20 May 2012


At the hearing on that day, the borrower informed the Master that he had lodged a complaint with the Financial Ombudsman. Acting on that assertion, the judge adjourned the hearing so as to allow the Financial Ombudsman to address the dispute.

However, ANZ filed an affidavit which recorded communications between its lawyers, on the one hand, and the Financial Ombudsman’s Service (FOS), on the other. That material indicated that the FOS had not received any complaint or dispute from the appellant. The implication from the affidavit was that the borrower had misled the Court when he said that he had lodged such a complaint. The Master ordered possession.

The borrower sought to have the orders for possession set aside on the grounds that the orders had been “improperly obtained”. He claimed he had not misled the Court because he had in fact, on 10 October 2011, posted a complaint to the Financial Ombudsman. As it happens, the FOS has received a complaint from the appellant dated 10 October 2011, but it did not receive it until 2 December 2011. This was rejected because it was found ANZ had not mislead the court in saying there had been no complaint to FOS.

The borrower then appealed arguing the National Credit Code applied to his loan. This argument was rejected because the loan was entered into before the National Credit Code came into existence.

The State Code (in force at the time) did not apply because the loan documents contain an express acknowledgment by the appellant that the loan is not regulated by the “Consumer Credit Code” (which I understand to be a reference to the State Code).

Even though it was inapplicable due to the finding that the National Credit Code did not apply the court noted what was required to make out a hardship application under the National Credit Code:

  1. On the hearing of a substantive application based on hardship, the power of the court is to interfere with the exercise of the lawful rights of a mortgagee. It then behoves the mortgagor to make a true, full and frank disclosure to the court of all relevant circumstances. There must be a full and frank explanation by the mortgagor as to why the default has occurred.
  2. Where the application is based on circumstances of alleged temporary or permanent hardship or unexpected changes in circumstances, those circumstances must be fully explained, with no room for suggestion or inference that there may be some other reason for the default.
  3. When, as is usually the case, the mortgagor is seeking the indulgence of the court, it will be necessary to propose what the mortgagor suggests should be the fair and equitable terms on which the relief should be granted. The mortgagor cannot hope to avoid a sale without being required to comply with some material and perhaps ongoing terms and conditions.
  4. Where there has been a temporary lapse in payment of instalments payable under the mortgage and the mortgagor proposes to resume payments, the court should be satisfied that the mortgagor has a reasonable prospect of making those payments or of complying with the fair and equitable terms that the mortgagor proposes or that the court thinks fit to impose.
  5. The mortgagor must present sufficient information to enable the court to reach its own independent conclusion that that is the case. The mortgagor’s unsupported assertion to that effect will seldom be sufficient.
  6. If, when viewed as a whole, the mortgagor’s application appears to be no more than an attempt to delay and frustrate the exercise of the mortgagee’s rights, then the application for relief may well fail.

Click here to read the full judgment

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Kate Cooper joined Bransgroves Lawyers in 2006 and has been a partner since 2009. Kate specialises in Supreme Court litigation in the fields of mortgage enforcement, professional negligence and originator/funder disputes. She has an extensive transactional practice including, origination deeds, aggregation deeds, commercial and construction lending and mortgage securitisation.

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