On 25 March 2021 the Queensland Supreme Court ruled on the sale of property by a mortgagee bank in possession. In the case, HSBC Bank v Wang, the borrowers fell behind in their repayments and the bank obtained an order for possession in early 2020. After taking control of the property, the bank listed the property for sale. A marketing campaign was undertaken and the property was sold soon thereafter in September 2020. However, COVID-19 restrictions had truncated the marketing campaign.
The borrower lodged a caveat prior to the sale, alleging the property was being sold for less than its true value by the bank, causing them loss. The Supreme Court was asked to rule on the validity of the caveat. The key complaint was that the reduced marketing period resulted in a lower sale price than would otherwise have been achieved.
The Court did not dispute the probability of a higher price being likely if the sale had been delayed. Rather, the court held that mere fact of a sale at an inadequate price does not demonstrate a lack of good faith in the bank’s sale process. For the borrower to succeed, it was necessary to show that the mortgagee’s failure to take reasonable steps to obtain a proper price was so serious as to be characterised as unconscionable conduct. Ultimately, the court held that there was no evidence that the Bank had failed to act appropriately in the sale.