#8401 - Securities Mortgages - LAWS203 Property Law

Securities - Mortgages Credit Contracts and Consumer Finance Act 2003 Requirements: S 17: If debtor is a natural person, creditor must disclose key information about loan before contract is made, or within 5 days afterwards. S 27: the debtor then had three working days to cancel the contract. S 99: If disclosure requirements not satisfied, contract cannot be enforced by anyone other than the debtor. Reopening of oppressive credit contracts, consumer leases, and buy-back transactions 117: applies to all credit contracts, consumer leases and buy-back transactions. Meaning of oppressive 118: Oppressive means oppressive, harsh, unjustly burdensome, unconscionable or in breach of reasonable standards of business practice Italia Holdings (properties) ltd v Lonsdale Holdings [1984] Vautier J If commercial party that knew what it was doing with legal advice, etc. Court won't find oppressiveness. * Advantageousness of contract not material * 'Oppressive': real detriment or hardship, 'harsh' similar * Unjustifiably burdensome: 'difficult' insufficient, must be unjust. ? i.e. Procedure must be unjust * Unconscionable: more than just unfair contract. * In contravention of reasonable standards of commercial practice - requires evidence of commercial practice, evidence that this is below that standard. S 120: Court can reopen contract if it thinks (a) Contract is oppressive (b) A party (intends to) exercise a contractual right/power in an oppressive manner. i. e.g. Right to possession (c) A party induced the other into the contract by oppressive means i. e.g. Blackmail (duress) S 123: consider whether oppressive at the time contract was made/performed S 124 - guidelines for when oppressive (a) Consider terms, performance, and inducement of contract. (b) Specifically: i. Amount payable: oppressive? ii. If default, time given to pay oppressive? iii. X iv. Creditor refused to release part of security? (c) And anything else. S 127: Court has power on reopening contracts (1) Court has power to make any order it thinks necessary to remedy (4): any order may be made on any terms and conditions S 130: Court has power at any time. Bartle v GE Custodians [2010] CA Retired couple, blue chip group, agreed to purchase apartment, unknown to them the secured loan for this was increased. 'No docks' loan, no inquiry into income. The oppression remedy is not a contract remaking remedy; statute intends that borrowers understand transactions they are getting into. [56] - three strands of 'oppressive' 1. Abuse of power 2. Unequal bargaining positions couples with hard terms 3. Departure from standards acceptable to the community. 'oppressive' is wide, not to be bounded, not a cloused concept, goes beyond existing concepts in our jurisprudence. Mortgages Defined in s 2 LTA Any charge on land created under the LTA for securing (re)payment. s 100 A mortgage under the LTA shall have effect as security, not a transfer Common law, mortgage was transfer of land, mortgagee became owner, mortgagor had equitable interest ('equity of redemption') Now, acts like a lease, dealt with apart from the fee simple, confers on creditor a group of powers to secure money owing. - Phillips, Re Forrest Fixed term/on demand mortgages ? Fixed term # Table: over the course of the term, you will repay everything (interest + money owed) # Interest only: pay interest over term, at end of term pay back the full sum owed. # Can be varied in anyway. ? On demand mortgages # Mean just that: ANZ Banking Group v Gibson # Parties are taken to have meant payment on demand. # Debtor is allowed time only reasonably needed to convert funds presently accessible to him into cash; objective test, produces certainty. Property Page 42