NEW ZEALAND GUARDIAN TRUST CO LTD V KENNETH STEWART BROOKS AND OTHERS

DOIhttps://doi.org/10.1108/eb024851
Published date01 March 1995
Pages290-293
Date01 March 1995
AuthorLORD Keith of KINKEL,LORD OLIVER OF AYLMERTON,LORD MUSTILL,LORD LLOYD OF BERWICK,LORD NICHOLLS OF BIRKENHEAD
Subject MatterAccounting & finance
NEW ZEALAND GUARDIAN TRUST CO LTD V KENNETH
STEWART BROOKS AND OTHERS
PRIVY COUNCIL (LORD Keith of KINKEL, LORD OLIVER OF AYLMERTON,
LORD MUSTILL, LORD LLOYD OF BERWICK AND LORD NICHOLLS OF
BIRKENHEAD) APPEAL FROM THE COURT OF APPEAL OF NEW ZEALAND
Date of
Hearing:
12th October, 1994
Date of Judgment: 17th November, 1994
Reported at: [1995]
1 Weekly Law Reports
96
THE FACTS
Budget Rent A Car Ltd (Budget) bor-
rowed money from a consortium of
financiers and bankers. The advance
was secured by a debenture trust
deed dated 5th May, 1987, entered
into between Budget, Budget Lease
Management (Car Sales) Ltd and the
Appellant, New Zealand Guardian
Trust Co Ltd (the Trust Company).
The holders of the debenture were
the lenders involved in the consor-
tium. The total sum advanced was
£17.25m.
Due to financial problems, Budget
was unable to repay the advances
made by the debenture holders. Two
of the debenture holders, Westpac
Securities Ltd (Westpac) and DFC
Financial Services Ltd (DFC) entered
into a deed of compromise with
Budget dated 30th July, 1990, under
which they agreed to accept
£10,537,000 in full and final settle-
ment of their claims. This sum was
advanced to Budget under new
financing arrangements. There was a
shortfall of £2,712,000 in respect of
the claims in question.
Westpac and DFC brought pro-
ceedings against the Trust Company
to recover the shortfall of £2,712,000
alleging breaches of the duties owed
to them under the trust deed. The
Trust Company joined, as third par-
ties to that action, the individuals
who were directors of Budget at the
material time (the Directors) claiming
an indemnity or contribution in
respect of the claims brought against
it by Westpac and DFC.
However, by a deed dated 7th
August, 1990, the Trust Company
had released Budget from all liabil-
ities towards it and, while the release
did not cover the Directors, they
pleaded it in answer to the claim
290

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