Peters Opal. Appeal Court ruling

[Alfie168]

I'm probably well behind the game on this, but on P9 of PBO there is a note about two P.O. customers losing their case to have returned the £97,500 they claim they had paid into a Peters Opel Client Account.

Just before the company went into administration the money was paid into a deficit current account.

The judge said there was 'some attraction' to ruling that the client account should be treated as having received the money. But he went on to say that by paying the money into a deficit account the money had ceased to exist., stating "The breach of trust had the consequence that the money had never become part of a trust fund "

Being a simple soul..the message I get is that client accounts afford you no protection whatsoever. Or is the judge saying it never went into a client account, thus cannot benefit from the protection offered by a client account. I'm also reminded of which profession uses client accounts more than any other.

Am I right or am I wrong or just too plain cynical for words (the latter is a distinct possibility)

Either way it was a nifty piece of sleight of hand to make the money 'cease to exist'.

What does the team think?

Tim

 

[Norman_E]

There was a very extensive thread on this, but I cannot now find it. One conclusion was that putting money into a clients account does work, but only if the money is actually deposited in the right bank account. In this case Peters Opal put the clients money straight into an overdrawn business account at their bank. The money "ceased to exist" because it part repaid the overdraft.

Edit. Now found it Here!

 

[Alfie168]

Doh!! How did I miss that thread....I know..I was still in shock from my 80 hour callout week. either that or i'd lost my glasses.

Thanks for referring me to it.

Tim

 

[Heckler]

A nifty sleight of hand indeed, if it was me i would be looking back to the transaction to see who he spoke to, who told him dosh was to go in to client account and what proof I had that I was told this. If I thought that on the balance of probability (dont forget civil cases need less proof) i had proof that a certain person told me that the dosh was going in a client account, then i would be pursuing the person who put it in the wrong account!
stu

 

[savageseadog]

What are you expecting from the British court system, justice? Welcome to the Alice in Wonderland world of reverse logic where the law somehow contrives to make black white.
You've got got to keep lining the pockets of lawyers to have a chance.

 

[moondancer]

Caveat emptor - or something like that.

 

[StephenSails]

Surely placing funds in anything but a specified client account is fraud or theft?

 

[Twister_Ken]

One or both, but when the company that has screwed you has gone belly up, why sue? There no money left to pay you if you win.

 

[sighmoon]

I'm no lawyer, but would have thought it's fraud on the part of the directors to let that happen, so the directors can be sued?

 

[Blue5]

It smacks that the directors were only too aware of what was happening and did all they could to minimize there own personal loss, they probably had personal guarentees against the overdraft.

 

[matelot]

[ QUOTE ]

Am I right or am I wrong or just too plain cynical for words (the latter is a distinct possibility)

Tim

[/ QUOTE ]

You are wrong but more significantly you are making the assumption that the legal system has something to do with dispensing justice. It hasnt, and if it does produce a just result that is only a happy co-incidence. Instead the legal system is about the literal interpretation of a set of rules whether generated by statute or by precedent.

And if you are thinking that the legal system is run for the benefit of lawyers - well of course it is. As house sales run for the benefit of estate agents and the NHS for the doctors and (as we have seen this week) the schools for the teachers. None of them would see it that way - its the unintended result of human nature.

 

[TimfromMersea]

I have only read the summary of the judgement in The Times and not the actual law report, but I believe that the case here centres around the fact that the money was given to the Company by the customer, in the belief and on the instruction that it would be placed in the client account.

However instead of doing this the Directors put the money in the Peters Opal ordinary 'office account' and not the client account. The money was then used for the general purposes of the Company.

The Judge's ruling was that the money was never in the client account, even though it was meant to be there, and so could not be treated as having been placed in the client account. To do so would be unfair to the rest of the creditors of the business, as it would effectively be placing the interest of one creditor or group of creditors (i.e. disaffected deposit paying customers) over another creditor or group of creditors (i.e. trade and business, and other, creditors.

I suspect the only remedy here would be an action against the Directors personally for a 'wrongful act' in putting in the office account money that should have been in the client account. The problem here may well be proving that the money was specifically given to them on the basis that it would be held in a client account, or that the Directors knew or should have known that the money should have been placed in the client account, or that the money was improperly withdrawn from the client account.

In any case the Directors as was may have no money or assets to pay any judgement - they may have protected their assets well! - and it's more litigation.

Lots of problems and not many solutitions I'm afraid!

As a past purchaser of a new Beneteau I must confess I had the same thought when I wrote the cheque to the UK dealer, on the basis that the only way that they would deal with the purchase would be that the French had cleared funds in their account before the boat left France. Fortunately it worked for me and I got the boat. Others have been desperately unfortunate and they deserve all our sympathy. Have the RYA legal dept been any help?

 

[benjenbav]

What may be happening - I don’t know if it is or it isn’t - is that the claimants may very well be using the judge's unambiguous comments as to wrongdoing in order to build a case against the directors who were in control of the company. I do believe that we still have the finest system of justice in this country, but it’s a bit like climbing the Eiger. You can’t go straight from the bottom to the top; sometimes you have to go sideways to get round obstacles.

 

[maxi77]

A couple of points, using electronic funds transfer give the payer more assurance the funds actually end up in the intended account, and secondly why do we seem so timid in this country about using the criminal law against company directer and officials who act in a fraudulant manner.

 

[Heckler]

Exactly, I would be seeking legal advice as to what exactly is the position when a director does "wrong" I know that limited doesnt absolve directors from everything.
Stu

 

[robp]

Quote
<<What may be happening - I don’t know if it is or it isn’t - is that the claimants may very well be using the judge's unambiguous comments as to wrongdoing in order to build a case against the directors who were in control of the company. >>

Yes, surely the directors have a duty of care when it is clear that someone entrusted them with funds that are not intended as as a loan for operating capital? As directors, government departments are constantly telling us that we are personally responsible (sometimes criminally) for many aspects of the business. This should be a clear case for those who shouldn't even have been seen as creditors. The money might have "disappeared" but it can be proved that it was received.

Some have said, "what's the point of persuing it if the directors don't have any money?" (sic). I doubt that but in any case when I was young, I was warned; don't drive without insurance, it's imprisonable and one could spend the rest of their lives paying compensation. Is it just a dusting of hands and walk away now, if there is no obvious stash to cover one's responsibilities?

 

[sailorman]

director Poor
directors wife Rich

 

[Koeketiene]

[ QUOTE ]
director Poor
directors wife Rich

[/ QUOTE ]

Not a good time for the director to have an affair then /forums/images/graemlins/tongue.gif
The wife OTOH... can have that gardener/milkman she always wanted
/forums/images/graemlins/laugh.gif

 

[DAKA]

Not sure if this has been covered in the original thread but if anyone is buying a boat with £100 000 that is sufficient to insist on your own separate client trust account.

That is the Broker/Dealer sets up a new bank account in trust solely to accommodate your funds.

The funds could be withdrawn for another purpose but it would be clear fraud easy to prove and get locked up for.

 

[Refueler]

[ QUOTE ]
director Poor
directors wife Rich

[/ QUOTE ]

I think you'll find the days of transfers to wife etc. are over - long gone and not allowed now. I remember the haulage co. I had connection with when the Owner was going t's up. He transferred everything to wifes name hoping to save it all for later resurrection. Unfortunately the 1 quid transfer fee was not accepted by court and the co. was held liable for full value before transfer of assets. New Directors also were held to be the new owners of the debt ! There was a lot more as well - but in essence - he was caught !