Jenkins v National Australia Bank Ltd [1999] VSCA 33

20. The two proceedings were tried together, Mr. and Mrs. Jenkins making common cause. In its statement of claim in the first proceeding the bank alleged that the sum of $559,752.80 was owing by Mr. and Mrs. Jenkins and, in the second proceeding, that $148,000 was owing by Mrs. Jenkins. Each of the guarantees relied upon contained an express provision that a certificate by the bank stating the amount owing should be conclusive evidence to that effect (as to which see Dobbs v. National Australia Bank [1935] HCA 49; (1935) 53 C.L.R. 643). Accordingly, at the trial on 16 March 1998, the bank put in evidence certificates dated 16 March stating that, under the first guarantee, Mr. and Mrs. Jenkins owed as at 10 March 1998 an amount of $878,501.21 (with daily interest of $222.63 accruing) and that, under the second guarantee, Mrs. Jenkins owed as at 10 March 1998 an amount of $135,271.02 (with daily interest of $39.84 accruing).

80. The assessment of the loss sustained by the guarantors when the bank misconducted itself in respect of the mortgaged property necessarily depended wholly upon the evidence given at trial. In broad terms, the principles were not in dispute. Where a mortgagee, who sells the mortgaged property, acts in breach of the duty he owes to the mortgagor, the mortgagor may require the mortgagee to account on the basis of wilful default. The mortgagor is entitled to be compensated for the loss thereby sustained and not uncommonly the measure of that loss will be the difference between the amount realised by the mortgagee and "the amount which would have been realized on a sale of the property conducted without wilful default": Pendlebury v. Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 C.L.R. 676 at 692 per Griffith, C.J. And though the foregoing refers in particular to the mortgagor, a like position obtains in respect of a surety, should the surety suffer resultant loss: Higton Enterprises Pty. Ltd. v. BFC Finance Ltd. [1997] 1 Qd.R. 168, Harrison v. ANZ Banking Group Ltd. (unreported, Court of Appeal, 15 May 1996). In Pendlebury, an inquiry was ordered to establish what the mortgaged property would have realised on a sale without default on the part of the mortgagor (see p.703) but no such inquiry was sought here: the parties were content to have the loss assessed by the trial judge on the evidence that was led.

"On that basis, Mr Schlicht [counsel for the bank] submitted that the amount of damages was $40,000, the amount expended by Mr Parkinson on restoring Camelot Castle to where it could be operated as a reception centre. However, when considering the position of Camelot Castle, it is necessary to separate the measure of damages in respect of the property, of which Mrs Jenkins was the registered proprietor and mortgagor, on the one hand, and the measure of damages in respect of the chattels, of which Harvord was the owner and mortgagor, on the other. The figure of $40,000 applies to expenditure under both heads. As the plaintiff [the bank] never valued the chattels or took an inventory of them, either at the time of the loan or at the time of taking possession of the property, there is no evidence other than the $40,000 figure as to their value. In addition, that figure does not take into account the voluntary labour of Mr Parkinson, his family and his friends, the provision of chattels and equipment which Mr Parkinson already owned, and the tables and chairs apparently donated by the police. It was suggested that Mr Parkinson's own labour was worth some $48,000. Given the duty of the Court to assess damages, however limited the available material (Commonwealth of Australia v. Amman Aviation Pty Limited [1991] HCA 54; (1991) 174 CLR 64) and doing the best I can with what is available to me, I consider that a reasonable estimate of the cost of restoring Camelot Castle to the state where it could be operated as a reception centre would be $120,000, being $60,000 for chattels and equipment and $60,000 attributable to labour and materials for the restoration of the freehold property subject to the mortgage."

(1991) 174 CLR 64