RHG Mortgage Securities v BNY Trust [2009] NSWSC 1011

In this case the trustee and noteholder asserted that there had been a default on a bundle of mortgages managed by RHG. They began steps towards appointing a receiver and RHG sought an injunction. An event of default was alleged to have occurred because of an Amortisation Event in January 2009. The trustee and noteholder also claimed there was an Amortisation Event in December 2008. They alleged that at the end of each of those months, the balances of all the loans in arrears for more than 90 days exceeded 1% of the balances of all the loans.

After examining the methodologies used by both parties the Judge determined that there had been Amortisation Event in December 2008 but not in January and that as January was the month relied upon in issuing the default notice the situation favored injunctive relief. The court also found there was a serious issue to be tried as to whether RHG would be entitled to relief against forfeiture and this by itself was sufficient to warrant the granting of an injunction. Finally, the Court determined  (on the balance of convenience principle) that damages would not be an adequate remedy for RHG if it ultimately won the case because of the reputational harm it would suffer (should receivers be appointed) and the possibility of cross-default, under other borrowing obligations undertaken by RHG.

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