Bransgroves acted for the lender in this case where the borrower sued 10 years after the event alleging breach of duty in the exercise of its power of sale. The Court noted a registered mortgage, operates as a deed to which s 16 of the Limitations Act 1969 and its 12 year limitation period apply.
Because the borrower was a corporation the relevant duty of a lender exercising a power of sale, is that laid down in the Corporations Act. In applying that test, Associate Justice Bryson noted:
It is essential to the borrowers’ case to establish that there was a serious discrepancy between the market value of the property at the time it was sold and the sale price. Unless there was a serious discrepancy, criticisms of the lender’s conduct cannot affect the outcome.
Thus the Court’s first enquiry is to consider whether there is evidence before the Court that the property was sold undervalue, and only if it was does the Court next consider whether the lender’s conduct was culpable. The Court then examined the evidence of valuation before it, and concluded that there was no evidence, the property was undersold. Notwithstanding the earlier quoted comment, His Honour took time to exonerate the lender noting:
This document shows careful consideration and review of factors relevant to a decision to sell and to the price, going through the information and advice available and supporting the decision to recommend it with careful reasoning. This rebuts any view that the defendant acted with any extraneous or improper motive, or with indifference or lack of appropriate attention to the business in hand and its importance.