7. Ross Delahunty [1993 Victoria]

Ross Delahunty is a suburban solicitor. He and his wife were having a house built in Brighton in 1989. They ran foul of the builder who didn't construct the house as they expected him to do. The builder held a significant position in the Housing Industry Association (HIA).

Delahunty became involved in arbitration with the builder and the outcome was far from satisfactory. He contacted the Department of Consumer Affairs and, through examination of comparable arbitrations, was able to show that the arbitration process was biased. The builder typically came out on top. Moreover, Delahunty claims that he was able to show how the bias was established.

Delahunty subsequently made application to the Housing Guarantee Fund (HGF) Ltd for restitution for faulty workmanship. This was a novel situation for the building industry and Delahunty found that he was not only fighting the HGF but also fighting the HIA. The builder was a director of both the HIA and of the HGF. Both the HIA and the HGF banked with the NAB.

Delahunty's photo appeared on the front page of the Melbourne Herald Sun Property Guide in early March 1993 with quotation from Alan Fels condemning shoddy builders.

The following Tuesday the NAB initiated the calling up of his loan. Delahunty suspected that any or all of the builder, the HIA or the HGF had instigated such action by using their influence with NAB, given the millions of dollars held by the NAB on behalf of both organisations.

Delahunty endeavoured to get another loan through seven other financial institutions. None of those attempts succeeded. None rang back as Delahunty had to declare that the NAB had called up his mortgage. Delahunty subsequently obtained a loan privately but the NAB refused to negotiate the payout of the mortgage.

In a Supreme Court action (No.5831) the NAB got summary judgment against Ross Delahunty for possession of his half share of the family home. Such summary judgment was not obtained against his wife. The matter against Mrs Delahunty went to trial. At mediation there was a proposal for settlement. This fell through, as the Delahuntys were informed by processing staff, because of the intervention by a senior NAB officer, a Mr Copsy. There was a proposal in mediation that Mrs Delahunty might pay out her husband's share and keep her own. Mr Copsy apparently said no to the NAB solicitors on the grounds that the Delahuntys hadn't paid rent nor had they serviced the loan since it was called up.

Ultimately the bank obtained judgment for possession and sold the Delahuntys' home for $505,000 in August 1997. The house subsequently resold in 2001 for $821,000. Although the bank claimed that it was owed over $900,000 it did not sue the Delahuntys to recover such monies. It only sought possession of their home.

The bank tried to bankrupt Mr Delahunty on three attempts but failed, due to procedural incompetence. It then took Mr Delahunty to court again and sued on the debt (No.6735). However the bank would never tell Delahunty what the residual debt was. No documentation was produced disclosing the presumed debt. Delahunty went back three times seeking further discovery in Supreme Court interlocutory proceedings. On two occasions the bank produced further affidavits showing extra material that hadn't been provided previously in either of the court cases. After about six efforts at discovery, the bank had not produced the documents that Delahunty sought.

At about the seventh attempt, Delahunty requested certain specific documents that he knew that the bank had but still refused to provide, especially in relation to the quantum of debt. The bank then withdrew from the proceedings instead of providing such information.

The debt to the bank before the conflict escalated was about $210,000. It was purely a business debt secured on investment assets which had subsequently been sold after request from the bank. However, the bank wrongly claimed that money (against which there was now no security) was still owing. There was also an overdraft of $15,000 which had arbitrarily been reduced by the bank from $30,000.

The only borrower was Mr Delahunty. However, the debt was secured against the house in the joint names of Mr & Mrs Delahunty which had earlier been valued at about $600,000 by the bank. However, after that Tuesday when the proceedings were initiated, the bank sent out an agent who did a kerbside valuation and he valued the property at just over $300,000. That was the trigger that gave the bank the credibility to take action and make demand.

Without servicing of the mortgage and with interest of 24% (6% higher than the normal rate) the total debt was approximately $450,000 and the bank sold the house for $505,000. The NAB wrote off the debt to $1 (although how much debt was written off is unknown), whereas the ‘red ink’ statements showed the continuation of the debt and the accumulation of charges. (The NAB ‘red ink’ statements are comparable to the ‘shadow ledger’ statements of the Commonwealth Bank.) Delahunty claims that there was no evidence that the bank wrote back the proceeds of sale against the tax write offs. Delahunty was advised that the NAB also claimed on its mortgage guarantee insurance. This case was never going to involve a bad debt unless the arbitrary kerbside valuation of $300,000 was taken as legitimate.

The NAB had no continuity of bank statements. There was no linking of separate accounts. Investment loans became home loans and some statements showed $600,000 to $700,000 debt while others showed $300,000. Delahunty persuaded the Master in the Supreme Court of the necessity for the continuity of bank statements to be produced but at that stage the bank withdrew its legal proceedings and paid Delahunty's legal costs instead of providing its modus operandi in dealing with the Delahunty account.

The Delahuntys no longer owe the NAB any money. Whether the bank owes the Delahuntys any money has never been determined because no proper accounting of the proceeds of sale has ever taken place. A proper accounting would have only occurred if another mammoth court case had been instigated by the Delahuntys. After ten years of litigation, that did not seem to be a viable option.

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