National Australia Bank Ltd v Morkul Australia P/L
[2002] VSC 214
•27 May 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 7122 of 2001
| NATIONAL AUSTRALIA BANK LIMITED | Plaintiff |
| v | |
| MORKUL AUSTRALIA PTY LTD AND OTHERS | Defendants |
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JUDGE: | BEACH J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 23 MAY 2002 | |
DATE OF JUDGMENT: | 27 MAY 2002 | |
CASE MAY BE CITED AS: | NATIONAL AUSTRALIA BANK LTD v MORKUL AUSTRALIA PTY LTD & ORS | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 214 | |
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CATCHWORDS: Interlocutory injunction – Bank refrained from seizing equipment leased by it – Injunction conditional upon defendant paying bank value of equipment.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Tsalanidis | Russell Kennedy |
| For the Defendants | Mr R. Cook | Lardners |
HIS HONOUR:
On 10 August 2001 National Australia Bank Ltd (NAB) filed a proceeding in the court whereby it seeks to recover from five defendants, namely Morkul Australia Pty Ltd (Morkul), Castrex Pty Ltd (Castrex), John William Heeney (Heeney), Barbara Shirley Heeney (Mrs Heeney) and Eric Townsend (Townsend) moneys advancing by it to Morkul, Heeney and Mrs Heeney. Castrex liability to the bank is pursuant to a mortgage given by it to the bank to secure repayment of the moneys to the bank; Heeney's and Townsend's liability is pursuant to a guarantee to the bank.
In their defences and counterclaim the defendants have raised various matters by way of defence, particularly allegations that the bank has been guilty of unconscionable conduct and misleading and deceptive conduct.
It is unnecessary to go into those allegations in my reasons for judgment as the present dispute is between NAB and Morkul and Heeney and can be isolated from the main issues in the case.
As part of its dealings with NAB, Morkul entered into two lease agreements in relation to equipment used in its business numbered 47 183 3172 and 47 122 3816 respectively.
Lease number 47 122 3816 has now been paid out by Morkul and can be ignored.
Lease number 47 183 3172 is dated 25 July 1997 (the lease) and relates to a Jet Pak Automatic L Sealer, a Jet Pak Hot Air Shrink Tunnel and a 2 metre long variable speed outfeed conveyor (the equipment).
Pursuant to the lease Morkul was required to pay 48 instalments of rental each of $1,066.76. At the conclusion of the lease it was to pay the further sum of $9,996, that being the residual value of the equipment.
Clauses 9.1, 9.7 and 10.1 of the lease read:-
"9.1Nothing contained in this Lease, shall confer on the Lessee any right of property or interest in or to the Goods and the Lessee shall be a bailee thereof only.
9.7(a)If the Lessor becomes entitled to retake possession of the Goods pursuant to the terms of this Lease, the Lessee hereby irrevocably authorises the Lessor to enter upon any land or premises whereon the Lessor or its authorised officer reasonably suspect that the Goods are, and for the purpose of such entry, break open any inside or outside gate, door fastening or other obstruction and detach and dismantle the Goods from any part of the premises, to which they may have been affixed.
(b)The Lessee hereby indemnifies and shall keep indemnified the Lessor, its agents, contractors and employees and any one or more of them, against any claim demand or action relating in any way to anything done in the purported performance of the rights contained in this Clause 9.7.
10.1(a)Upon the termination of this Lease by effluxion of time, the Lessee shall at its own cost, deliver the Goods in good order and first class condition to the Lessor, at the address appearing in Item 3 of the Schedule, or to such other address as the Lessor may direct either orally or in writing, together with any duly executed transfer of certificate of registration and such other logs, manuals, certificates and records as the Lessor requires.
(b)If the Lessee fails to deliver the Goods, it shall pay to the Lessor by way of liquidated damages for detention, an amount equal to the average daily rental payable by the Lessee during the term of this Lease, for each day such failure continues and the Lessor may, but without any obligation to do so, repossess the Goods at any time during such unauthorised detention."
Morkul has made no payment in respect of the lease since 24 December 1999 at which time there was a balance outstanding of $31,824.83.
It is the bank's case that as at 8 May 2002 that amount had increased to $51,876.49 principally by reason of the accrual of late payment charges, rental charges calculated in accordance with clause 10.1(b) and GST.
The details are set out in paragraph 6 of the affidavit of Julie Callea-Smyth sworn 8 May 2001, the relevant aspect of which reads:-
"Account number 47 183 3172:
Balance outstanding: $31,824.83
Plus late payment charges: $ 4,178.53
Plus tenancy rentals $10,588.20
Plus agent costs $ 948.75
Plus GST $ 4,336.18
Settlement figure $51,876.49".
Morkul and its director Heeney challenge the accuracy of those figures and the bank's entitlement to recover anything over and above the December 1999 balance of $31,824.83.
The equipment the subject of the lease is still being operated by Morkul in its business.
On 2 May 2002 the bank took steps to recover the equipment.
On the afternoon of that day an urgent application was made to me by Morkul for injunctive relief to restrain the bank from repossessing the equipment.
On appropriate undertakings been given to the court by counsel for the parties both that day and on 9 May the matter was stood over to 23 May.
On 22 May 2002 Morkul made an open offer to NAB to pay to it the sum of $24,843 in respect of the equipment within a period of 30 days on the basis that it be permitted to maintain and utilise the equipment until the trial of the proceeding and without prejudice to either of the parties' entitlement to maintain that the payment was incorrect at the trial of the proceeding.
The offer was rejected.
I finally heard Morkul's application on 23 May.
In my opinion the terms of the lease to which I earlier referred are clear and NAB has every entitled to recover its equipment.
If it does so however, Morkul's business operations will cease throwing out of work its eight employees.
The granting of injunctive relief by this court is discretionary and the court will be reluctant to do so where the order sought will cause undue hardship to innocent third parties.
Nevertheless, the court recognises the importance of upholding the rights of parties engaging in commercial transactions and their entitlement to an enforcement of their rights.
Having considered this matter over the weekend, I have concluded that the appropriate course to adopt is to order that within 30 days of this date the first defendant pay to the plaintiff the balance outstanding under the lease in respect of the equipment, namely $31,824.83 together with the late payment charges of $4,178.53. If the first defendant complies with that order, then I shall restrain the plaintiff from seizing the equipment until the trial and determination of the proceeding or further order. The usual undertaking as to damages has been given to the court on behalf of the defendants.
I therefore order that if within 30 days of this date the first defendant pay to the plaintiff the sum of $36,003.36 in respect of the equipment the subject of lease number 47 183 3172, then the plaintiff is restrained until the hearing and determination of this proceeding or further order from repossessing the equipment the subject of the said lease.
I reserve the costs of the application.
I reserve to the parties liberty to apply and I direct that within 48 hours this order be prepared by the solicitors for the first-named defendant and brought to me for authentication.
MR TSALANIDIS: I ask Your Honour that pending the 30 day period, that the first defendant will not dispose of or further encumber the equipment in that event.
HIS HONOUR: That undertaking was also given by counsel for the defendants and will be set out in the order.
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