A transaction by which a company guarantees or indemnifies a bank for the personal borrowing of its director, without demonstrable benefit to the company, may constitute an uncommercial transaction under s 588FB(1). However, a bank that enters into such a transaction in good faith, without reasonable grounds for suspecting insolvency, and which provides valuable consideration, may rely on the s 588FG defence even where its conduct falls short of the standards expected of a diligent financier. An estoppel by convention cannot arise from a tripartite deed where one party whose priorities would be affected did not agree or assume the relevant state of facts. The members of the Court were divided on whether the liquidator had discharged the onus of proving the transaction was uncommercial.
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