Devron Potatoes Ltd v. Gordon & Innes Ltd & Ors [2002] ScotCS 284 (25 October 2002)

Devron Potatoes Ltd v. Gordon & Innes Ltd & Ors [2002] ScotCS 284 (25 October 2002)

The pursuers' pleadings, while lengthy and not always clear, are sufficient to allow a proof before answer on the issues of bad faith and constructive trust against the third defenders. The law requires proof of bad faith or knowledge on the part of the bank, but the precise moment or extent of knowledge may be established at proof. The action should not be dismissed at this stage.

Citation
[2002] ScotCS 284
Parties
Pursuer: Devron Potatoes Ltd; First Defender: Gordon & Innes Ltd; Second Defender: Receivers of Gordon & Innes Ltd; Third Defender: Royal Bank of Scotland Plc
Jurisdiction
Scotland
Judgment Date
25 October 2002
Procedural Posture
Commercial Action / Debate on Relevancy (preliminary Plea) Before Proof
Outcome
Proof before answer allowed; action not dismissed against third defenders at this stage.
Legal Topics
Fiduciary Duties of Agents, Bank's Liability for Trust Funds, Constructive Trust, Unjust Enrichment, Pooling Arrangements in Agricultural Marketing, Set Off and Combination of Bank Accounts
Commercial Law Banking Law Trusts and Fiduciary Law Unjust Enrichment Fiduciary Duties of Agents Bank's Liability for Trust Funds Constructive Trust Pooling Arrangements in Agricultural Marketing +1 more

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Parties

Devron Potatoes Ltd

Pursuer

Gordon & Innes Ltd

First Defender

Receivers of Gordon & Innes Ltd

Second Defender

Royal Bank of Scotland Plc

Third Defender

Procedural Posture

Commercial Action / Debate on Relevancy (preliminary Plea) Before Proof

Legal Issues

  1. 1 Whether the third defenders (bank) are liable to account to the pursuers for sums in a designated grower's account on the basis of bad faith or constructive trust
  2. 2 Whether the pursuers' pleadings are sufficient to allow a proof before answer on the issues of bad faith and constructive trust
  3. 3 What level of knowledge or conduct on the part of the bank is required to establish liability for receipt of trust funds

Ratio Decidendi

The pursuers' pleadings, while lengthy and not always clear, are sufficient to allow a proof before answer on the issues of bad faith and constructive trust against the third defenders. The law requires proof of bad faith or knowledge on the part of the bank, but the precise moment or extent of knowledge may be established at proof. The action should not be dismissed at this stage.

Court Disposition

Proof before answer allowed; action not dismissed against third defenders at this stage.

Orders

  • Proof before answer allowed on the issues of bad faith and constructive trust against the third defenders.
  • No dismissal of the action against the third defenders at this stage.