Fingal Developments Pty Ltd v Nom De Plume Nominees Pty Ltd

Fingal Developments Pty Ltd brought an action against Nom De Plume Nominees Pty Ltd, seeking to establish the validity and enforceability of a second ranking mortgage over the defendant's assets, and to recover sums allegedly recovered in excess of the amount owing to the holder of a first ranking mortgage. The defendant counterclaimed for an account of the monies held by the first ranking mortgagee. The matter was heard in the Supreme Court of New South Wales.

The central legal issues were whether the holder of the second ranking mortgage had standing to sue the holder of the first ranking mortgage for amounts recovered in excess of the first ranking mortgagee's debt, and whether the holder of the first ranking mortgage had recovered sums in excess of its debt. Additionally, the court needed to determine whether the holder of the first ranking mortgage was liable to the holder of the second ranking mortgage for wasting the chargor company's assets, and if the second ranking mortgage was valid and enforceable.

The court held that the second ranking mortgage was valid and enforceable, and the holder of the second ranking mortgage had standing to sue the first ranking mortgagee for any sums recovered in excess of the first ranking mortgagee's debt. The court found that the first ranking mortgagee had recovered sums in excess of its debt by virtue of the accounts between the mortgager and mortgagee. Furthermore, the court held that the holder of the first ranking mortgage was liable to the holder of the second ranking mortgage for wasting the chargor company's assets, as such assets would have been available to other creditors.

The court ordered that the first ranking mortgagee pay to the second ranking mortgagee the sums recovered in excess of the first ranking mortgagee's debt, and that the first ranking mortgagee be liable to the second ranking mortgagee for wasting the chargor company's assets. The court also declared the second ranking mortgage to be valid and enforceable.