Westpoint Finance Pty Ltd v Chocolate Factory Apartments Ltd

Westpoint Finance Pty Ltd (the mortgagee) sought to enforce a mortgage against Chocolate Factory Apartments Ltd (the mortgagor). The mortgagor sought an injunction to restrain the mortgagee from exercising its rights under the mortgage, arguing that no money was owing. The matter came before the New South Wales Court of Appeal.

The primary legal issue before the Court of Appeal was whether the mortgagor had established a sufficient case to warrant the grant of an injunction restraining the mortgagee from enforcing its security. Specifically, the court had to determine the threshold required for a mortgagor to obtain such an injunction, particularly when the mortgagee asserted that money was indeed owing under the mortgage.

The Court of Appeal held that while a mortgagor may seek an injunction to prevent a mortgagee from exercising its rights where no money is owing, this right is limited. Once it appears that there is an arguable case that some amount is owed, the mortgagee is entitled to pursue its rights under the mortgage. The court found that the mortgagor had not demonstrated a sufficient basis to justify the continuation of the injunction.

The appeal was allowed, and the injunction previously granted was discharged.