Goldcorp Exchange Ltd. (Receivership), Re, (1994) 170 N.R. 241 (PC)

• Case Date: May 25, 1994
• Jurisdiction: Canada (Federal)
• Citations: (1994), 170 N.R. 241 (PC)

Goldcorp Exchange Ltd., Re (1994), 170 N.R. 241 (PC)

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Bryan Norreys Kensington and John Joseph Cregten (as the receivers of Goldcorp Exchange Limited (in receivership) and Bank of New Zealand (appellants) v. The unrepresented non-allocated claimants, Steven Paul Liggett and James William Heppleston (respondents)

(Privy Council Appeal No. 42 of 1993)

Indexed As: Goldcorp Exchange Ltd. (Receivership), Re

Judicial Committee of the Privy Council

Lord Templeman, Lord Mustill,

Lord Lloyd of Berwick and

Sir Thomas Eichelbaum

May 25, 1994.

Summary:

The Bank of New Zealand appointed receivers under the terms of a debenture issued by Goldcorp Exchange Ltd., a dealer in gold and other precious metals. The pri­vate investors ("customers") of Goldcorp asserted proprietary claims regarding Gold­corp's remaining stock of bullion. The receivers applied to the High Court of New Zealand for directions concerning the dis­posal of the remaining bullion.

The High Court of New Zealand con­sidered the customer's claims in three cate­gories. The first category was comprised of "non-allocated claimants", customers who had purchased bullion, but for whom there had not been any apportionment of specific and segregated parcels of bullion at the time the bank's floating charge crystallized. The second category was comprised of one member (Liggett), whose case was similar to the non-allocated claimants but had certain additional features. The third category con­sisted of claimants who had made contracts for the purchase of bullion from Walker & Hall Ltd. before that company's business was acquired by Goldcorp. The High Court, per Thorp, J., rejected the claims of the non-allocated claimants and of Liggett, but allowed the claims of the Walker & Hall claimants. The unsuccessful claimants appealed.

The New Zealand Court of Appeal agreed that the first two categories of claimants had no proprietary rights to the bullion. How­ever, the scope of the debate was enlarged on appeal to embrace a new claim to a proprietary remedy related directly or indi­rectly to the purchase price paid by the customers under sale contracts. The Court of Appeal, McKay, J., dissenting, found in favour of the non-allocated claimants and Liggett on this issue and held that the entire amount of the purchase monies could be traced into Goldcorp's general assets. The receivers and the bank appealed.

The Judicial Committee of the Privy Council allowed the appeal and restored the judgment of the High Court.

Bailment - Topic 2

What constitutes a bailment - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Customers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining stock of bullion - One group of customers referred to as "non-allocated claimants", consisted of customers who had purchased bullion, but who had received certificates of ownership rather than the metal, which was stored and insured by Goldcorp on a non-allo­cated basis - It was argued that Goldcorp, by acknowledging itself to be a bailee, gave its customers good title to that which they had agreed to purchase and was now precluded from denying that the customers had good title - The Judicial Committee of the Privy Council rejected the argument, holding that there was never any bailment - See paragraphs 23 to 24.

Contracts - Topic 4188

Remedies for breach - Rescission - Time for - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Customers of Goldcorp asserted, inter alia, claims to a proportion of Goldcorp's general assets seen as representing the purchase monies paid by the customers under contracts for the sale of gold - The customers argued, inter alia, that the sale transactions were rendered ineffectual because of mistake, misrepresentation and a total failure of consideration and that because of those vitiating factors, the customers were either left with a beneficial interest in the pur­chase monies or the purchase monies re-vested in them - The Judicial Committee of the Privy Council rejected the argument - The customers had never rescinded the contracts and even if that course were open, the remedies arising on rescission would be too late to affect the bank's secured rights - See paragraphs 40 to 45.

Equity - Topic 3606

Fiduciary or confidential relationships - What constitutes a fiduciary relationship - A bank appointed receivers under a de­benture issued by Goldcorp, a dealer in gold and precious metals - Customers of Goldcorp asserted proprietary claims re­garding Goldcorp's remaining stock of bullion - One group of customers referred to as "non-allocated claimants", consisted of customers who had purchased bullion, but who had received certificates of own­ership rather than the metal, which was stored and insured by Goldcorp on a non-allocated basis - Those claimants argued, inter alia, that Goldcorp was a fiduciary because it held itself out as willing to vest bullion in the customer and to hold it in safe custody on the customer's behalf in circumstances where the customer was totally dependent on and trusted Goldcorp - The Judicial Committee of the Privy Council rejected the argument - See para­graphs 31 to 33.

Estoppel - Topic 3

When available - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Customers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining stock of bullion - One group of customers referred to as "non-allocated claimants", consisted of customers who had purchased bullion, but who had received certificates of ownership rather than the metal, which was stored and insured by Goldcorp on a non-allocated basis - It was argued that Goldcorp, hav­ing represented to those customers that they had title to the bullion, could not now say that they did not have title and that the bank was also estopped because it now stood in Goldcorp's shoes - The Judicial Committee of the Privy Council rejected the argument - See paragraphs 17 to 22.

Sale of Goods - Topic 2708

Transfer of property in goods from seller to buyer - Whether title to goods passed to buyer - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Cus­tomers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining stock of bullion - One group of customers referred to as "non-allocated claimants", consisted of customers who had purchased bullion, but who had received certificates of ownership rather than the metal, which was stored and insured by Goldcorp on a non-allocated basis - The Judicial Com­mittee of the Privy Council affirmed that the non-allocated claimants did not obtain any legal or equitable proprietary interest under the contracts of sale - The contracts were for the sale of unascertained goods and the buyers could not acquire title until it was known to what goods the title related - See paragraphs 12 to 15.

Sale of Goods - Topic 2708

Transfer of property in goods from seller to buyer - Whether title to goods passed to buyer - A receiver was appointed for Goldcorp, a gold and precious metals dealer - Customers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining bullion stock - One group had purchased bullion from Walker & Hall Ltd. before that company's business was acquired by Goldcorp - Walker & Hall had stored the bullion representing cus­tomers' purchases en masse, but separate from its own stock - When Goldcorp purchased Walker & Hall's business, it absorbed the separated bullion into its own trading stock - The Judicial Committee of the Privy Council affirmed that there had been sufficient ascertainment and appro­priation of goods to the individual con­tracts to transfer title to the Walker & Hall claimants and that their proprietary re­coveries could not exceed the lowest bal­ance of metal held by Goldcorp between the accrual of the claimants' rights and the receivership - See paragraphs 56 to 68.

Sale of Goods - Topic 2805

Transfer of property in goods from seller to buyer - Unascertained goods - Ap­portionment to the contract - [See both Sale of Goods - Topic 2708 ].

Trusts - Topic 661

Creation of trust - Transactions not creat­ing trusts - General - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Customers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining stock of bullion - One group of customers referred to as "non-allocated claimants", consisted of customers who had purchased bullion, but who had received certificates of ownership rather than the metal, which was stored and insured by Goldcorp on a non-allocated basis - The Judicial Committee of the Privy Council affirmed that the non-allo­cated claimants did not obtain any legal or equitable proprietary interest under the contracts of sale - The Privy Council rejected an argument that collateral prom­ises made by Goldcorp contained a decla­ration of trust by Goldcorp in favour of the customers - See paragraphs 15 and 16.

Trusts - Topic 661

Creation of trust - Transactions not creat­ing trusts - General - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Customers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining bullion stock and also asserted claims to a proportion of Goldcorp's gen­eral assets seen as representing the monies paid by the customers under the sale con­tracts - One group of claimants consisted of customers who had purchased bullion, but who had received certificates of own­ership rather than the metal, which was stored and insured by Goldcorp on a non-allocated basis - The customers argued that the purchase monies paid by them were from the outset impressed with a trust in their favour - The Judicial Com­mittee of the Privy Council held that the purchase monies were not impressed with such a trust - See paragraphs 37 and 38.

Trusts - Topic 2310

Constructive trusts - Circumstances when not imposed - A bank appointed receivers under a debenture issued by Goldcorp, a dealer in gold and precious metals - Cus­tomers of Goldcorp asserted proprietary claims regarding Goldcorp's remaining stock of bullion - One group of customers referred to as "non-allocated claimants", consisted of customers who had purchased bullion, but who had received certificates of ownership rather than the metal, which was stored and insured by Goldcorp on a non-allocated basis - It was argued that the court should declare a restitutionary proprietary interest or a remedial construc­tive trust in the claimants' favour over the bullion in Goldcorp's vaults - The Judicial Committee of the Privy Council held that the doctrine was not applicable - See paragraph 34.

Cases Noticed:

Carlos Federspiel & Co. S.A. v. Charles Twigg & Co., [1957] 1 Lloyd's Rep. 240, refd to. [para. 13].

Wait, Re, [1927] 1 Ch. 606 (C.A.), consd. [para. 14].

Dublin City Distillery Ltd. v. Doherty, [1914] A.C. 823, consd. [para. 16].

Laurie Moorewood v. Dudin & Sons, [1926] 1 K.B. 223 (C.A.), refd to. [para. 16].

Whitehouse v. Frost (1810), 12 East. 614, refd to. [para. 16].

Waltons Stores (Interstate) Ltd. v. Maher (1988), 164 C.L.R. 387, refd to. [para. 17].

Australia v. Verwayen (1990), 95 A.L.R. 321, refd to. [para. 17].

Sharpe (Bankrupt), Re, [1980] 1 W.L.R. 219; [1980] 1 All E.R. 198, refd to. [para. 17].

Knights v. Wiffen (1870), L.R. 5 Q.B. 660, consd. [para. 18].

Simm v. Anglo-American Telegraph Co. (1879), 5 Q.B.D. 188 (C.A.), refd to. [para. 19].

Holroyd v. Marshall (1862), 10 H.L. Cas. 191 (H.L.), refd to. [para. 26].

Spence v. Union Marine Insurance Co. (1868), L.R. 3 C.P. 427, refd to. [para. 27].

South Australian Insurance Co. v. Randell (1869), 3 App. Cas. 101, refd to. [para. 27].

Indian Oil Corp. v. Greenstone Shipping (Co.) S.A. (Panama), [1988] Q.B. 345; [1987] 3 All E.R. 893, refd to. [para. 27].

Savage v. Salem Mills Co. (1906), 85 P. 69, refd to. [para. 27].

S.E.C. v. Chenery Corp. (1943), 318 U.S. 80, refd to. [para. 32].

London Wine Co. (Shippers) Ltd., Re, [1986] P.C.C. 121, refd to. [para. 36].

Mac-Jordan Construction Ltd. v. Brook­mount Erostin Ltd., [1992] B.C.L.C. 350, refd to. [para. 36].

Quistclose Investments Ltd. v. Rolls Razor Ltd. (In Liquidation), [1970] A.C. 567, refd to. [para. 38].

Kayford (In Liquidation), Re, [1975] 1 W.L.R. 279; [1975] 1 All E.R. 604, consd. [para. 38].

Eastgate, Re; Ex parte Ward, [1905] 1 K.B. 465; [1904-07] All E.R. Rep. 890, refd to. [para. 43].

Chase Manhattan Bank N.A. v. Israel-British Bank (London) Ltd., [1981] Ch. 105; [1979] 3 All E.R. 1025, refd to. [para. 44].

Sinclair v. Brougham, [1914] A.C. 398; [1914-15] All E.R. Rep. 622 (H.L.), dist. [para. 45].

Neste Oy v. Lloyds Bank plc, [1983] 2 Lloyd's Rep. 658, dist. [para. 45].

Space Investments Ltd. v. Canadian Imperial Bank of Commerce Trust Co. (Bahamas) Ltd., [1986] 1 W.L.R. 1072; 69 N.R. 50; [1986] 3 All E.R. 75 (P.C.), refd to. [para. 48].

Diplock's Estate, Re; Diplock v. Wintle, [1948] Ch. 465; [1948] 2 All E.R. 318 (C.A.), refd to. [para. 48].

Roscoe (James)(Bolton) Ltd. v. Winder, [1915] 1 Ch. 62, refd to. [para. 58].

Hong Kong (Attorney General) v. Reid, [1994] A.C. 324, refd to. [para. 66].

Napier (Lord) and Ettrick et al. v. Kershaw (R.F.) Ltd. et al., [1993] A.C. 713; 148 N.R. 81 (H.L.), refd to. [para. 66].

Napier (Lord) and Ettrick v. Hunter - see Napier (Lord) and Ettrick et al. v. Kershaw (R.F.) Ltd. et al.

Lord - see proper name of lord.

Statutes Noticed:

Sale of Goods Act 1893 (UK), sect. 16 [para. 12].

Sale of Goods Act 1908 (New Zealand), sect. 18 [para. 12].

Authors and Works Noticed:

Benjamin, Sale of Goods (3rd Ed. 1987), pp. 80, 218, 219, paras. 106, 357 [para. 26].

Birks, Peter, An Introduction to the Law of Restitution (1985), p. 377 et seq. [para. 65].

Blackburn, Lord, The Effect of the Con­tract of Sale (1st Ed. 1845), pp. 122 to 123 [para. 13]; 162 [para. 20].

Ford and Lee, Principles of the Law of Trusts (2nd Ed. 1990), pp. 738 to 768, paras. 1716 to 1730 [para. 58].

Goff, Robert, Lord Goff of Chieveley and Jones, Gareth, The Law of Restitution (3rd Ed. 1986), p. 74 [para. 58].

Goff, Robert, Lord Goff of Chieveley and Jones, Gareth, The Law of Restitution (4th Ed.), pp. 73 to 75 [para. 65]; 94 [para. 47]; 644 [para. 32].

Goode, Mary Oliver Memorial Address, (1987) 103 L.Q.R. 433, pp. 445 to 447 [para. 63].

Maddaugh, Peter D., and McCamus, John, The Law of Restitution (1990), generally [para. 66].

Paciocco (1989), 68 Can. Bar. Rev. 315 [para. 66].

Palmer, N.E., Bailment (2nd Ed. 1991), p. 1374 [para. 20].

Sherwin, Emily L., Constructive Trusts in Bankruptcy (1989), U. Ill. L. Rev. 297, p. 335 [para. 66].

Counsel:

Not disclosed.

Agents:

Not disclosed.

This appeal was heard before Lord Templeman, Lord Mustill, Lord Lloyd of Berwick and Sir Thomas Eichelbaum of the Judicial Committee of the Privy Council.

The following judgment of the Judicial Committee of the Privy Council was delivered by Lord Mustill on May 25, 1994.