Barclays Banking v Quistclose Investments

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Citation: Barclays Banking v Quistclose Investments [1970] AC 567.

This information can be found in the Textbook: Evans, Equity and Trusts, 3rd edition, Lexis Nexis, 2012, p. 423 [25.9]

Contents

Background Facts

  • Rolls Razor was heavily in debt to the Plaintiff [Barclays Bank].
  • It loaned money off Defendant [Quistclose] to pay dividends to its shareholders (not the Plaintiff), and then went insolvent. b
  • The Plaintiff tried to take the money loaned by the Defendant to Rolls Razor in order to pay off the debt.
  • The Defendant said this money was given to Rolls Razor for a specific purpose and no other (to pay dividends) and it was held on a trust.

Argument

  • The Defendant argues that the fact that the money was given for specific purposes means it was held on trust.

Legal issues

Judgment

  • The mutual intention of the Defendant and Rolls Razor was that the money should not become part of the assets of Rolls Razor, but should remain for payment of the dividend.
  • Thus, if the money could not be paid, the money had to be returned.
  • The fact that money is held separately to other money, and is there for a special purpose, is strong evidence that it was held on trust for those who are meant to receive it.

References

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