H Developments v Cronin [2007] NSWSC 1314

In this case the borrower was a property developer (H Developments). The lender was Suncorp Metway whose receiver (Cronin) took possession of the security property and sold it. On the day the sale was due to complete the the borrower sought an injunction to prevent the settlement on two grounds:

  1. Funds were imminently available to discharge the debt by way of refinance
  2. The sale by Cronin was at undervalue

So far as ground 1 is concerned the general rule is that once a property has been sold (and a third parties rights have intervened) the equity of redemption is extinguished and the borrower can no longer discharge the mortgage even if refinance is available. His Honour ignored that rule and instead noted that the evidence of a refinance was scant and the borrower was not able to pay the discharge figure into Court.

So far as ground 2 is concerned the general rule is that a court will only restrain a sale (where a third parties rights have intervened) is not being made in good faith or is grossly undervalue and damages will not be an adequate remedy. His Honour found that there was insufficient evidence for him to determine whether the sale was at undervalue or not and noting that damages would be a sufficient remedy (if it later turned out the property was sold at undervalue) refused to issue an injunction.

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