Provident Capital v Anderson [2012] NSWSC 525

A farmer granted both a real estate and chattels mortgage to a lender in relation to his farm. The farmer and his wife divorced and came to a settlement in family court whereby she was given certain of the charged goods.

The lender sought a final injunction restraining the husband and former wife from dealing with the goods charged by the mortgage, an order pursuant to section 79A of the Family Law Act 1975 that the consent orders be set aside so far as they relate to the goods and orders that transfers of such goods to the wife be set aside pursuant to section 37A of the Conveyancing Act 1919.

The wife claimed the goods were not used in connection with the farm and were not subject to the mortgage.

The court found that the lender had established a prima facie case that the goods in question were farm machinery and charged. The court found that prima facie the lender’s interest prevailed over that of the wife since its interest was prior in time and the wife was not a bona fide purchaser for value without notice.

Section 79A of the Family Law Act provides that family court orders may be set aside if they constitute a miscarriage of justice. The lender argued this on the basis that it was not informed of the family court proceedings.

Section 37A of the Conveyancing Act 1919 provides that transfers made with intent to defraud creditors are voidable.

The court found that the lender established a prima facie case of both of these bases.

The lender gave sufficient evidence that at least some of the items in the family court consent orders were recently advertised for sale. In the absence of undertakings from the wife, the court found there was a risk that the subject matter of the proceedings would be dissipated unless a restraining order was made. Further, if the goods charged were sold to bona fide purchasers without notice, the lender’s rights in that property would be defeated by the rights of such purchasers.

The court ordered that the wife be restrained from dealing with the goods charged and to pay into court the proceeds of sale in relation to goods already sold.

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