Who will win in priority dispute between a mortgagee and a tenant (Part 3)?

  • Author : Bill Stark - 09-10-2013

Further to my second post about who will win a priority dispute between a mortgagee and a tenant, the tenant (Mendonca) appealed to the Court of Appeal of the Supreme Court of Victoria.

In a miraculous outcome, the appeal was heard on 3 October 2013, being 4 working days after the original decision was handed down on 27 September 2013.

The next day, 4 October 2013, Justices of Appeal Priest and Santamaria handed down their reasons for decision in Mendonca v Mason [2013] VSCA 280.

The Court of Appeal refused the tenant's appeal.

The same day, 4 October 2013, the tenant applied for special leave to appeal to the High Court, and issued an application for a stay of the dismissal by Macaulay J of the application for an interlocutory injunction. Even more miraculously, Hayne J of the High Court heard the application for a stay on the day it was issued.


I appeared for the mortgagee in both the Court of Appeal and the High Court, successfully opposing the tenant's appeal and the application for a stay or an injunction pending the hearing of the application for special leave to appeal to the High Court.

The Court of Appeal and the High Court (Justice Hayne) both held that Macaulay J was not in error in concluding that damages for the alleged breach of the tenant's lease would be an adequate remedy and the mortgagee was entitled to lock the alleged tenant out of the premises.

In both appeals, I submitted to the court that:

(a) an order granting or refusing an interlocutory injunction is an order made in the exercise of discretion on a point of practice and procedure which does not have the effect of finally determining the rights of the parties;

(b) in accordance with the principles that generally govern appellate review of a discretionary judgment given in a matter of practice and procedure, an appeal court will not interfere with an order granting or refusing an interlocutory injunction unless an error of principle has occurred and failure to correct the error would work an injustice.

(c) the appellant cannot show that the primary judge acted on a wrong principle, or made an order which works a substantial injustice to the appellant. To the contrary, any decision to grant an injunction would have worked a substantial injustice to the respondent.

(d) it was relevant for the primary judge to consider that the appellant would not be able to meet the damages which might be awarded pursuant to the necessary undertaking; and

(e) the appellant’s claimed sentimental attachment to the premises did not weigh against the balance of convenience.

At paragraph 34 and following of the judgment of Priest JA, the Court of Appeal agreed with those submissions.

Significantly, at paragraph 42 Priest JA decided:

The primary judge also found that damages would be an adequate remedy. In my opinion it has not been demonstrated that he fell into error in so finding.

About the Author

Bill Stark

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