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The court decided that sums held by liquidators were secured by the charge over the property and could be returned to the trust company to be distributed in accordance with the terms of the trust. This is another case where mainly foreign investors have lost the majority of their investment in a large-scale residential development. Gary Blaker QC at Selborne Chambers, leading counsel for the first respondent, considers the judgment.
Re Pinnacle (Angelgate) Ltd (in liquidation)  EWHC 141 (Ch)
This is another case where mainly foreign investors have lost the majority of their investment in a large-scale residential development. As a result of the case they will be able to recover between 20% and 25% of their invested sums.
In this case, the liquidator held nearly £5m from the proceeds of sale of the development site in Manchester. The court was asked to consider whether it should be distributed by the liquidators or by a trust company which was formed to hold the investor’s deposits.
In interpreting a term of a charge over the property the court had to consider whether the charge secured the net proceeds of sale. In holding that they did, it ensured the monies would be transferred swiftly to the trust company and could be distributed to the individual investors.
The case also provides a useful reminder that in investing in this type of scheme the investors are deemed to have seen their money as being put into a ‘common pot’. Thus, the court was readily content to not apply the ‘first in, first out’ rule in ‘Clayton’s Case’ (Devaynes v Noble: Clayton's Case (1816) 1 Mer 529, 572). The sums were distributed on a pro rata basis according to the investment made in the scheme. It is another reminder that the rule in Clayton’s Case will be easily displaced and that it could lead to significant unfairness.
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