Bank of New Zealand v. Elders Pastoral Ltd., (1990) 114 N.R. 314 (PC)

• Case Date: October 22, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1990), 114 N.R. 314 (PC)

Bk. of N.Z. v. Elders Pastoral Ltd. (1990), 114 N.R. 314 (PC)

MLB headnote and full text

Elders Pastoral Limited (appellant) v. The Bank of New Zealand (respondent)

(No. 51 of 1989)

Indexed As: Bank of New Zealand v. Elders Pastoral Ltd.

Judicial Committee of the Privy Council

London, England

Lord Bridge of Harwich, Lord Templeman, Lord Griffiths, Lord Ackner, Lord Goff of Chieveley

October 22, 1990.

Summary:

As security for a loan, a farmer transferred and assigned the property in his livestock to the Bank at New Zealand by way of a mortgage. The mortgage was registered under the Chattels Transfer Act 1924. Under that Act, the farmer had an implied right to sell the livestock in the ordinary course of business. However, the Act also allowed the parties to amend the implied covenants. Here, the parties agreed to include a clause which gave the bank first claim to the proceeds of any sale of livestock. Later, another creditor (Elders) sold some of the livestock as the farmer's agent and claimed the proceeds. The Bank submitted that the amending clause constituted an equitable assignment of the farmer's statutorily implied right to the proceeds of any sale in the ordinary course of business. Therefore, the Bank submitted that its claim had priority over Elders' and sued Elders for the proceeds from the sale.

A Master of the court gave the Bank summary judgment. Elders appealed.

The Court of Appeal of New Zealand dismissed the appeal. However, the Court of Appeal affirmed the decision on the ground of constructive trust - not equitable assignment. Elders appealed.

The Privy Council dismissed the appeal. However, the Board affirmed the Court of Appeal's decision on the ground of the equitable assignment, not the constructive trust.

Note: An earlier decision in this matter is reported at 111 N.R. 310.

Choses in Action - Topic 363

Equitable assignments - What constitutes an equitable assignment - The Judicial Committee of Privy Council considered the nature of an equitable assignment - The Board found that the assignment need not purport to be an assignment and could assume various forms - The language was immaterial provided that the meaning was plain - "All that is necessary is that the debtor should be given to understand that the debt is being made over by the creditor to some third person." - See paragraph 5 - Also, the assignment could be of a future interest - See paragraph 8.

Choses in Action - Topic 363

Equitable assignments - What constitutes an equitable assignment - A farmer assigned his livestock to the Bank by way of a mortgage as security for a loan - The Act allowed the farmer to sell his livestock in the ordinary course of business - However, the parties included a clause which gave the Bank the first claim to the proceeds of any sale of livestock - A second creditor sold some of the farmer's livestock and claimed the proceeds - The Privy Council affirmed the Bank's claim to the proceeds on the ground that the clause was an equitable assignment of the farmer's right to receive the proceeds.

Choses in Action - Topic 1084

Assignment of book debts - Floating charge - Fixing or crystallizing of charge - [See second Choses in Action - Topic 363].

Cases Noticed:

William Brandt's Sons and Co. v. Dunlop Rubber Company Limited, [1905] A.C. 454, consd. [para. 5].

Tailby v. Official Receiver (1888), 13 App. Cas. 523, consd. [para. 8].

Dempsey and National Bank of New Zealand v. Traders Finance Corp., [1933] N.Z.L.R. 1258, consd. [para. 23].

Statutes Noticed:

Chattels Transfer Act, 1924 (New Zealand), sect. 2 [para. 18]; sect. 4(1) [paras. 3, 17]; sect. 4(2) [para. 21].

Counsel:

[None disclosed.]

This appeal was heard by Lord Bridge of Harwich, Lord Templeman, Lord Griffiths, Lord Ackner, Lord Goff of Chieveley of the Judicial Committee of the Privy Council in London, England. The decision of the Privy Council was delivered by Lord Templeman on October 22, 1990: