Foyster v ANZ Banking Group

Foyster (the applicant) sought judicial review of a decision made by ANZ Banking Group (the respondent) to refuse to grant her a loan. The application was heard by Gummow J in chambers.

The primary legal issue before the court was whether the respondent's decision to refuse the loan was vitiated by a breach of the respondent's duty of care to the applicant. The applicant contended that the respondent owed her a duty of care in assessing her loan application and that this duty was breached by the respondent's failure to adequately consider her financial circumstances and capacity to repay the loan.

Gummow J considered the established principles of negligence and the duty of care in the context of banking and lending. His Honour noted that while a bank owes a duty of care to its customers, this duty is generally confined to the proper conduct of the banking transaction itself, such as the safe keeping of funds or the execution of payment instructions. His Honour found that the respondent's decision to refuse a loan, based on its assessment of the applicant's creditworthiness and risk, did not fall within the scope of the duty of care owed by a bank to a customer in the ordinary course of banking business. The court held that a bank is entitled to exercise its commercial judgment in deciding whether or not to lend money, and that such a decision, absent fraud or misrepresentation, does not give rise to a cause of action in negligence.

The application for judicial review was dismissed.