140Restriction on exercise of power of sale

1. No power conferred by any mortgage to sell any quota shares shall, subject to section 141, become or be deemed to have become exercisable because of—

2. any default in the payment of any money secured by any mortgage of any quota shares; or
3. any default in the performance or observance of any other covenant expressed or implied in the mortgage,—
unless and until the mortgagee serves on the mortgagor a notice that complies with the requirements of this section, and (in any case if the default complained of is capable of remedy) the mortgagor fails to remedy the default before the date stated in the notice.

4. Every notice under subsection (1) shall inform the mortgagor of—

5. the nature and extent of the default complained of; and
6. the date by which the mortgagor is required to remedy the default (if it is capable of remedy); and
7. the rights that the mortgagee will be entitled to exercise if the default is not remedied within the stated period.

8. Any notice given under subsection (1) that does not comply with subsection (2) shall be void unless the failure does not materially prejudice the interests of the mortgagor.

9. The date to be stated in the notice shall be not earlier than 1 month from the service of the notice.

10. In addition to giving the notice under subsection (1), if any of the quota shares are subject to a caveat registered under this Act and the mortgagee has actual notice of the name and address of the caveator, the mortgagee shall forthwith, after serving notice on the quota owner, serve a copy of the notice on the caveator; but failure to comply with this subsection does not in itself prevent any of the powers referred to in subsection (1) from becoming or being deemed to have become exercisable and does not prevent any money secured by a mortgage from becoming or being deemed to have become payable.

11. In addition to giving the notice under subsection (1), if any of the quota shares are subject to a settlement quota interest registered under section 152A, the mortgagee must, after serving notice on the quota owner, immediately serve a copy of the notice on Te Ohu Kai Moana Trustee Limited; however, failure to comply with this subsection does not in itself prevent money secured by a mortgage from being payable, or being deemed to have become payable.

12. For the purposes of subsection (1), the entering into of a contract to sell or the granting of an option to purchase quota shares shall not be regarded as the exercise of a power of sale if the contract or option is conditional (either solely or together with other conditions) on the failure by the owner to remedy a default specified in a notice under this section served either before or after the contract is entered into or the option is granted, as the case may be.

13. A mortgagee who exercises a power of sale of quota shares owes a duty to the mortgagor to take reasonable care to obtain the best price reasonably obtainable as at the time of sale.

14. Notwithstanding any enactment or rule of law or anything contained in any deed or instrument by or under which the power of sale is conferred,—

15. it is not a defence to proceedings against a mortgagee for a breach of the duty imposed by subsection (7) that the mortgagee was acting as the mortgagor's agent or under a power of attorney from the mortgagor:
16. a mortgagee is not entitled to compensation or indemnity from the mortgaged quota shares or the mortgagor in respect of any liability incurred by the mortgagee arising from a breach of the duty imposed by subsection (7).