Mahaffy v Mahaffy [2010] NSWSC 1358

A litigant in the District Court suffered a costs order on indemnity basis payable forthwith. In order to avoid his defence in those proceedings being struck out for failure to pay the costs the litigant granted a mortgage to secure those costs. The mortgagee immediately took steps to sell the property and the litigant made this application to challenge the sale of the property.

The property had, by the time the case was heard, been sold. The basis of the challenge to the sale was that no s57(2)(b) notice had been served and therefore the power of sale had not arisen. Justice White determined that this was a serious matter to be tried. The mortgagee claimed no notice was required given the principal was due and there was also a non-monetary default. Justice White did not accept this argument indicating as there was no evidence that the default was other than a failure to pay money.

Nevertheless, the balance of convenience favoured the mortgagee because the property had been sold and the litigant had made no attempt to pay the costs orders. Accordingly, the defendant was able to complete the sale.

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