Qualified indefeasibility and the careless mortgagee

In recent years a great deal of case law has been generated in relation to mortgages where the mortgagee has not engaged in adequate identity verification of the mortgagor and the mortgage has subsequently been found to be forged. As a result, careless mortgagee provisions operate in Queensland as an exception to indefeasibility. Similar provisions are expected to commence soon in New South Wales. This article examines the mortgagee’s position with the benefit of indefeasibility and then considers the impact of the careless mortgagee provisions on the rights of a mortgagee under a forged mortgage, concluding that the provisions significantly change the dynamic between a registered mortgagee and registered owner who has not signed the mortgage. These provisions appear to give the mortgagee a conditional indefeasibility, with the intention of reducing the State’s exposure to the payment of compensation in the case of identity fraud. They are however, more successful in the case of forgery by a third party rather than forgery by a co-owner.

Identity fraud and land registration systems : an Australian perspective

There is no doubt that fraud in relation to land transactions is a problem that resonates amongst land academics, practitioners, and stakeholders involved in conveyancing. As each land registration and conveyancing process increasingly moves towards a fully electronic environment, we need to make sure that we understand and guard against the frauds that can occur. What this paper does is examine the types of fraud that have occurred in paper-based conveyancing systems in Australia and considers how they might be undertaken in the National Electronic Conveyancing System (NECS) that is currently under development. Whilst no system can ever be infallible, it is suggested that by correctly imposing the responsibility for identity verification on the appropriate individual, the conveyancing system adopted can achieve the optimum level of fairness in terms of allocation of responsibility and loss. As we sit on the cusp of a new era of electronic conveyancing, the framework suggested here provides a model for minimising the risks of forged mortgages and appropriately allocating the loss. Importantly it also recognises that the electronic environment will see new opportunities for those with criminal intent to undermine the integrity of land transactions. An appreciation of this now, can see the appropriate measures put in place to minimise the risk.

Micro-credit is necessary but not sufficient for entrepreneurs in desperate poverty

Micro-credit has often been used as a poverty alleviation strategy. However, there is little evidence to suggest that micro-credit alone can promote economic activities because micro-credit does not teach anything by itself (Brett 2006; Mayoux 1999; Sievers & Vandenberg 2007). Mistakenly, the focus of micro-credit has been the alleviation of immediate poverty, rather than the development of economic activity that would provide a long term solution. Paraphrasing the age old saying, "Give a man a fish and you feed him for a day, teach him to fish and you will feed him for a life time" micro-credit enables the fisherman to buy a net, but in many cases does nothing to ensure that he knows how to use it to benefit his family and the community. If the borrower doesn't know how to use the net, he will return to his old way of doing things-but with the added burden of having to pay back the debt. Given the state of extreme poverty experienced by the vast majority of the population in developing countries, borrowed money is often used for purposes other than creating the foundations for a sustainable economic growth. Typical examples of how micro-credit is generally used include covering funeral costs, buying food, medicines, and other similarly important necessities. The main problem that derives from using loans in this way is that apart from not improving living conditions in a sustainable manner, borrowers are also exposed to the risk of over-indebtedness, with its subsequent human and social implications.

Entrepreneurship in a developing economy : preliminary findings

Theories of entrepreneurship have largely been informed by research in western contexts, and recent calls for research attention to entrepreneurship in developing countries highlight the need for accurate information about entrepreneurship in this field. In addition, some findings from such research have highlighted the critical research needs in this area (Bruton, Ahlstrom & Obloj, 2009). This paper reports early findings from one study of a longitudinal research program with entrepreneurs in an Eastern African context, in a society largely affected by colonization and a long-standing civil war. Entrepreneurs in this study are recipients of micro-credit loans as well as elementary business training. Findings from a review of microloans indicate that entrepreneurial activities are largely in the form of local entrepreneurship rather than systemic entrepreneurship (Suatet, 2011) and the benefits of business improvements achieved from micro-loans are enhanced by feelings of agency and purpose regarding future business activities. Implications for theory and practice are presented.

Waving or drowning? Managing resource constraints in entrepreneurial firm with bricolage as a response to the global financial crisis

These are challenging times for new entrepreneurial firms. The development of the Global Financial Crisis shook the very foundations of global markets and institutions that most firms relied on to do business (Claessens, et al., forthcoming). In the midst of institutional flux and resource constraints, entrepreneurial firms, which have been shown to make a range of contributions to the economy (van Praag & Versloot 2007) faced increasing constraints. The Australian Federal Government quickly implemented the Green Loan program in response to the financial crisis. Unfortunately, the green loans program was flawed with obsolete processes and information (Faulkner, 2011), further constraining new firms. Prior research provides few clues regarding how resource-constrained entrepreneurial firms deal with these institutional flaws within institutional change and how they might overcome these challenges and prosper. One promising theory that evaluates behavioural responses to constraints and institutional flaws is bricolage (Levi Strauss, 1967). Bricolage aligns with notions of resourcefulness: defined here as “making do by applying combinations of the resources at hand to new problems and opportunities” (Baker and Nelson 2005: 333). Using three case studies, we consider how institutional flaws impact firm behaviours and illustrate the use of bricolage in attempts to reinforce, shape and change the GL program further extending bricolage domains of Baker and Nelson (2005).

Residential property investment : assessing home ownership long term viability

Home purchase and ownership is seen by the majority of Australians as the basis for a sound investment strategy and to seciure their long term retirement goals. Although home ownership rates in Australia are in excess of 65% of the population, there have been doubts raised as to the effectiveness of purchasing a house as the main source of retirement income. The main issue with this approach is that the house has to be sold to gain access to these funds or the owners have to take out a reverse mortgage to access the capital tied up in their home, which can be more expensive than selling. This paper will carryout a detailed analysis of a number of investment options to determine the effectiveness of home purchase as a long term investment vehicle. This study has found that the long term investment in equities or managed superannuation funds can provide a greater retirement income than the purchase of a residential property for owner occupation

Identity verification in conveyancing : the failure of current legislative and regulatory measures, and recommendations for change

"Defrauding land titles systems impacts upon us all. Those who deal in land include ordinary citizens, big business, small business, governments, not-for-profit organisation, deceased estates...Fraud here touches almost everybody." the thesis presented in this paper is that the current and disparate steps taken by jurisdictions to alleviate land fraud associated with identity-based crimes are inadequate. The centrepiece of the analysis is the consideration of two scenarios that have recently occurred. One is the typical scenario where a spouse forges the partner's signature to obtain a mortgage from a financial institution. The second is atypical. It involves a sophisticated overseas fraud duping many stakeholders involved in the conveyancing process. After outlining these scenarios, we will examine how identity verification requirements of the United Kingdom, Ontario, the Australian states, and New Zealand would have been applied to these two frauds. Our conclusion is that even though some jurisdictions may have prevented the frauds from occurring, the current requirements are inadequate. We use the lessons learnt to propose what we consider core principles for identity verification in land transactions.

Capitalisation of interest on short term loan “irreconcilable with what is right”

Higher than usual rates of interest charged by lenders on short term loans is not of itself considered to be a penalty or evidence of unconscionable conduct. These types of lenders often charge higher rates to take account of increased losses from higher than usual defaults by borrowers.

Is CEO human capital related to firm performance?

The global economy experienced continuous growth from 2002 to 2007 until the U.S. subprime mortgage crisis caused instability in worldwide stock markets. Simultaneously, global CEO turnover continued to fall to 13.8 percent in 2007. In contrast, the CEO turnover rate in Australia increased to 18 percent in 2007. The purpose of this paper is to determine under what conditions a change in a CEO is associated with firm performance. Succinctly, does the firm’s decision to replace the CEO depend on the CEO’s human capital or firm performance? The empirical study of Australian listed firms (2005 – 2008) shows that firm performance is not a determinant of CEO turnover, rather a CEO with less valuable human capital is more likely to be replaced. The study also finds that merely changing the CEO is not associated firm performance. Rather, there is a positive association between firm performance and the successor’s general human capital for firms that replace the CEO. Specifically, it is the internal successor’s general human capital that is an important determinant of increasing firm performance. These results are important because they imply that CEO turnover is a result of a more active market for CEOs and contributes to explaining why firms retain CEOs despite poor firm performance.

Improving the ability of guarantors to make a real choice : lenders' practices in taking third party guarantees

This article considers recent cases on guarantees of business loans to identify the lending practices that led the court to set aside the guarantee as against the creditor on the basis that the creditor had engaged in unconscionable conduct. It also explores the role of industry codes of practice in preventing unconscionable conduct, including whether there is a correlation between commitment to an industry code and higher standards of lending practices; whether compliance with an industry code would have produced different outcomes in the cases considered; and whether lenders need to do more than comply with an industry code to ensure their practices are fair and reasonable.

The Law of Real Property Mortgages [2nd. Ed.]

This book examines the principles and practice of real estate mortgages in an easily accessible text referenced to all the Australian States. It specifically deals with the major theoretical and practical aspects of the land mortgage, including vitiating factors in formation, mortgagees’ powers and duties and mortgagors’ rights – both statutory and other – as well as assignment, insurance and discharge. It focuses exclusively on real estate mortgages and provides a thorough account of the law through analysis of the plethora of court decisions and statutory provisions in this area. Duncan and Dixon analyse the substance of the mortgage transaction from creation through to rights of enforcement. In its detailed consideration of the rights and obligations of mortgagors and mortgagees, it covers topics such as priorities and tacking, insurance, variation and assignment, rights of discharge, entry into possession, foreclosure and power of sale. In addition, the book contains a separate chapter on factors that may affect the validity and enforcement of a mortgage, together with separate consideration of a mortgagee’s right to enforce a guarantee provided on behalf of a mortgagor, and the rights and liabilities associated with a receivership regime initiated by

The IKBALS project: multi-modal reasoning in legal knowledge based systems

In attempting to build intelligent litigation support tools, we have moved beyond first generation, production rule legal expert systems. Our work integrates rule based and case based reasoning with intelligent information retrieval. When using the case based reasoning methodology, or in our case the specialisation of case based retrieval, we need to be aware of how to retrieve relevant experience. Our research, in the legal domain, specifies an approach to the retrieval problem which relies heavily on an extended object oriented/rule based system architecture that is supplemented with causal background information. We use a distributed agent architecture to help support the reasoning process of lawyers. Our approach to integrating rule based reasoning, case based reasoning and case based retrieval is contrasted to the CABARET and PROLEXS architectures which rely on a centralised blackboard architecture. We discuss in detail how our various cooperating agents interact, and provide examples of the system at work. The IKBALS system uses a specialised induction algorithm to induce rules from cases. These rules are then used as indices during the case based retrieval process. Because we aim to build legal support tools which can be modified to suit various domains rather than single purpose legal expert systems, we focus on principles behind developing legal knowledge based systems. The original domain chosen was theAccident Compensation Act 1989 (Victoria, Australia), which relates to the provision of benefits for employees injured at work. For various reasons, which are indicated in the paper, we changed our domain to that ofCredit Act 1984 (Victoria, Australia). This Act regulates the provision of loans by financial institutions. The rule based part of our system which provides advice on the Credit Act has been commercially developed in conjunction with a legal firm. We indicate how this work has lead to the development of a methodology for constructing rule based legal knowledge based systems. We explain the process of integrating this existing commercial rule based system with the case base reasoning and retrieval architecture.

Asset lending, unconscionable conduct and intermediaries

This article deals with cases where borrowers of loans for business or investment claimed their lender had engaged in asset lending which amounted to unconscionable conduct under the equitable doctrine or under the Australian Securities and Investments Commission Act 2001 (Cth). The article reviews recent cases, seeking to identify the key factors influencing a conclusion of, or against, unconscionable conduct. The article examines the practice of lending through intermediaries and how the application of agency law can insulate lenders from the wrongful conduct of intermediaries. The article explains the gap in the current position and discusses possible law reform which may remedy that.

The technical efficiency of the Japanese banks : non-radial directional performance measurement with undesirable output

The paper analyses technical efficiency of the Japanese banks from 2000 to 2007. The estimation technique is based on the Russell directional distance function that takes into consideration not only desirable outputs but also an undesirable output that is represented by non-performing loans (NPLs). The results indicate that NPLs remain a significant burden as for banks' performance. We show that banks' inputs have to be utilised more efficiently, particularly labour and premises. We also argue that a further restructuring process is needed in the segment of Regional Banks. We conclude that the Japanese banking system is still far away from being fully consolidated and restructured.