The plaintiff supplied travel bags on credit terms to a company under a contract contained in a letter dated 14 April 1983 which provided, inter alia,
1. that credit would be extended for 45 days, and
2. that it was 'a condition of sale that ownership of the goods covered shall not pass to The Company until The Company has paid ... the total purchase price'.
Between 25 April and 18 July the company submitted a number of orders for travel bags which the plaintiff supplied on credit. The bags supplied were then sold by the company in the ordinary course of its business as a retailer and exporter of travel bags. The proceeds of sale of the bags were paid into the company's general bank account, where it was mixed with other moneys belonging to or received by the company. On 25 August the company went into liquidation still owing the plaintiff the purchase price of the bags. The plaintiff sought the determination of the court on the question whether the company was accountable to the plaintiff for the proceeds of sale of the bags. The plaintiff contended that since it had not been paid and since under the retention of title clause in the contract ownership in the bags had never passed to the company the bags must have been delivered by the plaintiff to the company under a bailment and it was therefore an implied term of the contract that the company was under a duty to account to the plaintiff in respect of the proceeds of sale of the bags, in accordance with the normal fiduciary relationship of bailor and bailee.
Held Regardless of whether the plaintiff and the company were in a relationship of bailor and bailee the parties were not in a fiduciary relationship because
1. there was no express acknowledgement of a fiduciary relationship and no provision that the plaintiff should obtain the benefit of claims against purchasers from the company,
2. the company was not selling as agent for the plaintiff or on the plaintiff 's account,
3. there was no obligation on the company to keep the proceeds from the sale of bags supplied by the plaintiff separate from its own moneys,
4. it was to be inferred from the fixed 45-day period of credit that the company was free during that period to use the proceeds received from the sale of the bags as it liked, and that was not compatible with the plaintiff having an interest in the proceeds of sale, and
5. it was not necessary to imply a term in the contract that the company was under a duty to account to the plaintiff because, having regard to the detailed express provisions relating to payment, such a term was not necessary to give business efficacy to the contract.
In the absence of a fiduciary relationship, the relationship was one of creditor and debtor and therefore the company was not under a duty to account to the plaintiff in respect of the proceeds of sale of the bags.