David Grant & Co Pty Ltd v Westpac Banking Corp- Ferndell Development v Westpac Banking (38,39,40-95) App

The High Court of Australia considered appeals from decisions of the Supreme Court of New South Wales in proceedings brought by David Grant & Co Pty Ltd and Ferndell Development Pty Ltd (the appellants) against Westpac Banking Corporation (the respondent). The dispute concerned the respondent's alleged breaches of its duties as a mortgagee in possession, specifically in relation to the sale of properties that had been mortgaged to secure loans provided to the appellants. The appellants contended that the sales were conducted in a manner that did not achieve the best price reasonably obtainable, thereby causing them loss.

The central legal issues before the High Court were whether the respondent, as mortgagee in possession, had breached its duty to exercise its power of sale with reasonable care to obtain the best price reasonably obtainable for the mortgaged properties. This involved determining the standard of care required of a mortgagee in possession when conducting a sale, and whether the specific actions taken by the respondent in marketing and selling the properties met that standard. The appellants also sought to establish that the respondent's conduct constituted a breach of statutory duty, if applicable, and a breach of its equitable duty.

The High Court, in its joint judgment, affirmed the established equitable duty of a mortgagee exercising a power of sale to act in good faith and to take reasonable steps to obtain a proper price. The Court analysed the evidence concerning the marketing and sale process, considering whether the respondent had adequately advertised the properties, sought appropriate valuations, and conducted the sale in a manner likely to attract competitive bidding. The Court found that while a mortgagee is not a trustee for the mortgagor, it must act with due diligence and take all reasonable precautions to secure a fair price. The Court ultimately held that the respondent had failed to discharge its duty in this regard, finding that the sales were not conducted with the requisite care to obtain the best price reasonably obtainable.

The High Court allowed the appeals, setting aside the orders of the Supreme Court and remitting the matter to the Supreme Court for determination of the quantum of damages.