Horizon Aluminium Products Ltd v Parker - [1985] 1 NZLR 506

Contract — Indemnity — Construction — Rescission for breach — Personal covenant by company's directors to indemnify lender for past advances of $30,578 and future advances secured by a floating debenture — Lender failed to comply with clause in debenture that it was to apply moneys received first in payment of interest and second in payment of company's oldest debt — Company paid lender $33,898 and moneys were used to discharge current account trading debts — On company's liquidation, debenture found to be an invalid security for past indebtedness — Lender became an unsecured and unpaid creditor — It sought to recover $26,352 plus interest from covenantors for past advances — Whether the method of accounting specified in the debenture applied between lender and covenantors — Whether lender's breach entitled covenantors to rescind their contract.