NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
6. Enforcement 6.1 Enforcement of Collateral by Non- Bank Secured Lenders New Zealand is considered a “creditor-friendly” jurisdiction. When designing an enforcement strategy, lenders should consider: • the type of security that the secured lender benefits from (ie, all-asset, specific asset security and/or guarantees); • the type of collateral being enforced over and the corresponding statutory requirements; • the rights and obligations under the relevant security agreement; • whether any statutory security “hardening periods” have lapsed, or whether excep - tions or defences are available to protect the secured lender when enforcing within the statutory hardening periods; and • whether enforcement would be undertaken by the secured lender or via an insolvency appointment (eg, receivers or administrators). Enforcement of Personal Property Under the PPSA, secured lenders can enforce security interests in personal property without court involvement in most circumstances. The secured lender is required to issue various notic - es (some of which can be contracted out of), will be able to release subordinate security interests, and has a duty to get the best price reasonably Enforcement of security interests in real property is primarily governed by the Property Law Act 2007 (PLA). Powers (such as taking possession and/or exercising its power of sale) are typically exercisable after the occurrence of a default under a mortgage. Secured lenders should be mindful: obtainable at the time of sale. Enforcement of Real Property
• of the need to issue notices and for those periods to expire before completing a sale of the property; • of the duty to get the best price reasonably obtainable at the time of sale; • that a mortgagee can release subsequent ranking security over the real property (which cannot be achieved by a receiver selling real property in the absence of a contractual right to do so); and • that when the secured lender sells (as mort - gagee) real property to itself, it will require a sale via the Registrar or with approval of the High Court. Guarantees Unless the secured lender has also taken secu - rity over the guarantor’s assets, a claim under a guarantee will be an unsecured claim. Common considerations when enforcing guarantees are: i) whether entry into the guarantee was appro - priately authorised; ii) whether any applicable financial assistance requirements have been met; iii) release through unauthorised material variations to the principal debt; iv) whether the guarantor has taken independent legal advice; and v) claims of undue influence or duress. Enforcement can also be implemented through the appointment of an insolvency official, as described in 7.1 Impact of Insolvency Pro- cesses . 6.2 Foreign Law and Jurisdiction An express choice of foreign law to govern the contract will usually be upheld by the New Zea - land courts as the proper law of the contract (such that Courts will refrain from assuming jurisdiction) as long as the choice is genuine and not contrary to public policy. However, New Zealand is not a party to the Hague Choice of Court Convention, and therefore proceedings
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