In the courts

Register your interest as lessor or risk losing priority
The High Court has again considered priorities of competing parties under the Personal Property Securities Act and confirmed that the owner of a leased asset can lose its rights to a lender that has a registered security interest over the asset.

What happens when one of three trustees acts without the knowledge or authority of the other two trustees?
Without the knowledge of the other two trustees, a trustee arranged a letter of credit with a bank for the accommodation of the trust and the other trustees refused to accept liability.

Be careful when you release a joint debtor - you may release each other joint debtor
The High Court has confirmed that a creditor's release of one joint and several debtor will release the other debtors from the same obligation unless the release is qualified by reservation of rights against the other debtors.

Know what you're getting yourself into when you give a guarantee
The High Court has awarded summary judgment against a guarantor, noting "the guarantor's concern is understandable; after four years he faces a claim in excess of $1 million. That is all he gets for trying to help another, from which offer of help he would have received nothing anyway".

Does a transfer of shares on change of a trustee trigger rights of pre-emption?
The Court of Appeal has determined that a change of trustee shareholders with no change in the underlying beneficial ownership did not trigger rights of pre-emption.

When are payments voidable in terms of section 292(2) of the Companies Act?
The Court of Appeal has agreed with a liquidator that payments made to a supplier were voidable in terms of section 292(2) of the Companies Act 1993.

Receivers' and mortgagees' duties essentially the same when selling mortgaged property
The English Court of Appeal has considered the obligations of a mortgagee selling a mortgaged property compared with the obligations of a receiver appointed by a mortgagee to sell a mortgaged property and concluded that the obligations are essentially the same.

Dodgy dividends fail to satisfy the solvency test
A liquidator successfully sought repayment of two dividends totalling $330,000 made to the company's shareholders on the basis that the distributions breached the Companies Act. The liquidator also argued in the alternative that the defendants had failed as directors to exercise the care, diligence and skill of reasonable directors.

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.