In November 2020, a sole practitioner sought our assistance, and we were retained to act for a prospective purchaser of a golf course and a 100-room hotel. The vendor was a mortgagee in possession, exercising its power of sale.
The proposed Contract of Sale contained a myriad of special conditions designed to recognise the mortgagee’s limited knowledge of the property and protect its interests. Each hotel room had its own title, and each was separately rated, so the section 32 statement was voluminous.
The vendor was also under official administration, and while a mortgagee exercising its power of sale can deliver title, clear of mortgages and charges, any caveat lodged by a buyer from the Administrator would frustrate the mortgagee’s sale, which is what happened.
It then became a contest between the two buyers. Simultaneously the contract terms were being negotiated with the mortgagee’s lawyers. Among other things, they wanted the mortgagee/vendor to be able to terminate the contract if the contest with the Administrators became too difficult. At the same time, our client sought to have the mortgagee commit to doing all things reasonably required to settle the sale.
The Administrator applied to the Federal Court for leave under s.442C of the Corporations Act 2001 to sell the property notwithstanding the mortgage. By Orders made on 9 December, the mortgagee and our client were joined as defendants in that proceeding but were ordered to remove caveats lodged against the Titles.
By Orders made on 24 December, the Administrators were given until 27 January to settle their sale, failing which, the mortgagee was authorised to settle its sale to our client, provided it did so by 10 February.
The rival buyer did not settle in time.
Settlement of our client’s purchase was scheduled for 5 February, but on that day, a mortgage guarantor obtained an ex parte injunction in the Supreme Court restraining the mortgagee from completing the sale. Our client applied to be joined as a party to that proceeding and on 9 February, that matter was transferred to the Federal Court and the injunction was lifted.
On the morning of 10 February, the Federal Court removed all remaining barriers to settlement but declined to extend the settlement deadline beyond midnight of that day. The Court’s Orders followed our client giving detailed undertakings to protect the rights and expectations of the golf course employees and the hotel. Despite the complexities of a sale involving over 100 Titles, settlement was arranged and completed in time.