• Legis Scriptor

Re Gold Corp. Exchange Ltd. (1994) ALL ER 806: A Review

Authored By- Amit Patel

Keywords- privy council, contact, judicial committee, Creditor, Contract of sale

Name of the case – In re Goldcorp Exchange Ltd: Kensington V Liggett

Equivalent citation -[1994] UKPC 3, [1995] 1 AC 74

Name of the parties- (1) Bryan Norreys Kensington and John Joseph Cregten (as the receivers of Goldcorp Exchange Limited (in receivership) (2) Bank of New Zealand Appellants v (1) the unrepresented non-allocated claimants (2) Steven Paul Liggett and (3) James William Heppleston

Bench - Lord Templeton, Lord Mustill, Lord Lloyd of Berwick, Sir Thomas Eichelbaum.

In the court of-Judicial Committee of the Privy Council


This case deals with mainly establishing, or negating fiduciary relations between the company, and its clients. It mainly states that the mutual intention that the money should not fall within the general fund of the company’s assets but should be applied for a special purpose. The sale of the goods act has been applied in this case. It clarifies that the company was created as an agent or not. The case emphasizes the concept that Specific property.


The case by the judicial committee of the Privy Council (referred to as council hereafter) revolves mainly around establishing or negating fiduciary relations between the company and its clients. The case was an appeal from the Court of Appeal of New Zealand. A company becomes insolvent and hence, the most obvious question arises who all are secured, and who all are the insecure creditor.


Goldcorp was the company with the unusual scheme of transferring gold and other precious metal but not physically. They sold bullion which was not allocated but promised to transfer the bullions within 7 days of demand. The customers have to pay for the same beforehand and the ownership was confirmed through invoice or certificate. The company also ensured that it would maintain separate and sufficient stock for each type of bullion for the delivery on demand

The case concerns the respondent no. 2, who purchased the gold maple coin from the company and agreed to buy further 1000 maples again, on the non-allocated basis, that is coin will be stored with the company. The company did acquire a good amount of coins but was not kept aside exclusively for the respondent no. 2. Eventually, the company ran into debts and was on the verge of becoming insolvent when the Bank of New Zealand sent their receivers. The non- allocated claimants immediately approached the court for the delivery of bullion which was just on the paper and was expecting future delivery.

Issues Raised

The issues raised in this case are as follows-

  • By the virtue of a contract of purchase, statements quoted in the brochures of the company, or the oral statements made by the employee, will the bullions would be taken as transferred to the customers immediately after the contract?

  • Property in bullion was passed to customers as soon as it was acquired by the company.

  • When the customers paid over the purchase money under the contract of sale, did they retain a beneficial interest in them by an express or constructive trust?

  • Should the court order restitution of the money have paid by the customer to the company?


The high court held that the customers do have proprietary interests in bullion which could be traced into stock remaining, but this would not be true for non -allocated claimants.

The court of appeal accepted the contention and reasoned that the fact that there was unallocated ownership in bullion there was no certainty in the subject matter thus there could not be a trust. It is very important to establish the mutual intention that the money should not fall within the general fund of the company’s assets but should be applied for a special purpose. Hence the facts of the case are inconsistent with such a trust. Here the company was not acting as an agent but advertised to sell the goods, but the money was not to purchase the gold but it was a payment to the company for a paper purchase of gold. The sale of goods Act requires the good to be ascertained before purchasing.

The case emphasizes the concept that Specific property must be identified before trust can be inferred by the bank