LORD SUMPTION: (with whom Lord Neuberger, Lord Clarke, Lord
Carnwath and Lord Hodge agree)
1. This appeal raises two important and controversial questions of commercial law. The first is: in what circumstances will the law treat the authority of an agent as irrevocable. The other is whether the receipt of money at a time when the recipient knows that imminent insolvency will prevent him from performing the corresponding obligation, can give rise to liability to account as a constructive trustee.
Introduction
2. Angove’s Pty Ltd is an Australian winemaker, which for many years employed an English company called D&D Wines International Ltd as its agent and distributor in the United Kingdom. D&D acted in both capacities. It bought wines
from Angove’s in its own right and it sold wines on Angove’s behalf to UK
customers, generally retailers. Both activities were governed at the relevant time by
an Agency and Distribution Agreement (or “ADA”) dated 1 December 2011. Under
clause 34, the ADA was terminable by either side on six months’ notice, or, under
clause 36, by notice with immediate effect in a number of events, including the
appointment of an administrator or liquidator.
3. On 21 April 2012, D&D went into administration, and on 10 July 2012

moved into creditors’ voluntary liquidation. At the commencement of the
administration, there were outstanding invoices amounting altogether to A$874,928.81, representing the price of wine which D&D had sold to two UK
retailers, but which the latter had not yet paid. On 23 April 2012, Angove’s gave
written notice terminating the ADA and any authority of D&D to collect the price
from these two customers. The notice declared that Angove’s proposed to collect
the price directly from the customers and would account separately to D&D for their
commission.
4. In due course, the liquidators objected to this course. They claimed to be entitled to collect on the outstanding invoices, deduct commission due to D&D, and
leave Angove’s to prove in the winding up for the rest of the price. The liquidators have never denied that Angove’s was entitled to terminate the ADA or that their
notice of 23 April 2012 had that effect. But they contended that the relationship
between D&D and Angove’s in relation to the transactions covered by the invoices
was that of buyer and seller, not agent and principal, and that accordingly the
company’s liability to Angove’s at the commencement of the administration was a simple debt for goods sold and delivered. Angove’s disputed this contention. They
also argued that any moneys held by D&D for their account were held in trust…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Angove's Pty Ltd v Bailey

Details

AGLC: Angove's Pty Ltd v Bailey [2016] UKSC 47
Case: [2016] UKSC 47
Decision Date

CaseChat Overview and Summary

This case concerns an appeal brought by Angove's Pty Ltd, an Australian winemaker, against a decision of the Court of Appeal which found that D&D Wines International Ltd, the liquidators of Angove's appointed agent and distributor in the UK, had an irrevocable authority to collect outstanding invoices on Angove's behalf. The court was required to determine whether the authority of an agent can be irrevocable and whether the receipt of money, when the recipient knows that imminent insolvency will prevent them from performing the corresponding obligation, can give rise to liability to account as a constructive trustee. The Supreme Court held that the authority of an agent may be revoked by the principal, even if it is agreed by their contract to be irrevocable. The revocation is effective to terminate the agent's authority, but gives rise to a claim for damages. The main exception to the general rule is the case where the agent has a relevant interest of their own in the exercise of their authority. The court found that the authority of D&D Wines was not irrevocable as it was not intended to secure a financial interest of the agent. The Supreme Court also held that the receipt of money by an agent, when the agent knows that imminent insolvency will prevent them from performing the corresponding obligation, cannot give rise to liability to account as a constructive trustee. The court found that the money collected by D&D Wines was not held in trust for Angove's and was instead part of the insolvent estate. The Supreme Court allowed the appeal and declared that the fund representing the proceeds of the invoices is payable to Angove's.

Orders