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The Foreign Currency Loan Experience in 1980s Australia: Dwyer v Commonwealth Bank of Australia - 3 |
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School of Economics and Political Science In the early 1980s, in the first flush of financial deregulation, three of Australia’s four major banks embarked on a strategy of marketing loans denominated in foreign currencies to small businesses and farmers. Devaluation of the Australian currency, especially against the Swiss franc, saw an escalation of principal owed in Australian dollars by such borrowers. The resulting crisis produced a wave of litigation against the banks. Some of the court judgments favoured the borrowers, albeit these judgments were in a minority. Legal precedent, judicial culture and the superior resources of the banks proved formidable obstacles to borrower success in the court system, not least against the Commonwealth Bank of Australia. This paper examines the judicial experience of one litigation in particular – that of Dwyer & Anor v. Commonwealth Bank of Australia. The thrust of Dwyer, although not identical, is representative of the experience of foreign currency loan borrowers in the Australian courts. |
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5 The judge brings his learning to bear on the case
As a necessary complement to a consideration of Sackar’s
cross-examination, 3 In the subsequent Court of Appeal hearing, Defence Counsel John Sackar plays the legal club card to good effect (1995a: 55): ‘Bearing in mind the transcript indicates that his Honour kept an active eye on what was going on before him, he made crucial findings on active issues’. When Dwyer’s counsel addressed His Honour, on the eighth day of the hearing (1991a: 365) regarding the length of the cross-examination, His Honour replied that Mr Sackar should be allowed to ‘probe the matter’.
Staff AJ came alive on the ninth day during Sackar’s
attempt to deny In particular, Sackar objected to paragraph 51, a three-page list (with sub-sections (a) to (i)) of what adequate information for prospective foreign currency loan borrowers would have entailed (Baird, 1991). This objection induced an exchange between Dwyer’s counsel, Pembroke, and His Honour that transcends the formal impartiality of the bench and captures the essence of the trial (1991a: 404ff.).
[Pembroke] “The case is not merely that a misrepresentation
was made. The case is that a misrepresentation – or several – were made
and that there were omissions. Mr. Baird, the solicitor, says if these
omissions or any one of them had been brought to his attention he would
have counseled his client not to take up the transaction … [Staff AJ] The inference from the whole of the evidence will be that Mr Dwyer would have accepted that advice [a full explanation] and so would his mother, the other borrower.
[Pembroke] “There is no evidence that Mr Dwyer would have
accepted Mr “The evidence of Mr Dwyer about this looked at overall is fairly clear. He called along his solicitor to assist him, to explain if need be what was being put to him by the bank. …
[Staff AJ] “Having regard to the way Mr Pembroke puts the
case, I think I will admit this material [par.51]. I have grave doubts
about its admissibility but it can be debated at the end of the case and
if I am persuaded it has some relevance, so be it and, if not, I will just
discard it. Certainly I would not treat is (sic) as corroborative of
anything that was said at the meeting in the absence of direct evidence
from Mr Baird.” His Honour made a curious and related intervention on the eleventh day, during Sackar’s attempt to clarify from a Baird Statement how many meetings and on what dates Baird may have met with staff of International Currency Services, a finance broker. His Honour (1991a: 484):
The substance of the witness’ recollection in this instance was inconsequential to the case, a product of one of Sackar’s diversions. But evidently, this diversion produced another black mark against Baird’s credibility. His Honour declined to comment on his estimation of the quality of recollection embodied in the swathe of unsworn statements from bank officers offered up by the Bank, some of which differed markedly, and on fundamental issues, from the sometimes strongly-held memories of Dwyer. 6 The judgment
We come now to His Honour’s judgement of the 18 October
1991 (Dwyer v Commonwealth Bank of Australia, 1991b). It is a judgement of
extremely low quality and reflects poorly on the integrity of the office
to which Mr Staff had been elevated (albeit in an Acting capacity). Of the
10 page judgement, the first seven are central to the case, constituting a
mere 2000 words. There are errors of fact. There are generalisations made
on speculative grounds. There is no legal argument or discussion of legal
principles or precedent. There is no The judgement centres on the denial of credibility to the account ofDwyer and Baird. Dwyer is said to have been committed to the obtaining of a foreign currency loan, to have been committed to the view that the risks were trivial, and thus no information from Commonwealth Bank or advice from Baird would have dissuaded Dwyer from this path. The bias of the judgement is compounded by a range of statements of factual detail which are not supported by the evidence, or (more typically) whose significance is not transparent but is open to alternative interpretations. • [Westpac] had for some time pressed the Dwyers to reduce the amount of their indebtedness by the sale of one or other of the properties. Mr Dwyer, had, however, resisted the Bank’s efforts … (1991b: 2)4. Geoffrey Dwyer proceeded to sell his residence in 1983, and exchanged contracts. The sale fell through because Dwyer’s solicitor had not brought the heritage listing of the residence to the buyer’s attention.
• Mr Looke filled out for Mr Dwyer an application for an
unhedged foreign currency loan in Swiss francs which was submitted to
Westpac. (p.2)5. Dwyer acted as a go-between for Looke’s proposal for a
bank-mediated loan of ‘not less than $US10,000,000.00’ for a collective of
prospective customers in US dollars to Westpac. The solicitor’s letter to
Westpac reads: ‘The loan and all interest and capital repayments are to be
made in the (sic) United States dollars’ (Roe et. al., 1982: 1). • Mr Dwyer conceded in his evidence that there was no question of him considering the [CBA] on-shore option as against the FCL option and that the only question which he had then to consider was the option of a simulated FCL as against an FCL. (p.3). Dwyer conceded nothing of the sort. • [Dwyer’s recollection of the content of the 1 August meeting] being inconsistent in a number of respects with the contemporaneous notes which Mr Baird took of the discussion … (p.3).But Dwyer and Baird differed on the role of graphs in the meeting, an inconsequential aspect. The interpretation of graphical ‘evidence’ is discussed below. • [Dwyer’s recollection] was in my opinion fashioned so as to …discount the fact that he was receiving important warnings and explanations from the Bank’s officers. (p.4). But where is the evidence for such warnings and explanations? • … I cannot be satisfied that Mr Dwyer would have relied upon or accepted such information or advanced as the Bank would have tendered and in reliance upon it … to put in place some stop-loss mechanism (p.5). But a stop-loss mechanism was not offered as it was then unavailable (of which more elsewhere)
• It is noteworthy that the written material indicates that
Mr Dwyer, whenever he applied for a loan, applied for an unhedged Swiss
franc loan. (p.6). Incorrect. Moreover, His Honour did not take into account the fact that the Australian dollar was not floated until December 1983 (indeed, not fully floated even then), and that relative currency movements during 1985 and after were now of a different order to that prevailing beforehand. In addition, His Honour declined to investigate the origins of the Dwyer CBA loan, rejecting a priori as improbable Dwyer’s account (as outlined above). Said Staff J (1991b: 7):
Improbable it was, but not unrealistic. This author has
advice from a retired bank manager of many years’ experience that it is
not unusual for senior bank officers to initiate a loan on the basis of
personal connections, with approval not subject to conventional
procedures. Dwyer insisted ‘That’s what happened.’ As Dwyer did not
approach the CBA for a loan, yet was met with an approval, on what grounds
could the ridiculing of the Dwyers’ explanation rest? As this significant
issue was pursued anew by Defence Counsel during the His Honour’s temper is encapsulated in his judgement of Mr David Baird, suburban solicitor. ‘Mr Baird was an honest witness but had a very imperfect recollection and in many case, no recollection at all. His lengthy hesitations and his tortured facial expressions, made it obvious to me that he often had no recollection and was seeking to reconstruct.’ (p.6) In general, Staff’s judgement is reprehensible in its sloppiness and impropriety. It puts at risk the reputation of the Australian judicial system as a vehicle for justice. By M. W. WALBERTThe Coming Battle documents from Congressional records, newspaper reports and writings by the founding fathers and others a chronology of events long forgotten that shaped our fledgling nation from 1776 to 1899. Read about the manipulation of our money and its supply, the intentional creation of recessions, depressions and panics, manipulation of the stock markets, and the demonetization of silver. by Eustace Mullins Eustace Mullins' carefully researched and documented treatise picks up from Walbert's expose' and brings it to the mid 1980's by Allen Aslan HeartWHAT CAN YOU DO? Stop playing THEIR game. Take back your power. Stop paying taxes that are not legal or lawful. Stop paying bills you don't really owe. Stop using THEIR money. There ARE ways if you open your mind and look for the gaps in their fences that keep the sheeple in their pasture. Are you chattel or a real person? You are the one who makes that choice.
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