the ticket-sale proceeds.

1. Preliminary issue. The court held that neither the pre-July 2022 nor the post-July 2022 standard agreement created a trust of the ticket-sale proceeds. The post-July agreement contained no material difference affecting the construction.
2. The question was one of construction. The relevant intention was objective and derived from the written agreement and relevant surrounding circumstances at the time of contracting. Subjective intention was irrelevant. The existence of an agency relationship and an obligation to account may make a trust more readily inferable, but neither is conclusive.
3. The court considered the factors identified in Bailey v Angove’s PTY Limited [2016] UKSC 215, including whether the agent was free to treat the money as part of its general assets and whether segregation was contemplated. Re Kayford Ltd [1975] WLR 279 established that segregation is useful but not essential. Re Fleet Disposal Services Ltd [1995] BCC 605 illustrated a fact-sensitive construction exercise, but its short payment period and communicated separate account materially distinguished it from the present agreements.
4. The agreements allowed Festicket to retain significant sums for at least 21 days and, in some cases, until after the relevant event, potentially for months. They imposed no obligation to segregate the money, no restriction on its use, and no obligation to account for interest. The words “retain”, “account for” and “remit”, the good-faith clause, the limitation of liability, and the fact that Festicket acted as agent did not outweigh those features.
5. The VAT provision did not assist the trust argument. Liability for VAT arose from section 1 of the Value Added Tax Act 1994, independently of any intention to create a trust. The agreement also did not create a fiduciary relationship or duty of loyalty. Relief from sanctions for the 62nd Respondent was limited to participation on the written-agreement issue; reliance on additional factual grounds was refused because it would expand the preliminary issue, require further evidence and increase prejudice and costs.

First-instance determination of a preliminary issue in administration proceedings. No appellate history is stated in the judgment.