27 May 2015


This was a case where the borrower alleged the lender breached it duties in exercising power of sale. 

The Court of Appeal held that if a lender can be shown to breach its duty in some way, the borrower then has free scope to draw a picture of an alternative universe in which a lender should have done something it did not do. The borrower then must prove that alternative imaginary act would have realised the market value:

Once a breach is established it is not necessary to show a causal link between the particular breach and loss. As long as it is established that the mortgagee failed to take a step that was reasonably necessary to ensure market price was achieved, it is not necessary to prove that the taking of that step would have ensured market price was achieved. Nor is it necessary for the mortgagor to prove that some identifiable individuals would have offered to purchase, or actually purchased, the property for any particular price had there been no breach of the duty: It is necessary to show that the steps it contends the mortgagee should have taken to ensure the property was sold to market value would, had they been taken, have led the mortgagee to take a different path than the one actually taken. Otherwise the step not taken would not have made a difference to the overall outcome of the sale and thus could not have been one necessary to comply with the duty.

 

Click here to read the full judgment

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Kate Cooper joined Bransgroves Lawyers in 2006 and has been a partner since 2009. Kate specialises in Supreme Court litigation in the fields of mortgage enforcement, professional negligence and originator/funder disputes. She has an extensive transactional practice including, origination deeds, aggregation deeds, commercial and construction lending and mortgage securitisation.

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