The borrowers defaulted on their personal loans and the lender obtained judgment for possession. The borrowers then sought a stay pending determination of their other proceedings brought by the receivers of their business against the same lender in relation to separate business transactions. The borrowers had no defence to the claim for possession. The borrowers allege that default on their personal loans directly resulted from the lender’s conduct, the subject of the other proceedings and it would be unjust if their homes were sold when the amount owing could be repaid out of future damages. Further, the borrowers allege they cannot afford to fund the other proceedings and pay rent if their homes were sold.
The court’s general stay powers are exercisable where the requirements of justice demand it. The court accepted that the borrowers’ other claim was not merely speculative since leave was granted to bring it
The court refused the stay for the following reasons:
- The borrowers had equity in excess of $860,000 after judgment without any forced sale discount, which would fund the other proceedings and pay rent so no prejudice would be suffered.
- The borrower’s argument of insufficient funds if no equity were realised undermines their undertaking as to damages offered as a condition of the stay.
- The lender would suffer prejudice because it would be required to leave the loans in place over a long period, exposing it to adverse property market fluctuations, without any licence fee or payment of interest and if the sale left no surplus available, any undertaking as to damages would be of no value.
- The borrowers were not the plaintiff in the other proceedings which concerned separate borrowings so any wrong found does not affect the lender’s rights against the borrowers on their personal loans.
- The borrowers have not offered to pay the amount of the debts into court.
- The lender is entitled to the benefit of its judgments.
- Any recovery in those other proceedings would not likely happen within a sufficiently short time.
Click here to read the full judgment