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4.1.1 Agreement

Document

(NB. Some of the clauses that have been quoted in the following pages have been added by means of Supplementary Agreements with Westpac rather than the execution of a new Agreement incorporating all the changes contained in those Supplementary Agreements.)

Clause 10 - Provision of Information

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10.5Schedule D information

The Bank agrees to provide the information referred to in Schedule "D" on a monthly basis, or at such other time as may be agreed upon by the parties. Information supplied monthly is to be submitted to the Commonwealth with the Bank's Subsidy invoice referred to in Sub-clause 11.4 and to be accompanied by a certification by an appropriate officer of the Bank that the information provided is in accordance with the Bank's records and is true and correct.

Clause 11 - Subsidy Scheme

11.1Agreement to pay Subsidy

In accordance with the terms of this Agreement, the Commonwealth hereby agrees to pay to the Bank subsidy in respect of:

(a)Specified Portfolio Assets, and

(b)Subsidised Advances made by the Bank.

11.2Commencement of obligation to pay Subsidy

The obligation of the Commonwealth to pay Subsidy to the Bank as prescribed in Sub-clause 11.1 is to commence:

(a)in so far as that Subsidy relates to a Specified Portfolio Asset, from the actual day upon which the Borrower first becomes liable for payment of interest thereon or from the relevant Vesting Date, whichever is the later; and

(b)in so far as that Subsidy relates to a Subsidised Advance by the Bank to a Borrower, from the actual day upon which the Borrower first becomes liable to pay to the Bank interest on such Subsidised Advance.

11.2A Continuation of Subsidy Payment after sale of dwelling-house

11.2A.1 Where:

(a)the Commonwealth is paying Subsidy on a Subsidised Advance Loan Account in respect of a person, and

(b)the person has sold the relevant holding or retirement village accommodation with the intention of acquiring another holding or retirement village accommodation with assistance under the Act within six months of the sale,

the Bank may accept security over:

(a)that other holding or retirement village accommodation; and

(b)if no other holding or retirement village accommodation has been acquired on or before sale of the relevant holding or retirement village accommodation, a term deposit or other security acceptable to the Bank (“Interim Security”) until the other holding or retirement village accommodation is acquired,

so that the loan can remain outstanding.  If the Bank determines that it is prepared to accept substitute security, the Commonwealth will continue to pay Subsidy in relation to the Subsidised Advance Loan Account.

11.2A.2 The continuing payment of subsidy in accordance with Sub-clause 11.2A.1 while the Bank has Interim Security shall be limited to six months from the sale of the relevant holding or retirement village accommodation.  Unless the Borrower has acquired another holding or retirement village accommodation within that six month period:

(a)the Commonwealth may elect at the end of that six month period to terminate payment of Subsidy; and

(b)notwithstanding anything in the relevant Subsidised Advance Contract, when the Subsidy is terminated the Bank may terminate the contract and demand repayment of all money owing under the contract in accordance with section 35A(1)(c) of the Act.

11.2A.3 The Bank agrees to notify the Commonwealth of the following details within ten business days of substitution of security in accordance with Sub-clause 11.2A.1:

  • DSH file number;
  • Westpac account number;
  • name of Borrower/s;
  • address and date of sale of former property; and
  • whether the substitute security is Interim Security, and if not, the address and date of purchase of the newly acquired property.

11.2A.4 Where the substitute security is Interim Security, and another holding or retirement village accommodation is acquired within the six month period referred to in Sub-clause 11.2A.2, the Bank agrees to notify the Commonwealth of the following details within ten business days of taking security over that other holding or retirement village accommodation:

  • DSH file number;
  • Westpac account number;
  • name of Borrower/s;
  • date of notice under Sub-clause 11.2A.3; and
  • address and date of purchase of the newly acquired property.

11.2A.5 Sub-clause 11.2A.1 does not apply in respect of Widow Advances, Advances for Essential Repairs and Assigned Advances.

11.3Subsidy payable monthly and in arrears

11.3.1 The Commonwealth shall pay subsidy in accordance with Sub-clause 11.5:

(a)monthly; and

(b)with effect from:

(i)in relation to new loans entered into on or after 1 November 1996, the date the loans were entered into; and

(ii)n relation to other loans, the Conversion Date; and in arrears

in respect of a Subsidy Period, after the amount of interest payable by a borrower on the Rest Day has been calculated in accordance with sub-clause 8.1 and debited to each borrower's Subsidised Advance Loan Account.

11.3.2 From 1 November 1996 interest on all subsidised advances made on or after that date will be charged on unpaid daily balances in accordance with Section 35A of the Defence Service Homes Act 1918 as amended.  The calculation of interest payable on all subsidised advances and specified portfolio assets in existence before 1 November 1996, and which remain current as at the Conversion Date, will be converted to the method based on unpaid daily balances on the Conversion Date.

11.3.3 If the Conversion Date is 1 June 1997 and notwithstanding Sub-clause 11.2, following the payment of the monthly subsidy invoice due on 18 May 1997 for the periods ending 1 June 1997 and 5 June 1997 for Specified Portfolio Assets and Subsidised Advances in existence before 1 November 1996 respectively, the payment of monthly subsidy will also change from "in advance" to "in arrears", in accordance with Sub-clause 11.3 as amended by the Third Supplementary Agreement.  The "Rest Day" in respect of all Specified Portfolio Assets shall move from the first day of the month to the fifth day of the month with effect from 1 June 1997 in accordance with sub-section 35A(2) of the Defence Service Homes Act 1918 and Item 7 of Schedule 1 of the Veterans' Affairs Legislation Amendment Act (No 1) 1996.  The last subsidy payment due "in advance" will be due on 18 May 1997 and cover the Subsidy Period ending on 5 June 1997.  The next subsidy payment shall be calculated "in arrears" and cover the Subsidy Period ending 5 July 1997 and be due and payable on 18 July 1997.

11.3.4 If the Conversion Date is other than 1 June 1997, the Department and the Bank will work out the timing of the subsidy payment consistent with the approach specified in Sub-clause 11.3.3.

11.4Subsidy Invoice

  • The Bank hereby agrees to provide the Commonwealth with a written invoice detailing its claim for Subsidy together with the information referred to in Sub-clause 10.5 not more than three (3) Business Days after the Rest Day for Subsidised Advances.

11.4ASubsidy Invoices from 1 November 1996 to Conversion Date

For the purpose of Sub-clauses 10.5 and 11.4, the Bank will provide the Commonwealth with two written invoices each month in respect of

(a)Subsidised Advance Loan Accounts in existence before 1 November 1996; and

(b)Subsidised Advance Loan Accounts initiated on or after 1 November 1996,

during the period from 1 November 1996 to the Conversion Date.  The information in Sub-clause 10.5 relating to loans the subject of an invoice will be provided with that invoice.  Each invoice will be delivered not more than three (3) Business Days after the Rest Day for the Subsidised Advance Loan Accounts the subject of that invoice.

11.5Verification and Payment of Subsidy in respect of Subsidised Advance Loan Accounts in existence before 1 November 1996

11.5.11 Except where the provisions of Sub-clause 11.5.2 apply upon receipt by the Commonwealth of the invoice and information referred to in Sub-clause 10.5 in respect of Subsidised Advance Loan Accounts in existence before 1 November 1996 the Commonwealth shall pay the Bank the amount of Subsidy which the Commonwealth has verified by 11:00 am. on the eighteenth day of the month to which such invoice and information refers.

11.5.22 If the Bank has not complied with the requirements of Clause 11.4 in respect of its claim for Subsidy on certain Subsidised Advance Loan Accounts in existence before 1 November 1996, but subsequently provides the invoice and information referred to in Sub-clause 10.5, the Commonwealth shall pay to the Bank the amount of Subsidy which it has verified by 11 am on the day which is seven (7) business days after the date on which the Bank provides the said invoice and information. The Commonwealth will promptly pay to the Bank claims verified after that date.

11.5AVerification and Payment of Subsidy in respect of Subsidised Advance Loan Accounts initiated on or after 1 November 1996

11.5A.1 Except where the provisions of Sub-clause 11.5A.2 apply, upon receipt by the Commonwealth of the invoice and information referred to in Sub-clause 10.5 in respect of Subsidised Advance Loan Accounts initiated on or after 1 November 1996, the Commonwealth shall pay the Bank the amount of Subsidy which the Commonwealth has verified by 11.00 am on the eighteenth day of the month immediately following the month to which such invoice and information refers.

11.5A.2 If the Bank has not complied with the requirements of Sub-clause 11.4 in respect of its claim for Subsidy on certain Subsidised Advance Loan Accounts initiated on or after 1 November 1996, but subsequently provides the invoice and information referred to in Sub-clause 10.5, the Commonwealth shall pay to the Bank the amount of Subsidy which it has verified by 11.00 am on the day which is seven (7) business days after the date on which the Bank provides the said invoice and information.  The Commonwealth will promptly pay to the Bank claims verified after that date.

11.5BVerification and Payment of Subsidy in respect of Subsidised Advance Loan Accounts on or after the Conversion Date

11.5B.1Notwithstanding Sub-clauses 11.5 and 11.5A, after the conversion of interest calculations from unpaid monthly balances to unpaid daily balances on the Conversion Date for Subsidised Advances and Specified Portfolio Assets in existence before 1 November 1996, and except where the provisions of Sub-clause 11.5B.2 apply, upon receipt by the Commonwealth of the invoice and information referred to in Sub-clause 10.5 in respect of all Subsidised Advance Loan Accounts, the Commonwealth shall pay the Bank the amount of Subsidy which the Commonwealth has verified by 11.00 am on the eighteenth day of the month immediately following the month to which such invoice and information refers, 3or by 11.00 am on the day which is seven (7) Business Days after the date on which the Bank provides the said invoice, whichever is the later.

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11.5B.2If the Bank has not complied with the requirements of Sub-clause 11.4 in respect of its claim for Subsidy on certain Subsidised Advance Loan Accounts, but subsequently provides the invoice and information referred to in Sub-clause 10.5, the Commonwealth shall pay to the Bank the amount of Subsidy which it has verified by 11.00 am on the day which is seven (7) business days after the date on which the Bank provides the said invoice and information.  The Commonwealth will promptly pay to the Bank claims verified after that date."

11.6Manner of Payment of Subsidy

11.6.1Subsidy in respect of Subsidised Advance Loan Accounts shall be paid by depositing the relevant amounts to such account or accounts as the Bank may from time to time advise.

11.7Dispute as to Subsidy Claim

In the event of a dispute or disagreement arising between the Commonwealth and the Bank as to the amount of Subsidy payable to the Bank by the Commonwealth in accordance with this Agreement then the following provisions shall apply.

11.7.1The Commonwealth shall pay to the Bank the amount of subsidy the Commonwealth has verified as being due.

11.7.2Such dispute or disagreement is, so far as is possible, to be resolved as soon as practicable directly between the Commonwealth and the Bank.

11.7.3In the event that any such dispute or disagreement cannot be resolved between the Commonwealth and the Bank within a period of seven (7) days after first occurring, the dispute or disagreement is to be referred to arbitration in accordance with the procedure outlined in Clause 26, except that the Commonwealth and the Bank agree that for the purpose of such dispute/disagreement the arbitrator shall be appointed by the President for the time being of the Australian Institute of Chartered Accountants.

11.7.4Until the actual resolution of such dispute or disagreement, the Commonwealth shall not be under any obligation to pay to the Bank that part of the Subsidy invoice which is disputed or over which disagreement exists.

11.7.5Upon resolution of such dispute or disagreement, the amount of Subsidy next payable to the Bank by the Commonwealth after such resolution takes place, or if insufficient time is available, the payment after the next payment, shall be adjusted to take into account the result of that resolution.

11.7.6The Commonwealth and the Bank agree that the amount of such adjustment shall bear interest at the Benchmark rate fixed in accordance with Sub-clause 11.10.

11.8Adjustment of Subsidy Invoice

The Commonwealth and the Bank further hereby agree that in the event that an invoice claiming Subsidy from the Commonwealth pursuant to Sub-clause 11.4 is found to be in error, the subject of an omission, or require variation, either by the Bank or the Commonwealth, then, subject to the dispute or disagreement resolution mechanism set out in Sub-clause 11.7, the Subsidy invoice next submitted by the Bank to the Commonwealth after the discovery of such error, omission and/or variation will be adjusted in favour of the Commonwealth or the Bank as is found to be necessary.

11.9Calculation of Subsidy

The amount of Subsidy payable by the Commonwealth shall be calculated as set out in paragraph (a) and adjusted as set out in paragraph (b) hereunder:

(a) the amount of Subsidy shall be equal to the difference between the actual amount of interest payable in that month by a Borrower on the Balance outstanding on any Subsidised Advance Loan Account and the notional amount of interest calculated by applying to the same Balance the Benchmark rate of interest determined at the end of the previous month pursuant to Sub-clause 11.10;

(b) in the event that the total amount of Portfolio Arrears exceeds 0.035 per cent of the aggregate of the Limits on all Subsidised Advance Loan Accounts, the total Subsidy payable pursuant to this Clause shall be reduced by an amount calculated by application of the following formula:

X = Y x a/b

where

X =the amount by which the Subsidy is to be reduced;

Y =the total Subsidy calculated in accordance with Sub-clause 11.9(a);

a = the amount by which Portfolio Arrears exceed 0.035 per cent of the aggregate of the Limits on all Subsidised Advance Loan Accounts; and

b = the aggregate of the Balances of all Subsidised Advance Loan Accounts.

11.9.1The Bank's reasonable systems development costs incurred to initially implement the interest rate changes resulting from the Defence Service Homes Amendment Act 1997 and as agreed with the Commonwealth, may be included in the calculation of subsidy as they are incurred at any time from the date of the Fourth Supplementary Agreement until 30 June 1999.  The Bank agrees to provide an itemised invoice in respect of these costs.”

11.9A Guaranteed minimum rate of Subsidy when Benchmark Rate is below 8.35%pa

11.9A.1 Despite anything in any certificate of entitlement or in any subsidised advance contract or portfolio mortgage, portfolio contract of sale, portfolio supplementary agreement or other portfolio agreement, but subject to Sub-clause 11.9A.3, if the rate of interest payable for a particular month on a subsidised advance, or on an amount owed to the Bank in relation to a specified portfolio asset exceeds the reduced Benchmark rate, the rate payable by the borrower for that month is reduced to the level of the reduced Benchmark rate.  In these circumstances, the amount of monthly Subsidy payable by the Commonwealth shall be calculated in accordance with Sub-clause 11.9 taking into account the reduced amount of interest payable by the borrower.

11.9A.2 The reduced Benchmark rate for the month is the Benchmark rate worked out for the month in accordance with Sub-clause 11.10 of the agreement, rounded up or down to 2 decimal places (rounding 0.005% up), less 1.5 percentage points.”

11.9A.3 In accordance with Section 35AD of the Act, Sub-clauses 11.9A.1 and 11.9A.2 do not apply in relation a portfolio contact of sale if the purchaser was not an eligible person when the contract was made.

11.9BOne-time adjustment of Subsidy for the period 5 January 1998 to 4 March 1998

11.9B.1 If, during the period 5 January 1998 to 4 March 1998, the reduced Benchmark rate applies in accordance with section 35AA of the Act, or a reduced interest charge for any Borrower results from the application of Sections 35AB or 35AC of the Act, the Commonwealth will provide the Bank with the details of each affected Subsidised Advance Loan Account and make a one-time payment of subsidy to the Bank as an adjustment after the March subsidy tape has been run.  An estimate of this one-time payment may be included in the March Subsidy payment and adjusted, if necessary, in the April Subsidy payment.”

11.9B.2 The Bank shall adjust each affected Subsidised Advance Loan Account to reflect the amount of reduced interest payable by the application of sections 35AA, AB and AC of the Act for the period 5 January 1998 to 4 March 1998, within 3 business days of receipt of the subsidy payment and the relevant details from the Commonwealth in accordance with Sub-clause 11.9B.1.  The amount of the reduction will be calculated by reference to such information provided by the Commonwealth.”

11.9B.3 In accordance with Section 35AD of the Act, Sub-clauses 11.9B.1 and 11.9B.2 do not apply in relation a portfolio contact of sale if the purchaser was not an eligible person when the contract was made.

11.10Calculation of Benchmark Rate

The Benchmark rate, being the maximum notional rate of interest to which the Bank is entitled in respect of the outstanding principal under all Specified Portfolio Assets and/or Subsidised Advances for the purpose of calculating payments of Subsidy to the Bank by the Commonwealth, shall be calculated in the manner provided in Sub-clause 11.10.7 or, if applicable, Sub-clause 11.10.8, by reference to the unregulated standard annual rates of interest applied in each State and the Australian Capital Territory and the Northern Territory to the first $25,000 (or such other amount as may be agreed by the Commonwealth and the Bank) of owner-occupied housing loans provided by the five (5) largest banking group providers of housing finance in Australia.

11.10.1For the purposes of Sub-clause 11.10, the unregulated standard annual rates of interest applied to owner-occupied housing loans shall be the rate which is applied to the largest number of owner-occupied housing loans outstanding in each State and the Australian Capital Territory and the Northern Territory to each of the banking groups concerned, as determined by reference to data compiled by the Reserve Bank of Australia or as the parties may otherwise agree.

11.10.2The five (5) largest banking group providers of housing finance in Australia for the purposes of this Sub-clause shall be determined as at 1 July in each Financial Year that Subsidy is payable on the basis of data published by the Australian Bureau of Statistics or, if such information is not available, as may otherwise be agreed between the parties.

11.10.3In the event that the parties are unable to agree on:

(a) the unregulated standard annual rates of interest applied to owner-occupied housing loans in each State and the Australian Capital Territory and the Northern Territory under Sub-clause 11.10.1; or

(b) the five (5) largest banking group providers of housing finance in Australia under Sub-clause 11.10.2;

within fourteen (14) days of first notification by either party to the other of that disagreement, the matter in dispute shall be determined by an independent nominee of the President of the Institute of Chartered Accountants of Australia.  Such determination shall be conclusive and binding on both parties. The fees and expenses of the nominee shall be borne equally by the parties.

11.10.4 Pending the resolution of any dispute or disagreement referred to in Sub-clause 11.10.3 in the manner provided for in that Sub-clause, the Benchmark rate used to calculate the Subsidy payable to the Bank by the Commonwealth in the immediately preceding month shall continue to apply.

11.10.5 Upon resolution of such dispute or disagreement, the amount of Subsidy next payable to the Bank by the Commonwealth after such resolution take place, or if insufficient time is available, the payment after the next payment, shall be adjusted to take into account the result of that resolution.

11.10.6 The Commonwealth and the Bank agree that the amount of such adjustment shall bear interest at the Benchmark rate fixed in accordance with Sub-clause 11.10.

11.10.7 Subject to Sub-clause 11.10.8, the Benchmark rate to be used for Subsidy payment purposes in any month shall be calculated monthly in two stages as follows:

(a) for each banking group concerned, a simple arithmetic average of the unregulated standard annual rates of interest for owner-occupied housing loans as defined in Sub-clause 11.10.1 which that banking group applied on the last day of the immediately preceding month in each State and the Australian Capital Territory and the Northern Territory in which the banking group concerned conducted housing loan business shall be calculated; and

(b) the figures calculated for each banking group under Sub-clause 11.10.7(a) shall then be subject to a simple arithmetic average to determine the Benchmark rate for that month.

11.10.8 In the event that the Bank should, in future, for any reason, offer publicly to make loans for the purchase or construction of owner-occupied houses in any State or Territory on terms including that the first interest rate to be applied is lower than the Benchmark rate determined in accordance with Sub-clause 11.10.7, then the Subsidy payable to the Bank by the Commonwealth in respect of each Subsidised Advance provided by the Bank to an Entitled Applicant in the relevant State or Territory during the period in which such publicly announced loans are available, shall be determined by reference to that lower rate for a period equal to the period during which that lower rate applies to such publicly announced loans. Thereafter the normal Benchmark rate shall apply.

11.10.9The application of Sub-clause 11.10.8 shall be suspended for the period during which the margin between the Bank's cost of funds and its primary housing rate is less than 2.5%.  The suspension in respect of new loans is to operate with effect from 5 January 1998.  The suspension in respect of loans for which the Bank has up until 4 March 1998 been receiving a subsidy calculated under Sub-clause 11.10.8 is to operate with effect from 5 March 1998.  The Bank undertakes to notify the Commonwealth when this margin is 2.5% or greater, within 5 Business Days of that occurring, in which circumstances the suspension will be lifted with effect from the next Rest Day.

The Bank's primary housing rate at any time will be the rate for the Bank used under Sub-clause 11.10.7 for the calculation of the Benchmark Rate and for Subsidy payment purposes at that time.

The Bank shall provide details of its cost of funds and its primary housing rate within 28 days upon request from the Commonwealth.

11.11Bank Providers of Housing Finance

The Bank and the Commonwealth hereby agree that for the purposes of this Agreement until 1 July 1989 the five (5) largest banking group providers of housing finance in Australia shall be:

(a)The Commonwealth Banking of Australia;

(b)Westpac Banking Corporation;

(c)The State Bank of Victoria;

(d)The National Australia Bank; and

(e)the Australia and New Zealand Bank Group Limited.

11.12Fall in Benchmark Rate

In the event that the Benchmark rate of interest prescribed in Sub-clause 11.10 falls below the actual rate of interest payable by a Borrower in respect of a Specified Portfolio Asset and/or Subsidised Advance, the Bank agrees to pay to the Commonwealth, on a monthly basis, an amount to be calculated as follows:

Such amount shall be equal to the difference between the notional amount of interest payable in that month by a Borrower on the Balance outstanding on any Subsidised Advance Loan Account at the end of the preceding month, calculated by applying the Benchmark rate of interest to that Balance and the amount of interest payable in that same month by the Borrower calculated by applying to the same Balance the actual rate(s) of interest prescribed under the terms and conditions governing that Subsidised Advance Loan Account.

11.13Deduction from Subsidy Payments

Any amount payable by the Bank pursuant to Sub-clause 11.12 shall be deducted from the Bank's claim for Subsidy provided pursuant to Sub-clause 11.4. In the event that such deductions exceed the total sum of Subsidy calculated in accordance with Sub-clause 11.9 then any net sum payable by the Bank to the Commonwealth shall be paid fifteen (15) days after the relevant Rest Day.

11.14Not used

11.15Termination/Suspension of Subsidy Payments and Recovery of Subsidy from Borrower

Notwithstanding the provisions of any other Clause in this Agreement, the Commonwealth may elect to recover from the Borrower in the manner provided for under the Amended Act or may terminate and/or suspend future Subsidy payments in respect of the following:

(a)a Borrower who, having obtained a Subsidised Advance pursuant to the Amended Act, a Portfolio Contract of Sale or a Corporation Advance under a Specified Portfolio Asset,

(i)is discovered to have made a false statement in order to obtain a Certificate of Entitlement, a Portfolio Contract of Sale or a Corporation Advance;

(ii)is discovered not to have been entitled to a Certificate of Entitlement, a Portfolio Contract of Sale or a Specified Portfolio Asset at the time when the Certificate of Entitlement was issued to the Borrower or the Corporation Advance secured by the Specified Portfolio Asset was received by the Borrower or the Portfolio Contract of Sale was executed by the Borrower;

(iii)purports to transfer a holding without a Certificate of Entitlement having been issued which provides for Commonwealth consent to the Transfer of Land and Subsidy to the proposed transferee;

(iv)is discovered to have used the Subsidised Advance or Corporation Advance for a purpose other than that for which it was made;

(v)is a transferee of a holding in respect of which the Commonwealth has issued a Certificate of Entitlement consenting to a Transfer of Land and Subsidy and has without reasonable excuse failed to comply with an undertaking given by that transferee under Sub-section 22(2) of the Amended Act;

(vi)becomes the husband or wife of another Borrower; or

(vii)4is discovered to have sold a 'holding' or 'retirement village accommodation' to which subsidy relates and has not acquired another 'holding' or 'retirement village accommodation' as a substituted security within six months in accordance with Sub-clause 11.2A.

(b)where the Bank takes action to enforce a Portfolio Contract of Sale or a security for which the Subsidised Advance or a Corporation Advance was provided and the Bank has not within three (3) months sold the property and discharged the loan outstanding to it thereon; or

(c)where an assignor has agreed to transfer a right of residence in a Retirement Village, or has given up a right of residence in a Retirement Village; or

(d)where the assignee has agreed to transfer all or part of his or her interest in a Retirement Village, or has terminated the assignor's right of residence in a Retirement Village.

11.15ATermination of Subsidy Payments and Recovery of Subsidy from the Estate Following Death of the Eligible Person and/or Spouse.

Notwithstanding the provisions of any other Clause in this Agreement, where Subsidy is terminated in accordance with Section 27A of the Defence Service Homes Act 1918 the Commonwealth may elect to recover from the estate of the Borrower in the manner provided for under the Act.

11.16Notice of termination of Subsidy payments to Bank

Where the Commonwealth elects to terminate future Subsidy payments to the Bank in respect of a Specified Portfolio Asset pursuant to Sub-clause 11.15(a) then it shall give the Bank one month's notice of its intention to do so. If prior to the completion of that one month period the Bank gives the Commonwealth notice that it intends to take action to enforce its security with respect to that Specified Portfolio Asset then the Commonwealth shall continue to pay Subsidy until the Bank has discharged its loan, or for three (3) months, whichever is the earlier. Any Subsidy paid to the Bank which is recoverable from the Borrower pursuant to the Amending Act shall be paid to the Commonwealth by the Bank as required by the Amending Act from any moneys due to the Borrower from the proceeds of any sale by the Bank of his land or land and dwelling house.

11.17Entitlement of Bank to charge applicable interest rate for Subsidised Advances

The Commonwealth acknowledges that it shall be a term of any Subsidised Advance made by the Bank to a Borrower that in the event that Subsidy is, for any reason whatsoever, terminated by the Commonwealth in respect of that advance, the Bank shall be entitled to charge the interest rate applicable to similar loans provided by the Bank to borrowers generally from the date of termination of Subsidy and for that purpose the Bank may close the Subsidised Advance Loan Account and open a new account in the name of the Borrower.

11.18Entitlement of Bank to charge applicable interest rate for Specified Portfolio Assets

The Commonwealth acknowledges that following Royal Assent to the Veterans' Affairs (1995-96 Budget Measures) Legislation Amendment Act 1995, it shall be a term of any Specified Portfolio Asset which vested in the Bank that in the event that Subsidy is, for any reason whatsoever, terminated by the Commonwealth in respect of that Specified Portfolio Asset, the Bank shall be entitled to charge the interest rate applicable to similar loans provided by the Bank to borrowers generally from the date of termination of Subsidy and for that purpose the Bank may close the Subsidised Advance Loan Account and open a new account in the name of the Borrower."

11.19Subsidy Scheme Documents

11.19.1 The Commonwealth (including, without limitation, the Department) shall not use, publish or authorise the use of a Subsidy Scheme Document unless that Subsidy Scheme Document has been approved by the Bank in accordance with this Clause.

11.19.2 The Commonwealth shall submit each Subsidy Scheme Document to the Bank for approval at least 28 days before the Commonwealth intends to publish or commence to use or authorise the use of that Subsidy Scheme Document.

11.19.3 The Bank will notify the Commonwealth in writing whether it approves a Subsidy Scheme Document submitted to it under Sub-clause 11.19.2 or whether it requires amendments to that Subsidy Scheme Document.

11.19.4 The Commonwealth will procure the amendment of any Subsidy Scheme Document in accordance with all written instructions given by the Bank.

11.19.5 If the Bank gives instructions to the Commonwealth under Sub-clause 11.19.3 requiring amendment to a Subsidy Scheme Document, the Commonwealth will, after completing those amendments, resubmit the Subsidy Scheme Document to the Bank under Sub-clause 11.19.2.

11.19.6 If the Bank does not notify the Commonwealth under Sub-clause 11.19.3 within 42 days of the Subsidy Scheme Document being submitted to the Bank under Sub-clause 11.19.2, the Bank will be taken to have approved the Subsidy Scheme Document.

11.20 Administrative Efficiencies

If the Commonwealth issues a Certificate of Entitlement which states that a new Additional Advance, a new Advance for Essential Repairs or a new Widow Advance may be provided as a top up to an existing Subsidised Advance Loan Account then:

(a)the Bank may, but need not, provide the additional funds within the same Subsidised Advance Loan Account (or on a new Subsidised Advance Loan Account for the whole of the increased amount); and

(b)if it does, the Commonwealth will pay Subsidy on the increased amount accordingly.

If the Bank determines not to do so, then the new Additional Advance, Advance for Essential Repairs or Widow Advance will be treated as a new loan with a separate Subsidised Advance Loan Account.

11.21 Broker Network

The Commonwealth agrees that the Bank may arrange the sale of subsidised advances through its broker network without penalty to borrowers and at no cost to the Commonwealth.

Clause 12 - Default Provisions

12.7Breach of this Agreement - Interest Payable

If the Commonwealth or the Bank commits a breach of this Agreement, including default in payment of Consideration, the party in default shall without prejudice to any other rights of the other party pay on demand interest on any moneys overdue during the period of default. Such interest shall be the weighted average yield set at the most recent weekly tender for the thirteen (13) week Treasury Note plus four (4) per cent.

12.8Exercise of Remedies

Time shall be of the essence of this Agreement. However, without prejudice to the other provisions of this Clause, if either party defaults under this Agreement the other party shall not be entitled to exercise any of its rights arising out of the default, including its right to sue for moneys then owing until it has served the party in default with a written notice specifying the default and its intention to exercise its rights unless the default is remedied and the reasonable legal costs occasioned by the default and moneys payable under Sub-clause 12.7 are all paid within fourteen (14) days of service of the notice and the party in default fails to comply with the notice.

PART 2 SCHEDULE D

INFORMATION TO BE PROVIDED BY THE BANK ON A MONTHLY BASIS

A.MONTHLY SUBSIDY REPORT ON SPECIFIED PORTFOLIO ASSETS AND SUBSIDISED ADVANCES

Particulars

Westpac Record Identifier

DSHL file number

Account number

DSHL indicator - account type

Hardship indicator

Progressive draw indicator

Interest rate

Benchmark rate

Current (spot) balance

Account limit

Limit reduction

Interest accrual

Benchmark accrual

Subsidy amount

Arrears amount

Date opened

Date closed

5Account name

State of loan origin

Interest rate index

Interest rate applied

Loan maintenance fee applied

Loan maturity date