In the courts

Lending to a Maori incorporation
The Court of Appeal has found that a mortgage granted by a Maori incorporation over land at Matauri Bay in Northland was not authorised by the incorporation's objects. However, the question of whether the lender was entitled to assume that the incorporation had taken proper steps to authorise the mortgage remains to be decided.

Sale by receiver extinguishes subordinate security
An appeal is pending following a High Court case that determined that, where a receiver sells personal property of a borrower, the sale automatically releases any security interest in those assets held by subordinate security holders.

Strict obligations for purchasers settling real estate transactions
The Supreme Court has agreed with a vendor under an agreement for sale and purchase that payment by the purchaser of a deposit by personal cheque is insufficient to give certainty of actual receipt of funds, and the vendor was entitled to cancel the agreement. In another recent case, a purchaser was denied specific performance after faxing confirmation of the deposit of settlement funds seven minutes late.

Undue influence over guarantors - new requirements for lenders in New Zealand?
The Court of Appeal has discussed the likely requirements for a defence of undue influence in lending cases in New Zealand.

Clear legal principles for derivative actions by shareholders or directors
In this case, the High Court stated that there is no dispute as to the legal principles applying to applications by a shareholder or director for leave to bring derivative action on behalf of a company under section 165 of the Companies Act 1993.

Goods leasing: no recovery of future rental payments following default
The High Court has indicated that a termination provision in a lease agreement that allows a lessor to recover on default the balance of the rental owing for the whole term, as well as the amounts already due and unpaid, may be viewed as a penalty and therefore be unenforceable.

Set-off arrangements subject to claw-back on liquidation
The Court of Appeal determined that set-off arrangements entered into by a company shortly before liquidation involved a "payment of money" that could be set aside by the liquidator as a transaction having preferential effect under the Companies Act 1993.

Conditional agreement to mortgage not caveatable
In a recent case, the High Court has confirmed the importance of expressing an agreement to mortgage as a present interest in the relevant property.

Discharge of mortgage does not release debtor from obligation to pay
The High Court has held that a discharge of mortgage given by a guarantor, which mistakenly acknowledged receipt of all monies intended to be secured by that mortgage, only released the relevant property and did not, according to its terms, release the principal debtor or the mortgagor from the repayment obligations owed to the bank.

Pooling of related companies' assets on liquidation allowed in limited circumstances
Despite the doctrine of separate legal personality, the "corporate veil" can be lifted and the assets of a company pooled with the assets of a related company in liquidation if there is some conduct that disentitles the companies from relying on the doctrine.

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.