Brazzill & Ors v Willoughby & Ors
A valid trust was created over all monies standing to the credit of the segregated account at the Bank of England pursuant to the FSA Notice. The beneficiaries of the trust are all customers who made deposits with KSF between 3 and 7 October 2008, whether or not matching funds were actually transferred into the account. The trust operates such that KSF is entitled to reimbursement from the account for repayments made to depositors. The Transfer Order operated to assign the rights of Edge Depositors to FSCS/HMT, who are entitled to the corresponding sums in the account. There are no equitable or restitutionary remedies (including subrogation) available to FSCS/HMT beyond the assignment....
- 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
- Jurisdiction
- England and Wales
- Judgment Date
- 10 July 2009
- Procedural Posture
- Ordinary Application for Directions (insolvency) / Judgment After Trial of Preliminary Issues
- Outcome
- Declaratory judgment with directions; trust declared and beneficiaries identified; assignment to FSCS/HMT confirmed; no subrogation or restitutionary remedy for FSCS/HMT; losses to be borne pro rata among beneficiaries.
- Legal Topics
- Creation and Operation of Trusts in Insolvency, Assignment of Rights Under Statutory Compensation Schemes, Interpretation of Regulatory Notices and Statutory Instruments, Ranking of Claims in Insolvency, Restitution and Subrogation in Insolvency Context
Case Brief
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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
Procedural Posture
Ordinary Application for Directions (insolvency) / Judgment After Trial of Preliminary Issues
Legal Issues
- 1 Whether a valid trust was created over the sums in the segregated account at the Bank of England under the FSA Notice
- 2 Who are the beneficiaries of the trust and what are the terms of the trust
- 3 How withdrawals and repayments affect the trust and its beneficiaries
Ratio Decidendi
A valid trust was created over all monies standing to the credit of the segregated account at the Bank of England pursuant to the FSA Notice. The beneficiaries of the trust are all customers who made deposits with KSF between 3 and 7 October 2008, whether or not matching funds were actually transferred into the account. The trust operates such that KSF is entitled to reimbursement from the account for repayments made to depositors. The Transfer Order operated to assign the rights of Edge Depositors to FSCS/HMT, who are entitled to the corresponding sums in the account. There are no equitable or restitutionary remedies (including subrogation) available to FSCS/HMT beyond the assignment....
Court Disposition
Declaratory judgment with directions; trust declared and beneficiaries identified; assignment to FSCS/HMT confirmed; no subrogation or restitutionary remedy for FSCS/HMT; losses to be borne pro rata among beneficiaries.
Orders
- A valid trust was created over all sums in the account.
- All post-Notice depositors are beneficiaries, whether or not matched.
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