The owner of property sought an injunction to restrain the lender in possession from auctioning the property on the day of the auction on the basis that he had a purchaser willing to pay an amount sufficient to discharge his secured debts. The owner claimed that there was a want of good faith or negligence on the part of the lender because they marketed the property in a price range that was less than the valuation; the private contract of sale was bona fide and at arm’s length and was sufficient to discharge all the secured debts.
The court refused an injunction on the basis of the following:
- A borrower has no right to sell after the lender has served a notice to pay, entered into possession and scheduled an auction, other than with the lender’s consent;
- A lender is not prevented from choosing the time of sale, how the property is prepared for sale, the conditions of sale and need not consult with the borrower;
- Damages would be an adequate remedy in the circumstances;
- The injunction was sought extremely late and the lender had no reasonable opportunity to contest it;
- Additional expenses would be incurred through postponement or cancellation of the auction and it is uncertain how this would impact any future auction;
- There was no evidence that finance would be available on the private sale;
- The proposed purchaser was not at arm’s length as its sole director was the second ranked caveator, claiming an unregistered mortgage securing approximately $800,000.