ANZ v Pola [2013] NSWSC 1801

The lender sold the borrower´s QLD agricultural property. The water rights were not sold separately. The borrower argued that this was a breach of the lenders´ duties. When the lender claimed possession of other properties in NSW the borrower sought to reduce the payout figure by the damages suffered.

The Court noted:

As long as it is established that a lender failed to take a step that was reasonably necessary “to ensure” market price was achieved, it is not necessary to prove that, as a matter of fact, the taking of that step would have ensured market price was achieved. It is necessary, however, for the borrower to show those steps would have led the mortgagee to take a different path to that actually taken.

The Court set out in detail guidelines for determining reasonable steps to be taken by the lender, as follows:

  1. The lender is not ordinarily required to take steps that would result in undue delay
  2. If the lender lacks the required knowledge, experience and expertise to make a decision it must obtain and act on the advice of others,
  3. Where there are assets or rights which could be sold separately the lender must ascertain the market value with and without those rights
  4. The lender must consider all alternative modes of sale
  5. A sale below the estimated market value does not of itself point to the conclusion that all reasonable care has not been taken
  6. Advertising must be:
    1. In appropriate media at appropriate times,
    2. Accurate without material omissions,
    3. Not improperly emphasising sale as mortgagee in possession
  7. Poor advertising is not cured by further information available on request

The appropriate advice and valuation in relation to the water rights would have taken three to four months to provide. The lender had been advised to sell before summer plantation. The Court determined that this was too much of a delay and it was not reasonable to expect the lender to obtain the advice and valuation.

Therefore, the lender was not in breach of its duties.

Click here to read the full judgment

Scroll to Top