The borrowers had defaulted under the mortgage and the court had granted the lender’s application for possession. However the court had previously stayed execution of possession so that the borrowers could try to organise refinance. The security premises was operating as a bowling alley and bringing important income to the borrowers.
Possession had initially been ordered in September 2012. The lender briefly took possession, however it was then agreed by all parties that the borrowers would return to the premises to operate their business, and pay monthly interest while they tried to refinance. They were to vacate in February 2013 if they had not refinanced.
The borrowers had made efforts to organise refinance, however negotiations with two new lenders had fallen through. At the time of the court hearing the borrowers were negotiating with a third lender, a mortgage broker.
The borrowers had not vacated the security premises as required in February 2013. They were asking the court to order that possession be delayed again so that they could try to refinance with the new mortgage broker.
The Judge weighed up the rights of the lender and the borrowers. Her Honour said the lender had already been generous, and that while it was possible the borrowers would settle the new loan, such a possibility might be speculative and optimistic. On the other hand, the lender’s equity was not being eroded and the borrowers were meeting their monthly interest payments. Her Honour also found that the security premises were generating important income, and that she was reluctant to end the borrowers’ business and waste the extensive (and expensive) fit-out if there was a reasonable possibility of refinance.
The Judge decided that it was not appropriate to delay the execution of the order for possession further, but that it was fair to let the order lie in the court registry until the end of May 2013 before the lender actually executed it and took possession of the security premises. The borrowers therefore had approximately three weeks before execution, which was the period of time they needed in order to complete refinance with the new mortgage broker. This was on condition that the borrowers keep paying monthly interest in advance and that the lender could execute their order for possession on two days notice after the end of May. The lender did not oppose this decision.