What are nab and its lawyers doing?

It would seem that the culture and business practices at nab leave a lot to be desired as proven by just three of many examples:
1. There is a petition on ‘change.org’ which highlights the culture of harassment by both nab and its lawyers, especially against people at a special financial disadvantage. In this case it seems nab and its lawyers [Gadens] are harassing their victim and are determined to sell the house of that victim just to satisfy their own seemingly rabid need for foreclosure at any financial or human cost;
2. In an article written about nab and Gadens by journalist Tess Lawrence she said, “Without question, the police should investigate how and why lawyer [Nab’s lawyers – Gadens] made .. a phone call .. and on what authority and on what grounds .. saw fit to interfere with the course of Justice ..” and, from another lawyer during the same case when addressing the victim in a public hallway, “You’re dead” .. “you f…ing bitch”. “The NAB and I will take you down”… “You will have nothing, you will be destroyed”. Charming.
3. In our case, after considerable maladministration and misfeasance, Nab acted unlawfully with extreme harassment and assaultive malfeasance by cancelling all our financial facilities, including our mortgage, and taking great delight in threatening to sell our home within 30 days – all without due cause. The Financial Ombudsman Service agreed with us and found nab’s acts unlawful and awarded contract restoration, damages and compensation. However, we believed the quantum to be insufficient so we are pursuing nab through VCAT. This has been going on for over 3 years with nab losing their ploy to have the case dismissed or shifted to the Supreme Court [which would have been a huge financial disadvantage to us] whilst employing nasty little tricks like delivering reams of documents the night before a hearing [twice] guaranteeing we had no time to read them, let alone understand them. In this instance and once again nab was found to have failed to have acted in a conscionable manner when the Judge agreed that nab’s actions were inappropriate.
As I said, these 3 examples are but 3 of many and clearly point to a culture within nab which has grown, to be what many victims consider, unconscionable and indeed ferrel.
At the heart of this culture is nabs continual refinement and reliance on their terms and conditions, developed at great expense by their teams of lawyers, which purport to give nab extreme power to do what they like and to whom they like. All three examples above clearly point to this malfeasance. In our case [example 3] it was indeed unconscionable malfeasance as nab knew its acts to be unlawful but ignored the law.
I purport that just the act of including terms and conditions nab knows are unlawful and to be read down are unconscionable in themselves.
The key question is, “Can an action or intention to action be deemed as unconscionable if that act or intention is against good conscience but as yet has no victim”. The corollary is that there is no unconscionable intent until someone is affected? [Has the tree fallen if no one sees it fall? – note, yes the tree has fallen!]
Take for example a contract and in the fine print there is a clause which stipulates that one party has the right to terminate the contract if they ‘deem’ any issue they wish a breach of that contract and the contract becomes null and void without loss of benefit to the author of the contract.
An obvious nonsense yet that is a standard term for nab. As a matter of fact, any contract which can be broken at will for no reason is not and can never be a contract because no one could rely on that contract. That is why a lawful process to break a contract is legislated – for example S88 and S89 of the National Credit Code.
Now let’s assume, in the normal run of events, that nab is in a strong position with services in demand and people needing those services. People sign off the contract including the ‘deeming clause’ because they have little choice. Say a mortgage or a credit card contract.
At what point and under what circumstances does the enforcement of the deeming clause become unconscionable and do we even need an enforcement to recognise the term as unconscionable and to be read down?
I believe that it is enough to make such clauses unconscionable even if there is no victim just because it may confuse, coerce and mislead people into believing it is valid. This sort of clause has the obvious intent of doing just that by advantaging the author unconscionably at the expense of others.
Take nab. They have similar deeming clause in their terms and conditions which allows them to summarily terminate an agreement and demand instant repayment of a loan. Yet there are provisions within the Code of Banking Practice, the Australian Consumer Law and the ASIC act which specifically preclude nab from actioning their deeming clause without due process.
So, on one hand we have nab with their deeming clauses and alleged cancellation rights and we have the law on the other stopping or at least modifying the same alleged rights.
As nab is well aware of the law and well aware of the way their deeming clause is inappropriate then isn't the unlawful inclusion of such a clause, by definition, unconscionable because the intent of the clause is to take unconscionable advantage - even if it’s never acted on!
Therefore the precursor to any litigation is whether or not the deeming clause is unfair because the intent of nab is unconscionable.
I would say that any clause which purports to allow one party to just deem a contract null and void to someone’s disadvantage must be read down as it would be unconscionable to leave it there.
Now let’s assume, nab acts on the deeming clause and we have a victim. Mr Victim had a credit contract and was using his ‘card’ for everyday things and accumulating frequent flyer points and paying his monthly commitments. He was late a couple of times but fixed the arrears and all was well and Nab were still charging lots of interest for the privilege. Then someone from nab decided to deem the victim’s card cancelled and the victim had to repay the entire debit within a few days because that’s what the deeming clause said.
This put the victim instantly in a state of special financial disadvantage for at least two very important reasons. Firstly, he had to find the money elsewhere to pay the loan [if he could] and secondly he had relied on the line of credit and instantly had no other immediate access to money to live on or pay bills. In effect he had relied on nab acting conscionably and in compliance with all parts of the law.
Mr Victim complained but nab just pointed to the deeming clause as justification for the cancellation. Nab was well aware of the law but chose to mislead and coerce the victim into believing they had the right.
Now, not only is the deeming clause unconscionable but nab acted on that clause in the full knowledge of its effect on the victim. Therefore the act is also unconscionable as it caused Mr Victim to lurch into a state of special financial disadvantage.
I believe Mr Victim has an actionable case against nab on at least two grounds. Firstly, nab included such a clause with obvious unconscionable intent to mislead and coerce and secondly, nab acted on it outside the known provisions of law.
I would say that pecuniary penalties apply for both inclusion and act and the victim needs to be compensated.
In the article written by Tess Lawrence [example 2] it seems clear that there is a culture within nab and its lawyers of ‘f..k you, nab will take you down, you will have nothing, you will be destroyed and we will do what we like including trying to influence the legal process when we want’. In my opinion nab’s conduct in this instance is common assault and should be treated as such.
The culture within nab and its lawyers of condoning these sorts of actions is thoroughly objectionable to any reasonable person. In our case, nab have been found guilty of unlawful acts to our disadvantage by the Ombudsman and yet nab still condone and continue with similar conduct which still can only be described as unconscionable.
Nab know that 99.99% of people will not question a multi-national company because they believe nab’s published terms and conditions are lawful and that nab must have a right to do what they do because it has teams of lawyers and they couldn’t fight them in any case. In our case this assumption is incorrect.
We are seeking more than justice for us. We are seeking an independent umpire [Judicial member at VCAT] to order that the terms and condition which purport to give nab ultimate power are unlawful and to be read down.
In this way people are able to rely on their ongoing financial contract, rely on nab complying with the law and rely on that same law to define a lawful process for voiding a contract and to also stipulate penalties for non compliance.
Perhaps nab need to change the way they think.
Jon Langevad
Tuesday, 7 October 2014

I am concerned about Montsalvat, the way it’s managed and its future.

Montsalvat - Australia is extremely lucky to have Montsalvat.  Make no mistake, this ‘artist’s colony’ built through the vision of Justus Jörgensen early last century has survived to this day and is a place people go to marvel at just how a French Gothic village could be created on a hillside in Eltham.  Not just a French low-line thatched affair but grand architecture inclusive of a great Baronial hall, a beautiful chapel, a delightful pool and some of the best ‘balanced’ architecture one could hope to see.  We are still lucky enough to have residing at the property the man who helped build this icon with his father, Mr Sigmund Jörgensen as patriarch, arts advisor, multi-hat-restaurateur and board member.

It is approaching 50 years ago, when I first stepped onto the property marvelling at the community feel by just wandering aimlessly around dodging killer geese and surly peacocks and stopping to watch artists at work perhaps to buy their wares. 

In my mind, Montsalvat must be both protected as a national icon and cherished by celebrating its history and making sure it continues in the manner visioned by Justus Jörgensen all those years ago.  In this way a zillion new people over the next 80 years can go and gawk and admire and experience a slice of living history without Walt Disney like exuberance. 

Ethos discomfort - But now, Montsalvat seems to be in some degree of ‘ethos-discomfort’.  Whilst the buildings remain and are most certainly worth a visit or ten, I am concerned that the current board and management do not understand the meaning behind Montsalvat and are failing to manage critical business aspects and heritage responsibilities.

As the saying goes, there is no free lunch!  To preserve Montsalvat requires vision and money and focus and clear strategies all leading to informed decisions by a coherent and transparent board.  Decisions which ensure working capital for infrastructure maintenance and development.

Board and management have failed - As I watch events unfold, monitor blog and change sites, read publicly available documents, watch everything and listen to all and sundry it seems to be increasingly clear that the current board and management are failing in their primary duty to make sure Montsalvat is protected, cherished and financially sound.  Unfortunately, there are many board and management decisions seemingly incongruous to these three very basic visions leading to profit diminishing year on year thereby curtailing infrastructure repairs let alone being able to take advantage of any ongoing strategic initiatives. 

Directors are required to make informed and independent judgments on decisions put to them [AWA Ltd v Daniels (t/as Deloitte Haskins & Sells) (1992) 7 ACSR 759] and are required to place themselves in a position to guide the company and monitor its management but Montsalvat seems to have a board riven with infighting whilst making questionable [even ultra vires] decisions in possible breach of the Corporations Act [2001] S180 etal. All board decisions seem to be treated as confidential subject to secrecy provisions inserted within the constitution. The result being the ‘self elected’ board only answers to itself with no members other than the actual board members - so there are no checks and balances.

Just a cursory look at the 2013 financial reports indicates problems like consultant’s fees, employment expenses and professional fees amounting to around 87% of gross profit, non current liabilities increased by $103,000 and the loss of a $600,000 revenue stream through gifting the popular albeit badly managed restaurant to a third party by tender for a fraction of its worth as that revenue stream. As directors have a lawful duty to be informed of the companies actual financial affairs [Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405], how can this happen?

Just three examples:

Deliberate sacrifice of a major revenue stream - Money was and is critical to the survival of Montsalvat but revenue streams are limited.  A few years ago we worked with Mr Sigmund Jörgensen to reinvigorate the restaurant establishing a vision, mission, strategic directions, strategic objectives, change plans, spatial changes, and cuisine changes all financially documented with timelines.  We estimated a nett profit to Montsalvat from the restaurant of some $3,000 to $4,000 per week and, based on later published turnover of up to $14,000 per week, they should have easily achieved that profit and more - providing it was properly managed.  Unfortunately, management did not take any of our advice apart from some spatial changes [since destroyed] resulting in losses roughly equivalent to profits foregone in as much as $300,000 per annum was lost to forecast.  That’s a lot of maintenance and marketing money just gone.  Management must have actually budgeted for wages etal  near 90% of gross profit and a cost of sales well above industry norms to screw this up.  Much worse, instead of fixing the problems, as a board and senior management should, and given they had all the information we gave them, decided instead of actually managing the restaurant to profit, to lease the space out for a fraction of its worth as a revenue stream for Montsalvat.  How can that be acceptable?  These are not the actions of a competent board and/or management given that under the Corporations Act each and every director must exercise their power and discharge their duties with the degree of care and diligence that any reasonable person would exercise.

Wasted marketing opportunities - Mr Jörgensen had just written a book on Montsalvat launching it a couple of weeks ago at Montsalvat itself.  This major event should have been embraced by board and management, but no.  Sigmund had to do his own marketing, beg entertainment, seek his own speakers and believe it or not the entry doors remained locked until after the advertised start time leaving guests outside in the dust for no reason. I was there, being extremely underwhelmed by the board and management in their conduct towards the launch and Mr Jörgensen but far far worse, their ambivalence if not rejection of the huge marketing opportunity this launch could have provided for the future benefit of the property they purport to direct and manage.  It is shameful as this conduct seems to be driven by board dysfunction and infighting to the detriment of Montsalvat.

Destruction of heritage - An example which really strikes at the heart of Montsalvat.  When Justus Jörgensen designed and built Montsalvat he designed a beautiful pool gated from the outside world and surrounded by artist accommodation and galleries.  This pool is an integral part of the ethos of Montsalvat as are the pools at Ripponlea and Mooramong.  Indeed we were at the National Trust property, Mooramong, a little while ago enjoying afternoon tea around the unfenced pool and have enjoyed many a visit to Ripponlea around their also unfenced pool which they use for functions and receptions. These heritage pools are unfenced for heritage reasons with no requirements by council or anyone to fence same.  Yet the board and management at Montsalvat decided to erect a glass fence [which they can’t afford to pay for] around their heritage pool.  This they are doing against significant objections [change.org] and no lawful imperative or need [no council requirement].  It is public information that the Board even lied to protect their decision to erect the fence by stating there was indeed a lawful requirement.  Heritage aesthetics are ignored and a vital part of Montsalvat’s ethos is being ripped away by a board who just doesn’t understand Montsalvat.

There are many more such examples - Montsalvat has lost its direction.

Three things need to happen starting right now to ensure Montsalvat’s protection and survival:

Stop - The current riven and dysfunctional board along with senior management must resign forthwith apart from Mr Jörgensen who, pursuant to Montsalvat’s constitution as a family member, must remain. 

Assess - An independent administrator / chair / chief executive needs to be appointed for a period of 12 months to instigate a totally independent assessment of all finances and decisions for the last 5 years.

Plan -  Develop a proper strategic plan.  During this time the board needs to be rebuilt with appropriate people after which senior management need to be appointed. 

As I said, I am very concerned about Montsalvat and its future.

Jon Langevad MBA

Discussion on unconscionable conduct through the inclusion and actioning of ‘deeming’ clauses within standard form consumer contracts

1.     Submission and argument that Financial Services Providers reliance on deeming clauses within their terms and conditions is mis-founded …

a.     “Deemed’ – to adjudge a point of view as fact [my df].

b.    “Can an action or intention to action be deemed as unconscionable if that act or intention is against good conscience but as yet has no victim”.  The corollary is that there is no unconscionable intent until someone is affected? [Has the tree fallen if no one sees it fall?].

c.     Take for example a contract and in the fine print there is a clause which stipulates that one party has the right to terminate the contract if they ‘deem’ any issue they wish a breach of that contract and the contract becomes null and void without loss of benefit to the author of the contract.

d.    An obvious nonsense.

e.     Now let’s assume, in the normal run of events, that a company is in a strong position with services in demand or people needing those services.  People sign off the contract including the ‘deeming clause’ because they have little choice.  Say a tenancy lease or a credit card contract.

f.     At what point and under what circumstances does the enforcement of the deeming clause become unconscionable and do we even need an enforcement to recognise this term as unconscionable and to be read down?

g.    I believe that it is enough to make such clauses unconscionable even if there is no victim just because it may confuse, coerce and mislead people and it has the intent of doing just that and advantaging the author unconscionably at the expense of others.

h.     Take most credit contracts.   They will all have a similar deeming clause somewhere in their terms and conditions which allows an FSP to summarily terminate an agreement and demand instant repayment of a loan.  Yet there are provisions within the Code of Banking Practice, the Australian Consumer Law and the ASIC act which specifically preclude an FSP from actioning their deeming clause without due process.

i.      So, on one hand we have the FSP with their deeming clauses and alleged cancellation rights and we have the law on the other stopping or at least modifying the same alleged rights.

j.      As the FSP is well aware of the law and well aware of the way their deeming clause is inappropriate then isn’t the inclusion of such a clause by definition, unconscionable and unlawful because the intent of the clause is to take unconscionable advantage - even if it’s never acted on!

k.     Therefore the precursor to any litigation is whether or not the deeming clause is unfair because the intent of the FSP is unconscionable.

l.      I would say that any clause which purports to allow one party to just deem a contract null and void to someone’s disadvantage must be read down as it would be unconscionable to leave it there.

m.   Now, an FSP acts on the deeming clause and we have a victim.  Mr Victim had a credit contract and was using his ‘card’ for everyday things and accumulating frequent flyer points and paying his monthly commitments.  He was late a couple of times but fixed the arrears and all was well.  Then someone from the FSP decided to change policy and deemed the victim’s card cancelled and the victim had to repay the entire debit within a few days because that’s what the deeming clause said.

n.     This put the victim instantly in a state of special financial disadvantage for at least two very important reasons.  Firstly, he had to find the money elsewhere to pay the loan [if he could] and secondly he had relied on the line of credit and had no other money to live on or pay bills.  In effect he had relied on the FSP acting conscionably and in compliance with all parts of the law.

o.    Mr Victim complained but the FSP just pointed to the deeming clause as justification for the cancellation.  The FSP was well aware of the law but chose to mislead and coerce the victim into believing they had the right.

p.    Now, not only is the deeming clause unconscionable but the FSP has acted on that clause in the full knowledge of its effect on the victim.  The act is also unconscionable and caused Mr Victim to lurch into a state of special financial disadvantage.

q.    Perhaps Mr Victim has an actionable case against the FSP on at least two grounds.  Firstly, the FSP included such a clause with obvious unconscionable intent and secondly, it acted on it possibly outside the provisions of law.

r.      I would say that pecuniary penalties apply for both inclusion and act and the victim needs to be compensated.

CHOICES AND OPTIONS

There is a war going on.

Not as you might suspect with guns, tanks and bombs but much more subtly with words and actions validated from those words.

Business is all about convincing people to move away from someone else and buy stuff from you.  Simple.  This happens quite lawfully by offering greater choice and options whilst convincing the hapless customer the someone else has less choice and fewer options.

The better our choices and options, the better our life.  “Perhaps the children would enjoy St Moritz this Christmas?” or “Which golf course to play today?” or even, “Do we have lamb or beef for dinner?”. 

The corollary to that is we remove choice and options when penalising people for doing something unlawful.  The more serious matters end up in goal whilst our courts preside over a multitude of ‘offences’ handing out orders which invariably enhance the winners options and choices whilst doing the opposite to the bad guy.

It seems clear that the good side is enhancement whilst the bad is restriction.

Now, for business, the trick seems to be to use language to make sure you retain and enhance your choices and options but at the same time using those same words to remove your client’s options and choices and their ability to go somewhere else for their widgets.  The law steps in when this becomes unconscionable and unlawfully disadvantaging.

The repository for all these ‘words’ is in ‘standard form terms and conditions’ which business trot out to ensure they remain top dog and it seems irrelevant to business whether or not those terms are lawful or conscionable because they rightly assume that people will also assume without reading them that ‘the words’ are indeed lawful  and must be complied with.  Now days they are eminently transparent in plain English and serve almost entirely to remove customer’s choices and options whilst enhancing their own.  This does not mean they are lawful and customers are treated as the bad guys.

Perhaps we should all have our own private booklet of terms and conditions which purport to allow us to enhance our choices and options.  One paragraph could read, “I am allowed to speed on the roads and can’t be booked”.  It’s in writing and must be obeyed!  Perhaps Judge Dredd would not see the point.

The war continues between say banks and legislation.  Banks want to gather in all the power for all the reasons discussed above whilst the law tries to protect people from the more unconscionable terms .  For example the banks deem themselves the sole purveyor of good and evil and demand the ability to remove a clients financial instruments [choices and options] at their sole discretion whilst at the same time denying customers of the same rights. 

The code of banking practice and the legislated national credit code prohibit this behaviour by ensuring the banks go through a process allowing customers options and choices before the banks can deem a client redundant and to be shed.  Yet those terms keep popping up and the courts keep ruling against them.

These days a term can be ruled by the courts as unconscionable whether or not anyone has been affected the same as actions by the banks using those terms can also be ruled as unconscionable.

Yet the game goes on.

Bad people try and take an unconscionable advantage by trying to mislead the public that their glossy booklets are actually lawful and must be obeyed.  Notice that few banks will put anything in writing and they will not want their conversations to be recorded.  Could it be that they know their actions to try and curtail customers options and choices to be unlawful?

This is war.

Respect is not earned - it is a God given right.

CAR INDUSTRY

When do we start taking the initiative and look outside political and media driven doom and gloom? 

When do we start to believe in our own Australian expertise and stop flailing about in discontinuous rage as another ‘foreign’ company withdraws ‘hurt’ when the going gets tough but after profiteering for years on uneven playing fields at the expense of our country?

When do politicians stop trying to assure the yet to be unemployed that they are trying to create new jobs through all sorts of ill-thought-through initiatives to make themselves look important and to be seen as doing something? 

Instead  …..  why don’t we bite the bullet and produce our own cars and other vehicles?

We will soon have 3 newly vacated plants which do and can produce cars.  Why don’t we produce our own world leading new-design taxis, government cars, town cars, military vehicles, scram jets, super tractors, planes, farm bikes, fun cars [Moke-a-like] or any other vehicle which is useful for us as a country and can be sold elsewhere?  And no, don’t call any the Kangaroo or the Wallaby or the bloody Dingo!!

I am really sick of the prevailing oh-woe-is-me attitude where we import expertise [because we are so backward, stupid and don’t have any talent] only to find the imports are wanting [EG. The Mexican triumvirate at Telstra or multiple managers at Coles Myer or several Australian icons currently in trouble with imported management].

We have sold our soul to foreign manufacturers who can’t manage a decent profit other than the ‘incentive fees’ we pay them [Ford worldwide a couple of years ago].  And, we accept foreign management just because they are foreign and must therefore be much better than us.

This is utter bullshit!

Abbot and Shorten – how about working together with an Australian collective spirit and foster/create/allow the creation of something special?

We are really that good!!

Yes?

How about starting by immediately enforcing Australian only isles at supermarkets?

ANZ and Corporate Governance

Yesterday in the Federal court ANZ was found guilty for illegally charging customers late payment fees. [All FSP’s and utilities will probably be in the same boat]

These extravagant, exorbitant and unconscionable fees will have to be paid back to all their customers with no time limit going backwards.  It’s not only the late payment fees which have to be refunded but most probably daily interest on each illegal fee going forward from the time of the illegal removal of the fee and any other effects that the fee may have forced such as dishonouring some other payment which should have never been dishonoured. 

Last night a spokesman for ANZ said on ABC radio [paraphrased] that the $15m this was going to cost ANZ is irrelevant to an organisation turning over billions. This rather smarmy comment seemed to sum up the bank’s attitude.  He said in effect that the $15m in paybacks meant nothing to a company the size of ANZ.  That arrogance is outstanding because it doesn't apologise for illegal acts or the effect on customers; he just said that they can afford to pay the fines.  This is appalling.

He didn't care.  He didn't care the bank acted illegally, he didn't care that it was costing the bank some $15m and he didn't care about shareholder losses.  I will also back it in that the $15m is just fees to be refunded and that the bank hasn't included the full cost to the bank for this issue including legal fees, staff fees, the cost of software to work through millions of transactions and the cost of lost customers and their costs including future ramifications from illegal charging. 

How did he know the fee quantum so quickly?  Could it be ANZ were well aware they were breaking the law? 

Remember it was just last week that ANZ had to refund $70m in overcharged fees to home loan customers!  Even ANZ’s own past CEO, John McFarlane said ANZ’s fees were unsustainable.  Greed seems to endemic and it’s getting worse.

Where is ANZ’s Corporate Governance on the rights of shareholders, responsibilities of the board, integrity and ethical behaviour?  Where is its fiduciary duty?

The questions are, ‘Is this the sort of culture we, as Australians, want to portray to the world and are these the sorts of people we want running our public companies? 

Santorini

Gods and Troglodytae muse within slingshot on beautiful Santorini.  Gods languish on the caldera whilst cogitating cave dwellers peer out of their carved doors on the, far far side.   However the third, and often overlooked, species is the humanoid identified by their unique method of encasing dangly bits.  These interlopers in the realm of the Gods maintain their omnipresent force by threatening and indeed scaring the cleaner than clean Gods and their somewhat scruffier and hairy nemesis, the Troglodytes , by displaying their bodily armour for all to revere.

Everyone watches the sunset, including the undies, in Santorini.

Photo and original words by Jon Langevad

FINANCIAL CONTRACTS WITH THE BANKS

Does anyone know why the banks seem to be able to vary standard financial contracts at their absolute discretion yet deny borrowers the same rights? This includes the ability to cancel any contract at will - for no given reason.

I always thought that a contract was a binding agreement on both parties to continue with that agreement until the terms of the contract naturally expired either through time or some other form of completion - a mutual obligation. In this way each party could rely on whatever benefit they subsumed from the contract and each other.

For example, Mr and Mrs Bloggs bought a home with a 20 year mortgage calculated to enable them to pay off the house and live comfortably.  The bank benefited from fees and interest - as clearly defined within the contract. At some point the bank arbitrarily changed its lending policy and decided to call the Blogg’s loan without reason.  Nothing to do with the Bloggs and their loan performance - just a new policy by the bank.  The Bloggs couldn’t  refinance and had to sell their home in a depressed market and lost a great deal of money whilst the bank got all its interest and termination fees.  Perhaps unjust enrichment?

Justice?  I don’t think so and it brings up a number of questions.

If a party to a contract has the ability to cancel a contract at will, was there a contract in the first place? I thought a contract was something which both parties could rely on for some mutual benefit for the natural life of that contract. If one party can vary the terms of the contract or ‘change the agreement’ at will then surely there was no ‘agreement’ in the first place?

This is obviously a nonsense yet all banks include ‘terminate at will’ clauses into their standard form contracts whilst ignoring the whole concept of expectation damages or damages wrought by breach of contract in that the injured party I thought had a right to ‘expect’ a contract to go full term and if that is truncated by the other party then they are entitled to expect damages equivalent to the benefit they would have received if the contract had gone the agreed distance?

Secondly, as far as I understand it, there are many provisions in many acts which specifically preclude the alleged rights of banks to unilaterally and unconscionably vary contracted terms including S12BH (1)b of the ASIC Act. It seems the law is clear so how come the banks can and do ignore those legislated provisions?

Thirdly, why do the banks include such terms and indeed rely on them when pursuing innocent borrowers?  The only reason I can think of is that banks feel the need to misrepresent their actual ability to breach a contract through a form of unconscionable coercion. It seems they ‘coerced’ Mr and Mrs Bloggs into believing that they had to sell their home even though the bank knew full well that they did not have the right and that the Bloggs had little financial or legal knowledge and that they could not deal with a gaggle of lawyers from a multinational telling them through ‘official’ legal letters that they had to sell their home.  The Bloggs were not capable of dealing with the banks self adduced phalanx of power and the banks knew it and indeed depended on it!  Surly this is misrepresentative and unconscionable coercion at its worst?

Recently we have been in a situation where we have had to take three different banks to the Financial Ombudsman Service [FOS] for what I considered legal and contractual breaches even though each bank incorporated within the standard terms and conditions their ability to ignore the law and basically do whatever they liked.  We have won all three with each bank found guilty of breaching the code of banking practice.  They were forced to rectify their actions and pay damages.

 

But key is that for FOS to make this determination it must have read down the bank’s own published terms which stated that the bank could in effect do what it likes.  That term and its implied power was read down and discounted by FOS as a legal body using the intent and practice of the law.

Yet, those sorts of clauses are still very much a part of standard form contracts.

My question and dilemma is – ‘How can banks publish terms and conditions with impunity which obviously breach the law knowing that those terms are indeed ‘unfair’ and will confuse the average borrower to the advantage of the bank?’  Surely, this is ‘unjust enrichment’?  The banks know that 99.99% of people will just accept the banks terms without question just because they are a bank with lots of lawyers and as a consequence must be right.

Perhaps they aren't right?