Written by In the case of Almona Pty Ltd v Parklea Corporation Pty Ltd [2021] NSWCA 171, the appellant, Almona Pty Ltd was the registered owner of land in Western Sydney up until 2016. In 2013 a receiver was appointed to Almona by its financier Westpac Banking Corporation. Almona and its principal, Mr Consantine arranged a refinancing facility with another party, Secured Asset Portfolio III Ltd (in Liq) (‘SAP’). SAP was a special purpose vehicle within a group of companies. Almona defaulted under the new financing agreement, and in 2015, a receiver and manager, PPB Advisory Pty Ltd (‘PPB) was appointed by SAP.
In 2016 SAP, as mortgagee exercising a power of sale, entered into a contract to sell the land to Parklea Corporation. The sale price was stated to be $85.35 million, with vacant possession, or $81.1 million if Mr Constantine remained in possession. As Mr Constantine did not vacate, SAP and Parlea settled at the $81.1 million price.
In 2018, Almona commenced proceedings seeking to set aside the transactions involved in the sale on grounds of fraud, breach of duty, unconscionable conduct and misleading or deceptive representations on the part of SAP and Parklea. The primary judge found that there had been a breach of SAP’s duty in failing to disclose to Mr Constantine that he could have received a higher price if he vacated the premise prior to settlement, but dismissed their other claims.
On appeal, the Court held that a mortgagee’s power of sale must be exercised in good faith, which requires them to take reasonable precautions to obtain a proper price and ensure that there be an independent bargain between the mortgagee and purchaser.
However, here the price offered was the best price emerging from the sale process, and in absence of any allegations or evidence of collusion, the challenge to the sale was not made out by Almona.