Wily v Rothschild

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2625/96 HUGH JENNER WILY in his capacity as Liquidator of AUR NL (IN LIQUIDATION), AUR NL (IN LIQUIDATION) v RAL AUSTRALIA

JUDGMENT Outline 1 Mr. Wily, the liquidator of AUR NL (In Liquidation) (AUR) seeks to set aside two transactions, one on the basis it took place within six months prior to the date of commencement of the winding up conferring a benefit on the defendant Rothschild Australia Ltd (RAL) and is void against the liquidator; the other on the basis that it was either a disposition of property of AUR to RAL after the commencement of the winding up or a transaction prior to commencement of the winding up void against the liquidator. Facts 2 An application for the winding up of AUR was filed on 3 July 1990, and the winding up commenced on that date. An order for winding up was made on 1 March 1991 and Mr. Wily was appointed liquidator. 3 AUR was a listed company engaged in the business of gold mining, predominantly at a mine called the Mt. Martin mine. Gold mining companies apparently obtain finance to carry out their mining operations by arranging what are called "gold loans" through certain finance providers. The intricacies of these arrangements were never properly explained, but the essential feature is that a certain sum of money is made available to the mine operator; that there is calculated how many fine troy ounces of gold this amount would purchase at the then spot price; and that the loan is repayable by payment of that amount of gold together with an additional amount called gold fees which would represent the interest component. 4 On 13 November 1987 AUR obtained a gold loan facility from RAL, secured partly by letter of credit issued by the Bank of New Zealand. This loan was eventually paid out by RAL calling on the letter of credit. The loan was referred to throughout as the "first gold loan" but really has little to do with the proceedings. On 23 August 1988 AUR obtained a further gold loan facility from RAL (the second gold loan facility) for an amount of $4,600,000 (the second gold loan), the main subject of these proceedings. 5 Clause 11A(a) of the second gold loan facility agreement provided as follows: 11A GENERAL UNDERTAKINGS (a) The Company shall as and when reasonably required by RAL enter into arrangements satisfactory to RAL (which may include forward sales contracts, options or floor price schemes) for the management and protection of gold price risk associated with the production of gold form the Project during the term of this Facility. Such arrangements shall be entered into with RAL or other substantial financial institution considered by RAL in its reasonable opinion to be of no less high reputation and experience in such arrangements as RAL. If such arrangements are entered into with RAL the Company shall lodge on deposit with RAL sufficient cash or other security as required by RAL (secured if required by RAL by first charge) to secure such arrangements which deposit or security shall be in addition to the deposits or securities (if any) otherwise referred to in this Facility.

The evidence of Mr. Lee, the managing director of RAL and of Mr. Russo, who was the head of the bullion trade section of RAL at the relevant times, establishes that gold loans are usually protected by hedging facilities involving forward sales of gold at a specified price on a future date or forward sales at the spot price plus a premium without specified date for sale. The purpose of these hedging facilities is to protect the miner and the finance company against sharp drops in the price of gold, so as to ensure the gold loan will be repaid. As these facilities in the instant case were arranged with RAL it can be presumed that RAL had in place its own facilities further down the line, but that does not matter here. The effect of the hedging facility was that AUR forward sold to RAL a proportion of its expected production from the Mount Martin mine although in fact the contracts could have been satisfied by AUR buying in gold from elsewhere. The hedging arrangements were governed by the terms of a bullion forward sales facility agreement between RAL and ALR, dated 11 June 1987 and a spot deferred forward sale facility annexed thereto. 6 To further protect its position RAL required AUR to enter into a deed of charge with RAL dated 23 May 1988 the provisions of which I will refer to in detail later, but the intent of which was to secure the gold loans. AUR entered into a further deed dated 12 October 1988 which was a fixed and floating charge the intent of which was the same. There can be no doubt that both securities provided security for the second gold facility or second gold loan. 7 By the end of May 1990 AUR owed to RAL on the smaller gold loan facility 6,022.913 fine troy ounces of gold. It also had forward contracts outstanding under which it agreed to sell 27,200 fine troy ounces of gold to RAL at a specified price and had 5,102.695 fine troy ounces of gold outstanding under deferred contracts under which AUR had agreed to sell to RAL under a forward sale facility. That quantity of gold had a spot price plus an interest component. The unchallenged evidence of Mr. Lee was that these forward sales contracts were entered into in compliance with clause 11A of the second gold loan facility. Nevertheless whatever the expectation there was no requirement that these forward sale contracts had to be satisfied or closed out by delivery of gold from the Mt. Martin mines. Gold could have been purchased from any outside source. 8 By June 1990 the price of gold had plummeted from the 1988 price. It thus became possible for gold to be purchased by or on behalf of AUR at a relatively low price, and for AUR to deliver that amount to RAL in satisfaction or part satisfaction of the hedging contracts bringing about a considerable profit to AUR. What happened was that RAL arranged for AUR to buy 4,033.138 fine troy ounces of gold which was delivered to RAL in satisfaction of the spot deferred positions bringing about a profit in AUR of $328,081.57. In addition AUR purchased 27,200 fine troy ounces of gold for the purpose of closing out the forward sales contract and in doing so generated a profit of $1,173,994.23. There was thus available to AUR a total profit of $1,502,075.80 of which the sum of $752,075.64 was used to purchase 1,684.30 fine troy ounces of gold which was delivered on 18 June 1990 to RAL and credited against the smaller gold loan facility, which after interest (gold fees) were taken into account, left owing to RAL on the second gold loan 5,060.846 fine troy ounces. The amount of $750,002.16 which was not used for this purchase was paid into what was called a "blocked account" with RAL in the name of a company AUR Management Pty. Limited, which was part of the AUR group, and which on the evidence of Mr. Andrew Wily was a company that "performed the management, treasury and revenue functions for companies in the AUR group including AUR". The result of all of this was that the smaller gold loan was partly discharged and a balance of funds was available in cash to AUR subject to any charge which RAL might have had over it. No point was taken about the blocked account being in the name of AUR Management, presumably because it held the funds for AUR in any event. 9 On 20 June 1990 RAL agreed to release $100,000 from the blocked account for the purpose of paying an insurance broker an amount due for current insurance premiums. A request for payment of a further $200,000 from the blocked account was refused. 10 A meeting of directors of AUR commenced on 2 July 1990 and was adjourned to 9.30 a.m. the next day when the directors resolved to apply for the winding up of the company and for the appointment of a provisional liquidator. On 3 July 1990 Mr. P.B. Allen was appointed provisional liquidator. On the same date RAL applied the funds remaining in the blocked account, namely $650,002.16 to the purchase of 1452.872 ounces of gold on behalf of AUR and on that date applied this in reduction of the smaller gold loan facility. On 5 July 1990, RAL sent to AUR notice of default in respect of this facility and a week later appointed receivers and managers to AUR pursuant to the deed of charge, dated 23 May 1988. 11 The transactions which the liquidator challenges are really not those identified in paragraphs 13(a) and(b) of the statement of claim but rather the following:

1. The transfer of 1684.30 ounces of gold on 18 June 1990 in reduction of the smaller gold loan.

2. The transfer of 1452.872 ounces of gold on 3 July 1990 to RAL in further reduction of the smaller gold loan.

The case was argued on this basis without objection. It is claimed the first transaction amounted to a preference void against the liquidator pursuant to s451 of the Companies (New South Wales) Code; and by late amendment, that the second payment was made either (i) after the commencement of the winding up and was void against the liquidator under s368 of the Code; or (ii) before the commencement of the winding up and was a preference void against the liquidator; or (3) before or after the commencement of the winding up and void against the liquidator. I have by separate judgment delivered today explained how this late amendment came about. 12 It is clear that at the time of each transaction AUR was insolvent and unable to pay its debts as they fell due. 13 RAL in its defence says that it held security over the funds applied to purchase the gold; that in any event there was no preference as it had a right of set off. Issues 14 The questions for determination are: (i) whether the claim of RAL to security is correct; (ii) whether in relation to the funds in the blocked account security could be held; and (iii) whether there was a right of set off which would defeat the claim of the liquidator. Provisions of the charge documents 15 The small gold loan facility dated 23 August 1988 provided, as a condition precedent to draw down, that security be given by AUR to RAL in a form satisfactory to RAL and its solicitors by, insofar as is relevant here, a first registered fixed and floating charge over the interest of the company in the project and all the project assets (including plant and equipment) including the company's right title and interest in the tribute agreement.

It may be that the fixed and floating charge of 12 October 1988 was given in response to this provision. It is stated to be collateral with the charge of 23 May 1988. 16 The deed of charge dated 23 May 1988 is expressed to be in consideration of the mortgagor (an obvious mistake for mortgagee) forbearing to sue in respect of existing loans and in consideration of advances to be given, and charges in favour of RAL "the mortgaged premises". Clause 36 defines "the mortgaged premises", "venture", and "production". 17 The particular parts of clause 36 relied upon by RAL as bringing the profits generated from the close out of the forward sale contracts and the gold delivered against the smaller gold loan within the ambit of the May charge are: 36. THAT except to the extent that such interpretation shall be excluded by or be repugnant to the context whenever the same is used herein: (a) The expression "the mortgaged premises" means all of the legal and beneficial right, title and interest of the Mortgagor in the Treatment Plant and in the Venture and all property and assets of the Mortgagor relating to the Venture from time to time including, without limitation:- (i) the tenements (not relied on) (ii) all other property, rights and interests acquired or contracted to be acquired from time to time for the purposes of the Venture; … (v) all of the Mortgagor's interest and estate in, to and under agreements, arrangements or understandings relating to the Venture to which the Mortgagor is a party or is otherwise bound; … (viii) all the Mortgagor's right, title and interest, to and under all agreements entered into by or on behalf of the Mortgagor for the sale of production and all benefit and advantage to be derived by the Mortgagor thereunder and therefrom: (ix) all moneys due, owing or payable or to become due, owing or payable to the Mortgagor in respect of the sale of Production; … (xi) all proceeds receivable by the Mortgagor from any sales of assets acquired or constructed by or on behalf of the Mortgagor for the purposes of the Venture. (b) The expression "Venture" means the venture previously constituted by the heads of Agreement dated 25th August, 1984 between the Phillips Syndicate (being James William Phillips, George Allison Phillips and Peter Farquhar Bowman), the Mortgagor and the Debtor and described therein as the Phillips Joint Venture and now carried on by the Mortgagor in respect of the Tenements and includes all activities carried out on or with respect to the Tenements for the purpose of developing the Tenements to obtain gold and other minerals by the mining, extraction and refining of gold and other minerals on and from the Tenements including, without limitation, the following activities:- (i) exploration for gold and other minerals; (ii) the mining, extraction, crushing, screening, refining, transportation, handling, storage, loading for shipment and delivery of gold and other minerals on and from the Tenements (including the extraction of gold from tailings dumps situated on the Tenement); (iii) the operation of the Treatment Plant, and all other plant, machinery, equipment, buildings and structures and other facilities required to mine and produce gold and other minerals on and from the Tenements; (iv) the doing of all acts and things which may be necessary or advisable for the efficient and economical conduct of the venture. (c) The expression "Tenements" means all of the right, title and interest of the Mortgagor in or conferred by the agreement dated 24th May, 1985 between Mt. Martin Gold Mines N.L. of the one part and the Mortgagor, the Debtor, James William Phillips, George Allison Phillips and Peter Farquhar Bowman of the other party and known as the "Mt. Martin Tribute Agreement" in respect of the Mt. Martin Gold Mine as defined therein and any extension or renewal thereof and any further agreement with the Mortgagor relating to the said Mt. Martin Gold mine. (d) The expression "Production" means gold and other minerals in whatever form and ore containing same produced by the Mortgagor or others from or in relation to the Venture … 18 So far as the October charge is concerned it charges in favour of RAL "the project assets wherever situate both present and future". "Project", "Project Assets" so far as relevant and "Project Production" are defined in Clause 26(1)(s),(t) and (u) as follows: (s) "Project" means the project known as the Mount Martin Project located approximately 34km south of Kalgoorlie in Western Australia including the development, construction, mining, working and operation of the mine located on the Tenements and the associated plant and equipment and infrastructure. (t) "Project Assets" means all property and all interests in property of any kind now or in the future owned, held or acquired by the Mortgagor where the dominant purpose for which such property is owned, held or acquired is its use in or in relation to the Project and includes (without limitation) the right tile and interest of the Mortgagor in: (f) all Project Production;

(g) all contracts for sale of Project Production; … (i) all contracts for the sale of gold, silver or minerals described in paragraph (f); … (k) all choses in action and rights and benefits conferred by or pursuant to any document or agreement (including the Joint Venture Agreement and other Project Documents or pursuant to any document or agreement now or in the future entered into for the purposes of the Joint Venture or any agreements or documents amending the same) now or in the future entered into for the purposes of the Project or the sale of Project Production;

(u) "Project Production" means all gold, silver or other mineral products produced from the Project; … 19 Both charges were fixed and floating charges, but as an event of default had occurred prior to the impugned transactions the floating charges had crystallised. Charged Property 20 While the evidence is that the forward sales contracts were entered into pursuant to the requirements of clause 11A of the small gold loan facility they are not property specifically referred to as being subject to any charge, and even if they were that would not carry the day on closing out. Thus it is necessary to consider the provisions of each charge relied upon by RAL as giving it security over the gold used to repay the gold loans. Its is convenient to give consideration first to those provisions in each charge relied upon as giving security, which I do not consider assist RAL and which I can deal with quite quickly. May charge - first consideration 21 I have set out the provisions on which RAL relies. I do not consider the gold paid to RAL in respect of either transaction falls within sub-clauses v, viii, ix or xi of Clause 36(a). That is because the gold is not an interest in or under any agreement, arrangement or undertaking relating to the venture; it is not an interest to or under an agreement for the sale of production as production is defined; it is not money due in respect of sale of production as defined; and it is not proceeds of sale of assets, although it might possibly have been acquired with such proceeds. October charge - first consideration 22 RAL does not rely on Clause 26(1)(t)(f) although I have reproduced it to make the decision clear. The gold transferred cannot come within (g) or (i) for the reason that it has no connection with project production. It could not come within (k) as it is not a benefit under any document. A profit made on closing out a contract is not a benefit conferred by such agreement on any reasonable and untortured construction. Remaining possibilities 23 There remain for consideration the general definition at the commencement of Clause 36(a) of the May charge; Clause 36(a)(ii) of that charge and general words of Clause 26(1)(t) of the October charge and I now deal with these. 24 I think it correct to state that while the forward sales contracts were entered into for the purpose of securing the future of the Mt. Martin mine it is quite unlikely that any attention was given to them when drawing up the charge documents. If the charges result in security over the profits on closing out or over gold purchased with those profits it is more good luck than good drafting. Nobody would think on first reading of the charges that they gave security over the assets said to be subject to the charge. The profits had nothing whatever to do with the project apart from the fact that the forward sales would not have been arranged were it not for the project. Having said that I return to this matter which I have found particularly difficult. 36(a) general words

25 The question is whether the profits on closing out or the gold purchased with those profits were property and assets relating to the venture. That is, did they relate to an activity carried out on or with respect to the tenements for the purpose of developing the tenements to obtain gold and other minerals by the mining, extraction and refining of gold on and from the tenements. I consider they did not. The activities referred to seem to be limited to physical activities on the tenements. Profits arising from closing out a futures contract with non-tenement gold do not fall reasonably within this part of the definition. 36(a)(ii) May Charge, 26(1)(t) October Charge 26 The question here is whether the profits or the gold are property relating to the venture being property acquired or contracted to be acquired from time to time for the purposes of the venture. While the venture agreement referred to in the definition of venture is not in evidence, the evidence nevertheless is clear enough that the venture is the gold mining venture carried on at the Mt. Martin Mine. The hedging contracts were acquired for the purposes of the venture. The hedging programme was agreed between Mr. Russo of RAL and Mr. Peterson on behalf of AUR. The close out of the forward contracts came about as a result of conversations between Mr. Russo and Mr. Peterson in the first half of 1990, when Mr. Peterson said to Mr. Russo words to the effect I authorise the close out of the forward sales contracts and for approximately $750,000 to be paid into a RAL blocked deposit account with the balance of funds being applied to purchase gold to reduce the gold loan.

If loan funds were obtained for the purposes of the venture, as they clearly were, I think it clear their repayment was a purpose of the venture. It follows the profits on closing out were property acquired for the purpose of the venture. Insofar as $752,073.64 was applied for the purchase of gold to reduce the gold loan, that gold would for the same reason be property acquired for the purpose of the venture and accordingly covered by the security. 27 So far as the moneys in the blocked account are concerned there is nothing to suggest that the application of the balance of $650,002.16 in that account was with the authority of AUR. Thus unless RAL held security over that blocked account or the funds in the account it had no security over the gold purchased with the proceeds in that account. There is no evidence this money was acquired for the purposes of repayment of the gold loans. Had it been then one would have assumed it would have been used for that purpose immediately. While there is no direct evidence of its intended disposition, I consider it clear it was only to be used in connection with the venture and acquired for that purpose. The only withdrawal from it was for that purpose. The further withdrawal of $200,000, which was sought was for that purpose. The parties clearly treated the blocked account as being under RAL control. Thus if it was possible to have security over that account, I consider the funds in the blocked account fell within clause 36(a)(ii). For much the same reasons I consider the proceeds to be held "for the purposes of the project" under clause 26(1)(t) of the October charge. 28 The moneys were deposited with RAL in an account in the name of AUR or in the name of its management company. In other words RAL owed to AUR the amount in the deposit account. As with many other matters in this case, there is no proper evidence of the terms of the deposit. The question then is whether RAL could have security over the debt it owed its depositor. In Broad v Commissioner of Stamp Duties [1980] 2 NSWLR 40 a question arose under the Stamp Duties Act 1920 as to whether a direction to hold money deposited with a bank as security for advances amounted to a mortgage or a debenture so as it make it a loan security, under that Act. Lee J said at 46: The very fact that "the deposit" means no more than an indebtedness of the bank to the plaintiff in the sum of $4,000 to be discharged on 2 November 1981, makes it impossible, in my view, for it to be held that the instrument is a mortgage or charge, on the simple footing that there can be no mortgage or charge in favour of oneself of ones own indebtedness to another. 29 In saying this he purported to follow the decisions in Halesowen Presswork and Assemblies Limited v Westminster Bank Limited [1971] 1 QB 1 and on appeal National Westminster Bank Ltd v Halesgrove Presswork Assemblies Limited [1972] AC 785, although it was liens that were under consideration there. As I understand it this position was regarded as correct in law until the decision of the House of Lords in Bank of Credit and Commerce International SA (No. 8) [1998] AC 214. In that case, although not necessary for the decision, the House of Lords disapproved the decision of Millett J in In Re Chargecard Services Limited [1987] Ch 150, in which case, according to Lord Hoffman, the doctrine of conceptual impossibility was first propounded. At least so far as this country is concerned, that is not the position. It was that decision which was discussed and affirmed in the Court of Appeal in Bank of Credit and Commerce International SA (No. 8) [1996] Ch 245, after a careful review of authorities and academic writing most of which I have considered. The principal speech in the House of Lords was given by Lord Hoffman, the other Law Lords agreeing with him. This decision leaves a trial judge in a difficult position. There is little to be gained by expressing an individual view and great weight must be given to the House of Lords decision, even if it has had a less than enthusiastic reception from at least one commentator, namely Professor Goode: see 114 LQR 178. However, the fact that the decision in Broad has stood for nearly twenty years, and that it was followed in Estate Planning Associates (Australia) Pty. Ltd v Commissioner of Stamp Duties [1985] 2 NSWLR 495 and accepted as correct in Esanda Finance Corporation v Jackson(1993) 11 ACLC 138, a decision of the Full Court of the Supreme Court of South Australia, provides a strong reason for continuing to follow it and to leave it to an appeal court to determine that such action is wrong. The position might have been different had the decision of the House of Lords been essential for its upholding the decision of the English Court of Appeal, but it was not, and seems partly at least to have been brought about through a desire to make the law accord with the desires of commerce rather than through totally convincing reasoning. In all these circumstances I have decided that I should follow the decision in Broad. I should add that I relisted the matter and sought further submissions as to whether different considerations applied to charged deposits, which could be traced to have come from assets which were themselves subject to charge. I got no real help from this, but some assistance is gained from the speeches of Lord Dilhorne and Lord Cross of Chelsea in National Westminster Bank v Halesowen Presswork [1972] 1 AC 785. Both Law Lords approved the following passage from the judgment of Buckley LJ in the Court of Appeal [1971] 1 QB 33 at 46: When the cheque was cleared, as it was on June 14, 1968, it ceased to be a negotiable instrument and also ceased to be in the possession of the bank. Any lien of the bank on the cheque must thereupon have come to an end. … The money or credit which the bank obtained as the result of clearing the cheque became the property of the bank, not the property of the company. No man can have a lien on his own property and consequently no lien can have arisen affecting that money or that credit.

It would follow from this that if the Broad "principle" exists it does so in such circumstances. For the reasons given I consider I should follow it. Set Off 30 It is necessary only to deal with the second transaction in view of my conclusions as to security on the first. And it should be borne in mind that it is only if I am correct in continuing to follow the decision of Broad in the face of the decision of the House of Lords in Bank of Credit and Commerce International (No. 8) that set off need be considered in relation to the second transaction. 31 The second transaction took place on 3 July 1990. The winding up commenced on that day. There is no evidence which would enable me to determine which event took place first. There is no reason why I should find that one order was more probable than the other. However, if either event would lead to the same result there is no reason to deny the plaintiff the benefit of the result. In this case either event would lead to the same result but that result does not bring a benefit to the plaintiff. 32 If the transaction took place after the winding up commenced then on the basis of the decision of the House of Lords in Stein v Blake [1996] AC 243 and followed in that House in Bank of Credit and Commerce International (No. 8) at 223 an automatic set off takes place at the commencement of the winding up to produce a balance due one way or the other. This is supported by the following passage in Gye v McIntyre (1991) 171 CLR 609 at 622: Section 86 is a statutory directive ("shall be set off") which operates as at the time the bankruptcy takes effect. It produces a balance upon the basis of which the bankruptcy administration can proceed. Only that balance can be claimed in the bankruptcy or recovered by the trustee. If its operation is to produce a nil balance, its effect will be that there is nothing at all which can be claimed in the bankruptcy or recovered in proceedings by the trustee. The section is self-executing in the sense that its operation is automatic and not dependent upon "the option of either party" (see, per Lord Selborne LC., In re Deveze; Ex parte Barnett (1874) 9 Ch App 293, at p 295).

In the circumstances of this case the views expressed in Re Capel Marac Finance Australia Ltd v Capel (1994) 48 FCR 195 as to self-execution at bankruptcy date need not be considered as RAL has in effect taken advantage of the security the right of set off gave. 33 If the transaction took place prior to the commencement of the winding up then as it took place on the same day as the winding up commenced, the position is that had it not taken place, set off would have been available so that the payment did not have the effect of giving RAL preference over other creditors. Section 122(1)(a) of the Bankruptcy Act 1966. The position of RAL and the other creditors was precisely the same. This is explained in the judgment of Hodgson J in Hamilton v Commercial Bank of Australia (1992) 9 ACSR 90 at 106 to 108. 34 It is nevertheless still necessary to consider s86(2) of the Bankruptcy Act and thus to consider whether, at the time of receiving credit from AUR, RAL had notice of any act or omission of the company which would give ground for an application to wind up the company under s364 of the Code: Law v Jones [1972] 2 NSWLR 573. In the circumstances of this case that would mean notice that the company was unable to pay its debts. 35 There is of course no suggestion that at the time of entering into the second gold loan AUR was unable to pay its debts. The question is whether at the time of receiving credit from AUR by payment or deposit into the blocked account, RAL had knowledge AUR was unable to pay its debts. There is no evidence that was the position on 18 June 1990. No questions were asked of the witnesses for the defendant about this. The notice of default in respect of the larger gold loan and the calling on the letter of credit securing it took place at the end of June 1990. Counsel for the defendant argued that the mutual dealings were the gold loans and the hedging contracts. I do not accept that to be the position. The credit under s86(2) in this case was the deposit into the blocked account. But even on that basis as I have said, there is no evidence that RAL had knowledge AUR was unable to pay its debts. Had it been in possession of that knowledge it is more likely than not it would have required all proceeds from the hedging contracts to be used towards repayment of the gold loan. Insofar as cases such a Naoroji v The Standard Chartered Bank of India [1868] LR 3 CD 444; and National Safety Council v Lloyds Bank NZ Ltd (1992) 7 ACSR 286 state the object of the forerunners of s86 of the Bankruptcy Act to have been to bring about a fair result where merchants have mutual dealings, each giving credit to the other, relying on the solvency of the other, that statement of reliance is I consider now covered by s86(2) of the Bankruptcy Act. It is to be remembered that RAL considered it had security over the deposit. No secured creditor is bound to give partial release whether or not the creditor considers the debtor solvent. 36 It follows the claims of the plaintiff in respect of each transaction fails and that the appropriate order is that the plaintiffs' claim be dismissed with costs.

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