Cassaniti v Commonwealth Bank of Australia

[2003] NSWSC 858

CITATION:	Cassaniti v Commonwealth Bank of Australia [2003] NSWSC 858
HEARING DATE(S):	12 September 2003
JUDGMENT DATE:	12 September 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Interlocutory injunction to restrain exercise of power of sale refused
CATCHWORDS:	MORTGAGES - remedies of the mortgagor - interlocutory injunction to restrain exercise of power of sale - mortgagee well secured for debt - power of sale accrued - possible availability of injunction to restrain mortgagee's sale as an incident to judicial sale - availability of injunction based on equitable right to redeem - need for payment into court of amount claimed as precondition for interlocutory injunction to restrain exercise of power of sale
LEGISLATION CITED:	Conveyancing Act 1919 Real Property Act 1900
CASES CITED:	Harvey v McWatters (1948) 49 SR (NSW) 173 Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 Yarrangah Pty Limited v National Australia Bank Limited (1999) 9 BPR 17,061
PARTIES :	Sam Peter Cassaniti - First Plaintiff Patricia Giuliana Cassaniti - Second Plaintiff Commonwealth Bank of Australia - Defendant
FILE NUMBER(S):	SC 3302/03
COUNSEL:	LJ Aitken - Plaintiffs R Hollo - Defendant
SOLICITORS:	Deigan Moore Associates - Plaintiffs Minter Ellison - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

FRIDAY 12 SEPTEMBER 2003

3302/03 SAM PETER CASSANITI & ANOR v COMMONWEALTH BANK OF AUSTRALIA

JUDGMENT – Ex Tempore

1 HIS HONOUR: This is an application for an order to restrain the defendant from exercising its power of sale in relation to two parcels of Real Property Act land at Greenacre. The defendant has a mortgage over those properties which has been in default for most if not all of this year. There is no issue that the Bank’s power of sale has accrued. An auction has been advertised for tomorrow.

2 The bank officer with charge of the file says that the demand was first served in late 2002 early 2003. The debt secured by the property as at today is of the order of 2.5 million dollars including costs.

3 The plaintiffs have, on a previous occasion, been able to obtain an injunction preventing a sale of the property from going ahead. That injunction is one which was obtained on 14 June 2003 to restrain a sale which was intended to take place that very day.

4 The basis on which that injunction was granted was that there was a serious question to be tried about whether there was a contract on foot whereby the bank had agreed, in the circumstances which existed, that it would not exercise its power of sale. That gave rise to an equity based on the equity to grant an injunction to restrain a breach of a negative covenant in a contract. There is no such equity called in aid today.

5 The evidence that has been called today shows that the bank has security for its debt which goes well beyond these two parcels of land at Greenacre. It has already appointed a receiver to one of its securities, a company which has some commercial premises at Dapto. The bank officer in charge of the file takes the view that, ultimately, the bank will suffer no shortfall on this loan. Even so, the bank wants to sell the property.

6 The plaintiff says that it is on the point of drawing down refinancing for its loan to the Commonwealth, and that that refinancing is expected to be drawn down this coming Tuesday. The plaintiffs offer an undertaking that if the auction sale is cancelled they will indemnify the bank for the wasted auction fees.

7 In support of his application for an injunction Mr Aitken for the plaintiff referred me to the decision of Young J in Yarrangah Pty Limited v National Australia Bank Limited (1999) 9 BPR 17,061. That case confirmed that equity probably has an inherent jurisdiction to order judicial sale of a mortgaged property when it is generally more beneficial to both parties. This jurisdiction arose when equity ordered sale of the security rather than foreclosure.

8 That inherent jurisdiction involves that Court exercising powers which are somewhat analogous to those arising under s 103 of the Conveyancing Act 1919, but the inherent jurisdiction has the advantage that it applies to Real Property Act land.

9 In Yarrangah, at par [37], Young J recognised that the jurisdiction is one to be exercised in a special case. He said:

“It is not to go against the normal procedures of permitting the mortgagee under its statutory or contractual power wide liberty to conduct the sale, and indeed, on analogy with s 103 of the Conveyancing Act , it would seem to me that where the mortgagee’s sale is actively proceeding the equitable power should not ordinarily be exercised.”

Applying that principle here, this is not a case where it is appropriate to order a sale conducted by the mortgagor and, as an incident to such an order, restrain the mortgagee from exercising its power of sale. Particularly is this so when the mortgagor wants, not to sell the property itself, but to refinance the mortgage debt.

10 Mr Aitken also refers to the existence of an equity to redeem. There can, of course, be no doubt about the existence of an equity to redeem. The difficulty with reliance on the equity to redeem in the present case is that it is presently exercisable only when the money to redeem the mortgage is tendered. No money is tendered today. Rather, there is a promise that money will be tendered on Tuesday.

11 Usually when an interlocutory injunction is granted to restrain an exercise of a power of sale it is necessary for the money due under the mortgage to be brought into court. The amount which needs to be brought into court under that practice is the amount which the mortgagee claims is due, whether or not the mortgagor agrees with that calculation: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161.

12 That usual practice does not apply in circumstances where there is a case to be made that the power of sale has not arisen: Harvey v McWatters (1948) 49 SR(NSW) 173. In the present case there is no challenge to the existence of the power of sale. I see no reason why the usual practice should not apply in this case; yet no payment into court is offered.

13 I can find no basis upon which there is any equitable right in the plaintiff to restrain the defendant from exercising its power of sale. When there is no case for the existence of an equitable right, questions of where the balance of convenience lies do not arise.

14 I dismiss the application. I order the plaintiff to pay the costs of the defendant of today’s application.

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Last Modified: 09/19/2003