E Ltd and S Ltd were independent companies trading as wine merchants, but in December 1991 and March 1992, respectively, the shares of the two companies were acquired by B, or a company controlled by him. In May 1972 administrative receivers were appointed for both companies. Both companies held stocks of wine for customers as bailees in return for rentals. Originally the stocks were held either in a duty paid warehouse or in a bonded warehouse; in the latter case duty would have to be paid before delivery to a customer. In the case of E Ltd, customers' wines were stacked by type and vintage, but were not marked with the individual customer's name. A master card index was kept which showed the names of customers and the numbers of cases allotted to each. The index was amended from time to time as delivery of wine was requested by a customer, or additional stocks were bought for customers and added to the stacks. Some wines were ordered for customers 'en primeur' from the producers, and were stored when they arrived in a bonded warehouse, where some stocks remained at the date of the appointment of receivers. Evidence showed that the card index was virtually 100 per cent accurate. After the acquisition of the shares of E Ltd by B the wines were moved to B's private residence; the stacks of wines were broken up and many of the index cards lost. A dispute arose as to ownership and custody of the wines between the receivers and B, who maintained that all the wines belonged to the customers and none to the company. After the receivers had obtained an order for delivery up to them, the wines were moved again. The receivers sought directions from the court as to whether and to what extent the wines held in E Ltd's customers' reserve or in bond had been sufficiently 'ascertained' for property to have passed to the customers in question, in accordance with the provisions of sections 16 to 18 of the Sale of Goods Act 1979. In the case of the wines kept by S Ltd in the company's duty paid warehouse all the stacks of wine were individually allocated, and accordingly the receivers were able to release those wines to the customers concerned. However, in S Ltd's bonded warehouse none of the wines had been allocated to specific customers either by marks on the cases or by an inventory, nor had any attempt been made to allocate the wines as between the company and its customers generally. Some customers had ordered and paid for 'en primeur' wines, but, at the date of the appointment of receivers, the wines had not been despatched from the relevant vineyards in France, and in some cases had not even been bottled. On the hearing of the receivers' application -
Held (1) that where a number of cases or bottles of identical wine were kept separately, or segregated from a company's trading stock, in store for a group of customers, those cases or bottles were 'ascertained' for the purposes of section 16 of the Sale of Goods Act 1979, even though they were not immediately appropriated to each individual customer; and that, accordingly, property passed by common intention, and not pursuant to section 18, rule 5 of the Act, the customers taking the goods as tenants in common.
Spence v Union Marine Insurance Co Ltd (1868) LR 3 CP 427 and Indian Oil Corporation Ltd v Greenstone Shipping SA (Panama) [1988] QB 345 applied. Healy v Howlett & Sons [1917] 1 KB 337 distinguished.
(2) That where the wines ordered and paid for in full by the customers had not, at the date of the appointment of the receivers, left the vineyards in France, or in some cases had not even been bottled, they remained part of the generic stock of the vineyards, and no proprietary interest passed at law or in equity to the customers, even though the wines were subject to a contract of sale to E Ltd or S Ltd.
(3) That a contract for the sale of goods did not of itself create any equitable interests, the respective rights and obligations of the parties being governed exclusively by the terms of the contract.
In Wait, Re [1927] 1 Ch 606, CA applied.
(4) That the availability of specific performance or the existence of an estoppel as between the customer and a company created no equitable interest binding the holder of a floating charge which subsequently crystallised.
In re London Wine Co (Shippers) Ltd [1986] PCC 121 applied.