[1] A company dealing in gold and other precious metals became insolvent and the Bank of New Zealand appointed receivers under a debenture.

The outstanding issue was whether the customers had title to the gold on for them, and thus beneficiaries of a trust, or were merely unsecured creditors resulting from a breach of contract.

The Bank of New Zealand on 11 July 1988, being owed money by Goldcorp Exchange Ltd, petitioned for the business to be wound up.

Their Lordships begin with the question whether the customer obtained any form of proprietary interest, legal or equitable, simply by virtue of the contract of sale, independently of the collateral promises.

These are sold on terms which preserve the seller's freedom to decide for himself how and from what source he will obtain goods answering the contractual description.

[...] A more plausible version of the argument posits that the company, having represented to its customers that they had title to bullion held in the vaults, cannot now be heard to say that they did not.

The plaintiff may well say, 'I abstained from active measures in consequence of your statement, and I am entitled to hold you precluded from denying that what you stated was true'.

This stock was therefore committed to the purchase to the extent that Wiffen could not properly have sold the whole of it without making delivery of part to his buyer.

The reasoning of Knights v Wiffen (supra) does not enable a bulk to be conjured into existence for this purpose simply through the chance that the vendor happens to have some goods answering the description of the res vendita in its trading stock at the time of the sale - quite apart, of course, from the fact that if all the purchasers obtained a deemed title by estoppel there would not be enough bullion to go around.

What the non-allocated claimants are really trying to achieve is to attach the proprietary interest, which they maintain should have been created on the non-existent stock, to wholly different assets.

Whilst sympathising with this notion their Lordships must reject it, for the remaining stock, having never been separated, is just another asset of the company, like its vehicles and office furniture.

[...] For these reasons their Lordships reject, in company with all the judges in New Zealand, the grounds upon which it is said that the customers acquired a proprietary interest in bullion.

In the light of the importance understandably attached to this dispute by the courts of New Zealand, and the careful and well-researched arguments addressed on this appeal, the Board has thought it right to approach the question afresh in some little detail.

This was a stronger case than the present, because the separate fund which the contract required the insolvent company to maintain would have been impressed with a trust in favour of the other party, if in fact it had been maintained and also because the floating: charge which, as the Court of Appeal held, took priority over the contractual claim, expressly referred to the contract under which the claim arose.

conforms entirely with the opinion at which they have independently arrived.Lord Templeman, Lord Lloyd and Sir Thomas Eichelbaum agreed.

The outcome of the advice of the Board was not mirrored by the Supreme Court in In re Lehman Brothers International (Europe)',[3] which concerned consumers who were held to have had a trust of assets under the Markets in Financial Instruments Directive that was designed to protect their savings.