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-Power of Sale •There are three steps in a power of sale:1.The mortgagor must be in default under the mortgage, usually through non-payment of interest or principal.2.There are strict rules about formalities, such as giving written notice. If these are not complied with, then the mortgagee will not be able to exercise the power of sale. 3.The duty or standard of care must be attained in the sale of the property.•A power of sale is the most commonly used remedy where the mortgagor defaults under the mortgage. If there is no express clause, it can be an implied remedy: Conveyancing Act, s 109.•Fixtures (Conveyancing Act, s 109(e)) and easement or profits a prende (Conveyancing Act, s 109(f)) can be sold separately.•Power of sale can only be invoked where the mortgagor has defaulted and written notice has been given to rectify the default to the mortgagor: RPA, ss 57 and 58.127
Semester One 2019•Any sale must be a genuinely independent bargain: ANZ v Bagadilly Pastoral (1978) 139 CLR 195.•There is no settled standard of care in Australia in regards to the mortgagee’s duty of care - general set of rules in exercising power of sale. The negligence - commonly associated with torts standard is stricter than the good faith standard - mortgagee has breached their duty of care •The “without negligence” test is outlined in the following cases:•McHugh v Union Bank of Canada  AC 299, per Lord Moulton: The mortgagee’s duty is to behave ‘as a reasonable man would behave in the realization of his property.: privy council —> objective standard •Standard Chartered Banking Ltd v Walker 1 WLR 1410, per Lord Denning: ‘This duty is only a particular application of the general duty of care to your neighbor which was stated by Lord Atkin in Donoghue v Stevenson.’: women was drinking beverage and disci=overed small - sued for breach of duty of care - standard should be similar to the standard in tort law •Cuckmere Brick Co v Mutual Finance Co Ltd  Ch 949, per Salmon LJ: A duty of the mortgagee was to take reasonable steps to ascertain ‘the true market value’ when selling the property: express duty - due diligence to check market rate •However, there has been a general move away from treating negligence based on the common law to conceiving it as an equitable duty: Downsview Nominees v First City Corp 2 WLR 86: •Key question is whether or not the mortgage has committed something that is unconsiousable - unjust - demand intervention of equity to protect right of mortgager from the right of sale. •The “good faith” test is outlined in Kennedy v de Trafford  AC 180. Lord Herschell stated a mortgagee would not be in breach so long as the duty in the power of sale were exercised in ‘good faith, without any intention of dealing unfairly.’ - whether or not people have acted as to what would be reasonably expected of them in good faith •In Australia, the standard is unspecified, but it is generally understood that the mortgagee cannot recklessly or willfully sacrifice the mortgagor’s interests: Pendlebury v Colonial Mutual Life Assurance Society