GGF Fund Limited v Anglian Windows Limited & Anor

In construing rules governing a mutual fund, the court must identify their objective meaning in their documentary, factual and commercial context. The rules’ defined concept of Member, rather than the wider and undefined expression subscriber, governed entitlement to a surplus.

Membership crystallised on the date when the fund was terminated, not when it closed to new business or when distribution occurred. An insolvency event automatically terminated membership while the fund remained in existence. Members who remained members at termination could cure missed payments up to that date. Where records were unreliable, the court adopted a pragmatic evidential approach. A Benjamin order permitted distribution of funds after reasonable steps had been taken to notify potential customer claimants.

The claimant, administrator and alleged trustee of the GGF Deposit Indemnity Fund, sought directions under CPR Part 64.2(a) concerning the distribution of an approximately £4 million surplus after the fund closed to new business and entered winding up.

The issues concerned the termination date, the effect of insolvency on membership, the meaning of Member and subscriber, missed quarterly payments, historic payment records, and the amount to retain for actual or potential customer claims. The defendants represented themselves and classes of potential beneficiaries. The central questions were who was entitled to participate in the distribution and on what terms.

1. Termination and membership. The fund was terminated on 31 March 2021. Closing to new business on 1 April 2020 did not crystallise members’ rights, since the fund continued receiving and determining customer claims. Termination and distribution were distinct stages.
2. Entitlement to the surplus depended on being a Member under the Fund Rules at the termination date. The wider expression subscriber in clause 3(3) of the claimant’s memorandum did not displace the rules’ defined membership requirement. The Crown, E Realisations 2020 Ltd, Cheam Windows Ltd and Designs 49 Ltd were not entitled on the dates applicable to them. Anglian Windows Ltd and Disign House Maidstone Ltd remained entitled.
3. An insolvency event automatically terminated fund membership while the fund existed. This followed from article 33.3 of the federation’s articles, rule 13 of the Fund Rules and rule 14.4 of the federation rules. The termination was automatic, unlike discretionary expulsion under rule 14.6. A post-termination insolvency could not remove an entitlement already crystallised.
4. The rules were not ultra vires and did not infringe the anti-deprivation rule. Under sections 28 and 39 of the Companies Act 2006, the memorandum operated as part of the company’s constitution and the validity of acts could not be challenged for lack of capacity. The arrangement was a commercially justifiable incident of fund membership, not an attempt to evade insolvency law.
5. Members who remained members at termination were entitled to participate even if quarterly payments were outstanding. Their subscriptions had to be brought fully up to date to 31 March 2021 before distribution. The claimant had to identify missed payments using the best available evidence. The reliable starting point was April 2014. A member was presumed to have paid where the claimant had no evidence of a missed post-April 2014 payment. Missed-payment and non-paying parties were not to be treated as separate legal categories.
6. For customer claims, the claimant had taken reasonable steps to notify potential claimants. It could distribute £179,182.11 under a Benjamin order. The £40,753.89 reserved for known or triggered claims had to be retained for a further three-month opportunity to advance claims or use vouchers, after which any balance could be distributed under the order.

First-instance determination by the High Court. No earlier appellate decision is stated in the judgment.