McMahon v Permanent Custodians [2013] NSWCA 275

Farmers defaulted under their mortgage and also the agreement resulting from mediation. The lender applied for a certificate under the Farm Debt Mediation Act 1994 prior to expiry of the extended period granted under the mediation agreement but the lender only commenced enforcement action after its expiry. Consent orders were made granting possession and judgment for the debt owing. The farmers sought an injunction to restrain the auctions and a declaration that the certificate was void because they were not ‘in default under the farm mortgage’ at the time the certificate issued and for the consent orders to be set aside. The court refused and the farmers sought leave to appeal on the basis that the Act required both a default under the farm mortgage and any agreement reached at mediation.

The Appeal Court rejected this and held that the literal meaning of the words applied given there was no ambiguity in the Act – the words of the section only required default under the farm mortgage. There was no reason to expand the words to refer to default under both the farm mortgage and any arrangement or agreement that relates to that farm mortgage which is reached at mediation.

The Appeal Court refused leave as the appeal was bound to fail.

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