In the courts

Retention of title clause in favour of lender ineffective
Where funds are advanced for the purpose of purchasing a specific asset, a clause which purports to allow the lender to retain title to that asset until it is repaid is unlikely to be effective where title has not been transferred to the lender and no security interest has been registered.

Voidable transactions: payments made outside usual payment pattern
The High Court has indicated that payments that do not fit a company's usual pattern of making payments, and that are made at a time when it cannot pay its debts, may be voidable on the application of a liquidator.

No undue influence nor unconscionable bargain in shareholder guarantees
In this case, the High Court was not satisfied that there was any undue influence exerted by a father in getting his daughters to guarantee a loan for their hotel business, nor that there was any unconscionable bargain, and the lender was not on inquiry as to either possibility.

In England, bank owes duty of confidentiality to payee under letter of credit
The House of Lords found in this case that a bank owed a duty of confidentiality to the payee under a letter of credit.

No contracting out of right to register caveat
In a recent High Court decision, an attempt to contract out of the purchaser's right to register a caveat over land was regarded as contrary to public policy and invalid.

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.