In the courts

Are late payments outside the ordinary course of business and therefore voidable on insolvency?
The fact that a payment is not made on time does not render that payment “outside the ordinary course of business” in determining if it is voidable on insolvency.

Contracting with trustees
A recent case serves as a reminder to ensure that the basic rules for contracting with trustees are followed.

Insider trading – no need for wilful or fraudulent conduct
Simple possession of inside information in connection with the sale or purchase of shares is enough to trigger liability under the Securities Markets Act 1988 – wilful or fraudulent conduct is not necessary.

Letters of credit and fraud – when can a bank avoid paying?
An English case confirms that a bank does not have to pay under a letter of credit if there is fraud on the part of the payee.

Employees' dishonesty and lack of good faith can be very costly
When a bank employee dishonestly assisted a husband in re-directing his wife's funds, the bank was ordered to reimburse the wife.

Is “reasonable care to obtain the best possible price” at a mortgagee sale taken where the purchaser is associated with the mortgagee?
The Privy Council has decided that a mortgagee sale by a lender to a purchaser associated with the lender was not a breach of the lender's duty to obtain the best price.

What is unconscionable conduct in the context of transactions between family members?
The Supreme Court of Victoria has decided that to establish unconscionable conduct, the claimant must have special disadvantages and the other party must take advantage by unfair means.

Should a parent-child relationship be treated in the same way as a husband-wife relationship in the context of a guarantee?
Australian courts decide that the protection traditionally given to a wife who guarantees her husband's debts does not extend to parents and children.

UPDATE: Are your guarantees enforceable?
An appeal against the decision in Alma Daphne Lee v Damesh Holdings (summarised in the Winter 2003 edition of Financial Services Quarterly) was heard in the Court of Appeal on 30 September.

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.