The issue was stated to be
"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."
If it were true that such a trust did arise (as Bingham J in Neste Oy supposed) it would be a startling conclusion.
First, if I agree to buy goods or services from you, and pay $1,000 cash in advance, my payment is conditional. if the work/services are not provided what do the parties expect will be returned? $1,000, or the very cash (or its traceable proceeds) that
was paid? The answer should be obvious.
Second if there were a trust, the law is imposing one that the recipient himself could not intentionally have created. If I owe you $1,000, but think I am about to go into insolvency and so declare myself a trustee of a right to $1,000 cash, that would
be struck down as a preference upon my going into insolvency. Should such a trust, preferring one class of creditor over another, be created by operation of law?
the result is fine, but some of the reasoning is poor. The reference at [30] to "transferring the entire beneficial interest" seems to resurrect the error in the reasoning in Chase Manhattan that we had hoped Westdeutsche had corrected. The apparent suggestion
at [29] that a "dishonest assister" is a (true) trustee is inconsistent with Sumption's own judgment in Williams.
RS
From: Enrichment - Restitution & Unjust Enrichment Legal Issues [ENRICHMENT@LISTS.MCGILL.CA] on behalf of Peter Watts (Law) [pg.watts@AUCKLAND.AC.NZ]
Sent: 27 July 2016 11:02
To: ENRICHMENT@LISTS.MCGILL.CA
Subject: [RDG] Bailey and another (Respondents) v Angove¹s Pty Ltd (Appellant) [2016] UKSC 47
Today, in the above case the Supreme Court, judgment given by Lord Sumption, has “held” that The Tiiskeri (Neste Oy v Lloyd’s Bank Plc 1983) was wrongly decided, as was Japan Leasing. In fact Lord Sumption notes that the appellant having won on another
point it was not strictly necessary to decide the point, but since it had been fully argued… He did note however that the claimant in The Tiiskeri was not permitted to argue for a constructive trust on the basis of the relevant payment’s having been made under
a mistake, and that point should be left open for future argument (Chase Manhattan lives for another day). Peter.