Home | Business News | Browse by Publication | M | Mondaq Business Briefing

Injunctions To Restrain The Exercise Of A Power Of Sale By A Mortgagee: When Will They Be Granted?

Article Excerpt
Key Points: Imminent refinancing or repayment, which had been a key factor in earlier cases where there was no dispute as to the amount owing, may no longer be a necessary pre-requisite for the grant of an injunction to restrain the exercise of a power of sale by a mortgagee.

In Australian Barter Currency Exchange Pty Ltd v Uniting Church (NSW) Trust Association Limited [2009] NSWSC 607, Justice Hoeben considered an application for an injunction to restrain the exercise of a power of sale by a mortgagee.

Although, in appropriate circumstances, courts will act to restrict the exercise of a power of sale by a mortgagee, this case extends the circumstances in which a court will do so. Here, an injunction was granted primarily because the value of the mortgaged property exceeded the amount owing. The injunction was granted notwithstanding that there was no dispute as to the amount owing, the default in the repayment of interest and principal had continued for approximately three years and previous attempts to refinance the loans had proved unsuccessful. The decision in this case is unfortunate in that it supports restricting the rights of mortgagees to exercise their powers even where the remedy of the relevant default is not imminent.

Background

In 2004, David Cassaniti, a director of the plaintiff companies, borrowed approximately $14 million from the defendant (Uniting Church (NSW) Trust Association Limited (Association))...