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Careless Drafting Exposes Lender to Unsecured Loan
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
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. -
Analysis of a Mortgagor’s Fundamental 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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Mortgagor Unlawfully Takes Possession of Security Property
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
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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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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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.
