FTG Securities Limited involved an application by FTG Securities Limited (FTG) for declarations as to the interpretation of a Deed of Priority. The Deed of Priority was entered into by Canterbury Finance Limited (CFL) and a bank with respect to the security interests in Tuam Ventures Limited (in Rec and in Liq) (TVL). Declaratory relief was sought against the bank and the receivers of TVL. An issue raised by way of an affirmative defence was whether the assignment of TVL's debt and securities to FTG is valid from a technical legal perspective and therefore whether FTG was properly a party to the Deed of Priority (as second charge holder) and able to enforce it against the bank.
That issue required consideration of the validity of two purported assignments of the debt and security interests in TVL. The Deed of Priority contained a clause that prevented either CFL or the bank from transferring or assigning any interest in their securities to any person unless that person entered into a deed or contract in a form approved by the other Secured Party (with such approval not being arbitrarily or unreasonably withheld or delayed) by which that person agrees to be bound by the Deed of Priority. The bank's approval to the assignments had not been sought at the relevant times.
Gendall J found that FTG did not obtain a valid statutory assignment of the debt and securities in TVL or the rights and obligations under the Deed of Priority because the bank's approval had not been sought. This invalidated the purported assignments. It followed that FTG is unable to enforce the Deed of Priority and has no standing to seek declarations in respect of that Deed.
The judgment is interim only and the parties are invited to make further applications as to what should occur next.