Walter v National Bank of Australia

[2001] VSC 64

SUPREME COURT OF VICTORIA
PRACTICE COURT	Not Restricted

No. 4486 of 2001

FRITZ JOSEF WALTER AND OTHERS	Plaintiffs
v.
NATIONAL BANK OF AUSTRALIA	Defendant

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	27 FEBRUARY 2001
DATE OF JUDGMENT:	27 FEBRUARY 2001
CASE MAY BE CITED AS:	FRITZ JOSEF WALTER & ORS. v. NATIONAL BANK OF AUSTRALIA
MEDIUM NEUTRAL CITATION:	[2001] VSC 64

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CATCHWORDS:      Application for interlocutory injunctive relief – No serious question to be tried – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	In Person
For the Defendant	N. Mukhtar QC with J. Moore	Russell Kennedy

HIS HONOUR:

1. The first and second named plaintiffs Fritz Josef Walter and Ingrid Adelheid Rosa Walter are the trustees of the Walter Family Trust and the owners of land on the Lincoln Causeway at Wodonga.  On that property they have established the Palatinat restaurant and brewery.  The restaurant and brewery are conducted by Palatinat Brewery Pty Ltd which is a company controlled by Mr and Mrs Walter and their daughter, the third named plaintiff, Carmen Walter.

1. On 16 December 1998, Mr and Mrs Walter as trustees of the Walter Family Trust, entered into two loan agreements with the defendant, the National Australia Bank Limited.  The first loan agreement was an interest only loan of $1m repayable in 12 months.  The second loan was for $380,000 payable over seven years.  The Walter family and their company, Palatinat, guaranteed the debt.  The guarantee was secured by a registered debenture charge over the company, a first registered mortgage over the land on which the restaurant and brewery is built, and a first registered mortgage over the Walter's family home in Wodonga.

1. The funds were drawn down on 24 December 1998.  In a letter written to the Walters by the bank on 30 December 1998, the bank explained how the total sum of $1,380,000 had been disbursed.  It would appear that a little over $1,074,000 was used to pay out existing loans and the balance of some $305,000 was then paid into Palatinat's bank account.

1. The $1m loan, of course, became repayable on 31 December 1999.  However, at the request of the Walters, the bank extended the facility for two months to 29 February 2000.

1. In April of 2000 there was a meeting between the Walters and officers of the bank.  At that meeting the Walters were informed that the bank was unwilling to continue to support them and requested them to either re-finance the loan of $1m or sell the restaurant and brewery.  At that time, the bank agreed not to take action before 1 July 2000.

1. In a letter written by Carmen Walter to the bank on 27 April 2000, Ms Walter told the bank,

"We have put the Palatinat brewery on the market as well as our family home.  After the sale of our home we wish to reduce the $1m interest only loan from the net proceeds.  I am sure it is clear that my family is sincere about what we do and we are aware of the situation concerning the trading position of the brewery which we are continually improving."

1. I should add that that letter which is written on the letterhead of Palatinat is Exhibit AGS 18 to the affidavit of Ashley Gordon Russell Smith, affirmed 26 February 2001.

1. In May 2000 the Walters asked the bank whether it would roll over the $1m loan and asked for a further advance of working capital of $300,000.  On 15 August 2,000 the bank refused any further facility.

1. There were further meetings in September, October and November 2000.  During the course of those meetings the bank warned the Walters that it would appoint a receiver to Palatinat if the Walters did not re-finance the $1m loan and eventually it gave the Walters until 18 November to do so. The plaintiffs did not do so and late in November the bank served formal demands for repayment upon them.

1. On 30 November 2000 the bank appointed a receiver and manager over Palatinat Brewery Pty Ltd under its debenture and on 1 December 2000 the receiver took possession of the restaurant and brewery business.  On 21 December 2000 the bank appointed the same receiver, receiver  and manager over the land under the mortgage that Mr and Mrs Walter had given it.  Since his appointment as receiver, the receiver has taken steps to sell the restaurant and brewery by auction.  The date fixed for the sale is 2 March next.

1. I now have an application by the plaintiffs for an injunction restraining the receiver from proceeding further with the sale of the restaurant and brewery.  Mr and Mrs Walter and their daughter Carmen have appeared before me this morning in person.  Their command of English was said not to be good and so I permitted a person I assume to be a friend of theirs, a Mr Malcolm McClure to address me on their behalf.  If I may so, a totally unsatisfactory situation.

1. I have had regard to the matters put to me on behalf of the plaintiffs but none of them satisfy me that there are serious issues to be tried in this proceeding.  The plaintiffs well knew that the loan of $1m was due for repayment on 31 December 1999; thereafter, by extension after extension the bank gave them ample opportunity to re-finance the restaurant and brewery or to sell the restaurant and brewery.  That, of course, is also clear from Exhibit AGS 18 to which I earlier referred.

1. As I have said, I am not satisfied that there are any serious issues to be determined in this proceeding.  Even if there was a serious issue to be determined I do not consider that the balance of convenience is such as to justify granting to the plaintiffs the relief they now somewhat belatedly seek.  That would cause the loss of the advertising expenditure of over $19,000 already incurred by the receiver and the loss of a further sum of $13,000 in respect of agents commission.

1. As against that, if the plaintiffs ultimately satisfy a court that the bank has acted improperly in the matter, in my opinion, the plaintiffs would be adequately compensated by an appropriate award of damages.  Their summons seeking interlocutory relief which was filed in the court on 16 December is dismissed with costs to be taxed including any reserve costs and paid by the plaintiffs.

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