This Act requires a mortgagee (lender) to give an individual farmer at least 30 days' written notice before taking possession of or selling farm equipment, and lets a farmer apply to a court for a relieving order that can keep equipment with the farmer for up to one year. Lenders must meet notice, disclosure and sale‑price duties, face penalties, and may be ordered to compensate losses. It applies only where the mortgagor is an individual, excludes mortgages under the National Credit Code or the continued Credit Act 1987, and includes special hire‑purchase rules.
This Act creates a statutory regime that delays and limits the immediate enforcement rights of mortgagees over equipment used in farming businesses, and gives courts an express power to stay enforcement and return equipment for up to one year. Mechanically the Act does the following.
It makes it an offence for a mortgagee to take possession of, or sell, farm equipment under a mortgage unless certain procedural conditions are met. A mortgagee cannot exercise those enforcement rights unless the mortgagor has defaulted, a written default notice has been given under part 2, and the default has not been remedied by the due day stated in that notice (s 7). A contravention attracts a maximum penalty of 500 penalty units (s 7).
It prescribes the required content of a default notice and fixes a minimum notice period. Unless the mortgagee reasonably believes the default is incapable of being remedied, the default notice must set out how the mortgagor has defaulted, what must be done to remedy it (including amounts), that the mortgagee intends to take possession or sell on or after a stated day (the due day), that a further unremedied default of the same type before the due day permits taking possession without another default notice and any other matters prescribed by regulation. If the mortgagee reasonably believes the default cannot be remedied, the notice has a shorter content requirement but must still state the due day. The due day must be at least 30 days after the day the notice is given (s 8).
It creates specific, limited exceptions to the default-notice requirement, including where a mortgagor removes or disposes of equipment in breach of the mortgage or urgent action is necessary to protect equipment, where the mortgagee was induced to enter the mortgage by fraud, where the mortgagee cannot find the mortgagor after reasonable attempts, or where a court orders otherwise (ss 9-11). The onus of proving an exception under ss 10 or 11(a) or (b) is on the mortgagee (s 12).
Current sections
Direct links to the current provisions in Credit (Rural Finance) Act 1996.
38
pt.1
Preliminary
Preliminary
sec.1
Short title
sec.1 Short title
This Act may be cited as the Credit (Rural Finance) Act 1996 .
sec.2
Commencement
sec.2 Commencement
This Act commences when the Consumer Credit (Queensland) Act 1994 , section 4 commences.
sec.3
Definitions and dictionary
sec.3 Definitions and dictionary
The dictionary in the schedule defines particular words used in this Act.
sec.4
Purpose of Act
sec.4 Purpose of Act
The purpose of this Act is to provide some protection to farmers against the enforcement of mortgages over equipment they use to carry out their farming businesses.
The purpose is to be achieved mainly by providing for—
a mortgagee to give at least 30 days notice before exercising a right to take possession of, or sell, farm equipment; and
the court to make an order allowing a farmer to keep possession of equipment, for up to 1 year, if the equipment is used to carry out the farmer’s farming business and the court considers, among other things, that the farmer has a reasonable prospect of being able to remedy any default.
(sec.4-ssec.1) The purpose of this Act is to provide some protection to farmers against the enforcement of mortgages over equipment they use to carry out their farming businesses.
(sec.4-ssec.2) The purpose is to be achieved mainly by providing for— a mortgagee to give at least 30 days notice before exercising a right to take possession of, or sell, farm equipment; and the court to make an order allowing a farmer to keep possession of equipment, for up to 1 year, if the equipment is used to carry out the farmer’s farming business and the court considers, among other things, that the farmer has a reasonable prospect of being able to remedy any default.
(a) a mortgagee to give at least 30 days notice before exercising a right to take possession of, or sell, farm equipment; and
(b) the court to make an order allowing a farmer to keep possession of equipment, for up to 1 year, if the equipment is used to carry out the farmer’s farming business and the court considers, among other things, that the farmer has a reasonable prospect of being able to remedy any default.
sec.5
Application of Act
sec.5 Application of Act
This Act applies to all persons including the State and, so far as the legislative power of the State permits, the Commonwealth and the other States.
However, this Act applies in relation to a mortgage only if the mortgagor (or, if there is more than 1, each mortgagor) is an individual.
Also—
part 2 does not apply in relation to a mortgage to which the National Credit Code applies; and
this Act does not apply in relation to a mortgage to which the the repealed Credit Act 1987 as continued applies.
The provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 , section 15 .
s 5 amd 2010 No. 16 s 35 sch
(sec.5-ssec.1) This Act applies to all persons including the State and, so far as the legislative power of the State permits, the Commonwealth and the other States.
(sec.5-ssec.2) However, this Act applies in relation to a mortgage only if the mortgagor (or, if there is more than 1, each mortgagor) is an individual.
(sec.5-ssec.3) Also— part 2 does not apply in relation to a mortgage to which the National Credit Code applies; and this Act does not apply in relation to a mortgage to which the the repealed Credit Act 1987 as continued applies. The provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 , section 15 .
(a) part 2 does not apply in relation to a mortgage to which the National Credit Code applies; and
(b) this Act does not apply in relation to a mortgage to which the the repealed Credit Act 1987 as continued applies. Note— The provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 , section 15 .
sec.6
Courts with jurisdiction under this Act
sec.6 Courts with jurisdiction under this Act
The jurisdiction expressed to be exercisable by the court under this Act in relation to a mortgage is exercisable by—
if proceedings in relation to the mortgage have been started in, or are before, a court—that court; or
otherwise—the court whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when the proceeding concerned is started in the court.
In this section—
court includes QCAT.
s 6 amd 2009 No. 24 s 422
(sec.6-ssec.1) The jurisdiction expressed to be exercisable by the court under this Act in relation to a mortgage is exercisable by— if proceedings in relation to the mortgage have been started in, or are before, a court—that court; or otherwise—the court whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when the proceeding concerned is started in the court.
(sec.6-ssec.2) In this section— court includes QCAT.
(a) if proceedings in relation to the mortgage have been started in, or are before, a court—that court; or
(b) otherwise—the court whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when the proceeding concerned is started in the court.
pt.2
Default notice
Default notice
sec.7
Mortgagee must give default notice
sec.7 Mortgagee must give default notice
This section applies if a mortgagee has a right under a mortgage over farm equipment to take possession of, or sell, the equipment.
The mortgagee must not exercise, or purport to exercise, the right unless—
the mortgagor has defaulted; and
the mortgagee has given the mortgagor, and guarantor (if any), written notice (a default notice ) under this part for the default; and
the default has not been remedied by the due day stated in the default notice.
Maximum penalty—500 penalty units.
s 7 amd 2002 No. 52 s 8
(sec.7-ssec.1) This section applies if a mortgagee has a right under a mortgage over farm equipment to take possession of, or sell, the equipment.
(sec.7-ssec.2) The mortgagee must not exercise, or purport to exercise, the right unless— the mortgagor has defaulted; and the mortgagee has given the mortgagor, and guarantor (if any), written notice (a default notice ) under this part for the default; and the default has not been remedied by the due day stated in the default notice. Maximum penalty—500 penalty units.
(a) the mortgagor has defaulted; and
(b) the mortgagee has given the mortgagor, and guarantor (if any), written notice (a default notice ) under this part for the default; and
(c) the default has not been remedied by the due day stated in the default notice.
sec.8
Requirements for default notice
sec.8 Requirements for default notice
Unless the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state—
how the mortgagor has defaulted; and
what the mortgagor must do to remedy the default, including, for example, any amount that must be paid to the mortgagee; and
that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ) unless the default is remedied; and
that, if the mortgagor makes another default of the same type before the due day that is not remedied by the due day, the mortgagee may take possession of, or sell, the equipment without giving another default notice under this part; and
anything else prescribed under a regulation.
If the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state—
how the mortgagor has defaulted; and
that the mortgagee believes the default is incapable of being remedied; and
that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ); and
anything else prescribed under a regulation.
The due day must be at least 30 days after the day the notice is given to the mortgagor.
s 8 amd 2002 No. 52 s 9
(sec.8-ssec.1) Unless the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state— how the mortgagor has defaulted; and what the mortgagor must do to remedy the default, including, for example, any amount that must be paid to the mortgagee; and that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ) unless the default is remedied; and that, if the mortgagor makes another default of the same type before the due day that is not remedied by the due day, the mortgagee may take possession of, or sell, the equipment without giving another default notice under this part; and anything else prescribed under a regulation.
(sec.8-ssec.2) If the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state— how the mortgagor has defaulted; and that the mortgagee believes the default is incapable of being remedied; and that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ); and anything else prescribed under a regulation.
(sec.8-ssec.3) The due day must be at least 30 days after the day the notice is given to the mortgagor.
(a) how the mortgagor has defaulted; and
(b) what the mortgagor must do to remedy the default, including, for example, any amount that must be paid to the mortgagee; and
(c) that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ) unless the default is remedied; and
(d) that, if the mortgagor makes another default of the same type before the due day that is not remedied by the due day, the mortgagee may take possession of, or sell, the equipment without giving another default notice under this part; and
(e) anything else prescribed under a regulation.
(a) how the mortgagor has defaulted; and
(b) that the mortgagee believes the default is incapable of being remedied; and
(c) that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ); and
(d) anything else prescribed under a regulation.
sec.9
Exception to s 7 —further default during notice period
sec.9 Exception to s 7 —further default during notice period
This section applies if—
a mortgagor defaults under a mortgage; and
the mortgagee gives the mortgagor, and guarantor (if any), a default notice under this part for the default; and
the mortgagor makes a further default of the same type before the due day stated in the default notice for the first default; and
the further default is not remedied by the due day stated in the default notice for the first default.
Section 7 does not apply to the mortgagee in exercising, or purporting to exercise, a right under the mortgage for the further default.
(sec.9-ssec.1) This section applies if— a mortgagor defaults under a mortgage; and the mortgagee gives the mortgagor, and guarantor (if any), a default notice under this part for the default; and the mortgagor makes a further default of the same type before the due day stated in the default notice for the first default; and the further default is not remedied by the due day stated in the default notice for the first default.
(sec.9-ssec.2) Section 7 does not apply to the mortgagee in exercising, or purporting to exercise, a right under the mortgage for the further default.
(a) a mortgagor defaults under a mortgage; and
(b) the mortgagee gives the mortgagor, and guarantor (if any), a default notice under this part for the default; and
(c) the mortgagor makes a further default of the same type before the due day stated in the default notice for the first default; and
(d) the further default is not remedied by the due day stated in the default notice for the first default.
sec.10
Exception to s 7 —taking possession to protect equipment
sec.10 Exception to s 7 —taking possession to protect equipment
Section 7 does not apply to a mortgagee in exercising, or purporting to exercise, a right under a mortgage to take possession of farm equipment if the mortgagee reasonably believes—
the mortgagor has removed or disposed of the equipment, or intends to remove or dispose of the equipment, in contravention of the mortgage; or
it is necessary to take possession urgently to protect the equipment.
(a) the mortgagor has removed or disposed of the equipment, or intends to remove or dispose of the equipment, in contravention of the mortgage; or
(b) it is necessary to take possession urgently to protect the equipment.
sec.11
Other exceptions to s 7
sec.11 Other exceptions to s 7
Section 7 does not apply to a mortgagee in exercising, or purporting to exercise, a right under a mortgage if—
the mortgagee reasonably believes it was induced by fraud by the mortgagor to enter into the mortgage; or
the mortgagee has unsuccessfully made all reasonable attempts to find the mortgagor; or
the court orders that the mortgagee may take possession of, or sell, the equipment without complying with section 7 .
(a) the mortgagee reasonably believes it was induced by fraud by the mortgagor to enter into the mortgage; or
(b) the mortgagee has unsuccessfully made all reasonable attempts to find the mortgagor; or
(c) the court orders that the mortgagee may take possession of, or sell, the equipment without complying with section 7 .
sec.12
Onus on mortgagee to show s 7 does not apply
sec.12 Onus on mortgagee to show s 7 does not apply
The onus of proving that section 7 does not apply to a mortgagee because of section 10 or 11 (a) or (b) is on the mortgagee.
pt.3
Relieving order
Relieving order
sec.13
Mortgagor may apply for a relieving order
sec.13 Mortgagor may apply for a relieving order
This section applies if—
for a mortgage over farm equipment—the mortgagee has given the mortgagor a default notice under part 2 ; or
for a mortgage over equipment (whether or not it is farm equipment)—
the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or
the mortgagor has defaulted under the mortgage; or
for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
The mortgagor may apply to the court for a relieving order if—
the mortgagee has not taken possession of, or sold, the equipment or, if the mortgagee has taken possession of the equipment, has not parted with possession of the equipment; and
the mortgagor is a farmer who is using, or intending to use, the equipment to carry out the farmer’s farming business, or would be using, or intending to use, the equipment to carry out the farmer’s farming business if the mortgagee had not taken possession of the equipment.
(sec.13-ssec.1) This section applies if— for a mortgage over farm equipment—the mortgagee has given the mortgagor a default notice under part 2 ; or for a mortgage over equipment (whether or not it is farm equipment)— the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or the mortgagor has defaulted under the mortgage; or for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
(sec.13-ssec.2) The mortgagor may apply to the court for a relieving order if— the mortgagee has not taken possession of, or sold, the equipment or, if the mortgagee has taken possession of the equipment, has not parted with possession of the equipment; and the mortgagor is a farmer who is using, or intending to use, the equipment to carry out the farmer’s farming business, or would be using, or intending to use, the equipment to carry out the farmer’s farming business if the mortgagee had not taken possession of the equipment.
(a) for a mortgage over farm equipment—the mortgagee has given the mortgagor a default notice under part 2 ; or
(b) for a mortgage over equipment (whether or not it is farm equipment)— (i) the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or (ii) the mortgagor has defaulted under the mortgage; or (iii) for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
(i) the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or
(ii) the mortgagor has defaulted under the mortgage; or
(iii) for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
(i) the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or
(ii) the mortgagor has defaulted under the mortgage; or
(iii) for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
(a) the mortgagee has not taken possession of, or sold, the equipment or, if the mortgagee has taken possession of the equipment, has not parted with possession of the equipment; and
(b) the mortgagor is a farmer who is using, or intending to use, the equipment to carry out the farmer’s farming business, or would be using, or intending to use, the equipment to carry out the farmer’s farming business if the mortgagee had not taken possession of the equipment.
sec.14
Notice of application
sec.14 Notice of application
If the mortgagor applies for a relieving order, the mortgagor must immediately give a copy of the application (a notice of application ) to the mortgagee.
The court may order that the mortgagor is not required to comply with subsection (1) if the court is satisfied the mortgagor has unsuccessfully made all reasonable attempts to find the mortgagee.
The order may be made on conditions.
(sec.14-ssec.1) If the mortgagor applies for a relieving order, the mortgagor must immediately give a copy of the application (a notice of application ) to the mortgagee.
(sec.14-ssec.2) The court may order that the mortgagor is not required to comply with subsection (1) if the court is satisfied the mortgagor has unsuccessfully made all reasonable attempts to find the mortgagee.
(sec.14-ssec.3) The order may be made on conditions.
sec.15
Effect of serving notice of application
sec.15 Effect of serving notice of application
If the mortgagor gives a notice of application to the mortgagee, the mortgagee must not, until the court orders otherwise or the application is withdrawn or dismissed—
sell the equipment; or
if the mortgagee does not have possession of the equipment—take possession of the equipment; or
if the mortgagee has possession of the equipment—part with its possession (other than to return it to the mortgagor).
Maximum penalty—500 penalty units.
To remove any doubt, it is declared that if the mortgagee has possession of the equipment when given a notice of application, the mortgagee is not required by subsection (1) (c) to return the equipment.
(sec.15-ssec.1) If the mortgagor gives a notice of application to the mortgagee, the mortgagee must not, until the court orders otherwise or the application is withdrawn or dismissed— sell the equipment; or if the mortgagee does not have possession of the equipment—take possession of the equipment; or if the mortgagee has possession of the equipment—part with its possession (other than to return it to the mortgagor). Maximum penalty—500 penalty units.
(sec.15-ssec.2) To remove any doubt, it is declared that if the mortgagee has possession of the equipment when given a notice of application, the mortgagee is not required by subsection (1) (c) to return the equipment.
(a) sell the equipment; or
(b) if the mortgagee does not have possession of the equipment—take possession of the equipment; or
(c) if the mortgagee has possession of the equipment—part with its possession (other than to return it to the mortgagor).
sec.16
Court may make relieving order
sec.16 Court may make relieving order
The court must decide the application by dismissing it or by making a relieving order.
In deciding the application, the court must consider—
whether the mortgagor has a reasonable prospect of being able to remedy the stated default within 1 year after the notice day; and
how necessary the equipment is to the mortgagor in carrying out the farming business; and
whether the mortgagor has removed, damaged or disposed of the equipment, or intends to remove, damage or dispose of the equipment, in contravention of the mortgage; and
anything else the court considers relevant to making a just decision.
A relieving order is an order that—
if the mortgagee has possession of the equipment—the mortgagee must return it to the mortgagor; and
the mortgagee must not take possession of, or sell, the equipment for a stated period ending not later than 1 year after the notice day.
The court may make a relieving order on terms it considers appropriate, including, for example, that the mortgagor pay any enforcement expenses incurred by the mortgagee.
In this section—
notice day means the day the mortgagee is given the notice of application or, if the court orders that the mortgagor is not required to give the notice, the day the court makes that order.
stated default means—
if the mortgagee has given the mortgagor a default notice under part 2 —the default stated in the notice; or
otherwise—the default that is claimed by either party to have been made by the mortgagor.
(sec.16-ssec.1) The court must decide the application by dismissing it or by making a relieving order.
(sec.16-ssec.2) In deciding the application, the court must consider— whether the mortgagor has a reasonable prospect of being able to remedy the stated default within 1 year after the notice day; and how necessary the equipment is to the mortgagor in carrying out the farming business; and whether the mortgagor has removed, damaged or disposed of the equipment, or intends to remove, damage or dispose of the equipment, in contravention of the mortgage; and anything else the court considers relevant to making a just decision.
(sec.16-ssec.3) A relieving order is an order that— if the mortgagee has possession of the equipment—the mortgagee must return it to the mortgagor; and the mortgagee must not take possession of, or sell, the equipment for a stated period ending not later than 1 year after the notice day.
(sec.16-ssec.4) The court may make a relieving order on terms it considers appropriate, including, for example, that the mortgagor pay any enforcement expenses incurred by the mortgagee.
(sec.16-ssec.5) In this section— notice day means the day the mortgagee is given the notice of application or, if the court orders that the mortgagor is not required to give the notice, the day the court makes that order. stated default means— if the mortgagee has given the mortgagor a default notice under part 2 —the default stated in the notice; or otherwise—the default that is claimed by either party to have been made by the mortgagor.
(a) whether the mortgagor has a reasonable prospect of being able to remedy the stated default within 1 year after the notice day; and
(b) how necessary the equipment is to the mortgagor in carrying out the farming business; and
(c) whether the mortgagor has removed, damaged or disposed of the equipment, or intends to remove, damage or dispose of the equipment, in contravention of the mortgage; and
(d) anything else the court considers relevant to making a just decision.
(a) if the mortgagee has possession of the equipment—the mortgagee must return it to the mortgagor; and
(b) the mortgagee must not take possession of, or sell, the equipment for a stated period ending not later than 1 year after the notice day.
(a) if the mortgagee has given the mortgagor a default notice under part 2 —the default stated in the notice; or
(b) otherwise—the default that is claimed by either party to have been made by the mortgagor.
sec.17
Compliance with relieving order
sec.17 Compliance with relieving order
A mortgagee must comply with a relieving order.
Maximum penalty—500 penalty units.
pt.3A
Particular provisions for hire-purchase agreements where farm equipment is repossessed
Particular provisions for hire-purchase agreements where farm equipment is repossessed
sec.17A
Application of pt 3A
sec.17A Application of pt 3A
This part applies if—
the mortgagor under a mortgage that is a hire-purchase agreement has defaulted under the mortgage; and
the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the farm equipment.
s 17A ins 2002 No. 52 s 10
(a) the mortgagor under a mortgage that is a hire-purchase agreement has defaulted under the mortgage; and
(b) the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the farm equipment.
sec.17B
Meaning of hire-purchase agreement
sec.17B Meaning of hire-purchase agreement
A hire-purchase agreement is an agreement entered into after the commencement of this section, under which—
farm equipment is let or hired to a farmer and the farmer has an option to purchase the farm equipment; or
a farmer agrees to purchase farm equipment by instalments, whether the instalments are described as rent, hire or something else.
Two or more agreements, which individually are not hire-purchase agreements, are also a hire-purchase agreement , from the time the last agreement is entered into, if under the agreements—
there is a bailment of farm equipment to a farmer; and
the farmer may purchase the farm equipment or the property in the farm equipment may pass to the farmer.
However, a hire-purchase agreement does not include an agreement mentioned in subsection (1) or (2) if—
the property in the farm equipment passes to the farmer—
at the time the agreement is entered into; or
at any time before delivery of the farm equipment; or
the total market value of the farm equipment at the time the agreement is entered into is more than $40000000.
In this section—
farmer , for a hire-purchase agreement, does not include a farmer engaged in the business of selling farm equipment of the same nature or description as the farm equipment being let, hired, purchased or bailed under the agreement.
s 17B ins 2002 No. 52 s 10
(sec.17B-ssec.1) A hire-purchase agreement is an agreement entered into after the commencement of this section, under which— farm equipment is let or hired to a farmer and the farmer has an option to purchase the farm equipment; or a farmer agrees to purchase farm equipment by instalments, whether the instalments are described as rent, hire or something else.
(sec.17B-ssec.2) Two or more agreements, which individually are not hire-purchase agreements, are also a hire-purchase agreement , from the time the last agreement is entered into, if under the agreements— there is a bailment of farm equipment to a farmer; and the farmer may purchase the farm equipment or the property in the farm equipment may pass to the farmer.
(sec.17B-ssec.3) However, a hire-purchase agreement does not include an agreement mentioned in subsection (1) or (2) if— the property in the farm equipment passes to the farmer— at the time the agreement is entered into; or at any time before delivery of the farm equipment; or the total market value of the farm equipment at the time the agreement is entered into is more than $40000000.
(sec.17B-ssec.4) In this section— farmer , for a hire-purchase agreement, does not include a farmer engaged in the business of selling farm equipment of the same nature or description as the farm equipment being let, hired, purchased or bailed under the agreement.
(a) farm equipment is let or hired to a farmer and the farmer has an option to purchase the farm equipment; or
(b) a farmer agrees to purchase farm equipment by instalments, whether the instalments are described as rent, hire or something else.
(a) there is a bailment of farm equipment to a farmer; and
(b) the farmer may purchase the farm equipment or the property in the farm equipment may pass to the farmer.
(a) the property in the farm equipment passes to the farmer— (i) at the time the agreement is entered into; or (ii) at any time before delivery of the farm equipment; or
(i) at the time the agreement is entered into; or
(ii) at any time before delivery of the farm equipment; or
(b) the total market value of the farm equipment at the time the agreement is entered into is more than $40000000.
(i) at the time the agreement is entered into; or
(ii) at any time before delivery of the farm equipment; or
sec.17C
Mortgagee must give notice of best price estimate and expenses
sec.17C Mortgagee must give notice of best price estimate and expenses
The mortgagee must, within 30 days after the mortgagee takes possession of the farm equipment, give the mortgagor a written notice stating—
a best price estimate for the farm equipment; and
the mortgagee’s estimate of the mortgagee’s enforcement expenses; and
the mortgagee’s estimate of any expense the mortgagee must reasonably incur to return the farm equipment to the mortgagor.
Maximum penalty—500 penalty units.
s 17C ins 2002 No. 52 s 10
(a) a best price estimate for the farm equipment; and
(b) the mortgagee’s estimate of the mortgagee’s enforcement expenses; and
(c) the mortgagee’s estimate of any expense the mortgagee must reasonably incur to return the farm equipment to the mortgagor.
sec.17D
Action after notice given to mortgagee
sec.17D Action after notice given to mortgagee
The mortgagor may, within 21 days after the mortgagee gives the mortgagor notice under section 17C , give the mortgagee written notice requiring the mortgagee to—
sell the farm equipment to a person nominated by the mortgagor at a price not less than the best price estimate for the farm equipment stated in the notice given under section 17C ; or
return the farm equipment to the mortgagor under section 17E .
s 17D ins 2002 No. 52 s 10
(a) sell the farm equipment to a person nominated by the mortgagor at a price not less than the best price estimate for the farm equipment stated in the notice given under section 17C ; or
(b) return the farm equipment to the mortgagor under section 17E .
sec.17E
Return of farm equipment when breach remedied
sec.17E Return of farm equipment when breach remedied
The mortgagee must return the farm equipment to the mortgagor if, within 14 days after the mortgagee receives a notice under section 17D (b) , the mortgagor—
pays or tenders to the mortgagee the amount owing under the mortgage for the period ending on the day the mortgagor pays or tenders the amount; and
pays or tenders to the mortgagee—
the mortgagee’s enforcement expenses; and
any expense the mortgagee must reasonably incur to return the farm equipment to the mortgagor; and
remedies any other breach of the mortgage, or if the mortgagor can not remedy the breach, pays or tenders to the mortgagee any expense the mortgagee must reasonably incur to remedy the breach.
Maximum penalty—500 penalty units.
s 17E ins 2002 No. 52 s 10
(a) pays or tenders to the mortgagee the amount owing under the mortgage for the period ending on the day the mortgagor pays or tenders the amount; and
(b) pays or tenders to the mortgagee— (i) the mortgagee’s enforcement expenses; and (ii) any expense the mortgagee must reasonably incur to return the farm equipment to the mortgagor; and
(i) the mortgagee’s enforcement expenses; and
(ii) any expense the mortgagee must reasonably incur to return the farm equipment to the mortgagor; and
(c) remedies any other breach of the mortgage, or if the mortgagor can not remedy the breach, pays or tenders to the mortgagee any expense the mortgagee must reasonably incur to remedy the breach.
(i) the mortgagee’s enforcement expenses; and
(ii) any expense the mortgagee must reasonably incur to return the farm equipment to the mortgagor; and
sec.17F
Return of farm equipment when breach not remedied
sec.17F Return of farm equipment when breach not remedied
This section applies if the mortgagee returns the farm equipment to the mortgagor and the mortgagor has not remedied a breach of the mortgage.
The mortgagee may again take possession of the farm equipment if—
the mortgagee gives the mortgagor, when the farm equipment is returned, written notice—
stating the breach and how the mortgagor may remedy the breach; and
requiring the mortgagor to remedy the breach within 14 days, or a longer period stated in the notice, after the notice is given; and
the mortgagor does not remedy the breach within 14 days, or the longer period stated in the notice, after the notice is given.
s 17F ins 2002 No. 52 s 10
(sec.17F-ssec.1) This section applies if the mortgagee returns the farm equipment to the mortgagor and the mortgagor has not remedied a breach of the mortgage.
(sec.17F-ssec.2) The mortgagee may again take possession of the farm equipment if— the mortgagee gives the mortgagor, when the farm equipment is returned, written notice— stating the breach and how the mortgagor may remedy the breach; and requiring the mortgagor to remedy the breach within 14 days, or a longer period stated in the notice, after the notice is given; and the mortgagor does not remedy the breach within 14 days, or the longer period stated in the notice, after the notice is given.
(a) the mortgagee gives the mortgagor, when the farm equipment is returned, written notice— (i) stating the breach and how the mortgagor may remedy the breach; and (ii) requiring the mortgagor to remedy the breach within 14 days, or a longer period stated in the notice, after the notice is given; and
(i) stating the breach and how the mortgagor may remedy the breach; and
(ii) requiring the mortgagor to remedy the breach within 14 days, or a longer period stated in the notice, after the notice is given; and
(b) the mortgagor does not remedy the breach within 14 days, or the longer period stated in the notice, after the notice is given.
(i) stating the breach and how the mortgagor may remedy the breach; and
(ii) requiring the mortgagor to remedy the breach within 14 days, or a longer period stated in the notice, after the notice is given; and
sec.17G
Effect of breaches being remedied
sec.17G Effect of breaches being remedied
This section applies if—
the farm equipment is returned under section 17E ; or
section 17F applies and the mortgagor remedies the breach mentioned in a notice given under section 17F (2) (a) within 14 days, or the longer period stated in the notice, after the notice is given.
The mortgage operates as if a breach had not occurred and the mortgagee had not taken possession of the farm equipment.
s 17G ins 2002 No. 52 s 10
(sec.17G-ssec.1) This section applies if— the farm equipment is returned under section 17E ; or section 17F applies and the mortgagor remedies the breach mentioned in a notice given under section 17F (2) (a) within 14 days, or the longer period stated in the notice, after the notice is given.
(sec.17G-ssec.2) The mortgage operates as if a breach had not occurred and the mortgagee had not taken possession of the farm equipment.
(a) the farm equipment is returned under section 17E ; or
(b) section 17F applies and the mortgagor remedies the breach mentioned in a notice given under section 17F (2) (a) within 14 days, or the longer period stated in the notice, after the notice is given.
sec.17H
Amount mortgagor may recover if farm equipment is not returned
sec.17H Amount mortgagor may recover if farm equipment is not returned
This section applies—
if—
the mortgagee does not return the farm equipment to the mortgagor; and
the repossession value of the farm equipment is—
at least equal to the net amount payable under the mortgage; or
less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
whether or not the mortgagor gives the mortgagee notice under section 17D .
The mortgagor may recover from the mortgagee an amount equal to the total of the repossession value and the actual payments, less the net amount payable.
s 17H ins 2002 No. 52 s 10
(sec.17H-ssec.1) This section applies— if— the mortgagee does not return the farm equipment to the mortgagor; and the repossession value of the farm equipment is— at least equal to the net amount payable under the mortgage; or less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and whether or not the mortgagor gives the mortgagee notice under section 17D .
(sec.17H-ssec.2) The mortgagor may recover from the mortgagee an amount equal to the total of the repossession value and the actual payments, less the net amount payable.
(a) if— (i) the mortgagee does not return the farm equipment to the mortgagor; and (ii) the repossession value of the farm equipment is— (A) at least equal to the net amount payable under the mortgage; or (B) less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
(i) the mortgagee does not return the farm equipment to the mortgagor; and
(ii) the repossession value of the farm equipment is— (A) at least equal to the net amount payable under the mortgage; or (B) less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
(A) at least equal to the net amount payable under the mortgage; or
(B) less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
(b) whether or not the mortgagor gives the mortgagee notice under section 17D .
(i) the mortgagee does not return the farm equipment to the mortgagor; and
(ii) the repossession value of the farm equipment is— (A) at least equal to the net amount payable under the mortgage; or (B) less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
(A) at least equal to the net amount payable under the mortgage; or
(B) less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
(A) at least equal to the net amount payable under the mortgage; or
(B) less than the net amount payable under the mortgage, but the total of the repossession value and the actual payments is more than the net amount payable; and
sec.17I
Maximum amount mortgagee may recover
sec.17I Maximum amount mortgagee may recover
This section applies—
if the mortgagee does not return the farm equipment to the mortgagor; and
whether or not the mortgagor gives the mortgagee notice under section 17D .
The mortgagee may not recover an amount under the mortgage, by judgment, order or otherwise, that is more than the net amount payable less the total of the repossession value and the actual payments.
s 17I ins 2002 No. 52 s 10
(sec.17I-ssec.1) This section applies— if the mortgagee does not return the farm equipment to the mortgagor; and whether or not the mortgagor gives the mortgagee notice under section 17D .
(sec.17I-ssec.2) The mortgagee may not recover an amount under the mortgage, by judgment, order or otherwise, that is more than the net amount payable less the total of the repossession value and the actual payments.
(a) if the mortgagee does not return the farm equipment to the mortgagor; and
(b) whether or not the mortgagor gives the mortgagee notice under section 17D .
sec.17J
Mortgagee to obtain best price
sec.17J Mortgagee to obtain best price
This section applies if the mortgagee sells the farm equipment to a person other than a person nominated by the mortgagor in a notice under section 17D (a) .
The onus of proving the mortgagee obtained the best price the mortgagee could reasonably have obtained for the farm equipment when the mortgagee took possession of the farm equipment is on the mortgagee.
s 17J ins 2002 No. 52 s 10
(sec.17J-ssec.1) This section applies if the mortgagee sells the farm equipment to a person other than a person nominated by the mortgagor in a notice under section 17D (a) .
(sec.17J-ssec.2) The onus of proving the mortgagee obtained the best price the mortgagee could reasonably have obtained for the farm equipment when the mortgagee took possession of the farm equipment is on the mortgagee.
pt.4
Miscellaneous
Miscellaneous
sec.18
Compensation for noncompliance by mortgagee
sec.18 Compensation for noncompliance by mortgagee
This section applies if a mortgagee contravenes section 7 , 15 , 17 , 17C or 17E .
On the application of the mortgagor, the court may order the mortgagee to compensate the mortgagor for any loss suffered because of the contravention.
An order under subsection (2) —
may be made whether or not the mortgagee has been prosecuted for the contravention; and
does not affect the mortgagee’s liability to be prosecuted for the contravention.
s 18 amd 2002 No. 52 s 11
(sec.18-ssec.1) This section applies if a mortgagee contravenes section 7 , 15 , 17 , 17C or 17E .
(sec.18-ssec.2) On the application of the mortgagor, the court may order the mortgagee to compensate the mortgagor for any loss suffered because of the contravention.
(sec.18-ssec.3) An order under subsection (2) — may be made whether or not the mortgagee has been prosecuted for the contravention; and does not affect the mortgagee’s liability to be prosecuted for the contravention.
(a) may be made whether or not the mortgagee has been prosecuted for the contravention; and
(b) does not affect the mortgagee’s liability to be prosecuted for the contravention.
sec.19
This Act in addition to other laws
sec.19 This Act in addition to other laws
This Act is in addition to any other law about the enforcement of a mortgage.
In particular, this Act does not prevent the issue of a notice to a mortgagor under other legislation.
This section is subject to section 5 (3) .
(sec.19-ssec.1) This Act is in addition to any other law about the enforcement of a mortgage.
(sec.19-ssec.2) In particular, this Act does not prevent the issue of a notice to a mortgagor under other legislation.
(sec.19-ssec.3) This section is subject to section 5 (3) .
sec.20
Contracting out
sec.20 Contracting out
The following provisions of a mortgage or other instrument are void—
a provision to avoid or modify the effect of this Act;
a provision to have a mortgagor indemnify a mortgagee for any loss or liability arising under this Act.
A mortgagee must not be a party to a mortgage or other instrument containing a provision mentioned in subsection (1) .
Maximum penalty—100 penalty units.
(sec.20-ssec.1) The following provisions of a mortgage or other instrument are void— a provision to avoid or modify the effect of this Act; a provision to have a mortgagor indemnify a mortgagee for any loss or liability arising under this Act.
(sec.20-ssec.2) A mortgagee must not be a party to a mortgage or other instrument containing a provision mentioned in subsection (1) . Maximum penalty—100 penalty units.
(a) a provision to avoid or modify the effect of this Act;
(b) a provision to have a mortgagor indemnify a mortgagee for any loss or liability arising under this Act.
sec.21
Service of notices on each mortgagee, mortgagor or guarantor
sec.21 Service of notices on each mortgagee, mortgagor or guarantor
If a provision of this Act requires a notice to be given to a mortgagee, mortgagor or guarantor, and there is more than 1 mortgagee, mortgagor or guarantor for the mortgage, the notice must be given to each mortgagee, mortgagor or guarantor.
sec.22
Approval of forms
sec.22 Approval of forms
s 22 om 2002 No. 52 s 12
sec.23
Regulation-making power
sec.23 Regulation-making power
The Governor in Council may make regulations under this Act.
Source text: opening excerpt
Sourced from Queensland Legislation (legislation.qld.gov.au), CC BY 4.0.
pt.1 Preliminary
Preliminary
sec.1 Short title
sec.1 Short title
This Act may be cited as the Credit (Rural Finance) Act 1996 .
sec.2 Commencement
sec.2 Commencement
This Act commences when the Consumer Credit (Queensland) Act 1994 , section 4 commences.
sec.3 Definitions and dictionary
sec.3 Definitions and dictionary
The dictionary in the schedule defines particular words used in this Act.
sec.4 Purpose of Act
sec.4 Purpose of Act
The purpose of this Act is to provide some protection to farmers against the enforcement of mortgages over equipment they use to carry out their farming businesses.
The purpose is to be achieved mainly by providing for—
a mortgagee to give at least 30 days notice before exercising a right to take possession of, or sell, farm equipment; and
the court to make an order allowing a farmer to keep possession of equipment, for up to 1 year, if the equipment is used to carry out the farmer’s farming business and the court considers, among other things, that the farmer has a reasonable prospect of being able to remedy any default.
(sec.4-ssec.1) The purpose of this Act is to provide some protection to farmers against the enforcement of mortgages over equipment they use to carry out their farming businesses.
(sec.4-ssec.2) The purpose is to be achieved mainly by providing for— a mortgagee to give at least 30 days notice before exercising a right to take possession of, or sell, farm equipment; and the court to make an order allowing a farmer to keep possession of equipment, for up to 1 year, if the equipment is used to carry out the farmer’s farming business and the court considers, among other things, that the farmer has a reasonable prospect of being able to remedy any default.
(a) a mortgagee to give at least 30 days notice before exercising a right to take possession of, or sell, farm equipment; and
(b) the court to make an order allowing a farmer to keep possession of equipment, for up to 1 year, if the equipment is used to carry out the farmer’s farming business and the court considers, among other things, that the farmer has a reasonable prospect of being able to remedy any default.
sec.5 Application of Act
sec.5 Application of Act
This Act applies to all persons including the State and, so far as the legislative power of the State permits, the Commonwealth and the other States.
However, this Act applies in relation to a mortgage only if the mortgagor (or, if there is more than 1, each mortgagor) is an individual.
Also—
part 2 does not apply in relation to a mortgage to which the National Credit Code applies; and
this Act does not apply in relation to a mortgage to which the the repealed Credit Act 1987 as continued applies.
The provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 , section 15 .
s 5 amd 2010 No. 16 s 35 sch
(sec.5-ssec.1) This Act applies to all persons including the State and, so far as the legislative power of the State permits, the Commonwealth and the other States.
(sec.5-ssec.2) However, this Act applies in relation to a mortgage only if the mortgagor (or, if there is more than 1, each mortgagor) is an individual.
(sec.5-ssec.3) Also— part 2 does not apply in relation to a mortgage to which the National Credit Code applies; and this Act does not apply in relation to a mortgage to which the the repealed Credit Act 1987 as continued applies. The provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 , section 15 .
It gives a mortgagor who is a farmer (individual) a right to apply for a relieving order if a default notice has been given or the mortgagee has taken or purported to take possession, or the mortgagor reasonably believes enforcement may be attempted. If a notice of application is served on the mortgagee, the mortgagee must not, until the court orders otherwise, sell the equipment, take possession if not currently in possession, or, if in possession, part with possession (other than to return it to the mortgagor) (ss 13-15). A court must dismiss or make a relieving order and, in deciding the matter, must consider whether the mortgagor has a reasonable prospect of remedying the default within one year, how necessary the equipment is for the farming business, whether the mortgagor has misused the equipment, and anything else relevant to making a just decision (s 16). A relieving order can require the mortgagee to return equipment and restrain enforcement for a period ending not later than one year after the notice day, and can be made on terms (including payment of enforcement expenses) (s 16). The mortgagee must comply with a relieving order (s 17).
The Act contains a freestanding part dealing specifically with hire-purchase agreements entered into after the commencement of that part (pt 3A, ss 17A-17J). Where the mortgage is a hire-purchase and the mortgagee takes possession, the mortgagee must give the mortgagor within 30 days a written notice stating a best price estimate, enforcement expenses estimate and estimated expense to return the equipment (s 17C). The mortgagor then has 21 days to require either sale to a nominated purchaser at not less than the stated best price estimate or return of the equipment (s 17D). If the mortgagor remedies the breach and pays sums and expenses within prescribed periods, the mortgagee must return the equipment (s 17E). There are consequential rules about re-possession, the mortgage operating as if no breach occurred where breaches are remedied, limits on mortgagee recovery and the mortgagee’s onus to prove it obtained the best price (ss 17F-17J).
The Act provides compensation and civil remedies. If the mortgagee contravenes key provisions (s 7, s 15, s 17, s 17C or s 17E) the court may order compensation for loss suffered because of the contravention (s 18). The Act operates in addition to other law about enforcement of mortgages and does not prevent notices under other legislation (s 19). Contracting out of the Act is void , an instrument cannot lawfully contain a provision that avoids or modifies the Act or requires a mortgagor to indemnify a mortgagee for loss or liability arising under the Act; a mortgagee must not be a party to such an instrument (s 20).
The Act applies to all persons including the State (subject to constitutional limits), but it applies in relation to a mortgage only where the mortgagor (and each mortgagor if more than one) is an individual (s 5). Part 2 does not apply where the National Credit Code applies, and the Act does not apply to mortgages under the continued Credit Act 1987 (s 5).
These are the mechanical changes. The Act’s stated policy purpose is to "provide some protection to farmers against the enforcement of mortgages over equipment they use to carry out their farming businesses" and to achieve that mainly via the notice obligations on mortgagees and the court’s power to allow farmers to retain equipment for up to one year if the court considers, among other matters, that the farmer has a reasonable prospect of remedying the default (s 4). The rest of this note tests how those mechanisms allocate incentives, costs, discretion and compliance burdens.
Main concepts
The Act is built around a small set of recurring legal constructs. The statute uses common property-security terminology (mortgagee, mortgagor, guarantor) alongside specialised statutory devices. The schedule (not reproduced here) is said to define particular words used in the Act; practitioners should consult it for any terms not defined in the body (s 3). Key concepts in the operative text are described below, with the precise statutory references.
Default notice and due day. A default notice is the written notice the mortgagee must give under part 2 before exercising a right to take possession or sell farm equipment. The due day is the date stated in the default notice on or after which the mortgagee intends to take possession or sell; that date must be at least 30 days after the day the notice is given (s 8). The content obligations vary depending on whether the mortgagee reasonably believes the default is capable of being remedied (s 8).
Farm equipment and equipment. The Act addresses enforcement in relation to "farm equipment" and, in some parts, to "equipment" more generally. The text repeatedly distinguishes farm equipment used to carry on a farmer’s farming business, and the special protective devices (relieving orders, hire-purchase rules) rely on that connection (ss 4, 13, 16). The schedule is indicated as defining particular words; it is therefore the primary place to confirm statutory definitions (s 3).
Relieving order and notice day. A relieving order is a court order that requires the mortgagee to return equipment (if in possession) and restrains the mortgagee from taking possession or selling for a stated period not later than one year after the notice day. Notice day means the day the mortgagee is given the notice of application under s 14 or, where the court dispenses with service, the day the court makes that order (s 16).
Hire-purchase agreement (pt 3A). A hire-purchase agreement is defined in s 17B for the purposes of pt 3A. It covers post-insertion agreements where farm equipment is let or hired with an option to purchase, or where a farmer agrees to purchase by instalments (whether called rent, hire or otherwise). Two or more separate agreements can be aggregated and treated as a single hire-purchase agreement if together they create a bailment with an option or transfer. The subsection excludes agreements where property passes to the farmer at contract signing or before delivery, and excludes equipment with total market value exceeding $40,000,000. s 17B also excludes farmers who are in the business of selling similar farm equipment from the definition of farmer for hire-purchase purposes.
Best price, enforcement expenses, repossession value, net amount payable, actual payments. Pt 3A uses these financial measures to allocate money flows after repossession. The mortgagee must provide a best price estimate and estimates of enforcement and return expenses within 30 days of taking possession (s 17C). If the mortgagee does not return equipment, the mortgagor may recover certain amounts depending on the relationship between repossession value, actual payments and net amount payable (s 17H), and the mortgagee’s recoverable amount is limited (s 17I). The mortgagee bears the onus of showing it obtained the best price reasonably obtainable if it sells to someone other than the mortgagor’s nominee (s 17J).
Onus and evidentiary responsibilities. The statute places several onuses on mortgagees: to prove an exception to s 7 (s 12), to prove they obtained the best price (s 17J), to comply with return obligations under ss 17E and 17F, and to give required notices (s 17C). The mortgagor bears the procedural burden of applying for a relieving order and giving a copy of the application to the mortgagee, subject to judicial dispensation (ss 13-14).
Court powers and remedies. The court must dismiss or make a relieving order and has discretion to impose terms, including payment of enforcement expenses by the mortgagor (s 16). The court may order compensation for loss suffered where mortgagees contravene certain provisions (s 18). Jurisdictional allocation is flexible , proceedings already before a court continue there, otherwise the appropriate court is the one whose monetary jurisdiction is not exceeded by the amount payable under the mortgage (s 6). Court includes QCAT under the definition in s 6.
These concepts govern the allocation of rights and obligations between creditors and farmer-mortgagors, structure timing and notice requirements, and set evidence burdens for both parties. Practitioners should cross-check defined terms in the schedule and confirm whether the loan is captured by the National Credit Code (which displaces part 2: s 5(3)).
Who it affects
The Act distributes procedural rights and duties across a limited set of actors. Identify who pays, who decides and who changes behaviour.
Mortgagees (lenders, conditional vendors, hire-purchase owners). Mortgagees are the principal regulated party. They must comply with the default-notice rules before taking possession or selling farm equipment (s 7), maintain documentary proof of attempts to locate mortgagors if relying on s 11(b), give additional notices and estimates in hire-purchase situations (s 17C), and satisfy evidential burdens where exceptions or best-price standards are invoked (ss 12 and 17J). Mortgagees who contractually attempt to avoid the Act or require indemnities from mortgagors face those provisions being void and, if they participate in such instruments, a maximum penalty of 100 penalty units (s 20). When a mortgagor serves a notice of application under s 14, the mortgagee is statutorily restrained from selling or taking possession for the duration of the court process unless the court orders otherwise (s 15). Mortgagees must also comply with any relieving orders (s 17) and may be ordered to pay compensation for statutory contraventions (s 18).
Mortgagors , specifically individual farmers. The Act applies to a mortgage only if the mortgagor (and each mortgagor) is an individual (s 5). The Act therefore shields individual farmers rather than corporate farming businesses. Mortgagors who are farmers and either using or intending to use equipment in their farming business may apply for a relieving order (s 13) and can, in a hire-purchase context, require sale to a nominated purchaser or return of equipment within statutory windows (ss 17D-17E). Mortgagors who obtain a relieving order can retain equipment and have enforcement stayed for a stated period up to one year (s 16).
Guarantors. Guarantors are recipients of default notices (s 7) and are treated as parties to whom notices must be given; notices must be served on each mortgagee, mortgagor or guarantor where more than one exists (s 21). The Act therefore affects guarantors’ information rights and exposure to enforcement.
Buyers and nominated purchasers in hire-purchase cases. Pt 3A permits a mortgagor to nominate a buyer to purchase farm equipment at not less than the mortgagee’s best price estimate where the mortgagee has taken possession and provided the estimate (s 17D).
Courts and tribunals. Courts decide relieving order applications and enforce compliance. The text expressly includes QCAT within "court" for jurisdiction under the Act (s 6). The Act prescribes the matters the court must consider in deciding whether to make a relieving order (s 16) and gives the court power to order compensation for contraventions (s 18).
The State and Commonwealth. The Act applies to all persons including the State and, subject to constitutional limits, the Commonwealth and other States (s 5). However, the territorial/constitutional operation is subject to the legislative powers of the State.
Who changes behaviour. Mortgagees must alter enforcement timing and documentation practice: they must give detailed default notices (s 8), wait at least 30 days before repossession unless exceptions apply (s 8, s 10), and follow the hire-purchase notice and return regime where relevant (pt 3A). Mortgagors must act quickly to preserve equipment: they have limited windows to apply for relieving orders and to give notices under pt 3A (s 14, s 17D). Courts will face factual questions about prospects of remedy and necessity of equipment within the one-year window (s 16), which imposes evidential and procedural loads on both parties.
Distribution of benefits and costs. The statute concentrates a protective benefit on individual farmers who use equipment in their farming businesses (s 4). The costs are diffuse across mortgagees (administrative burden, possible delay to enforcement, potential limitations on recoverable amounts in hire-purchase cases) and concentrated when a particular mortgagee seeks to enforce quickly but must comply with statutory steps or risk penalties and compensation orders (ss 7, 18). The Act imposes compliance and documentary burdens predominantly on mortgagees; mortgagors bear the procedural task of applying to the court to obtain relief but receive statutory pause on enforcement upon service of their application (s 15).
Key duties and rights
This section lists the principal statutory duties imposed on mortgagees and the corresponding rights and remedies available to mortgagors, with references to the operative provisions.
Mortgagee duties
Give a valid default notice before taking possession or selling farm equipment, unless an applicable exception obtains (s 7). The notice must comply with s 8’s content requirements and specify a due day at least 30 days after service (s 8).
If the mortgagee reasonably believes the default is incapable of remedy, tailor the default notice to the alternative content set out in s 8(2) and still state a due day at least 30 days after service (s 8).
Where the mortgagee takes possession of farm equipment in a hire-purchase context, the mortgagee must give the mortgagor a written notice within 30 days stating a best price estimate, estimates of enforcement expenses, and estimates of expenses to return the equipment (s 17C).
Where equipment is sold other than to a mortgagor-nominated purchaser in a hire-purchase case, the mortgagee bears the onus of proving the sale obtained the best price reasonably obtainable at the time of repossession (s 17J). The mortgagee must also comply with relieving orders (s 17).
Where the mortgagee returns equipment despite an unremedied breach, the mortgagee may re-take possession only if it gives written notice at return specifying the breach and a remedial period (minimum 14 days unless a longer period is stated) and the mortgagor fails to remedy within that period (s 17F).
A mortgagee must not be party to, and must not enter, a mortgage or instrument containing provisions that avoid or modify the Act or require the mortgagor to indemnify the mortgagee for liabilities under the Act; participation attracts a penalty (s 20).
Mortgagee rights and exceptions
The mortgagee retains the general right to take possession of and sell equipment under the mortgage, subject to compliance with the Act (s 7).
The Act recognises exceptions where the mortgagee may act without complying with s 7, for example, where the mortgagee reasonably believes the mortgagor has removed or intends to remove the equipment in breach of the mortgage or urgent action is necessary to protect the equipment (s 10). It also allows exceptions where the mortgagee believes it was induced by fraud or has been unable to locate the mortgagor after reasonable attempts, or where the court orders non-compliance (s 11).
In hire-purchase cases the mortgagee may sell the equipment if the mortgagor does not exercise the 21-day election to nominate a buyer or require return, but the mortgagee must seek the best price and can be limited in the amount recoverable (ss 17D, 17J, 17I).
Mortgagor rights and duties
Mortgagors who are farmers using or intending to use the equipment in their farming business may apply to the court for a relieving order where the mortgagee has given a default notice, taken or purported to take possession, or the mortgagor believes enforcement may be attempted (s 13).
After lodging an application, the mortgagor must immediately give a copy to the mortgagee unless the court excuses service on proof of reasonable attempts to find the mortgagee; the court may impose conditions if it dispenses with service (s 14).
Service of a notice of application triggers a statutory moratorium on sale, taking possession where not in possession, or parting with possession where in possession, until the court orders otherwise or the application is withdrawn or dismissed (s 15). Note: if the mortgagee is already in possession when served, the mortgagee is not required by s 15 to return the equipment (s 15(2)).
If the court grants a relieving order, it must be by dismissal or a precise order and may include terms such as the mortgagor paying enforcement expenses. The court must consider whether the mortgagor has a reasonable prospect of remedying the stated default within one year, the necessity of the equipment to the farming business, and whether the mortgagor has improperly removed or damaged equipment (s 16). A successful mortgagor may keep equipment for a stated period not later than one year after the notice day (s 16).
In hire-purchase scenarios the mortgagor has a 21-day window after receiving the mortgagee’s best price and expense estimate to demand sale to a nominated buyer at not less than the stated best price or to demand return of the equipment (s 17D). If the mortgagor pays amounts due and associated reasonable expenses within 14 days of a 17D(b) notice the mortgagee must return the equipment (s 17E).
Remedies and compensation
The court may order the mortgagee to compensate the mortgagor for any loss caused by contravention of key provisions (s 18). Such an order may be made regardless of whether the mortgagee has been prosecuted for the contravention and does not affect criminal liability (s 18(3)).
In hire-purchase cases where equipment is not returned and particular valuation tests are met, the mortgagor may recover from the mortgagee an amount equal to the total of repossession value and actual payments less the net amount payable under the mortgage (s 17H). Conversely, the mortgagee may not recover under the mortgage, by judgment or otherwise, more than the net amount payable less the total of repossession value and actual payments (s 17I).
These duties and rights set fixed procedural steps and financial consequences that mortgagees and mortgagors must observe. The statute places operational and evidentiary responsibilities principally on mortgagees and gives mortgagors specific, time-limited statutory remedies to preserve equipment and seek compensation.
Penalties and enforcement
The Act combines criminal-style penalties, civil compensation remedies and declaratory enforcement mechanisms. Practitioners should note the multiplicity of enforcement levers and the placement of evidential burdens.
Monetary penalties
Section 7, which prohibits a mortgagee from exercising repossession or sale rights unless the statutory preconditions are met, carries a maximum penalty of 500 penalty units. The Act repeats that maximum penalty in s 15 (breach of moratorium after notice of application) and in s 17 (compliance with a relieving order) and s 17C and s 17E are listed in s 18 as contraventions giving rise to compensation orders. The penalty unit value is not specified in the Act text provided; practitioners must convert penalty units into dollar amounts under the general penalty-unit framework in the relevant jurisdiction.
Section 20 makes void any provision that avoids or modifies the Act or requires a mortgagor to indemnify a mortgagee, and a mortgagee participating in such an instrument faces a maximum penalty of 100 penalty units. That provision imposes a positive sanction on mortgagees to avoid contracting-out clauses.
Civil and remedial enforcement
The court may order compensation to a mortgagor for loss suffered because of a mortgagee’s contravention of specified sections (s 18). The court’s power is available whether or not the mortgagee has been prosecuted, and it does not affect the mortgagee’s criminal liability (s 18(3)). This creates a civil remedy independent of criminal proceedings.
The Act confines recovery by the mortgagee in hire-purchase cases. If the mortgagee does not return farm equipment, the mortgagor may recover an amount in prescribed circumstances (s 17H), and the mortgagee’s recoverable amount under the mortgage is capped by a formula in s 17I. These provisions impose substantive limits on the money a mortgagee can obtain in certain hire-purchase repossession outcomes.
Evidence and onus
The mortgagee bears the onus of proving that s 7 does not apply where the mortgagee relies on s 10 or s 11(a) or (b) exceptions (s 12). The mortgagee also bears the onus of proving in hire-purchase sales that it obtained the best price reasonably available at the time of repossession (s 17J). These evidential placements increase the mortgagee’s litigation and documentary burden in contested enforcement actions.
Court orders and judicial discretion
Courts must either dismiss a relieving order application or grant a relieving order and are guided by statutory considerations (s 16). The court’s power to make the relieving order on terms, for example requiring mortgagors to pay enforcement expenses incurred by the mortgagee, gives judicial discretion to balance interests. The Act also empowers courts to excuse a mortgagor from serving the notice of application if the mortgagor has made reasonable attempts to find the mortgagee, and the court can impose conditions when dispensing with service (s 14).
Interaction with other enforcement regimes
The Act expressly states it is in addition to other law about enforcement of mortgages and does not prevent notices under other legislation (s 19). Practitioners must therefore account for parallel statutory obligations that may require different notices or timetables.
Practical enforcement risk
Noncompliance exposes mortgagees to criminal penalties, civil compensation orders and limitations on monetary recovery in hire-purchase cases. Where mortgagees rely on statutory exceptions (fraud, inability to find the mortgagor, urgent protection of equipment), they carry the evidentiary onus to prove their position in court (s 12). Mortgagees therefore face both timing risk and evidentiary risk: failing to comply with notice requirements or to document exceptions may lead to penalty exposures and compensatory liabilities.
Regulatory and secondary enforcement
The Governor in Council may make regulations under the Act, including any matters prescribed for default notices (s 8(e), s 23). Regulations could expand or clarify procedural details, increasing the compliance perimeter for mortgagees and mortgagors.
Overall, the enforcement framework mixes criminal penalties with civil remedies and evidential onuses to produce a compliance architecture that places primary operational responsibilities on mortgagees and leaves enforcement and remedial discretion to courts considering specific facts.
How it interacts with other laws
The Act is written to coexist with, and in some circumstances be displaced by, other statutory schemes. The text expressly addresses how it fits alongside other credit and enforcement legislation and identifies jurisdictional touches.
Priority and displacement
Part 2 of this Act does not apply in relation to a mortgage to which the National Credit Code applies (s 5(3)(a)). That is an explicit displacement provision. Practitioners must therefore determine whether the mortgage is captured by the National Credit Code before applying the notice and default framework in part 2.
The Act does not apply in relation to a mortgage to which the repealed Credit Act 1987, as continued, applies (s 5(3)(b)). The text references that the provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010, s 15, indicating that historical continuity matters to application.
Complementary operation
Section 19 states the Act is in addition to any other law about enforcement of a mortgage and does not prevent the issue of a notice to a mortgagor under other legislation. This indicates a complementary posture rather than exclusivity: obligations under other statutes can coexist with duties in this Act. For example, a mortgagee must still be mindful of other statutory requirements, prescribed notices or court orders under other regimes.
Jurisdictional and tribunal interface
The Act designates which court may exercise its jurisdiction (s 6). If proceedings have already been started, that court retains jurisdiction; otherwise the appropriate court is the one whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when proceedings are started. The statutory definition expressly includes QCAT within "court" for the purposes of this Act (s 6). That inclusion may move some matters into tribunal processes with their own procedural rules and remedies.
Contractual prohibition and statutory overrides
The Act voids contractual provisions that seek to avoid or modify its effect or require a mortgagor to indemnify for loss or liability arising under the Act (s 20). That is a direct statutory override of private ordering to the extent those contractual clauses attempt to exclude the Act’s protective regime. A mortgagee who participates in such an instrument faces a penalty (s 20).
Regulatory details and gap-filling
The Governor in Council has regulation-making power (s 23), and s 8 allows prescribed matters to be included in default notices. Any regulatory instruments made under s 23 can therefore alter procedural formality, add content requirements or define technical terms by regulation, affecting how the Act interacts with administrative procedures.
Cross-references to external definitional schemes
The schedule is said to define particular words used in the Act (s 3). Because the body text uses technical valuations such as "repossession value", "net amount payable" and "actual payments" in pt 3A, practitioners must check whether those concepts are defined in the schedule or in related legislation. The Act itself does not, in the reproduced text, specify those calculations.
Practical implication
The combined effect is that practitioners will typically need to check the status of the mortgage against the National Credit Code, the continued Credit Act 1987 rules (as applicable), the civil recovery rules in the jurisdiction, and any regulations made under this Act. The Act neither displaces all other enforcement mechanisms nor is it fully standalone; rather, it sits alongside other statutory and contractual regimes, with particular primacy rules (e.g. s 5).
Amendment history
The text includes internal amendment annotations that identify statutory changes and insertions. The following points summarise the amendment history as shown in the Act text supplied; practitioners should consult official reprints and legislative histories for full enactment dates and commencement details.
Amendments in 2002 (2002 No. 52). Part 3A (secs 17A-17J) was inserted by 2002 No. 52 s 10. Several other sections were amended in 2002: s 7 was amended (2002 No. 52 s 8), s 8 was amended (2002 No. 52 s 9), s 18 was amended (2002 No. 52 s 11), and s 22 was omitted (s 22 om 2002 No. 52 s 12). The notations in the source show these changes and that pt 3A's hire-purchase provisions were added at that time.
Amendment in 2009 (2009 No. 24). Section 6, which specifies courts with jurisdiction under the Act and defines "court" to include QCAT, was amended by 2009 No. 24 s 422. The insertion of QCAT in the definition indicates a tribunal/jurisdictional adjustment to where matters under the Act can be heard.
Amendment in 2010 (2010 No. 16). Section 5(3) carrying application limitations was amended as noted (2010 No. 16 s 35 sch). The text annotates that s 5 was amended by that instrument.
Continuity notation. The source text contains a note that the provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 (s 15) and that the Act does not apply in relation to mortgages to which the continued Credit Act 1987 applies (s 5(3)(b)). This reflects interaction between State legislation and federal framework changes.
What the amendment notes tell us operationally. The 2002 bundle of amendments introduced the hire-purchase regime (pt 3A) with substantive procedural and valuation consequences and also modified default-notice content and penalties. The 2009 change brought tribunals (QCAT) formally within the Act’s jurisdictional compass. The 2010 amendment adjusted application boundaries vis-à-vis the continuations of the Credit Act and the National Credit Code. Section 22 (approval of forms) being omitted in 2002 removed a statutory form-approval requirement.
Limitations of this history. The annotations give the amending instrument numbers and internal section references but do not supply commencement dates or explanatory memoranda. To advise a client on transitional issues or to ascertain whether particular provisions apply to loans entered before certain dates, practitioners must consult the official reprints, the full amendment Acts, and commencement notices.
Litigation history
The supplied Act text does not include any reported cases or litigation examples. No judicial decisions, bindings or illustrative case law are cited in the text. Consequently:
There is no litigation history recorded in the body of the Act as provided here. The statute itself names no cases and the schedule (as reproduced) contains no reported decisions.
Practical consequence. Because courts must exercise discretion under s 16 (for example, to determine whether the mortgagor has a reasonable prospect of remedying a default within one year and whether the equipment is necessary to the farming business), judicial interpretation of terms such as "reasonable prospect", "necessary", "best price", "repossession value", "net amount payable" and "actual payments" will be important to compliance and enforcement outcomes. The absence of cases in the text means practitioners should search legal databases and tribunal records for any decisions applying or construing the Act, paying special attention to any QCAT determinations after the 2009 amendment to s 6.
Recommended research steps. Where litigation issues arise, counsel should look for decisions in the following fora: the court specified in s 6 (where the proceedings were started), the relevant State or territory courts with monetary jurisdiction in the mortgage amount, and QCAT for tribunal-level disputes. Search terms should include "relieving order", "Credit (Rural Finance) Act 1996", "hire-purchase", "best price", and section-specific references (ss 7, 15, 16, 17C-17J). Also check for any appeals that address evidentiary onuses placed on mortgagees by ss 12 and 17J.
Absence of precedent increases uncertainty. Without a recorded body of authority provided in the statute, outcomes will depend heavily on judicial fact-finding and local evidentiary standards. Mortgagees relying on exceptions or asserting they obtained the best price will face fact-intensive litigation with the onus on them.
In short, the Act’s operative provisions are clear in allocating duties and onuses, but litigation risk and interpretive uncertainty remain until courts have developed an interpretive line.
Gotchas
This Act contains several technical traps for the unwary. The following items are practical "gotchas" that arise directly from the statutory text and can materially change outcomes. Each entry cites the relevant section.
Application only to individual mortgagors (s 5). The Act applies to a mortgage only if the mortgagor (and each mortgagor, if there is more than one) is an individual. Corporate mortgagors are outside the protective mechanism. Practitioners must confirm the mortgagor’s legal capacity and corporate form early; a nominal individual director will not necessarily attract relief if the legal mortgagee is a company.
Part 2 excluded where National Credit Code applies (s 5(3)(a)). If the mortgage falls under the National Credit Code, the default-notice scheme in part 2 does not apply. Creditors often assume statutory protections are uniform; here they are expressly displaced in Code-covered loans. Verify Code coverage before relying on s 7’s requirements.
Minimum 30-day due day (s 8). The due day stated in a default notice must be at least 30 days after service. Some mortgagees might consider shorter internal notice periods, but the Act proscribes this for farm equipment defaults, unless the mortgagee reasonably believes the default is incapable of remedy (s 8(2)).
Exceptions to s 7 , quick re-default and urgent action (ss 9-11). The Act allows the mortgagee to proceed without another default notice if the mortgagor makes a further default of the same type before the original due day and does not remedy it (s 9). Also, s 10 allows immediate repossession where the mortgagee reasonably believes the mortgagor has removed/disposed of equipment in contravention or urgent possession is necessary to protect the equipment. Reliance on these exceptions requires documentary support: the mortgagee bears the onus to prove them (s 12).
Effect of service of notice of application (s 15). Once a mortgagor gives the mortgagee a notice of application, the mortgagee must not sell, take possession (if it did not already have possession), or, if in possession, part with possession (other than return it) until the court orders otherwise or the application is withdrawn/dismissed. However, s 15(2) makes clear that if the mortgagee had possession when the notice of application was served, the mortgagee is not required by s 15(1)(c) to return the equipment. Practitioners must not assume the moratorium compels return where the mortgagee already has possession.
One-year maximum for relieving orders (s 16). Courts can make orders restraining repossession for a period not later than one year after the notice day. Parties must plan for the statutory temporal limit and the evidentiary requirement that the mortgagor have a reasonable prospect of remedying the stated default within that year.
Hire-purchase definitions and thresholds (s 17B). The hire-purchase regime applies only to agreements entered into after the commencement of the hire-purchase provisions and excludes agreements where property passes to the farmer prior to delivery or where the total market value at signing exceeds $40,000,000. Two or more agreements can together be treated as a hire-purchase agreement if they create a bailment with purchase terms. Misclassifying a transaction as hire-purchase or non-hire-purchase can change the creditor’s notice and recovery obligations.
Tight timelines in pt 3A (ss 17C-17E). When the mortgagee has taken possession in a hire-purchase case, it must give the 30-day best-price/expense notice within 30 days of taking possession (s 17C). The mortgagor then has only 21 days to respond with a demand under s 17D, and if the mortgagor elects return, they then have 14 days to pay or tender the necessary amounts for a return under s 17E. Missing any of these windows changes rights and remedies.
Complex valuation-based remedies (ss 17H-17I). The mortgagor’s recovery and the mortgagee’s recovery from the mortgage depend on a comparison of repossession value, actual payments, and net amount payable. The Act uses these financial measures without giving precise calculation rules in the body text reproduced. Practitioners must carefully identify where definitions are placed (the schedule or other legislation) and calculate outcomes before advising clients, because small valuation differences determine whether a mortgagor may recover or whether the mortgagee is limited in its recovery.
Onus to show best price (s 17J). If the mortgagee sells to a buyer not nominated by the mortgagor, the mortgagee must prove it obtained the best price it reasonably could have obtained at the time it took possession. That necessitates contemporaneous marketing evidence and may lengthen the sale process or raise costs.
Contracting out is void and penalised (s 20). Mortgagees cannot lawfully deal with instruments that attempt to avoid the Act or shift statutory liabilities onto mortgagors by indemnity. Documents containing such clauses are void as to those clauses. Mortgagees who participate expose themselves to penalties, so pre-existing form mortgages should be reviewed for invalid clauses.
Service on multiple parties (s 21). Notices required by the Act must be given to each mortgagee, mortgagor or guarantor where there is more than one. Failure to serve every relevant party may affect compliance and give rise to arguments about defective notice.
Penalty unit calculations. The text sets penalties in penalty units (e.g., 500 units for contravening s 7), but does not state their monetary value. Practitioners must convert penalty units to dollar amounts using the jurisdictional penalty unit legislation to quantify exposure.
Regulatory content. s 8 allows for "anything else prescribed under a regulation" to be required in a default notice. If regulations exist, they may impose additional required content. Always check for regulations made under s 23.
These "gotchas" are rooted in the statute’s text. They emphasise the need for documentary discipline by mortgagees, rapid procedural responsiveness by mortgagors, careful classification of agreements for hire-purchase treatment, and precise valuation work in repossession scenarios.
How to comply
This section sets out a practical, source-grounded compliance checklist for mortgagees and mortgagors, with steps tied to the statutory provisions. The aim is to minimise enforcement risk, preserve judicial discretion and document compliance.
For mortgagees (lenders, conditional vendors, hire-purchase owners)
Pre-enforcement screening
Confirm that the mortgagor is an individual and that the mortgage is not captured by the National Credit Code (s 5). If the mortgagor is a company, the Act’s protections do not apply and normal enforcement may proceed.
Check whether the mortgage agreement was entered before the hire-purchase provisions commenced. If the mortgage is or aggregates into a hire-purchase agreement under s 17B, pt 3A applies.
Default notice drafting and service (s 7, s 8)
Do not exercise repossession or sale rights unless the mortgagor has defaulted, a valid default notice under part 2 has been given to the mortgagor and guarantor(s), and the default has not been remedied by the due day stated (s 7).
Draft default notices to include the precise content in s 8(1): how the mortgagor has defaulted; what must be done to remedy the default (including amounts); that the mortgagee intends to take possession or sell on or after a stated due day; that a further unremedied default of the same type before the due day allows the mortgagee to take action without another default notice; and any matters prescribed by regulation (s 8(1)). If the mortgagee reasonably believes the default cannot be remedied, use the alternative form in s 8(2).
Ensure the due day is at least 30 days after service (s 8(3)).
Serve notices on each mortgagee, mortgagor and guarantor where more than one exists (s 21).
Establish and document exceptions (ss 9-12)
If you believe an exception applies (e.g. further default during the notice period, urgent need to protect equipment, fraud, inability to find mortgagor), document contemporaneous reasons and attempts to locate the mortgagor. Remember that the onus of proving the exception under s 10 or s 11(a) or (b) is on the mortgagee (s 12).
Hire-purchase procedures (pt 3A)
If the mortgage is a hire-purchase and you take possession, give the mortgagor a written notice within 30 days stating: best price estimate, enforcement expenses estimate, and estimate of any expense to return the equipment (s 17C).
Prepare to accept a mortgagor’s election under s 17D within 21 days. If the mortgagor demands return (s 17D(b)), be ready to accept payment tendered under s 17E within 14 days and promptly return equipment when the statutory conditions are met (s 17E). If returning equipment with existing breaches, provide written notice of breach and the remedial period to the mortgagor when returning, as required by s 17F.
Maintain contemporaneous marketing evidence and sale negotiations to rebut any later claim that you did not obtain the best price reasonably obtainable (s 17J).
When faced with a notice of application (ss 13-16)
On receiving a copy of a relieving-order application (s 14(1)), do not sell, take possession if not already in possession, or part with possession if already in possession, until the court orders otherwise or the application is withdrawn/dismissed (s 15). Exception: s 15(2) clarifies that if you were in possession at service, you are not required by s 15 to return the equipment.
If the mortgagor applies for relief, be prepared for the court to consider whether the mortgagor has a reasonable prospect of remedying the default within one year and how necessary the equipment is to the farming business (s 16). Collect evidence of the mortgagor’s conduct, the equipment’s condition and any enforcement expenses incurred.
Avoid contracting out and indemnity clauses (s 20)
Review standard form mortgages and ancillary documentation to ensure there are no clauses attempting to avoid or modify the Act or requiring mortgagors to indemnify mortgagees for liabilities under the Act. Such clauses are void and mortgagees who are party to them face penalties.
Record-keeping and evidence
Keep clear records of notices given, attempts to find mortgagors, valuation methodologies, marketing activity, auction/sale particulars, enforcement expenses and communications, because evidential onuses (s 12, s 17J) can be decisive.
Regulatory compliance
Check for regulations made under s 23 that prescribe additional notice content or procedural requirements (s 8(e)). Update forms and procedures accordingly.
For mortgagors (individual farmers)
Determine eligibility
Confirm you are an "individual" mortgagor and that you use or intend to use the equipment in your farming business, which is necessary to qualify for a relieving order under s 13.
Responding to default notices
Read default notices carefully for the content required by s 8. If the notice sets a due day, consider remedying the stated default by the due day to avoid repossession rights maturing under s 7.
Applying for a relieving order (ss 13-16)
If a mortgagee gives a default notice, takes possession, or you reasonably believe enforcement may be attempted, you may apply to the court for a relieving order (s 13). On making an application, immediately serve a copy on the mortgagee unless you can satisfy the court you have unsuccessfully attempted to find the mortgagee (s 14). Service triggers a moratorium on enforcement action (s 15), subject to the court ordering otherwise.
Prepare evidence to show a reasonable prospect of remedying the default within one year and that the equipment is necessary to the farming business (s 16). Be ready to respond to claims that you have removed, damaged or disposed of equipment in contravention of the mortgage.
Hire-purchase options (pt 3A)
If the mortgagee takes possession under a hire-purchase agreement and gives the best-price/expense notice under s 17C, you have 21 days to require sale to a nominated buyer at not less than the stated best price or to demand return of the equipment (s 17D). If you choose return and can pay or tender amounts under s 17E within 14 days, the mortgagee must return the equipment (s 17E).
Monetary remedies
If the mortgagee does not return equipment in certain hire-purchase scenarios, you may recover amounts under s 17H. Also, if the mortgagee contravenes specified sections you may apply for compensation under s 18.
Procedural precautions
When applying for relief, serve the mortgagee promptly and retain proof of service; if you cannot locate the mortgagee, be prepared to show reasonable attempts to the court to obtain dispensation under s 14(2).
Other compliance notes for both parties
Convert penalty units to dollar amounts in your jurisdiction to quantify exposure and consider internal escalation policies where enforcement may be delayed by the Act.
If the mortgage may fall under the National Credit Code or the continued Credit Act 1987, obtain specialist advice because different procedures or displacement may apply (s 5(3)).
Where QCAT may have jurisdiction, be prepared for tribunal procedures and timelines (s 6).
Following the statutory steps, keeping contemporaneous records and observing the tight timeframes in pt 3A will materially reduce legal risk for both mortgagees and mortgagors. When in doubt, seek early court directions rather than unilateral steps that risk contravening s 7 or falling foul of s 15 or s 17.
(a) part 2 does not apply in relation to a mortgage to which the National Credit Code applies; and
(b) this Act does not apply in relation to a mortgage to which the the repealed Credit Act 1987 as continued applies. Note— The provisions of the Credit Act 1987 are continued by the Credit (Commonwealth Powers) Act 2010 , section 15 .
sec.6 Courts with jurisdiction under this Act
sec.6 Courts with jurisdiction under this Act
The jurisdiction expressed to be exercisable by the court under this Act in relation to a mortgage is exercisable by—
if proceedings in relation to the mortgage have been started in, or are before, a court—that court; or
otherwise—the court whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when the proceeding concerned is started in the court.
In this section—
court includes QCAT.
s 6 amd 2009 No. 24 s 422
(sec.6-ssec.1) The jurisdiction expressed to be exercisable by the court under this Act in relation to a mortgage is exercisable by— if proceedings in relation to the mortgage have been started in, or are before, a court—that court; or otherwise—the court whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when the proceeding concerned is started in the court.
(sec.6-ssec.2) In this section— court includes QCAT.
(a) if proceedings in relation to the mortgage have been started in, or are before, a court—that court; or
(b) otherwise—the court whose monetary jurisdiction is not exceeded by the amount payable under the mortgage when the proceeding concerned is started in the court.
pt.2 Default notice
Default notice
sec.7 Mortgagee must give default notice
sec.7 Mortgagee must give default notice
This section applies if a mortgagee has a right under a mortgage over farm equipment to take possession of, or sell, the equipment.
The mortgagee must not exercise, or purport to exercise, the right unless—
the mortgagor has defaulted; and
the mortgagee has given the mortgagor, and guarantor (if any), written notice (a default notice ) under this part for the default; and
the default has not been remedied by the due day stated in the default notice.
Maximum penalty—500 penalty units.
s 7 amd 2002 No. 52 s 8
(sec.7-ssec.1) This section applies if a mortgagee has a right under a mortgage over farm equipment to take possession of, or sell, the equipment.
(sec.7-ssec.2) The mortgagee must not exercise, or purport to exercise, the right unless— the mortgagor has defaulted; and the mortgagee has given the mortgagor, and guarantor (if any), written notice (a default notice ) under this part for the default; and the default has not been remedied by the due day stated in the default notice. Maximum penalty—500 penalty units.
(a) the mortgagor has defaulted; and
(b) the mortgagee has given the mortgagor, and guarantor (if any), written notice (a default notice ) under this part for the default; and
(c) the default has not been remedied by the due day stated in the default notice.
sec.8 Requirements for default notice
sec.8 Requirements for default notice
Unless the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state—
how the mortgagor has defaulted; and
what the mortgagor must do to remedy the default, including, for example, any amount that must be paid to the mortgagee; and
that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ) unless the default is remedied; and
that, if the mortgagor makes another default of the same type before the due day that is not remedied by the due day, the mortgagee may take possession of, or sell, the equipment without giving another default notice under this part; and
anything else prescribed under a regulation.
If the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state—
how the mortgagor has defaulted; and
that the mortgagee believes the default is incapable of being remedied; and
that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ); and
anything else prescribed under a regulation.
The due day must be at least 30 days after the day the notice is given to the mortgagor.
s 8 amd 2002 No. 52 s 9
(sec.8-ssec.1) Unless the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state— how the mortgagor has defaulted; and what the mortgagor must do to remedy the default, including, for example, any amount that must be paid to the mortgagee; and that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ) unless the default is remedied; and that, if the mortgagor makes another default of the same type before the due day that is not remedied by the due day, the mortgagee may take possession of, or sell, the equipment without giving another default notice under this part; and anything else prescribed under a regulation.
(sec.8-ssec.2) If the mortgagee reasonably believes the default is incapable of being remedied, the default notice must state— how the mortgagor has defaulted; and that the mortgagee believes the default is incapable of being remedied; and that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ); and anything else prescribed under a regulation.
(sec.8-ssec.3) The due day must be at least 30 days after the day the notice is given to the mortgagor.
(a) how the mortgagor has defaulted; and
(b) what the mortgagor must do to remedy the default, including, for example, any amount that must be paid to the mortgagee; and
(c) that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ) unless the default is remedied; and
(d) that, if the mortgagor makes another default of the same type before the due day that is not remedied by the due day, the mortgagee may take possession of, or sell, the equipment without giving another default notice under this part; and
(e) anything else prescribed under a regulation.
(a) how the mortgagor has defaulted; and
(b) that the mortgagee believes the default is incapable of being remedied; and
(c) that the mortgagee intends to take possession of, or sell, the equipment on or after a stated day (the due day ); and
(d) anything else prescribed under a regulation.
sec.9 Exception to s 7 —further default during notice period
sec.9 Exception to s 7 —further default during notice period
This section applies if—
a mortgagor defaults under a mortgage; and
the mortgagee gives the mortgagor, and guarantor (if any), a default notice under this part for the default; and
the mortgagor makes a further default of the same type before the due day stated in the default notice for the first default; and
the further default is not remedied by the due day stated in the default notice for the first default.
Section 7 does not apply to the mortgagee in exercising, or purporting to exercise, a right under the mortgage for the further default.
(sec.9-ssec.1) This section applies if— a mortgagor defaults under a mortgage; and the mortgagee gives the mortgagor, and guarantor (if any), a default notice under this part for the default; and the mortgagor makes a further default of the same type before the due day stated in the default notice for the first default; and the further default is not remedied by the due day stated in the default notice for the first default.
(sec.9-ssec.2) Section 7 does not apply to the mortgagee in exercising, or purporting to exercise, a right under the mortgage for the further default.
(a) a mortgagor defaults under a mortgage; and
(b) the mortgagee gives the mortgagor, and guarantor (if any), a default notice under this part for the default; and
(c) the mortgagor makes a further default of the same type before the due day stated in the default notice for the first default; and
(d) the further default is not remedied by the due day stated in the default notice for the first default.
sec.10 Exception to s 7 —taking possession to protect equipment
sec.10 Exception to s 7 —taking possession to protect equipment
Section 7 does not apply to a mortgagee in exercising, or purporting to exercise, a right under a mortgage to take possession of farm equipment if the mortgagee reasonably believes—
the mortgagor has removed or disposed of the equipment, or intends to remove or dispose of the equipment, in contravention of the mortgage; or
it is necessary to take possession urgently to protect the equipment.
(a) the mortgagor has removed or disposed of the equipment, or intends to remove or dispose of the equipment, in contravention of the mortgage; or
(b) it is necessary to take possession urgently to protect the equipment.
sec.11 Other exceptions to s 7
sec.11 Other exceptions to s 7
Section 7 does not apply to a mortgagee in exercising, or purporting to exercise, a right under a mortgage if—
the mortgagee reasonably believes it was induced by fraud by the mortgagor to enter into the mortgage; or
the mortgagee has unsuccessfully made all reasonable attempts to find the mortgagor; or
the court orders that the mortgagee may take possession of, or sell, the equipment without complying with section 7 .
(a) the mortgagee reasonably believes it was induced by fraud by the mortgagor to enter into the mortgage; or
(b) the mortgagee has unsuccessfully made all reasonable attempts to find the mortgagor; or
(c) the court orders that the mortgagee may take possession of, or sell, the equipment without complying with section 7 .
sec.12 Onus on mortgagee to show s 7 does not apply
sec.12 Onus on mortgagee to show s 7 does not apply
The onus of proving that section 7 does not apply to a mortgagee because of section 10 or 11 (a) or (b) is on the mortgagee.
pt.3 Relieving order
Relieving order
sec.13 Mortgagor may apply for a relieving order
sec.13 Mortgagor may apply for a relieving order
This section applies if—
for a mortgage over farm equipment—the mortgagee has given the mortgagor a default notice under part 2 ; or
for a mortgage over equipment (whether or not it is farm equipment)—
the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or
the mortgagor has defaulted under the mortgage; or
for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
The mortgagor may apply to the court for a relieving order if—
the mortgagee has not taken possession of, or sold, the equipment or, if the mortgagee has taken possession of the equipment, has not parted with possession of the equipment; and
the mortgagor is a farmer who is using, or intending to use, the equipment to carry out the farmer’s farming business, or would be using, or intending to use, the equipment to carry out the farmer’s farming business if the mortgagee had not taken possession of the equipment.
(sec.13-ssec.1) This section applies if— for a mortgage over farm equipment—the mortgagee has given the mortgagor a default notice under part 2 ; or for a mortgage over equipment (whether or not it is farm equipment)— the mortgagee has exercised, or purported to exercise, a right under the mortgage to take possession of the equipment; or the mortgagor has defaulted under the mortgage; or for another reason, the mortgagor believes the mortgagee may exercise, or purport to exercise, a right under the mortgage to take possession of, or sell, the equipment.
(sec.13-ssec.2) The mortgagor may apply to the court for a relieving order if— the mortgagee has not taken possession of, or sold, the equipment or, if the mortgagee has taken possession of the equipment, has not parted with possession of the equipment; and the mortgagor is a farmer who is using, or intending to use, the equipment to carry out the farmer’s farming business, or would be using, or intending to use, the equipment to carry out the farmer’s farming business if the mortgagee
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