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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
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
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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All Monies Mortgages Still in Use Despite Exposing Lenders
All monies mortgages still in use despite repeated warnings about exposure to the lender.
In Hunt & Hunt Lawyers (a firm) v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10 the High Court was required to consider whether the liability for damage suffered by a lender was solely attributable to the negligent conduct of the lender’s solicitor or whether a proportion of this liability could be attributed to the fraudulent conduct of other parties.
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Judgment for Possession: Compromise if Mortgagee Delays?
Does a mortgagee compromise its rights under a judgment for possession if it allows the mortgagor time in which to discharge the debt rather than immediately taking possession of the mortgaged property?
In Wolfe v Permanent Custodians Limited [2012] VSC 275 the Supreme Court of Victoria dismissed several claims made by a plaintiff borrower. An agreement whereby the lender agreed to refrain from enforcing a judgment and warrant for possession over the borrower’s property in return for payment of the owed money was held to not interfere with the lender’s right to enforce a judgment and Warrant of Possession.
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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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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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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.
