Angove’s PTY Limited v Bailey & anr [2016] UKSC 47

WTLR Issue: October 2016 #163





A, an Australian winemaker, employed an English company called D&D as its agent and distributor in the UK. D&D bought wines from A in its own right and sold wines on A’s behalf pursuant to an agency and distribution agreement (the agreement). The agreement was terminable by either party on six months’ notice or by notice with immediate effect in a number of events including the appointment of an administrator or liquidator.

On 21 April 2012, D&D went into administration and on 10 July 2012 into creditors’ voluntary liquidation. On administration there were outstanding invoices for wine that D&D had sold to UK retailers but had not yet been paid. On 23 April 2012, A gave written notice terminating the agreement and any authority D&D had to collect the price from the retailers. A proposed to collect the price directly and would account to D&D separately for their commission.

D&D’s liquidators objected and claimed to be entitled to collect the prices, deduct D&D’s commission and leave A to prove in the winding up for the rest of the price on the basis that the relationship regarding the invoices transactions was that of buyer and seller, not agent and principal, and thus a simple debt claim for goods sold and delivered. A contended that any moneys held by D&D were held in trust for them.

The matter came before the court as an application under s112 of the Insolvency Act 1986. The judge held that in the relevant respects the relationship was of principal and agent only and D&D’s authority to collect the price ended on A’s termination notice.

Before the Court of Appeal, the liquidators did not challenge the finding that D&D was acting as an agent, but argued that if it acted as an agent, then the authority to collect the price for goods sold on A’s behalf survived the termination of the agreement because they needed it in order to recover their commission.

The Court of Appeal accepted the argument and allowed the appeal, holding that D&D’s authority was irrevocable because the general rule that authority can be revoked must yield to what the parties have agreed should be their respective legal rights and obligations on the termination of the agency. Construing the agreement, the Court of Appeal held that a continuing right to collect the price was implicit in D&D’s right to deduct commission from the price before remitting it to A and D&D’s obligation to account to A for the price within 90 days of the bill, whether or not it had by then been received from the customer.

A’s argument that the proceeds were held for them on trust failed at both stages for different reasons.


  1. (1) In what circumstances will the law treat the authority of an agent as irrevocable?
  2. (2) Whether the receipt of money at a time when the recipient knows that imminent insolvency will prevent him from performing the corresponding obligation, can give rise to liability to account as a constructive trustee.


  1. 1) Regarding issue (1) the Court of Appeal only applied part of the test. The general rule is that an agent’s authority is revocable even if it is agreed to be irrevocable. It cannot therefore be enough to exclude the general rule that the authority is agreed to be irrevocable. What has to be agreed is not just that the authority is to be irrevocable but that it is intended to secure the financial interest of the agent. Both are questions for the construction of the agreement.
  2. 2) On construction of the agreement, it was not expressed to be irrevocable or to survive termination of the agreement and no such implication was possible.
  3. 3) Therefore A’s notice of 23 April 2012 was immediately effective to terminate D&D’s authority to collect on the outstanding invoices.
  4. 4) It was therefore unnecessary to deal with issue (2). However, assuming the contrary finding were made regarding issue (1), there was no constructive trust in this case (Neste Oy v Lloyd’s Bank Plc [1983] 2 Lloyds Rep 658 and In re Japan Leasing Europe Plc [1999] BPIR 911 overruled). An agent has a duty to account to his principal for money received on his behalf. The duty does not necessarily give rise to a trust of the money in the agent’s hands. That depends on the intentions of the parties derived from the contract, or in some cases from their conduct. If an agent became insolvent before accounting to his principal for money received on his behalf then, unless the relations between the parties are such as to make the agent an express trustee of the money, the money will form part of the agent’s insolvency estate and the principal must prove in the liquidation.
  5. 5) Appeal allowed and declared that the fund representing the proceeds of the invoices is payable to A.
JUDGMENT LORD SUMPTION (with whom Lord Neuberger, Lord Clarke, Lord Carnwath and Lord Hodge agree): [1] This appeal raises two important and controversial questions of commercial law. The first is: in what circumstances will the law treat the authority of an agent as irrevocable. The other is whether the receipt of money at a time …
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Counsel Details

Stephen Moriarty QC (Fountain Court, Temple, London EC4Y 9DH, tel 020 7583 3335), e-mail, Francis Reynolds QC (Hon) (7 King’s Bench Walk, Temple, London EC4Y 7DS, tel 020 7910 8300), e-mail and Nicholas Craig (3 Verulam Buildings, London WC1R 5NT, tel 020 7831 8441, e-mail instructed by APP Law Solicitors (3 Finger Post Lane, Norley, Cheshire, England WA6 8LE) for the appellant.

Jamie Riley (Littleton Chambers, 3 King’s Bench Walk North, Temple, London EC4Y 7HR, tel 020 7797 8600, e-mail and Philip Hinks (3 Verulam Buildings, London WC1R 5NT, tel 020 7831 8441, e-mail instructed by Shoosmiths LLP (20th Floor, Tower 42, 25 Old Broad Street, London EC2N 1HQ, tel 020 7305 5692, e-mail for the respondents.

Cases Referenced

Legislation Referenced

  • Insolvency Act, s112
  • Powers of Attorney Act 1971, s4(1)