Bali v Sweeney

The plaintiff, Ms Padma Bali, approached me as Duty Judge on the afternoon of Thursday 1 February 2024 seeking an interlocutory injunction to restrain the defendants from conducting an auction of her property in Providence Road, Ryde on Saturday 3 February 2024.

I declined to grant the injunction. That is because, although I was satisfied that there is a serious question to be tried as to whether the defendants’ power of sale could be impugned, the balance of convenience did not favour the granting of an injunction.

The Providence Road property was, until last October, the plaintiff’s residence. The plaintiff also owns an investment property in Blaxland Road, Ryde.

In August 2021 the plaintiff executed a mortgage in favour of the defendants over the Blaxland Road property as security for advances made by the defendants to a company associated with the plaintiff’s sister.

Deep within that mortgage were provisions the black letter of which:

On 10 August 2021 the plaintiff also executed a separate document being a “Power of Attorney by the Guarantor” under which the plaintiff separately appointed the defendants as her attorneys under power “to do any act or thing which in the opinion of [the defendants] … is necessary or expedient to give effect to any right, power or remedy conferred on the [defendants] … under the [Blaxland Road mortgage].”

There exist certificates of legal and financial advice given to the plaintiff.

As to the legal advice the plaintiff obtained, she has deposed:

As to the financial advice received, the plaintiff has deposed:

Almost a year later, on 11 July 2023, the defendants registered the power of attorney referred to at [6] above.

On 6 October 2023, the defendants instructed their solicitors to draft a mortgage in their favour over the Providence Road property, caused their lawyers to execute the document “pursuant to the Registered Power of Attorney”, and caused the mortgage to be registered.

Several weeks later, the defendants took possession of the Providence Road property.

The plaintiff described the process whereby that occurred as follows:

On 10 January 2024, the plaintiff became aware that the defendants had listed the Providence Road property for auction on 3 February 2024. On 18 January 2024 she retained her current solicitors. Those solicitors investigated the background and called on the defendants to not proceed with the auction. The defendants refused to do so.

In those circumstances, I was satisfied that there was a serious question to be tried as to whether the defendants’ power of sale is exercisable in that there is a serious question to be tried that the plaintiff may be entitled to relief, whether under the Contracts Review Act 1980 (NSW), or otherwise to be relieved from the consequences which would otherwise flow from the black letter of the documents that she has executed.

So much was accepted by Mr Young SC, who appeared for the defendants.

However, as Mr Young has submitted, the balance of convenience did not favour the granting of an injunction restraining the auction. Indeed, the balance of convenience strongly pointed to the conclusion that no injunction should be granted.

That is because the defendants’ mortgage is a second mortgage over the Providence Road property.

There is a first mortgagee, BNY Trust Company of Australia Ltd. On 9 November 2023, BNY obtained judgment for possession against the plaintiff. It also obtained a monetary judgment in the sum of $2,077,595.85.

On 15 November 2023, the solicitors for BNY wrote to the solicitors for the defendants enquiring as to the steps the defendants proposed to take to sell the Providence Road property.

On 21 November 2023, the solicitors for the defendants wrote to the solicitors for BNY:

It thus seemed inevitable that, were I to restrain the defendants from conducting the auction on 3 February 2024, the defendants would notify BNY of that fact, causing the latter company to itself cause the Providence Road property to be sold.

There was no evidence before me to suggest that there is any dispute about the amounts owing by the plaintiff to BNY, nor as to BNY’s entitlement to possession of the Providence Road property.

Thus, were the auction to be delayed, interest would continue to accrue on the plaintiff’s indebtedness to BNY until what, on the evidence before me, is the inevitability of the sale of the property.

Further, and just as importantly, the existence of the first mortgage, and BNY’s judgment of possession and debt against the plaintiff, was clearly a matter that was relevant for the plaintiff to disclose to me as Duty Judge. This only arose from the evidence adduced by the defendants.

I am confident that these matters were not known to Ms Gallifuoco, who appeared for the plaintiff, until she was shown the relevant material in the defendants’ evidence immediately prior to the commencement of the hearing. However, the matters were obviously known to the plaintiff.

Following conclusion of the hearing late in the afternoon on Thursday 1 February 2024, I granted Ms Gallifuoco liberty to make any further submissions by 8am Friday 2 February 2024.

Ms Gallifuoco sought leave to adduce evidence of correspondence between BNY’s solicitor and the plaintiff’s solicitor on 1 February 2024, in which BNY’s solicitor said:

As there is no evidence that the plaintiff has any ability to put forward, let alone perform, any “proposal to exit the loan”, I saw this as taking matters no further.

I declined to grant the plaintiff the interlocutory relief she sought.

I then stood the matter over to the Equity Registrar on 5 February 2024 for directions.