NAB v Amed [2012] NSWSC 362

The guarantors wanted to raise a defence that the property was sold at undervalue.

The court noted that no action lay in negligence:

There is no common law duty in negligence which makes a mortgagee liable for common law damages if it fails to obtain a good price for a mortgaged property.

The court noted that if there was any action available to the guarantors it would be in unconscionable conduct:

If a failure by a mortgagee to take reasonable steps to obtain a proper price is sufficiently serious to be characterised as unconscionable as that expression is understood in equity, then in the taking of accounts between the mortgagee and the mortgagor, the mortgagee will be accountable for the price which would have been obtained if the mortgagee had not been guilty of unconscionable conduct.

The court refused leave for the guarantor to lodge a cross-claim alleging unconscionable conduct because of the terms of the Guarantee. The Guarantee provided:

Your obligations under this guarantee and indemnity are not affected by the fact the bank fails to obtain, register or realise, or deals in any other way with any security.

Another clause read:

You give up in favour of the Bank any right against the Bank which would reduce your liability under this guarantee until the Bank has received 100 cents in the dollar of all the amounts which the borrower owes the Bank and all amounts payable by you under this guarantee.

Another clause read:

You must make payments to the Bank without any set-off or counterclaim and without any deduction or withholding for taxes.

Another clause read:

The Bank may demand and recover from you any amounts which the customer owes the Bank without taking into account any amounts which the Bank may owe the customer for any reason.

The court held that such clauses are effective and not contrary to any principle of law and entered summary judgement.

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