• Mortgagor Wins Right to File Cross-Claim Against Mortgagee

    to win cross-claim

    In a recent judgment of the Supreme Court of NSW a mortgagor obtains the right to file a cross-claim, but with restrictions. To pursue further claims an additional security amount is payable to the mortgagee.

    Australian Securities Ltd v Borina Pty Ltd [2017] NSWSC 1073 considers whether a mortgagor’s claims are futile and doomed to failure.

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  • Personal Property Securities Register: Perfecting Registration

    personal property securities register

    The Personal Property Securities Register (PPSR) is a national online register It protects parties purchasing personal property from either an individual or an entity. How can a lender perfect its registration so as to ensure protection?

    OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21 highlights the importance of correctly registering a security interest on the Personal Property Securities Register.

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  • To Imply or Not to Imply: Examining the Duty of Good Faith

    duty of good faith

    Whether or not the elusive “duty to act in good faith” actually exists in commercial contracts is a matter of considerable debate.  The courts appear so uncertain in fact, that they explicitly accept the ambiguity and proceed “just in case” on the basis that such a duty does exist. 

    This occurred in Kosho Pty Ltd & Anor v Trilogy Funds Management Limited [2013] QSC 135. The Queensland Supreme Court acknowledged that there was little guidance around the existence and nature of a duty to act in good faith. And yet the Court proceeded on the assumption that such a duty existed regardless.

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  • Guarantees Tagged Unconscionable: What Can Lenders Do?


    Claims of unconscionable conduct are a constant threat for lenders.  Lenders may feel confident that a guarantor secures the debt repayment, only to find the guarantees struck out as unconscionable. 

    Therefore, many lenders now structure their facilities to avoid guarantees by listing parties as co-borrowers.  However, a new line of cases may have extended the principles of unconscionable conduct to parties other than guarantors.

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  • Penalty Doctrine: High-Risk Loans Warrant Greater Returns

    penalty doctrine

    The penalty doctrine again came under the spotlight in Quantum Asset Management Pty Ltd v Love Properties (WA) Pty Ltd [2017].

    A 53% per annum interest rate may seem steep, but the Court declined to label it a penalty. The decision took into account the high-risk nature of the loan.

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  • Late Payment Fee Escapes the Penalty Tag

    late payment fee

    In a recent NZ Court of Appeal decision a late payment fee of over $30 million on a $37 million loan dodged the penalty tag. The Court held the fee to be proportionate to the lender’s interests and so enforceable.

    What are the effects of this key judgment? It certainly issues a warning to commercial borrowers. Escaping late payment fees may not be as simple or clear cut.

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  • Equitable Charge Prevails But Needless Costs Deducted

    In a recent judgment a plaintiff with an equitable charge gains the upper hand in a priority dispute. However, due to raising avoidable issues, the Court deducts the unnecessary legal fees.

    Morris Finance Pty Ltd v Commonwealth Bank of Australia & Ors [2017] VSC 260 (18 May 2017) highlights the need for a clear legal strategy.  Due to not having one the plaintiff had its costs reduced by 25%.

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  • Liquidator Prevails Against Secured Creditor

    The High Court considered a priority dispute between a liquidator and a secured creditor. In a key decision the liquidator’s claim took priority.

    The High Court’s verdict is a good outcome for liquidators. It is however a less welcome result for secured creditors.

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  • Mortgage Document: Should Lenders Be Concerned About Quality?

    The mortgage document is important but complex. Often these documents contain difficult to understand legal terms, phrases and concepts.

    How can lenders protect their rights and interests? What does a good mortgage look like? Let’s define what key items should be included in all mortgage documents.

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  • Secured Creditor Has Debt Extinguished by DOCA

    What is the position of a secured creditor under a deed of company arrangement (DOCA)? Does the secured creditor maintain its debt or can the DOCA extinguish part of it?

    The Supreme Court of NSW focussed on this issue In the matter of Bluenergy Group Limited (subject to a Deed of Company Arrangement) (administrator appointed) [2015] NSWSC 977. The judgment is of significant concern to secured creditors insofar as contingent or future debts, such as accruing interest and enforcement costs, are concerned. 

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