Kalpana Kalpana (Editor)

Re Kayford Ltd

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Court
  
High Court

Citation(s)
  
[1975] 1 WLR 279

Re Kayford Ltd [1975] 1 WLR 279 is a UK insolvency law and English trusts law case, concerning the creation of a trust over payments made by consumers, in an insolvent company.

Contents

Facts

The directors of Kayford Ltd, a mail order business, were concerned about insolvency. 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 went insolvent, and soon Kayford Ltd also found it could not survive. It went into 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, including certainty of intention, beneficiaries 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.’

References

Re Kayford Ltd Wikipedia