Georges v Wieland [2009] NSWSC 733

In this case the lender pulled out of the loan before the advance was made. Justice Brereton noted:

Loan agreements are rarely the subject of decrees for specific performance, but that is not because specific performance cannot be granted of loan agreements; it is because damages are usually an adequate remedy, and those damages are usually the cost of obtaining a replacement loan on commercial terms in the market.

On past occasions specific performance (forcing the lender to make the loan) have been made where to leave the borrower to pursue common law claims for damages would have involved complex questions, great difficulty in measuring damages and remoteness of the damages, and great delay and expense. In this case, unique to its facts due to a side agreement, the court ordered specific performance.

Bransgroves have found the main danger lenders find themselves in is if their letter of offer and security documentation is poorly drafted. Borrowers, particularly developers who face ruin if the loan does not proceed tend to be the ones making these sorts of applications. Accordingly it is vital that construction facility agreements be drafted by or checked by Bransgroves. For further information on the drafting required see page 120 of Mr Bransgroves textbook The Essential Guide to Mortgage Law in NSW.

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