Glodale Pty Ltd v Investec Bank (Australia) Pty Ltd
[2003] VSC 47
•5 March 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4552 of 2003
| GLODALE PTY LTD (ACN 007 096 540) and ORS | Plaintiffs |
| v | |
| INVESTEC BANK (AUSTRALIA) LTD (ACN 071 292 594) | Defendant |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 February 2003 | |
DATE OF JUDGMENT: | 5 March 2003 | |
CASE MAY BE CITED AS: | Glodale Pty Ltd v Investec Bank (Aust) Limited | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 47 | |
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Mortgages – right of mortgagee to take possession and sell – whether contained by Terms of Deed - construction of Deed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M.S. Goldblatt | Goldsmiths |
| For the Defendant | Mr M.L. Sifris SC and Mr A. Trichardt | Gadens Lawyers |
HIS HONOUR:
On 28 February 2003, I heard and dismissed an application made on behalf of the plaintiffs for interlocutory orders as follows:
“1.A declaration that, pursuant to the terms of the Asset Management Deed, Investec Bank (Australia) Limited (‘Investec’) is bound to comply with the provisions of clause 5 thereof prior to the appointment of any Receivers and Managers and/or Administrators pursuant to the Guarantees.
2.An injunction restraining Investec, whether by itself, its officers, its servants and/or agents or howsoever otherwise from appointing Receivers and Managers and/or Administrators to any of the Plaintiff companies prior to it fully complying with the provisions of clause 5 of the Asset Management Deed.”
These are my reasons.
The plaintiffs, Glodale Pty Ltd, Boz One Pty Ltd, The Boat House Port Douglas Pty Ltd and Wallabah Pty Ltd are all companies of which James Geoffrey Rolfe and his wife, Rachel Elizabeth Rolfe, are directors. In September 2001, Glodale entered into an agreement with the defendant, Investec Bank (Australia) Ltd (“Investec”), whereby Investec lent $11.8M to Glodale. The loan documentation is voluminous and the securities included a fixed and floating charge granted by each of the plaintiffs. In addition, mortgages were granted to Investec as follows:
· by Glodale a mortgage over the property situate at and known as 363-367 Francis Street, Yarraville
· by Boz One a mortgage over the property known as “the Verandahs” and situate at 14 Owen Street, Port Douglas in Queensland
· by the Boat House a mortgage over the property situate at and known as 41-43 Murphy Street, Port Douglas
· by Mrs Rolfe a mortgage over the property known as and situate at 54 Wright Street, Middle Park
In August 2002, Investec asserted that Glodale was in breach of the loan agreement. It called up the principal and made demands upon the plaintiffs and Mr and Mrs Rolfe. There were disputes about these matters and their legal effect, and on 29 November 2002 the parties, including the parties to this proceeding and Mrs Rolfe, entered into an Asset Management Deed. The present application concerns the construction of that document.
The Deed in cl. 2 records the agreement of the parties that Glodale was in default under the loan agreement and that the balance of $11,474,454.14 was, as at 19 November 2002, presently due and payable by Glodale and by each of the guarantors, who included the plaintiffs other than Glodale itself and Mrs Rolfe. The parties also agreed that Investec is entitled to exercise its rights under the securities held including its rights as mortgagee under the mortgages to take possession and sell the four mortgaged properties. The operative parts of the Deed are contained in cll. 3 and 4 which I set out in full:
“3.1Notwithstanding the Acknowledgments, and particularly the acknowledgment by Glodale and the Guarantors (including the Mortgagors) that Investec is presently entitled to take possession of the Secured Properties without further notice to Glodale and the Mortgagors and to sell the Secured Properties, Investec, Glodale and the Guarantors (including the Mortgagors) have agreed as follows:
(a)Glodale must, on or before each of 6 December 2002, 28 December 2002 and 28 January 2003, pay to Investec an amount of fifty thousand dollars ($50,000.00) in Immediately Available Funds in partial reduction of the Facilities.
(b)Glodale must, on or before 19 December 2002, provide Investec with written evidence that an Approved Financier is prepared to refinance the Facilities within sixty (60) days or within such other time acceptable to Investec (which time Investec can accept or reject in its sole and absolute discretion). Such refinancing may be subject to only the following two (2) conditions:
(i)preparation of legal documentation; and
(ii)valuations to be obtained within 4 (four) days.
4.1In addition to the matters referred to in clause 3 above, Glodale and Investec have agreed that Glodale must:
(a)immediately obtain valuations from a valuer acceptable to Investec of the Port Douglas Owen Street Property and the Port Douglas Murphy Street Property, and provide these valuations to Investec on or before 6 December 2002; and
(b)cause Boz One Pty Ltd to have placed the Port Douglas Owen Street Property for sale on the open market in accordance with the sale methods and for the reserve prices as set out in Schedule 4 to this Deed, and call for written expressions of interest to be submitted on or before 6 December 2002.
4.2In the event that Glodale is in default of any of its obligations contained in clause 3.1 and an offer is or has been obtained, in an amount equal to or in excess of the reserve price as set out in Schedule 4 to this Deed, for the purchase of the Port Douglas Owen Street Property, Glodale shall cause Boz One Pty Ltd to do all such things or execute all such documents as necessary to accept that offer and enter into and complete a contract for the sale of the Port Douglas Owen Street Property, such offer to be accepted by 20 December 2002.”
Clause 2(h) provides:
“Glodale and the Guarantors (including the Mortgagors), by their execution of this Deed, acknowledge and agree that:
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(h)Other than the specific provisions of clauses 3 and 4, nothing else in this Deed shall operate as a waiver by Investec of its rights in terms of any of the Facilities, or any of its rights to enforce the Securities and particularly, nothing in this Deed diminishes in any way whatsoever the rights of Investec to appoint external administrators to Glodale or any of the Guarantors or any of the Mortgagors; and”
Clause 5 provides:
“5.1If Glodale defaults with respect to any of its obligations contained in clause 3.1 or clause 4 then Glodale and the Guarantors (including the Mortgagors) agree and acknowledge that Glodale and/or, the Guarantors or the Mortgagors will offer for sale and will sell, the Secured Properties in any manner which Investec, in its absolute discretion considers is appropriate, in the following order and within the following times
(a)subject to clause 4.2 the Port Douglas Owen Street Property – by 31 January 2003;
(b)the Port Douglas Murphy Street Property – by 28 February 2003;
(c)the Middle Park Property – by 17 March 2003; and
(d)the Francis Street Property – by 31 March 2003.
5.2If Glodale defaults with respect to any of its obligations contained in clause 5.1, then Glodale and the Guarantors (including the Mortgagors) agree that Investec shall be entitled to take possession of all of the secured Properties without further notice to Glodale or the Guarantors (including the Mortgagors), and sell the secured Properties in any manner and in whatever order Investec, in its absolute discretion decides is appropriate.
Clause 8 provides:
“In the event that Glodale is in default of any of its obligations under this Deed, for the consideration specified in clause 3 of this Deed, and to enable Investec to:
(a) obtain the maximum benefit under this Deed; and
(b) exercise all or any of its rights under this Deed or at law,
Glodale and the Guarantors hereby irrevocably appoints Investec, to be its attorney in its name and at its expense to make, do and execute all things which Glodale and/or the Guarantors agree or are required to do or execute under this Deed, or which Investec shall consider necessary or expedient to do or execute in the fulfilment, enforcement and/or attempted enforcement of this Deed, or the exercise of the rights, remedies, powers and discretions of Investec arising under this Deed.”
There was no dispute that Glodale has not complied with cl. 3.1. With respect to cl. 4, Mr Rolfe says, and this is accepted, that, although Boz One put the Owen Street property on the market as was required by cl. 4.1(b), no expression of interest in accordance with cl. 4 was received. With respect to cl. 5.1, the sales required to have been made to date have not yet been made.
What was put on behalf of the plaintiffs is that, upon its proper construction, the Deed precludes Investec from exercising its rights as chargee and mortgagee until it has sold down the four properties pursuant to cl. 5.2 and that such sales can only be undertaken by Investec acting as attorney under the power conferred by cl. 8. This means that the sales will be vendors’ sales and not mortgagee sales.
I considered that there was no substance in this submission for the following reasons:
(1)The only restraint imposed upon the rights of Investec to exercise its security rights is that contained in cl. 3.2 which is not applicable by reason of Glodale’s non-compliance with cl. 3.1.
(2)Clause 2(h) in terms limits the operation of the Deed in terms of waiver of such rights to the specific provisions of cll. 3 and 4. It does not include cl. 5.
(3)Clause 5.1 operates only where Glodale defaults with respect to its obligations under cl. 3.1 or cl. 4. Glodale has defaulted under cl. 3.1. Whether it has defaulted under cl. 4 is problematic. This was not argued before me and I do not base my decision on it. Under cl. 4 the obligation imposed on Glodale was, pursuant to cl. 4.1, to obtain valuations with respect to the Owen Street property and the Murphy Street property. In terms of cl. 4.2 it was to cause Boz One to accept an offer for the Owen Street property. I am not at all confident that it breached either of these obligations. The non-receipt of an expression of interest is not a breach of cl. 4. It may well be, therefore, that cl. 5 does not operate in any event.
(4)It is by no means certain that Glodale, as distinct from the owners, Boz One and the Boat House, is in default under cl. 5.1. If it is not, cl. 5.2 does not apply. Again, this point was not argued and I mention it only for completeness.
(5)Assuming cl. 5.2 operates, it empowers Investec to take possession and to sell the four properties. It may sell them in any order and in any manner of its choosing. The only restraint in terms of the order of selling is the inapplicable cl. 5.1. To my mind, the effect of cl. 5.2, where it operates, is to make clear that all restraints on the rights of Investec with respect to the mortgage securities have gone. It does not, by a side wind, impose further restraints. Nor is this conclusion affected by cl. 8 which simply confers rights on Investec to act in the name of Glodale and the guarantors if it be so minded.
I was pressed also with the practical difficulties attending the implementation urged on behalf of the plaintiffs. These depended upon the further facts that there were rights and property associated with the mortgage securities which would be difficult to deal with independently of the freehold. I pass over these matters. The terms of the Deed are, to my mind, abundantly clear on the point at issue.
Accordingly, I concluded that I should refuse the injunctive relief sought, even on an interlocutory basis, and I did so.
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