Application for leave to appeal
46I have referred above to the grounds set out in the draft notice of appeal that Mr Sharpe seeks leave now to bring. They turn on the proposition that the deed of settlement gave rise to a "new and distinct farm debt" requiring compliance with the mediation provisions of the legislation. Reliance is placed by Mr Sharpe on Waller v Hargraves Secured Investments Ltd [2012] HCA 4; (2012) 245 CLR 311, where the High Court held that successive loan agreements entered into pursuant to a deed of settlement agreement, read with the registered mortgage, created distinct interests in, and powers over, the farm property that secured the obligations under the mortgage and that this gave rise to successive farm mortgages under the Act, with the consequence that no enforcement action could thereafter be taken under that mortgage by reference to obligations arising under the loan agreements entered into in accordance with the settlement agreement absent compliance with the Act.
47At [16], French CJ, Crennan and Kiefel JJ noted that the successive discharges of the debt secured by the registered mortgage had extinguished Ms Waller's obligations arising under that mortgage. Mr Sharpe contends that, similarly, each of the loan agreements operated in effect (though not in their terms) to discharge the previous farm debt and create a new one; and that the Deed of Settlement does so as well.
48In his written submissions, Mr Sharpe raised five matters by way of synopsis of his argument, to which he then spoke when addressing the Court in oral submissions.
49First, Mr Sharpe submits that the Deed of Settlement constitutes the tenth loan agreement made by the parties and that it is new and distinct from the farm debt/farm mortgage constituted by the ninth (2009) loan agreement. This submission is based on the terms of the Deed of Settlement when read with the all moneys registered mortgage that secured the loans under the earlier loan agreements.
50Reliance is placed for the purposes of this submission on various definitions of "loan", including amongst others, the provision of credit or any other form of financial accommodation. Pausing there, it is not difficult to see that the operation of the stay for which provision was made in the Deed of Settlement was to provide Mr Sharpe with financial accommodation or credit in the sense that Hargraves was agreeing on certain terms to defer the exercise of powers and rights that it had to enforce a monetary judgment to which Mr Sharpe was thereby consenting. The question, however, is whether the Deed of Settlement falls within the definition of "farm mortgage" under the Act and whether execution of the consent judgment amounts to "enforcement action" within the definition of that term in the Act.
51"Farm mortgage" is defined in s 4 as, relevantly, including "any interest in, or power over, any farm property securing obligations of the farmer whether as a debtor or guarantor ...". "Enforcement action" is defined as meaning, in relation to a farm mortgage, "taking possession of property under the mortgage or any other action to enforce the mortgage, including the giving of any statutory enforcement notice ...", and expressly excluding the enforcement of a judgment obtained before the commencement of the Act.
52Mr Sharpe places weight on the result in Waller in which successive loan agreements were held to have discharged the debts secured by a registered mortgage under earlier loan agreements, extinguishing the obligations of the borrower arising under that mortgage by reason of those earlier agreements and creating distinct interests in and powers over the farm property secured by the existing instrument of mortgage and thus the last loan agreement, read with the mortgage, was taken to have created a new interest or power over the farm property, falling within the definition of "farm mortgage for the purposes of the Act (at [16]). In that case, Heydon J noted at [66] that the expression "enforcement action" was not limited to judgments other than money judgments and implicitly included the enforcement of judgments (including money judgments) if obtained after the commencement of the Act. His Honour said that action to obtain a money judgment (and by the same reasoning action to obtain a judgment other than a money judgment) after the commencement of the Act amounts to "enforcement action" so long as it is action to enforce the mortgage.
53In Sharpe v Heywood, Gleeson JA, with whom Barrett JA agreed, rejected as not fairly arguable an argument that the making and entry of a consent order (by which the parties had agreed to set aside a default judgment and enter judgment for a smaller sum) was an enforcement action in relation to a new farm mortgage constituted by that consent order. This was said by Mr Sharpe to have arisen from the provision in the consent order for the court to note that Mr Sharpe charged the land and consented to the lodgement of caveats over his Campbells Hill property "as security for the ... obligation to pay the Judgment debt".
54Mr Sharpe in the present case points to clause 7.1 of the Deed of Settlement as creating a power over property and hence bringing the Deed of Settlement within the definition of a "farm mortgage" under the Act and giving rise to a new and distinct farm debt. I have difficulty with that submission. Clause 7.1 seems to me instead to amount to an acknowledgement of the rights that Hargraves would have under the consent judgment to which Mr Sharpe had agreed (at a time when there was a subsisting s 11 certificate in relation to the farm mortgage constituted by the 2009 loan agreement and mortgage) in the event of a failure to make payment in default of the regime provided for in the Deed. In that event, there would be a default for the purposes of clause 1.2 and this would have the effect that the stay provided for by that clause would come to an end.
55The second argument made in the written submissions was that the issue and execution by Hargraves of the writs for possession constituted actions of enforcement under the deed "farm debt" and "farm mortgage" and for that reason those enforcement actions are void pursuant to s 6 of the Act. That turns on the proposition that I think is not correct that the Deed of Settlement created a new farm debt/mortgage.
56Third, it is said that the provisions in the "deed loan agreement" granting immediate possession upon failure in the performance of an obligation for the farmer prior to, and without a right to, mediation of the default, are against the "principal and organic purpose" of the Act. As already noted, the acknowledgement of Hargraves right, pursuant to the consent judgment, to immediate possession of the properties (assuming the stay period had expired) does not involve the grant of a right.
57Reference is made by Mr Sharpe to the intention of the legislature being to protect against "hair trigger" unilateral action being taken against farmers. However, it is difficult to see the long drawn-out process that has occurred to date as amounting to hair trigger action. What the Act provides for is a measure by which farmers will have an opportunity to enter into mediation of disputes before enforcement action is taken in relation to farm debts or, as Barrett J, as his Honour then was, said in Myross (NSW) Pty Limited v Kahlefeldt Securities Pty Limited, [2003] NSWSC 138 (at [23]), to require a mortgagee to "hold his hand on enforcement of the farm mortgage until there has been an opportunity for resolution of differences with respect to the mortgage by mediation and either an arrangement acceptable to the mortgagor and the mortgagee has been reached or the possibility of resolution is seen to be exhausted".
58It would make a mockery of that process if the mere entry into an agreement at mediation provided an ongoing mechanism for dispute and mediation deferring ad infinitum the ability of the lender to enforce an acknowledged debt. That is not the result contemplated in Waller. Rather, it is only where the result of the mediation is to bring into existence a new farm mortgage, that the prohibition on enforcement of that fresh farm mortgage prior to compliance with the mediation process will operate.
59That is consistent, in my view, with the observations of Heydon J in Waller at [57] as to what had been submitted would be the unsatisfactory outcome if Ms Waller's argument were to succeed. There, his Honour said:
But the unsatisfactory consequence [that a dispute about a farm debt settled at mediation might then lead to a dispute about alleged breach of the settlement terms preventing enforcement of those terms even if a s 11 certificate had been issued] would not follow if the settlement terms involved only adjustments to the farm debt such as extending the term to pay, reducing the principal or capitalising interest. These adjustments would leave the initial farm debt in place; to that initial farm debt the s 11 certificate could apply; and s 8(3) would affect the s 8(1) immunity from enforcement action.
60Fourth, it is submitted by Mr Sharpe that, the parties having entered into an agreement with a judgment order having been attached "as a security term of that agreement" does not prevent the operation of the Act. Again, this is premised on the Deed of Settlement giving rise to a new farm mortgage.
61Fifth, it is submitted by Mr Sharpe that the Deed of Settlement 'holds the judgment for the debt of the ninth loan' and provides mandatory provisions (clauses 3.4 and 7.1) for its enforcement, to which Hargraves should be required to adhere. This appears to relate to Mr Sharpe's contention that Hargraves failed to comply with its obligations in relation to the marketing and sale of the Dorrigo property prior to the date on which the deed provided that Hargraves could elect to proceed with the marketing and sale of that property without consultation with or recourse to Mr Sharpe.
62In essence those submissions turn on the proposition that a new farm debt was created and that the issue of the writs of possession (and subsequent execution of those writs) amounted to enforcement in breach of the legislation.
63Mr Sharpe maintains that leave should be granted to appeal in circumstances where this would provide a basis for the questions raised in his appeal to be determined having regard to the "black letter interpretation" of the objects of the Act as set out in Waller. It is submitted that, if leave is refused, those same questions will continue to be re-asked of lower courts with "little and defined direction" for those courts.
64In response, Hargraves points to the fact that the Deed of Settlement expressly maintained its right to enforce the consent judgment and submits that this did not give rise to a new farm debt mortgage. Hargraves' principal position is that the debt owing under the October 2009 agreement merged in the consent judgment entered into in July 2012 and that the Deed of Settlement did not involve the creation of any new farm debt. If that is not accepted, Hargraves submits that the Deed of Settlement did not adjust or extinguish the loan agreement but was a deed in aid of the loan agreement's enforcement. Hargraves further contends that the Deed of Settlement, if it involved any adjustment or extinguishment of the 2009 loan agreement at all (which is not conceded), did no more than adjust matters of a kind that Heydon J suggested would not lead to the outcome in Waller.
65Ultimately, it is not necessary to reach a conclusion as to whether the Deed of Settlement constituted a new farm mortgage for two reasons: first, if it did, then Mr Sharpe concedes that Hargraves is entitled to rely on the s 11 certificate issued in May 2013 at least for any enforcement action to be taken in relation to that mortgage after May 2013. Hence, the appeal in practical terms will be futile. Second, if the issue of the creditor's petition by Mr Heywood has the result that s 5(2)(b) applies, then the Act no longer applies to Mr Sharpe.
66As to the first of those matters, Mr Sharpe submits that there is authority for the proposition that the issue of a s 11 certificate does not retrospectively validate enforcement action taken by a lender in breach of the Act. He relied for that proposition on what was argued in National Australia Bank Limited v Landy Chen-Conway & Anor [2008] NSWSC 448 (see at [11]). However, Einstein J held at [25] that the s 11 certificate having by then been issued by the authority, the plaintiff was free to continue with enforcement action under the mortgage in question. He also referred to Roxo v Normandie Farm (Dairy) Pty Limited [2012] NSWSC 765, where Adamson J held that s 11 did not operate retrospectively to validate proceedings that were otherwise a nullity because of s 6 of the Act. Her Honour held that proceedings commenced and a s 57(2)(b) notice served before mediation under the Act were a nullity.
67Here, however, the consent judgment is not challenged by Mr Sharpe and he concedes that the new s 11 certificate means that future enforcement action based on that judgment is not precluded. Therefore the appeal seems to me to be futile and as a question of discretion leave should not be granted on that basis.
68As to the second matter, that also seems to me to be decisive on the present application. Mr Sharpe sought to argue that a distinction was to be drawn from the use of the term "bankruptcy petition" as opposed to "creditor's petition"; from the difference in wording between the former version of s 5 and the present; and from the reference to the word "property" not "assets" in s 5. Mr Sharpe points to subsections (2)(a) and (c) as involving a determination as to the position of the farmer.
69In my opinion those matters do not support a construction of s 5 as meaning that (2)(b) is enlivened only if the farmer presents a bankruptcy petition or if there is a sequestration order made. The section seems to me in its ordinary meaning to refer to the presentation of a petition in the bankruptcy jurisdiction and that has occurred. Nor is the fact that the creditor's petition is under challenge determinative, although it might perhaps go to the exercise of discretion if that were relevant in a particular case.