KFT Investments v Bullard [2012] VSC 307

The lender sued to recover its debt under a loan granted to the borrowers, guaranteed by their company. The borrowers and company applied to transfer the proceedings to NSW or to stay the proceedings until a mediation is conducted under the Farm Debt Mediation Act 1994 (NSW). The central issue was whether the NSW Act applied.

The court found that the NSW Act did not apply for the following reasons:

  1. The Act only prevents a creditor taking enforcement action in respect of a farm mortgage, not a loan and guarantee (as here);
  2. The borrowers must be “farmers” (here another company was the operator of the farming business not the borrowers or the guarantor).

The court refused to transfer the proceedings out of Victoria.

The court noted that the fact that there was a cross-collateralised mortgage over a farm in NSW was not relevant.

Click here to read full judgment

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