› Leave to proceed under s 440D of the Corporations Act 2001 (Cth)
Corporations
› Voluntary administration
› Factors relevant to leave: solid foundation of claim, distraction of administrators, prejudice to applicant, effect on other creditors
Equity
› Mortgages
› Equity of redemption: second mortgagee's right to redeem prior mortgagee ('redeem up, foreclose down')
Equity
› Mortgages
› Right to payout figure and account ancillary to offer to redeem
Quick Take
1On a s 440D application, the stay is the starting point. Leave requires circumstances warranting its displacement, assessed by reference to the objects of Pt 5.3A and, for a company in administration, the effect of leave on the administrators' ability to secure the objects for which they were appointed.
2A second mortgagee's claim to 'redeem up' by paying out a prior mortgagee may be pursued, and leave granted, separately from any foreclosure claim against the mortgagor. The mortgagor remains a necessary but passive party so that it is bound by the account. Whether a second mortgagee can redeem without foreclosing, and how the ancient equity of redemption interacts with Pt 5.3A, were held to be claims of substance left for final hearing.
3A dispute between secured creditors over who holds the first-ranking security, rather than the amount owed by the company, cannot be resolved through the proof of debt procedure. On the facts, such a dispute did not prejudice other creditors because it altered the identity of the secured creditor, not the amount of secured debt.
