Forest Resort claim rejected in court

A COMPANY involved in the development of Forest Resort near Creswick has had a claim against its funders rejected in the Victorian Supreme Court.

Rytelle Pty Ltd lodged a counterclaim against fund custodians Perpetual Nominees Pty Ltd, who were trying to enforce a guarantee and indemnity after Rytelle failed to repay a $34 million loan.

Rytelle was involved in the resort development, which came to fruition in 2006 through developers Jim and Joan Walsh.

Rytelle claimed the lenders failed to make funds available as and when required by the agreement, causing the builder to walk off the site, resulting in adverse publicity preventing sales and preventing Rytelle from getting funding from another lender. Receivers were appointed in 2009.

It also alleged the lender had engaged in misleading conduct by saying it would have no difficulty in providing ongoing funding, and that the default interest rate on its account was an unenforceable penalty.

However, Justice Michael Sifris said yesterday Rytelle had failed to “establish the necessary causation between the lender’s alleged breaches and the losses suffered by the borrowers”.

He also said the lenders were not obliged to advance the funds under the loan agreement, as the borrowers were in default when the funds were requested.

In relation to the misleading conduct claim, Justice Sifris said the resort continued to pursue other lenders but did not receive terms they were willing to accept.

He also said the default interest rate was not a penalty as it was not extravagant and was in line with market rates.

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