Proprietary Claims and Their Priority in Insolvency

Abstract

Two recent successful appeals to the Privy Council from the Court of Appeal of New Zealand have once again emphasised the importance of proprietary claims in conferring priority in insolvency over the claims of the general creditors of a bankrupt. Attorney-General for Hong Kong v. Reid1 concerned land in New Zealand purchased with the proceeds of bribes accepted by a Hong Kong Public Prosecutor as an inducement to exploit his official position to obstruct the prosecution of certain criminals. The Privy Council imposed a constructive trust where the Court of Appeal of New Zealand had, in accordance with precedent,2 denied one and thus enabled the Government of Hong Kong to recover the land in priority to any other creditors of the Public Prosecutor. In Re Goldcorp Exchange3 concerned the liquidation of a gold-dealer which had offered its purchasers the option of leaving their gold in its custody as “non-allocated bullion”.