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[2009] VSC 499
procedural. The application for an interlocutory injunction failed. The plaintiffs' summons was dismissed, with the costs of the summons to be costs in the cause (para 31).
The court refused to stop the mortgagee from exercising its rights over the property. The plaintiffs' evidence raised a dispute about whether a further $1.4 million loan had been promised, but their case depended on a valuation condition that had not been satisfied. Their evidence also did not establish the alleged failure to give statutory notice or adequately support the claimed losses. The judge was concerned that the mortgagee took possession after consenting to the mortgagor defending the earlier possession case, but that concern was not enough to overcome the problems with the injunction application. If an injunction had otherwise been justified, the judge would have required payment of the whole mortgage debt into court.
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2,313 words · generated 29/09/2026
In Longreach Family Living Pty Ltd v South Eastern Secured Investments Ltd [2009] VSC 499, Kaye J considered an interlocutory application to restrain a mortgagee from taking possession of, or proceeding with the sale of, mortgaged property. The judgment records that Woondella Pty Ltd owned the property, known as Woondella Park Maffra Road, Sale, and that Longreach Family Living Vic Pty Ltd was an associated company involved in its development (para 1).
1 cited instrument linked from this judgment.
On 21 December 2007, Woondella mortgaged the property to South Eastern Secured Investments Ltd. The mortgage secured a $3.3 million advance made to Longreach. The loan arrangements also required both plaintiffs to provide fixed and floating charges over their assets (para 2).
The central factual dispute concerned an alleged further $1.4 million advance. The plaintiffs said that South Eastern had agreed, or represented, that it would provide the additional funds as the development progressed. South Eastern disputed that account. Mr Benjamin, a director of both plaintiffs, said that the initial $3.3 million advance was limited by the property's $6 million valuation, and that a further valuation could be obtained later to support funds for completion of the first stage. Mr Smith, for South Eastern, said that Mr Benjamin had expressed confidence that stage one could be completed using the initial advance (paras 9–11).
South Eastern brought possession proceedings against Woondella. Woondella defended on the basis that the additional advance had been promised but not made (paras 3–4). The judgment then states that leave to defend was granted by consent on 4 September 2007 and that South Eastern took possession a week later, on 11 September 2007 (paras 5–6). This creates an apparent chronology inconsistency with paragraph 3, which says the possession proceedings commenced in April 2009. The judgment does not explain or reconcile those dates.
The present proceedings included claims for damages based on breach of contract and misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth). Woondella also sought relief to set aside the mortgage. Paragraph 12 refers to relief under s 87A, while paragraph 13 describes the proposed issue as whether the mortgage might be set aside under s 87. The judgment does not discuss or resolve that difference in statutory references.
The immediate question was narrower: whether the plaintiffs had shown a basis for an interlocutory injunction restraining possession and sale (para 8). Kaye J dismissed their summons. The costs of the summons were ordered to be costs in the cause (para 31).
The plaintiffs relied on three proposed grounds for a serious issue to be tried: non-compliance with the notice requirements in s 76 of the Transfer of Land Act; an arguable contractual or Trade Practices Act claim that could reduce or eliminate the mortgage debt by way of set-off; and a potential basis to set aside the mortgage (para 13).
On the notice question, the court focused on the evidence actually put forward in this application. Although Woondella had denied receipt of the notice in the earlier possession proceeding, the present claim and affidavits did not raise the service issue or provide proof of non-service. Kaye J held that the plaintiffs bore the onus of providing sufficient proof of an arguable failure to comply with s 76, and that they had not done so (paras 14–16).
On the alleged further advance, the judge accepted that the conflicting affidavits raised a serious issue about whether an additional advance had been agreed or represented (para 17). But identifying a factual dispute did not itself establish that the plaintiffs qualified for the advance. On Mr Benjamin's account, the further funding depended on a new valuation. The parties' common understanding was that South Eastern lent at a 55 per cent loan-to-value ratio. The court reasoned that a valuation of $8.5 million, reflecting the redeveloped land at the relevant stage, would therefore have been necessary. That condition had not been met (paras 19–20).
The court also considered the loan's commercial context. It found it implicit that any further advance would be conditional on the plaintiffs meeting their existing loan obligations. The evidence appeared to show that they had already fallen behind on interest by the time they said they qualified for the additional funds (para 21). These findings led the judge to conclude that the plaintiffs had not established a prima facie entitlement to the advance or the alleged representation as framed (para 20).
The claimed losses further weakened the application. Kaye J noted that the plaintiffs had not provided evidence of attempts to refinance after learning there would be no further advance, which affected the asserted claim to have mitigated their loss (para 22). The material purporting to verify the loss schedule was also described as skeletal and unsupported by costings or calculations (para 23). Consequently, the court found no serious issue concerning a damages cross-claim or set-off that would justify an injunction (para 24).
Finally, the court addressed the payment-into-court principle. It referred to Inglis v Commonwealth Trading Bank of Australia and subsequent authorities. The judgment describes the ordinary position as requiring a mortgagor to pay the mortgage debt into court where the dispute goes only to the amount due. It also notes that a court may exercise discretion not to require payment where the issue concerns enforceability of the mortgage itself (paras 24–25). The cases mentioned concerning claims under s 52 involved circumstances where the mortgagor had an arguable basis to recast the loan or set aside the security; the plaintiffs' case here was materially different, in the judge's view (paras 26–27).
The judgment does not purport to establish a comprehensive new rule about interlocutory injunctions against mortgagees. It applies principles drawn from authorities it cites to the evidence before it. Its account of the payment-into-court approach distinguishes between a dispute about how much is due and a dispute that puts the enforceability of the mortgage itself in issue (para 25).
For the first category, Kaye J stated that a mortgagor ordinarily needs to pay the mortgage debt into court to hold the mortgagee out of its rights to the security. For the second, the court may decide, in the exercise of its discretion, not to require payment into court. The judgment cites Harvey v McWatters, Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd, and MCP Muswellbrook Pty Ltd v Deutsche Bank Asia AG in connection with that qualification (para 25).
The judgment also discusses cases in which injunctive relief involving Trade Practices Act damages claims was conditioned on payment of outstanding interest only. Kaye J said that in those cases the court had concluded that the mortgagor had an arguable case to recast the loan agreement or have the security set aside (para 26). The judgment cites Glandore Receivers & Managers Appointed v Elders Finance & Investment Co Ltd and Graham v Commonwealth Bank of Australia for that discussion.
In this case, the court considered the plaintiffs' pleaded position too ambitious in light of the material: they sought to set aside the whole mortgage, whereas any arguable case might at most support some adjustment to the loan agreement. They had not advanced a claim to mould the agreement and did not offer to pay outstanding interest (para 27). The judge's alternative conclusion was that, even if a serious issue had been established, the plaintiffs would have needed to bring the whole mortgage debt into court (para 28).
The judgment therefore illustrates application of the cited approach, rather than a change to it. It should not be read as saying that every disputed loan term requires payment of the entire mortgage debt, because the judge expressly recognised a discretion where enforceability is in issue. Nor does it establish that a damages claim can never support injunctive relief. The judge distinguished the authorities in which the court considered that there was an arguable case to alter the loan or set aside the security.
At paragraph 14, Kaye J says the plaintiffs carried the onus to provide sufficient proof of an arguable failure to give the s 76 notice. In plain English, it was not enough to point to a denial made in another proceeding. The plaintiffs needed evidence in this application that could support the notice allegation.
At paragraph 17, the judge recognises a serious issue arising from the conflicting accounts about the additional advance and the alleged representation. This is important because the decision was not simply that there was no factual dispute. Rather, the court accepted that there was a dispute, then considered whether the conditions and evidence established a basis for interim relief.
At paragraph 20, the judge identifies the further valuation as a precondition to the claimed additional advance. The stated loan-to-value ratio meant that the property had to reach a value of $8.5 million at the relevant development stage. The court found that the condition had not been met. In practical terms, the plaintiffs' own version did not establish that they had qualified for the extra funding.
At paragraph 25, the judgment explains the general payment-into-court distinction. A dispute only about the sum outstanding ordinarily calls for the debt to be paid into court; a dispute about whether the mortgage itself is enforceable may permit the court to exercise its discretion differently. The wording is qualified, not absolute.
At paragraph 28, the judge states the result that would follow if a serious issue had been established: the whole mortgage debt would have to be brought into court. This was an alternative conclusion, not the condition actually imposed on an injunction, because the injunction application was dismissed.
At paragraphs 29–31, the judge expresses concern that South Eastern took possession after consenting to leave to defend the earlier possession case. The judge nevertheless concludes that this consideration could not overcome the other deficiencies. The passage demonstrates that conduct relevant to discretion does not necessarily determine the outcome where the applicant has not cleared other hurdles.
The decision is most directly relevant to an interlocutory application where a mortgagor seeks to restrain a mortgagee from taking possession of or selling secured property, and relies on alleged non-compliance with a statutory notice requirement, a disputed promise of further lending, or a damages claim said to reduce the secured debt.
The judgment highlights the significance of evidence that addresses each asserted ground in the application itself. A prior denial of service in another proceeding did not substitute for proof in this case (paras 14–16). Likewise, conflicting evidence about a promise of further funding established a dispute, but the court still examined whether the promise was conditional and whether the conditions had been fulfilled (paras 17–21).
It is also relevant where the asserted loss or set-off is relied on to restrain enforcement. The judge considered the absence of evidence of mitigation and the lack of supported calculations when assessing whether that claim could carry the application (paras 22–24). These are features of the court's assessment in this judgment, not a universal checklist that the judgment declares applicable to every injunction application.
The decision may also be relevant where a mortgagor asks the court to restrain a mortgagee without paying the secured debt into court. It identifies the distinction between disputing the amount due and disputing the enforceability of the mortgage, while emphasising that the court's response depends on the case presented and the relevant discretion (paras 24–28).
The supplied judgment contains no information about later cases considering, applying, distinguishing, or criticising Longreach. It therefore does not support a claim about how later courts have treated this decision. The only authorities discussed in the judgment are cases Kaye J cited when explaining the payment-into-court principles and the treatment of mortgage-related cross-claims (paras 24–26).
A research account of the decision's subsequent treatment would require sources beyond the judgment provided here. No later case citations or statements about its precedential status can be reported from this text alone.
Several matters are left unresolved in the judgment. First, it does not determine whether South Eastern actually promised or represented that it would make the further advance. Kaye J found a serious issue on that factual question but decided the interlocutory application by considering conditions, arrears, and the insufficiency of other supporting material (paras 17–23).
Second, the court did not finally decide the merits of any breach of contract or misleading-conduct claim. It assessed whether the material supported interim relief, not whether the plaintiffs would ultimately establish liability or damages. Similarly, it did not decide whether the mortgage should be set aside at trial. It considered that outcome extraordinarily unlikely on the case then advanced, and observed that a more limited adjustment to the loan might be the outer limit of an arguable case (para 27).
Third, the apparent inconsistencies in the judgment's dates and statutory references are not explained. The possession proceeding is said to have commenced in April 2009, while leave to defend and possession are dated September 2007 (paras 3, 5–6). Paragraph 12 refers to s 87A of the Trade Practices Act for relief, while paragraphs 13 and 27 refer to s 87 (paras 12–13, 27). This analysis records those differences rather than resolving them.
Finally, the judgment does not set out a full account of the principles governing all applications for interlocutory injunctions, nor does it explain the details of every cited authority. Its treatment is focused on the mortgage, the asserted advance, the evidence supplied, and the proposed payment-into-court condition. Any broader use of the decision should keep that case-specific scope in view.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this analysis, have it checked by a qualified Australian lawyer.
PRACTICE - Interlocutory injunction - Claim by mortgagor - Whether serious issue to be tried - Whether mortgagee's power of sale to be restrained - Whether plaintiffs to be required to pay mortgage debt into court.
1 The second-named plaintiff, Woondella Pty Ltd ("Woondella"), is the registered proprietor of a property called Woondella Park Maffra Road, Sale. The first plaintiff, Longreach Family Living Vic Pty Ltd ("Longreach"), is an associated company with Woondella and is involved in the development of that land.
2 On 21 December 2007, Woondella entered into a mortgage with the defendant whereby it mortgaged the property as security for an advance by the defendant to Longreach in the sum of $3,300,000. It was a term of the loan, inter alia, that both plaintiffs would provide fixed and floating charges over their assets as further security for it.
3 In April 2009 the defendant, South Eastern Secured Investments Limited ("South Eastern"), commenced proceeding number 141 of 2009 against Woondella seeking possession of the mortgage property.
4 In response, Woondella defended those proceedings on the basis that as part of the loan agreement, South Eastern agreed to make a further additional advance of $1.4 million to Longreach as the development works on the property progressed, but in breach of that agreement it failed to make that advance.
5 In due course in those other proceedings, South Eastern, applied for summary judgment. That application was resisted by Woondella, and on 4 September 2007, Associate Justice Mukhtar, by consent, gave Woondella leave to defend in those proceedings.
6 Notwithstanding that Woondella had an arguable defence to the claim by the mortgagee for possession of the property, nevertheless one week later, on 11 September 2007, the defendant saw fit to take possession of the property exercising or purporting to exercise its rights under the mortgage.
7 In these proceedings, the two plaintiffs have sought both damages against the defendant South Eastern, and in addition, Woondella has sought an order setting aside the mortgage.
8 The present application before me is brought by the summons by the plaintiffs seeking an interlocutory injunction restraining the defendant from seizing possession of the property and, as I understand it, from proceeding with the sale of it.
9 The parties in both two proceedings have filed competing affidavits as to whether or not it was part of the loan agreement that the additional advance of $1.4 million would be made by South Eastern to Longreach in the course of the development.
10 In his affidavit in the first proceeding, Mr Benjamin, who is a director of both plaintiffs, swore that in negotiations with Mr Smith of South Eastern in November or December 2007, he sought a loan of $4.7 million. However, initially because the property was valued at $6 million, South Eastern was only in a position then to advance $3.3 million by way of loan. However in the course of those discussions, Mr Smith had told Mr Benjamin that when the project had advanced, a further valuation could be obtained so that the balance of the funds required for finishing the first stage of the project, namely $1.4 million, would be available.
11 In his affidavit in the first proceeding, Mr Smith put that matter in issue. He has sworn that when the valuation of $6 million of the property was obtained, the plaintiff agreed to advance 55 per cent of that value, totalling $3,300,000. He said he discussed the valuation with Mr Benjamin, who said he was confident he could complete stage one with the $3,300,000.
12 In the present proceeding, the plaintiffs base their claim on two causes of action. Firstly, it is claimed that it was part of the loan agreement that there be the further advance of $1.4 million made to enable completion of stage one of the project, and that in breach of that agreement, the defendant failed to make the further advance. Further or in the alternative it is put that in representing that the defendant could and would make the further advance of $1.4 million, Mr Smith, on behalf of the defendant, engaged in conduct that was misleading under s 52 of the Trade Practices Act 1974 (Commonwealth). In both causes of action the plaintiffs claim damages against the defendant. Additionally, the second plaintiff, Woondella, claims relief under s 87A of the Trade Practices Act to have the mortgage set aside.
13 In argument before me today, Mr Cook submitted that there was a serious issue to be tried in respect of three matters. Firstly, he submitted that it had not been established that a notice to pay had been served under s 76 of the Transfer of Land Act and therefore that the mortgagee did not have any right to take possession of the property and to sell it. Secondly, he submitted that there was an arguable issue that in respect of the two plaintiffs' claims for damages, both a breach of contract, and s 52 of the Trade Practices Act, that those damages could be set off against the debt secured by the mortgage and that accordingly, it was arguable that there was either no debt owing or no debt at present payable under the mortgage. Thirdly, he submitted there was a serious issue to be tried as to whether the mortgage might be set aside pursuant to s 87 of the Trade Practices Act.
14 I turn to the first matter raised by Mr Cook. In the first proceeding, Woondella, in its defence, made a denial that it had received the notice to pay under s 76 of the Transfer of Land Act. However, in this case it is Woondella and also Longreach which seek injunctive relief against the mortgagee. The onus of proof lies on the plaintiffs in this proceeding to put forward sufficient proofs to establish an arguable case that the defendant failed to comply with its obligation to give a notice under s 76 of the Transfer of Land Act.
15 There is nothing in the claim in this case which would have put the mortgagee on notice that the issue relating to the service of the s 76 notice had been raised. No such matter had been raised in the pleadings or in the affidavits.
16 Accordingly, the onus lay on the plaintiffs to establish the failure to serve that notice. No such proof is forthcoming and therefore there is no arguable case made out that the defendant has failed to take possession of the property in accordance with s 76 of the Transfer of Land Act.
17 I turn then to the claims made by the two plaintiffs under the Trade Practices Act in the contract. In light of the conflict between the affidavit of Mr Benjamin and the affidavit sworn by Mr Smith, there is clearly a serious issue to be tried as to whether there was, as part of the original loan agreement or a collateral agreement, a term that the defendant, South Eastern, loan a further $1.4 million to Longreach. There is also, in my view, a serious issue to be tried whether, in so representing that matter to the plaintiffs, the defendant engaged in conduct that was misleading and deceptive under s 52 of the Trade Practices Act.
18 However, that of course is not the end of the matter in respect of this part of the claim for an interlocutory injunction.
19 It is clear that, on the view put forward by Mr Benjamin in his affidavit, that if there was any obligation to advance a further $1.4 million or alternatively if Mr Smith represented that such a further advance would be made, that in turn was conditional upon the provision of a further valuation justifying the additional advance.
20 It is common ground that it was understood between the parties that the defendant was lending on a loan to value ratio of 55 per cent. Thus it was a precondition of the agreement asserted by the plaintiffs, alternatively the misrepresentation relied on by the plaintiffs, that in order to qualify for the further advance, the plaintiffs would need to produce to the defendant, a valuation that the land was worth $8.5 million as redeveloped to that stage. That condition had not been met and thus the plaintiff has not established a prime facie case of any entitlement in terms of the agreement alleged or, indeed, in terms the representation alleged.
21 Further, it would seem from the material that, in any event, by the stage at which the plaintiffs, on their view of the facts, qualified for the further advance, they had already fallen in arrears in payment of the interest. I agree with Mr McKenzie that it would implicit in any agreement or representation made, that the further advance would only be made if the plaintiffs were complying with their obligations under the loan. In my view, the implication of such a term would be inevitable in light of the commercial reality of the case. At the time at which the plaintiffs on their view of the facts qualified for the further $1.4 million, it would seem that already they had fallen in arrears in payment of interest.
22 I also agree with Mr McKenzie that it appears that the plaintiffs, having become apprised of the fact there would be no further advance made from the middle of 2008, have done nothing to mitigate their loss and that impacts on the cross-claim asserted by them for damages. No evidence has been put forward by Mr Benjamin on behalf of the plaintiffs of any attempt to refinance the loan in order to progress the development and thus mitigate the losses claimed.
23 Finally, I agree with Mr McKenzie that it would seem that the plaintiffs have not put forward appropriate proofs, even at this interlocutory stage, as to the damages sustained by them. In his affidavit, Mr Benjamin purports to verify, in one line, a table of loss and damage which was intended to be appended to the statement of claim, but which was not. Mr Cook, in his helpful outline of submissions, provided a table. Strictly speaking, that has not been verified, but even if it were, it is a table which, to say the least, is in skeletal form, unsupported by any form of costings or calculations and is of little weight, even in this interlocutory application.
24 It would seem that, at its highest point, the plaintiffs' claim at this interlocutory stage would be, if it were made out, one for loss and damage by way of cross-claim or set-off. In my view, it has not established there is a serious issue to be tried in relation to any such set-off or cross-claim for the reasons I have already stated. But even if that were so, the plaintiffs would face the problem which is posed by the line of authority that ordinarily where it is sought to hold a mortgagee out of its rights, a mortgagor must bring into court the amount of the mortgage debt which is outstanding. That principle is stated in the locus classicus Inglis & Anor v Commonwealth Trading Bank of Australia[1].
25 It is true that that principle has, to some extent, been modified in other authorities in which it has been considered. In particular, the authorities, it would seem to me, now provide that if the issue raised by the mortgagor goes only to the amount due, then ordinarily the mortgagor will need to bring into court the amount of the mortgage debt, in order to be able to hold the mortgagee out of its rights to its securities. However, if the issue which is raised, goes to the enforceability of the mortgage itself, then the court, in the exercise of its discretion, may decide not to require the mortgagor to bring the debt into court. See, for example, Harvey v McWatters[2]; Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd[3]; MCP Muswellbrook Pty Ltd & Ors v Deutsche Bank Asia AG & Ors[4].
26 In the context of cross-claims for damages under s 52 of the Trade Practices Act, the courts have also, in some cases, moulded the relief by way of injunction so as to require payment of outstanding interest only as a condition of the injunctive relief sought. However, in each of those cases, the court had concluded that the mortgagor did have an arguable case either to recast the loan agreement, or alternatively to have the security set aside at trial. See Glandore Receivers & Managers Appointed v Elders Finance & Investment Co Limited[5]; Graham v Commonwealth Bank of Australia[6].
27 In the present case, it would seem to me that even if, notwithstanding my findings to the contrary, there were a serious issue to be tried relating to the agreement or the claim under s 52 of the Trade Practices Act, it would be extraordinarily unlikely that, at trial, a court would be moved to set aside the whole of the mortgage. At most, an arguable case may perhaps be raised that the loan agreement might be moulded in some way to cater for the agreement asserted by the plaintiffs. However, no such claim has been made to mould the loan agreement, but rather the bolder claim has been made by the plaintiffs, both in their statement of claim and persisted in before me, that the mortgage be set aside. Secondly, it would seem that the plaintiffs do not offer or stand ready to pay outstanding interest payments as a condition of an injunction.
28 In those circumstances, I have come to the conclusion that there is no serious issue to be tried. If there were such a serious issue to be tried I would have required that the plaintiffs bring into court the whole of the mortgage debt.
29 Before departing from the matter I should, however, mention matters I raised with both counsel. I am concerned about the way this case has come to this court. In the first set of proceedings, the mortgagee, South Eastern Secured, issued proceedings seeking possession of the mortgaged property. That claim was resisted on the very grounds, which are now relied on by the mortgagers before me. Based on those grounds, it would seem that the mortgagee accepted that there was a serious issue to be tried, or, to put it more accurately, that there was an arguable defence available to the mortgagor and therefore consented to leave to defend being granted. Notwithstanding its concession in the other case, the mortgagee nevertheless saw fit to take possession of the property in this case.
30 If I had come to the conclusion that there had been a serious issue to be tried, or if indeed I had come to the conclusion that there was such an issue to be tried as to justify at least contemplating granting an injunction, that matter would have gone to the exercise of the discretion. I must say that I am concerned that a mortgagee would behave in that way. Nothing put by Mr McKenzie in argument has explained to me why the mortgagee, having made the concession which it did in the first proceeding, nonetheless proceeded to take possession of the property. The mere denial in the defence of the mortgagors in the first proceeding that they were in possession of the property, did not carry the inference that there was any concession that the mortgagee should have a right to possession of it.
31 However, standing alone, that discretionary factor does not overcome the other hurdles which are insuperable, in my view, to the grant of an interlocutory injunction in favour of the plaintiffs in this case. For those reasons the application for an interlocutory injunction must fail and, accordingly, the summons of the plaintiffs should be dismissed and that the costs of the summons be costs in the cause.
[1] [1972] HCA 74; (1972) 126 CLR 161, especially at 164-5, Walsh J, and on appeal, 169, Barwick CJ.
[2] (1948) 49 SR(NSW) 173, especially at 178, Sugarman J.
[3] [1976] VicRp 26; [1976] VR 309, at 319 to 20 Lush J.
[4] [1998] 12 NSWLR 16, at 32 Powell J.
Longreach Family Living Pty Ltd
South Eastern Secured Investments Ltd [2009] VSC 499
(1972) 126 CLR 161
The application for an interlocutory injunction failed. The plaintiffs' summons was dismissed, with the costs of the summons to be costs in the cause (para 31).