Hypothetical by Manny Wood published in the Coffs Coast News Of The Area on 16 April 2021.
John purchases a property for $2 million and obtains a loan to finance the acquisition.
Unfortunately, John soon finds himself unable to work due to the restrictions imposed because of the coronavirus pandemic and as a result, his mortgage falls into arrears.
The bank obtains default judgement and ultimately takes possession of John’s home.
After an unsuccessful attempt at auction, the bank enters into a contract to sell the property for $1.2 million.
John is not happy with the sale price and lodges a caveat preventing the sale, claiming that the bank failed to act in good faith by selling the property at significant undervalue.
The bank commences action in the Supreme Court, seeking to have the caveat removed so that the sale can proceed.
John claims that the coronavirus pandemic has affected the sale price and on this basis, says that the bank should delay the sale and continue to market the property.
John obtains a valuation, stating that his property is worth $2 million.
The bank obtains their own valuation, supporting the sale price. The bank also provides evidence that the property had been extensively marketed.
The Court finds that is there is no evidence that delaying the sale would achieve a better result. The Court also finds that the bank was not in breach of its duty to act in good faith.
The Court ultimately orders the removal of the caveat.
However, the Court decides that John had a caveatable interest and that his failure to remove the caveat was not “so completely unfounded” that he should be ordered to pay the bank’s legal costs, whilst noting that the bank may, in any event, have the ability to recover these costs under the terms of the mortgage.
If YOU would like a particular issue addressed, please email Manny at manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
