This resolution is important for contractors’ rights to retention monies in construction contracts.

The Hong Kong Court of First Instance (CFI) held in a recent judgment that, whilst the absence of segregation is not necessarily fatal to a trust, a valid trust cannot be formed due to lack of certainty of subject matter unless the money in question is part of a “sufficiently identifiable bulk”. This decision clarifies the nature of a contractor’s rights over retention monies in construction contracts, particularly when the employer becomes insolvent.