Sharpe v Heywood [2013] NSWCA 192

The borrower entered into a loan agreement that included security over farm machinery and a term in the loan agreement provided that in the event of default a caveat would be lodged over the borrower’s property. The loan agreement was covered by the Farm Debt Mediation Act. The parties attended mediation as required and the lender brought proceedings. Before going to trial the matter was settled with Consent Orders. Those orders included payment of a lesser judgment sum, as well as allowing the lender to lodge a caveat over the property to secure the judgement sum. However, the borrower did not pay the judgment sum and the lender sought to enforce the Consent Orders.

The borrower applied to set aside the Consent Orders. He had argued that the Consent Orders created a new “farm debt” under the Farm Debt Mediation Act and therefore further mediation was required before the lender could enforce the judgment.

The Court held that the consent orders could only be challenged if obtained by fraud, mistake or by an agreement which is void or voidable. This was not, the argument of the borrower so the Court dismissed the application

The borrower appealed to the Court of Appeal The Court of Appeal upheld the earlier decision noting that the borrower’s argument was that the enforcement of the Consent Order was void because the Consent Order records a new farm mortgage and any enforcement action would be contrary to s 8 of the Act, there being no s 11 certificate permitting such enforcement action in respect of the asserted new farm mortgage. The only problem was the application that was brought was not to stay enforcement but to set aside the Consent Orders.

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