Question 1

Read the following facts then answer the questions following

The facts: Simos decided to open a small restaurant in a Sydney suburb. The following events occurred

Date	Event	Work columns [not marked]
		Type of security	Type of interest	Priority
January 2018	He borrowed $250,000 from Commonwealth Bank (CBA) to acquire premises; he signed a mortgage over the premises which he handed to the bank, with the certificate of title; the bank lodged these documents at Land and Property Information [LPI].
February 2018	Next, he needed working capital to fit out his kitchen, so he borrowed $60,000 from Greater Business Finance Ltd (GBF); he signed a security instrument over the kitchen equipment and GBF recorded the security instrument on the PPSA register.
June 2018	Patronage was good so he decided to open a bar; he borrowed another $30,000 from CBA and signed another mortgage over the premises. CBA just held this mortgage in a safe.
July 2018	He borrowed $15,000 from GBF to pay for redecorating the restaurant; he signed a second security instrument(over the kitchen equipment) but GBF did not register it.
August 2018	He decided to upgrade the air conditioning in the restaurant. He borrowed $20,000 from National Bank (NAB) and signed a third security instrument over the kitchen equipment; NAB registered the security instrument on the PPSA register.
October 2018	He borrowed another $25,000 from NAB to purchase new chairs and tables. He signed another mortgage over the premises which NAB held in a safe and lodged a caveat at the Land Titles Office.

By February 2019 patronage was badly reduced because another restaurant opened in the same street. Simos was unable to keep up interest payments on all his borrowings. He closed the restaurant in May 2019. The building and equipment were sold to repay his creditors.

The questions

1 What type of SECURITY is held by CBA for the June 2018 loan?

A.registered mortgage (R/M)

B.perfected security interest (P/S/I)

C.unregistered mortgage (U/R/M)

D.unperfected security interest (U/S/I)

2 What type of SECURITY is held by GBF for the February 2018 loan?

A.registered mortgage (R/M)

B.perfected security interest (P/S/I)

C.unregistered mortgage (U/R/M)

D.unperfected security interest (U/S/I)

3 What type of SECURITY is held by CBA for the January 2018 loan?

A.registered mortgage (R/M)

B.perfected security interest (P/S/I)

C.unregistered mortgage (U/R/M)

D.unperfected security interest (U/S/I)

4 What type of SECURITY is held by GBF for the July 2018 loan?

A.registered mortgage (R/M)

B.perfected security interest (P/S/I)

C.unregistered mortgage (U/R/M)

D.unperfected security interest (U/S/I)

5 For the January 2018 loan CBA has

A.a legal interest and a power of sale

B.a legal interest but not a power of sale

C.an equitable interest and a power of sale

D.an equitable interest but not a power of sale

6 For the June 2018 loan CBA has

A.a legal interest and a power of sale

B.a legal interest but not a power of sale

C.an equitable interest and a power of sale

D.an equitable interest but not a power of sale

The building was sold for $290,000 and the kitchen equipment was sold for a total of $90,000. How much would have been received (you may assume no repayments of the capital sums borrowed had been made):

7. by CBA in total

A. $250,000

B. $265,000

C. $290,000

D. $280,000

8. by GBF for the February 2018 loan

A. $60,000

B. $110,000

C. $170,000

D. $60,000

9. by GBF for the July 2018 loan

A. $25,000

B. $90,000

C. $40,000

D. $10,000

10. by NAB for the August 2018 loan

A. $30,000

B. $10,000

C. $20,000

D. $90,000

11 by NAB for the October 2018 loan

A. $30,000

B. $25,000

C. $20,000

D. $90,000