Hargraves Secured Investments Limited v Waller

Contracts Review Act 1980 Farm Debt Mediation Act 1994 LEGISLATION CITED : Farm Debt Mediation Amendment Bill 1996 Real Property Act 1900 Rural Assistance Act 1989

Australian Cherry Exports Ltd v Commonwealth Bank of Australia (1996) 39 NSWLR 337 Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 CASES CITED : Gain v Commonwealth Bank of Australia (1997) 42 NSWLR 252 Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41 Perpetual Trustees Victoria Ltd v Ford [2008] NSWSC 29; (2008) 70 NSWLR 611 Varga v Commonwealth Bank of Australia [1996] NSWSC 86; (1997) NSW Conv R 55-797

PARTIES : Hargraves Secured Investments Limited (Plaintiff) Roslyn Edwin Waller (Defendant)

COUNSEL : D M Loewenstein with A R A Kulik (Plaintiff) V A Thomas (Defendant)

SOLICITORS : Hargraves Solicitors (Plaintiff) Jackson Lalic Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15600/2007 Hargraves Secured Investments Limited v Roslyn Edwina Waller

JUDGMENT 1 HIS HONOUR: The defendant owns a farm. She borrowed money from the plaintiff, which took a farm mortgage from her as security for the loan. The terms of the loan were contained in the first loan agreement. When the defendant defaulted under the first loan agreement the plaintiff gave the defendant a notice pursuant to s 8(1) of the Farm Debt Mediation Act 1994 ("the Act") and a mediation took place. The plaintiff and the defendant reached a settlement at the mediation and they entered into a Deed of Settlement and a second loan agreement. The defendant defaulted under the second loan agreement. A third loan agreement was then entered into and the defendant defaulted under that as well. No further notice pursuant to s 8(1) of the Act was given to the defendant and no further mediation took place. The New South Wales Rural Assistance Authority ("the Authority") subsequently issued a certificate to the plaintiff pursuant to s 11(1) of the Act. The plaintiff then commenced these proceedings seeking to recover the amount of the unpaid loan and an order for possession of the farm. 2 It is in these circumstances that the following issues arise for determination. First, are the proceedings void in accordance with s 6 of the Act because they were commenced "other than in compliance with" the Act, in this case before a further mediation had taken place and a further certificate pursuant to s 11(1) had been issued? Secondly, was the third loan agreement made between the plaintiff and the defendant unjust in any respects by reason of the operation of the Contracts Review Act 1980. If the second issue is decided in favour of the defendant, a further question also arises of what relief if any should be granted to give effect to that decision. Background 3 The defendant initially applied to the plaintiff for a loan in June 2003. The first loan agreement was entered into on 28 August 2003. The amount of that loan was $450,000. The defendant agreed to repay it by monthly instalments calculated by reference to the interest rate in the agreement on the fifth day of every month and to repay the principal sum and any outstanding interest on 5 September 2006. The operative rate of interest was 8.5 per cent with a default rate of 12.5 per cent. The defendant executed a registered first mortgage in favour of the plaintiff. In the period between February 2004 and July 2005 the defendant defaulted in the repayment of this loan. 4 On 5 June 2005 the plaintiff and the defendant participated in a mediation pursuant to the provisions of the Act. On 26 July 2005 they entered into a Deed of Settlement. Among other things the deed recited that the plaintiff had applied for farm debt mediation and that the defendant agreed to mediate "to resolve the issues between them". The deed also recited that it had been agreed between the plaintiff and the defendant "that all disputes between the parties be settled on the terms and conditions in this Deed". 5 The plaintiff agreed to increase the loan by $190,000 so as to arrive at a new principal amount of $640,000. Because the defendant then owed the plaintiff more than the original sum of $450,000, and in apparent recognition or anticipation of the fact that the defendant would not be able to make any loan repayments to the plaintiff from capital she had, or from income that she may earn, the plaintiff was authorised at settlement of the second loan agreement to deduct all but $17,409.53 from the $190,000 that was being advanced. The defendant received that smaller sum and the balance of the $190,000 was retained by the defendant, which was allocated in accordance with the following reconciliation:

(a) Arrears of interest with no penalty up to 5th August, 2005 $41,645.00

(b) Payout to RIV West $66,740.43

(c) Pay HSI 10 months interest in advance from 5th August 2005 to the 5th June 2006 @ 9% on $640,000.00 $48,000.00

(d) Payment of penalty @ 2.00% for 11 months @ $750.00 per month $8,250.00

(e) Payment to HSI for establishment fee, up stamp of mortgage, and solicitors fees $2,955.04

(f) Payment to Jackson Smith Trust Account $5,000.00

(g) Balance payable to Ms Roslyn Waller $17,409.53

6 The Deed of Settlement also contained the following clauses: " Releases

3. HSI releases and discharges Ms Waller from all suits, actions, causes of action, claims and demands whatsoever and wheresoever, which HSI now has or would have had against Ms Waller but for the execution of this Deed, in respect of any matter or thing arising from the penalty interest at 12.50% p.a. for the period April 2004 to August 2005 inclusive and this Deed may be pleaded as a bar to any such suit or action commenced by HSI against Ms Waller, except any suit or action to enforce this Deed and its provisions.

4. Ms Waller releases and discharges HSI and its servants, agents and employees (present and former) from all suits, actions, causes of action, claims and demands whatsoever and wheresoever, which Ms Waller now has or would have had against HSI but for the execution of this Deed, in respect of any matter or thing arising from the penalty interest at 12.50% p.a. for the period April 2004 to August 2005 inclusive and this Deed may be pleaded as a bar to any such suit or action commenced by Ms Waller against HSI, except any suit or action to enforce this Deed and its provisions.

5. On or before 5 September 2006 (' the expiration date '), Ms Waller must complete either of the following:

(i) Subdivide and sell parts of her property in order to have her loan with HSI reduced to $200,000.00 provided her equity remains greater than 35% of Valuation; or

(ii) Have her loan with HSI refinanced with another lending institution with the loan repaid to HSI.

6. In the event that Ms Waller defaults in making her interest repayments, from the date of this Deed to the expiration date, and does not rectify the default within fourteen (14) days after being served with a Notice by HSI, then Ms Waller agrees to immediately give possession of the Property to HSI." 7 The second loan agreement was entered into on 28 July 2005. With the exception of the principal sum, which was increased to $640,000, and the equivalent interest rates, which had risen to 9 per cent and 13 per cent respectively, and the repayment date, the second loan agreement was identical in its operative parts to the first loan agreement. The repayment date had changed to 5 September 2006 in line with the terms of the Deed of Settlement. Although clause 6 of the Deed of Settlement referred to the failure by the defendant to make payments of interest as provided as an event of default, the pre-payment of interest at settlement as a deduction of $48,000 from the sum of $190,000 meant in effect that no such default could occur before 5 June 2006. 8 However, default ultimately did occur. Accordingly, the third loan agreement was entered into on 29 August 2006. It was also in the same generic terms as the previous agreements. The interest rates had become 9.25 per cent and 13.25 per cent respectively. The repayment date for the principal sum and unpaid interest was now 5 September 2009. The defendant paid only $13,400 to the plaintiff between the date of the third loan agreement and the commencement of these proceedings on 1 November 2007. 9 After the execution of the third loan agreement the plaintiff obtained a certificate issued by the Authority pursuant to s 11 (1) of the Act. It was dated 20 October 2006. That certificate was described by Mr John Gorman, who swore a series of affidavits on behalf of the plaintiff, as being "in respect of the defendant's obligations under the first loan agreement, the second loan agreement and the third loan agreement". That statement is on one view not entirely accurate in the light of the matters that follow. 10 The certificate is headed "FARM DEBT MEDIATION ACT 1994 RURAL ASSISTANCE AUTHORITY SECTION 11 CERTIFICATE". It contains the statement "THE ACT DOES NOT APPLY TO FARM MORTGAGE". It refers in terms to it being a certificate issued pursuant to s 11(1) of the Farm Debt Mediation Act 1994. It is issued to the plaintiff and contains the following statement: "This certificate certifies that pursuant to Section 11 Farm Debt Mediation Act, 1994 the New South Wales Rural Assistance Authority is satisfied that the Farm Debt Mediation Act does not apply to the farm mortgage, details of which are set out hereunder". 11 The certificate then describes the mortgage given by the defendant to the plaintiff. There is no dispute in these proceedings that there has only ever been one mortgage given by the defendant to the plaintiff, that it was a farm mortgage to which the Act applied, that it ultimately came to secure all of the monies advanced to the defendant by the plaintiff in accordance with the three loan agreements and that the s 11(1) certificate accurately referred to it. The certificate was endorsed with a notation, presumably in accordance with s 11(5) of the Act, indicating that it "expired" on 2 June 2008. 12 The certificate also described the balance outstanding as at the date of issue of the s 8 notice as "$488,250.00". That would appear to be the amount of the defendant's indebtedness to the plaintiff under the first loan agreement when the plaintiff originally applied for a mediation under s 8(1) of the Act. The second and third loan agreements had not been executed when the plaintiff did so. By way of contrast, the statement of loan account maintained by the plaintiff covering the defendant's loan as at 5 October 2006 showed a debit balance in that account of $644,933.33. That amount apparently corresponds to the principal sum advanced in accordance with the second and third loan agreements together with interest accrued on that sum since 5 September 2006. 13 If the s 11(1) certificate applied to all three loan agreements it would presumably have referred to the sum outstanding at the time that it issued. It is not clear to me what Mr Gorman intended to convey by his reference to the s 11(1) certificate applying "in respect of" the loan agreements. As is discussed in more detail below, such a certificate is in terms issued in respect of the farm mortgage rather than in respect of the loan that it secures. These matters are central to resolution of the first issue in the proceedings. The first issue 14 Unlike the second issue, this issue falls to be determined by reference to facts that are not contested. The framework for the first issue is to be found in the terms of the legislation. Section 6, s 8 and s 11(1) of the Act are as follows: " 6 Enforcement action in contravention of Act void

Enforcement action taken by a creditor to whom this Act applies otherwise than in compliance with this Act is void.

8 No enforcement action until notice of availability of mediation given

(1) A creditor to whom money under a farm mortgage is owed by a farmer must not take enforcement action against the farmer in respect of the farm mortgage until at least 21 days have elapsed after the creditor has given a notice to the farmer under this section.

(2) Notice to the farmer is to be in writing in a form approved by the Authority (informing the farmer of the creditor's intention to take enforcement action in respect of the farm mortgage and of the availability of mediation under this Act in respect of farm debts).

(3) This section does not apply if a certificate is in force under section 11 in respect of the farm mortgage concerned.

11 Certificate that Act does not apply to farm mortgage

(1) The Authority must, on the application of a creditor under a farm mortgage, issue a certificate that this Act does not apply to the farm mortgage if:

(a) the farmer is in default under the farm mortgage, and

(b) no exemption certificate is in force in relation to the farm mortgage, and

(i) satisfactory mediation has taken place in respect of the farm debt involved, or

(iii) 3 months have elapsed after a notice was given by the creditor under section 8 and the creditor has throughout that period attempted to mediate in good faith (whether or not a mediation session or satisfactory mediation took place during that period)." 15 Section 4 of the Act defines "farm debt" to mean a debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage. "Farm mortgage" is defined to include any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor. "Enforcement action", in relation to a farm mortgage, means taking possession of property under the mortgage or any other action to enforce the mortgage. "Mediator" means a mediator for the time being accredited by the Authority constituted by the Rural Assistance Act 1989 pursuant to arrangements instituted by the Authority under the Act, and "mediation" means mediation by such an accredited mediator. "Creditor" means a person to whom a farm debt is for the time being owed by a farmer. "Default", in relation to a farm mortgage, means failure to perform an obligation that, under the terms of the mortgage, is a ground for enforcement action. "Loan" and "loan agreement" are neither defined in the definition section nor referred to elsewhere in the Act. 16 The defendant contended that the plaintiff was obliged to serve a notice under s 8(1) of the Act before taking any enforcement action against her in connection with her defaults "under the third loan agreement". She submitted that the certificate dated 20 October 2006 "was not effective in relieving the plaintiff of that obligation". The defendant reasoned as follows. 17 In the present proceedings the plaintiff relied upon the defendant's failure to pay interest after September 2006 as an event of default that authorised the commencement of the enforcement action. The plaintiff pleaded a failure to pay the instalment of interest due on 5 October 2006 as the earliest relevant breach of the terms of the loan agreements. Although the defendant refers to enforcement action taken in October 2007 "when the plaintiff commenced the present proceedings seeking orders for possession of Mrs Waller's property", the proceedings were not in fact commenced until the following month. 18 The defendant submitted that even though the plaintiff pleaded breaches of the first loan agreement it could not base its enforcement action in these proceedings on any breach of that agreement "because all disputes in relation to that agreement were settled under the terms of the Deed [of Settlement]". From 28 July 2005 all of the defendant's obligations to pay principal and interest to the plaintiff "existed under the second loan agreement". From 29 August 2006, all of the defendant's obligations under the second loan agreement were discharged and replaced by the obligations that she assumed under the third loan agreement. The defendant therefore submits that "[i]t is the third loan agreement that is the 'farm debt involved' in this case": see s 11(1)(c)(i) of the Act. I observe in passing that the defendant is at pains for her purposes to emphasise the farm debt involved in preference to the farm mortgage as principally informing her argument. This is because the Authority must be satisfied (in this case) that satisfactory mediation has taken place in respect of the "farm debt involved". 19 The defendant contends that the certificate issued by the Authority is not a certificate within the meaning of s 8(3) of the Act that had the effect of relieving the plaintiff from its obligation to give notice to the defendant before the proceedings were commenced. The defendant submitted that the definition of farm mortgage "is not directed to the instrument registered at the Land Titles Office, but to the security interest it creates". The defendant contended that the 20 October 2006 certificate issued by the Authority "was a certificate in respect of the interest that secured the defendant's obligations under the first loan agreement". The defendant did not have any obligations under the first loan agreement in October 2007. The defendant submitted that the first loan agreement "was not an agreement covered by the registered mortgage within the meaning of clause 35 of the Memorandum of Common Provisions": see below. She argued that in October 2007 the "mortgage concerned" (to adopt the expression used in s 9(3)) was the interest in her property "created by the registered mortgage that secured her obligations under the third loan agreement" and that "[t]he certificate relied upon by the plaintiff was not issued in respect of that 'farm mortgage'". 20 The defendant accurately but critically observed that the plaintiff's case was based upon a construction that holds that once there has been a mediation in respect of a farm debt and a certificate has been issued by the Authority under s 11, the creditor may rely on that certificate while still current and take enforcement action based on a farmer's default "under any subsequent debt provided it is secured by the same all moneys mortgage". The defendant described this as in effect a "blanket approval" upon which the creditor can rely regardless of whether or not the enforcement action relates to a farm debt that has been mediated or that the farmer has declined to mediate. 21 The defendant also contended that her construction would, but that the plaintiff's construction would not, promote the object of the Act as set out in s 3. The defendant also relied upon what was said by Young J in Varga v Commonwealth Bank of Australia [1996] NSWSC 86; (1997) NSW Conv R 55-797 at 56,258 - 56,259 as follows: "One must construe the Act to fulfil its purpose. The purpose was to prevent persons being driven off their farms because of inability to pay debt where it was possible for the debt to be rearranged after a bona fide mediation process. To fulfil the purposes of the Act, one must construe it, to my mind, favourably to the farmer, and unless compelled by the language, not permit the overriding purposes of the Act to be defeated by technicalities . " 22 The defendant argued that each new loan agreement gave rise to a new farm debt. There has been no mediation process in relation to the farm debt constituted by the third loan agreement. All enforcement action taken by the plaintiff was in those circumstances said to be void. This even included, according to the defendant's submissions, any notice given to the defendant under s 57(2)(b) of the Real Property Act 1900. 23 The defendant argued that the subject matter of a farm debt mediation is a dispute in relation to a farm debt. A dispute as to a farm debt cannot be delineated or mediated without reference to the contractual rights of the parties, including the amount of the debt and the terms for its repayment. The defendant contended, "the farm debt cannot be disconnected from the agreement that creates it". She relied upon the terms of s 9 for support. That section is as follows: " 9 Farmer may request mediation

(1) A farmer to whom notice has been given under section 8 may, within 21 days after the notice was given, notify the creditor in writing that the farmer requests mediation concerning the farm debt involved.

(1A) A farmer who has not been given notice under section 8 but who owes money to a creditor in relation to a farm debt may notify the creditor in writing that the farmer requests mediation concerning the farm debt involved. A farmer may request mediation under this subsection whether or not the farmer is in default.

(2) The Authority may approve a form for the purposes of a notification under this section and a notification given to a creditor in that form is sufficient notification for the purposes of this section. Failure to use the approved form does not of itself invalidate a notification given by a farmer.

(3) If a farmer requests mediation but subsequently refuses to mediate, this Act ceases to apply to the farm mortgage concerned." 24 The defendant sought to draw upon the terms of this section to emphasise that it is the farm debt that is mediated. In this way she sought apparently to elevate the loan agreements to some higher level of significance in the scheme of the Act than the farm mortgage. This approach would then reinforce the notion that every change in the farm debt, or the agreement pursuant to which it was incurred, called up afresh the requirement to mediate. However, for the reasons that follow, the defendant's argument fails to come to terms with the fact that the operative provisions of the Act apply to the farm mortgage: it is the creditor's ability to take active steps towards the enforcement of the mortgage that is temporarily postponed. This is examined in more detail below. Consideration 25 In my opinion it is apparent from s 9 and from the Act generally that the Act is principally concerned to deal with farm mortgages rather than farm debts. It does not in relevant terms even speak of agreements. The proposition that the Act is concerned with farm mortgages emerges clearly from the terms of s 3 of the Act. It provides as follows: " 3 Object

The object of this Act is to provide for the efficient and equitable resolution of farm debt disputes. Mediation is required before a creditor can take possession of property or other enforcement action under a farm mortgage." 26 The enforcement action that is constrained by the Act is the taking possession of property or other enforcement action under a farm mortgage. The underpinning philosophy of the Act would appear to be based upon the perceived wisdom of bringing the creditor and the farmer to mediation in circumstances where there is a dispute that the creditor might otherwise seek to resolve by an action for possession of the farm. Such action is qualitatively different to an action to recover unpaid money. 27 In Australian Cherry Exports Ltd v Commonwealth Bank of Australia (1996) 39 NSWLR 337 at 339, Priestly JA said the following: "Although the farm debt is necessarily secured by mortgage, it is noticeable that s 8(1), as enacted, and more clearly I think in its rewritten form, prohibits enforcement action for the prescribed period, in respect of the farm mortgage, not the farm debt." 28 His Honour then said this at 340: "For the reasons I have already mentioned, the Act appears quite plainly to be imposing its temporary moratorium on actions to enforce farm mortgages, not farm debts. The distinction is significant. A farm debt is two things, a debt and a secured debt. It does not cease to be a debt because it is also a secured debt. Had the purpose been directed against actions to enforce farm debts both as debts and secured debts, nothing would have been easier than to say so." 29 The presence of a legislative brake upon an action to recover possession is to be contrasted with the absence in the Act of any equivalent restriction upon an action pursuant to a simple loan agreement for recovery of unpaid arrears not involving a claim for possession under the mortgage or not involving some other enforcement action that is only authorised by the mortgage itself. Moreover, the requirement for mediation does not appear to operate as a condition precedent to the recovery of possession simply because, as in the present case, the loan secured by the mortgage is varied or the respective obligations of the parties to the loan transaction change, provided that mediation has taken place at some time in relation to the mortgage. Indeed, a mediation can be avoided altogether if the farmer declines to participate in it, suggesting a somewhat less paternalistic approach than one that requires mediation as a condition precedent in every case. Mediation need not always necessarily occur. 30 In Gain v Commonwealth Bank of Australia (1997) 42 NSWLR 252 at 257 Gleeson CJ commented as follows: "Built into the legislation are provisions aimed at limiting the time during which one party can delay the enforcement of the other's rights. This is an obvious problem against which the legislation was intended to guard. It is not the purpose of the legislation to provide an unlimited moratorium on farm debts, or to allow debtors to keep creditors at bay for as long as they wish." 31 Even though mediation takes place in relation to a farm debt as is emphasised, by way of example, in the words of s 11(1)(c)(i), s 11(2)(b) and s 11(2)(c)(iii), the certificate that s 11 contemplates actually issues with respect to the farm mortgage. The defendant has emphasised the apparent significance of the debt, and the various loan agreements as the constantly changing factors that warrant return to mediation. The Act does not in my opinion contemplate or require this. On the contrary, the Act does contemplate that a certificate shall remain in force for a specified period, in this case until 2 June 2008. The period during which the certificate remains in force is calculated by s 11(5), which provides for presently relevant circumstances as follows: "(5) A certificate under this section remains in force until the date specified by the Authority in the certificate. The date specified is to be calculated on the basis that the period for which the certificate is to be in force is:

(a) if satisfactory mediation in respect of the farm debt concerned has taken place, the period commencing on the date of its issue and ending on the third anniversary of the last date of the mediation, or . . ." 32 Furthermore, even though the certificate may have expired it continues in force in respect of any proceedings or enforcement action taken before that occurs. Section 11(6) makes this clear: "(6) The expiry of a certificate under this section does not affect any proceedings for recovery of a farm debt, or for the exercise or enforcement of any right of the creditor, already taken or commenced by a creditor while the certificate was in force, and any such proceedings may be continued and concluded as if the certificate were still in force." 33 There is another reason why the defendant's submissions are incorrect. In the present case the mediation took place at a time when the defendant's only relevant breach related to the first loan agreement. The terms of the Deed of Settlement were to take account of the defendant's breaches under that agreement, to replace that agreement with the second loan agreement and in effect thereafter to waive, or to exonerate the defendant from, any breach of the first loan agreement. Clauses 3 and 4 make this clear. They give effect to the sentiment of recital F, which says that "[i]t has been agreed between Ms Waller and HSI that all disputes between the parties be settled on the terms and conditions in this Deed". 34 In the event that the defendant's submissions were correct the plaintiff or any equivalent creditor could not rely upon breaches of any agreement reached at a mediation without the need, if the farmer required it, for a subsequent mediation, even if a s 11 certificate had issued. This would then give rise to the spectre of successive mediations and successive certificates, a cycle that could be broken only by the refusal of the creditor to settle. Even though the Act anticipates that a creditor may decline to mediate, and cannot, in effect, be criticised or penalised for that fact (see, for example, s 9A(2)), the defendant's contention would potentially encourage such a result. It would also be inimical to the purpose of the Act outlined in s 3 if the requirement or prospect of constant mediations was to be endorsed or encouraged, let alone entrenched. It would hardly promote "the efficient and equitable resolution of farm debt disputes". 35 The plaintiff's mortgage was also an all monies mortgage. Clause 35 of the Memorandum of Common Provisions provides relevantly that: "35. agreement covered by this mortgage means: * an agreement or other arrangement (including a deed) under which one or more of you incurs or owes obligations to us or under which we have rights against you, including any such agreement or arrangement which all of you acknowledge in writing to be an agreement covered by this mortgage; and

amount owing means, at any time, all money which one or more of you owe us, or will or may owe us in the future, including under this mortgage or an agreement covered by this mortgage. . . " 36 The defendant's emphasis upon the argument that successive loan agreements would work to re-vivify the mediation obligation contained in s 8 fails to acknowledge that the farm mortgage is unaffected in its force or effect by variations in the amount that it secures from time to time. The Act directs attention to restraining, or more accurately postponing, the taking of enforcement action under the farm mortgage but does not do so in the context of, or by reference to, the amount owing at any particular time. If the defendant committed an act of default under the mortgage, the plaintiff would be entitled to take steps to enforce the security given by the farm mortgage if mediation had taken place and a certificate under s 11 was in force. I reiterate that farm debt disputes are mediated but that s 11 certificates issue with respect to farm mortgages. It is in my opinion unrealistic to suggest that the Act does not contemplate that a farmer might default in compliance with his or her obligations under a farm mortgage after a successful mediation has taken place. The scheme of the legislation supports the proposition that a creditor ought to be entitled to proceed to enforce the terms of any agreement reached at or following a successful mediation with the authority of a s 11 certificate and otherwise unhindered. 37 In Varga (supra) Young J said this at 56,259: "I was not shown the mortgage used in the instant transaction, but it was conceded by both solicitors that it was an "all moneys" mortgage. Thus, any moneys owing to the Bank on any account whatsoever would be secured by the mortgage.

Mr Garnsey, the solicitor for the Bank, said that only the original debt was relevant for the purpose of working out what was a farm debt. I am not convinced of this. It is quite common with farmers and graziers for a debt to be incurred to a bank and then to be completely repaid when there is a good season, but then further obligations to the Bank to build up during bad seasons or even between wool clips. It would seem to me strange that the legislation honed in at a time when the original debt was incurred and not to anything more recent. Furthermore, the definition of "creditor" as applying to a person who increased a farm debt is strange unless one has to look at accretions to the original debt. Thirdly, the indefinite article seems to steer one away from looking at merely one debt to look at any number of debts which could be a farm debt.

Accordingly, when, as here, there is an initial loan for the purpose of buying out a person's wife's interest in the farm, but then there are subsequent charges for interest and bank charges and FID in connection with the operation of the farm, whether or not the initial loan was a farm debt, there is in existence at the date when the Bank wishes to enforce its mortgage, a farm mortgage." 38 Finally, although I do not consider that the Act is so obscure, ambiguous or unclear that it requires resort to any ancillary aids to construction, I take some comfort from the Farm Debt Mediation Amendment Bill 1996 Second Reading Speech, New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 30 October 1996 at 5532, which introduced amendments to s 11, where reference was made to the way in which s 11 was understood to operate. This included the following: "This amendment will give comfort to a farmer who has been to mediation, restructured, traded out of trouble, and experiences further problems at a later date. Under existing legislation, once the creditor has obtained a section 11 certificate, there is no obligation to submit to further mediation at any stage in the future . The bill proposes that after a period of three years the provisions of the Act should once again come into force for that particular farm mortgage." [emphasis added] 39 I consider that the Act does operate in this way. Conclusion 40 In these circumstances I find that the proceedings were not commenced "other than in compliance with" the Act and are not void in accordance with s 6. The second issue 41 The defendant originally contended that all three loan agreements were unjust within the meaning of the Contracts Review Act. This contention was confined to the third loan agreement at the hearing. The defendant submitted that by August 2006 she: (i) had not sold any of the subdivided lots for the purpose of reducing her indebtedness to the plaintiff or even taken the necessary steps to allow this to happen;

(ii) had failed again to meet her interest obligations under the second loan agreement and was in no position to repay the principal due under that agreement in September 2006;

(iii) was unlikely to be able to meet the interest payments that would fall due under any further loan agreement and would be liable for penalty interest. 42 The defendant submitted that it would have been obvious to the plaintiff that the longer the defendant took to sell off the subdivided lots, the more her equity in the property would be eroded by accumulating arrears of interest, thereby reducing her equity in the homestead block. The defendant's written submissions referred to the fact that she did not obtain legal advice before entering into the third loan agreement and did not receive advice from her rural counsellor. These contentions were never particularised in her defence and, as appears below, were in any event effectively abandoned and overtaken by the following as her principal argument. 43 The defendant said that the agreement was made without any enquiry by the plaintiff with respect to the steps that the defendant needed to take to sell the subdivided lots or her ability to meet her obligations under the third loan agreement, and presumably the ease with which she would be able to do it. The defendant submitted that when the third loan agreement was executed, the defendant's position was such that it necessarily amounted to "pure asset lending". The plaintiff was lending money knowing full well that the defendant would be unable to meet the interest payments and when it was apparently content to rely on its security. The defendant contended that in certain circumstances such an agreement could amount to an unjust contract: see Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413. In Perpetual Trustee Co Ltd v Khoshaba [2006] NSWCA 41, Basten JA said at [128]: "[128] To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least in circumstances where the borrowers can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, s 9(2)(e) or (f). That does not mean that the Act will permit intervention merely where the borrower has been foolish, gullible or greedy. Something more is required: see Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482 at 491 (Handley JA) cited with approval in Elkofairi (supra) at [77] by Beazley JA." 44 Pure asset lending is not illegal and there may be circumstances in which it is not unfair: see Perpetual Trustees Victoria Ltd v Ford [2008] NSWSC 29; (2008) 70 NSWLR 611 at [107]. However the defendant submitted that in all of the circumstances of the present case, and having regard to the public interest, the third loan agreement was unjust within the meaning of the Act. An historical review 45 In order to put these submissions into context, some review is required of the dealings between the plaintiff and the defendant, with particular emphasis on what took place at the time that the third loan agreement was negotiated and executed. The circumstances surrounding the mediation and the Deed of Settlement that it produced, and what followed, are equally instructive. The defendant's own background, experience, education and personal history also require some examination. 46 The defendant was born in May 1945 and was 56 years old in March 2002 when she bought the farm for $790,000. She holds a science degree from Sydney University and was a high school maths and science teacher for 34 years. She is a widow with a daughter and two grandchildren. She is now 63. 47 Prior to March 2002 the defendant had owned two properties in Lithgow. She sold these properties but still required a further $450,000 to complete her purchase of the farm. This sum was raised by a mortgage over the farm arranged through an attorney in Sydney. Since buying the farm the defendant has grazed sheep and cattle, grown Merino wool and bred and sold Australian stock horses. 48 In December 2002 the Federal Government declared the district where the farm is located as drought affected and in exceptional circumstances. It has remained that way since then to the present time. The farm is located in the Mudgee-Merriwa Pastures Protection Board in the Central Tablelands District. Part of the Federal Government's initiative included an interest subsidy. 49 The defendant entered into her first loan agreement with the plaintiff on 28 August 2003 in order to refinance her original borrowings. She once again borrowed $450,000. 50 In October 2003 the defendant experienced what she called "cash-flow difficulties". She said this was caused by the drought. She made a request for help to the Authority and said that she received an interest subsidy on 5 November 2003. The defendant used that subsidy "primarily" for mortgage repayments to the plaintiff. In about November 2004 the plaintiff applied for farm debt mediation. The mediation took place in June 2005 following which the plaintiff advanced a further $190,000 to the defendant. She said she understood that as a result of the mediation she would enter into a new loan agreement with the plaintiff under which the interest that she owed up until then would be added to the principal of her first loan and that "the principal would be increased to cover the interest on the new loan for the following 12 months, so that [she] would not have to find the money to pay interest during that period". The defendant also said she understood as a result of capitalising the interest that the loan principal would increase from $450,000 to $640,000 and that she would have to subdivide her property into lots that could be sold, thereby reducing the debt to $200,000, and complete the subdivision and sale within 12 months. 51 The defendant said that she was not told by the plaintiff and did not know what the monthly interest payments would be, although she expected them to be higher than those that she had paid under the first loan agreement. When the defendant began to receive monthly statements she then understood that her interest payments would be in the region of $5,000 per month. She also understood that the increased principal covered these payments under the second loan agreement. 52 The defendant said that the drought continued through 2005 and into 2006. She had to buy all the feed for the stock. The price of wool had dropped from $28 to $10 per kilo. The defendant made little money from the horse stud as very few live foals were born that year. This was a result of the drought. 53 The defendant said that in about August 2006 she had a conversation with Mr John Gorman from the plaintiff and said: "The drought is rolling along and I'm having some further difficulties. I have been up to date until now, could I have a further extension".

"OK. We will need to execute a further loan agreement". 54 The parties executed the third loan agreement on 28 August 2006. Towards the end of 2006 the defendant telephoned Mr Gorman and said: "I am experiencing difficulties making the repayments on the loan, could you increase the loan again to offset the interest arrears?"

"OK". 55 Sometime earlier, in about February 2006, the defendant had been introduced to a broker named Denis Sheridan from Dubbo. He arranged finance for her with a lender called Circuit Finance Australia Limited. The defendant subsequently entered into three loan agreements with Circuit Finance, without the plaintiff's knowledge or approval, secured by a caveat on the title to the farm and other security she gave over a number of vehicles, including her tractor. She borrowed $37,000 in about March 2006, $44,000 in April 2006 and $28,000 in June 2006. The defendant said that she did not think that the loans from Circuit Finance would have any effect upon her agreement with the plaintiff and said that when she borrowed these amounts from Circuit Finance she had no idea that she would be giving any security over the farm. However, when she informed Mr Gorman about the loans from Circuit Finance when he telephoned her in May 2007, she was told that the plaintiff would not "be able to help [her] any further". 56 As a result of that conversation the defendant said that she drove all the way to Victoria and spoke to Mr Gorman. She asked him for an opportunity "to catch up on the loan arrears". She said to him, "I have taken steps to secure some more funding and I will have the income to do so". According to the defendant, Mr Gorman told her: "You have 30 days". Over the next 30 days the defendant made payments to the plaintiff in the sum of approximately $20,000. 57 At paragraph 24 of her 2 September 2009 affidavit the defendant said this: "[24] In about July 2006 I realised, from the monthly statements that I received from [the plaintiff], that the 12 months in which the interest due to [the plaintiff] would be paid out of the capital of the new loan had come to an end. At no time before the conversation that I refer to in paragraph 32 below did I have any discussion with Mr Gorman or anyone else at [the plaintiff] about the interest that I would now be required to pay on the [plaintiff's] loan. Nobody asked me for any information about how I would meet those payments." 58 The defendant deposed to the following matters at [30] and [31] of the same affidavit: "[30] By the end of 2006 on the basis of sales of property in the area, I believed that my property had increased in value since the mediation in 2005. Also the conditions had improved - we had had some rain in the spring of 2006 and I was confident that the 2006/07 year would be a better year.

[31] I knew that I had to proceed with the subdivision of the Property and sale of the subdivided lots in order to repay the amounts due to [the plaintiff]. I hoped that I could increase the principal of the loan from [the plaintiff] to cover the back interest and that [the plaintiff] and Circuit Finance would be paid back through the sale of the subdivided lots." 59 On 22 December 2006 Mr Gorman wrote to the defendant on the letterhead of Hargraves, solicitors, of which firm it would appear he was then the senior partner. That letter was in the following relevant terms: "We advise we act on behalf of Hargraves Secured Investments Limited.

We refer to your previous conversations with John Gorman of this office and note that you are agreeable to subdivide land situated at the above address.

We enclose herewith Mid-Western Regional Council Development Application form, please sign where indicated and return to our office as soon as possible.

Once the document has been received we will complete the Application and forward to the council.

If you have any questions regarding this matter, please do not hesitate to contact this office." 60 The defendant said that even though she signed the form sent to her with that letter and sent it back to Mr Gorman, "at that stage [she] understood that it was up to [her] to progress the subdivision". However, the defendant also said that she did not know how to go about it. At some time early in 2007 she rang the council and asked whether she could subdivide the property. She was told that the council was intending to change the minimum lot size of 1000 acres but they gave her no other information about what to do. 61 In about March 2007 the defendant "entered a selling agency agreement with Raine and Horne in relation to the property". She was told that the estimated gross sale price was somewhere between $1.15M and $1.2M. She said that that estimate increased her confidence in the value of the property but there were no offers to buy it. 62 The defendant paid $13,400 to the plaintiff in June 2007 that she raised from horse sales. She said that she knew that that was not the full amount of interest that she had agreed to catch up on but "thought it would satisfy [the plaintiff] for a period of time, so that [she] could complete the subdivision of the property and the sale of as many of the subdivided lots as was necessary to repay [the plaintiff]." 63 The defendant had a meeting with her accountant in late June 2007 and asked him about subdividing the property. She was told to consult R J Crooks and Associates Pty Ltd, a land surveyor. Mr Crooks in due course prepared an application on her behalf to subdivide the farm into several blocks. This was submitted to the council and approved. 64 In August 2007 the defendant went back to Michael Kearins at Raine and Horne and gave him the approval from the council. She asked him for another appraisal of the value of the farm. According to his appraisal the property had a potential value of between $1.385M and $1.5M. 65 During the period from May 2007 until the end of October that year the plaintiff continued to send the defendant monthly notices. She said that the plaintiff "had not spoken to [her] about the interest". In evidence to which the plaintiff objected, the defendant said that Mr Gorman knew that she was proceeding with the subdivision. She said, "I had this understanding because Mr Kearins told me on a number of occasions that he had spoken to Mr Gorman about the sale of the subdivided lots". The defendant said, "I assumed that [the plaintiff] would allow me time to sell the properties and would not take any enforcement action while I was going through that process". 66 It should immediately be noted, however, that the defendant does not contend that the plaintiff's commencement of these proceedings adversely affected or interfered with her ability to continue to attempt to sell the farm. The objectionable nature of the evidence on which the defendant relies therefore attains no significance or importance in any event. The defendant's complaints relate to anterior events concerned with the formation of the third loan agreement and the circumstances in which that occurred. The defendant has been free at any time in the two years since the commencement of these proceedings up to the present time to sell the farm and reduce or extinguish her debt to the plaintiff if she had been so minded. The defendant does not seek to make any case based upon reliance by her on anything that the plaintiff did or refrained from doing in this respect. 67 By October 2007 the total amount due on the loan was $714,200. That sum has now increased to almost $907,000. 68 In a recent affidavit the defendant said that in June 2005 she understood that she was under an obligation to subdivide the farm into blocks that could be sold. From that time up to the present it was her understanding, based on discussions she had with Mr Gorman in relation to the subdivision, that this meant that she had an obligation to obtain any approvals or consents from the council that were necessary for a purchaser of any of the blocks to build a residence and to have road access. This would significantly increase the value of the subdivided lots. 69 Despite an advertising and sales campaign commencing in September 2009 the farm has not sold. It was auctioned on 22 October 2009 but there were no bidders and it was passed in with a reserve price of $1.25M. The property remains on the market for sale in lots. 70 In these circumstances, despite the terms of the defendant's amended cross claim, it was expressly not the defendant's case that the third loan agreement should be declared void or set aside in its entirety. Rather the defendant contends that the third loan agreement should be varied to avoid as far as practicable the unjust consequences of the agreement. The defendant identifies these allegedly unjust consequences as the accumulation of interest at what she describes as "penalty rates" which had the effect of increasing the principal under the third loan agreement from $640,000 in August 2006 to its present level. The defendant limits her claim for relief to orders that would relieve her of the obligation to pay all, or at least a considerable part, of her indebtedness represented by that interest and that would confine the plaintiff to the proceeds of the subdivided lots, presumably excluding the homestead block upon which her residence is located. Particulars 71 It is instructive and important to understand the ways in which the defendant contended that the third loan agreement was unjust. In her second further amended defence the defendant put her case as follows. 72 First, she was unable to protect her interests at the time of entering into each loan agreement because, by virtue of her mental capacity at each of those times, she did not understand that she would be unable to make the repayments required under each loan agreement. As will be apparent, this contention became limited to the third loan agreement. Secondly, the defendant said that she was unable to protect her interests at these same times because, by virtue of her mental capacity, she did not understand the effect of the loan agreements, or for presently relevant purposes, the third loan agreement. Thirdly, the defendant contended that no proper opportunity was afforded to her to negotiate with the plaintiff about the terms of the loan agreement. Fourthly, the defendant says that the plaintiff knew or ought to have known that she would be unable to make the repayments required under each loan agreement. Fifthly, the plaintiff knew or ought to have known when entering into each loan agreement that default by the defendant was an inevitable consequence of her doing so. 73 As already mentioned, the defendant never specified or particularised an absence of legal advice or assistance from her rural counsellor in her pleaded defence as matters supporting the proposition that the third loan agreement was unjust. This is referred to later in these reasons. Consideration 74 Neither the evidence nor the defendant's submissions provided any elaboration or explanation of what was contemplated by the defendant's "mental capacity". She is an educated woman with tertiary qualifications. She had worked as a teacher for over 30 years. There was no suggestion that she was suffering from any mental infirmity or psychological or psychiatric condition. Moreover, the defendant withdrew any suggestion that the first two loan agreements were, or either of them was, unjust, suggesting that she did not suffer from any difficulties with her mental capacity at that time. No evidence explains what changes, if any, occurred between the execution of the second and third loan agreements. 75 In the same vein, no evidence or submissions were directed to giving any content to the allegation that the defendant did not understand the relevant loan agreement by reason of her mental capacity. The defendant did not contend that she did not or could not understand the loan agreement, and clearly would have difficulty in rationalising an ability to teach maths and science with an incapacity to understand a quite simple and concise contract. The alleged difficulty or problem with the defendant's mental capacity that she said affected or interfered with her understanding of the loan agreement was never identified. 76 The suggestion that no proper opportunity was afforded to the defendant to negotiate with the plaintiff is also difficult to understand. Once again, no complaint is made that any such lack of opportunity attended the entry into the first and second loan agreements. The third loan agreement was almost identical to the second save for the interest rates and the dates for repayment. More fundamentally, the defendant does not identify the way or ways in which she alleges that the third loan agreement would or might have been different if she had been given an opportunity freely to negotiate some variation to its terms. 77 Without intending any disrespect to the author of the defendant's defence, the particularisation of her case in these ways would appear to have been an optimistic and understandable attempt to formulate a case in advance or in anticipation of evidence that would hopefully, but which did not ultimately, exist or emerge to support it. The inevitable frailties of a case constructed in this way were duly recognised and appreciated by the defendant's counsel at the hearing of the case. The Contracts Review Act defence quickly became confined to one that sought to emphasise that the third loan agreement was an asset-lending contract with which the defendant could not comply, where the capital that secured it was the only source of repayment and default was inevitable. However, for the reasons that follow, even a case pared in this way could not succeed. 78 The defendant's farm was her only recurrent source of income. It is quite apparent now, and would have been apparent from not long after her purchase, if not from the start, that the farm was never likely to become a viable proposition and that the defendant could never have afforded to keep it. Whatever source or sources of finance the defendant was able to attract, she was realistically never going to be in a position to do any more than postpone the inevitable sale of the property by refinancing and capitalising unpaid or overdue interest. 79 The farm was acquired in March 2002 with finance from another provider. By 30 June 2002 the defendant's farming enterprise has incurred operating losses of $63,044. In 2003 these losses were $174,763 and in 2004 the losses were $129,568. By letter from the Authority dated 10 November 2004, rejecting her application for an exceptional circumstances interest subsidy, the defendant was advised in the following terms "It is noted that from information provided the Authority was not satisfied that the farming enterprise could demonstrate viability in the long term. It was noted that:

• The farm enterprise does not have the capacity to generate sufficient income to services [sic] farm related expenses, living expenses and financial commitments.

• The farm despite enduring drought conditions is not considered to have future prospects of commercial viability.

• The farm has a history of operating losses [referred to above]." 80 When the defendant received that letter she was 15 months into the first loan agreement. The balance of her loan account with the plaintiff had become $490,000, or $40,000 in arrears. 81 The defendant consulted Andrew Foy-Brown, a rural financial counsellor employed by Macquarie Rural Advisory Service Inc, an organisation under the umbrella of the Commonwealth Department of Agriculture, Fisheries and Forestry. He wrote a letter on her behalf dated 6 December 2004 appealing against the Authority's decision not to grant the defendant another interest subsidy. She had by then received the plaintiff's s 8 notice seeking farm debt mediation under cover of a letter dated 7 October 2004. The appeal would appear not to have succeeded. On 18 October 2005 the defendant's further application for an interest subsidy was also declined. Mr Foy-Brown wrote another letter on the defendant's behalf dated 9 November 2005 appealing against that decision as well. The Authority's letter rejecting that appeal is dated 29 November 2005 and contains the following: "The Committee noted the additional information that the losses incurred in the farming enterprise have been partially offset by off-farm income, particularly relating to termination and superannuation payments. It also noted total equity had increased, but that this was due to an escalation in land prices.

However, the Committee further noted the consistent history of operating losses in the latest three available financial years, and that consequently total liabilities have increased. It also noted the very low levels of farm income received throughout this period.

The Committee particularly noted that liabilities to Hargraves Secured Investments Limited now total $640,000 and that total farm income estimated for the 12 months ended August 2006 is $121,280. This represents a debt to gross income ratio of over 5.1:1, which is well in excess of benchmark levels for sustained viability.

The Committee noted advice that the application is 'investigating ways to eventually decrease the debt permanently'. It also considers that at present debt levels the farming enterprise does not demonstrate long term commercial profitability." 82 The defendant asserts that the plaintiff knew or ought to have known when entering the third loan agreement that the defendant would be unable to make repayments required under it and that default was inevitable. However, in my view the defendant knew or ought to have known exactly the same things. When she received the letter last referred to she was indebted to the plaintiff for $640,000 and by June 2006 had borrowed another $109,000 from Circuit Finance as well. She had known and had assistance from her rural counsellor Mr Foy-Brown since the end of 2002 and he had attended the farm debt mediation as her advisor. His signature even appears as a witness to the defendant's signature on 15 July 2005 when she gave her written acceptance of the plaintiff's 5 July 2005 letter offering the second loan. Jackson Smith, solicitors, acted for her at this time as well. The third loan agreement is in cognate terms. 83 On 31 July 2006 Mr Gorman wrote to the defendant noting that the second loan agreement matured on 5 September 2006 and indicating that the plaintiff "would be more than happy to offer you a similar facility for a further three (3) years". He advised that "[i]t is however open to you to repay the mortgage at this time". A variable interest rate of 9.25 per cent was offered. On a copy of that letter the defendant wrote "Yes, I would like to renew my loan with you for another 3 years. Thank you". 84 It is difficult to accept, and I do not accept, that the defendant did not then appreciate and understand that the loan she was about to undertake was a loan for $640,000 with continuing indicative monthly repayments of almost $5,000. She still had no sufficient income to pay such a monthly sum and she knew it. She had already taken steps to arrange for the farm to be subdivided, as the plaintiff well knew. Mr Gorman reminded the defendant that she could repay the mortgage instead of renewing it, a proposition that the defendant must have well understood and appreciated could only have occurred if she had been willing to sell the farm, or some considerable proportion of it. She chose not to do so but decided instead to commit herself to a further loan with the plaintiff. The clear benefit to the defendant was that she was able to retain the farm, even though I find as a fact that she well knew and understood that her equity in it was subject to further inevitable reduction at least at the rate of monthly interest instalments that she would not be able to find. She was once again buying time. 85 The third loan agreement was not unjust. On one view of the matter it may not even have been unwise, as it was a way to provide some extra time to arrange an organised sale of the farm as long contemplated. This after all was what the defendant agreed to do following the mediation when she assumed a responsibility, with the benefit of legal advice and that of her rural counsellor, to execute the Deed of Settlement. Clause 5 specifically contemplated the sale or refinance of the property at the maturity of the second loan agreement. Moreover, it is clear from the defendant's own account, especially her acceptance of the arrangement to subdivide the farm and of her role in effectuating it, that she recognised that she would be required to sell it sooner or later. She eventually consulted Mr Crooks and her accountant in June 2007 with a view to putting the arrangements to do so in train. In the events that occurred it would have no doubt been financially more prudent to do so much earlier. 86 I find that at the time she entered the third loan agreement the defendant was content for any sale of her farm to be delayed as long as possible. Indeed, the fact that the defendant has not sold the property in the two years since the commencement of the proceedings promotes the strong inference that she was and remains unrealistically hopeful of never having to sell it despite the most obvious and pressing indications that she should do so. Her present predicament, including accruals to her debt by accumulating interest, is clearly caused by a failure to recognise that she could never afford to keep the farm. It is not the result of any unjust aspect of the third loan agreement. 87 In particular, this is not a case of a borrower raising finance against the security of an otherwise unencumbered asset, thereby putting it at risk, when there was never any realistic prospect of making interest payments on the loan. Such asset lending contracts have been held, quite understandably, to be unjust. They can lead to the loss of a valuable asset, often the borrower's only asset. In the present case the defendant was facing the loss of her farm whether or not she executed the third loan agreement. This was the result of anterior events and circumstances about which no complaint is made. This is not a case, such as Elkofairi, where the very loan transaction under scrutiny itself created the situation that was bound from the start to result in the borrowers' loss of their home: see, for example, Beazley JA at [56] - [59]. The defendant here was knowingly buying time, just as she had done before. This arrangement was probably unwise and inadvisable but the contract that facilitated it was not unjust. The plaintiff did not unconscientiously or in any other way take advantage of the defendant's disadvantageous position. 88 Although the defendant did not seek to emphasise that she entered the third loan agreement without legal or other financial advice, I do not in any event consider that these were matters that had any impact upon the question of whether the contract was unjust. At the time the third loan agreement was entered into the defendant was in an almost identical position to that which confronted her one year earlier when the second loan agreement was executed. She chose not to sell or to give possession of the farm to the plaintiff despite her uncontroversial agreement to do so following the mediation. The defendant was not under any general or special disadvantage when she executed the third loan agreement because of an absence of advisers at her elbow at the time. The defendant has not demonstrated any inability to protect her own interests. Whether or not she can be described as "foolish, gullible or greedy", the defendant was in my view consciously set on a course of not parting with her farm, or not doing so except on terms that she sought to dictate or control. The circumstances extant at the time she entered the third loan agreement were not such as to render it unjust. The absence of legal or rural financial advice does not alter that fact. The defendant's failure to re-consult such advisers was her choice, in the same way that she had chosen to seek advice in the past. That failure was in no way associated with the plaintiff or the terms of the third loan agreement or the circumstances in which the defendant executed it. 89 The defendant in any case gave the following evidence in cross-examination: "Q. And you say in paragraph 26 there you had a certain conversation, paragraph 26 of your affidavit. Can you turn that up, please? Before the conversation that you refer to in paragraph 26, you entered a loan agreement which was the third loan agreement dated 29 August 2006, do you remember that? A. Yes.

Q. And you understood before you entered into that agreement that you had the same access to assistance from solicitors and from such people as Mr Foy-Brown that you had before? A. Exactly.

Q. And so you entered into the third loan agreement? A. I did.

Q. Knowing that you had such assistance? A. Exactly." 90 In my opinion that evidence puts the issue of the importance or otherwise of legal or financial advice beyond any doubt. Conclusion 91 The third loan agreement is not unjust within the meaning of the Contracts Review Act. Relief 92 It is unnecessary in the circumstances to deal with the form of any relief that the defendant has claimed. However, I observe that the defendant's submissions have referred from time to time to the concept of penalty interest. The defendant made no complaint about interest rates and the term penalty interest was used as shorthand for the concept that if interest instalments were not paid on time then the defendant was not entitled to the lower rate. This is uncontroversial. 93 I also note that the defendant contended that if relief were to have been given it should have been in the form of an order ameliorating the effects of the defendant's requirement to pay interest at the higher rate. However, as will already be apparent, I consider that the imposition of the obligation to pay at the higher rate was something that flowed from the defendant's decision not to sell the farm and instead to commit to a course of attempting to retain it until she decided to sell on her terms. This was foolish but it was a decision that the defendant made freely and with a full appreciation of the risks. As I have recorded earlier at par [58] above, the defendant said in her own affidavit that shortly after the third loan agreement had been executed, "[she] knew that [she] had to proceed with the subdivision of the property and sale of the subdivided lots in order to repay the amounts due". The defendant could not have been under any misapprehension, for as long as she delayed or ignored the sale of the farm, that the undiscounted rate of interest would continue to apply and that it could only realistically be stopped by the long contemplated sale of the farm. This was not because the third loan agreement was unjust. Orders 94 Subject to any submissions that the parties may wish to make with respect to the form of my orders, I propose the following: 1. Order that the defendant give possession to the plaintiff of the property known as "Merryangledre" otherwise described and identified in the amended statement of claim filed 28 March 2008.

Grant leave to the plaintiff forthwith to apply for the issue of a writ of possession.

Postpone execution of the writ until a day no earlier than 31 January 2010, or such later day as the plaintiff and the defendant may otherwise agree.

Direct the entry of judgment for the plaintiff for $906,667.93, or such adjusted sum as the parties may otherwise agree.

Grant liberty to the parties to apply on 3 days' notice to vary or amend these orders in accordance with any agreement that may be reached as contemplated in orders (3) and (4) above.

Order the defendant to pay the plaintiff's costs of the proceedings.

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