Background
Hungry Joe Productions Pty Ltd borrowed funds from DCF Lending Pty Ltd, with the loan secured by an Avalon property owned by the company’s controller, James Isbell. After default, DCF took possession and marketed the property for sale. It exchanged contracts with Margaret Dupree for $2.65 million.
The plaintiffs sought urgently to stop settlement. They alleged DCF had failed to take reasonable care under s 111A of the Conveyancing Act 1919 (NSW) to obtain at least the property’s ascertainable market value, or the best reasonably obtainable price. They also foreshadowed challenges to the finance transaction, including alleged unfairness, economic duress, unconscionable conduct and misleading conduct.
The Court’s Holding
Slattery J dismissed the application for interlocutory relief, with costs. DCF accepted there was a serious question to be tried concerning its statutory duties in conducting the mortgagee sale, and the Court also considered that some issues about the loan and enforcement process were arguable. But DCF had an arguable defence, and the issue was ultimately resolved on the balance of convenience.
The Court held that the balance favoured the defendants. Although refusing relief meant the plaintiffs could lose a family home of substantial personal significance, the evidence created serious doubt that they could refinance and repay DCF even if they later succeeded. Their damages undertaking was of limited apparent value, while delay could cause DCF further unrecoverable loss and impose hardship and costs on Ms Dupree, an independent bona fide purchaser. The dismissal and costs orders, and the existing restraint on settlement, were stayed until noon on 3 August 2026 to permit an application for leave to appeal.
Key Takeaways
- An arguable breach of a mortgagee’s s 111A sale duties does not itself justify an injunction stopping settlement.
- Where interim relief would practically determine who keeps the property, the court may assess the relative strength of the parties’ cases more closely.
- A mortgagor’s realistic ability to refinance, and the practical value of its undertaking as to damages, can be decisive in the balance of convenience.
Why It Matters
The decision illustrates the difficulty of stopping a mortgagee sale after contracts have been exchanged with an unrelated purchaser. Even where the sale price is disputed and the mortgagee’s marketing is open to challenge, the court will weigh whether an injunction can realistically preserve a viable path for the mortgagor to redeem or refinance.