CC Automotive Group Ltd, Re [2019] EWHC 2771 (Ch) (06 November 2019)

CC Automotive Group Ltd, Re [2019] EWHC 2771 (Ch) (06 November 2019)

Customers' beneficial interests in the trust fund are not security interests; Section 5 of the Mercantile Law Amendment Act 1856 does not entitle alternative policy funders to assignment of those interests. Equitable subrogation does not apply because alternative policy funders did not bargain for assignment of customers' interests at the time of providing replacement policies. The trust fund should be distributed to customers, subject to practical arrangements for PCL and AIOF shares and distribution costs.

Citation
[2019] EWHC 2771 (Ch)
Parties
Applicant: Daniel Robert Whiteley Smith; First Respondent: Retail Money Market Limited; Second Respondent: Walker Morris Trustees Limited
Jurisdiction
England and Wales
Judgment Date
06 November 2019
Procedural Posture
Insolvency Application / Judgment Following Hearing of Application for Directions
Outcome
Application granted in part; directions given for distribution of trust fund to customers.
Legal Topics
Declaration of Trust, Beneficial Ownership, Equitable Subrogation, Section 5 Mercantile Law Amendment Act 1856, Consumer Credit Act 1974, Mistaken Payments, Unjust Enrichment
Insolvency Trusts Restitution Declaration of Trust Beneficial Ownership Equitable Subrogation Section 5 Mercantile Law Amendment Act 1856 Consumer Credit Act 1974 +2 more

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Parties

Daniel Robert Whiteley Smith

Applicant

Retail Money Market Limited

First Respondent

Walker Morris Trustees Limited

Second Respondent

Procedural Posture

Insolvency Application / Judgment Following Hearing of Application for Directions

Legal Issues

  1. 1 Whether customers or third party funders are entitled to the trust fund under the Declaration of Trust
  2. 2 Whether Section 5 of the Mercantile Law Amendment Act 1856 entitles alternative policy funders to assignment of customers' beneficial interests
  3. 3 Whether equitable subrogation applies to alternative policy funders who provided replacement policies by mistake

Ratio Decidendi

Customers' beneficial interests in the trust fund are not security interests; Section 5 of the Mercantile Law Amendment Act 1856 does not entitle alternative policy funders to assignment of those interests. Equitable subrogation does not apply because alternative policy funders did not bargain for assignment of customers' interests at the time of providing replacement policies. The trust fund should be distributed to customers, subject to practical arrangements for PCL and AIOF shares and distribution costs.

Court Disposition

Application granted in part; directions given for distribution of trust fund to customers.

Orders

  • Trust fund to be distributed to customers in accordance with Declaration of Trust.
  • Liquidator to devise procedure for PCL customers to claim their share, with unclaimed sums to fall into liquidation estate.