Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd & Ors [2002] NSWSC 16

New South Wales Supreme Court

CITATION : Artistic Builders Pty Ltd v Elliot & Tuthill (Mortgages) Pty Ltd & Ors [2002] NSWSC 16 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 4825/01 HEARING DATE(S) : 6/11/01-12/11/01 JUDGMENT DATE : 8 February 2002

Artistic Builders Pty Ltd (plaintiff) Elliot & Tuthill (Mortgages) Pty Ltd (1st defendant; cross-defendant) Nova Scotia Developments Pty Ltd (2nd defendant; 1st cross-claimant) PARTIES : Metlej Developments Pty Ltd (3rd defendant; 2nd cross-claimant) Kayrouz Constructions Pty Ltd (4th defendant; 3rd cross-claimant) L.A.D.S. Developments Pty Ltd (5th defendant; 4th cross-claimant) Nordoc Pty Ltd (6th defendant) JUDGMENT OF : Campbell J

M Walton SC (plaintiff) COUNSEL : N Francey (1st defendant; cross-defendant) J Kelly SC (2nd-5th defendants; cross-claimants) Harris & Company (plaintiff) SOLICITORS : Elliot Tuthill (1st defendant; cross defendant) Metledge & Thompson (2nd-5th defendants; cross claimants) Foleys, Solicitors (6th defendant) CATCHWORDS : MORTGAGES - general law duty owed by mortgagee exercising power of sale - duty owed to third mortgagee same as duty owed to mortgagor - MORTGAGES - general law duty owed by mortgagee exercising power of sale - effect of first mortgagee taking deliberate action to keep seriously interested potential purchaser away from auction organised by first mortgagee - MORTGAGES - general law duty owed by mortgagee exercising power of sale - effect of first mortgagee's exercise of power of sale being affected by first mortgagee seeking an advantage for itself - MORTGAGES - general law duty owed by mortgagee exercising power of sale - juristic origin of duty to act in good faith - MORTGAGES - general law duty owed by mortgagee exercising power of sale - remedy for breach of duty - CORPORATIONS - RECEIVERS MANAGERS AND CONTROLLERS - duty of controller of property under s 420A Corporations Act 2001 (Cth) in selling that property - CORPORATIONS - RECEIVERS MANAGERS AND CONTROLLERS - remedies available for breach of s 420A Corporations Act 2001 (Cth). - CORPORATIONS - whether remedy of damages available under s 1324 (10) Corporations Act 2001 (Cth) when there is breach of duty established by the Act, but no injunction is sought concerning that breach - CORPORATIONS - RECEIVERS MANAGERS AND CONTROLLERS - who can obtain a remedy under s 423 Corporations Act 2001(Cth) against a controller who breaches a statutory duty established by Corporations Act - CORPORATIONS - RECEIVERS MANAGERS AND CONTROLLERS - range of remedies available under s 423 Corporations Act 2001 (Cth) - CORPORATIONS - RECEIVERS MANAGERS AND CONTROLLERS - procedure adopted by the Court in conducting an inquiry under s 423 Corporations Act 2001 (Cth). - PROCEDURE - separate hearings on liability and damages - when appropriate to order inquiry as to damages - PROCEDURE - election between remedies - MORTGAGES - general law duty owed by mortgagee exercising power of sale - form of order appropriate when inquiry and account ordered, following breach of duty Real Property Act 1900 Corporations Act 2001 (Cth) LEGISLATION CITED : Bankruptcy Act 1924 (Cth) Bankruptcy Act 1966 (Cth) Companies Act 1961 (NSW) Companies Act 1963 (NT) Hawkesbury Valley Developments Pty Ltd v Custom Credit Corporation Ltd (1994) 8 BPR 15,581 Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138 Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 Forsyth v Blundell (1973) 129 CLR 477 Warner v Jacob (1882) 20 ChD 220 Belton v Bass, Ratcliffe and Gretton Ltd [1922] 2 Ch 449 Kennedy v De Trafford [1897] AC 180 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Hughes Brothers Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91 Hughes Aircraft Systems International v Air Services Australia (1997) 146 ALR 1 Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187 Coroneo v Australian Provincial Assurance Association Ltd (1935) 35 SR (NSW) 391 Forsyth v Blundell (1973) 129 CLR 477 Bank of New South Wales v Adams [1982] 2 NSWLR 659 Adams v Bank of New South Wales [1984] 1 NSWLR 285 Colin D Young Pty Ltd v Commercial and General Acceptance Limited (1982) NSWConvR 55-097 Macquarie Bank Ltd v Clarke (Supreme Court of New South Wales - Commercial Division 22 March 1990 (unreported)) Scandinavian Pacific Ltd v Burke (1991) 5 BPR 97413 Garden Mews St Leonards Pty Ltd v Butler Pullnow Pty Ltd (No.2) (1984) 9 ACLR 116 Prioris Pty Ltd v Inscorp Holdings Ltd (Young J, 4 February 1994 (unreported)) Pulsford v Devenish [1903] 2 Ch 625 CASES CITED : Woods v Winskill [1913] 2 Ch 303 In Re: Glyncorrwyg Colliery Co [1926] Ch 951 Westminster Corporation v Haste [1950] 1 Ch 442 Inland Revenue Commissioners v Goldblatt [1972] Ch 498 Executor Trustee Australia Ltd v Deloitte Haskins Sells (1996) 22 ACSR 270 Waterhouse v Waterhouse (1999) 46 NSWLR 449 Permanent Trustee Australia Ltd v Perpetual Trustee Co Ltd (1994) 15 ACSR 722 Commissioner for Corporate Affairs v PW Harvey [1980] VR 669 Blair v Maidstone Palace of Varieties Ltd [1909] 2 Ch 283 Re Siromath Pty Ltd (No.3) (1991) 9 ACLC 1587 Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1990) 8 ACLC 39 R v Judges of the Federal Court of Australia; Ex Parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113 In Re: Hill & Ellis (1942) 13 ABC 57 Re Ah Toy (1986) 4 ACLC 480 Burns Philp Investment Pty Ltd v Dickens [No.2] (1993) 31 NSWLR 280 Commissioner for Corporate Affairs v Harvey [1980] VR 669 United Australia Ltd v Barclay's Bank [1941] AC 1 Island Records Ltd v Tring International Plc [1996] 1 WLR 1256 Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd (1997) 75 FCR 230 Tomlin v Luce (1889) 43 ChD 191 Wolff v Vanderzee (1869) 20 LT 353 Hall v Hayward (1886) 32 ChD 430 DECISION : First mortgagee in breach of both general law duty, and of section 420A Corporations Act 2001 (Cth) in exercising power of sale. Remedies of account, and for payment of loss sustained by the breach, ordered for each respective breach, with plaintiff required to elect between those remedies.