Mr. X and bank’s victim go to AGM in Sydney today to confront bank’s board
As interest rates set to rise, call for big reforms to protect consumers
The Commonwealth Bank’s foreclosure practices will be put in sharp focus at the bank’s AGM to be held in Sydney today at 11am at the Parkside Auditorium, Sydney Convention and Exhibition Centre at Darling Harbour.
Independent Senate candidate Nick Xenophon has travelled to Sydney to attend the AGM along with Doug Jovanovic who has been embroiled in a 10 year legal battle with the bank. (Both Nick and Doug and obtained proxies to have the right to speak at the AGM.)
A short history of the saga:
1. In August 1998, the CBA, as mortgagee, sold the Plaza Hotel in Hindley Street Adelaide.
2. The CBA did not appoint an agent, advertise or market the property.
3. The CBA sold the property to one of two sets of partners for $800,000 being approximately the alleged amount of money owed to the CBA.
4. The other partner, Doug Jovanovic claims that the freehold property was worth at least $1.5 million, namely $700,000 more than the sale price.
5. There is now litigation which commenced about 10 years ago.
6. The Full Court of the Supreme Court of South Australia (March 2004) has determined that the sale of the property by the CBA was in breach of Section 420A of the Corporations Act and therefore unlawful.
7. The District Court has assessed damages and both parties have now appealed the judgement.
8. At the hearing of the assessment of damages (May 2006), each party purported to call one independent expert valuer to give independent expert valuation evidence as to the value of the property.
9. In September 2007 the Full Court of the Supreme Court of South Australia has heard the appeal and reserved it decision.
10. Shortly before the hearing of the Full Court appeal, Mr. Jovanovic discovered that the valuer who the CBA called was not an independent expert and had in fact been working as a permanent and full time employee of the CBA and had a loan and a mortgage jointly with his wife for about $780,000 at the time that he gave his evidence, which had never been disclosed to the Court.
11. During the course of the appeal, the solicitor for the bank swore and filed and affidavit admitting that the CBA and its legal team were aware that their witness was a permanent and full time employee of the CBA and had made a deliberate decision not to disclose that information to the Court or to Mr. Jovanovic’s legal team unless specifically asked.
12. During the course of the appeal, the Chief Justice, said, “it was an obvious thing to tell the Court” and “it seems to me the Court is deprived of quite a material matter.”
Mr. Xenophon said the Jovanovic case highlighted “gross inadequacies in current laws that fail to properly protect consumers”.
Section 420A of the Corporations Act – which only applies to companies that take out a loan – requires a mortgagee forcing a sale to take all reasonable care to not sell for less than market value. However, individuals having their properties sold in a forced sale have to rely on the ‘common law’ test, which is far less stringent – to act in good faith not to sacrifice an asset.
In the UK consumers are protected with a stronger test applying to corporations in Australia where mortgagees must use best endeavours to get the best price.
Mr. Xenophon said:
“The Jovanovic case highlights the nightmare an individual can be caught up in against a multi -billion dollar financial institution like the Commonwealth Bank.”
“The Bank’s Board has an obligation to explain whether its practices on forced sales have changed since this case, and whether they will continue to use their own employees to give expert evidence without being upfront about it to the Court.”
“With more and more Australians facing massive mortgage stress because of interest rate increases, now is the time to overhaul laws and banking practices to give real protection to consumers.”
