Setting Up A Designated Deposit Account

The principle that retention is held on trust is a well established one. However the recent case of Bodill & Sons (Contractors) Limited v Harmail Singh Mattu [2007] EWHC 2950 which came before Mr Justice Akenhead answers certain questions about the manner in which those trust accounts should be set up. In particular, the case provides important guidance as to whether the bank account should expressly be designated a trust account so that the bank, and others, are aware of the status of the money being held in it.

By a contract dated 24 February 2006 in the JCT Standard Form of Building Contract, Private Edition with Contractor’s Designated Supplement, 1998 edition, Mr Mattu engaged Bodill to construct new apartments and convert two warehouses at Hinckley in Leicestershire. The contract sum was £3.79 million. By 12 October 2007, £3.97 million had been certified although retention was still being