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Neste Oy V. Lloyd's Bank Notes

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NESTE OY V. LLOYD'S BANK FACTS The plaintiffs in this action are a shipowning company incorporated in Finland. At the material time they owned three vessels named Tiiskeri, Nestegas and Enskeri. As agents in the United Kingdom the plaintiffs from time to time employed a company named Peckston Shipping Ltd. ("PSL"). When the plaintiffs' vessels put into United Kingdom ports and incurred liabilities in respect of jetty and river dues, pilotage, towage, berth fees and similar expenses, or when the masters of the vessels required cash, the plaintiffs transferred funds to PSL to discharge these liabilities and make advances of cash or sometimes perhaps to reimburse PSL for having done so. They also paid PSL an agency fee. Unfortunately PSL and the group to which it belonged found themselves in financial difficulties, and a time came when a receiver was appointed and Lloyds Bank plc. ("the bank"), bankers to PSL and other group companies, exercised a right of set-off between PSL's accounts which were in credit and those which were in debit. The plaintiffs and other owners in a like position challenged the right of the bank to set-off against PSL's debt to the bank sums held by PSL for onward payment to United Kingdom creditors of the owners. The owners contended, putting the matter very shortly at this stage, that these funds were not available for set-off because they were held by PSL on trust to apply in a specified way and no other. The bank was said to have notice of the position. ISSUES

1. Were all or any of the funds transferred by the plaintiffs to the account of PSL between Jan. 14 and Feb. 22, 1980, subject to a trust to pay the same to creditors of the plaintiffs in respect of expenses incurred by the plaintiffs' vessels?

2. If so, did the bank have such notice that the funds were so held as to preclude it from exercising any right of set-off in respect of those funds?
HOLDING Was there a constructive trust?
It was argued for the respondents that agents owe their principals duties of a fiduciary character but urged that agents funded by their principals do not necessarily hold the funds as trustees: whether in a particular case an agent is a trustee depends on all the circumstances including the intention of the parties, express or to be inferred.

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