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Question: equity pq question 1 mr and mrs hall owned and operated...

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Equity PQ

Question 1

Mr and Mrs Hall owned and operated a drive-in movie theatre. After pay TV was introduced and several video/DVD stores opened, attendance at the drive-in dropped off to such an extent that the Halls could no longer meet their loan repayments to Daisy Finance Ltd. In January Daisy Finance Ltd sold the drive-in to Holly Pty Ltd, pursuant to the power of sale under the mortgage.

 

In March, Holly Pty Ltd borrowed $100,000 from Kate to redevelop the drive-in site. To secure the loan Kate obtained a mortgage over the drive-in.

 

Mr and Mrs Hall, having discovered that Holly Pty Ltd is a wholly owned subsidiary of Daisy Finance Ltd, came to you seeking advice. Your advice was that they would be entitled to have the sale to Holly Pty Ltd set aside on the grounds of fraud. The Halls then instruct you to lodge a caveat on their behalf, and to issue proceedings next week.

 

You have just received an urgent email from Mrs Hall which says that she has just been told by a friend at the local school that Kate took a mortgage over the property, not knowing of the fraudulent exercise of the power of sale, but the mortgage has not yet been lodged for registration.

 

Advise Mr and Mrs Hall.

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