In the courts

Mortgagees liable for GST on sales of mortgaged property
A Privy Council decision has confirmed that, if a mortgagee sells property (in relation to which the mortgagor would have been liable for GST had it sold the property), then the mortgagee has to pay the GST to the IRD in priority to all amounts due to it and other charge-holders.

What you don’t know can’t hurt you
A recent decision of the High Court has proven that a bank’s lack of knowledge of a customer’s financial difficulties can help it in a liquidation situation.

Absolute assignments vs assignments by way of security - implications for assignors and assignees
The High Court considered whether a lessor that assigned its rights under a lease could sue the lessee for non-payment of rent, and determined that it could, if the assignment was by way of security, and not absolute.

When the rule in Clayton’s case isn’t fair
The High Court recently decided that application of the pari passu rule of distribution was fairer in the circumstances than the rule in Clayton’s case.

Is forbearance to sue valuable consideration when determining whether to set aside a charge as voidable?
A case heard in the High Court determined that forbearance to sue by a creditor is not valuable consideration that can prevent a charge in favour of that creditor being set aside as voidable under the Companies Act 1993.

Trustees fail to escape liability on basis of no personal liability, no consideration and not every party signed
In a case heard recently in the High Court, it was decided that trustees who had given an indemnity could not escape liability under that indemnity.

A second guarantee given by the same person covers debts already incurred, not just new debts
Where a second guarantee recording liability for a higher amount was given, an English court decided that it guaranteed debts incurred both before and after the guarantee was given.

When is a company insolvent?
The New South Wales Supreme Court has summarised some principles from accepted authorities on the question of whether a company is insolvent at a given time.

Payments made by insolvent companies – what is in the ordinary course of business?
The High Court considered whether a payment made by an insolvent company was in the ordinary course of business and determined that, in this case, it was.

Payment by personal cheque not acceptable
The Court of Appeal has agreed with the High Court that a payment made by personal cheque is not acceptable payment until it has cleared.

Enquiries and information

For more information on any of the cases, articles and features in Financial Services Quarterly, please email Rachel Gowing or call on 64 9 916 8825.