BANKING LAW & REGULATION

COML 309 BANKING LAW & REGULATION

Jim Peters wishes to purchase a dairy farm for $12 million. He has a deposit of $1 million. He seeks funding of $11 million from CSB Bank Co Ltd for his purchase.
CSB Bank Co Ltd requires Jim to transfer title to the farm to the bank until he has paid off the loan with the agreed interest. Jim accepts this proposal. In due course, the bank became the registered proprietor of the farm under the Land Transfer Act 1952.
Over time, dairy prices dropped. Due to this drop in prices, Jim fell behind in his contractual payments to CSB Bank Co Ltd.
Peter Brown, manager of the CSB Bank Co Ltd branch at which Jim maintained his account, initiated a sale of the farm after following all statutory notice requirements. The sale was widely advertised in the media in the local area but not otherwise.
At the sale, the price the purchaser of the farm agreed to pay was lower than the market value of dairy farms in the area. The proceeds of the sale satisfied Jim’s liability to CSB Bank Co Ltd, but Jim received only $400,000 from the sale. The market value for farms in the area suggested Jim should have received $600,000.
CSB Bank Co Ltd received a letter from Jim’s lawyer, Mary McIntosh, complaining that CSB Bank Co Ltd had caused Jim to lose much of his equity in the farm.
You work at the Head Office of CSB Bank Co Ltd. The file disclosing the circumstances above has landed on your desk. You are asked to advise the CSB Bank Co Ltd what it should do.
Required: Write a report (a report might include the following– (1) a summary of conclusions; (2) reasoning to justify those conclusions, including a statement of the salient facts, a statement of the relevant law, and the application of the latter to the former; and (3) your conclusions including practical advice as to the course of action the bank should take) to your manager, containing your advice.
Reading for this assignment:
Applefields Ltd v Damesh Holdings Ltd [2001] 2 NZLR 586 (CA) (available to you on Blackboard on the Assessments Page for COML 309);
Chapter 11 of Tyree’s Banking Law in New Zealand (3rd ed); and
Part 3 of the Property Law Act 2007.
Your answer must not exceed 1,500 words (including footnotes). Your answer should be well written (attending particularly to spelling, grammar, and punctuation) and structured logically.
The assignment is due at 2 pm on Friday, 3 June 2022, and must be submitted by Turnitin. The weighting for this assignment is 25% of your course overall mark.