Elaine Palser considers the latest authorities on the Quistclose trust
In Bellis v Challinor [2015] EWCA Civ 59, [2015] All ER (D) 213 (Feb) and Gore v Mishcon de Reya [2015] EWHC 164 (Ch), [2015] All ER (D) 57 (Feb), the question arose whether monies transferred to a solicitors’ client account were held on trust for the solicitors’ client or on a Quistclose trust for the transferor. Both decisions have provided clarity as to when a Quistclose trust will be found to exist and the nature of the construction exercise the court will undertake.
Quistclose trusts are important where monies are provided for a specific purpose and the recipient of funds becomes insolvent before that purpose is fulfilled. If there is a trust, then the transferor of the funds has a proprietary claim to the money (and the ability to trace) as opposed to ranking merely as an unsecured creditor. It also means that recipients of such funds—including solicitors holding monies in client accounts—could be sued for breach of trust if they part
