Sharpe v W H Bailey [2013] NSWSC 913

The lender and borrower had settled a case about a debt, and the terms of settlement contained a clause whereby the lender was granted a second mortgage on the borrower’s property.

The borrower defaulted on the terms of settlement and the lender tried to enforce the mortgage. The borrower tried to set aside the judgment, arguing that the settlement agreement was a new farm debt, therefore enforcement was prohibited without mediation according to the Farm Debt Mediation Act and so the judgment was void.

The argument was not successful at first instance so the borrower appealed. He asked the Supreme Court to stay the execution of the judgment for the lender until the appeal was heard.

The Judge hearing the appeal noted that a stay is a discretionary matter and only to be granted if there is a fairly arguable case in favour of the person asking for the stay; and the status quo must be preserved until the appeal is decided in order for the appeal to have meaning.

The Judge found that there was a fairly arguable case that the settlement terms were secured by a fresh mortgage, which qualified that agreement as a new farm debt. The Judge decided that the interests of justice did require the stay be granted

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