Trust character of wage deductions: sums withheld for a co-operative society are excluded from the company's liquidation estate.

Money deducted from employees' wages for remittance to a co-operative credit society, under the governing wage and co-operative arrangement, is held for a specific purpose and not as the company's beneficial property. Because the company had only a custodial role, with no debtor-creditor relationship, no interest element, and no indication that the society placed surplus funds with it, the deductions were impressed with a trust. In winding up, the liquidator could claim only property to which the company had legal and beneficial title. The deducted sums therefore did not form part of the assets available for general distribution and were recoverable by the society in full.

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Issues: Whether the amount deducted by the company from employees' wages pursuant to requisitions of the co-operative credit society was trust money outside the company's assets in liquidation, or whether it formed part of the company's assets distributable in winding up.

Analysis: The winding-up provisions require the liquidator to take custody only of property to which the company has both legal and beneficial title. On the admitted facts, the employees had earned the wages, the society was entitled to recover the deductions under the governing co-operative arrangement, and the company's role was only to deduct and remit the sums to the society. The deductions were not treated as a deposit or investment of surplus funds, as there was no payment of interest, no indication of a debtor-creditor relationship, and no material showing that the society had placed its own surplus money with the company. The statutory scheme under the Payment of Wages Act and the co-operative legislation supported the validity of the deductions and the obligation to remit them. Once deducted for the specific purpose of payment to the society, the money retained the character of funds held for another and the company had no beneficial interest in it.

Conclusion: The amount was impressed with a trust and did not form part of the company's assets in liquidation; the society was entitled to receive it in full before distribution of the company's assets.

Final Conclusion: The liquidator could not treat the deducted wages as distributable assets of the company, and the society's claim had priority over general distribution in winding up.

Ratio Decidendi: Money deducted from wages for a specific and admitted liability to a co-operative society, and held only for remittance to that society, is not part of the company's beneficial assets and is recoverable from the liquidator as trust money.

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