(4) In any proceedings in which it is established that a credit provider has taken possession of mortgaged goods contrary to subsection (1), the burden of establishing that the possession of the goods was lawfully taken by virtue of subsection (2) lies on the credit provider.
(5) Nothing in this section prevents a credit provider from accepting the return of goods under section 85.
93 Requirements to be met before credit provider can enforce an acceleration clause
(1) An acceleration clause is to operate only if the debtor or mortgagor is in default under the credit contract or mortgage and:
(a) the credit provider has given to the debtor and any guarantor, or to the mortgagor, a default notice under section 88; and
(b) the default notice contains an additional statement of the manner in which the liabilities of the debtor or mortgagor under the contract or mortgage would be affected by the operation of the acceleration clause and also of the amount required to pay out the contract (as accelerated); and
(c) the default has not been remedied within the period specified in the default notice (unless the credit provider reasonably believes that the default is not capable of being remedied).
(2) However, a credit provider is not required to give a default notice under section 88 or to wait until the period specified in the default notice has elapsed before bringing an acceleration clause into operation, if:
(a) the credit provider reasonably believes that it was induced by fraud on the part of the debtor or mortgagor to enter into the contract or mortgage; or
(b) the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or
(c) the court authorises the credit provider not to do so; or
(d) the credit provider reasonably believes that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider’s permission or that urgent action is necessary to protect the goods.
(3) This section is in addition to any provision of any other law relating to the enforcement of real property mortgages and does not prevent the issue of notices to defaulting mortgagors under other legislation.
93A Extra requirements for enforcing reverse mortgage if debtor’s liability exceeded value of reverse mortgaged property
(1) This section applies in relation to a credit contract for a reverse mortgage and a mortgage securing the debtor’s obligations under the contract if:
(a) Subdivision B of Division 1 applies in relation to the contract and the mortgage (see section 86A); and
(b) just before the amount was received by the credit provider as described in paragraph 86A(1)(b), the debtor’s accrued liability described in paragraph 86A(1)(a) exceeded that amount; and
(c) one or more of the conditions in section 86E are met (so that sections 86B, 86C and 86D do not apply).
(2) If section 88 requires the credit provider to give the debtor or mortgagor a default notice before beginning enforcement proceedings to recover any of the excess, the credit provider must not begin them unless:
(a) the default notice given to the debtor or mortgagor specifies:
(i) the amount received by the credit provider; and
(ii) the debtor’s accrued liability just before that amount was received; and
(iii) the conditions in section 86E that are met; and
(b) if the credit provider knows of a practising lawyer acting for the debtor or mortgagor and the credit provider gave the debtor or mortgagor the default notice by means other than giving it to the lawyer—the credit provider has given the lawyer a copy of the default notice at the same time as, or as soon as practicable after, giving the debtor or mortgagor the notice.
Criminal penalty: 50 penalty units.
Division 3—Postponement of enforcement proceedings
94 Postponement of exercise of rights
Postponement request
(1) A debtor, mortgagor or guarantor who has been given a default notice under section 88 or a demand for payment under section 90 may, at any time before the end of the period specified in the notice or demand, request (a postponement request), orally or in writing, that the credit provider negotiate a postponement of:
(a) the enforcement proceedings; or
(b) any action taken under such proceedings; or
(c) the operation of any applicable acceleration clause.
Credit provider’s notice about postponement
(2) If the debtor, mortgagor or guarantor gives the postponement request, the credit provider must, within 21 days after the day of receiving the request, give the person a written notice:
(a) that states whether or not the credit provider agrees to negotiate a postponement; and
(b) if the credit provider does not agree to negotiate—that states:
(i) the name of the AFCA scheme; and
(ii) the person’s rights under that scheme; and
(iii) the reasons for not agreeing to negotiate.
Criminal penalty: 30 penalty units.
Enforcement proceedings
(3) If the debtor, mortgagor or guarantor gives the postponement request, the credit provider must not begin enforcement proceedings unless:
(a) the credit provider has given the debtor, mortgagor or guarantor a notice under subsection (2) in response to the postponement request; and
(b) the period of 14 days, starting on the day the credit provider gives the notice under subsection (2), has expired.
Criminal penalty: 50 penalty units.
Note: The credit provider must allow the debtor or mortgagor at least 30 days from the date of the default notice to remedy the default—see section 88. The 14‑day period in subsection (3) may end before, at the same time as, or after the end of the period for remedying the default specified in the default notice.
(4) However, the credit provider may take possession of mortgaged goods if the credit provider reasonably believes that:
(a) the debtor or mortgagor has removed or disposed of the mortgaged goods, or intends to remove or dispose of them, without the credit provider’s permission; or
(b) urgent action is necessary to protect the goods.
(5) Subsections (2) and (3) are offences of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
95 Effect of negotiated postponement
(1) A default notice under section 88 or a demand for payment under section 90 is taken, for the purposes of this Code, not to have been given or made if a postponement is negotiated with the credit provider and the debtor, mortgagor or guarantor complies with the conditions of postponement.
(2) It is a condition of any postponement negotiated with a credit provider after the credit provider has taken possession of property subject to a mortgage that the mortgagor pay the reasonable costs of the credit provider in taking possession of the property.
(3) A credit provider must give written notice of the conditions of a postponement referred to in subsection (1) not later than 30 days after agreement is reached on the postponement. The notice must set out the consequences under subsection (6) if the conditions of the postponement are not complied with.
Criminal penalty: 100 penalty units.
(4) Subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(5) A credit provider that is required to give notice under section 71 in relation to a postponement is not required to comply with subsection (3).
(6) If any of the conditions of a postponement are not complied with, a credit provider is not required to give a further default notice under this Code to the debtor, mortgagor or guarantor with whom the postponement was negotiated before proceeding with enforcement proceedings.
96 Postponement by court
(1) If the debtor, mortgagor or guarantor is unable to negotiate a postponement, the debtor, mortgagor or guarantor may apply to the court for a postponement.
(2) The court may, after allowing the applicant, the credit provider and any debtor, mortgagor or guarantor concerned a reasonable opportunity to be heard, order or refuse to order the postponement to which the application relates and may make such other orders as it thinks fit.
(3) The court may, if it thinks it appropriate in the circumstances, stay any enforcement proceedings under the credit contract or mortgage until the application has been determined.
97 Credit provider may apply for variation of postponement order
(1) A credit provider that is subject to an order under this Division may apply to the court for variation of the order.
(2) On such an application, the court may vary the order to which the application relates as it thinks fit or may refuse to vary the order or may revoke the order.
Division 4—Enforcement procedures for goods mortgaged
98 Information as to location of mortgaged goods
(1) A credit provider may, by written notice to a mortgagor under a goods mortgage, require the mortgagor to inform the credit provider, within 7 days after the day the notice is given to the mortgagor, where the mortgaged goods are and, if the mortgaged goods are not in the mortgagor’s possession, to give the credit provider all information in the mortgagor’s possession that might assist the credit provider to trace the goods.
(2) A mortgagor who contravenes a notice under this section commits an offence.
Criminal penalty: 50 penalty units.
(3) Subsection (2) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
99 Entry to residential property to take possession of goods
(1) A credit provider, or an agent of a credit provider, must not enter any part of premises used for residential purposes for the purpose of taking possession of mortgaged goods under a goods mortgage unless:
(a) the court has authorised the entry; or
(b) the occupier of the premises has, after being informed in writing of the provisions of this section, consented in writing to the entry.
(2) The regulations may provide for procedures for the obtaining and giving of consent for the purposes of this section and may set out the circumstances in which consent is or is not taken to have been given.
(3) If premises are entered in contravention of this section by a credit provider or an agent of a credit provider, the credit provider commits an offence.
Criminal penalty: 50 penalty units.
(4) Subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
100 Court may order entry
The court may, on the application of a credit provider that is entitled to take possession of mortgaged goods, authorise the credit provider to enter residential premises for the purpose of taking possession of mortgaged goods.
101 Order for possession
(1) The court may, on the application of a credit provider that is entitled to take possession of mortgaged goods, order a person who has possession of the goods to deliver them to the credit provider at a specified time or place or within a specified period.
(2) The court may, on the application of a credit provider or other person required to deliver goods to a credit provider, by order vary the place at which or time or period within which goods must be delivered to the credit provider.
(3) A person who contravenes an order under this section commits an offence.
Criminal penalty: 30 penalty units.
(4) Subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
102 Procedures to be followed by credit provider after taking possession of goods
Notice to be given
(1) A credit provider that has taken possession of goods under a mortgage must, within 14 days after doing so, give the mortgagor a written notice containing the following matters:
(a) the estimated value of the goods;
(b) the enforcement expenses incurred up to the date on which the goods were taken into the credit provider’s possession and, if enforcement expenses are accruing while the goods remain in the credit provider’s possession, the rate of accrual;
(c) a statement of the mortgagor’s rights and obligations in the form set out in the regulations.
Goods not to be sold immediately
(2) A credit provider must not dispose of goods taken under the mortgage within 21 days after the date of the notice, unless the court authorises the credit provider to do so.
Effect of proceedings
(3) If at the end of that 21 day period a stay of enforcement proceedings is in force under this Code or an application under section 76 has not been determined, the credit provider must not dispose of the goods until those proceedings have been determined and any period allowed for appeal has elapsed.
Payment during notice period
(4) The credit provider must return the goods if:
(a) the amount in arrears (less any accelerated amount) and the credit provider’s reasonable enforcement expenses are paid within that 21 day period and the debtor has not committed a further default of the same kind under the credit contract; or
(b) the credit contract is paid out.
Offence
(5) A credit provider that contravenes this section commits an offence.
Criminal penalty: 50 penalty units.
(6) Subsection (5) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
103 Mortgagor may nominate purchaser of goods taken by credit provider
(1) The mortgagor may, within 21 days after the date of the notice given under section 102, nominate in writing a person who is prepared to purchase the goods from the credit provider at the estimated value or at any greater amount for which the credit provider has obtained a written offer to buy the goods.
(2) The credit provider must offer to sell the goods to that person for the estimated value or, if there is a written offer to buy the goods for a greater amount, that amount.
Criminal penalty: 50 penalty units.
(3) Subsection (2) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
104 Sale of goods by credit provider
(1) The credit provider must, if payment is not made within 21 days after the date of the notice given under section 102 and that section does not prevent the sale, as soon as reasonably practicable (or at such time as the credit provider and mortgagor agree) sell the goods in accordance with section 103 or, if there is no nominated buyer or the nominated buyer under that section does not buy the goods, for the best price reasonably obtainable.
(2) The credit provider must credit the mortgagor with a payment equivalent to the proceeds of the sale less any amounts which the credit provider is entitled to deduct from those proceeds. On the sale of the goods, the amount required to pay out the contract becomes due.
(3) A credit provider that sells mortgaged goods must give the mortgagor a written notice stating the gross amount realised on the sale, the net proceeds of the sale, the amount required to pay out the credit contract or the amount due under the guarantee, any further recovery action proposed to be taken by the credit provider against the debtor and any other information required by the regulations.
(4) A credit provider that contravenes a requirement of this section commits an offence.
Criminal penalty: 50 penalty units.
(5) Subsection (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
105 Matters for which account can be debited after mortgagee sale of goods
A credit provider that sells mortgaged goods under section 104 is entitled to deduct from the proceeds of that sale only the following amounts:
(a) the amount currently secured by the mortgage in relation to the credit contract, not being more than the amount required to discharge the contract;
(b) the amount payable to discharge any prior mortgage to which the goods were subject;
(c) the amounts payable in successive discharge of any subsequent mortgages to which the goods were subject and of which the credit provider had notice;
(d) the credit provider’s reasonable enforcement expenses.
106 Compensation to mortgagor
(1) The court, on application by a mortgagor, may order a credit provider to credit the mortgagor with a payment, fixed by the court, exceeding the net proceeds of sale if it is not satisfied that the credit provider sold the goods as soon as reasonably practicable, or at a time agreed between the credit provider and the mortgagor, for the best price reasonably obtainable.
(2) On application by a mortgagor, the mortgagee under any prior mortgage to which the goods are subject or the mortgagee under any subsequent mortgage of which the credit provider has notice, the court, if not satisfied that the credit provider exercised its power of sale in accordance with this Division, may make an order requiring the credit provider to compensate the mortgagor or the relevant mortgagee for any loss suffered as a result.
(3) The onus of proving that a power of sale was exercised in accordance with this Division is on the credit provider that exercised it.
Division 5—Enforcement expenses
107 Recovery of enforcement expenses
(1) A credit provider must not recover or seek to recover enforcement expenses from a debtor, mortgagor or guarantor in excess of those reasonably incurred by the credit provider. Enforcement expenses of a credit provider extend to those reasonably incurred by the use of the staff and facilities of the credit provider.
Civil effect
(2) Any provision of the credit contract, mortgage or guarantee that appears to confer a greater right is void. If enforcement expenses are in fact recovered in excess of this limitation, they may be recovered back.