THE Octaviar decision was emphatically overturned by the Queensland Court of Appeal on Friday. For the days since, banking and finance lawyers have been busy establishing how to move forward with client advice.
The New Lawyer can reveal that in an unlikely union, top-tier competitors Allens Arthur Robinson and Mallesons Stephen Jaques have been liaising on how to best deal with last week's decision.
In terms of how to deal with transactions, Mallesons partner Martin James said this morning: "It's certainly our position, and the position of our friends over at Allens, that we should continue to do all of that in the same way."
The Queensland Court of Appeal overturned the Octaviar ruling of McMurdo J, which cast doubt over the validity of company charges, in a 3-0 decision. But lawyers are warning that this not not yet mean that banks and borrowers can return to the way things were.
"We're grappling with how to advise clients... We are saying that pending resolution of any appeal, at the moment we should be cautious and not really change much of what we have been doing over the last six months," said James.
But James said there are principles that came out of the original Octaviar decision that the Court of Appeal hasn't addressed. "So whilst they have given very strong orders in favour of the appellant in the appeal, we see that there is a residue of the original principles that came out of the McMurdo J judgement that might still be there. We're adopting a practice that says little should change."
Friday's decision was "fairly emphatic", said Allens Arthur Robinson banking and finance partner Diccon Loxton in an interview with Boardroom Radio. But while people can breathe easier and sleep easier, "I can't see them entirely relaxing yet", he said.
"The first thing is that there could be an appeal to the High Court," said Loxton. "The parties seem to have an awful lot of money to throw at this and there is awful lot at stake. So they have a while yet in which they can decide to appeal."
Loxton said of the original decision: "[It] threw the cat amongst the pigeons. The Corporations Act requires you to register variations of charges which increase the amount secured. Until the original decision everyone just thought that was limited to variations of the terms of the actual charge. But what the judge did in that case was to say the variations include anything that have the effect of increasing the amount secured."