Bailey v Angove’s Pty Ltd [2016] UKSC 47

Angove's, an Australian winemaker, used D&D Wines as its UK agent and distributor. When D&D entered administration, two retailers still owed money for sales arranged on Angove's behalf. Angove's terminated the agreement and revoked D&D's authority to collect those payments, proposing to collect directly and pay the commission separately. D&D's liquidators argued that its authority survived so that it could deduct its commission from the receipts. Angove's would then be an unsecured creditor for the balance. A further argument concerned whether receipt of money when the agent knew it could not account because of insolvency created a constructive trust.

Did the agent's collection authority survive revocation because commission was owed, and did knowledge of insolvency independently turn contractual receipts into trust property?

The Supreme Court held that the collection authority had ended. An authority coupled with an interest can be irrevocable, but it must be intended both to be irrevocable and to secure the agent's own relevant financial interest. D&D's ability to deduct commission was a payment mechanism rather than the required security. Lord Sumption also addressed the trust argument on the assumed basis that the authority continued. Knowledge that insolvency would prevent performance did not itself create a constructive trust. An agency duty to account can be merely personal; whether receipts are trust money depends on the arrangement. The alternative trust discussion was unnecessary to the successful revocation ground and must be identified accordingly.

An agent's financial interest in receiving commission does not itself make its authority irrevocable. Separately, insolvency and inability to account do not alone convert a contractual payment obligation into a proprietary trust claim with priority over other creditors.

The case connects fiduciary relationships with insolvency without treating every agency receipt as trust property. Its practical lesson is to identify the source of the claimed proprietary right before discussing tracing or creditor priority. The Supreme Court's alternative trust analysis rejects a general appeal to unfairness as sufficient. Compare FHR, where an established fiduciary rule attaches to an unauthorised commission, rather than an ordinary debt becoming proprietary because the debtor is insolvent.