Manager says NAB in wrong on demand

THE National Australia Bank now admits it had no legal right to demand funds from the sale of a musical instrument importer’s home be used to pay his business debts.

Ross Dillon told the banking royal commission he would not have sold his home and broodmare farm in the NSW Hunter Valley if he knew he would end up with nothing.

NAB concedes it had no legal entitlement to use the proceeds of the 2015 sale of the property, Goanna Downs, towards the loans for Mr Dillon’s National Music business.

It was only revealed when NAB executive Ross McNaughton appeared at the royal commission yesterday.

Senior counsel assisting the commission Michael Hodge, QC, said: “Is it fair to say you now understand that NAB had no lawful entitlement to insist on the full proceeds of Goanna Downs being used to pay down the debts of National Music?” Mr McNaughton replied: “That’s correct.”

The general manager of its strategic business services division said he had only realised the property did not directly secure the National Music debts when he reviewed his royal commission statement.

He initially believed NAB did have the right to insist all the proceeds were used to pay down National Music’s debts, because of a personal guarantee and indemnity provided by Mr Dillon and his wife.

NAB, in fact, only held security over Goanna Downs for the Dillons’ mortgage and personal borrowings.

Mr Dillon said he had planned to reduce the business debts, but would not have gone ahead if he had realised “we weren’t going to get a penny”.

NAB’s barrister Wendy Harris, QC, spent some time questioning him, suggesting the bank had supported the business through difficult times and continued to do so.

Mr Dillon said the bank had been amazing, with the exception of the bankers around the time of the property sale.