Preferential payment in provident fund deposits was limited to the traceable instalment, with the balance ranking as an ordinary claim.

Preferential payment was confined to the amount traceable to the provident fund instalment, because the original deposit was made when the fund rules allowed deposit with the bank and did not create a breach of trust. Any possible breach arose only on renewal, and only for the annual instalment that had to be invested in authorised securities. The statutory investment duty therefore limited the extent of any tainted amount, and the whole deposit could not be treated as one mixed trust fund. The bank's alleged knowledge of later rule changes did not enlarge the preferential claim, so the balance ranked only as an ordinary creditor's claim.

---

---

Issues: Whether the applicant was entitled to preferential payment out of the bank's assets in respect of the deposited sums, and whether any breach of trust in the manner of investment displaced or enlarged that entitlement.

Analysis: The application turned on the character of the money deposited, the effect of the fund's rules, and the limited extent to which any statutory duty to invest in authorised securities could operate. The initial deposit was made when the fund's rules permitted deposit with the bank, so no breach of trust arose at that stage. On renewal, any possible breach could arise only for the annual instalment that was required to be invested in authorised securities. The statutory provision regarding the fund's investment arrangement limited the amount capable of being treated as affected by such breach, and there was insufficient basis to treat the whole deposit as one tainted fund. The bank's alleged knowledge of later rule changes did not alter the position.

Conclusion: The applicant was entitled to preferential payment only to the limited extent of the amount traceable to the provident fund instalment, and the remaining balance ranke d only as an ordinary creditor's claim.

---