10. Conclusion
As noted in the introduction, the
representations summarised above highlight issues that deserve exposure
and generate questions that deserve answers.
Several questions present themselves:
1. Is there a statutory requirement upon banking and financial
institutions in Australia to provide for the safety and security of
depositor funds?
2. Why do borrowers who have had a productive relationship with the bank
but who may have experienced problems (possibly short-term) have their
facilities withdrawn, as opposed to two alternatives: working with the
customer to re-establish their viability with appropriate instruments and
terms to the mutual benefit of both customer and lender; or working with
the customer to facilitate an ending of the relationship on terms that
minimise the costs to the borrower without substantially inconveniencing
the lender?
3. Why do some borrowers who have never defaulted on loan payments have
their facilities withdrawn and their assets subsequently commandeered?
4. Why do customers not have the most appropriate credit facilities for
their needs, with the potential for inappropriate facilities contributing
to their demise?
5. Is it possible that banks regularly determine facilities on the
criterion of borrower assets rather than that of borrower business
prospects?
6. Is the traditional use of security over the family home a morally
legitimate practice? This issue was raised in Finding a Balance (Reid
Committee, 1997: p.150), which in turn noted that the issue had also been
raised in the House Industry Committee’s previous report on small business
(the Beddall report) in 1990.
7. What is the rationale of foreclosing on a borrower on terms that that
would have left the bank with better returns if the alternatives of either
continued support or support until sale as going concerns had been
pursued? Are there net gains to the bank from tax deductions arising from
write-offs of the debt?
8. Following the bank’s decision to place customer assets on an impaired
status, are all customer bank statements (including both conventional and
red ink/shadow ledger statements) distributed to customers, as per the
recommendations of a Commonwealth Parliamentary Committee (Chapman, 2000)?
9. Why is bank discovery of relevant documents, following request from
aggrieved customers, a belated and inadequate process?
10. To what extent is staff turnover at the point of contact with
customers a contributory factor in a customer’s demise? What principles
have driven the substantial staff turnover at branch manager level in
recent years, and has the functionality of such turnover been evaluated?
11. Why are customer assets sold under value?
12. Why are customer preferences for sale of assets refused?
13. Is there any statistical relationship between the phenomenon of assets
sold under value and the pursuit of customers to bankruptcy?
14. In banking litigation, why do the courts persist with the farce that
the ‘receiver is the agent of the mortgagor’ (the borrower) and that ‘the
mortgagor is solely responsible for the receiver's acts and defaults and
for the payment of the receiver's remuneration’ (c/f Walter, VSC36;
Freeman, FCA244)? Is this fiction a perennial de facto vehicle for the
mortgagee (the bank lender) to exercise discretion over the receiver’s
actions without incurring any legal responsibility?
15. On occasions when the apparent cause of customer problems is
incompetence on the part of bank employees, why is the customer left (or
pursued through the courts) as the ultimate victim?
16. On occasions when the apparent cause of customer problems is
malfeasance on the part of bank employees, why is the customer left (or
pursued through the courts) as the ultimate victim?
11. References
Ackland, Robert & Harper, Ian (1992),
“Financial deregulation in Australia: boon or bane?”, in Peter Forsyth
(ed.), Microeconomic Reform in Australia, Sydney: Allen & Unwin.
APRA [Australian Prudential Regulation Authority] (2004), Report into
Irregular Currency Options Trading at the National Australia Bank, 23
March.
Bell, David (2004), “Banking world a friendlier place for small
businesses”, Australian Financial Review, 4 March.
Chapman Committee [Parliamentary Joint Statutory Committee on Corporations
and Securities] (2000), Report on ‘Shadow Ledgers’ and the Provision of
Bank Statements to Customers, October.
Edwards, V. & Valentine, T. (1998), “From Napier to Wallis: Six Decades of
Financial Inquiries”, Economic Record, 74, 226.
Hardgrave, Gary (1998), “Grievance Debate: National Australia Bank”, 30
November. Hansard, House of Representatives, p.935.
Hardgrave, Gary (2001), “Adjournment: Banking: Fee-Free Accounts”, 27
March. Hansard, House of Representatives, p.25782.
Jones, Evan (2001), “A sorry saga of reform off the rails”, Canberra
Times, 6 August.
KPMG Consulting (2002),
Small Business Banking in Australia: a research
report. February. 63pp. Commissioned for the Australian
Bankers’ Association.
KPMG (2003),
Small Business Banking in Australia 2003: a research
report. November. 84pp. Commissioned for the Australian
Bankers’ Association.
Lampe, Anne (2003a), “Buyer relied on CBA, court told”, Sydney Morning
Herald, 25 June.
Lampe, Anne (2003b), “CBA officer broke bank rules”, Sydney Morning
Herald, 27 June.
Lampe, Anne (2003c), “CBA set debt rate at zero, court told”, Sydney
Morning Herald, 28-29 June.
Lampe, Anne (2004a), “A tale that courts disaster”, Sydney Morning Herald,
25 February.
Lampe, Anne (2004b), “CBA crushes customer over $65”, Sydney Morning
Herald, 10 May.
Lekakis, George (2002), “NAB sheds marginal customers”, Australian
Financial Review, 16 August.
Love, David (2001), Straw Polls, Paper Money, Ringwood: Viking.
Martin Committee [House of Representatives Standing Committee on Finance
and Public Administration] (1991), A Pocket Full of Change: Banking and
Deregulation, Canberra: A.G.P.S.
McLean, Paul (1990), “Adjournment: Banking Industry”, 12 November. Hansard,
Senate, p.3955.
McDonnell, Denis Lane & Monroe, John George (eds.) (1952), Kerr on the law
of Fraud and Mistake, 7th edn., London: Sweet & Maxwell.
Reid Committee [House of Representatives Standing Committee on Industry,
Science and Technology] (1997), Finding a balance: towards fair trading in
Australia, Canberra: A.G.P.S.
Sensis (1999), Yellow Pages Survey.
12. Court Case References
National Australia Bank v AWJ & WH
McMinn [2001]
Queensland Supreme Court No. 5580 of 2001
Handberg v Walter & Anor [2001] VSC 145 (7 May 2001)
Victorian Supreme Court (Practice Court) No. 5147 of 2001
National Australia Bank v Walter [2004] VSC 36 (16 February 2004)
Victorian Supreme Court
National Australia Bank v Voloshin [2000] NSWSC 84 (25 February 2000)
New South Wales Supreme Court No. 11227 of 1999
National Australia Bank v Freeman [2000] QSC 295 (11 October 2000)
Queensland Supreme Court No. 4013 of 1998
National Australia Bank v Freeman [2001] QCA 473 (2 November 2001)
Queensland Supreme Court of Appeal No. 9718 of 2000
National Australia Bank v Freeman [2002] FCA244 (12 March 2002)
Federal Court of Australia No. Q 7001 of 2001
National Australia Bank v Delahunty
Victorian Supreme Court No. 5831 of 1993
National Australia Bank v Delahunty
Victorian Supreme Court No. 6735 of 1996
National Commercial Banking Corporation v Smith & Sweeney
District Court No. 2598 of 1984
National Commercial Banking Corporation v Smith & Sweeney
Queensland Supreme Court No. 447 of 1986
Kabwand Pty. Ltd. [& ors] v. National Australia Bank G65 of 1986
Federal Court of Australia (Queensland)
Kabwand Pty. Ltd. [& ors] and National Australia Bank G355 of 1988
Federal Court of Australia (Queensland)
EP & EJ Somerset ex parte National Australia Bank
Hearing of Section 41(7) Affidavit
Federal Court of Australia (Queensland) No. QP 374 of 1990
EP & EJ Somerset ex parte National Australia Bank
Federal Court of Australia (Queensland)
General Division Bankruptcy District No QP 151 of 1991
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