Privy Council confirms burden of proof regarding duty to achieve best price reasonably obtainable rests with the mortgagor

On 29 May 2025, in Finlayson v Caterpillar Financial Services Corp [2025] UKPC 24 (The Bahamas), the Judicial Committee of the Privy Council of the United Kingdom (the Privy Council) heard the appeal of Mr Garet O Finlayson and Mr Mark Finlayson (the Appellants) following the Supreme Court of the Bahamas and the Court of Appeal of the Bahamas finding in favour of the respondent, Caterpillar Financial Services Corporation (the Respondent).

In December 2001, the Respondent granted a loan to Kurc Limited (Kurc), which was beneficially owned by the Appellants, and the loan was secured against the Appellants’ mega yacht, Maratani (the Vessel). The Appellants acted as Kurc’s guarantor for the loan. When Kurc defaulted, the Respondent took possession of the Vessel and under its power of sale as mortgagor, sold the Vessel for USD$2.43 million – after which, the outstanding loan totalled USD$4 million. When the Respondent issued proceedings against the Appellants for the remaining amount, the Appellants counter-argued that they were not liable for the amount as the Respondent had failed to take reasonable care when exercising its power of sale to obtain the best price possible.

The issue for the Privy Council to consider was whether the burden of proof as to whether the Respondent had complied with its duty to take reasonable care when exercising its power of sale rested with the mortgagor or the mortgagee. The Privy Council dismissed the appeal on the basis that the burden rested on the mortgagor, except where the sale involves a conflict of interest for the mortgagee, and that the Appellants had not supplied sufficient proof to relieve them of their duties as guarantor.

The full judgment can be found here.