New South Wales Consolidated Acts

MORATORIUM ACT 1932 - SECT 9

9 Limitation of rights of mortgagee

(cf Act No 48, 1930, s 4)

(1) A mortgagee shall not without leave of the court exercise any of the rights, powers, or remedies expressly or impliedly given to him by the mortgage against the mortgagor or the mortgaged property for the recovery of the moneys secured by the mortgage or for the enforcement or realisation of the security.
On any application under subsection one of this section founded upon default in the payment of interest, or of any rate, tax, or charge, the court shall have power to make such order as it thinks proper under the circumstances although such interest, rate, tax, or charge may not be in arrears for the period appropriate to the case mentioned in paragraph (a) or paragraph (b) of subsection two of this section.
Provided that nothing contained in this section or in any enactment by this Act repealed shall prevent the mortgagee:

(a) from making any demand or giving any notice for payment of any moneys secured by the mortgage,

(b) from bringing any action for debt or damages or suit or other proceeding for an injunction in the case of a breach of any covenant, agreement, or condition in the mortgage expressed or implied:

(i) securing to the mortgagee some collateral benefit,

(ii) in the nature of a covenant for title,

(iii) in the nature of a restrictive covenant,

(c) from recovering by action the price of goods supplied or moneys payable for services rendered by a mortgagee to a mortgagor notwithstanding that the payment of such price or moneys may be secured by a mortgage,

(d) in the case of a mortgage of leasehold premises or of licensed premises within the meaning of the Liquor Act 1982 , from exercising any right, power, or remedy given to the mortgagee on the happening of any event whereby the lease may be forfeited or the licence endangered.

(2) Nothing contained in this section or in any enactment by this Act repealed shall preclude the mortgagee from entering into possession or taking proceedings to obtain possession or appointing a receiver of the mortgaged property in any of the following cases:

(a) where interest is or continues to be unpaid:

(i) in the case of a mortgage of land occupied by the mortgagor for any grazing, dairying, poultry farming, viticultural orcharding, beekeeping or horticultural purpose or for the growing of crops of any kind or for vegetable growing or for any purpose declared by the Governor to be an agricultural purpose for the purposes of the Agricultural Lessees Relief Act 1931 -for a period of two years,

(ii) in the case of a mortgage of any other land occupied by the mortgagor as his home-for the period of two years,

(iii) in the case of any other mortgage to which this Act applies-for the period of two years

after the same becomes payable:
Provided that where the terms of the mortgage provide for the capitalisation of interest, the date at which by such terms a rest may be taken shall for the purposes of this paragraph be regarded as the date upon which the interest becomes payable,
Provided further that where on or after such date any unpaid interest has been or shall be capitalised in accordance with the terms of the mortgage, such interest shall not, for the purposes of this subsection, be, by reason of such capitalisation, deemed to have been or to be paid.

(b) where the mortgagor is or continues to be in default for a period of not less than two years under the provisions of any covenant or agreement in the mortgage expressed or implied for the payment of rates, taxes or other charges on or in respect of the mortgaged property,

(c) where the mortgagor is in default under the provisions of any covenant, agreement, or condition in the mortgage expressed or implied for the insurance, maintenance, or cultivation of the mortgaged property, or in the case of lands held under the Crown Land Consolidation Act 1913 , the Returned Soldiers Settlement Act 1916 , or the Closer Settlement Acts, for the payment of moneys due to the Crown thereon, or for the doing of any act for the preservation of the security:
Provided, however, that if any suspension or deferment of any such payment shall have been made under the provisions of any of the aforesaid Acts, the mortgagor shall not, during the operation of any such suspension or deferment, be deemed to be in default in respect of such payment.

(d) where the mortgagor has abandoned possession of the mortgaged property,

(e) where a sequestration order has been or is made against the mortgagor,

(f) where the mortgagor has executed or executes a deed of assignment or of arrangement under the provisions of any bankruptcy law for the time being in force,

(g) where an order has been or is made, or a resolution has been or is passed, for the winding-up of the mortgagor being a company,

(h) where the mortgagor being deceased and his estate insolvent, the same is being administered by or under the direction of any court,

but the court may, on the application of the mortgagor made within three months after the mortgagee has entered into possession or appointed a receiver, order the mortgagee to vacate possession or determine the appointment of the receiver either absolutely or on such terms or conditions as it thinks fit.
Unless the court otherwise orders no such order shall prevent the mortgagee from entering into possession or taking proceedings to obtain possession or appointing a receiver on the commission or omission by the mortgagor subsequently to the order of any act or thing entitling the mortgagee under the provisions of this subsection so to do.

(2A) Where the mortgagor has, by failing to make a payment of money, made default under the provisions of any covenant or agreement referred to in paragraph (b) or paragraph (c) of subsection two of this section he shall be deemed to continue to be in such default notwithstanding that the mortgagee has made the payment which the mortgagor has so failed to make.

(3)

(a) The court shall not grant any application for leave to commence or continue proceedings for the recovery of the whole or any part of the principal sum secured by the mortgage, or for foreclosure, unless the court is satisfied that:

(i) after the commencement of the Moratorium (Amendment) Act 1950 , the mortgagee has, with a view to discharging the mortgage (being a mortgage of land), offered to take from the mortgagor or to arrange with some other person to take from the mortgagor a new mortgage (being a mortgage of land) over the mortgaged property on terms and conditions not less favourable to the mortgagor than the terms and conditions contained in the existing mortgage or where those terms and conditions have been affected by any of the provisions of subsection seven of section twenty-five of the Moratorium Act 1930 , as amended by subsequent Acts, section thirty-four of this Act and the Interest Reduction Act 1931 , as amended by subsequent Acts, not less favourable to the mortgagor than those terms and conditions as so affected, and the mortgagor has unreasonably refused to accept such offer, or

(ii) it would, having regard to all relevant circumstances, be unjust and inequitable not to grant the application.

(b) Any term or condition of a new mortgage referred to in subparagraph (i) of paragraph (a) of this subsection which would operate to exclude the provisions of this Part of this Act shall be disregarded in determining whether the terms and conditions of such new mortgage are not less favourable than those contained in the existing mortgage.

(c) The terms and conditions of a new mortgage referred to in subparagraph (i) of paragraph (a) of this subsection shall be deemed to be less favourable than the terms and conditions of the existing mortgage:

(i) if under such new mortgage an action, suit or proceeding for the payment by the mortgagor of any principal moneys secured by the new mortgage or interest thereon would lie at the instance of the mortgagee,

(ii) if such new mortgage fixes a date for payment of the principal sum secured by such mortgage or any part thereof earlier than five years from the date of execution of such mortgage.

For the purposes of this paragraph a mortgage shall be deemed to be one under which an action, suit or proceeding for the payment by the mortgagor of any principal moneys secured by the mortgage or interest thereon will lie at the instance of the mortgagee if:

(a) in any agreement supplementary to or collateral with such mortgage the mortgagor is under an obligation to the mortgagee for the payment of any such moneys or interest as aforesaid, or

(b) any bill of exchange or promissory note is to be given by the mortgagor to the mortgagee in connection with the mortgage transaction.

(4) In any case where, after the date fixed by the mortgage for repayment of the principal sum, the principal sum or any part thereof remains unpaid, and the mortgagor satisfies the court that he is unable to redeem the property, or to repay a portion of the principal sum, as the case may be, the court shall not grant leave to take any proceedings to recover such principal sum or part thereof or for foreclosure unless the court is satisfied:

(a) that, by reason of the wasting nature of the security, the continuance of the mortgage would seriously affect the security, or

(b) that the conduct of the mortgagor has, in respect of the non-performance by him of any covenant expressed or implied in or by the mortgage, or in respect of any dealing with the mortgagee or the mortgaged property, been such as to render him undeserving of the benefit or protection of this Act, or

(c) that by reason of any such non-performance great hardship will be inflicted on the mortgagee.

A mortgagor shall not be deemed unable to redeem the property, or to repay a portion of the principal sum, as the case may be, where the mortgagor has unreasonably refused to accept an offer by the mortgagee of the nature referred to in subsection three of this section.

(4A) An order made by the court under subsection one of this section, giving a mortgagee leave to exercise all or any of his rights, powers or remedies against the mortgaged property, shall enure and shall be deemed always to have enured for the benefit of the assigns of the mortgagee, and shall not be and shall be deemed never to have been prejudiced or affected by any change occurring after the making of such order in the title to or ownership of the mortgaged property.

(5) In any case where, after the date fixed by the mortgage for payment of the principal sum or any part thereof, the principal sum or part remains unpaid, the time for payment of the principal sum or part shall, unless and until an application for leave is dealt with by the court under this section, be by force of this Act extended to the prescribed date for repayment upon the terms that interest shall after the commencement of this Act continue to be payable at the close of the same intervals of time as are provided by the mortgage with respect to the interest thereby secured, or, if no provision is so made, then quarterly, and at the following rate:

(a) in the case of a mortgage the obligation to pay interest whereunder has been affected by the provisions of the Interest Reduction Act 1931 , as amended by subsequent Acts, at the rate provided in the mortgage as reduced by the provisions of section five and subsection one of section six of that Act, or if and so far as any order has been made under section seven of that Act, at the rate determined by such order,

(b) in the case of a mortgage the obligation to pay interest whereunder has not been affected by that Act, at the rate provided in the mortgage.

Provided that in any case the rate of interest payable shall not exceed seven per centum per annum, unless the court on the application of the mortgagee fixes a higher rate, but not exceeding the rate provided in the mortgage.

(6) Where a mortgagee obtains a decree absolute or an order under the provisions of the Real Property Act 1900 , for foreclosure and sells the foreclosed property within twelve months of the making of the decree or order for foreclosure, the mortgagor shall be entitled to recover in a court of competent jurisdiction the amount, if any, by which the net purchase money received by the mortgagee exceeds the amount of the moneys due to him under and by virtue of the mortgage after deducting therefrom all moneys reasonably spent by the mortgagee in improving the mortgaged property.