Almona Pty Ltd v Parklea Corporation Pty Ltd

Almona Pty Ltd appealed to the Court of Appeal of New South Wales against a decision concerning the exercise of a mortgagee's power of sale. The dispute arose from a sale of property by Parklea Corporation Pty Ltd, the mortgagee, to a purchaser. Almona, the mortgagor, alleged that the sale was not conducted in good faith and sought to set it aside. The core of Almona's grievance was that the mortgagee's actions, including an alleged attempt to refinance and discharge the mortgage prior to the transfer of title, and the acceleration of the sale process due to Almona's own refinancing attempts, were improper.

The Court of Appeal was required to determine whether the mortgagee, Parklea Corporation, had breached its duty to exercise the power of sale in good faith. Specifically, the court considered whether the mortgagee's conduct, including the alleged pre-transfer refinancing and the circumstances surrounding the sale process, demonstrated a lack of good faith. Further issues included whether the mortgagee's failure to communicate the requirement of vacant possession to the occupant of the property, which would have likely resulted in a higher sale price, constituted a breach of duty, and whether any alleged fraud by the mortgagee, such as bid-rigging or collusion with the purchaser, could be established, particularly in light of a pre-existing relationship between the parties and the mortgagee's financing of the purchaser and acquisition of control over it.

The Court of Appeal found that the mortgagee had not breached its duty to exercise the power of sale in good faith. The court reasoned that the mortgagor's own actions in attempting to refinance had accelerated the sale process, and the mortgagee's actions were a response to this. The court also held that the failure to communicate the vacant possession requirement to the occupant did not amount to fraud or a breach of the duty of good faith in the exercise of the power of sale, although it acknowledged that damages might be awarded for this specific failure. The court found no evidence of collusion or bid-rigging sufficient to establish fraud.

Consequently, the Court of Appeal dismissed Almona Pty Ltd's further amended notice of appeal and ordered Almona to pay the costs of each respondent. The cross-appeal by Parklea Corporation Pty Ltd was also dismissed, with Parklea ordered to pay Almona's costs of the cross-appeal. A summons by Secured Asset Portfolio III Ltd (in liq) seeking leave to cross-appeal from the trial judge's costs order was also dismissed, with Secured Asset Portfolio III ordered to pay Almona's costs of that summons.