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Penalty Interest: Higher & Lower Interest Rate Permissible
Penalty Interest – Court of Appeal confirms that it is permissible for a lender to charge a higher and a lower rate of interest.
In Kellas-Sharpe & Ors v PSAL Limited [2012] QCA 371, the Queensland Court of Appeal considered whether the charging of a lower concessionary rate of interest and a higher standard rate of interest gives rise to the operation of an unenforceable penalty rate of interest.
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Misleading and Deceptive Conduct Alleged Against BankWest
Misleading and deceptive conduct alleged against BankWest.
In Commonwealth Bank of Australia Ltd v Chamos [2012] NSWSC 1345 the Supreme Court of New South Wales considered issues surrounding misleading and deceptive conduct alleged against a mortgagee.
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Construction of Contractual Terms & Priority Between Lenders
Construction of contractual terms and the concept of priority between secured lenders.
In AET SPV Management Pty Limited v Wildfire Amusements Pty Ltd the court was required to construe an agreement to determine whether a mortgagee had agreed to postpone the priority of its first registered mortgage in favour of another lender.
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Competing Interests in Security Property
Competing interests in security property – will the court allow the holder of a registered caveat to interfere with the rights of a prior registered mortgagee to sell the security property as mortgagee in possession?
In Bateson v Jones [2013] WASC 8, Justice Pritchard of the Supreme Court of Western Australia was required to determine an application for the extension of a caveat filed by a lender in response to a lapsing notice issued by a prior registered mortgagee. The reasons for the Judge’s dismissal of the application are discussed below.
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Solicitor’s Certificate: Do These Cure Undue Influence?
Solicitor’s Certificates – Do these cure undue influence, and does the solicitor advising a guarantor need to be independent from the borrower?
These issues were dealt with by Justice Applegarth in McIvor v Westpac Banking Corporation [2012] QSC 404. It affirms how vital it is for lenders to ensure that all borrowers and guarantors receive independent legal advice in relation to their rights and obligations under loan agreements and mortgages prior to funding. His Honour also confirmed that it is not necessary for the solicitor advising the guarantor to be independent of the borrower.
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Summary Judgment Against Borrowers for Residual Debt
Lender obtains summary judgment against borrowers for residual debt remaining after security property sold as mortgagee in possession.
If exercised with caution, applications for summary judgement can be a cost effective way for lenders to resolve proceedings against borrowers. This without the cost of having to run the matter to trial.
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Shadow Directors: Lenders and Mortgagees Cautioned
Shadow Directors – lenders and mortgagees cautioned about the pitfalls of working too closely with defaulting borrowers to achieve a return of capital and interest.
Given the post GFC economic climate, many creditors are pursuing recovery procedures outside the standard legal process after an event of default has arisen. So called “workouts” are one example, where creditors exercise considerable control over the debtor company in default. This gives rise to the possibility of the creditors involved in a “workout” or restructure of a defaulting company being held liable if the workout fails and the company is liquidated. The case of Buzzle Operations Pty Ltd (in liquidation) v Apple Computer Australia Pty Ltd [2011] NSWCA 109 dealt with this issue.
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Court Reduces Amount Guaranteed by Volunteer Wife
Supreme Court of Queensland reduces amount guaranteed by a volunteer wife even though she obtained independent legal advice.
In Dowdle v Pay Now For Business Pty Ltd & Anor [2012] QSC 272 the Supreme Court of Queensland considered the issue of misleading and deceptive conduct where a wife sought to have a guarantee and mortgage set aside even though she had received legal advice prior to executing a mortgage and guarantee to secure monies advanced to her husband.
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Statutory Demand & Offsetting Claims
The Supreme Court of Victoria considers the elements required to set aside a statutory demand where the company asserts an off-setting claim.
In the matter of Innovision Developments Pty Ltd v Martorella & Anor [2012] VSC 390, the Supreme Court of Victoria set aside a creditor’s statutory demand for payment of a debt even though the debt was a money judgment entered by that court in favour of the creditor.
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Finance Brokers are the Agent of the Borrower Not the Lender
Supreme Court confirms that finance brokers are the agent of the borrower not the lender.
In Secure Funding Pty Ltd v Moon & Anor Justice Lyons of the Supreme Court of Queensland upheld the general principle that a finance broker is not the agent of the lender even if the lender pays a fee to the broker.
