Victor Seeto v Bank of WA [2010] NSWSC 922

This case involved a $22 million facility where the lender appointed receivers to borrower’s hotel businesses and properties. The borrower responded by bringing an application for a mandatory injunction for removal of receivers, on the grounds that the appointments were invalid. There were several established defaults including a failure to provide accounts and to keep overdraft facility within bounds. The borrower relied upon the Banking Code requirement for the bank to act fairly and reasonably towards them, and in a consistent and ethical manner. In finding for the lender, the court noted that the code preserved the bank’s entitlement to act with careful regard to its own interests and does not require the bank to subordinate its own interests to those of the customer, or to prefer the interests of the customer. The code is directed to the manner of exercise of the contractual right or power. It does not operate to qualify or vary such right or power. Accordingly the power to appoint a receiver could not be affected.

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