Equitable charges came under the spotlight in a recent NSW Supreme Court ruling. In Morris Finance Ltd v Free  NSWSC the Court analysed the wording of a lease agreement. Did it contain language necessary to create an equitable charge?
The Lender looked to enforce the charge by seeking orders for judicial sale of property and ancillary orders for possession.
The Court will not ordinarily make an order for judicial sale of a mortgaged property against the wishes of the mortgagee unless the mortgagee’s conduct would otherwise prejudice the mortgagor.In the matter of Koovousis v Tony, trustee in bankruptcy of the Estate of Vrkic, Elliott May Lawyers convinced the court that the rights of its mortgagee client should prevail over the rights asserted by a purchaser seeking specific performance of a contract of sale over the mortgaged property.