A lender and borrower agreed to settle possession proceedings on the basis that the secured properties would be sold in an orderly fashion and the proceeds applied as between two loans in a sequential fashion. However the lender applied the proceeds in a different order and then sought summary judgment for the amount outstanding. The borrower argued that the settlement deed required the proceeds to be applied to one loan first and then the other loan and this question had to be determined first.
The Court agreed that the deed clearly provided for the sale proceeds of certain of the properties to be applied to discharge one loan first with the borrowers paying any shortfall and should they fail to pay the shortfall, consent to judgment in favour of the lender for possession of the other properties, to be sold and applied to pay the second loan.
The court refused summary judgment.