I Waller V Hargraves Secured Investments LTD [2012 ] HCA PDF

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I WALLER V HARGRAVES SECURED INVESTMENTS LTD [2012] HCA A Relevant facts 

The appellant1 borrowed $450 000 from HSI,2 secured by an “all moneys” registered mortgage over her farm.

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In 2004, she defaulted, and the respondent gave notice under the Act3 that they intended to take enforcement action. Pursuant to s 9(1), the appellant requested mediation for the dispute; this resulted in a second loan agreement amounting to $640 000.

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In 2006, the appellant defaulted again – this led to a third loan agreement which extended the due date to September 2009. This agreement was also defaulted on.

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In October 2006, the respondent was issued a s 11 certificate to affirm that satisfactory mediation had taken place for the first loan agreement.

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After a third default, the respondent brought a claim for the outstanding balance and possession of the farm. B Issues

Did the s114 certificate of satisfactory mediation lift the bar on the enforcement of the third loan agreement? Was the action for a money judgment – as distinct from the action for possession – a s 4(1) “enforcement action” for the purposes of s 8(1)5, and thus also barred? C Decision For the first issue, s 8(1) of the Act forbids enforcement action by a creditor ‘in respect of’ a farm mortgage unless a s 11 certificate is in force – the Judge determined that each of the three loan agreements created distinct interests in the appellant's property within the expansive definition of ‘farm mortgage’ in s 4(1). Therefore, HSI was barred by s 8(1) from seeking an enforcement action because they only had a s 11 certificate applicable to the first default. 1 Roslyn Waller. 2 Hargraves Secured Investments Limited. 3 Farm Debt Mediation Act 1994 (NSW). 4 Farm Debt Mediation Act 1994 (NSW). 5 Ibid.

Regarding the money judgement, the definition of “enforcement action” in s 4(1) is wide enough to extend beyond enforcement of the security by means of possession – it includes reliance on any of the rights in the ‘farm mortgage’. Therefore, the respondent's action for a money judgment, so long as it was action to enforce the mortgage, was barred alongside the seeking of possession by s 8(1).

IV Significance to ADR Practitioners This case is significant to ADR practitioners, as it highlights situations where ADR can achieve justice and fairness better than adjudication. In the spirit of the Act, mediation was included to level the power differential between farmers large institutional lenders6 - ADR can help avoid the expense and delay of litigation7 and open a non-adversarial dialogue. This is appealing to farmers, as they tend to be “asset rich and cash poor,”8 and default is not uncommon when climatic disasters or disease affect crops and cattle, or prices on the world market become unfavourable. The appellant was also indirectly protected by the requirement for mandatory mediation,9 as HSI could not seek an enforcement action against her without first opening a dialogue.

6Patricia Bergin, ‘The Objectives, Scope and Focus of Mediation Legislation in Australia’ (Paper presented at “Mediate First” Conference, Hong Kong Convention and Exhibition Centre, 11 May 2012) 10. 7 Waller v Hargraves Secured Investments Ltd [2012] HCA 322(28). 8 Waller v Hargraves Secured Investments Ltd [2012] HCA 322(28). 9 Farm Debt Mediation Act 1994 (NSW) s 11....