| Shivas v Bank of New Zealand | |
|---|---|
 | |
| Court | High Court of New Zealand |
| Full case name | Gillian Shivas & John Falloon v Bank of New Zealand |
| Decided | 14 November 1989 |
| Citation(s) | [1990] 2 NZLR 327 |
| Transcript(s) | judgment |
| Court membership | |
| Judge(s) sitting | Tipping J |
| Keywords | |
| duress | |
Shivas v Bank of New Zealand [1990] 2 NZLR 327 is an important case in New Zealand regarding duress. [1]
Mrs Shivas was a trustee of a family trust established by her husband Mr Shivas. Mr Shivas also ran a separate company involved in selling airplanes. As a result of the company experiencing financial difficulties and being unable to service its debts, the principal creditor, the BNZ, asked for the company to provide extra security, namely for the family trust to give a guarantee over the company's debts as well as grant a mortgage over the Shivas family home.
The trustees, reluctant to give such a guarantee, which included the family home, ultimately gave the guarantee after the BNZ said they would appoint receivers to the company if the guarantee was not given. The trustees had access to independent legal advice at the time.
Unfortunately, these guarantees only delayed the inevitable, as 18 months later, the company was placed into receivership, with the receivers seeking to enforce the trust's guarantee as well as the mortgage over the family home.
The trustees tried to set aside the guarantees on the grounds of duress, even though they had not raised this issue once with the BNZ in the 18 months that had passed since it was signed.
The trustees got an interim injunction in the meantime, preventing the BNZ enforcing the guarantee.
The court ruled that the trustees did not have to give the guarantee at the time, as they could alternatively have refused to grant the guarantee. The BNZ's threat of placing the company into receivership was held to not be illegitimate pressure. The judge also noted that the plaintiff did not protest duress at the time of signing, nor during the following two years. As a result, the court held that the trust's guarantee was enforceable.
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.
A mortgage is a legal instrument of the common law which is used to create a security interest in real property held by a lender as a security for a debt, usually a mortgage loan. Hypothec is the corresponding term in civil law jurisdictions, albeit with a wider sense, as it also covers non-possessory lien.
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
In law, receivership is a situation in which an institution or enterprise is held by a receiver – a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights" – especially in cases where a company cannot meet its financial obligations and is said to be insolvent. The receivership remedy is an equitable remedy that emerged in the English chancery courts, where receivers were appointed to protect real property. Receiverships are also a remedy of last resort in litigation involving the conduct of executive agencies that fail to comply with constitutional or statutory obligations to populations that rely on those agencies for their basic human rights.
Unconscionability is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. Typically, an unconscionable contract is held to be unenforceable because no reasonable or informed person would otherwise agree to it. The perpetrator of the conduct is not allowed to benefit, because the consideration offered is lacking, or is so obviously inadequate, that to enforce the contract would be unfair to the party seeking to escape the contract.
In finance, a floating charge is a security interest over a fund of changing assets of a company or other legal person. Unlike a fixed charge, which is created over ascertained and definite property, a floating charge is created over property of an ambulatory and shifting nature, such as receivables and stock.
In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property which enables the creditor to have recourse to the property if the debtor defaults in making payment or otherwise performing the secured obligations. One of the most common examples of a security interest is a mortgage: a person borrows money from the bank to buy a house, and they grant a mortgage over the house so that if they default in repaying the loan, the bank can sell the house and apply the proceeds to the outstanding loan.
The Bankruptcy and Insolvency Act is one of the statutes that regulates the law on bankruptcy and insolvency in Canada. It governs bankruptcies, consumer and commercial proposals, and receiverships in Canada.
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, similar to bankruptcy in the United States. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – in the United Kingdom colloquially called being "under administration" – is an alternative to liquidation or may be a precursor to it. Administration is commenced by an administration order.
United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While UK bankruptcy law concerns the rules for natural persons, the term insolvency is generally used for companies formed under the Companies Act 2006. Insolvency means being unable to pay debts. Since the Cork Report of 1982, the modern policy of UK insolvency law has been to attempt to rescue a company that is in difficulty, to minimise losses and fairly distribute the burdens between the community, employees, creditors and other stakeholders that result from enterprise failure. If a company cannot be saved it is liquidated, meaning that the assets are sold off to repay creditors according to their priority. The main sources of law include the Insolvency Act 1986, the Insolvency Rules 1986, the Company Directors Disqualification Act 1986, the Employment Rights Act 1996 Part XII, the EU Insolvency Regulation, and case law. Numerous other Acts, statutory instruments and cases relating to labour, banking, property and conflicts of laws also shape the subject.
A deed of trust refers to a type of legal instrument which is used to create a security interest in real property and real estate. In a deed of trust, a person who wishes to borrow money conveys legal title in real property to a trustee, who holds the property as security for a loan (debt) from the lender to the borrower. The equitable title remains with the borrower. The borrower is referred to as the trustor, while the lender is referred to as the beneficiary.
Allan James Hubbard was a businessman who lived in Timaru in the South Island of New Zealand, and was the founder of South Canterbury Finance, New Zealand's largest locally owned finance company. In 2006, the New Zealand Listener described Hubbard as the most powerful businessman in the South Island.
English land law is the law of real property in England and Wales. Because of its heavy historical and social significance, land is usually seen as the most important part of English property law. Ownership of land has its roots in the feudal system established by William the Conqueror after 1066, but is now mostly registered and sold on the real estate market. The modern law's sources derive from the old courts of common law and equity, and legislation such as the Law of Property Act 1925, the Settled Land Act 1925, the Land Charges Act 1972, the Trusts of Land and Appointment of Trustees Act 1996 and the Land Registration Act 2002. At its core, English land law involves the acquisition, content and priority of rights and obligations among people with interests in land. Having a property right in land, as opposed to a contractual or some other personal right, matters because it creates priority over other people's claims, particularly if the land is sold on, the possessor goes insolvent, or when claiming various remedies, like specific performance, in court.
Downsview Nominees Ltd v First City Corp Ltd[1992] UKPC 34, [1993] AC 295 is a New Zealand insolvency law case decided by the Judicial Committee of the Privy Council concerning the nature and extent of the liability of a mortgagee, or a receiver and manager, to a mortgagor or a subsequent debenture holder for his actions.
South Canterbury Finance was New Zealand's largest locally owned finance company when it collapsed in August 2010, triggering a $1.6 billion bail-out of investors deposits by the New Zealand Government; almost $1 billion was recovered by receivers.
Couch v Branch Investments (1969) Limited [1980] 2 NZLR 314 is an often cited case regarding the temporary forbearance of taking legal action on enforcing a debt as being consideration to enter into a new contract with the creditor. It reinforces the English case of Callisher v Bischoffsheim (1870) LR 5 QB 449.
Contractors Bonding v Snee [1992] 2 NZLR 157 is a leading New Zealand case regarding undue influence.
Jenkins v NZI Finance Ltd (1991) 3 NZBLC 102,198 is a cited case in New Zealand regarding that the common law remedy of non est factum for a contract is not available simply because a party was careless in signing a contract without first properly reading it.
Between May 2006 and the end of 2012 there were sixty-seven finance company collapses in New Zealand; including companies entering into liquidation, receivership or moratoria. An inquiry by the New Zealand Parliament estimated losses at over $3 billion that affected between 150,000 and 200,000 depositors. The most high-profile collapses were South Canterbury Finance, Hanover Finance and Bridgecorp Holdings. The collapse radically reduced the size and importance of the non-bank finance sector in New Zealand. According to the Reserve Bank, at the height of financial expansion prior to the 2007 crisis, non-bank lenders had assets of about $25 billion and made up 8 percent of lending by financial institutions. By late 2013 the size of the finance sector was half its previous size and accounted for only 3 percent of institutional lending. In the years following the beginning of the collapses, sweeping legislative and regulatory changes were made, aimed at improving oversight and regulation of the finance industry.
Peace River Hydro Partners v Petrowest Corp, 2022 SCC 41 is a case of the Supreme Court of Canada on the applicability of arbitration laws on the authority of a receiver appointed under the Bankruptcy and Insolvency Act.