Military Road No 158 v Lion Pacific Projects [2013] NSWSC 1545

The owner of a medical practice took out a mortgage to the bank and granted an option to its tenants who run a medical practice at the premises to buy the property. The bank consented ot the option. The mortgagor defaulted and the bank sought possession and exchanged contracts with a purchaser. The medical practice sought an injunction to restrain the sale.

The court found that while there was a serious issue to be tried as to whether the mortgagee can, having consented to the call option, exercise its rights as mortgagee the balance of convenience did not favour an injunction for the following reasons:

  1. The purchaser had offered the caveator a call option in almost identical terms, which offered even greater protection. If the scheme proposed was adopted the caveator obtains an option from the new proprietor which is clearly not in liquidation. The combined offer of the bank and purchaser maintains the status quo and preserves the caveator’s interest to call for the transfer of the property should the option be exercised;
  2. Any detriment from the sale was compensable in damages;
  3. The medical practice, aware that the bank was planning to sell the property at auction did nothing to stop the auction and undertook no steps to injunct the sale until well after the auction and even after the contract was entered into with the purchaser;

The court refused the injunction.

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