Goodridge appeal reaffirms accepted practice

Background

The background to the case was summarised in our Brief Counsel of March 2010.

In brief, the judge held that Leverage Equities, the assignee of a margin loan contract, had not given proper notice to Mr Goodridge when demanding a margin call.

The judge also found that the transfer of the margin loan contract from Macquarie Bank to Leverage Equities was ineffective because Mr Goodridge had not consented to the transfer and the loan was incapable of assignment.

It was this finding that caused most concern as it had potentially significant ramifications for syndicated loan transfers and the assignment of financial assets in securitisations. It is this aspect of the judgment, which the Federal Court in Leveraged Equities Limited v Goodridge [2011] FCAFC 3 has now overturned by allowing the appeal, which is of most interest from a New Zealand perspective.