Australia and New Zealand Banking Group v Webb

[2011] NSWSC 1590

Supreme Court

New South Wales

Medium Neutral Citation:	Australia & New Zealand Banking Group v Webb & Ors [2011] NSWSC 1590
Hearing dates:	Tuesday, 29 November 2011
Decision date:	29 November 2011
Jurisdiction:	Equity Division - Duty List
Before:	White J
Decision:	Refer to paras [19] and [20] of judgment.
Catchwords:	INJUNCTIONS - interlocutory injunction - application for ex parte injunction restraining exercise of mortgagee's power of sale - where no dispute that power of sale arisen - where contended mortgagee is not exercising power of sale in good faith - general approach reconsidered in Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd [2011] NSWCA 39 - serious question to be tried as to whether bank acting in good faith in seeking to exercise power of sale over family home where other properties secured to bank sufficient to discharge debts - balance of convenience favours restraint on exercise of mortgagee's power of sale - injunction granted
Cases Cited:	Bayblu Holdings Pty Ltd v Capital Finance Australia Limited [2011] NSWCA 39; (2011) 279 ALR 166; (2011) 15 BPR 29,055 Solid Holdings v IMFML Finance Pty Ltd [2008] NSWSC 573 Maytom v Perpetual Trustees Victoria [2010] NSWSC 765 Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 MBF Investments Pty Ltd v Nolan [2011] VSCA 114
Category:	Interlocutory applications
Parties:	Australia & New Zealand Banking Group (Plaintiff) Ivan John Webb (1st Defendant) Elaine Therese Webb (2nd Defendant) Benjamin Michael Webb (3rd Defendant) Portion Pty Ltd (In Liquidation)
Representation:	Ex parte (Plaintiff) In person (3rd Defendant) Blake Dawson (Plaintiff) N/a (Defendants)
File Number(s):	2009/292057

Judgment

1. HIS HONOUR : This is an urgent application for an injunction to restrain the exercise of a mortgagee's power of sale.

1. A number of properties is listed for sale by auction this evening. The auction is due to commence in a little over an hour. The defendants initially sought an order to restrain the sale of three properties, but after argument the application has been narrowed to seek an order to restrain the mortgagee from selling the family home in Chifley Drive, Dubbo.

1. The approach to applications to restrain a mortgagee sale where there is no dispute that the power of sale has arisen, but where it is contended the mortgagee is not exercising the power in good faith, has to be reconsidered in the light of the Court of Appeal's observations in Bayblu Holdings Pty Ltd v Capital Finance Australia Limited [2011] NSWCA 39; (2011) 279 ALR 166; (2011) 15 BPR 29,055.

1. The previous approach summarised in my judgment in Solid Holdings v IMFML Finance Pty Ltd [2008] NSWSC 573 and in Maytom v Perpetual Trustees Victoria [2010] NSWSC 765, was that in general, equity will not restrain the exercise of the mortgagee's power of sale in such cases unless the moneys sworn by the mortgagee to be payable are paid into court.

1. Such principles have frequently been adopted where the issue is a dispute as to the amount due under the mortgage, or where there is a challenge to the way in which the mortgagee is exercising its power of sale. Although the Court of Appeal did not decide the question in Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd , the observations of Campbell JA at [57] and [65]-[66] show that the position may well be that the general rule in a case such as this is perhaps best understood as a principle that applies usually, but not always.

1. His Honour also observed that in Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 Walsh J was not considering cases in which it is alleged that a mortgagee has not acted in good faith.

1. A mortgagee may fail to act in good faith if its decision as to which of several properties should be sold to recoup the amount owed is driven by an ulterior purpose such as evicting a mortgagee from a home on one of the lots ( MBF Investments Pty Ltd v Nolan [2011] VSCA 114 at [88].

1. Depending upon the facts, a selection of lots to be sold in opposition to the wishes of the mortgagor may demonstrate an absence of good faith. In the present case, it appears that the properties that are listed to be sold secure the obligations of the first and second defendants under the guarantee of a facility granted by the ANZ Bank on 20 August 2007.

1. The evidence before me was that the guarantee is limited to $1.7 million. After taking into account moneys that the defendants say have been paid to reduce that debt, the balance of the amount owing would be paid off under what is presently a proposed contract for the sale of a shop in Yarrandale Road, Dubbo.

1. An exchange of correspondence between the solicitors for the ANZ Bank and the proposed purchaser shows that an agreement has apparently been reached on terms, albeit subject to contract. The matter seems to have progressed to the extent that the Bank has permitted the purchaser to cease paying rent. The purchaser, at least, is of the view that accumulation of rent is to be applied against the agreed price.

1. The defendants say that it can be inferred that the reason no contracts have yet been exchanged is that no contract has been provided by the Bank to the purchaser, in order to reduce the prospect of a challenge to the exercise of the power of sale over other properties. I think there is a serious question to be tried in that respect.

1. If that property were sold for the agreed price, then the question would be whether the properties proposed to be sold tonight are also security for other debts.

1. The loan agreements and the mortgages are not before me. Apparently there is a reason for this. The third defendant says that it was not until today that the defendants became aware of the exchange of the correspondence in relation to the sale of the property at Yarrandale Road, Dubbo. I was told that the solicitors for the Bank were told that this application would be made, but the solicitors advised that there would be no appearance. Thus, I am left with a position of assertion and counter-assertion as to whether or not the properties do secure debts other than the guaranteed debt.

1. The defendants say that although some of the properties to be sold do secure other debts, the family home in Chifley Drive, Dubbo does not. If that is the fact, then there is sufficient reason, notwithstanding the general rule in relation to the restraint on a mortgagee's power of sale, to restrain the sale of the family home.

1. If the other properties that are secured to the Bank would be sufficient to discharge the debts owed to the Bank, then there would be a serious question to be tried as to whether the Bank was acting in good faith in also seeking to exercise the power of the sale over the family home.

1. I think that there is a serious question to be tried as to whether the power of sale in relation to the family home is being exercised in good faith. The balance of convenience favours a restraint on the exercise of the power.

1. The matter can be brought back to court shortly. If it appears on a hearing at which both parties are represented that there is no such serious question to be tried, then the property can be relisted for auction in the near future.

1. The defendants offer the usual undertaking as to damages.

1. For these reasons, upon the defendants giving to the Court the usual undertakings as to damages, I order that up to and including 2 December 2011 the plaintiff by itself, by its servants or agents be restrained from selling the property known as 35 Chifley Drive, Dubbo. This order may be entered forthwith.

1. I stand the matter over to 2 December 2010 before the Duty Judge at 10.00am. I abridge the time for service of the notice of motion and affidavit to noon on 30 November 2011.

Decision last updated: 19 December 2011