Lesic v Gippsreal Ltd [2007] NSWSC 426

New South Wales Supreme Court

CITATION : Lesic v Gippsreal Ltd [2007] NSWSC 426

HEARING DATE(S) : 20 April 2007

JUDGMENT DATE : 20 April 2007

JURISDICTION : Equity

JUDGMENT OF : Hamilton J

DECISION : Short term injunction granted to restrain exercise of power of sale under mortgage.

CATCHWORDS : MORTGAGES [50] – Mortgages and charges generally – Remedies of mortgagee – In general – Injunction to restrain exercise of mortgagee's powers – Necessity for offer of redemption and payment into court – Exceptions.

LEGISLATION CITED : Real Property Act 1900 s 57(2)(b)

CASES CITED : Harvey v McWatters (1948) 49 SR(NSW) 173 Parist Holdings Pty Ltd v Perpetual Nominees Ltd [2006] NSWSC 599

Zelko Lesic (P) PARTIES : Gippsreal Limited (D1) Quentin James Olde (D2) Ian Charles Francis (D3)

FILE NUMBER(S) : SC 2365/07

COUNSEL : G O Blake SC and M Pesman (P) N J Owens (Ds)

SOLICITORS : Sage Solicitors (P) Leonard Legal (Ds)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

FRIDAY, 20 APRIL 2007

2365/07 ZELJKO LESIC v GIPPSREAL LTD & ORS JUDGMENT 1 HIS HONOUR: This matter has come up very urgently today. The subject matter is whether a mortgagee or its receiver ought be allowed to sell the mortgaged property this afternoon. An auction sale of the property is fixed for next Thursday, 26 April 2007. However, the plaintiff mortgagor did not have notice of the proposed sale before auction until this morning. He initially approached the Court this morning, but the matter has been delayed until late in the afternoon to permit the defendant to attempt to assemble evidence to resist the application. 2 In the result, a body of evidence has been laid before me so considerable that I simply cannot read and absorb it in the time which remains before what I am told is the deadline for entering into this contract, namely, 4.30pm, it being 4.10pm as I speak. 3 So far as I can get possessed of the relevant facts in the very limited time available, the plaintiff appears to have a substantial case; certainly he has raised a serious question to be tried as to whether the occasion for the exercise of the power of sale has arisen at all. The defendant concedes that for the power of sale to have arisen, a notice under s 57(2)(b) of the Real Property Act 1900 would need to have been given. There is evidence that shows that the s 57(2)(b) notice was forwarded by express post. However, the mortgagor, who is a natural person, has denied in the witness box receiving the notice. Whether he did or not is certainly not a question that can be determined this afternoon, nor probably would it be appropriate for it to be determined upon any interlocutory application. 4 On the balance of convenience it may be that the mortgagor will lose the property if the contract is entered into. Mr Owens, of counsel for the defendant, has put to me that this is not so. He has put that an advantageous sale may well be lost if the contract is not entered into this afternoon and that that risk is established by a letter from the proposed purchaser making an offer which is expressed to expire today, 20 April 2007. Furthermore, Mr Owens draws attention to a very complicated clause, or series of clauses, in the proposed contract, which he says would permit the vendor to escape unscathed if the contract could not go ahead because of the mortgagor's rights. I have not had time to absorb those clauses and form a view as to whether this characterisation of them is correct or not. I have not even had time to hear from counsel for the plaintiff as to the plaintiff's attitude to the construction of these clauses. 5 I am reminded on the defendant's behalf of the general rule that the amount owing under the mortgage must be paid into Court as the price of injunctive relief restraining a sale. However, I recently summarised the up to date treatment in the courts of the principle of law in this regard in Parist Holdings Pty Ltd v Perpetual Nominees Ltd [2006] NSWSC 599. Suffice it to say that that judgment reminds by reference to the judgment of Sugerman J in Harvey v McWatters (1948) 49 SR(NSW) 173 at 174, 176 that the ordinary rule does not apply in a case where there is a serious question to be tried as to whether the power of sale is presently exercisable at all. 6 Whilst I appreciate the force of the submission that is put by Mr Owens on the defendants' behalf on the balance of convenience arising from the risk of loss of the sale if the contract not be exchanged this afternoon, I have come to the conclusion that I should grant interlocutory relief for a very short time. In doing so I bear in mind that it is not clearly demonstrated that the sale will be lost if the contract is not exchanged today. I propose to do my best to maximise the chance of the contract still being available by granting the injunction only up to and including Monday, 23 April 2007. This is the best I can do upon a perfunctory survey of the considerable body of evidence before me. 7 So far as I am concerned, the Judge who deals with the matter on Monday should not in any way be trammelled as to the way in which his Honour deals with the application, upon a more ample survey of the evidence and more ample submissions made, by what I have done in the constraints of the time available this afternoon. 8 I make the following orders: