Bankside barristers Polly Pope and Camille Butters, and employed barrister Nadia Murray-Ragg, have secured a rare injunction against a mortgagee sale.
The case is significant as it re-evaluates several decades of High Court authority as to when a mortgagor loses their right to redeem the mortgage.
A mortgagor retains an entitlement to redeem its mortgage until the property “has been sold”. The Court made sense of the previous authorities by interpreting “has been sold” as the point at which the mortgagee is bound to complete the mortgagee sales agreement, subject to contingencies beyond its control. Here the mortgagee bank had agreed to sell the property following a tender process, but retained the ability to cancel the agreement for any reason whatsoever. The right of redemption therefore continued.
The High Court judgment also addresses the mortgagee vendor’s statutory and equitable duties to take reasonable care to obtain the best reasonably obtainable price, when a leased property is being marketed for sale.
In order to discharge its duties, if a mortgagee has not consented to a lease, the mortgagee vendor’s sales campaign may need to be founded on the proposition that purchasers are unlikely to be bound by that lease. It may not be sufficient for a real estate agent to provide oral advice to the market.
In one of his Honour’s final High Court judgments prior to taking up his appointment to the Court of Appeal, Justice Johnstone found that the overall justice favoured the granting of interim orders permitting a final opportunity to redeem.
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