Rodgers v Schmierer

Rodgers v Schmierer involved a dispute concerning the validity of a second mortgage executed by Mr and Mrs Reader in favour of the respondents, who were administrators of the company Vokal. The mortgage was intended to secure obligations under a deed of company arrangement, which had been approved by the creditors of Vokal. The appellants, Rodgers, challenged the enforceability of the mortgage, arguing that it was invalid due to the absence of proper legal advice and procedural irregularities.

The primary legal issue before the court was whether the second mortgage executed by the Readers was valid and enforceable. This involved examining the requirements for obtaining proper legal advice and whether the procedural steps in executing the mortgage complied with relevant statutory provisions. Additionally, the court had to consider the impact of the deed of company arrangement on the rights of creditors and the enforceability of the mortgage.

The court found that both Mr and Mrs Reader had received independent legal advice regarding the deed of indemnity and second mortgage, as required by law. The court also noted that it was standard practice for the firm to obtain security to cover trading losses and administrator disbursements. The deed of company arrangement, which was approved by the creditors and established an Administration Fund and a Deed Fund, further supported the validity of the mortgage. The court held that the second mortgage was valid and enforceable, as it complied with the necessary legal and procedural requirements.

The orders of the court were that the application by Rodgers to challenge the enforceability of the second mortgage be dismissed and that the costs of the proceedings be reserved.