Haynes v St George Bank

This matter concerned an appeal by Mr Haynes against findings made by a judge of the Supreme Court of South Australia regarding the liability of St George Bank. Mr Haynes had sought to recover losses he suffered in relation to a portfolio loan facility provided by the Bank. While Mr Haynes did not appeal the finding that he would have suffered his losses regardless of any breach by the Bank, he pursued an appeal against the judge's findings that the Bank had not breached a prudential obligation clause.

The central legal issue before the Full Court of the Supreme Court of South Australia was whether the Bank had breached its duty to exercise the care and skill of a diligent and prudent banker in assessing and approving Mr Haynes' application for an extended portfolio loan facility. This involved determining whether the Bank's assessment methods and its opinion as to Mr Haynes' ability to repay the extended facility were reasonable in the circumstances.

The Court, comprising Kourakis CJ, Blue and Doyle JJ, upheld the trial judge's findings. The Court reasoned that the transaction, while marginal, was within the Bank's guidelines and that Mr Haynes' entrepreneurial nature and successful track record as a customer justified a flexible approach. The Court noted that the loan was essentially bridging finance, intended to be short-term, and that Mr Haynes, as a sophisticated investor, understood the risks involved. The Court concluded that the Bank had exercised the requisite care and skill in its assessment and had not breached its prudential obligations.