Ward v Smart So Hoe [2015] VSC 691

A lender sued for possession and judgment. The guarantor who mortgaged his property as collateral for the loan counterclaimed for redemption.

The court found the lender’s default notice was invalid because it incorrectly identified the event of default, being the non-payment of interest because interest had been pre-paid. However the court found that the owners had no right to redeem the mortgage and recover the property unless they repaid the loan.

The court stated the law as follows:

A mortgagor coming into equity to redeem, must do equity and pay principal, interest and costs before he can recover property which at law is not his. An amount sufficient to pay off all moneys due and owing under the mortgage should be paid into court or deposited, even if it has been refused by the lender. This will stop interest running on the mortgage. A willingness to make payment will not suffice. A registered mortgagee has a right of possession upon default. It is not dependent on establishing a right of sale.

The court further said:

The offer of the third party to pay out monies owing on the mortgage did not constitute redemption.

The court found the lender entitled to possession and gave judgment for the amount owing. However the court found that because the default notice was invalid, default interest ran from the date of the loan maturing and not from the date of the default notice.

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