5 The judge brings his learning to bear on the case
As a necessary complement to a consideration of Sackar’s
cross-examination,
the Dwyer case requires commentary on the contribution of the presiding
judge, Acting Justice Staff. It is not an impressive contribution. His
Honour appeared to be somnolent through Sackar’s long-winded
cross-examination, tolerating diversion and abuse of the witness.3 [In
fact, his nose was red when the court convened and remained literally
somnolent and incapacitated throughout the hearing.]
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
admissibility of a number of key paragraphs in Baird’s written submitted
Statements (p.403). They relate to the 1 August meeting, to Baird’s claims
of being denied adequate information, and that his advice to Dwyer would
have been negative if adequate information had been supplied. His Honour
did not accept all of Sackar’s objections, but concurred with many of
them. If Baird had memories unacceptable to the Bank’s counsel, then he
wasn’t allowed to bring them to the Court.
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] “As I recollect it, mere silence is irrelevant. In general
there is no duty to speak. “The Court of Appeal [in Mehta –v- Commonwealth
Bank] made
it quite clear that the reason for their observation to that effect was
that on the facts there wasn’t any reason to think that Dr Metter (sic)
assumed that what he was being told was a full and complete explanation.
“The Court of Appeal said there was no duty at law to speak.
…
[Pembroke] “Yes, but if you speak, as the bank did in this case, if
you give a formal representation then you are saddled with a duty. What
was spoken was a partial explanation. It is a very major part of the whole
case and I would address your Honour on that. …
[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
Baird’s advice.
“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 admits the crucial paragraph but denies its bearing. Pembroke
and Staff AJ had both read the Mehta judgment but had contrasting
interpretations of its meaning. Staff’s appropriation of Mehta is allowed
to retire and is not brought forth again from its slumber.
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):
“We all know how these statements come to be prepared. They
are
not the witness’s own words. All I will say is that I think the other
evidence demonstrates the imperfection of the witness’s [Baird’s]
recollection abundantly.”
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
consideration of context. There is no consideration of Bank policy in the
light of bank discovered documents, and no contemplation of what bank
officers might or might not have said.
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).
• Subsequently, an application was made by Mr Dwyer to the defendant for
an unhedged foreign currency loan, in Swiss francs… (p.2). But ‘unhedged’
is a furphy. A fully hedged foreign currency loan had no advantages over a
domestic loan. A foreign currency loan, as offered by all relevant
institutions to small business borrowers, was de facto unhedged.
• 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.
In support of the general thrust, there is presented the usual canard that
Dwyer could not possibly be ignorant of foreign exchange fluctuations
‘having regard to his dealings in his export and import business over many
years’. The experience of a small trader with foreign currency is in
discrete parcels, albeit Dwyer had had a disastrous experience with a
fluctuation in the gold price. A debt roughly commensurate with the Dwyer
family’s total assets and entirely denominated in a foreign currency of
unknown variability is of a different qualitative order.
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):
“I could not accept him or his mother’s evidence of the
conversations alleged to have been had with Mr. Gerathy at times when Mr.
Gerathy was absent from Australia, nor did I consider it probably that Mr.
Gerathy would have given the unqualified assurances alleged having regard
to his apparent lack of information as to the plaintiff’s financial
position.”
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
Appeal, it will be revisited below.
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.
1
-
2
-
3
-
4
-
5
REAL Freedom
Library
History of Banking Fraud:
The Coming Battle
