Saturday, February 29th, 2020 - Vizzone Twigg Lawyers

Yesterday, Justice Rothman of the Supreme Court of New South Wales said that the ANZ Bank did not act unconscionably in providing loans to a male widower who had recently lost his wife and was raising young twins.

In the long-awaited Judgment which will have implications for the banking industry, his Honour said that a Mascot resident was not at a “special disadvantage” when he had approached the bank for business loans to purchase a tyre business at Revesby in 2015.

The business immediately failed and Mr Giannaklis immediately approached the bank for a number of increases to overdrafts and further loan advances. All loans were secured by a personal guarantee and the family home.

Some of the figures provided by Mr Giannaklis appeared ultimately to be unsustainable or incorrect.

It was submitted by John Vizzone of Vizzone Ruggero Twigg Lawyers to the Court, that the bank had an obligation to act responsibly and verify that information provided by applicants was correct and that they had an ability to repay loans.

His Honour disagreed stating:

80:       “It may well be that ANZ was aware that Mr  Giannaklis ’ wife had died. It is a logical jump, not available to Mr  Giannaklis , then to assume that ANZ was aware that Mr  Giannaklis  was unable properly to care for himself or to run his business, as a consequence.

  1. None of the figures provided by Mr  Giannaklis  to ANZ disclosed an inability to service the Loans, each of which has been set out in the course of this judgment. The proposition, stripped to its fundamental premise, is that a lending institution should be liable to a borrower (or guarantor) for believing figures presented by the borrower and/or guarantor to justify a loan. Such a proposition would take unconscionability to a level not hitherto countenanced.

He continued:

  1. None of the figures provided by Mr Giannaklis  to ANZ disclosed an inability to service the Loans, each of which has been set out in the course of this judgment. The proposition, stripped to its fundamental premise, is that a lending institution should be liable to a borrower (or guarantor) for believing figures presented by the borrower and/or guarantor to justify a loan. Such a proposition would take unconscionability to a level not hitherto countenanced.
  2. Unconscionability occurs in circumstances where one party to a transaction is at a special disadvantage in dealing with the other party, because of illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affecting her or his ability to protect her or his own interest and the other party unconscientiously takes advantage of the opportunity thus placed in her, his, its hand

Partner John Vizzone says that the decision is disappointing and may have ramifications for the industry.

“We thank Justice Rothman for a fair hearing however we are disappointed with this decision,” John Vizzone said.

“The Royal Commission into banking sought greater responsibility upon banks to ensure responsible lending. Responsible lending begins with being able to ensure that persons are able to repay loans.”

“In this case, a person had only just lost a partner and was the sole bread-winner for the family. The ANZ itself had internal memos expressing concerns about the person requesting more and more money yet continued to advance him further monies. Now he faces losing his family home,” Mr Vizzone explained further.

“We will be looking at this decision closer and considering our appeal rights.”

You can access the full decision: http://www.austlii.edu.au/au/cases/nsw/NSWSC/2020/148.html

If you require further information or comment please contact John Vizzone on: 0416167690.

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Vizzone Twigg Lawyers


Vizzone Ruggero Twigg is a well established law firm in Sydney with offices in the Sydney CBD and Mascot.

Find out more: http://www.vrtlawyers.com.au


John Vizzone
M: 0416167690
W: www.vrtlawyers.com.au

Keywords

Banking, ANZ, Responsible lending, royal commission, foreclosure, law, supreme court, justice rothman

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