New Cap Reinsurance v Chase Manhattan (No 2)

In the case of New Cap Reinsurance v Chase Manhattan (No 2), the plaintiff, New Cap Reinsurance, sought an interlocutory injunction against Chase Manhattan, a financial institution, to prevent the corporation from entering provisional liquidation. The dispute centred on the preservation of priority of Australian liabilities under section 116 of the Insurance Act 1973 (Cth) and the requirement for an undertaking as to damages. The case was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the limited undertaking by the corporation, as opposed to the provisional liquidator, provided adequate protection to the defendants, Chase Manhattan. The court had to determine whether the provisional liquidator's statutory priority and equitable lien to recover expenses would provide better protection in this situation. Additionally, the court considered whether the balance of convenience favoured granting the interlocutory injunction to the plaintiff.

The court found that the limited undertaking by the provisional liquidator provided better protection to the defendants than the corporation's limited undertaking. The court recognised that the provisional liquidator's statutory priority and equitable lien to recover expenses could ensure that the plaintiff's interests were adequately protected in the event of provisional liquidation. The court held that the balance of convenience favoured the plaintiff, and therefore, granted the interlocutory injunction, preventing the corporation from entering provisional liquidation until the substantive proceedings were concluded.

In summary, the court granted the plaintiff's application for an interlocutory injunction, preventing the corporation from entering provisional liquidation. The court found that the limited undertaking by the provisional liquidator provided better protection to the defendants, and the balance of convenience favoured the plaintiff. The court also acknowledged the provisional liquidator's statutory priority and equitable lien to recover expenses as factors that could ensure the plaintiff's interests were adequately protected.