Farepak Foods and Gifts Ltd & Ors v Revenue and Customs & Anor Rev 1, Court of Appeal - Chancery Division, December 18, 2006, [2006] EWHC 3272 (Ch)

Extract

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Farepak Foods and Gifts Ltd & Ors v Revenue and Customs & Anor Rev 1, Court of Appeal - Chancery Division, December 18, 2006, [2006] EWHC 3272 (Ch)

Neutral Citation Number: [2006] EWHC 3272 (Ch)

Case No: 7475 OF 2006

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 18/12/2006

Before :

MR JUSTICE MANN

IN THE MATTER OF FAREPAK FOOD AND GIFTS LIMITED

(IN ADMINISTRATION)

AND IN THE MATTER OF THE INSOLVENCY ACT 1986

Between :

| |SHAGUN SUNIL DUBEY | |

| |MARTHA HANORA THOMPSON | |

| |(JOINT ADMINISTRATORS OF FAREPAK FOODS AND GIFTS LIMITED) | |

| | |Applicants |

| |- and - | |

| |HM REVENUE AND CUSTOMS | |

| |SUZY HALL |Respondents |

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MS. L. HILLIARD (instructed by Messrs Taylor Wessing) for the Claimants.

MR. J. LOPIAN (instructed by Solicitor for Revenue & Customs) for the First Respondent.

MR. A. TRACE Q.C. and MR. M. SMITH (instructed by Denton Wilde Sapte LLP) for the Second Respondent.

Hearing dates: 15th and 18th December 2006

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Judgment

Mr Justice Mann :

Introduction

1. This is an application for directions by the administrators of Farepak Food and Gifts Ltd (“Farepak”) as to whether and how they should distribute certain funds held by them. The application turns on whether the moneys are held on trust for the customers who provided them.

Factual background

2. This case arises out of an insolvency which has caused considerable disappointment and disadvantage to a large number of, typically, low income families. The company operated a Christmas savings scheme under which customers could spread their Christmas savings over a year. Small contributions could be made month by month so that enough had accumulated by the beginning of November to buy a shopping voucher, or a hamper, or other goods. It operated through a system of “Agents”, who were typically work colleagues, friends or members of the same family as the customers. The Agents collected the money and forwarded it to Farepak. There were approximately 26,000 Agents, most of whom had no more than 6 or 7 customers. The administrators’ calculations indicate that the average customer order through an agent was £250 to £300.

3. On 11th October the directors decided to cease trading. Farepak went into administration on 13th October 2006. It is heavily insolvent and any dividend will be but a few pence in the pound. It did not, and will not, fulfil its Christmas 2006 orders. A lot of people who relied on Farepak’s s...

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