security 5+6

Question 1

lta mtg def obli

Answer 1

mtg can secure obligations beyond the repayment of money
e.g. perfomance or contractual duties

Question 2

freedom of contract vs equity

Answer 2

FOC- supports enforceable collateral advantages
equity - once debt is payed, mor is free from conditions tied to the mtg

Question 3

kreiglinger approach

Answer 3

1. is it unconsionable
2. is it a penal clause
3. is it repugnant

Question 4

1. is it unconsionable
   kreiglinger approach

Answer 4

• equity set aside uncon contracts
• handled under the CCCFA

Question 5

2. is it a penal clause
   kreiglinger approach

Answer 5

• punishment for failure 2 meet terms is inconsistent with equitable right of redemption
• if additional cost after default, could be penal and contradict equitable or contractual ROR

Question 6

3. is it repugnant
   kreiglinger approach

Answer 6

• contradicts both equitable and contractual ROR
• clause w/ unfair advantage beyond the contractual term

Question 7

clogs

Answer 7

clog is something that interferes, restricts, defeats MOR equitable ROR

Question 8

kreiglinger case facts

Answer 8

• wool broker, sheep skin as by product of meat works
• ## wool brokers give loan to meat works and agree that wool brokers have ROFR on the sheep skins

Question 9

kreiglinger case what is the Coll adv

Answer 9

• ROFR to sheep skins

Question 10

kreiglinger case held

Answer 10

• valid after the mtg
• col adv was seperate to the mtg, two seperate doc
• rained valid for the term
• transaction was commercial, ROFR was primary, mtg secondary
  NOT A CLOG ON EROR

Question 11

REEVE v Lisle

Answer 11

primary transaction was option to enter partnership and the mtg was secondary, was there only to protect the transaction if it fails

Question 12

Noakes v rice issue

Answer 12

• requirement to buy liquor from the brewery (coll adv) could continue after mtg was repaid

Question 13

Noakes v rice HOL decision

Answer 13

• the Coll adv was valid until mtg was paid
• ## was making a free public house a tied public house and this is not the same property

Question 14

collateral adv can …

Answer 14

be valid until mtg relayed but after the term if they are informed they are seen as penal and a clog on the EROR

Question 15

Bradley v Carrit facts

Answer 15

• tea broker lender so could take security over shares in tea company and ensure broker was main supplier of tea
  -mee to be compensate if mor failed

Question 16

Bradley v Carrit HOL decision

Answer 16

• Coll adv could not continue after the loan was repayed
  -deemed clog on EROR bc it continued beyond repayment
• it imposed on going restrictions on how shares could be used

Question 17

Bradley v Carrit and noakes v rice

Answer 17

no control over the shares and not being a free public house are the same

Question 18

limits on the collateral approach case

Answer 18

Lewis v frank love
jones v Morgan

Question 19

Lewis v frank love facts

Answer 19

• mee feel into default
• transfer of existing mtg was made
• new mee required mor to grant option to purchase property

Question 20

Lewis v frank love held

Answer 20

court ruled that the option was a clog on the EROR and rejected it was part of contract
- opt to purchase tied to mtg are clog unless part or primary transaction

Question 21

jones v Morgan facts

Answer 21

• mor sold land to reduce debt
• mee agreed to release the part of security but required that half of the remaining land in trust for them

Question 22

jones v Morgan held

Answer 22

court held that it was a clog
- bc the terms varied the EROR
as it required payment of the debt PLUS half remaining property, unfair restriction

Question 23

MEE remedies against MOR in default

Answer 23

1. sue
2. enter into poss
3. sell mtg prop
4. appt receivers

Question 24

MEE remedies against MOR in default
1. sue

Answer 24

sue for breach of personal covenant ( promise to repay)
- no need for personal promise sometimes

Question 25

MEE remedies against MOR in default 2. enter into poss

Answer 25

under s137 pla, a mee can enter into poss of mtg prop, with express power in mtg

Question 26

MEE remedies against MOR in default 3. sell mtg prop

Answer 26

power to sell in mtg document - mee cannot purchase property via private sale

Question 27

MEE remedies against MOR in default 4. appt receivers

Answer 27

- if the mor is a company, the mee may have power to appt receivers to manage the property

Question 28

safeguards for the MOR

Answer 28

1. default req 2. PLA notice, s119 pla 3. right to redeem s97 4. mee duties

Question 29

safeguards for the MOR 1. default req

Answer 29

- can only take action when the mor has DEFAULTED

Question 30

safeguards for the MOR 2. PLA notice, s119 pla

Answer 30

- warning issued to mor -notice of mee intention to excercsie powers

Question 31

safeguards for the MOR 3. right to redeem s97

Answer 31

- mor can redeem (repay and claim) at any time b4 the sale

Question 32

safeguards for the MOR 4. mee duties

Answer 32

- obtain the best price at time of sale - act in good faith

Question 33

apple feilds v Damesh DOC

Answer 33

- the court said that DOC under s176 PLA does not limit the basic equitable rule that the mee decides how to sell the mtg property

Question 34

apple feilds v Damesh price

Answer 34

- mee not obliged to sell at highest only best possible price at the time of sale -

Question 35

apple feilds v Damesh possesion

Answer 35

- mee not to request to obtain orders for possession to remove the mor from prop b4 selling - mee can sell even if mor is still in possession

Question 36

mee remedy against trespassers case

Answer 36

Lockwood homes

Question 37

Lockwood homes

Answer 37

- bank could pursue against Lockwood as the builders default occurred after the removal of the show home affirming the mee vulnerable position and need for protection

Question 38

mee remedy against trespass

Answer 38

- mee can take action against trespasser if they are in possession of the property - on LW mee didn't possesion at the Time of act

Question 39

mee remedy against trespass by relation

Answer 39

- mee can establsh a r2ip at the time if trespass, may have right 2 sue

Question 40

mee remedy against trespass continuing

Answer 40

- occurs when a trespasser continues to act unlawfully on mtg prop after the mee acquires possession

Question 41

trespass for damage 2 reversion

Answer 41

need to show PERMANENT damage - in Lockwood show that the home is more valuable with the show home

Question 42

cousins v Wilson

Answer 42

- Purchaser can not make a trespass claim against third party as does not have possession of the property yet and cannot make a reversionary claim because an equitable interest is not a common law interest.