Angove’s PTY Limited (Angove’s) is an Australian winemaker. D & D Wines International Limited (D & D) acted as Angove’s agent and distributor in the United Kingdom. D & D bought wine from Angove’s and sold wine on its behalf. Angove’s and D & D had entered into an Agency and Distribution Agreement (ADA) dated December 1, 2011.
The ADA was terminable by either party on six months’ notice or immediately on the appointment of an administrator or liquidator. D & D entered into administration on April 21, 2012 and into creditors’ voluntary liquidation on July 10, 2012. A$874,928.81 remained owing to D & D for wine sold to two retailers.
On April 23, 2012, Angove’s terminated the ADA. The termination notice stated that Angove’s would collect the unpaid sums and pay D & D its commission separately. However, the liquidators of D & D wanted to collect the sums, deduct D & D’s commission and leave Angove’s to prove for repayment of the balance in the winding up. The outstanding sums were received by D & D and Angove’s after D & D received the termination notice. They were, therefore, held by the liquidators in an escrow account (and Angove’s’ solicitors’ client account on the same terms), pending the outcome of the litigation. This meant that the sums could not be used by either party until the issue of beneficial ownership and contractual entitlement was resolved and the customers had received good receipt for the payments that they had made.
Angove’s applied pursuant to section 112 of the Insolvency Act 1986 for an order that the sums be paid over to it on the basis that: (i) the liquidators’ right to collect the moneys had been revoked by the termination notice; and/or (ii) the sums were held by D & D on constructive trust for Angove’s. The liquidators argued that D & D’s liability to Angove’s as at the commencement of the administration was a simple debt obligation to remit the purchase price for goods sold and delivered, net of D & D’s commission.