Aen Coase v State Bank of New South Wales

The Court of Appeal of New South Wales heard an appeal by Aen Coase against the State Bank of New South Wales. The dispute concerned the Bank's alleged breach of a duty of care owed to Coase in its conduct as a mortgagee in possession. Coase contended that the Bank had failed to exercise reasonable care in managing and selling the mortgaged property, resulting in a loss to him.

The central legal issues before the Court were whether the Bank, as mortgagee in possession, owed a duty of care to the mortgagor, Coase, in the management and sale of the mortgaged property, and if so, whether that duty had been breached. The Court was required to consider the scope of the mortgagee's obligations and the standard of care expected in such circumstances.

The Court of Appeal affirmed that a mortgagee in possession owes a duty of care to the mortgagor to exercise reasonable care to obtain a proper price for the mortgaged property when selling it. This duty is not merely to act in good faith but to take reasonable steps to ensure the best price reasonably obtainable in the circumstances. The Court found that the Bank had failed to discharge this duty, as its actions in managing and marketing the property were not sufficiently diligent, leading to a sale at an undervalue. The appeal was therefore allowed.