The High Court decision of Waller v Hargraves Secured Investments Limited [2012] HCA 4 (Roslyn) comes at a time where rural debt is rising in the shadow of falling land prices. The case deals primarily with the requirement in NSW legislation that requires mediation before a creditor can take enforcement action under a farm mortgage, and before what is known as a section 11 certificate can be issued under the Act.  

In Roslyn, the borrower had defaulted and the lender had issued a section 11 certificate under the Act. A mediation resulted in the parties agreeing to extend the loan and increase the funds. The borrower again defaulted, and the lender proceeded with enforcement action under the new loan agreement and its mortgage without observing the mediation requirements of the Act.

The High Court held that the section 11 certificate originally issued referred to the first loan agreement and not the subsequent loan agreement which the borrower was now in default. Due to this, the lender had not complied with the legislation, as the later loan agreement was a ‘new’ loan, and therefore the lender needed to enter into a new round of mediations and issue a new section 11 certificate before being able to take enforcement action.

Although the decision relates to New South Wales legislation, the case is relevant to parties in other states due to similar requirements in the Farm Debt Mediation Act 2011 (Vic) and the Queensland Farm Debt Finance Strategy.