APPLICATIONS FOR LEAVE TO APPEAL GRANTED

37323

James Chadwick Rankin, carrying on business as Rankin’s Garage & Sales v. J.J. by his Litigation Guardian, J.A.J., J.A.J., A.J.

(Ont.)

Torts — Negligence — Duty of Care — Motor vehicles

Restrictive covenant - if in doubt, lender should be notified; the costs risk of insolvency proceedings; interim payments; service of claim form; Wragge & Co's banking and finance experts bring you the latest on the cases and issues affecting the lending industry.

Restrictive covenant - if in doubt, lender should be notified

The defendant was the sole director of a company which went into liquidation. Almost six years after his appointment as liquidator, the claimant commenced proceedings seeking an order pursuant to s 212 Insolvency Act 1986 that the defendant contribute to the company’s assets on the basis that he had acted in breach of duty of care and skill and in breach of fiduciary duty owed to the company, which had resulted in the company’s deficiencies.

The claimant and defendant both lent money to a company (Y) under a credit facility. Y’s financial position deteriorated, the parties appointed investigating accountants and put Y into “workout”. Following an assignment of Y’s indebtedness to the claimant to the defendant’s subsidiary, the claimant brought proceedings against the defendant for breach of an anti-claim clause in the assignment.

The recent case of Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd [2017] EWHC 257 (Ch) (Singularis) is an important decision affecting any institution that handles client payments, including banks. It decided that a stock broker was liable in negligence for having breached its duty of care to its customer, Singularis Holdings Ltd (in liquidation) (Singularis), by paying monies out of its client account on the instruction of one of Singularis' directors and its only shareholder, Mr Al Sanea.

Background

United States District Court Judge Alan S. Gold, on February 11, 2011, reversed a Florida bankruptcy court’s controversial October 2009 fraudulent transfer judgment1 against a group of lenders based on their receipt of a $421 million loan repayment in July 2007. 3V Capital Master Fund, et al., v. Official Committee of Unsecured Creditors of Tousa, Inc., et al, Case No. 10-60017-CIV (S.D. Fla. Feb.

The U.S. Court of Appeals for the Eighth Circuit recently held that insiders who control the operations of a debtor owe a duty, as fiduciaries, to refrain from self-dealing. In re Brook Valley VII, Joint Venture (Lange v. Schropp), 496 F.3d 892 (8th Cir. 2007). The controlling insiders of two Chapter 11 debtors had thus breached their fiduciary duties to the debtors when they caused the debtors to consent to a foreclosure sale of estate properties and then secretly purchased the properties for themselves at the sale.

Introduction

In Primary Wool Co-Operative v Stevens, the High Court considered, among other things, whether there was an arguable case that the receivers of Bruce Woollen Mill Limited (BWM) had breached their duties to a surety and whether this meant (in the summary judgment context) the surety could escape liability to the secured creditor.

(High Court Auckland, CIV 2010-404-6381, 8 April 2011, Associate Judge Matthews)

In ASB Bank Limited v Hall, the High Court confirmed that a bank does not owe a duty of care to a creditor, director or shareholder of a customer of the bank.