Asset Core v Jarrett 1 Enterprises [2015] QSC 270

A borrower defaulted on both his mortgages. The second mortgagee obtained default judgment and the second mortgagee was in the process of obtaining default judgment. The owner entered into a contract of sale with a related party of the second mortgagee but failed to settle on the contract. The purchaser sought specific performance and the second mortgagee also sought orders pursuant to section 78(2)(c) of the Land Title Act 1994 (Qld) seeking foreclosure of the right of the owner to redeem the property and an order for sale in accordance with the contract and also a court directed sale on the same terms as the contract pursuant to section 99(2). The first mortgagee did not oppose these orders because there would be sufficient funds to pay out the first and some of the second. The second mortgagee also sought an interim injunction restraining the first mortgagee from exercising any of its rights to sell the property, on the basis that any delay preventing sale would result in a loss to the second mortgagee because of the increase in the amount owing under the first mortgage.

The court held this consequence arose by reason of being a second rather than a first mortgagee and did not establish any right to an interim injunction. The court noted that the second mortgagee did not seek to challenge the validity of the first mortgage and there was no conduct on the first mortgagee’s part that resulted in a failure to settle. In any case, the court noted that it was not appropriate to order an injunction to restrain the first mortgagee from exercising its rights even though this would undoubtedly affect the amount the second mortgagee recovered because that was simply the position of a second mortgagee.

The injunction was refused.

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