The borrowers sued the lender for misleading and deceptive conduct. During the course of the proceedings the lender appointed an administrator to the borrowers following default under a charge. The borrowers sought to have the administrator restrained from taking further action until the outcome of the proceedings.
Justice Barrett noted that the primary proceedings were complex and so he would assume there was a serious question to be tried. The application therefore turned on the balance of convenience.
The administrator reported that the borrowers were insolvent and ought to be wound up. He noted that the borrowers had been selling down their assets to pay off debts. The Judge noted that “a very strong countervailing factor” was required to override the need for winding up. The borrowers argued that they would lose the ability to fight their misleading and deceptive proceedings and that the assets might be sold at reduced value.
The Judge was not persuaded. He noted that even if the securities are set aside the borrowers will likely still owe the debt. Accordingly the injunction was not granted.