• Courts Won’t Assist Borrowers with Imprudent Transactions


    The courts will not intervene to assist borrowers who become the victim of their own imprudent transactions, even where they have not been advised to seek independent legal and financial advice.

    In the matter of Donnelly v Australia and New Zealand Banking Group Ltd [2014] NSWCA 145 the court held that a borrower who voluntarily engages in risky business is not entitled to call upon equitable principles to be redeemed from the consequences inherent in taking those risks.

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  • Careless Drafting Exposes Lender to Unsecured Loan

    careless drafting

    Careless drafting and a failure to properly structure loan facility and variation documents leave a lender with an unsecured loan and significant costs exposure.

    In the matter of Sibonna Nominees Pty Ltd v Evangelos Vouzas and Christina Vouzas [2013] VSCA 369, the Court of Appeal of Victoria affirmed the trial judge’s finding that a mortgage provided by the borrower’s parents secured no money and that the lender was not entitled to exercise any power of sale over 2 ‘mortgaged’ properties.

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  • Judicial Sale of a Mortgaged Property

    judicial sale

    The Court will not ordinarily make an order for judicial sale of a mortgaged property against the wishes of the mortgagee unless the mortgagee’s conduct would otherwise prejudice the mortgagor.

    In the matter of Koovousis v Tony, trustee in bankruptcy of the Estate of Vrkic, Elliott May Lawyers convinced the court that the rights of its mortgagee client should prevail over the rights asserted by a purchaser seeking specific performance of a contract of sale over the mortgaged property.

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  • Analysis of a Mortgagor’s Fundamental Right to Redeem

    right to redeem

    A mortgagor retains the right to redeem the mortgage in equity even if it is in default of its obligations under the mortgage and loses the contractual right to redeem.

    In the decision of Sun North Investments Pty Ltd as trustee v Dale & Anor [2013] QSC 44 the Supreme Court of Queensland provides a useful analysis of a mortgagor’s fundamental right of redemption.

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  • Charging Clauses Not Void for Uncertainty


    Charging clauses in loan agreements and guarantees entitling a lender to call for a mortgage on terms and conditions yet to be determined are not void for uncertainty.

    In GE Commercial Corporation (Australia) Pty Ltd v Future Network (Albury) Pty Ltd [2013] NSWSC 1228 the Supreme Court of New South Wales rejected a guarantor’s attempt to have a guarantee provision declared void because of uncertainty

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  • FOS Creates New Rights for Dispute Resolution

    dispute resolution

    External Dispute Resolution bodies like the Financial Ombudsman Service (FOS) are able to create new rights between parties. By contrast, courts generally only ascertain and enforce existing rights.

    In Utopia Financial Services v Financial Ombudsman Service [2012] WASC 279, the Supreme Court of Western Australia affirmed the exceedingly wide powers FOS has at its disposal to resolve disputes involving its members, even if this means creating new rights and obligations.

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  • Mortgagor Unlawfully Takes Possession of Security Property

    security property mortgagor

    What happens when a mortgagor unlawfully re-takes possession of a security property?

    In J P Morgan Trust Australia Limited v Anthony Robert Bridge [2013] NSWSC 668, the Court was required to consider the rights and standing of a mortgagor who re-enters possession of a property after execution of a writ by the sheriff.

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  • Asset Lending Not Necessarily Prohibited By Public Policy


    Public policy does not necessarily require that asset lending be prohibited, or even deterred.

    In Provident Capital Ltd v Papa [2013] NSWCA 36 the New South Wales Court of Appeal found that a loan was not unconscionable simply because it was “asset lending”.

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  • Execution of a Writ of Possession Stayed by Supreme Court

    writ of possession

    The NSW Supreme Court exercises its discretion and stays the execution of a writ of possession.

    In Secure Funding Pty Ltd v Colin West [2013] NSWSC 746 a short stay of execution was granted by the Supreme Court to allow the borrowers to make the missed payments and to provide evidence of the progress of an application for further finance. The decision demonstrates the scope of the court’s discretionary power to stay proceedings.

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  • Lender Fails to Insist on Independent Legal Advice

    independent legal advice

    Another lender fails to insist on its borrower obtaining independent legal advice.

    In Paccar Financial Pty Ltd v Menzies[2013] NSWSC 772 the critical issue before the court was whether certain loan documents had been signed and/or sufficiently explained to the borrower by the lender. None of which would have been required had the lender insisted on independent legal advice.

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Solutions. Not just advice