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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.
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Obligations Imposed on Mortgagees Exercising Power of Sale.
Queensland Supreme Court case involving former CEO of ABC Learning highlights the obligations imposed on mortgagees exercising power of sale.
In the recent matter of Westpac Banking Corporation v Helicopters Brisbane Pty Ltd & Ors [2012] QSC 263 the Supreme Court of Queensland was asked by Eddy Groves, former CEO of ABC Learning, to dismiss an application for summary judgment. The court was required to consider the operation of s85 Property Law Act 1974 dealing with the obligations imposed on a mortgagee exercising power of sale over secured property.
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High Court Clarifies the Operation of the Penalties Doctrine
High Court clarifies the operation of the penalties doctrine in Australia.
In Andrews v Australia and New Zealand Banking Group Limited [2012] HCA 30 the High Court of Australia held that a fee could be characterised as a penalty even though it was payable without there being any breach of agreement.
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Caveat Dispute: Mortgagee Unable to Transfer Land
Caveat Dispute – where mortgagee exercising power of sale is unable to transfer the land due to a caveat lodged by the former director of the mortgagor.
In McElligott v Commonwealth Bank of Australia [2012] the Queensland Court of Appeal was asked to consider a registered owner’s caveat preventing the registration of a transfer and mortgage. And an order by the Supreme Court to remove this caveat under s 127 of the Land Title Act 1994 (Qld).
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Priority Dispute: Mortgagee Lodging a Proof of Debt
Priority Dispute – whether a mortgagee surrenders its rights when lodging a proof of debt in respect of its entire claim.
In Combis & Ors v The Trust Company Ltd [2011] QSC 388 the court was asked by the liquidator of a borrower to find that a mortgagee who had discharged its mortgage to allow the security property to be sold by a receiver became disentitled to any share of the surplus sale proceeds because the mortgagee lodged a proof of debt for all monies owed to it.
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Letter of Offer Dispute: Application Fee If Borrower Withdraws
Letter of Offer Dispute – charging an Application Fee when the borrower withdraws.
The Queensland Court of Appeal decision of Memery v Trilogy Funds Management Limited [2012] QCA 160 provides a useful analysis of when a lender may charge an application fee under a letter of offer agreement even if the loan does not proceed.
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Farm Debt Mediation Act: Mortgage Lenders Must Adhere
Farm Debt Mediation Act.
In Waller v Hargraves Secured Investments the High Court warned mortgage lenders of the need to adhere to the Farm Debt Mediation Act prior to taking enforcement action under a defaulting mortgage or loan agreement
