Once the Royal Commission brings down its findings the lawyers will begin to circle in the water because it will be alive with the sweat of bankers who have done the wrong thing by their customers. The advantage for the victims of these rogue banks this time around is that the Royal Commission has exposed the Banks’ chicanery for all to see. Their guilt is beyond question.
In our day, when we, Helen and I, as former clients of Storm Financial were members of class actions brought against the BOQ and the Macquarie Bank (the CBA was also in the mix although we were not involved in that class action), we had to prove our case. No such obstacle exists now because the Royal Commission has done it for everyone that is now seeking compensation for the wrongs the Banks have done when dealing with them.
Having said that, you still need to be made aware of the pitfalls that await you. Law firms are in the same league as banks. Their prime aim is to make money out of your cases and your interests are a secondary consideration. They are therefore looking to settle on terms favourable to them and you will be left with the scraps if you are not careful. A cynical attitude on my part maybe, but one borne out of past experience.
The likes of Slater and Gordon and Maurice Blackburn (class action chasers) will be leading the charge against the banks, no doubt. They have a reputation for getting in on the action when money is to be made.
So what can you expect if and when you do decide to join a class action because that will be the only outlet open to you? Trust me, it’s too expensive to go it alone!
For anyone that is interested in how class actions work, you can download a “Quick Guide to Class Actions’ from my website ‘Storming on Banks – Class Actions’
On the surface, class actions do seem to offer hope for those that do not have the money (most of us once the wrongdoers have relieved us of our life savings) to fight banks and other powerful financial institutions when they have committed wrongs that have been deleterious to us.
The class action procedure is a simple one. You join a number of individuals that share a common grievance in law. This matter is then pursued through the courts by a law firm that is invariably financed by a litigation funder.
“The increasing use of litigation funding for a broad range of class actions is another well-established trend of the Australian funding market. By 2017, almost half of all class actions filed in the Federal Court of Australia were class actions supported by third party litigation funders.”
For anyone that wants to know what you can expect if they join a class action, here’s the truth of it. The strategy for the wrongdoers, if they are banks, is straight forward. They hire a band of lawyers to eat up time in court and then, when they think the time is ripe and the plaintiffs have become mentally and financially exhausted, the banks offer a settle for an amount which is always disproportionate to the losses you have suffered at their hands. Somewhere in the region of 10 cents to 15 cents in the dollar if you are lucky. The lawyers for the plaintiffs welcome such a move because their real intent is to get paid off as soon as possible, so allowing them to chase ambulances once again.
The judges for their part are well versed in the tactics employed by powerful financial institutions. They therefore go through the motions of conducting a trial knowing full well that a settlement will be made sooner or later and nothing legally worthwhile will be achieved in the end. The wrongdoers (the Banks) and the lawyers for both sides are in a “win, win” situation. The banks walk away with most of the loot they have misappropriated from their customs whilst escaping scot-free from any form of punishment. The class actions members are dished out a pittance in the way of a settlement whilst the lawyers return to their offices singing, “Money, money, money! It’s a rich man’s world.” If it’s justice you seek, you won’t find any by being part of a class action. Class actions are designed to protect the wrongdoers, channel money into lawyers’ coffers, and placate the wronged by giving them a little of their money back. It’s a crap system that we all have to live with because those with the power to effect change prefer to do nothing.
Class actions, in fact, are the best argument yet for implementing a ‘Consumer Protection Insurance Scheme’ because class actions allow the wrongdoers to escape punishment and only return a little of what they stole from you.
Class actions procedures in point of fact also conflict with the principles of the common law laid down by our forefathers. It’s an American system that has no place in our body of law, but has found one because it offers a means whereby lawyers and litigation funders can feather their nest at the expense of those that have been wronged. The pretext being that it offers consumers a pathway to compensation. The reality is that class actions are a ‘get rich’ scheme for those that run them.
That’s the reason why a Consumer Protection Insurance Scheme will never be implemented in this country. Too many vested interests are at work striving to maintain the status quo. Too many lawyers are now being drawn towards the money pit that class actions create.
Unfortunately, though, there’s nothing else out there at the moment so you that are victims of past banks’ discretions are stuck with them.
I can see the likes of Slater & Gordon and Maurice Blackburn throwing their arms up in the air whilst pontificating wildly at my heresy. Yet, they know full well that I speak the truth.
It is, of course, unfair to tar all lawyers with the same brush. I have no doubt that there are many out there that are hardworking and dedicated. However, like good financial advisers, they are hard to find. We were lucky enough to find Levitt-Robinson in the end. They, at least, fought hard for us in what proved to be a herculean task. I can’t say the same for our former lawyers, Slater and Gordon though. In 2010, we (Helen and I) became a client of theirs following the Storm Financial disaster.
We, had originally employed another law firm to act on our behalf following the collapse of Storm Financial, but switched our allegiance to S & G because we really thought that they would challenge the Banks involved whereas our former lawyers appeared to be impotent. After all, S & G had the experience and the resources to tackle these banks head on, or so I thought at the time. However, Slater & Gordon’s approach to the CBA/Storm case and the Resolution Scheme it eventually brokered with that bank convinced me otherwise. The ‘Storm Resolution Scheme’ sounded like a really wonderful idea until I dug a little deeper and discovered its true purpose. It was to my mind merely a way for the CBA and S & G to settle this matter quickly and beneficially for both parties. The CBA Storm clients that S & G were supposed to represent were merely pawns in a resolution scheme that benefitted the CBA and S & G but did little for Storm’s CBA clients.
S & G would argue that they were able to obtain a settlement of A$132 million out of the CBA but it was less than half of what ASIC was able to settle with the CBA later on; a further A$134 million in fact. Unfortunately, both S & G and ASIC missed the point of the exercise! The CBA should have been hung out to dry for the wrongs they did, but both parties squandered the opportunity because one was greedy and the other was weak.
Consequently, thousands of consumers have “gone down the tubes since” because they collectively failed to expose the CBA for what it is, “A bank with no shame!”
That’s the number one problem with class actions. The wrongdoers can buy their way out of trouble for a fraction of what they swindle out of people. This encourages transgressors to keep on reoffending with impunity.
The CBA is a classic case in point. The fact that the CBA avoided the legal consequences of their dishonesty stimulated its hierarchy to go on and commit further financial mayhem with their customers’ asset for the next eight years.
The booklet S & G issued at the time to those of their Storm clients that were in the Resolution Scheme is, to my mind, a classic example of how lawyers seek to pull the wool over people’s eyes when they see a benefit in it for themselves. In this booklet, S & G made certain assumptions that lacked any legal validity in order to gain an early settlement.
When I had the temerity to write to S & G, challenging the assertions made in their booklet, they responded by terminating their services to us. They promptly returned our paperwork through the post without any accompanying letter explaining why. I guess they had no answers to my questions because there weren’t any. I assume that I was seen as a potential troublemaker they needed to silence.
I didn’t leave the matter there though. Instead, I sought to take this matter up with ASIC because in those days, I was still naive enough to believe that ASIC really cared.
In my letter to the Chairman of ASIC dated 19th March 2010 (some 8 years ago now) I repeated what I had stated earlier to Slater and Gordon.
Re: Slater & Gordon’s publication: “Storm CBA Resolution Scheme - Proposal Framework & Advice Booklet”
You are already aware from past correspondence you have received from me, of my many concerns about the inequity of the CBA resolution scheme that Slater & Gordon and the CBA have negotiated
Unfortunately, one of the problems we as former investors of Storm Financial have had to date is lack of legal advice about our position. The first real inkling of customers’ legal rights is contained in Slater & Gordon’s ‘Proposal Framework & Advice Booklet’. This basically tells everyone that the offer made by the CBA is the best CBA’s Storm clients can expect and they should accept it forthwith.
We, Helen and I, were terminated as clients some weeks ago by Slater & Gordon because I questioned the legal advice given in this Booklet which seemed to me to be supporting the position of the CBA rather than that of S and G’s own CBA Storm clients. To my mind this Booklet is full of inaccurate legal advice.
Helen and I are not former customers of the CBA but rather are former customers of the Macquarie Bank. However, I see enough similarities in the CBA v Storm Customers’ case and our case against the Macquarie Bank to convince me that I have a vested interest in the way this matter turns out.
I have before me a copy of Slater & Gordon’s booklet, part of which covers margin and housing loans.
Reading through this, it appears that the CBA proposal has been made on the assumption that Storm Financial acted in an ‘agency’ capacity as far as its Storm clients were concerned. Yet, such an assumption has yet to be tested in a proper court of law.
Frankly, I do not concur with the views expressed by Slater & Gordon in this booklet because I believe that they are wrong.
Slater & Gordon will tell you that I am not a lawyer and that is true. However, I have enough knowledge from my legal studies in the UK and Australia, particularly in contract law, to appreciate when lawyers are making subjective assumptions rather than working on the evidence at hand, and certain contractual principles that are immutable in the common law.
S & G’s legal arguments in this Booklet are based for the most part on the inference that Storm was acting in an agency capacity as far as its clients were concerned when dealing with the Banks; in this case, the CBA.
I really find it odd that S & G and ‘The Panel’ have touted ‘Agency’ when there is strong legal argument to the contrary. It is even stranger when you consider that S & G have been engaged by CBA’s Storm customers to represent them? Instead, S & G appear to be supporting the CBA’s position which seems an odd stance to take considering that they are meant to be representing the interests of their CBA Storm clients rather than the CBA.
The ‘Goodridge’ case alone should have strengthened S & G’s position considerably. Instead, S & G and ‘The Panel’ simple ignored the findings in this case. Why? Because S & G said, “…it wasn’t relevant due to a third party being present in our case; namely Storm Financial. I reject this notion totally
I will now quote from various sections of this booklet and comment as I do so:
“12. Was Storm a party to the margin loan contract? What was its role in the contract?
12.1 ALTHOUGH IT WAS STORM THAT HAD MOST OR ALL OF THE DEALINGS WITH COLONIAL RELATING TO YOUR MARGIN LOAN, STORM WAS NOT A PARTY TO THE MARGIN LOAN CONTRACT. THE CONTRACT WAS AN AGREEMENT SPECIFICALLY BETWEEN YOU AND COLONIAL. IN THE "SMALL PRINT" OF YOUR MARGIN LOAN APPLICATION, YOU AUTHORISED STORM TO ACT ON YOUR BEHALF IN RELATION TO YOUR FINANCIAL DEALINGS, AND THE MARGIN LOAN CONTRACT PROVIDED THAT YOUR AUTHORISED FINANCIAL REPRESENTATIVES COULD DEAL WITH COLONIAL ON YOUR BEHALF.”
Note in particular the words stated above, “STORM WAS NOT A PARTY TO THE MARGIN LOAN CONTRACT”. Storm, in fact, only served as a go-between. Storm Financial initiated the arrangements with the banks, but had no part in any contracts between its clients and the banks’ Storm customers.
“TECHNICALLY, STORM WAS ACTING AS YOUR AGENT WHEN IT COMMUNICATED WITH COLONIAL ON YOUR BEHALF, AND SPECIFICALLY WHEN IT NEGOTIATED THE MAY 2007 VARIATION TO THE CONTRACT THAT PERMITTED THE HIGHER MARGIN CALL LSR - THAT IS, IT ACTED ON YOUR BEHALF, AND WITH YOUR CONSENT TO ENTER INTO CERTAIN LEGAL OR FINANCIAL ARRANGEMENTS FOR YOU.”
Rubbish! A contract cannot be altered without the consent of each of the contacting parties. Storm, for the reasons I have stated, was not a contracting party. If we, Storm’s customers, did not give Storm or the CBA express permission to negotiate fresh conditions between themselves that cut across our agreements with the CBA, that Bank’s May 2007 agreement with Storm was a direct violation of these contractual agreements. The CBA with the help of S & G are seeking to cover up this fact.
“15.1 PARTIES TO A CONTRACT ARE ENTITLED TO VARY THE CONTRACT TERMS, IF EACH OF THE PARTIES AGREES. THE AGREEMENT BETWEEN STORM AND COLONIAL TO EFFECTIVELY INCREASE THE MCLSR UP TO OR BEYOND 90% IS AN EXAMPLE OF SUCH A CHANGE - STORM SOUGHT AND AGREED TO THIS VARIATION ON YOUR BEHALF, AND COLONIAL WAS ENTITLED TO AGREE TO THE CHANGE.”
This is another example of misrepresentation. The words, “STORM SOUGHT AND AGREED TO THIS VARIATION ON YOUR BEHALF…” when Storm was never our agent to start with is nothing more than a smokescreen to obscure the truth.
In our Storm SOA’s (Statements of Advice) we had agreed to conditions that contained certain “breakeven ratios”. Such ratios controlled the risk factors involved. Increasing the “THE MCLSR UP TO OR BEYOND 90%” increased the risk factor significantly, putting us in the “High Risk” category. This was something we would never have agreed to if we had known about it. Further, such arrangements between the CBA and Storm cut across the safety margins WE had previously agreed with Storm.
In SICAG’s submission to the Parliamentary Joint-Committee in 2009, a Mr. Paul Johnston is mentioned. I’ll now quote from this submission:
“Mr. Johnston was the head of Colonial Margin Lending from its inception in early 1996 until his departure from the company in 2003. Mr Johnston, who is known as the father of margin lending in Australia, has advised SICAG he was responsible for growing the margin lending book from less than $1million at the date of his appointment to $1.9 billion of loans. He was also responsible for the management of $918 million of lending through CBA subsidiary, Commsec.
Mr Johnston was responsible for producing, developing and implementing the rules, procedures and protocols for the margin-lending product, in addition to sales and distribution control.
Mr Johnston makes the following points:
• An agreement entered into between CGI and Emmanuel Cassimatis in May 2007 (see Ron Jelich’s submission No.54 to this inquiry for a copy of this agreement). The agreement provided for an upward movement in loan-valuation ratios exclusively for Storm clients. The agreement allowed for an increase in the buffer from 70% to 80% and from 80% to 90% for a margin call. There appears to be no evidence of any formal advice to advisers or clients of this variance. The agreement was in fact not adhered to, as it talks about moving the buffer from 70% to 80% and the margin call from 80% to 90% for certain Storm funds, whereas in fact the real ratios sat somewhere in the low 80's for buffer and low to mid 90's for margin call.
• From a risk management viewpoint, it seems an unnecessary risk to take, given the volume of business generated . . . also if this was something I would do it would have happened back in 1996 so as to give me a superior competitive edge in the market.
• The loan agreement is and always has been between the client and the borrower, not the agent – in this case, Storm.
• After consultation with a former IT colleague at the bank, I believe a margin loan facility could not go past 100%. If it did, it would be the bank’s problem, not the borrower’s.
• The lending parameters were set at 66%, giving the bank, the adviser and the client a level of comfort from a risk management standpoint. To take the buffer to the low 80s and margin call to low to mid 90s is very risky.
At all times during my tenure as head of margin lending, margin call notices were sent automatically to clients, in writing, with advisers copied in for reference. If a margin call was not rectified within five days I felt it was my right and duty to sell the client up (unless evidence was supplied that positive action was being taken to meet the margin call) to protect the client and the bank’s position. I believe I (on behalf of the bank) was liable for any shortfall if action wasn't taken at the end of five days or 24 hours if direct shares were involved. The five-day window was a generous timeframe compared to other margin lenders at the time.
• The margin call was always automatically generated by a computer system used by the bank called original MLS, now known as ‘EMPIRE’. A margin call notice could only be stopped through manual intervention.
• I was instrumental in the writing of clause 4.2 of the terms and conditions which talks about ‘you’ receiving a margin call. My knowledge and practical application of that clause is that the bank contact the client in writing, then the client (in consultation with the adviser) rectifies the position. Again, I should stress that if the margin call wasn't fixed in the five-day period, I immediately sold the client down to protect BOTH parties (unless evidence was supplied that positive action was being taken to get the call fixed).”
Three things emerge from this statement by Mr. Johnston:
1. The loan agreement is and always has been between the client and the borrower, not a third party, in this case, Storm.
2. What a prudent banker would do in relation to margin lending ratios and margin calls.
3. The culture that has been prevalent in banking circles in relation to margin loans from the get-go!
The ‘Goodridge’ case demonstrates that the CBA’s actions in this case can be challenged in law! As I have stated previously, Colonial was not entitled to change anything in its margin loan contracts without the express permission of the other party in the contract, namely its customers.
“16. Who was responsible for monitoring my margin call status? Storm? Colonial? Me?
16.1 THE MARGIN LOAN CONTRACT PLACES THE ONUS ON YOU TO MONITOR THE STATUS AND POSITION OF YOUR LOAN, WHETHER THROUGH A FINANCIAL ADVISER OR ON YOUR OWN. IT REQUIRES THAT COLONIAL PROVIDE YOU OR STORM WITH NOTICE ONCE YOUR LOAN IS IN MARGIN CALL BEFORE IT IS PERMITTED TO REDEEM OR SELL ANY OF YOUR INVESTMENTS, HOWEVER RESPONSIBILITY FOR DAY-TO-DAY MONITORING OF THE LOAN WAS GIVEN TO YOU (OR STORM). BECAUSE YOU WERE PAYING SUCH LARGE FEES TO STORM (AROUND 7.1 % OF INVESTED FUNDS), IT WAS REASONABLE FOR YOU TO ASSUME THAT STORM WOULD MONITOR YOUR POSITION FOR YOU.”
The ‘Goodridge’ case has identified Banks’ responsibilities in relation to margin calls. Working on the basis that Storm was not a party to the customers’ margin call contracts with the banks, it makes a liar of the statement, “IT REQUIRES THAT COLONIAL PROVIDE YOU OR STORM WITH NOTICE ONCE YOUR LOAN IS IN MARGIN CALL…” The party shown in the margin loan contract as being “the customer” was the CBA’s Storm customer, not Storm Financial. Clearly, someone, somewhere has conveniently overlooked this fact!
Yes, it can be argued that Storm should have been monitoring our position but that does not offset the Banks’ responsibilities to notify their customers in writing directly of any margin calls. Further, such notification should take place within a timeframe governed by prudent banking practice.
“16.2 THE BANK WAS ENTITLED TO ADVISE EITHER YOU OR STORM OF A MARGIN CALL. IN THE COURSE OF THE PANEL HEARINGS THE BANK DEMONSTRATED THAT IT WAS KEEPING TRACK OF ITS CUSTOMERS' MARGIN CALL POSITIONS, AND WAS PROVIDING NIGHTLY UPDATES OF THESE TO STORM. GIVEN THIS AND THE OTHER EVIDENCE AVAILABLE, IT IS POSSIBLE THAT A COURT MIGHT FIND THAT THE BANK HAD COMPLIED WITH ITS OBLIGATIONS CONCERNING MONITORING THE LOANS.”
I think I’ve already established whose responsibility it was to monitor the loans.
If we are to believe the CBA, it operates the most efficient and systemized banking institution in the world. The only dissenters appear to be the former customers of that bank that had the misfortune to employ Storm Financial.
“16.3 THERE ARE A NUMBER OF POSSIBLE COUNTER-ARGUMENTS. A NUMBER OF THE VERSIONS OF THE MARGIN LOAN APPLICATION BOOKLETS IN USE THROUGHOUT THE PERIOD LISTED SPECIFIC FORMS OF COMMUNICATION THAT MUST BE USED WHEN PROVIDING NOTICE OF A MARGIN CALL IN ORDER FOR IT TO BE EFFECTIVE (SEE PARAGRAPH 11 ABOVE). FOR A NUMBER OF THESE VERSIONS, EMAIL WAS NOT A SPECIFIED METHOD OF COMMUNICATION, SO THE BANK DID NOT STRICTLY COMPLY WITH ITS NOTIFICATION OBLIGATIONS BY SENDING ITS INFORMATION TO STORM IN THIS WAY. IN ADDITION, IT IS CLEAR THAT AT SOME STAGE IN LATE 2008 THE BANK BECAME AWARE THAT STORM HAD STOPPED RESPONDING TO ITS NOTIFICATIONS OF MARGIN CALLS. AN ARGUMENT COULD BE MADE THAT ONCE THE BANK KNEW THAT ITS NOTICES WERE BEING IGNORED OR NOT ACTED ON, ITS COMMUNICATIONS TO STORM BECAME INEFFECTIVE, AND IT SHOULD HAVE SOUGHT SOME OTHER MEANS OF PASSING ON THE NOTICE - SUCH AS BY CONTACTING YOU DIRECTLY. BECAUSE OF THIS, YOU WOULD HAVE REASONABLE PROSPECTS OF SUCCESSFULLY ARGUING THAT THE BANK BREACHED ITS CONTRACTUAL OBLIGATIONS BY FAILING TO PROVIDE EFFECTIVE NOTIFICATION OF YOUR MARGIN CALL PRIOR TO SELLING DOWN YOUR ASSETS.”
Let’s consider the above wording, “…SO THE BANK DID NOT STRICTLY COMPLY WITH ITS NOTIFICATION OBLIGATIONS…?” The fact is that the banks, in this case, the CBA, did not comply with its “notification obligations” full-stop! The ‘Goodridge’ case has determined that if the margin call is not expressed in written notification directly to the Bank’s customer, no margin call has been made!
“…YOU WOULD HAVE REASONABLE PROSPECTS OF SUCCESSFULLY ARGUING THAT THE BANK BREACHED ITS CONTRACTUAL OBLIGATIONS BY FAILING TO PROVIDE EFFECTIVE NOTIFICATION OF YOUR MARGIN CALL PRIOR TO SELLING DOWN YOUR ASSETS.”
The CBA contends (and Slater & Gordon’s booklet seems to support that contention) that an agency agreement existed between the CBA’s Storm customers and Storm giving Storm authority to act on their behalf.
Let’s look at this issue a little closer. What, in fact, is an agency agreement anyway?
‘An Agency Agreement is a legal contract between “the principal” and “the agent” whereby a fiduciary relationship is created that defines the agent's duties and authority.’
What does “fiduciary” mean?
“In law, “fiduciary” is defined in the personal sense as a person who occupies a position of such power and confidence with regard to the property of another that the law requires him to act solely in the interest of the person whom he represents. Examples of fiduciaries are agents, executors and administrators, trustees, guardians, and officers of corporations. They may be contrasted with persons in an ordinary business relationship,
in which each party is free to seek purely personal benefits from his transactions with the other.”
Financial advisers do not have a fiduciary responsibility so Storm doesn’t qualify on that score!
The law requires an agent to act solely in the interest of the person whom he represents. I’m afraid Storm doesn’t qualify on that score either!
“The Principal grants the Agent the right to create legal relationships with third parties and to work under the principal’s control and on his behalf. Therefore the principal agrees to be bound by the actions of the agent.
For example if the agent negotiates an agreement with one of the principal’s customers, the principal agrees to honour the agreement as if the principal had himself personally made the agreement.”
We never gave Storm the right to create legal relationships with third parties. If we did, where’s the document to prove it? We only gave Storm permission to act on our behalf as far as making the arrangements for these loans was concerned. That’s as far as it went. Our contracts for housing and margin loans were strictly between the Banks and us. Storm’s SOA, which was a contract in itself, was entered into by Storm’s clients with Storm for the sole purpose of receiving financial advice and management of their asset portfolios. It did not give Storm the permission or the authority to act on our behalf arbitrarily.
The agreements that Storm’s clients had with third party providers were separate contracts that Storm arranged on behalf of its customers but was not a party to itself. Because Storm was never a party to these contracts, it had no right to interfere with the terms of such or negotiate any conditions without our prior knowledge or approval.
If the Banks now claim that Storm was our agent, what was the “consideration” for Storm so being? Only by “consideration” having passed, would Storm be even remotely in the frame!
At the end of the day we are talking about issues in law. The CBA in its dealings with Storm Financial has assumed (wrongly as it turned out) that Storm had actual or apparent authority to act on behalf of its clients. One has to conclude that by so doing, the banks are either stupid or have deliberately ignored their customers’ rights in this matter.
Whatever, the notion of “agency” proffered by S & G is a nonsense! Yet, S & G and the CBA have instigated an agreement based on this very assumption?
In addition, this resolution scheme militates against the rights of the CBA’s customers who agreed to it, because they are the injured parties. Their entitlement to sufficient compensation for “damages” under the laws of contract are basically high-jacked by agreeing to such a proposal.
I’ll remind you once again of Section 12CA (1) of the ASIC Act:
“A corporation must not, in trade or commerce, engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.”
I believe that this agreement is questionable in law because it does not protect the contractual rights of the CBA’s customers that had signed enforceable agreements (housing and margin loans) with the CBA.
The agreement itself gets off to a bad start by stating something that is not valid in contract law.
The “Storm Financial Information Bulletin” issued on 16/3 by Slater & Gordon stated:
“Time Limits for considering offers
We have received a number of questions regarding the amount of time available to consider offers (or Proposals as they are described under the scheme) received from the Bank.
The Scheme provides that you have 28 days from the date of the Proposal to accept or reject the Proposal. This 28 day period commences from the date of the Proposal.
The 28 day period commences from the date that Slater & Gordon receives the proposal, not the date that you actually receive the proposal at your mailing address. We distribute all Proposals through Australia Post's Express Post service and therefore all clients should receive their proposals within 1, 2 or 3 business days.
If after receiving the Proposal you have decided to accept the offer, then we recommend that you return the Deed of Settlement to us as soon as possible after you discuss the proposal with your Slater & Gordon lawyer.
The sooner your documents are returned to us, the sooner we can register your acceptance of the Proposal with the Bank.
Where any client has reason to require an extension of time, we have been talking to the bank about that. We are pleased to say that the Bank is adopting a sensible approach to such requests. In other words, if 28 days is not enough time to consider the proposal, consider our advice, and consider your options, then we are confident that the Bank will be reasonable in response to any requests to extend the deadline.”
I find it incredible that Slater & Gordon do not understand the basic fundamentals of contract. Only when a proposal is accepted does it become a legal agreement or contract.
An “offer” in a proposed contract, if it states that the offer is to remain open for a “28 day” period, comes into effect from “the time the offer is communicated to the offeree!” Slater & Gordon are not a party to the contract and yet S & G state, “The 28 day period commences from the date that Slater & Gordon receives the proposal, not the date that you actually receive the proposal at your mailing address.” The offer is therefore already spurious because it is not a “28 days” offer!
This is just another example of bogus legal advice that has no validity in contract law.
I thank you for this opportunity to state our grievances and we, the victims of Storm Financial and the Banks, now look forward to seeing justice served.”[End of letter]
Slater & Gordon will argue that the ‘Goodridge’ Decision was subsequently overturned on Appeal. True! But the principles relating to the responsibilities and obligations of the parties that enter into margin loans agreements, namely, the Banks and the borrowers, were not.
It is interesting to note that not once to my knowledge during the time that has passed since the ‘CBA Resolution Scheme’ was first implemented (nearly 9 years now), and the Storm class actions that subsequently took place later, has the issue of “agency” ever been raised by any of the Banks’ lawyers in Court? If “agency” were such an important consideration then, why was it never pursued in court by the lawyers for the CBA when Levitt-Robinson later took the CBA to court on behalf of a body of Storm clients who borrowed from the CBA? Could it be because the Banks’ lawyers knew that “agency” was never a viable legal avenue to pursue?
It is evident that this Resolution Agreement was an instrument designed to get the CBA “off the hook” and relieve it of its legal obligations to its Storm customers. For S & G’s part, it was an attempt by them to weaken their Storm CBA clients’ resolve so that they would then be more amenable to settling in the short term. I believe S & G made A$6 million or so from this Resolution Scheme once this matter had been settled so it was in their best interests to act this way.
The “Proposal…Booklet” issued by Slater & Gordon argued the CBA’s case (even though S & G were representing CBA’s Storm customers) based on unsustainable allegations, assumptions rather than facts, and a specious claim of “agency”. It is apparent that such a Booklet was printed before the ‘Goodridge’ judgement was handed down because many of its comments conflict with the principles of law in relation to margin calls that are contained in that judgement.
Lawyers like Financial Advisers rely on their clients’ ignorance. After all, we in the general community are not lawyers or financial experts, are we? The problem is that half the time, one wonders whether some of them are either. How can you tell? You can’t. You trust in God and take a giant leap into the abyss.
In the end we, Helen and I, were fortunate enough to find a law firm that were willing to take on these banks on our terms. It was a David and Goliath battle that they/we could never win but at least we got a fairer deal money wise than if we had gone with the big boys. One cannot ask for more than that.
The one thing that everyone has going for them at the moment is that the Royal Commission has lifted the lid on the banks’ unscrupulous and unbecoming conduct in the many years, pre and post Storm, thus considerably weakening their legal positions. Evidence abounds of their turpitude and it will be hard for them to defend their actions. This makes them more amenable to settling quickly.
What you must ensure is that they are not allowed to get away with offering you a pittance. Don’t allow your lawyers to dictate terms of any settlements. They are only in it for the money. Form a Committee among yourselves and insist on having a voice at the negotiating table. You tell your lawyers what YOU want! Don’t let them tell you what they want! You should be controlling them! Not the other way around! You can only do this if you act as a collective.
Having said all this, there may be another way out but it will require a show of force from all of you. I am now referring to ASIC’s part in this financial debacle.
In my previous article, ‘WHAT DOES THE FINDINGS OF THE ROYAL COMMISSION TELL US? IT’S TIME TO FIND YOURSELF A GOOD LAWYER! I suggested that injured parties hold ASIC accountable and seek assistance from that body where compensation is concerned. Why, at the end of the day, should you have to employ lawyers when ASIC should be seeking compensation on your behalf and paying the costs of doing so?
Fanciful! Not really! Think about this! ASIC brought a legal action against the CBA back in 2010 on behalf of Storm’s clients who were customers of the CBA. This, in and of itself, is a precedent. If ASIC did it then, why not now? ASIC got you in this mess to start with by its ineptitude. It should be up to ASIC to now bail you out.
That’s where a Committee comes in! Collectively, you have a voice! Use it to exert pressure on ASIC to act on your behalf.Author: FRANK AINSLIE14 January 2019