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Neste Oy v Lloyd’s Bank

[1983] 2 Lloyd’s Rep 658

Case summary last updated at 24/02/2020 17:33 by the Oxbridge Notes in-house law team.

Judgement for the case Neste Oy v Lloyd’s Bank

The plaintiff ship owner was accustomed whenever one of his vessels entered a UK port to transfer to the bank account for its agent at Lloyds Bank sufficient funds to enable the agent to discharge all liabilities incurred by the vessel => a number of such payments were made immediately before and after the agent appointed a receiver and therefore could no longer trade. The court held that the agent had become a trustee of the payment received after the appointment of the receiver; at the time of its arrival, the bank had already known of the appointment of the receiver and had therefore been placed upon enquiry => the bank was consequently bound by this trust and was not subsequently entitled to set-off the payment.
 
Bingham LJ: An agent will thus clearly be liable for inconsistent dealing if he knowingly misapplies property subject to a trust; the criterion which in this respect suffices for the imposition of liability for knowing receipt, whether that criterion be knowledge or, as the law presumably stands at present, unconscionability, should also apply to the imposition of liability for inconsistent dealing.

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