Cba v Jovanovic (No 3) - [2005] SADC 170

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CBA v JOVANOVIC & ORS (NO 3)
Judgment of His Honour Judge Lee
22 December 2005
MORTGAGES - MORTGAGES AND CHARGES GENERALLY - REMEDIES OF THE MORTGAGEE - SALE UNDER POWER - MODE OF EXERCISE OF POWER
MORTGAGES - MORTGAGES AND CHARGES GENERALLY - REMEDIES OF THE MORTGAGOR
EVIDENCE - ADMISSIBILITY AND RELEVANCY - OPINION EVIDENCE - EXPERT OPINION
Sale of hotel property by plaintiff under power of sale in mortgage – claim by plaintiff against guarantors to recover shortfall – counterclaim by guarantors and mortgagor – after plaintiff's claim allowed, Full Court held on appeal that plaintiff in breach of obligation under s 420A of Corporations Act 2001 (Cth) to take all reasonable care to sell property for not less than market value – action remitted to trial judge to determine price which would have been obtained had plaintiff taken all reasonable care in terms of section – action assigned to another judge after trial judge disqualified himself – application by defendants to call further valuation evidence – meaning of requirement to "take all reasonable care to sell the property for not less than market value" discussed - whether previous witnesses addressed correct test – application allowed subject to condition that only previous witnesses be called – witnesses directed to confer – terms imposed including term that conference be under supervision of Master.
Corporations Act 2001 (Cth) s 420A, referred to.
Jovanovic & Ors v Commonwealth Bank of Australia [2004] SASC 61; Murray v Figge (1974) 4 ALR 612; Hines Exports Pty Ltd v Mediterranean Shipping Co (SA) (2001) 80 SASR 268; Florgale Uniforms Pty Ltd v Orders (2004) 187 FLR 142, considered.

CBA v JOVANOVIC & ORS (NO 3)
[2005] SADC 170

On 3 March 2004, in Jovanovic & Ors v Commonwealth Bank of Australia [2004] SASC 61, the Full Court of the Supreme Court ordered that orders of a judge of this Court be set aside and that the action be remitted to the judge for the hearing and determination of the issue identified by the Full Court in its reasons. Later the judge disqualified himself, and the action was assigned to me.
Although I have already read and heard lengthy written and oral submissions on that issue, I am not yet in a position to finally deal with it. I must first determine an application by the defendants and a plaintiff by counterclaim to call further evidence.
The relevant background is as follows:
1. In November 1995, the defendants (Mr and Mrs Jovanovic) arranged to purchase a property known as the Plaza Hotel in Hindley Street, Adelaide. The property is located approximately 250 metres west of the intersection of Hindley and King William Streets. The property included three ground level shops. The price was $750,000. The property was owned at that time by Roclin Pty Ltd (Roclin). Roclin was controlled by two male persons each named Govedarica. A hotel business was conducted on the property.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Cba v Jovanovic (No 3)

Details

AGLC: Cba v Jovanovic (No 3) [2005] SADC 170
Case: [2005] SADC 170
Decision Date: 22 December 2005

CaseChat Overview and Summary

The case of Cba v Jovanovic (No 3) involves a dispute between the Commonwealth Bank of Australia (the plaintiff) and various defendants, including the guarantors and the mortgagor of a hotel property. The plaintiff had sold the property under a power of sale contained in a mortgage. Following the sale, the plaintiff sought to recover any shortfall from the guarantors, while the guarantors and mortgagor filed a counterclaim. The case was initially heard in the Supreme Court of Victoria, with an appeal subsequently taken to the Court of Appeal, which was then remitted to the trial judge. The matter was reassigned to a different judge after the original trial judge disqualified himself.

The legal issues before the court included the extent of the plaintiff's obligations under section 420A of the Corporations Act 2001 (Cth) when exercising a power of sale, specifically the requirement to take all reasonable care to sell the property for not less than market value. The court had to determine whether the plaintiff had fulfilled this obligation and, if not, what price would have been obtained had the plaintiff exercised reasonable care. The defendants sought to adduce further valuation evidence to assist in determining this price, raising questions about the admissibility of such evidence and the appropriate standard for valuation.

The court allowed the defendants' application to call further valuation evidence, subject to certain conditions. The court considered that the previous valuation evidence did not adequately address the correct test for determining the market value of the property. The court imposed terms to ensure that the additional evidence would be relevant and reliable, including a requirement that the witnesses confer under the supervision of a Master. The court emphasised the importance of the plaintiff taking all reasonable care to achieve the best possible sale price for the property, and the need for clear and expert evidence to determine what that price would have been.

The final orders of the court included the allowance of the application to call further valuation evidence, subject to the terms imposed, and the direction for the witnesses to confer under supervision. The case was to proceed to a new trial to determine the price that would have been obtained had the plaintiff taken all reasonable care, with the new judge presiding over the matter.

Orders