Recent Developments in
Banking and Finance Law
Professor Richard Hooley
King’s College, London;
Fitzwilliam College, Cambridge.
Saving Gateway Accounts Act 2009
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eligibility
maturity period
maturity payment
qualifying balance
Banking and Payment Services Conduct
Regime
Out go
- The Banking Code
- The Business Banking Code
In come
- The Banking Conduct of Business
Sourcebook (BCOBS)
- The Payment Services Regulations 2009
BCOBS
It applies to firms with respect to the
regulated activity of accepting deposits
from banking customers carried on from
an establishment in the UK and activities
connected with that activity, eg cheques
and foreign exchange (BCOBS, 1.1.1R.).
‘Banking customers’: consumers, microenterprises, small charities.
Companies Act 2006
Most of the Companies Act 2006 that had not
already been brought into force came into force
on 1 October 2009, including those parts dealing
with the acquisition by a limited company of its
own shares (Part 18) and company charges
(Part 25). See also Part 3 of the Overseas
Companies (Execution of Documents and
Registration of Charges) Regulations 2009.
Banking Act 2009 (Restriction of Partial
Property Transfers) (Amendment)
Order 2009
Financial Markets and Insolvency
Regulations 2009
Lehman Bros International (Europe) (in
administration) (No 2)
Blackburne J had to decide whether a
scheme for the distribution of property held
by a company on trust fell within Part 26 of
the Companies Act 2006. He held that it
did not.
Perpetual Trustee Co Ltd v BNY
Corporate Trustee Services
Held that a conditional priority clause of
the type commonly found in structured
finance transactions was valid.
Clause 5.5
‘The Trustee shall apply all moneys
received by it under this Deed in
connection with the realisation or
enforcement of the Mortgaged Property as
follows: Swap Counterparty Priority unless
(i) an Event of Default … occurs under the
Swap Agreement and the Swap
Counterparty is the Defaulting Party … in
which case Noteholder Priority shall apply.’
Money Markets International
Stockbrokers Ltd v London Stock
Exchange Ltd
‘there cannot be a valid contract that a
man’s property shall remain his until
bankruptcy, and on the happening of that
event go over to someone else, and be
taken from his creditors.’
Butters v BBC Worldwide Ltd
Peter Smith J rejected the argument that
the anti-deprivation principle could not
apply because the insolvency event that
triggered the loss of the asset was not the
insolvency of the company that owned the
asset itself but of another company in the
group. He declined to follow Perpetual
Trustee on this point.
Butters
Group
Media
2e
Video
BBCW
[Licence]
Termination clauses
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The licence automatically terminated if
the following two conditions were met:
a shareholder of 2e, or any parent
company of any shareholder of 2e
suffered an insolvency event (as defined
in the JVA); and
the other shareholder in 2e issued a
share notice.
Re Kaupthing Singer & Friedlander Ltd
(In administration)
Held: the right of legal set-off can be
excluded by agreement.
Alfa Telecom Turkey Ltd v Cukurova
Finance International Ltd
• an equitable mortgage over shares is a security
interest in financial collateral for the purpose of
the Financial Collateral Arrangements Regs;
• an equitable mortgagee can validly appropriate
financial collateral without the need to be
registered as the legal owner; and
• appropriation requires an ‘overt act’ evidencing
the intention to exercise the power of
appropriation which is communicated to the
collateral provider.
Classic Maritime Inc v Lion Diversified
Holdings
• 13 August: COA between Classic and
Limbungan under which Limbungan was
required to supply a guarantee from Lion
Industries.
• 28 August: Guarantee given by Lion
Diversified Holdings ‘In order to induce
Classic to enter into a COA dated 13
August …’
Bank of Scotland plc v Makris
Where the debtor was a joint venture
company in which the surety was one of
the ‘partners’, the relationship between
surety and debtor was held to be noncommercial and the bank was not put on
enquiry as to the possibility of undue
influence so as to activate the sanitisation
process specified in Royal Bank of
Scotland v Etridge (No 2).
Chartbrook Ltd v Persimmon Homes Ltd
The House of Lords upheld the rule excluding
evidence of what was said or done during the
course of negotiating the agreement for the
purpose of drawing inferences about what the
contract meant. But HL stressed that the rule did
not exclude the use of such evidence for other
purposes: eg, to establish that a fact which might
be relevant as background was known to the
parties, or to support a claim for rectification or
estoppel.
Attorney General of Belize v Belize
Telecom Ltd
Formulations that the implied term must
‘go without saying’ or that it must be
‘necessary to give business efficacy to the
contract’ were not to be treated as different
or additional tests. ‘There was only one
question: is that what the instrument, read
as a whole against the relevant
background, would reasonably be
understood to mean?’ (per Lord Hoffmann
at [21]).
Mediterranean Salvage & Towage Ltd v
Seamar Trading & Commerce Inc
Court of Appeal considered the test for the
implication of terms as recently set out by
the Privy Council in Attorney General of
Belize v Belize Telecom Ltd and in doing
so re-emphasised that a term can only be
implied if it is necessary in the business
sense to give efficacy to the contract.
Parabola Investments Ltd v Browallia Cal
Ltd
The victim of fraudulent
misrepresentations, which had entered
into loss making transactions as a result of
the fraud, was awarded damages for the
loss of profits on alternative trades that it
would otherwise have made during the
period of the fraud, together with damages
for loss of profits from discovery of the
fraud until trial.
Re Carson Country Homes Ltd
The fact that a company director had forged
another director’s signature on a debenture did
not render the forged signature a nullity for all
purposes and so bank, as bona fide purchaser
for value, could rely on s 44 of the Companies
Act 2009 to render the debenture validly
executed where the director who had forged the
signature had been vested with apparent
authority to warrant that all formalities relating to
the approval and execution of the debenture had
been duly complied with.
SRM Global Master Fund LP and others v
Commissioners of Her Majesty’s
Treasury
The basis of valuation of the shares of
former shareholders in Northern Rock plc,
following its nationalisation in February
2008, was not incompatible with their
rights guaranteed by art 1 of the First
Protocol to the European Convention on
Human Rights 1950.
HSBC Bank plc v 5th Avenue Partners
Ltd
Court of Appeal held that a bank may owe
a duty of care to a third party when
representing that it had accepted and
intended to carry out its customer’s
instructions.
Lancore Services Ltd v Barclays Bank
plc
Court of Appeal held that there was no
agency or fiduciary relationship between a
merchant and a merchant acquirer who
supplied the facilities which enabled the
merchant to accept card payments.