This case involved a spectacular reversal of fortune for a successful multi-millionaire who got ensnared in the failed mortgage fund MFS.
The borrower started his working life at the age of 15 in a bank at Hervey Bay. He worked his way up through the bank, then became a police officer and then a professional footballer for the Sydney Swans, after which he started his own business.
His company organised end of season trips for sporting groups. Later the business offered packages for Schoolies Week on the Gold Coast. It proved to be a very successful, and he invested his profits in real estate.
Eventually his business became a publicly listed company and in 2005 MFS made a “three-for-one” scrip takeover offer for his company. As a result, he acquired approximately ten million MFS shares, and became a director of MFS with particular responsibilities in the tourism side of its business however he resigned after six months.
In 2007 he obtained a $10m credit facility with NAB to acquire multiple beachfront properties on the Gold Coast to build his dream mansion. He subsequently sought to increase the facility to $20 million to fund for construction, but the facility was never put in place because the bank’s wanted a QS report on drawdown she did not accept.
Subsequently he took out a $16.5m margin loan from NAB secured against his MFS shares to purchase additional MFS shares which he believed were undervalued.
When, upon the approach of the GFC, the MFS shares became worthless, his beachfront properties were sold by the bank, and they then sought the balance of his property assets. He resisted on the grounds that the bank had represented to him that the $20 million facility would be established without the bank’s QS condition and further that the bank had induced him to purchase the additional MFS shares. These two representations formed the basis of several causes of action against the bank for breach of contract, negligence, misleading and deceptive conduct and unconscionable conduct.
The court did not believe the borrower and said that to win the proceedings he was prepared to deny and invent conversations, distort the bank employee’s sympathy into a confession of wrongdoing, advance an improbably theory that the bank employee did not tell him about the extra conditions attaching to any facility increase and make a bogus claim of $56m in respect of his company’s shares, which were worthless. The court found that the alleged bank representations were not made. This meant that all the claims failed. The court dismissed the case and ordered the borrower to pay the bank’s costs.
Click here to read the full judgment.