Family Homes Lost As Judge Dismisses Bank Loan Claim

Family Homes Lost As Judge Dismisses Bank Loan Claim

Sydney Morning Herald
11 September 1992
By ANNE LAMPE

A Federal Court judge has dismissed, with costs, a claim by a former Commonwealth Bank client over a consolidated loan that did not eventuate and the resultant forced sale of the client's property in 1987.

Apart from ratifying the forced sale, the decision also gives the bank possession of the home of the former client's son and his wife. The possession order was postponed pending submissions from the parties.

The former client, Mr Donald Benson, and his wife Betty, had claimed that the bank had reneged on an arrangement to consolidate their business and other debts and thus set in train a process that triggered the forced sale of three rural properties and other assets at prices well below valuation.

Mr Benson had brought an action against the bank under Section 52 of the Trade Practices Act, claiming the bank had made misleading representations to him over the loan consolidation.

The bank denied it had given any of the assurances alleged to have been made by Mr Benson.

Justice Burchett rejected much of Mr Benson's evidence and found that the bank moved on the properties after finding that Mr Benson's companies were insolvent.

In late 1986 Mr Benson and his company, Polygraph Products Pty Ltd, had sought a $150,000 loan.

At the time Polygraph owed the bank large sums on overdraft and the bank had asked the company to reduce its debt.

Justice Burchett found that Polygraph's affairs were run by Mr Benson's son, Mr William Benson and associated companies, and that Mr William Benson had not responded satisfactorily to requests by the bank for financial statements.

Commonwealth Bank officers had expressed their perturbation for some time about the debt, and in a letter in July 1986 had sought payments to reduce the overdraft.

Despite this request, Polygraph's debt continued to climb from $937,328 to just over $1 million and the bank expressed its disappointment with this result.

The issue came to a head in August 1987, when the bank told Mr Benson of Polygraph's apparent insolvency position and said properties had to be sold.

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