The present does not appear to me to be such a case. The real dispute here is whether the power of sale is presently exercisable at all. The plaintiff's claim is that she has already paid more than sufficient to satisfy the instalments which have already become due, upon the terms that it is to be set off in discharge of those instalments as they become due and that there is therefore no default. This claim is disputed and the £1,500 is said by the defendant to have been paid on another account. However, the real nature of the dispute is not what amount is payable, there being an undisputed default, but whether a case for the exercise of the power of sale has arisen at all."
16 Over the last 15 years, there have been various expressions of judicial opinion which are to the effect that the requirement in Inglis should be widened. For this to be done, it will need to be found either that there should be an additional exception to the general rule or that the time has come when the general rule should itself be revised and restated.
17 Those proposed modifications include a relaxation of the rule to permit injunctive relief:
(1) where the plaintiff claims that he can redeem the mortgage within a fairly short time by carrying out an on its face reasonable refinancing proposal;
(2) where the plaintiff has a demonstrable capacity to secure or at least refinance the mortgage debt.
18 As to proposition (1), this is derived from the judgment of Bryson J, as his Honour then was, in Grose v St George Commercial Credit Union Limited (1991) NSW ConVR 55-586 at 59,300 - 59,301. His Honour there suggested that the rule in Harvey, if literally applied, could wreak hardship. His Honour suggested that it should not be taken to be intended to prevent injunctive relief where there was a realistic prospect of refinancing. No doubt the evidence would need to establish that the mortgagor claimed to be able to redeem the matter within a fairly short time and that the refinancing proposal was rather likely to be fulfilled.
19 The matter has also been the subject of discussion in learned writing including by Bryson J and the present Chief Judge in Equity writing extracurially: The Hon Justice John Bryson, Restraining Sales by Mortgagees and a Curial Myth (1993) 11 Aust Bar Rev 1; P W Young, A Mortgagor's Right to Approach the Court (1993) 1 APLJ 61. And see note by P W Butt in (1989) 63 ALJ 696.
20 The second of the formulas which I have set out above comes from the recent decision of the Court of Appeal in Notaras v Sly & Weigall [2005] NSWCA 235 at [133]. In indicating that proposition (2) above was an appropriate formula or test to apply, the Court of Appeal did not consider the matter in detail and did not analyse in detail what had been said in Harvey or in Inglis or, indeed, in any subsequent discussions. That was because the Court of Appeal was not dealing with the question in the form in which it arises in applications such as the present, but was dealing with an appeal in an action for negligence against two firms of solicitors in relation to advice given to a mortgagor who was a prospective applicant for injunctive relief to restrain a mortgagee sale.
21 Whilst a Judge of this Court must always pay adequate attention and give adequate respect to statements of the Court of Appeal, I have some doubt as to whether what is said in Notaras is an adequate basis to depart from a principle, which, although it may in some ways be regarded as harsh, has had long acceptance in Courts of Equity.
22 It should be added that, in so far as it may be thought to operate harshly in some circumstances against mortgagors who have immediate and real prospects of re-financing, on the other hand it must be borne in mind that there is a very considerable public interest in not fettering in any undue way the rights and manner of exercise of a mortgagor's power of sale, because of the effect that this might have of unsettling the finance market and discouraging persons, natural and corporate, from lending in that market, which is critical to the conduct of business in this as in other countries.
23 As I have said, this is, as I perceive it, an ongoing and unresolved controversy. Part of the reason for that is that it usually arises in injunction applications from which there are not often appeals and in which urgency precludes the giving of fully reasoned judgments.
24 As it turns out, I do not have to give my resolution of this dilemma in the present case. The reason for that is that, even if the more liberal test is adopted, there are two deficiencies in the evidence which the plaintiff has brought forward. The first is a lack of sufficient certainty as to whether or not Bank West is even going to make a refinancing offer. The second is that, whether it be thought that offer might, if and when it comes, will be in the sum of $23 million or $22 million, it will not, on the evidence, provide enough money to pay out the mortgage, even on the lower interest calculation which has been put forward.
25 In those circumstances, there could not be a restraint of the exercise of the power of sale on the ground of the likelihood of early redemption.
26 I turn then to the second head for injunctive relief. The second basis on which injunctive relief was claimed was that, whatever the general rule as to tender of the payment of the outstanding amount, it did not have application in circumstances where there was an allegation of breach of the mortgagee's duty not to act unconscionably toward the mortgagor. In this regard it was said that, in this particular case, it should be established that a sale at an undervalue may amount to a breach of the mortgagee's duty.
27 Before considering the application of the legal principles appropriate to the alleged breach of the mortgagee's duty of this case, I should say something about the duty under which a mortgagee must approach the exercise of its power of sale. One statement of those principles made by a master of equitable jurisdiction was that by Jacobs J in Australia and New Zealand Banking Group Limited v Bangadilly Pastoral Commercial Limited (1978) 139 CLR 195 at 201.
28 To understand this and a later quotation from Bangadilly, it is important to note that it was conceded by counsel for the mortgagee that, because of the relationship between the mortgagee and the purchaser under the sale which had already been effected, the onus was on those supporting the sale to justify the exercise of the power of sale (at 197). Normally, if the bona fides of the mortgagee were challenged, the mortgagor would bear the onus of establishing the lack of bona fides.
29 Jacobs J said at 201 - 202:
"In my opinion the trial judge placed too much emphasis on a need for conscious planning, deceptiveness, collusion and underhand exercise of the power before he felt himself able to find that the sale lacked bona fides. It is true that bona fides in this connexion is not concerned with the motive for exercising the power of sale but, once the decision to sell has been made, it is concerned with a genuine primary desire to obtain for the mortgaged property the best price obtainable consistently with the right of a mortgagee to realize his security. At the same time the mortgagee is concerned with his own interests and not with the interests of the mortgagor or subsequent incumbrancers, and therefore a wide latitude has been allowed to him in his manner of exercising his power of sale. However, when there is a possible conflict between that desire and a desire that an associate should obtain the best possible bargain the facts must show that the desire to obtain the best price was given absolute preference over any desire that an associate should obtain a good bargain."
30 It has been pressed upon me that the duty was more correctly expressed by Isaacs J in Pendlebury v Colonial Mutual Life Assurance Society Limited (1912) 13 CLR 676 at 701 -702. However, I do not think there is, for present purposes, any significant difference between the statements.
31 Mr Drummond, of counsel for the mortgagor, was specifically challenged by Mr Sullivan, of Queen's Counsel for the mortgagee, at the end of the argument to state whether and in what way the mortgagee was acting in breach of its duties towards the mortgagor relating to the exercise of the power of sale. Thus challenged, after consideration, Mr Drummond specifically said that it was not alleged that the mortgagee was at present engaged in any conduct which would be a breach of its duty.
32 It has appeared to me that the plaintiff has differed from time to time during the course of the argument in the submissions it was putting in this regard. It is not entirely surprising, in view of the fact that, as I have already said, the matter has swayed to and fro and the factual substratum has changed during the conduct of the application.
33 I should add, however, that, on all the material available to me, I could not find that the mortgagee was threatening at the present time to sell the property at an undervalue. In this regard I should say at once, bearing in mind what was said by Jacobs J as quoted above, that the mortgagee was not under any duty to undergo additional risks and delay in selling the property otherwise than in one line, in order to maximise price, particularly if that involved, as it would in some of the circumstances advocated by the mortgagor, expenditure of considerable moneys by the mortgagee to carry out that process.
34 It is clear that no injunctive relief is justified under the second head.
35 That leads me to the third head of the submissions put on behalf of the plaintiff. Those were to the effect that there was an obligation on the mortgagee to provide to the mortgagor information concerning a proposed sale as a corollary of a right of the mortgagor to bring proceedings to restrain that sale, if it appeared that it would be in breach of the mortgagee's duty.
36 This raises the question of whether or not the mortgagee is, generally or in this case, under a duty to reveal to the mortgagor the terms on which it proposes to enter into a sale of the property by private treaty. Concerning that matter, in general terms, it was said by Aickin J in Bangadilly supra at 229:
"It is no doubt true that a mortgagee is not normally under a specific obligation to inform the mortgagor, or those known to be claiming under him, of a proposed sale, apart from the general notice of default which is a prerequisite to exercise of the power of sale. Nonetheless failure to inform the mortgagor and persons known to be claiming under him may be a relevant matter. Personal irritation on the part of the mortgagee's agent or being on bad terms with it and its solicitors is not an adequate explanation for such failure. All these are relevant factors in considering whether the onus of proving bona fides in the relevant sense has been discharged."
37 The same subject matter was discussed in E L J Tyler, P W Young and Clyde Croft, Fisher and Lightwood's Law of Mortgage (2nd Aust Ed, 2005) at [20.24].
38 Aickin J's proposition is that, in general terms or ordinary circumstances, there is no obligation on a mortgagee to give a mortgagor notice of the terms of a particular proposed sale. That may be different in a case where, in the circumstances, the withholding of that information by itself or with other facts can be characterised as showing unconscionable conduct on the part of the mortgagee, perhaps, as in Bangadilly, in a case where evidence establishes that the mortgagee is colluding in some improper way with a prospective purchaser.
39 In my view there is no evidence in this case to deflect the general principle. It must also be borne in mind that the fact that a contract for sale has been entered into will, if the transaction be an improper one, not impede the mortgagor from seeking to have that transaction set aside by a Court of Equity.
40 That leads me to the last consideration. If there were any suggestion that the non communication of the fact and terms of a sale might, whether intentionally or not, impede a mortgagor in making an application to set aside a sale entered into or delay that application for a time disadvantageous to the mortgagor, then it may be that there should be injunctive relief to compel the prompt revelation of the contract.
41 In this case, the mortgagee has both dispelled the fear of any such thing occurring and precluded the need for further consideration of whether any injunctive relief would be merited, by undertaking to the Court that, upon the plaintiff's application being otherwise dismissed, it will undertake to the Court that it will communicate to the mortgagor a copy of any contract entered into forthwith after the entry into of the contract.
42 Upon that basis, the conclusion that I reach upon this application is that the application should be dismissed.
43 As to costs, the usual result in the case of an unsuccessful interlocutory injunction application must follow, namely, that the plaintiff must pay the defendant's costs of the application.