The secured creditor can now enforce its mortgage following the Bankruptcy of Ms Waller
In 2012 the High Court gave judgment in Waller v Hargraves Secured Investments Limited [2012] HCA (4). That case was the subject of presentations by a number of Kemp Strang partners directly to clients and at our Briefings and external conferences.
In summary, the High Court determined that the structure of a settlement reached between Ms Waller and the secured creditor at a Farm Debt Mediation resulted in new loan agreements being entered into between the creditor and Ms Waller, effectively re-financing the original secured debt. Although the debt had originally been the subject of a certificate under the Farm Debt Mediation Act allowing the secured creditor to enforce its mortgage without further mediation, the certificate was held to be ineffective with respect to the new loans and further mediation under the Act was required before the secured creditor could enforce its mortgage.
The High Court case had a recent sequel in Hargraves Secured Investments Limited v Michael Slaven as Trustee of Bankrupt Estate of Roslyn Edwina Waller [2013] NSWSC 673.
Since the High Court case, Ms Waller had been declared bankrupt and Mr Slaven was appointed as the Trustee in Bankruptcy of her property.
The secured creditor sought to enforce its security, relying on the provision in section 5(2) of the Farm Debt Mediation Act, which provides that that Act does not apply in respect of a farmer whose property is the subject of a bankruptcy petition presented by any person.
The Trustee in Bankruptcy had no interest in defending the proceedings. However Ms Waller sought to have the proceedings dismissed on the basis that the issues had already been determined on the merits.
The Court held that the only issue determined on the merits by the Court was whether the enforcement proceedings were valid, having regard to the provisions of the Farm Debt Mediation Act. The combination of:
- continuing default by Ms Waller under the Loan and Mortgage;
- Ms Waller being declared bankrupt; and
- the provisions of the Farm Debt Mediation Act not applying to a farmer whose property is the subject of a bankruptcy petition,
meant that the secured creditor was entitled to have its proceedings against Mrs Waller for the enforcement of the mortgage heard.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
