P & R holdings Pty Ltd vs. Walthamstow Pty Ltd - (04 Aug 2020)
Restraint of the mortgagee sale is not granted unless the debt owed to the mortgagee is paid into Court
Present was the Plaintiff's application for an interlocutory injunction restraining the Defendant from selling a property located at Seven Oaks Street, Cannington. The Defendant is the mortgagee in possession of the property.
It was alleged by the Plaintiff that, the Defendant had breached its duty in two respects. First, it had breached its statutory duty of sale by failing to take steps of a reasonable and prudent person pursuant to Section 420A of the Corporations Act 2001 (Cth) to obtain the best possible price. Second, the Defendant had breached its common law duty not to act recklessly or wilfully sacrifice the interests of the Plaintiff.
It was necessary for the Plaintiff to show that, there was a serious question to be tried and the balance of convenience favoured the grant of the injunction. As a general rule, restraint of the mortgagee sale is not granted unless the debt owed to the mortgagee is paid into Court. Of course that rule is not inflexible and must depend upon the circumstances. But any party seeking to restrain a mortgagee in possession must either comply with the rule or provide cogent reasons why it has not done so.
In present case, the debt owed by the Plaintiff to the Defendant was as at 8 June 2020, $4,281,843.50.7 It is clear that, sale of the property, even if it was sold at or about the figure in the Plaintiff's valuation, would leave the Defendant with a very substantial shortfall. The debt owed by the Plaintiff to the Defendant continues to rise - the Plaintiff is not making any payments pursuant to the mortgage. This, in itself, is a compelling reason why the injunction ought not be granted.
The disparity between the valuation obtained by the Defendant and the offer made by the City was considerable. But when the City was prepared to pay an amount just over the valuation it is impossible to conclude the property is being sacrificed.
There is no serious question to be tried in present matter. Moreover, the balance of convenience does not favour the Plaintiff. If this sale is lost, there may be difficulties in the future obtaining the price the City are prepared to pay, let alone a higher price. Given the extent of the indebtedness of the Plaintiff to the Defendant, to run the risk of this sale falling over is not in any one's interest. Application dismissed.
Tags : SALE VALUATION INJUNCTION GRANT