Harker-Mortlock v Commonwealth Bank of Australia

The appeal concerned a dispute between the appellants and the Commonwealth Bank of Australia (the Bank) regarding mortgages over real property. The Bank sought to enforce its possessory interest under these mortgages, relying on the liquidation of a company, ilnvest (in liq) Pty Limited. The appellants contended that the liquidation did not constitute an event of default and that the repayment of a loan account had matured the loan secured by the mortgages. Further issues arose concerning whether the appointment of a new trustee replaced the borrower in the loan documents.

The court was required to determine several legal issues. These included whether the liquidation of ilnvest (in liq) Pty Limited was an event of default under the mortgages. The court also considered whether the repayment of the loan account had matured the loan. Additionally, the court examined whether the appointment of a new trustee effectively replaced the original borrower in the loan documentation. The applicability and effect of the *Farm Debt Mediation Act 1994* (NSW) were central, specifically whether the Bank's proceedings for possession constituted an enforcement action under the Act, and if a certificate issued under section 11 of the Act following mediation and settlement was void. The court also addressed allegations of misleading and deceptive conduct by the Bank regarding the availability of farm debt mediation, and whether the mortgagor was principally engaged in farming operations. Finally, the court considered a claim for rectification of declarations of trust and whether an award of interest under section 100 of the *Civil Procedure Act 2005* (NSW) was contrary to an agreed maximum amount for a guarantor.

The court reasoned that the liquidation of ilnvest (in liq) Pty Limited did not, in itself, constitute an event of default under the mortgage agreements. It was determined that the repayment of the loan account had matured the loan, thereby discharging the mortgages. The court found that the *Farm Debt Mediation Act 1994* (NSW) applied to the enforcement action, and that the certificate issued under section 11 was not void. The court also found that the Bank had engaged in misleading and deceptive conduct by informing the mortgagor that mediation was unavailable, and that the mortgagor was principally engaged in farming operations. The court dismissed the claim for rectification, finding that the true meaning of the documents could be ascertained by construction. Regarding the guarantee, the court held that the award of interest under the *Civil Procedure Act 2005* (NSW) was not contrary to the agreed maximum amount.

The court granted leave to the appellants under section 471B of the *Corporations Act 2001* (Cth) to commence proceedings against ilnvest (in liq) Pty Limited by joining it as a respondent to the appeal, subject to terms that no judgment be enforced against the company or its assets without further leave. The court ordered that ilnvest (in liq) Pty Limited be joined as the second respondent to the appeal. An amendment was made to a previous order to dismiss the first cross-claim. Ultimately, the appeal was dismissed, and the appellants were ordered to pay the costs of the first respondent and the costs of ilnvest (in liq) Pty Limited as the second respondent.