The borrower sought an injunction to stop the sale of three blocks of land in a larger aggregation of properties all securing the same debt. They wanted the other properties sold first.
The application was made pursuant to s 1321 of the Corporations Act which essentially allows appeals from the decisions of Receivers.
The borrowers failed for two reasons:
Section 1321 can only be applicable to “a receiver or a receiver and manager of property of a corporation” and could have no application to the properties in question which were held by individuals.
The borrower sought to argue that the jurisdiction extended to the properties of the individuals because they were being sold together with the properties of a corporation. The judge was dismissive of this argument:
That contention is not seriously arguable. Each of the properties is to be sold separately at a separate auction. The fact that a series of coordinated auctions is to take place in the context of two separate and distinct receiverships does not confer upon the Court jurisdiction over a receivership that it would otherwise not have.
The alleged unreasonableness said to invoke the court’s discretion under s 1321 was firstly, the‘fire sale’ manner in which the properties are to be sold. Secondly, the receivers’ insistence on selling the three properties where funds from the other sales will likely be sufficient to meet the outstanding debts.
The judge rejected this argument:
It is not for the Court to come to a view as to the best method of sale. In a field involving a high level of speculation, opinions will differ and the adoption of one expert opinion as to the best way to sell in preference to another could rarely be described as unreasonable.
As for the claim concerning the adequacy of the other properties to recover the loan, the receivers argued there was a serious danger of there beinbg a shortfall:
The receivers’ view that the sale of all the properties will be necessary in order to recoup the outstanding debts is cogent and well supported by the material considered by them.
Accordingly the injunction was refused.