Eileen Josephine Riley v Commonwealth Bank of Australia

Eileen Josephine Riley (the appellant) brought proceedings against the Commonwealth Bank of Australia (the respondent) in the Supreme Court of New South Wales, Court of Appeal. The dispute concerned the respondent's alleged breach of duty in its dealings with the appellant, particularly in relation to a loan facility and the subsequent sale of her property.

The central legal issues before the Court of Appeal were whether the respondent owed the appellant a duty of care in its capacity as a mortgagee exercising its power of sale, and if so, whether that duty had been breached. Specifically, the court considered whether the respondent had acted with reasonable care and diligence in conducting the sale of the appellant's property, and whether the sale price obtained was a true and fair price.

The Court of Appeal, applying established principles of mortgagee's duties, found that a mortgagee exercising its power of sale owes a duty to take reasonable steps to obtain a proper price. The court examined the evidence relating to the marketing and sale process undertaken by the respondent. It concluded that the respondent had taken reasonable steps in the circumstances to advertise the property and to secure a sale, and that the sale price, while perhaps not the highest achievable, was not so low as to indicate a breach of duty. The court affirmed that a mortgagee is not a trustee for the mortgagor and is entitled to sell the property for the best price it can obtain, provided it acts in good faith and with reasonable care.

The appeal was dismissed.