MBF Investments Pty Ltd v Nolan

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2009 3876

MBF INVESTMENTS PTY LTD (ACN 005 731 957)	Appellant
	v
DAMIEN NOLAN	Respondent

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JUDGES	NEAVE, REDLICH and WEINBERG JJA
WHERE HELD	MELBOURNE
DATE OF HEARING	29 and 30 July 2010
DATE OF JUDGMENT	20 April 2011
MEDIUM NEUTRAL CITATION	[2011] VSCA 114	1st Revision:  25 Nov 2011 [163] & [227]
JUDGMENT APPEALED FROM	Nolan v MBF Investments Pty Ltd [2009] VSC 244 and [2009] VSC 457 (Vickery J)

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MORTGAGES – Statutory power of sale – Transfer of Land Act 1958, s 77(1) – Scope of mortgagee’s duty – Pendlebury v The Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676; Hawkesbury Valley Developments Pty Ltd v Custom Credit Corporation Ltd [1995] NSW Conv R 55-731, considered – Property sub-divided after default – House situated on one lot – Whether mortgagor had ‘home occupation interest’ – Relevance of international instruments to interpretation of statutory duty – Fair market value obtained at auction – Order of sale of lots contrary to wishes of mortgagor – Sale not causative of any loss.

CONTRACT – Construction – Exclusion clause – Deed of settlement – Limitation of duty owed by mortgagee to have regard to particular interest when exercising statutory power of sale – Waiver of any liability arising from exercise of power.

DAMAGES – Breach of duty owed when exercising statutory power of sale – Transfer of Land Act 1958, s 77(4) – Nature of remedy – Measure of loss and damage – Increase in value of properties wrongfully sold.

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Appearances:	Counsel	Solicitors
For the Appellant	Mr R M Garratt QC with Mr L E Hawas	Rigby Cooke Lawyers
For the Respondent	Mr C W R Harrison SC with Mr T J Sowden	Nicholas O’Donohue & Co Lawyers

NEAVE JA

REDLICH JA
WEINBERG JA:

Introduction

1. The appellant, MBF Investments Pty Ltd (‘MBF’), an investment company controlled by the Christian religious order known as the Good Shepherd Sisters, was the mortgagee of property situated at 16-18 Walmer Street, Kew (the ‘property’).  The respondent, Mr Damien Nolan, was the mortgagor of that property, which he held as trustee of a family trust known as the Prudent Trust.  By the time the property came to be sold, it had been subdivided into three lots (hereafter referred to as ‘Lot 1’, ‘Lot 2’ and ‘Lot 3’).  There was a house on Lot 1, in which Mr Nolan had lived with his wife and children for many years.  The other two lots were vacant.

1. Following the mortgagor’s failure to make the payments of interest required by the mortgage, and after giving the required notices,[1] MBF exercised its power of sale by auctioning the three lots on 18 August 2001. Mr Nolan then initiated Supreme Court proceedings claiming damages from MBF for an alleged breach of the duty to sell ‘in good faith and having regard to the interests of the mortgagor’ imposed on it by s 77(1) of the Transfer…