The revelations in the case around FOS staffing, expertise and decision-making make for interesting reading for those involved in banking enforcement litigation and the reasons in the case provide helpful guidance on construing the TOR.
Category: Banking and Finance
Case Note by Kieran Hickie and Andrew Kirby. The Full Court of the Federal Court of Australia has overturned the decision of Gordon J that late payment fees charged by the ANZ bank on credit cards against its customers constituted penalties and were unenforceable.
Guarantees and the Code of Banking Practice – compliance with the Banking Code required to enforce a guarantee
Case Note by Kieran Hickie and Andrew Kirby. The recent decision of the Supreme Court of Victoria in National Australia Bank Ltd v Rice  VSC 10 highlights that care and attention must be taken by banks and lenders to ensure compliance with the Banking Code is taken in order for guarantors to understand their rights and liabilities under a guarantee. Non-compliance with the requirements of the Banking Code can result in guarantees not being enforceable.
Article by Kieran Hickie and Andrew Kirby. Reforms to the summary judgment procedure in the Supreme Court of Victoria and the County Court of Victoria now provide for one streamlined test in respect of summary judgment applications.
High Court finds settlement between one co-surety and lender does not affect other co-surety’s right to claim contribution in equity where contribution disproportionate
The decision of the High Court of Australia confirms and explains the application of the equitable doctrine of contribution between co-sureties. It provides a helpful summary of the law in respect of co-ordinate liabilities and the nature of covenants not to sue, all of which should be kept in mind by co-sureties when settling recovery proceedings brought against them by a lender.
Justice Hargrave has declined to follow the earlier decision of Justice Pagone in Solak v Bank of Western Australia Ltd  VSC 82. The cases involved the construction of a registered “all monies” mortgage which included a forged mortgage document and a forged loan agreement. Justice Hargrave followed New South Wales Court of Appeal decisions in holding that the mortgage effectively secures nothing because the underlying loan documents had been forged.
Attempted challenge by a financial services provider to a determination by the Financial Ombudsman Service under its terms of reference
The decision of the Victorian Court of Appeal in favour of the Financial Ombudsman Service Ltd (FOS) highlights the difficulties for financial services providers in trying to challenge decisions of FOS and the dispute resolution process under the terms of reference (TOR). The TOR operate as a binding contract with a finality clause in favour of FOS’ decisions and determinations.
Non compliance of terms of settlement by a borrower in relation to repossession proceedings commenced by a lender
Co-authored by Kieran Hickie and Andrew Kirby. The decision of the Victorian Court of Appeal in favour of the NAB highlights some difficulties that might arise between lenders and recalcitrant borrowers in relation to terms of settlement for the compromise of repossession proceedings. The Court of Appeal’s decision demonstrates that borrowers who enter terms of settlement must comply with the conditions of the terms of settlement.
Solicitors acting for financers and lenders in financing transactions must take care to avoid nasty surprises after settlement
Co-authored by Andrew Kirby and Kieran Hickie: The Court of Appeal has affirmed the importance of solicitors acting for mortgagees to ensure payout figures and settlement instructions provided to settlement agents are accurate. Following settlements of refinancing transactions, an outgoing mortgagee will not necessarily be prevented from asserting that settlement funds are insufficient to finalise settlement. Rather, they may demand the return of a discharge of mortgage handed over at settlement on the basis the borrower has not complied with its obligation to pay out the registered mortgagee in full.
Guarantors as ‘privies’ of a principal debtor – can they be bound by a decision of a Court in circumstances where they are not a party to litigation?
Co-authored by Andrew Kirby and Kieran Hickie: Guarantors commonly have some association or relationship with a principal debtor. If proceedings are taken against a principal debtor, but not a guarantor, resulting in a binding judgment, the Victorian Supreme Court has recently held that in subsequent proceedings against a guarantor, the guarantor is not a ‘privy’ of the principal debtor and therefore is not bound by the determination of issues in the earlier proceeding.
Branch franchisees fail in a class action against the Bank of Queensland – Andrew Kirby and Kieran Hickie
The Bank of Queensland (BOQ) has recently won a large class action proceeding in the New South Wales Supreme Court. The Bank successfully defended claims of misleading and deceptive conduct, unconscionable conduct and negligence brought by franchisees who claimed loss and damage caused by the failure of their franchise branches.
In a land mark judgment handed down on 5 February 2014 by the Federal Court, Gordon J held that late payment fees charged by the ANZ Bank infringed the doctrine of penalties.
This case involved enforcement of a foreign award in Australia. Orders were made in aid of enforcement to prevent dissipation of shares in Australian companies owned by the award debtors. The award debtors were not permitted to re-agitate as a ground for resisting enforcement, a ground unsuccessfully agitated by them before the court at the seat of the arbitration to set aside the award.
In this case Mr Schmidt obtained a line of credit facility from Perpetual Trustees Australia Limited (Perpetual) and gave a mortgage over his home as security for the facility. Violet Homes Pty Ltd (Violet) was the mortgage originator and manager and processed the loan application on behalf of Perpetual. Mr Schmidt borrowed the money to invest in what he thought were property developments. He was duped into doing so by Mr Maddock, who has since been convicted of fraud. Most of the money advanced by Perpetual to Mr Schmidt was paid directly or indirectly to Mr Maddocks and was lost.