THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.10 - THE NATIONAL GUARANTEE FUND

Division 8 - Claims in respect of insolvent members

SECTION 965   ORDERING OF ALTERNATIVE CLAIMS AND PREVENTION OF DOUBLE RECOVERY  

965(1)  [Sale or purchase]  

Where:

(a)  a member organisation has received under the agreement for a sale or purchase of securities by the member organisation on behalf of a person, the consideration for the sale or settlement documents in relation to the purchase, as the case may be; and

(b)  subsection 951(1) or 952(1), as the case may be, entitles the person to make a claim against SEGC under Division 6 in respect of the sale or purchase;

subsection (2) applies.

965(2)  [Obligations discharged before insolvency]  

This Division does not, because of:

(a)  a dealer, being the member organisation or a partner in the member organisation, having become insolvent at a particular time; and

(b)  the member organisation having received, under the agreement, the consideration or the settlement documents;

entitle the person to make a claim in respect of the consideration or the settlement documents, as the case may be, unless the member organisation's obligations to the person in respect of the sale or purchase, as the case may be, in so far as those obligations related to the consideration or the settlement documents, were discharged before that time.

965(3)  [No alternative claim]  

Where:

(a)  because of a dealer having become insolvent on a particular day, this Division entitles a person to make a claim (in this subsection called the ``first claim'' ) in respect of property; and

(b)  because of a dealer having become insolvent on a later day, this Division entitles a person to make another claim in respect of the property;

SEGC shall not allow the other claim unless:

(c)  the person has made the first claim and SEGC has allowed or disallowed it;

(d)  the Board is satisfied that if the first claim had been made SEGC would have disallowed it; or

(e)  the Board is satisfied that, when the person first became aware of the dealer referred to in paragraph (b) having become insolvent on the later day:

(i) the first claim was barred; or

(ii) it was no longer reasonably practicable for the person to make the first claim before it became barred.

965(4)  [No double recovery]  

Where:

(a)  at a particular time, SEGC allows a claim made by a person under this Division in respect of property; and

(b)  because of:

(i) a dealer having become insolvent (whether before, at or after that time); and

(ii) the property having, before that time, been entrusted or received as mentioned in paragraph 963(1)(b);

this Division entitles the person to make another claim in respect of the property;

SEGC shall not allow the other claim.