Forsyth v Blundell; Associated Securities Ltd v Blundell [1973] HCA 20

High Court of Australia Menzies, Walsh and Mason JJ. Forsyth v Blundell; Associated Securities Ltd v Blundell [1973] HCA 20

ORDER That the order of the Supreme Court of the Australian Capital Territory be varied by adding an order that the defendant Shell Oil Company of Australia Limited by itself its servants and agents be restrained from completing the agreement for sale entered into with the defendant Associated Securities Limited by document in writing dated 19th March 1970. That the defendant Shell Oil Company of Australia Limited and the defendant Associated Securities Limited pay the costs of the plaintiffs of the appeals. That otherwise the appeals be dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

1973, Aug. 7 Menzies J.

As I have the misfortune to differ from the other members of the Court, I will content myself with a short statement of why I consider that this appeal should be allowed.

The rule to be applied here is not in doubt; it was stated authoritatively by Lord Herschell in the last century. In Kennedy v De Trafford [1] , which has been followed by this Court in Barns v Queensland National Bank Ltd [2] and Pendlebury v Colonial Mutual Life Assurance Society Ltd [3] , the Lord Chancellor said [4] :

if a mortgagee in exercising his power of sale exercises it in good faith, without any intention of dealing unfairly by his mortgagor, it would be very difficult indeed, if not impossible, to establish that he had been guilty of any breach of duty towards the mortgagor. Lindley L.J. in the Court below, says that "it is not right or proper or legal for him either fraudulently or wilfully or recklessly to sacrifice the property of the mortgagor." Well, I think that is all covered really by his exercising the power committed to him in good faith. It is very difficult to define exhaustively all that would be included in the words "good faith", but I think it would be unreasonable to require the mortgagee to do more than exercise his power of sale in that fashion. Of course, if he wilfully and recklessly deals with the property in such a manner that the interests of the mortgagor are sacrificed, I should say that he had not been exercising his power of sale in good faith. 1. [1897] A.C. 180. 2. (1906) 3 C.L.R. 945. 3. (1912) 13 C.L.R. 676. 4. [1897] A.C., at p. 185.