Kingsway Group v Belramoul [2009] NSWSC 608

A husband and wife bought a property in Mosman with a mortgage for $1.9 million and obtained a DA to demolish the existing building and put up substantially larger building. However the development failed and the lender exercised power of sale experiencing a sizable shortfall.

The borrowers were then sued for the shortfall. They put on a defence claiming the lender had breached its duty in the sale of the property. The court carefully reviewed the steps taken by the lender in selling the property.

Because the borrowers were individuals the applicable standard was the good faith test, which the lender was found not to have breached. The court accordingly entered judgement against the borrowers for $1.1 million.

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