Re London Wine Co (Shippers) [1986] PCC 121; [1986] 1 WLUK 731

KEY POINTS

• Property ownership transfers through a legal handover between parties, often upon agreement, payment, or delivery, depending on contract terms.

• Unidentified items at the contract stage and unascertained goods become owned when specified or separated from a bulk, offering flexibility in generic or bulk transactions.

• Property transfer for wine stored in bulk occurs upon identifying or separating a specific quantity or quality, simplifying trade and storing large volumes.

• Crystallisation of floating charges occurs when a floating charge, a type of security interest over a company's assets, becomes fixed and attaches to specific assets.

  • This typically happens when certain triggering events occur, such as defaulting on loan terms, transforming the floating charge into a fixed charge, and granting the lender greater control over the specified assets.

FACTS

• LWC, a wine company with substantial warehouse stocks, operated a scheme where individuals could invest or lay down wine.

  • Purchasers acquired wine from LWC, which remained in bulk storage in warehouses.

  • Each purchase was recorded in LWC's stock book with a reference number indicating the warehouse location.

  • The purchased wine remained in bulk storage without specific allocation.

  • LWC issued a document of title confirming the purchaser as the sole and beneficial owner. The sales contract indicated that the wine belonged to the purchaser and would be stored by the vendor.

• LWC's bank borrowings were secured by a floating charge over its assets. In August 1974, the bank appointed a receiver, which led to the floating charge's crystallization.

• The receiver sought court directions regarding three categories of wines held for purchasers by LWC.

  1. The first category involved S purchasing the entire stock of a specific wine.

  2. The second category included B and others purchasing wine, depleting LWC's stock of that particular description across multiple warehouses.

  3. The third category pertained to mortgages of purchased wine, with the warehouseman acknowledging the mortgagee's interest.

• No specific appropriation had occurred in each category, making it impossible to specify which cases of wine in the bulk storage were attributable to any particular purchase contract.

JUDGEMENT

• In each category, the court ruled that the wine remained LWC's property, allowing the receiver to dispose of it.

• Claims of a trust in undivided shares for purchasers were dismissed due to the inability to identify specific cases of wine. No right to specific performance was granted as the Sale of Goods Act didn't apply to unascertained goods.

• Selling quantities of wine did not transfer proprietary interest, and acknowledgments by warehousemen created estoppel but did not confer actual title.

• The receiver retained rights under the floating charge.

COMMENTARY

• LWC, a wine company, operated a scheme where purchasers acquired wine stored in bulk in warehouses.

• The court ruled that the wine remained LWC's property in each category, allowing the receiver to dispose of it.

• Claims of a trust in undivided shares for purchasers were dismissed due to the inability to identify specific cases of wine.

  • No right to specific performance was granted under the Sale of Goods Act for unascertained goods.

  • Warehousemen's acknowledgments created an estoppel but did not confer actual title.

• The receiver retained rights under the floating charge.