Goater v CBA [2014] NSWCA 265

The borrowers sought to set aside default judgment for possession on the basis that it should not have been entered as the borrowers had acted on advice from the registry that their defences could be faxed and filed in that way. The court refused to set aside judgment noting that the borrowers had been put out of their property and it was simply too late to reinstate their possession let alone raise new defences. The borrowers sought leave to appeal and also an injunction to restrain the sale of their properties by the bank. The borrowers offered the usual undertaking as to damages, but conceded it was worthless as they had no assets other than the properties in question. The borrowers were not in a position to pay into court the mortgage debt.

The court noted that the court has power to set aside judgment for possession after a writ has been executed, if for example the judgment was irregularly obtained but said this was for a separate hearing and in any case, refused an injunction for the following reasons:

  1. the general rule is that a borrower must pay into court the sum owing under the mortgage to get an injunction (unless the mortgage is invalid or the power of sale has been improperly exercised), which the borrower was unable to do and the payment proposal they put forward did not even meet the amount early agreed under a FOS agreement;

  2. the mortgage debt would continue to increase;

  3. the value of the properties was less than the mortgage debt;

  4. the bank’s financial position would continue to worse;

  5. the refusal of an injunction would not render leave to appeal futile because there was no imminent sale planned by the bank and the application for leave to appeal would be decided before the properties were sold. The court noted that a further injunction could be sought if a sale became imminent or leave was granted; and

  6. the refusal of an injunction would enable the bank to ready the property for sale.

The court noted that the fact that a case might be cast by the borrowers as an attempt to enforce compliance with the FOS Agreement and the fact that the borrowers might have a claim for damages for breach of the FOS Agreement (if the bank wrongly proceeded on the basis that the borrowers were in default of council payments) did not exempt the borrowers from the general rule that they must pay into court the mortgage debt to get an injunction. The court said if it were wrong, then the usual undertaking as to damages should be given and the borrowers’ impoverished state did not exempt them from this, but as any undertaking would be worthless the court would require the borrowers to pay the interest outstanding on the whole of the mortgage debt so that the prejudice to the bank would be minimised.

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