Why I’m part of the IMF class action against Bankwest: WA property developer tells
A former Bankwest customer who says the bank's actions in calling in two loans "ruined" his family and his business has detailed his reasons for signing up to a mooted class action that accuses the bank of improper lending and recovery practices after its takeover by the Commonwealth Bank during the GFC.
Peter Randles, a property developer from Western Australia's North Fremantle, says he is signing up to a mooted class action run by the law firm Slater & Gordon and funded by IMF after the bank's actions caused him to almost lose his family home. He says he is very confident the class action will proceed.
Randles says he and his wife had two accounts with Bankwest: one residential and one commercial. After working two years on an apartment development, Randles says he was told by Bankwest in 2008 that its parent HBOS had no money for development and he should refinance elsewhere.
Randles says after getting approval from the Commonwealth Bank to pay out a home loan account to the tune of $3.2 million, he was told by Bankwest that it wanted both loans paid in full.
Randles says he was informed by the bank that they were in default in July 31, 2008, and over the next two years, the interest rate on the combined loans averaged 18%, after being informed by the bank that they were in default.
The Randles lost their home in April 2010, and their properties were put up for auction by the bank in the middle of last year. ANZ then came forward with a last-minute refinance offer for the $7.5 million debt, with about one-third – $2.4 million – accumulated interest.
"The basis of our claim is by not accepting the full payout on our residential account, and we'd had that account for 20 years, we want all for our penalty interest back. The domino effect for not accepting that payment is ruinous," Randles says.
But Bankwest says it strongly denies the allegations.
"Due to the GFC and the broader economic environment property values and property development in general suffered between 2008 and 2011," a spokesperson said.
"Bankwest assisted many customers through this period and continues to do so."
"Bankwest has over a million customers and over the past 18 months has had the largest increase in customer satisfaction of all banks across Australia."
The comments follow confirmation from Van Moulis, commercial litigation lawyer at Slater & Gordon, that he is working on due diligence on behalf of a group of dozens of aggrieved borrowers, primarily property developers.
Bankwest was eventually purchased by CommBank for $2.1 billion in December 2008; the complaints of the property developers centre on sudden demands for payment and excessive interest payments after that deal.
A Sydney property developer, Guy Goldrick, has argued that a provision allowing CommBank to claw back bad and doubtful debts from HBOS led the bank to make harsh decisions on loans.
In documents from IMF, managing director Hugh McLernon says while "little is known" about an agreement allowing CommBank to claw back part of the purchase price for Bankwest from the vendor, "what is clear is that CBA called upon the warranty and was paid some $200 million".
"At the same time some commercial developer clients of Bankwest believe they were hard done by when Bankwest revaluated their security and called up their loans in the period after CBA took control of Bankwest," McLernon writes.
"If there was a time limit and if CBA had to call up the loans or take some enforcement action within that limited time in order to get the advantage of the warranty and if that warranty was unlimited, then there is some risk that the CBA has been enthusiastic in its quest to have Bankwest identify and take action against commercial property developers whose loans were within the categories set out in the warranty."
He also notes that Bankwest's statement of financial position, which detailed money owed to them from the Reserve Bank, and other banks and financial institutions, shows that the amount of money pouring into Bankwest soared from zero in July 2008, to $29 million the following month, before swelling to $3.752 billion in December 2008.
The Reserve Bank has told The Age that it had $55 billion deployed helping Australian banks with liquidity by the time of CommBank's takeover of Bankwest, but declined to say whether Bankwest was one of its recipients.
The takeover of Bankwest has already been the subject of an inquiry, although Nationals Senator John Williams has recently flagged an interest in a Senate inquiry into bank practices, following complaints from constituents that loans were being pulled without warning and leading to assets being sold at fire sale prices.