Mortgage—Sale by mortgagee—Powers and duties of mortgagee—Sale by private treaty—Failure to stimulate competition—Calculated indifference to interests of mortgagor—Remedies of mortgagor—Injunction—Whether limited to cases where purchaser guilty of collusion or fraud—Real Property Ordinance 1925-1961 (A.C.T.), s. 94 (2)*. * Section 94 (2) of the Real Property Ordinance 1925-1961 (A.C.T.) provides that "All sales, contracts, matters and things made, done or executed in pursuance of the last preceding sub-section shall be as valid and effectual as if the mortgagor or encumbrancer had made, done or executed them, and the receipt or receipts in writing of the mortgagee or encumbrancee shall be a sufficient discharge to the purchaser of the land, estate or interest, or of any portion thereof, for so much of his purchase money as is thereby expressed to be received."
Decisions
1973, August 7. The following written judgments were delivered:- MENZIES J. As I have the misfortune to differ from the other members of the Court, I will content myself with a short statement of why I consider that this appeal should be allowed. (at p481)
"... if a mortgagee in exercising his power of sale exercises it in good faith, without any intention of dealing unfairly by his mortgagor, it would be very difficult indeed, if not impossible, to establish that he had been guilty of any breach of duty towards the mortgagor. Lindley L.J. in the Court below, says that 'it is not right or proper or legal for him either fraudulently or wilfully or recklessly to sacrifice the property of the mortgagor.' Well, I think that is all covered really by his exercising the power committed to him in good faith. It is very difficult to define exhaustively all that would be included in the words 'good faith', but I think it would be unreasonable to require the mortgagee to do more than exercise his power of sale in that fashion. Of course, if he wilfully and recklessly deals with the property in such a manner that the interests of the mortgagor are sacrificed, I should say that he had not been exercising his power of sale in good faith." (at p481)
3. I do not think that statements in some cases, such as McHugh v. Union Bank of Canada (1913) AC 299 or Cuckmere Brick Co. Ltd. v. Mutual Finance Ltd. (1971) Ch 949 , that the mortgagee is under a duty to take reasonable…
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 Forsyth v Blundell
Sign in free to access the full text
Details
AGLC
Forsyth v Blundell [1973] HCA 20
Case
[1973] HCA 20
Decision Date
CaseChat Overview and Summary
The Full Federal Court heard an appeal in *Forsyth v Blundell*. The dispute concerned the validity of a notice of rescission of a contract for the sale of land, which had been served by the purchaser, Mr Blundell, on the vendor, Mr Forsyth. The central issue was whether the notice of rescission was effective to terminate the contract.
The court was required to determine whether the purchaser's notice of rescission was validly served in accordance with the terms of the contract and the general law. Specifically, the court had to consider whether the notice was served at the correct address and whether the vendor had actual knowledge of the notice, notwithstanding any technical defects in service.
The court held that the notice of rescission was not validly served. While the contract stipulated service at a particular address, the notice was sent to a different address. Although the vendor did receive actual notice of the rescission, the court found that this did not cure the defect in service, as the contract required strict compliance with the specified method of service. The legal principle applied was that contractual provisions for service of notices must be followed precisely, and actual knowledge of the notice by the recipient does not, in itself, render defective service effective unless the contract or equity provides otherwise.
Consequently, the Full Federal Court allowed the appeal, finding that the contract had not been validly rescinded.