Unitherm Heating Systems Ltd -v- Wallace as official liquidator of BHT Group Ltd (In Liquidation) [2015] IECA 191 (29 July 2015)

Unitherm Heating Systems Ltd -v- Wallace as official liquidator of BHT Group Ltd (In Liquidation) [2015] IECA 191 (29 July 2015)

The proceeds of sale clause in Unitherm's standard conditions of sale did not create a fiduciary relationship or a trust over the proceeds received by BHT from onward sale of goods. The relationship between Unitherm and BHT was that of seller and buyer, not principal and agent or trustee in possession. The clause created a charge over the book debts of BHT, which required registration under s.99 of the Companies Act 1963. As the charge was not registered, it was void against the liquidator. Unitherm is therefore an unsecured creditor for the sum claimed.

Citation
[2015] IECA 191
Parties
Applicant/respondent: Unitherm Heating Systems Limited; Respondent/appellant: Kieran Wallace as official liquidator of BHT Group Limited (in liquidation)
Jurisdiction
Ireland
Judgment Date
29 July 2015
Procedural Posture
Appeal / Judgment on Appeal From High Court
Outcome
Appeal allowed; High Court order set aside.
Legal Topics
Retention of Title Clauses, Proceeds of Sale Clauses, Fiduciary Relationships, Trusts, Charges and Registration, Tracing of Proceeds
Insolvency Law Commercial Law Company Law Retention of Title Clauses Proceeds of Sale Clauses Fiduciary Relationships Trusts Charges and Registration +1 more

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Parties

Unitherm Heating Systems Limited

Applicant/respondent

Kieran Wallace as official liquidator of BHT Group Limited (in liquidation)

Respondent/appellant

Procedural Posture

Appeal / Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether the proceeds of sale clause in Unitherm's standard conditions of sale created a trust or a registrable charge over the proceeds received by BHT from onward sale of goods.
  2. 2 Whether a fiduciary relationship existed between Unitherm and BHT (as principal and agent or trustee in possession) in respect of the proceeds of sale.
  3. 3 Whether Unitherm is entitled to trace proceeds of sale into BHT's accounts in priority to unsecured creditors.

Ratio Decidendi

The proceeds of sale clause in Unitherm's standard conditions of sale did not create a fiduciary relationship or a trust over the proceeds received by BHT from onward sale of goods. The relationship between Unitherm and BHT was that of seller and buyer, not principal and agent or trustee in possession. The clause created a charge over the book debts of BHT, which required registration under s.99 of the Companies Act 1963. As the charge was not registered, it was void against the liquidator. Unitherm is therefore an unsecured creditor for the sum claimed.

Court Disposition

Appeal allowed; High Court order set aside.

Orders

  • Declaration that Unitherm stands as an unsecured creditor of BHT in the sum of €93,907.65.
  • Order reversing and setting aside the High Court order declaring a trust over the proceeds of sale.