''Re Kayford Ltd (in liquidation)''

975 Year 975 ( CMLXXV) was a common year starting on Friday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * Arab–Byzantine War: Emperor John I raids Mesopotamia and invades Syria, using ...

1 WLR 279 is a

UK insolvency law United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While UK bankruptcy law concerns the rules for natural persons, the term insolvency is generally used for companies formed under the ...

and English trusts law case, concerning the creation of a trust over payments made by consumers, in an insolvent company.

Facts

The

directors Director may refer to: Literature * ''Director'' (magazine), a British magazine * ''The Director'' (novel), a 1971 novel by Henry Denker * ''The Director'' (play), a 2000 play by Nancy Hasty Music * Director (band), an Irish rock band * ''D ...

of Kayford Ltd, a

mail order Mail order is the buying of goods or services by mail delivery. The buyer places an order for the desired products with the merchant through some remote methods such as: * Sending an order form in the mail * Placing a telephone call * Placing ...

business, were concerned about

insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet ...

. They were receiving pre-payments for goods from their customers, and were concerned about this being taken by other creditors. They got advice from their solicitors who said that they should open another account and deposit money from customers into that account. Suppliers of Kayford Ltd became insolvent, and soon Kayford Ltd also found it could not survive. It went into insolvent liquidation and the creditors claimed that the money in the accounts was part of the company’s assets. It was contended that instead the money was held on trust for Kayford’s customers.

Judgment

Megarry J held that the money was subject to a trust. It fulfilled all the requirements for creation of a

trust Trust often refers to: * Trust (social science), confidence in or dependence on a person or quality It may also refer to: Business and law * Trust law, a body of law under which one person holds property for the benefit of another * Trust (bus ...

, including certainty of intention,

beneficiaries A beneficiary (also, in trust law, '' cestui que use'') in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the perso ...

and subject matter. Although he said different considerations could apply for trade creditors, he was ‘concerned only with members of the public, some of whom can ill afford to exchange their money for a claim to a dividend in the liquidation, and all of whom are likely to be anxious to avoid this.’

Notes

{{reflist, 2

References

* United Kingdom insolvency case law High Court of Justice cases 1975 in United Kingdom case law