Brazzill & Ors v Willoughby & Ors [2009] EWHC 1633 (Ch) (10 July 2009)

Brazzill & Ors v Willoughby & Ors [2009] EWHC 1633 (Ch) (10 July 2009)

A valid trust was created over the sums standing to the credit of the segregated account at the Bank of England pursuant to the FSA Notice. The beneficiaries of the trust are those depositors whose funds were matched in the account, as determined by statutory definitions of 'customer' and 'deposit'. The ING Transfer Order operated as a statutory novation, transferring rights and liabilities to ING Direct and extinguishing trust interests for transferred accounts. FSCS compensation payments result in assignment of claims to FSCS, with any excess recoveries attributable to HM Treasury. Non-regulated depositors and excluded categories do not benefit from the trust.

Citation
[2009] EWHC 1633 (Ch)
Parties
Applicant: Patrick Brazzill; Applicant: Alan Bloom; Applicant: Thomas Burton; Applicant: Margaret Mills; Respondent: Bernadette Willoughby; Respondent: Kaupthing Singer & Friedlander (Isle of Man) Ltd; Respondent: Transport for London; Respondent: HM Treasury; Respondent: Financial Services Compensation Scheme; Other: Sub-Category 8 Creditors
Jurisdiction
England and Wales
Judgment Date
10 July 2009
Procedural Posture
Ordinary Application / Trial
Outcome
Directions granted; trust created; beneficiaries and operation determined; effect of Transfer Order and FSCS payments clarified.
Legal Topics
Creation and Operation of Trust, Statutory Interpretation, Banking Insolvency, Compensation Schemes, Transfer of Liabilities
Insolvency Trusts Banking Law Financial Regulation Creation and Operation of Trust Statutory Interpretation Banking Insolvency Compensation Schemes +1 more

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Parties

Patrick Brazzill

Applicant

Alan Bloom

Applicant

Thomas Burton

Applicant

Margaret Mills

Applicant

Bernadette Willoughby

Respondent

Kaupthing Singer & Friedlander (Isle of Man) Ltd

Respondent

Transport for London

Respondent

HM Treasury

Respondent

Financial Services Compensation Scheme

Respondent

Sub-Category 8 Creditors

Other

Procedural Posture

Ordinary Application / Trial

Legal Issues

  1. 1 Was a valid trust created over monies in the segregated account?
  2. 2 Who are the beneficiaries of the trust?
  3. 3 What are the terms and operation of the trust?

Ratio Decidendi

A valid trust was created over the sums standing to the credit of the segregated account at the Bank of England pursuant to the FSA Notice. The beneficiaries of the trust are those depositors whose funds were matched in the account, as determined by statutory definitions of 'customer' and 'deposit'. The ING Transfer Order operated as a statutory novation, transferring rights and liabilities to ING Direct and extinguishing trust interests for transferred accounts. FSCS compensation payments result in assignment of claims to FSCS, with any excess recoveries attributable to HM Treasury. Non-regulated depositors and excluded categories do not benefit from the trust.

Court Disposition

Directions granted; trust created; beneficiaries and operation determined; effect of Transfer Order and FSCS payments clarified.

Orders

  • Trust declared over sums in segregated account for eligible depositors as per statutory definitions.
  • ING Transfer Order extinguished trust interests for transferred accounts.