Ian Hamilton Fisher and Joan Rosemary Fisher v Commonwealth Bank of Australia
[1990] FCA 848
•16 May 1990
IN THE FEDERAL COURT OF AUSTRALIA )
)
| NEW SOUTH WALES DISTRICT REGISTRY ) | No. G766 of 1988 |
)
| GENERAL DIVISION | ) |
| BETWEEN: | IAN HAMILTON FISHER First applicant JOAN ROSEMARY FISHER |
| /' | Second applicant |
| AND: | .COMMONWEALTH BANK OF AUSTRALIA Respondent |
MINUTES OF ORDER
Judge making order: Beaumont, J.
| Date order made: | 16 May 1990 |
| Where made: | Sydney |
| THE COURT ORDERS: |
Stood over for directions at 9.30 a.m. on Frlday 15 June and for further hearing at 10.15 a.m. on Monday 16 July 1990 and following days in th a t
week.
IN THE FEDERAL COURT OF AUSTRALIA )
1
| NEW SOUTH WALES DISTRICT REGISTRY ) | No. G766 of 1988 |
1
| GENERAL DIVISION | ) |
| BETWEEN: | IAN HAMILTON FISHER First applicant JOAN ROSEMARY FISHER Second applicant |
| - | COMMONWEALTH BANK OF AUSTRALIA Respondent |
AND :
| C O R M : | Beaumont, J. |
DATED: 16 May 1990
Findings of fact with respect to the express misrepresentations alleged in the second further amended statement of claim
By consent of the parties, evidence has been called and submissions made, with respect to the express misrepresentations alleged by the applicants in their second further amended statement of claim.
The relevant allegations are pleaded in seven groups as
follows:
(i) The meeting with Hr Green in Taree in August 1984
| " 3 . | In August, 1984 the Applicants wished to borrow funds in the sum of one million five hundred thousand dollars ($1,500,000.00) for the purpose of refinancing their then existing debts secured by mortgages and to provide additional funds for the purchase by the Applicants of an investment property. |
4. In August, 1984 the First Applicant on behalf of himself and the Second applicant met with the servant of the Respondent, Mr. Terrence Green, at the Respondent's branch office at Taree ('the Taree meeting').
5. During the course of the Taree meeting the First Applicant informed Mr. Terrence Green that the Applicants wished to borrow funds from the Respondent, that the Applicants had heard mention of foreign currency loans and that the Applicants knew nothing of foreign currency loans.
6. During the course of the Taree meeting the said Mr. Terrence Green showed to the First Applicant a graph depicting the commercial interest rates applicable to borrowings in various countries including Switzerland and Australia for the period of twelve (12) months approximately preceding the date of the Taree meeting ('the interest rate graphp). The interest rate graph showed a maximum interest rate applicable to borrowings in Switzerland of 6.5%.
7. During the course of the Taree meeting the said Mr. Terrence Green showed to the First Applicant a graph depicting the movements in the relative value of the Swiss franc and the Australian dollar over a period commencing on or about December, 1983 ('the exchange rate graph'). The exchange rate graph depicted a maximum variation in the value of the Swiss franc and the Australian dollar of approximately ten percent (10%) above or below the then prevailing rate.
8. During the course of the Taree meeting the Respondent by its servant Mr. Terrence Green bade the following oral representations to the First Applicant:-
|
| (e) | a Swiss franc loan attracted an effective interest rate of 7.5% per annum being interest of six percent (6%) plus the Respondent's lenders1 margin of one and a half percent (1 1/2%); |
| (f) | that the value of the Swiss franc was most unlikely to fluctuate against the value of the Australian dollar by more than ten percent (10%) above or below the then existing level; |
| (g) | that the Swiss franc was so stable and fluctuated by such a small margin when compared to the Australian dollar that hedging of a Swiss franc loan was not worthwhile; |
(gg) that i t , was neither necessary nor desirable to hedge any foreign exchange risk because the cost of hedging would deprive the Applicants of the benefit of the foreign currency loan and because of the protection offered by reason of the matters pleaded in subparagraph (i) below;
| (h) | that the Applicants would not need to know about hedging if they were considering a Swiss franc loan; |
(i) that if the Applicants entered a Swiss franc loan facility and the relatlve value of the Swiss franc at any time during the term of that loan increased by more than five percent (5%) of the value of the Australian dollar cash parity adjustment could be made by the Applicants or the Swiss franc loan would be converted to Australian dollars; and
| (j) | the term of the loan would be five (5) years and there would be no problem in renewing the term for a further five (5) years. |
8A During the course of the Taree meeting Mr. Terrence Green further orally represented to and advised the Applicants that they could and should borrow more than the amount of their present requirements and leave the balance on deposit with the Respondent at interest by way of further security."
(ii) The meeting with Mr Isaacs and Mrs Skelton in Forster in
December 1984
"12. In or about December, 1984 the Applicants had a meeting with Respondent's servants, Mr. wal Isaacs and Mrs. Pamela Skelton, at the offices of the Respondent's branch at Forster, New South Wales ('the Forster meeting').
13. During the course of the Forster meeting Mr. Wal Isaacs, on behalf of the Respondent orally represented:-
|
(C) that Mrs. Pamela Skelton was qualified to advise the Applicants in relation to a foreign currency facility.
14. During the course of the Forster meeting Mrs. skekon on behalf of the Respondent made the folcfowing oral representations to the Applicants:-
| ||||
| (C) that a foreign currency facility was the best facility for the Applicants' needs; | ||||
|
(6%) together with the Respondent's lenders
margin of one percent (1%); and
| (e) | if the relative value of the Swiss franc against the Australian dollar increased by more than five percent (5%) of the value of the Australian dollar the Applicants' Swiss franc borrowings would be brought on-shore at domestic interest rates." |
(iii) The meeting with Mrs Skelton in Forster in January 1985
"15A. In late January, 1985 at the Forster branch of the Respondent the Respondent by its servant Mrs. Pamela Skelton orally represented to the Applicants by the First Applicant that if the foreign currency in which any loan from the Respondent to the Applicants were denominated moved adversely to the Australian dollar by more than 5% of the amount of the loan and if the Applicants did not top up their security then the Respondent would bring the loan back on shore and the Applicants would pay, and would be able to pay, interest rates in respect of the loan whilst it was on shore."
(iv) The meeting with Mr Isaacs in Forster in January 1985
"19A On or about 16 January 1985 the Respondent by its
servant Mr. Wal Isaacs orally represented to and
advised the ~pplicants by the First Applicant that:
| (a) | the Applicants should maximise their borrowing and apply for a foreign currency loan in an amount equivalent to $3,000,000.00; |
| (b) | the amount of such loan more than the amount of the Applicants' present requirements should be left on deposit with the Respondent by way of further security; and |
(C) the Applicants would thereby derive substantial profit."
(V) The meeting with Mr Vanner in Sydney in February 1985
| "22 | On or about 12th February, 1985 the Respondent, by its servant and agent, the Deputy Chief Manager of the Respondent, Mr. Vanner, made the following representations to the Applicants at the Respondent's offices at 108 Pitt Street, Sydney:- | |||
| ||||
| (C) the Respondent was very well equipped to monitor its customers' foreign currency loans; | ||||
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(vi) The meeting with Mrs Skelton in Forster in August 1985
"28. On 14th August, 1985 the Applicants met with the Respondent's servant, Mrs. Pamela Skelton at the offices of the Respondent's Forster branch and made known to Mrs. Skelton that they sought her advice as to the appropriate measures they should take to minimise the risk of further financial loss.
29. During the course of the meeting referred to in paragraph 28 above the Respondent by its servant Mrs. Skelton made to the Applicants the following representations:-
|
(vii) The meeting with Mrs Skelton and Hr HcLeod in Forster in early 1986 and the meeting with Hessrs Edwards, Rogers and Tuskan i n February 1981
"38A. Further or Alternatively:-
| (a) | In about early 1986 Mrs Pam Skelton and/or Mr Wal McLeod on behalf of the Respondent advised the Applicants to engage in foreign currency trading to attempt to reduce the amount of their losses. |
| (b) | In about February 1987 Messrs John Edwards, John Rogers and David Tuskan on behalf of the Respondent gave similar advice to the Applicants. |
(C) The Applicants were on each occasion advised that the Respondent could trade in foreign currencies on behalf of the Applicants at a cost of $15.00 per contract.
Particulars
Advice given orally in converstions at the time stated between the First Applicant and the named Officers of the Respondent."
In the Important areas, there is little common ground between the parties. In order to understand the nature of the conflicts in the evidence, it is convenient, in the first instance, to outline the relevant evidence given by the witnesses called by the parties. Where there is a conflict in the evidence, I will indicate my frndings later.
1. Introduction
The first applicant,' Ian Hamilton Fisher, and his wife, Joan Rosemary Fisher, the second applicant, own a grazing property at Khatabundah, near Wingham, in New South Wales. In 1984, Mr Fisher was interested in purchasing a property near the Ord River in the Northern Territory. The property, which adjoined Victorian River Downs Station was known as "Carlton Hill". Mr Fisher needed to raise finance if the acquisition was to proceed. Mr Fisher discussed with a friend, Mr Brian Stone, the possibility of obtaining "offshore" finance. mention was made of the fact that offshore loans were available at "cheap" rates of interest. However, the inquiry made of Mr Stone was not further pursued by Mr Fisher.
2. The meeting with Mr Stack in 1984
In 1984, Mr Fisher discussed the matter with Mr Ray Stack, a senior solicitor practising in Taree with substantial property interests. The possibility of borrowing offshore was discussed. Mr Fisher asked Mr Stack whether he thought offshore loans were "any good". Mr Stack said that "we thlnk" such loans are "all right, we have borrowed extensively offshore...but... we
are solicitors, we are not bankers. If you want to know about [such loans] you should talk to an expert in that field...~ou should talk to Terry Green at the Commonwealth Bank, this is
| where we got our loans. ..I'll | make an appointment for you." |
| Mr Stack was not called. | So far as it went, Mr ~lsher's |
version of his discussion with Mr Stack was not challenged in cross-examination. It appears not to be contentious. However, there is dispute between the parties as to Mr Fisher's state of knowledge of foreign currency loans at this time. This will be dealt with later. As has been said, Mr Stack was not called.
3. The meeting between Hr Fisher and Mr Green in Taree In August
1984
It is common ground that Hr Fisher met M r Green in Taree. In his pleading, M Fisher originally said that the meeting took place in October or November 1984. The Bank's documentation, which was discovered, indicated that the meeting took place on 17 August 1984. Mr Fisher now asserts that this was the date of the meeting. There is a substantial confllct in the evidence as to what was discussed at this meeting which took place at the Commonwealth Bank in Taree. It will be convenient to describe Mr Fisher's version before going to M C Green's evidence.
(a) Me Fisher's version
According to Mr Fisher's evidence, the discussion
commenced as follows:
| (1) Nr Fisher said: | "Ray Stack told me you are an expert in |
foreign currency loans."
(2) Mr Green said: "That's right."
| (3) M r Fisher said: | "I would like to know if you think they are |
any good. I don't know anything about them but I have come
here to find out."
(4) Mr Green said: "We think they are excellent value, [an] excellent way of borrowing. Many people in Taree have already got these loans. Eventually there will be a huge number of people borrowing this kind of finance because there is huge amounts there available at interest only
| terms, at cheap rates sf interest." | ., |
(5) Mr Fisher said: "Could you tell me which would be the most desirable to borrow in?"
| ( 6 ) Mr Green said: | "Swiss francs would be most desirable |
because they are the most stable, and they have teen the
most popular to date."
| (7) Mr Green then produced a graph and said: | "You can see from |
this graph that the Swiss franc is a low rate of interest which remains stable." (The graph was not tendered and is, apparently, unavailable.)
(8) Mr Green said that the loans were for five years, with interest only to be paid during the five years, with the option of a further five years, and interest to be pald at the end of each six-monthly roll-over.
| (9) Mr Green then said: | "Do you understand that the value of |
the currencies can vary?"
| (10) Mr Fisher said: | "No, I did not understand that, I thought |
it would remain constant for the term of the loan."
| (11) M r Green said: | "No your loan can be more or less at any |
point in time."
| (12) Mr Fisher said: | "How much would it vary?" |
| (13) Mr Green said: | " S to 10 per cent." |
(14) Mr Fisher said: "what would happen if when it came time to pay out the loan it was more than the actual amount we had borrowed?"
| (15) Mr Green said: | "You could pay it out as it was or you could |
apply to have the loan run on until such time as the currency had increased in value and it could well be that the position would be reversed."
(16) Mr Green then said: "Nbw do you realise that you have to establish your ability to service this loan on an onshore basis?"
| (17) Mr Fisher said: | "Why is that?" |
| (18) Mr Green said: | "In case that loan has to be brought anshore |
at any time for any reason."
| (19) Mr Green later said: | "If the currency weakens and the |
loan...blows out up to 5 per cent, the Bank wlll wear [this]. Above that, you will have to top up the loan with
cash. "
| (20) Mr Fisher said: | "what would happen if I don't top up the |
loan with cash?"
(21) Mr Green said: "The loan would be brought onshore."
| (22) Then Mr Green said: | "You will have the abillty wlth thls |
loan to maximise your borrowing."
(23) Mr Fisher said: "What does that mean? I have always endeavoured to borrow the absolute minimum required."
| (24) Mr Green said: | "No, in this case you borrow the maxlmum |
your security will allow based on approximately borrowing 62 per cent of security, and any surplus to your requirements
you can place in an interest bearing deposit with the Bank and you will earn far in excess of the interest you are paying for the overall loan, and thus you will generate a profit."
| (25) Mr Green added: | "Of course there will be other charges |
relating to the loan; there will be lender's margin of 2
per cent, and there will be an establishment fee."
(26) Mr Fisher said: "What about hedging? I have heard of hedging and I don't know what the word means, but I have heard about it in relation to foreign offshore loans."
| (27) Mr Green said: | "You won't need to know about hedging |
because the cost of hedging added to the interest rate you will be paying will bring the cost of the loan up to being
| comparable with an onsho~e | loan so we wont be hedging." |
(28) Mr Fisher then said: "I haven't got any foresight, I only claim to have hindsight. Can you show me graphs going back over previous years to indicate to me how much these currencies move, or how much they have moved over preceding years, because all my business decisions are usually based on hindsight like this."
(29)Mr Green then brought out another graph, "the Swiss-Australian" graph, which was also not tendered. Hr Green said: "You can see from the graph that the movement above and below the midway point where the dollar is now [i.e. approximately 2 Swiss francs to the dollar] ... that it only goes above and below that midway point about 5 per cent, which gives you a maximum of 10 per cent variation."
| (30) Mr Fisher said: | "Does it always regain its value against |
the Swiss currency?"
| (31) Mr Green said: | "Yes, you can see from the graph that it |
does. "
| (32) Mr Fisher said: | "This graph only seems to go back over 12 |
months. What about the years prior to this graph, have you
got any more graphs of those?"
| (33) Mr Green said: | "The Australian dollar was floated in |
December 1983 and since that time the Australian dollar has found its true value and became stable. Prior to that the price of the Australian dollar was fixed by the Federal Treasury and bears no relationship to the situation now."
(34) Mr Fisher then told Mr Green about the proposal to purchase the "Carlton Hill" property. Mr Fisher said that he held a certified valuation of the property for $1.8 million, that there would be $500,000 to $600,000 to be held "in escrow" that he would be able to collect on settlement; and that he held his own valuations on his other assets.
| (35) Mr Green said: | "If you wish, you put $3000 on my desk and I |
will process a loan for you."
(36) Mr Fisher said: "Is this win, lose or draw?"
(37) Mr Green said: "That's right."
(38) Mr Fisher said: "I'll need time to think about that one."
Mr Fisher then left.
(It is common ground that Mr Fisher did not pursue the matter further with Mr Green. Instead, Mr Fisher made rnquiries of many other sources, culminating in an approach to another branch of the Bank at Forster, in December 1984.)
(b) Mr Green's version
M Green gave a very different version of the
discussion.
(1) Mr Green's evidence was that Mr Fisher "asked straight out for a $1.38 million Swiss franc loan...to buy a property at the Ord River."
(2) Mr Fisher said that a friend from the Hunter River Valley region had advised him that there were Swiss loans available at low interest rates.
(3) Details of the security proposed to be offered and Nr Fisher's anticipated income were discussed.
(4) Mr Fisher said that he was going to sell 2,700 head of cattle in the first 12 months "but the funds were going to be used for the operation of the farm."
(5) Mr Fisher then gave Mr Green an indication of the income from all his assets and "what was available for rollovers and costs."
(6) Mr Green then produced several graphs to Mr Fisher.
(7) The graphs were tendered in evidence (Ex.33) and were as
follows:
-4-
| ! | > - |
| I | c - |
| I *- | C - |
rr.-
-
T"-
| " C - |
| ' c- |
| *- | l - | I- |
| . | c - , | . |
| 4.- : . l | "* | ---- |
| .. | - .- |
. ,.-. -
| --- | , + . , | 4. | -.,- |
:_._ ...
| 1:-;2,-, - | - |
| E::;.-:;;5 | . | ; | - | , | . ; | : | , | .; |
(8) According to Mr Green's evidence -
"We then went on to if he drew down, at today as an example, I believe the exchange rate was approximately 2.06, we then calculated what it would be if the exchange rate varied to 2.28. We also then calculated the Australian equivalent I £ it varied down to 1.78, the exchange rate. we also discussed the graph where it raised from the start to the end - I think it was 2.82 to about 1.78 I believe - and that covered a period of 5,
| 77 | to | 82 . . . " |
9
(9) Mr Fisher then asked about hedging.
(10) Mr Green said that he did not know much about hedging but stated that "if you [have] a fully hedged loan for the full term of the time...it works out to pretty similar to being in the Australian equivalent onshore."
(11) Mr Green said that "the interview concluded basically by
telling Mr Fisher to discuss the application with his
solicitor further and his accountant, and to contact me on
the next day and we would let him know what we were dolng."
(12) On 17 August, and possibly also on the next worklng day, 20 August, Mr Green prepared the following diary note:
b:r Ray Stack phoned on behalf of X r F i sher i7ho is t ry ing
t o purchase the Carlton H i l l s S ta t ion near the Ord !liver
| i n ::'ester.: | Aust ra l ia f o r $1.3 | mill ion A m ; | includes a l l |
stock and plant.
| I | 1:r |
| securi ty:- |
Fisher has the following proper t ies ava i lab le f o r
| ' | l ) | Tarae Discount | l u r n t t u r e Bu i ld iw 0/value | $500,000 |
| l | Bank value max. say $375,000 |
| 2) Farn i'lingham | 0/value | $400 ,OCO |
| I | This farm i s known & v value say $210,000 |
$400,000
| 3) Golf and tennis complex at Singleton 0/value | Bank value on the veSy depressed |
Singleton market $220,000
| bank value | $805,000 |
| I 4) Property being pwchased | I |
| v value | a f t e r r ea l i za t i on |
| expenses etc. | $800,000 |
| TOTAL SECURITY | $1 605,000 |
I -
| Tiis would leave a debt of $1.38 | mi l l ion agains t $1.60 |
mil l ion
secur i ty .
J.'
He
intends t o s e l l 2700 c a t t l e within two months f o r $ 8 0 0 , ~ ~
however a l l t h i s is required f o r the first 12 months rur,nl".g
cos ts .
l
| I | I t was heard from the l o c a l shock d: | s t a t i o n agent t ha t thrce |
| l ocz l people | hzd | purchased Victor ia D o n s S t a t i on yesterday |
and t h i s fel low was one of them.
| I | The | dea l i7as Vic tor ia Doms | $10.7 | mi l l ion |
| Carlton H i l l | 1.3 | mi l l ion |
| ;;l 2,00 | mil l ion |
| These | p r o ~ e r t i e s | a re owned | by Hooker Es ta tes . |
| I | 1 | Eelieve the deal i s not a t t r a c t i v e and we | allow i t t o pass- |
| ( 1 3 ) On 20 August. Mr Green made enquiries concerning the value of the secur i t ies proposed to be offered by Mr | Fisher. |
| ( 1 4 ) On | 31 August, Mr | Green received a memorandum from the B a n k p s |
| N.S .W. | Branches Division as follows: |
| 17/8 | INTERNAL MEMORANDU |
1
| W | BBANCHES | D I V I S I O N CBA |
| NEBOHCF 'C~A E* | 5810 CGC |
| tTg | , ,h | August 1984 |
| have had a b r i e f discussion with Nr Stack regarding t h i s |
| I | 4~ l i c a t i o n and he has indicated t h a t the appl icant requires | |||||||
| ||||||||
| ||||||||
| - | . .?hie basis. | |||||||
| C . | '4 i | |||||||
|
| @' a' ,W/CDB package f o r the amount sought and he was t o re-approack | .&ts | c l i e n t on t h i s basis . |
| !" | I . - | ;(l i |
| :Should t h e appl ica t ion proceed on t h i s ba s i s we | would | require tht |
| /' . | fpllowing; | ||
| q | 1 1 : . | ||
|
.
should include present occupation(s) and experience;
| ' | ' Deta i l s of | ex i s t i ng balance sheet and | income/ |
| .I expenditure; | |||
| I | l |
| m. | 'Expanded details of income to be received from the | |
|
' I .
| . | ' | Proposed term of borrowings. |
| A s you w i l l appreciate the proposal wi l l ' need t o be | inves t iga ted |
| by; a Rural Of f ice r and before considering the matter | f u r t h e r we |
| w i J l r equ i re a non-refundable | f r o n t end f e e of Ii3,000.- | Mr Stack |
| bag been informed of t h i s requirement. | I .I |
| ing ~en{or Manager | Branches | , | NSW, |
(15) Mr Green said in evidence that he wrote the words "Noted. Declined." which appear at the end of the memorandum. Mr Green also said in evidence that, at about this time, he telephoned Mr Fisher and informed him that the application had been declined. (As has been seen, M Fisher made no reference to this telephone discussion in his evidence in
chief. )
(16) In his evidence, Mr Green agreed that he asked Mr Fisher whether he understood that the value of currencies can vary. But Mr Green denied all the other statements attributed to him by Mr Fisher.
4. Mr Fisher's approach to Mr Parton in October 1984
After the discussion with Mr Green in August 1984, Mr Fisher saw an advertisement by a Sydney finance broker in a newspaper advertising offshore loans. M Fisher contacted the broker who referred him to Neville William Parton, a finance broker who operated in the Taree and Wingham area.
In October 1984, Mr Parton told Mr Fisher that he was a builder but that he had recently borrowed offshore from the ANZ Bank and had decided to establish himself as a finance broker. Mr Fisher outlined to Mr Parton the terms of the lending arrangement proposed by Mr Green. Mr Parton said that he thought that he could do better with another bank; and that his brokerage would be 1%. Mr Fisher indicated his willingness to pursue such an arrangement. Mr. Parton suggested that an approach be made to Mr Fisher's own bank, the National Australia Bank at Wingham.
5. The meeting between Mr Fisher, Mr Parton and Mr Shaw in
October 1984
In October 1984 Mr Fisher and Mr Parton met with David Lachlan Shaw, the manager of the Wingham branch of the National Australia Bank.
(a) Mr Fisher's version
According to Mr Frsher's evidence, Mr Fisher told Mr Shaw that he wanted an offshore loan in order to acquire "Carlton Hill"; Mr Shaw said that his Bank did not have the facility
available, and that he d ~ d not know anything about offshore loans
except that he had heard that there was some tax "disability" in
relation to them, although he did not know what it was.
(b) Mr Parton's version
According to Mr Parton's evidence, the meeting was
short. The Bank manager said that the Bank did not deal in
offshore lending as there was some kind of a tax problem with it.
( C ) Mr Shawls version
Mr Shaw said, in his evidence, that he met with Mr
Fisher on two occasions.
(i) The first meeting
According to Mr Shaw's evidence, Mr Fisher was a
longstanding customer of the National Australia Bank. He met with Mr Fisher and Mr Parton in or about October 1984. Mr Fisher introduced MC Parton as his "financial adviser". Mr Fisher said that he would like to borrow $1.5 million to enable him to purchase a hotel/motel at Nabiac, near Taree. He said that he
would like the loan in Swiss francs. He also said that he would deposit $300,000 with the Bank on a term deposit. Mr Shaw said that he was not aware of all that was involved with currency loans and that he would have to telephone the Bank's international operations department for direction. (Mr Shaw said in evidence that he had never done a foreign currency loan.)
(ii) The second meetinq
Mr Shaw later telephoned the Bank's international
operations department. Subsequently, Mr Fisher and Mr Parton called on Mr Shaw. Mr Shaw 'informed them that he had telephoned the Bank's international operations department and that the Bank would require Mr Fisher to acknowledge the risk involved in this type of lending before it would be prepared to go any further with it. Mr Fisher then said: "There's no danger with this type of loan and that's why we want it." Mr Fisher said that he wished to pursue the offshore borrowing.
(iii) The final telephone discussion with Mr Fisher
Later, the regional manager of the Bank visited the
Wingham branch and discussed MC Fisher's application with Mr Shaw. At the time the regional manager telephoned Mr Fisher to discuss the matter with him. Mr Fisher declined to discuss his application because Mr Parton was not available. Mr Fisher was then informed that the Bank was not prepared to go any further with the matter.
6. The meeting between Mr Fisher, Mr Isaacs and Mrs Skelton in
Forster in December 1984
(i) Mr Fisher's version
According to Mr Fisher's evidence, in about the middle
of October (not December) 1984, Mr and Mrs Fisher and Mr Parton went to the Forster branch of the Commonwealth Bank and there met the manager, Mr Isaacs. (Mr Isaacs has since died.) Mr Fisher asked Hr Isaacsl opinion on foreign currency loans. Mr Isaacs said that he thought that they were an excellent way to borrow, and most suited to the Fisher's needs. Mr Isaacs then introduced the Fishers to the branch".s loans officer, Mrs Pam Skelton, saying that she was "most efficient".
Mrs Skelton asked Mr Fisher whether he knew anything about foreign currency loans. Mr Fisher said that Mr Green had been telling him about them. Mrs Skelton said that Hr Green had processed a lot of foreign currency loans for people in Taree. Details of the loan were then discussed.
(By this time, it was known that the proposal to acquire "Carlton Hilln could not proceed. Mr Fisher said that, having lost the opportunity to buy "Carlton Hill", he had searched the area from the Hunter River to Coffs Harbour "looking for a business that had an earning suitable to maintain such a loan as an offshore loan and still show a reasonable surplus." Mr Fisher said that he had made an offer, which had been accepted, of $650,000 on the Boomerang Hotel at Nabiac. (None of this evidence appears to be contentious.)
Mr Fisher proposed to Mrs Skelton that he "borrow to cover the purchase of that hotel but we maximise our borrowing to the extent of our security and we borrow $1.3m. The additional money would be to go to pay out my existing loan with the National Australia Bank at Wingham of approximately $100,000 and the remaining amounts [would] be placed on IBD to generate additional income or to be there in readiness if we found additional income producing property to buy." Mrs Skelton said: "That's good." She then informed Mr Parton what she would require to process the application.
At this interview, or possibly at a later interview, with Mrs Skelton, Mrs Skelton gave Mr Fisher the following information bulletin dealing with exchange rate and interest rate movements:
| lSSUED BY | INl€RNATKINAL DIVISION | . , , |
COMMON WEALTH BANK OF AUSTRALIA
EXCHANGE RATE
A N D
INTEREST RATE
MOVEMENTS
| This bulletin is produced by the Forelsn Exchange Advrsorf ;::-p | For |
| further information contact Mart Fuller or Jovan Xnezev:: | : | t ' e | 5::-ey |
| numbers shown below, or any of the following dealers : |
| SYDNEY : | Slrnon Prost |
| . | Bhrbara McElwee |
(02) 233 5088
| Telex 20072 | Pc ullne Cameron |
| Mlchael Adland Ian Small | |
| H3L30URNE : | Ken Davey . |
| (031 6 1 6 4115 | Grag willlams |
| Telex 139780 | |
| LEO Melville | |
| HONG KONG : | 3rcnZan Fitzpatrick |
| LONDON | HLJ King |
| NEd YOXX : | Garry Deadman |
| 50s ANGELES : | Steve Lucas |
REPORT OF MONTHLY EXCHANGE RATE MOVEMENTS
| OCTOBER | 1 9 8 4 |
EASED ON MIDRATES AGAINST THE AUSTRALIAN DOLLAR.
| COUNTRY | START | E N D | MOVEMENT | P.C. | HIGH | DATE | LOW | DATl |
| U . K . | . 6 6 8 8 | . 6 9 6 8 | . 0 2 8 0 | . 7 0 0 0 | 1 9 / 1 0 | 5 / 1 ( |
| AUST | 1 7 . 7 4 0 4 | 1 8 . 1 7 9 9 | . 4 3 9 5 | 1 8 . 2 4 7 0 | 1 6 / 1 0 | 4 / l( |
| EELG | C | 5 1 . 4 4 8 9 | 5 1 . 9 4 8 0 |
| ~ - | - ~ - . | .-.. | ..- | . 4 9 9 1 | 5 2 . 6 2 0 2 | 1 7 / 1 0 | 29 / l ( |
| BELG | F | 5 1 . 5 7 3 1 | 5 2 . 4 5 7 7 |
- - -
| . a 8 4 6 | 5 2 . 9 9 3 4 | 1 7 / 1 0 | 411. |
| CANA | 1 . 0 8 9 4 | 1 . 1 1 9 7 | . 0 3 0 3 | 1 . 1 1 9 7 | 3 1 / 1 0 |
| UENM | 9 . 1 8 6 7 | 9 . 3 2 9 8 | . l 4 3 1 | 9 . 3 8 9 9 | 1 7 / 1 0 |
| FRAN | 7 . 7 9 1 8 | 7 . 9 1 1 1 | . l 1 9 3 | 7 . 9 8 8 4 | 1 7 / 1 0 |
| HUNG | 6 . 4 5 0 7 | 6 . 6 4 1 1 | . l 9 0 4 | 6 . 6 4 1 1 | 3 1 / 1 0 |
| ITALY | 1 5 7 4 . 9 1 6 6 1 5 9 8 . 3 6 1 1 | 2 3 . 4 4 4 5 | L603.4790 | 1 7 / 1 0 |
| JAPAN | 2 0 4 . 0 9 7 8 | 2 0 7 . 8 7 6 4 | 3 . 7 7 8 6 | . | 2 0 7 . 8 7 6 4 | 3 1 / 1 0 |
| NCTH | 2 . 8 6 5 9 | 2 .9087 | . 0 4 2 8 |
| NOHW | 7 . 2 7 8 6 | 7 . 4 9 7 0 | . 2 1 8 4 |
| ( # | qRT | 1 3 3 . 2 3 6 8 | 1 3 7 . 2 3 9 1 | 4 . 0 0 2 3 |
| . | .JG | 1 . 7 8 5 6 | 1 . 8 3 3 7 | . 0 4 8 1 |
| SPAIN | 1 4 1 . 1 0 1 0 | 1 4 4 . 6 7 2 3 | 3 . 5 7 1 3 |
| SIV'ED | 7 . 1 4 6 1 | 7 . 3 8 4 4 | . 2 3 8 3 |
| W I T | 2 . 0 9 3 5 | 2 . 1 1 5 7 | . 0 2 2 2 |
| H.GER | 2 . 5 5 0 5 | 2 . 5 7 3 2 | . 0 2 2 7 |
| IRELND | . a 1 7 0 | . a 3 7 9 | . 0 2 0 9 |
| CXINA | 2 . 1 5 1 5 | 2 . 2 6 5 4 | . l 1 3 9 |
| F 1 JI | . g 3 5 4 | . g 6 2 6 | . 0 2 7 2 |
| FINL | 5 . 2 0 9 4 | 5 . 4 0 8 4 | . l 9 9 0 |
| CREC | 1 0 4 . 4 6 1 7 | 1 0 6 . 0 4 4 2 | 1 . 5 8 2 5 |
| I N D I A | 9 . 8 9 2 3 | 1 0 . 2 6 2 0 | . 3 6 9 7 |
| INDON | 8 7 2 . 4 3 5 4 | 9 0 1 . 4 5 7 0 | 2 9 . 0 2 1 6 |
| KUWAIT | . 2 4 7 9 1 1 . 6 3 7 9 | . 2 5 6 6 | . 0 0 8 7 |
| MALAY | 2 . 0 0 6 0 | 2 . 0 4 5 4 | . 0 3 9 4 |
| MALTA | . 3 9 6 3 | . 4 0 2 5 1 2 . 0 5 6 6 | . 0 0 6 2 |
| NEW | C | 1 4 1 . 2 8 1 0 | 1 4 4 . 0 8 1 3 | 2 . 8 0 0 3 |
| NEW | Z | 1 . 6 9 9 8 | 1 . 7 3 7 2 | . 0 3 7 4 |
| ONAN | , 2 8 6 3 | . 2 9 3 8 | . 0 0 7 5 |
| . 4 1 8 7 |
| (P4F | . 7 7 4 5 | . 7 7 9 1 | . 0 0 4 6 |
| PHIL | 1 4 . 8 8 2 1 | 1 6 . 2 3 8 4 | 1 . 3 5 6 3 |
| SOL | I S | 1 . 0 5 0 1 | 1 . 1 1 9 7 | .D696 |
| ST3 | AF | 1 . 3 8 3 2 | 1 . 6 3 6 8 | . 2 5 3 6 |
| S R I | L | 2 1 . 0 5 1 3 | 2 1 . 4 1 6 3 | . 3 6 5 0 |
| THAI | 1 9 . 1 6 2 4 | 1 9 . 5 8 3 3 | . 4 209 |
| U.S.A. | .B278 | - 8 4 9 5 |
| VANU | 8 3 . 7 2 0 0 | 8 6 . 1 8 6 4 |
END OF TABLE
29.
| INTEREST | R A T E | COMPARISON |
| P | C180 DAYS> |
| 24.00 I | AUSTRALIAN BANK ACCEPTED BILLS |
| - | EURO UNITE0 STATES DOLLARS EURO GREAT BRITISH POUNDS |
| - EURO SWISS FRANCS | ........ ..... |
| 22.OOt | . | . - | EURO GERMAN OEUTSCHEMARKS |
| - - | EURO JAPANESE YEN |
I
| I ' | .! | \ |
\
| O O ~ | b. | -. .___ | \ \ | I |
| . | , | \ | \ | ./..l |
| 1"' | '" |
| I . | 'L - | \ . | I |
| ,..--'. | I |
| ~ ~ | , |
| P.. | /--c |
| _-_*' ' | '.-/ ..- |
| I | 2. -6. S 2 |
| ,\ | c- |
| '_ | - -' | . | i |
| /'-.N. | / |
| \ | /. |
| / | \.-. |
| s, | , | , | , | ,L.-- .-. \ | /. | '.-.d. c-' | J4. ,3 |
c). S. .
| 1 ' | I |
| .. | \ |
| oo t | MONTHS |
COMMONWEALTH aANK OF AUSTRALIA
FOREIGN EXCHANGE ADVISORY SERVICE
30.
| M A J O R CURRENCIES AGAINST AUD | \ |
(SINCE AUSTRALIAN DOLLAR FLOAT)
CHF PER AUD
| ..+ - | GBP PER AUD |
4.E
| - | -- |
12.c
| NZD PER AUD | I |
| 1.20 | AI;; |
| -.L | L | I- | - - - --l |
| DEC 12 | FEE 13 | APR l6 | JUN 19 | AUG 20 | GCT 22 |
| 1983 | 1984 | 1984 | 1984 | 1984 | 1984 |
DAYS
COMMONWEALTH BANK OF AUSTRALIA
FOREIGN EXCHANGE ADVISORY SERVICE
(Mr Fisher said that the handwriting on Ex.B was placed by
himself when he was demonstrating a point to Mrs Fisher.)
(ii) Mr Parton's version
Before the meeting with Mr Isaacs, Mr Parton spoke to
Mrs Skelton and said that he had a client who was looking for funds of $1.3 m. and asked her whether the Forster branch might be interested. She said that the branch would be interested. Mr Parton said that Mr Fisherrwas looking% at a foreign currency borrowing.
Later, but before the meeting with Mr Isaacs, Mr Parton submitted to the Forster branch a written application for loan. The application dealt with the following topics:
| "l . | Purpose of Loan |
2 . Assets 6 Liabilities of I.H. Fisher h J.R. Fisher
3. Security Offered.
4. Particulars of Property to be Purchased.
5. Particulars of Income from property to be Purchased.
6 . Particulars of Properties Offered as Security.
7. Summary of Income and Ability to Service Loan.
The purpose of the loan was there stated as follows:
PURPOSE OF LZAh.
To purchase hotel. 9 unlc Motel and Cafe known as the
| "Boomerang Hotel", Nabrac lncludrng costs of purchase | $680,000 |
| Pay out o f exlstlng brll faclllty wlch the Natlonal Bank o f Auscralra | |
| S 80.000 | |
| Pay out of exlsclng oberdraft faclllcy wrth Naclonal Bank o f Auscralla | |
| To be Invested in 1.B.D. @ 12% P.A. Mln. | |
| TOTAL |
Income and ability to service the loan was dealt with as
follows:
INCOME AND ABILITY TO SLki'lCE LOAN.
INCOME.
income from rural property Uingham
(see letter o f details from accountant)
| C o m m e r c ~ a l | property ~ a r e k |
(see lease for further part~cularsl
| I n d u s t r ~ a l | property | S ~ n g l e t o n |
(see letter o f details from Accountant1
Hotel, Motel and Cafe
| (see'83 | 8b p r o f ~ t | and loss accounts) |
| I.B.D. of 520,000 inbested @ 12.. | 562,200 |
| Ability to Service Loan | TSTAL | 12L1..000 |
1.300.000 S 16.. say onshore = 2Gd.030
| Income | = | ?LL,OOO |
| R e s ~ d u a l | = | 36.000 |
| 1 , 3 0 0 , 0 0 0 C | 7.57.say | &hore | = | q7,Sir i . |
| Income | = | 2Lb.003 |
| Residual | = | 1L6.500 |
| If ~t | I S necessary t o come back on shore because o f adverse |
| exchange | r ~ s k . | ~t | I S a n c l c ~ p a t e d | that the I.B.D. | funds o f |
| $520,000 would be u t ~ l ~ s e d | to reduce the p r ~ n c ~ p a l | by way o f |
| p a r t ~ r ~ a l | discharge o n roll over. | T h ~ s | usuld b r ~ n g | the |
| onshore | loan down t o $780.000 | a r e d u c t ~ o n | sf Income by |
$62,000 would leave a total lncorne of 5182.000.
| $780,000 3 16% | = | 12L.030 |
| 4. | Total Income | = 182,000 | |
| R e s ~ d u a l |
|
(It is not in contention that the written application for loan was handed to the Bank's officers at about thls tlme. There is a conflict in the evidence as to the exact time at which it was, in fact, delivered.)
In the initial conversation with Mr Isaacs, Mr Fisher gave "a little bit of his background." Mr Isaacs then called Mrs Skelton in and said that, as the loans officer, she would be looking after the matter.
There was discussion, in Hrs Skeltonls office, of the "facts and figuresn in the loan application prepared by Mr. Parton.
(iii) Mrs Fisher's version
At the' meeting with Mr Isaacs in December 1984, Mr
Isaacs said that foreign currency loans were good value and the modern way of borrowing money; that one condition that the Fishers had to show that they would fulfil1 for the borrowing was to show that they could pay the onshore rate of interest "because if the adverse currency arose above 5 per cent we would be brought back onshore unless we could top it up and then we could stay onshore [sc. offshore], and he explained that this was a safeguard, that we would come back onshore and so the amount that we borrowed would not increase in value very much or substantially."
Hr Isaacs then left them with Mrs Skelton, saying that
she was "most competent."
Mrs Fisher cannot recall the details of the discussion
with Mrs Skelton except that Mrs Skelton said that "we have to
establish that your various business activities can service the
loan. "
(iv) Mrs Skeltonrs version
MC6 Skelton's account of the meeting was that nr Isaacs said to the applicants at the outset:
"I do not know anything about these sorts of things but
Pam will see you. Pam will go into the office with you and she will do the application for you."
Mrs Skelton said that she then had a general discussion with the applicants and Mr Parton in which Mr Parton handed over the written applications for loan.
Later, Urs Skelton gave the following evidence:
Do you remember anything else about what was said at
that first meeting?---Yes, I remember a few more things that were said. I remember saying to Ian Fisher that I had not done these sort of loans
before and that I had a little bit of information
| that I had found out and hoped I could help him. | He |
mentioned that he had been been to our Taree branch
and asked me if I knew Terry Green, who was the
| loans officer there. | I said I just knew him very |
slightly and he mentioned that he had applied for a
loan there and they had asked him for an
establishment fee up front and he w k s not very happy
with that. He asked me would we would do that and I
said, "no we would not ask for a fee up frontmm. AS
far as this handout goes, as well as talking about
the various aspects of the loan, the security that
was offered, the amount of money that they wanted to
borrow, the purpose of the loan, and income and
expenditure, we did discuss the foreign currency
| side of it as far as overseas interest rates. | Do |
| you want me to go on? |
Yes, please go on?---The exchange rates and parity adjustment and that type of thing. We did do some examples of - - -
| MR McDOUGALL: | Your Honour, I object to the | - | - |
| v i d nr | i. +hi | - |
Can you try and be more specific. When you say you did some examples?---We sat there with a calculator and worked out some various possibilities: With the exchange rate as it was that day, if they had
borrowed the mount of money in, say, Swiss francs
as at that day and the possibility of if the rate
moved vhat the difference would be, and what the 5
per cent movement would mean and in excess of 5 per
cent. We looked at a few different possibilities.
Do you recall what percentage possibilities you looked at?
| MR McDOUGALL: | Your Honour, I object to this. I |
would ask at this stage we be told what was said
rather than have some extract or summary.
| MR BENNETT: Can you- | try- | and put this as best you |
| can in direct speech. | Now what was said about |
particular examples?---I am trying to put it in
direct speech. I asked Ian Fisher if he knew
anything about foreign currency loans and from his
discussions I assumed with Neville Parton he knew -
- -
MR McDOUGALL: I object.
| MR BENNEW: | Do not tell us what: you assume. To |
the best of your recollection, we all understand you want to borrow, what it would vork out to be today" and Ian Fisher and Neville Parton said "Yesn. I calculated that and we wrote that down and then I said "Let us work out a further comparison of what would happen if the rate moves 5 per centn. I
do not remember the exact words - what we want you
to do is to put your best recollection as to what
was said in direct speech, if you can?---I said ##Let
us work out an example of the conversion from
| calculated that and wrote that down. | Then I said |
| "How about we work it out at 10 per centnQ | and |
calculated that and wrote that down as well and
worked out a few more examples and I said "For
| example, what if the rate moves 20 per centQQ | and I |
think ve had a bit of a laugh and Ian Fisher said "I
hope that does not happenw.
Mrs Skelton denied that Mr Isaacs said, in her presence, that foreign currency loans were good value and the modern way of borrowing. She also gave this evidence:
Do you recall Mr Isaac saying this in your presence, "If there was an adverse movement of 5 per cent in the currency the loan will be brought back onshore unless you can top it up8@?---No.
| -When you say 81n081, | are you able to say whether that |
was said in your presence?---No, it was not said in
| my presence. | P |
Did you say that Mr Green had done a lot or a large number of foreign currency loans?---I do not
| remember saying that. | I remember=ayhrg mme- | - |
like I believe that he had done some foreign
currency loans.
-Was anything said
b about the National Bank that yGu can recall?---Yes.
I remember asking Ian Fisher why have you not
applied through your own bank and Ian Fisher replied
that he had applied for a foreign currency loan but
the National Bank thought they vere too risky.
After t he meeting, Mrs Skelton prepared, and there was submitted t o t he Bank's N.S.W. Branches Administrat ion, a w r i t t e n
| app l i ca t ion | f o r | loan | a s | follows: |
| SSI~J BRAKCHES DIVIS?WR~€Y?~ m | mCIUdq | Sure) |
| TO | >EPD OFFICE h'SW |
l
YOU.
| REF. L r!. | - - |
| OUR | . | - | AW'blSTRAiaOW |
| FROM FOi(S?z'? NSW 2$$0 | .. |
| a r ~ r a ~ ~ c r L 0 | : | JE |
| omr | 17/12/84 |
| S I J B J E ~ APPLICATIOK | FOR |
| I S HK!ILTOI\' FISER AND JOAN ROSEMARY FIS-, | CRAZIER & H.D. |
| @ | YISTORY | |||||||||
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| I n Ju ly | 1982 | a p p l i c a n t s purchased | a | commercial | p rope r ty | i n Ta ree l s |
| main | shopping cen t r e . | The proper ty | i s leased | a s a f u r n i t u r e a |
| fum-i$&ing shop and | has been wel l | es tab l i sbed | f o r many | years . 3" |
| Presen t | a p p l i c a t i o n | i s t o | '0 | P | t | 9 |
| .3'5b;iblaC*and a 9DF has been M | ~ E a ? : e t p * |
| Zowever | t h e F i she r s wish t o ob ta in of f shore f | d were | advised |
| by | t h e National 3ank a t Wingha t h a t it was |
| hpe enc lose | a p p l i c a t i o n f o l d e r compiled | by | a | f i nance broker | and | a |
| uersona l | r e f e rence | on | Mr | Fi she r by t h e Chairman of t h e :,lea: | Indus t ry |
| ku tho r i t y . | / |
Foreign currency loan - over 5 y e a r s with
| 3.D.F. | opt ion | i f requ i red |
| ?urchase Joomerang Hotel Nabiac | S680,370- / |
| Payout Natioznl Sank Overdraf t | 15,000- 4 |
| Payout Rat ional Sank 9DF | 90,090-/ |
| Payout S t a t e Sank Drought Loan | ( i f necessary) | 5,mO-/ |
| - - |
| To | be | i r v e s t e d with | t h e Bank | and | he ld | a s s e c u r i t y | 520,000- |
| p r i o r | t o a p p l i c v l t s | ob t a in ing | a | f u r t h e r v i a b l e | p roper ty |
| S o l i c i t o r s costs,Loan Fees & Stamp Duty e t c | 25,230- | J |
$l,325,OCO- /
SECLlITY AVAILA3LE
7
| 3 e f e r | enclosed | f o l d e r | ( p l e a s e r e t u r n | i n Cue | course) . |
| 3 LL.-ZNCE | SZETS |
| S e f e r | enclosod | f o l d e r . | - |
| Presen t owcers of | t h e h o t e l employed Managers and paid themselves |
| wages | a lso . | / |
/
| Applicant i n t ends t o employ | a | f u l l t ime manager | end r e t a i n t.?e thre l |
| ca sua l g i r l s . | F u r t h e r wages | w i l l n o t be drawn./ |
| Th! | h o t e l | has | been | ex t ens ive ly | r a o v a t e d wi th | e x t ~ r i o r | and 1n:erloS |
| pe n t i n g , new c a r p e t throughout, | extension of | t h e lounge a rea and | a | ; |
| i n t e r i o r p lne wa l l board | throughout. | / | I | i |
| 3 | e | ho te l | grounds | a r e very | bare | a t p r e sen t wi th l i t t l e g r z s s | a r d |
| no | t r e e s . | Appl ican ts i n t end | t o considerably | improve | t h e ex ter ior |
| with t r e e s , | p l e n t s e t c . | a t very | l i t t l e cost.,/ |
| ' Not | declared i n balance s h e e t s a r e t ak ings from | : |
| .Pool t a b l e , j u t e box and v ideo machines | !(ET | 51 53- | - | - .-. |
| .Excess | ba r p r o f i t s | S9G9- | ?. d . |
| .Excess | motel | p r o f i t s |
| Estimated income from Hotel | $75,000- F.:. | ||
| Income from Pulteney S t r e e t Tarze |
| ||
| Estimated income from M t Thorly Indoor Cr icke t |
| ||
| Income from c a t t l e s a l e s |
| ||
| Income from Term Deposit say 10% P.A. |
| e1,325,000- | BDF say 16% $212,0oo-J | / |
| 3,:25,000- | FCL say 8% | $106.000J |
| W | :p?lic.nt.s | in tend | t o d e p o s i t | S - l f f i c i en t r e g u l a r d e p ~ s ; ~ ~ | ,, |
| o s s i b l e c o s t s of | on | shore f i nance should t h i s be | nqeSsary. |
| Fri w i l l be p a r t l y reduced | by t h e s e payments and | s;ie | of | a s s e t s |
| with in 5 years. | J |
| Kew | commercial c l i e n t , h o t e l and business working accounts, and |
| r e t e n t i o n of | p a r t l oan funds i n term | depos i t s o r 3 s l l s . j |
| de | have | no t | obtained | a p p l i c n t s personal | t e x a t i o n | r e t u r n s bu t W |
| ob t a in t hese i f required. | Q |
| Mr | Fisher , who was in t roduced by h i s l oan broker, | appears t o be |
| an a s t u t e businessman | who | has accumu?lted | c ~ r a i d e r a b l e | asse t s4 |
| It | was | intended | t h a t t h i s a p p l i c a t i o n | incorpora te t h e p u r d a s e |
| of | an office/shopping complex i n M t I s a Qld . | However t h i s purchase |
f e l l through i n t h e l a s t few days due t o another o f f e r be1 g a c c e ~ t e
P
| For | t h i s reason | a p p l i c a n t s have | requested | a l o a n l a r g e r than | t h a t |
| p r e s e n t l y required; | s o they may,with | t h e Bank's | app-oval , | purchase |
| a | y e t t o be | decided | p o t e n t i a l l y | v i a b l e business | i n t h e | nea r |
| This p a r t of | t h e loan w i l l be lodged on term depos i t u n t i l r |
| Providing | c o c f l i c t of | i n t e r e s t | (brought | about | by | p o t e n t i a l | t h i r d |
| Darty mortgagors Yaff | P ty Limited and Ian F i she r Holdings ~ t y d i m i t e |
| i s overcome | by | t h e r e l a t i v e A r t i c l e s | of | Pssoc ia t ion | and | v a l u a t i o n s |
| a r e | acceptable. |
| Approval | i s s t rong ly reconmended. |
| % | p | - |
/
| W | J | I S A A C |
Yanager
7 . The approval of the loan application in January 1985
According to Mrs Skelton's evidence, on 14 January 1985, Mr Fisher and Mr Parton called in and asked that the loan application be increased to $3 m.
On 16 January 1985 the Bank approved the first loan
application as follows:
| COMMONWEALTH BANK OF AUSTRALIA | FORSTER NSW 1418 |
| REmRLv~P Miss 5 Cagen:ZFi | REPLY THE HAWAGER |
| PO | B o x 59 |
| 15 | J a n u a r y | 79e5 | TELEPHOEIE | 54 601 | 1 |
r
| P:r | & Mrs I Z.' F i s h e r |
| :ear | I'r S i:rs F i s h e r |
-
| I | wish t o c c n f i r ? t h e =a.?'('s | a ~ p r o v z l | of 2 Foreign ',ur:er.=j. | - | A |
| Loan of 51.5 | r r . i l l 1 0 ~ (:ritl- 3ill Clscoun: | r a c l l i ~ y | o>tl:7) |
| s u b z e c t | t o t h e 3 e n k ' s | u s u a l | t e r s s and | condi ' lons | ' ~ h i c ? |
| ~ z c L L ? ? : | - |
L
| . | S a t i s f z c t o r y | s e c u r i t y | p o s i t i o n | b e i n g | e s t a b l i s h e d | ar? | ,G |
| i ~ c l u d e | mcrrtgzges | o v e r pro??r:y | e t %hatsbundsh 'l12 | ::;3,;!i2'3, |
| c o i r ~ e r c l s l | ? r o ? e r t y | a t 135 F u l t e n e y | S t r e e t , | T e r ~ e | 2r.d | I n d o z r |
| C r l c k e t | C e n t r e | e t ;,lount | Thor l ey , | S ing le to r . . |
| . A | c h a r g e w l l l a l s o be | t e k e n | o v e r Term | D e p o s i t | Funds. |
| . F o r e i g n Cur rency Loan - margin | above SI30R of | 1% p e r 2nnuv. |
| - p a r i t y a d j ~ s t ~ e r t s | o f | 5'5 | p e r annuq. |
| . B i l l D l s c o u n t F a c l l l t y - | tisag'e .Fee | o f | 1.00: | p e r ernu?. |
| . F a c l l i t y Fee of | 0.5:< | p e r a.nnum. | ( r l l z t e s t c bo th | f z c l l l t i e s ) |
| . S l x month ly | r o l l o v e r s w l t h | f u l l c l e a r a n c e | w l t h i n | 5 | y e a r s . |
| . C o n f l i c t o f | I n t e r e s t and | d u t y b e i n g | s a t l s f a c t o ~ l l y | r e s o l v e d |
| i n r e g a r d | t o Yeff | P t y L i n l t e d and | I a n F i s h e r F a ~ i l y | Ho ld ing |
| Ca | P t y Limi ted . | -, | C _ |
| . S c c t i o c 230 | (3) | ( a ) | C e r t i f i c a t e 3 e i n g | e x e c u t e 3 | s tp ' i -g | ttz: |
| Yeff | 3 t y L i ~ l t e d | i r d | I a n F i s h e r F a z i l y "ol%r: | ? t y | Li-i'ed |
| a r e e x e ~ p t | p r o p r i e t r a r y | Con3acies . |
-
| . %n$s , | a f t e r payou t | of | o v e r d r s f t | 2 rd | 9111 3 i ; c o ~ r t :?cl l l :y |
| : l | t | n | 2 | S | belr .5 | l z 2 g e 5 o- | T e r i ==?ss:: |
| 2 ; | t k i s c f f i c e u n t i l r . ~ r c ? p s e of | a | p c t s n t i ~ l l y | v:a3?le | ~ . : s - ? F I : |
| i? t t s | nesr | f c t u r e | ( s u ? j e c t | t o t 5 e | 3an1< ' s a??ro-r>l) . |
9 .
| .;e | ? r e k-.?;.-jr t o h sve been | of | a s s i s t r r c e 3 - this O C C ~ S L O T . , |
On 24 January 1985, the Forster branch submitted to the Bank's N.S.W. Branches Administration an application for a foreign currency loan of $3 m.
8. The proposed acquisition of the Cowra Town House Motor Inn
In January 1985, it was learnt that the Nabiac Motel had been sold to another party. Mr Fisher and Mr Parton looked for another property and located the Townhouse Hotel/Motel at Cowra. Their offer to purchase for $1 m. was accepted. It was agreed that Mr. Parton "was to have a minor share and assist [Mr Fisher] with the management."
In late January 1985, Hr Fisher informed Mrs Skelton of the proposal to acquire the Cowra property.
9. The alleged meeting between Mr Fisher and Mr Isaacs and Mrs
Skelton in about February 1985
According to M Fisher, in about February 1985, Mr Fisher spoke again with Mr Isaacs. Mr Fisher mentioned the Cowra purchase. Hr Fisher's evidence was as follows:
"I want you to tell us what was said; who said it; what he said?---I said, 'We have been maximising our borrowing to have a substantial amount placed on interest bearing deposit with the bank to generate additional income so that our borrowing was, the maximum we could achieve with the available securities', and M r Isaac said, 'Do you realize that that money that remains with the Bank on IBD is in itself security on a dollar for dollar ratio; it is itself excellent security?' He said, 'If you wished you could borrow additional moneys and so long as it remained on IBD with the bank that would be acceptable because it would be securing itself'. And I said, 'What, can we borrow twice as much as we are borrowing' and he said, 'Yes' and I said, 'Well, we should apply for 3,000,000' and he said, 'That will be an excellent idea1. So, we told Pam Skelton we wish to apply for $3,000,000."
Mr Fisher told Mrs Skelton that he wish to leave the additional amount on IBD with the Bank to generate further income, and "as such, it would be security itself." Mrs Skelton said that she understood this and said that an application for loan for $3 m. would be made accordingly. Mr Fisher then said that he would "like to speak to someone most senior in the Bank, preferably the general manager because it [is] a substantial loan we [are] applying for and as the whole thing seemed quite amazing to me, I wanted to get the opinion of the most senior person available in the Bank of the merits of this idea."
(It appears from Mrs Skeltonls evidence, and from the
Bank's documentation, that Mr Fisher is in error in suggesting
that the increase to $3 m. was not raised until February - see
the submission to N.S.W. Branches Administration dated 24 January
1985 already referred to.)
Shortly afterwards, Mrs Skelton informed Mr Fisher that she had arranged for him to meet in Sydney with Mr Vanner, the State Manager for Corporate Lending. In February 1985, Mr and Mrs Fisher and Mr Parton met with Mr Vanner.
10. The approval of the loan application in February 1985
On 6 February 1985, the Bank's N.S.W. Branches Administration wrote to the Forster branch as follows:
FORSTER NSW
| F& | Ref h Date L0:JH 24/1 | INTERNAL MEMORANDUM WP 4517H/JA |
| FFO | ,,(TBe | U | NSW BRANCHES ADMINISTRATION |
Reference CLS Ext 5401 MJH
| Date | 6 February 1985 | |
| SUBJECT | APPLICATION FOR FOREIGN CURRENCY LOAN FISHER I H h J R | |
| Foreign Currency Loan with Bills Discount option of $1.511 has Seen approved to assist: | ||
|
| , | Legal and stamp duty) ($1,090,000); |
| . | payout National Australia Bank Overdraft ($15,000) and Bills Discount Facility ($85,000): |
| \ I | Q |
| , | b | , | meet facility and establishment fees ($22,000 . | -- - |
| \ | approximately); |
| . | place funds on Term Deposit ($288,000 approxlnately); |
This approval is basically as submitted but sublect to the following:
| . | Property Valuations Department's going concern valuation/assessment of the Town House Motor Inn being in line with Banks estimate of $950,000. |
| - . | R/T/B/S to be taken over the Town House Motor Inn |
| . | Charge over Term Deposit of $288,000 (approxrmately). |
-
| - . | Establishment fee of $7,000 '(we note this may already have been paid for approval conveyed in memorandum 21/12/84). |
| . Facility fee 0.5%pa. - | - -S-- |
| - | - |
-
3 . 9111s Dlscount - Usage Fee l.O%pa
| - . Pore~qn Currency Loan Option: | - |
- SIBOR plus l.O%pa
- parity ad]ustments of 5% pa.
| - . | Satisfactory Conflict of Interest investlg-tlo?. |
. Section 230 (8)(a) Certificate.
| - . | Six monthly rollovers within a term of 5 years |
| . | Control documents and future correspondence belng |
| i | directed to NSW Hunter Region who will control t h e |
| fl .- | accounts and prepare appropriate F/C/L documentation. |
We presume you have already discussed the advantages/risks of Foreign Currency Loans with tke clients and will leave it to you to discuss the aooie approval with them. When the F/C/L is taken infor? '-5x Hunter Region of the initial funding amount to ena3:e preparation of appropriate documentation.
| Attachment to your submission is returned. | Copy of : - : S |
approval has been forwarded to NSW Hunter Region.
T 9obinson
Deputy Chief Yanager
On 12 February 1985, the Bank wrote to the applicants as
follcws:
COMMONWEALTH BANK OF AUSTRALIA
r0"nr" '1s- 1.11
| APPLICATION ?OR | F O X I C N CURRENCY LOAN |
| ~ ---- | - - ~ |
| usual terms and conditibis m i c h | ~ inclcde: |
| . establishment Fee of S7,CCO-. |
| . iaclllty Fee of 0.5% p.a. | (which relates to both facilities). |
. 3x11 Discount Facility - usage fee 1% p.a.
| , Foreign C~rrency | Loan Optlon |
| I | - SlBOR plus 1% p.a. - Parity adjustments at 5% p.a. |
| . | Conflict of Interest being satisfactoryily resolved in regard to Yeff Pty Limited and Ian Fisher Family Rolding CO Pty Limited. |
| . Section 230(8)(a) | Certificate being executed stating that |
Yeff Pty Limited and Ian Flsher Family Holding CO Pty
Limited are exempt proprietrary companies.
. Six monthly rollovers within a term of 5 years.
| . | Satisfactory ?ecurity position being established and to lnclude mortgages over property at iihatabundah Via Yingham. | |
|
CrlcceC Centre at Mounr Thorley. Singleton. Hotel/Motel 'Tom qoxse Motor Innn Covra, acknoviedgement over Term
| ||
| licelce. stock, chattels and good a l l at Hotel/Motel ":on "ouse Motor IM". |
we are na-5 CO have been of assrstance on thls occaslon.
/+'
I
Acr,ng Yanager
N.9. Thrs supercedes letter dzted 16/1/85. Total approval
to eate 8150000C-.
11. The meeting with Mr Vanner in February 1985
(i) Mr Fisher's version
Mr. Fisher asked Mr Vanner what he thought of their
application and offshore loans generally. Mr Vanner said that it was an excellent way to borrow, the most modern way, and that the Bank had the largest dealing room of any of the Banks, the most foreign currency loan experts of any of the Banks and the most representatives throughout the world, so that he could be assured that their loan was in good professional hands. M r Vanner also said that because they were so new to foreign currency loans, the Bank was denying their applications for $3 m. and cestrlcting them to $1.5 m., but they could reapply at a later date l f they found additional income-bearing property.
M Fisher then asked Mr Vanner how the Bank actually acquired the Swiss francs and enquired whether the Bank "borrowed" the Swiss currency "directly" for the Flshers. Mr Vanner said: "No, we actually borrow in parcels of $20 m. worth, to lend on to people like you and when that parcel is getting
low, we will get another parcel ..."
( i i ) Hr. Parton's version
nr Parton gave the following account:
What was said and what happened?---Mr Vanner had put to Mr Fisher that the - basically discussions of the rejection of the $1.3 million.
What did he say?---In fact, from my recollection,
spoke to Mr Fisher along the basis that $3 milllon
may be a little bit large amount at that point and
he could see that Mr Fisher's requirements at that
time were only for approximately 1 million, and they
had given approval for 1.5; and that he felt that L C
may be better for Mr Fisher to take the 1.5 at that
stage and review the situation a little further down
the track regarding $3 million.
Was anything else said that you can recall?---Yes, 1
can recall Mr Vanner talking in regards to the
bank's dealing room and mentioning that they
believed the Commonwealth Bank - that they had
possibly the largest dealing room floor in the
Southern Hemisphere.-
(iii) Hrs Fisher's version
Mrs Fishervs evidence was as follows:
Did Mr Vanner say anything to you about your
proposal?---He said the foreign currency borrow~nq
was a very practical way to finance our project but
he also said that - he did mention that a lot of
people were using the foreign currency facility at
present and then went on to say that he did not
think it was a good idea for us to borrow the 3
million, the total of 3 million as we were so new to
the foreign currency borrowing.
Can you recall anything else that Mr Vanner said?---He told us that the Commonwealth Bank had the most foreign currency experts and also better facilities and larger dealing room than any other bank and that our loan would be in good hands.
(iv) MC Vanner's version
According to Mr Vanner's evidence, Mr Vanner said that he would not approve a foreign currency loan of $3 m. because, he said, he considered that the risks of foreign loans were far too great to consider the higher amount (i.e. $3 m. compared with $1.5 m.). Mr Vanner asked Mr Fisher about his connection with the Cattlemen's Union, and enquired whether this involved Mr Fisher in negotiations and dealings in cattle on the international market. M Fisher said that it did. Mr Vanner agreed that he said that the Bank had the largest dealing room of any of the banks. He denied saying that offshore loans were an excellent way to borrow, the most modern way; that the Bank had the most foreign currency experts of any of the Banks; and that the Bank had the most representatives throughout the world. fir Vanner also denied that he gave to Mr Fisher the explanation as to the way in which the Bank borrowed foreign currency.
On 14 February 1985, Hr Vanner wrote the following memorandum to the Forster branch:
| REPEREICE | CLS FXT 5b01 KJ3 | |
| D A T E | 14 February 1985 | |
| QPROED APPLICATION FOR FOREIGN CUXX3'i?I LCMI | ||
| .Lf ' ' FC ' | FISEX I H & J 3 | |
| dlth reference to ap?roval letter of 6/2/35 w e conflrm that appllcatlon for Forel-T Currency Loan | ||
| ||
| 3lary note of recent neetlng 12/2/35 wlth W anand Yrs TlsheT, brol<er Y ! :;evll_le Parton 1s attache?. |
| The | d i a ry note | re fe r red | t o | i n | the | memorandum | was | a s |
follows:
FISHER I X & J R
| FORSTsFl | NSd | B U N C H |
| Mr | and Yrs | Flsher and t h e i r broker , | Y r Nevi l le Par ton |
| c a l l e d t o d i scus s ciecllne o f | t h e i r 53m | application where |
| t h e 3ank approved only B1.5m | f o r , i n t e r a l i a , purchase of |
| t h e Cowra | Town | House | Kotor Inn, | and n o t t h e add i t i ona l S1 .?m |
T/3 a s sought.
| Y r Vanqer | explained | t h e reasons behmci | t he dec i s ion , |
| b a s i c a l l y | : |
| a | i3m | fo re ign currency exposure | opens up | t h e p o s s i b i l i t y |
| of | l a r g e | i n t e r e s t and | exchange | r a t e r i s k s ; |
l
| . | being new | customers bo th t o t h e bank and t o fo re ign |
| currency loans , i t was | f e l t t h a t 31.5111 was a manageable |
| a d | l e s s r l s k y sum | than $3.0~1. | /? |
| Y x | Vanner | s a l d t h a t notwiths tanding |
a ~ p l i c a t i o n , t he Bank's door was op f o r any worthwhile investment Mr F1
| M J iiAD5 | ZXT 5401 |
SYDNEY NSd
14 February 1935
53.
| 12. The ~ank's | letter dated 13 March 1985 |
On 13 March 1985, th? Bank wrote to Mr and Mrs Fisher as follm:
| COMMONWEALTH BANK OF AUSTRALIA | FOLITZl N W 1111 |
lurrrw Kerrie Goddard:JH
| 1 3 +'arch | 1985 |
r
Yr 6 Y15 I H Fisher
JIA Y I Y C W NSW 2429
L
3ear Mr & Mrs Fisher
APPROVD FOREIGN CURAENCY LOAN/BILLS DISCOUNT FACILITY
de acknowledge your acceptance of a Foreign Currency Loan/
Bills Discount Facility of~S1,500.000.
de return a copy of the loan agreement for your records. You should familiarise yourself with the contents of the agreenent and in particular we draw attention to:-
| . | Clause 2 stipulates that five banking days' notice is required for drawdown of U e Foreign Currency Loan and any subsequent rollovers and that the loan must be drawn down | |
| ||
| rollover notices are also attached and these should be delivered to this office at the appropriate times: | ||
| . | Clause 5 dhich stipulates that the Foreign Currency Loan may be denominated in any one freely convertible foreign currency and that the currency denomination of the loan |
may be sditched at the end of an interest period;
| . | Clause 6 which stipulates that if an adverse exchange rste noverrent in excess oi 5% cccurs, a cash adjus+ment of the variation is to be made. No adjustment is necessary if the.variation is less than 5%. |
Should the exchange rate move in your favour by an amount in excess of 5%, cash adjustment by the Bank will only be made to the extent of cash adjustments previously made by the borrower to cover adverse exchange rate movements and remain outstanding. Exchange gains in excess of payments referred to in the previous sentence will be held as a buffer
against possible adverse future exchange rate movements and in the long term as a reduction against the final repayment axount.
| . | Clause 8 which stipulates that all interesr and principal payments to our branch must be made free and clear of any raxes, including kuscralian withholding tax. |
Xe enclose dravdom notice to be completed and executed by yourselves where indicated. Please return the notice to this office.
It will be necessary to stamp the Bank's security documents
in order to comply with State Government regulations and this
will involve an amount of 54,977-50 which will be debited to
your account at this office.
It has given us much pleasure in being able to assist you with this loan and we trust you will not hesitate to contact either myself or .Ws Skelton sbould you require any further information.
fours sincerely
1t appears now to be common ground that the loan agreement was not enclosed with the letter.
13. The execution of the loan agreement in March 1985
In March 1985, the applicants attended at the Forster branch and executed the loan agreement in the presence of Mrs Skelton, who witnessed their signatures.
Clause 6(d) of the loan agreement, bearing date 25 Harch 1985, (there is a conflict in the evidence as to the exact date on which the agreement was executed) dealt with the subject of "parity adjustment" as follows:
| (d) | I f an Mrmca i a t o b. | r a n d U f m e q I n t a r u t Data |
| ("tha | L1-mt | l n t a r u t Data") | in | the a m c u r n m q in which |
| i t | 1u | d m a i n a t a d | i u d i a t d 7 p r io r | th.rmto | t | h | ch. | Bank |
| m#+ | datamina | tha | d i f f a rmca | ( i f | m) | b.-= | tha | wmt |
| in. such | currme). | of | much | Advancm | during | tiu | In ta raa t |
| Pariod anding on tha Pc1.r.n~ In ta raa t Data ('tha | F i ra t -c") |
| and much -c | ("the Sacond Lomt") U i a calculated 4 |
| the h k | consartin# | i n t o tha t | currency | the Original |
| Aumtrdian Dollar -t | of auch Adrmca o r p u t t b r w f on tba |
| basis' of | the Bank'. | #pot ra t* | of | uch.nla | r a l a t i r a t o tha |
n u t fo l lo r ing In ta raa t Pariod m
( i ) if auch d i f fa rmca ucacd . f i r e per cant (52) of tha F i r a t
bmmt and tb. Fi ra t Amomt oxcad. tb. Sacond Amount
eh= the Advmca r h d l b. rapaid on th. h l a v m t I n t a r u t Data in tha c m m q in which it L t h d m h a t a d . The mount in much eurrancy tha t a h d l ba ra-advanced during tha n u t f o l l w l n g Intaraat Pariod a h d l . u f r m
| ||||
| Original A u m t r r l i ~ Dollar h u n t of auch Advmea m h a not r a v oa my meh In ta raa t Data U a ruult of the | ||||
|
| ( i i ) i f mch differenc. | 1. | lemm t h m firm p r cant (52) | of |
the Firat Amount or i t tha Seemd h o m t ueaada the Pirmt h n t then tha Mv.nca a h d l b. rapaid on tha Xcl-mt Intermme Data in tha c u r r a 1 9 in which it i#
| t h m danopinatad | md | rhaU b. | r c d r m c a d forthwith on |
| t e r u tha t ch. Bmk vill for thr ich HL. | available t o |
| the | h r r a r the | ama -c | in | h i t a d S t a t u Dollar. |
o r cb. ra lnvmt Optiond Curran9 U tha car* may b. U WU repaid hereuder . l l~t O r w d A w t r a l i m Dollar
| Ammt of | such M n n e a aha l l not r a n on | any much |
| I n t e r u t Data | u a r a d t of | tha | oparation of | t h i m |
| aubelauma. L |
Skelton said in evidence that, at the time of execution of the loan agreement, c1.6 was discussed as follows:
~ r s
*Do you recall anything been being said about
that?---Yes, I do because the other clauses were
fairly straightforward and when it came to clause 6
and you went to relate that back to the loan
agreement I personally could not quite understand
the draft letter compared to the clause in the
agreement and we went through it a couple of times.
What do you recall saying about it?---I recall saying that, *I don't not really understand it.
| You'll | have to read it yourselvesn; and Mr Fisher |
| said - he said, "1'11 | be showing it to my |
| solicitorw. |
At about the same time, the applicants and certain companies controlled by them executed security documents prepared by the Bank. These mortgages bore date 27 February 1985 (this appears to be the date on which they were executed) and their execution was witnessed by another Bank officer, Kerrie Goddard.
14. The drawdown on 25 March 1985
On 25 March 1985, completion of the purchase of the Cowra motel took place and the loan was drawn down. On that date, M r . and Mrs Fisher received written confirmation of the loan as follows:
| C ~ M M O N W E A L ~ | BANK OF AUSTRALIA | - |
| S ~ n g a w m | Branch |
50 Rafflaa Plaee 422.04 Shall Towar
Slngawld 0101
| R s ~ b l t c | of Slngapare |
LOAN CONFIRHATION
| R.' | 005952 | on.: | 2iMAH85 | TELEX |
| - |
JE CONFIRM OUR LOAN 10 YOU ~JALUC 25nAct85 nAFURING 25SEP85
| CCY | F' l t INCIPAL | I t 4 TEKEST | HATE | INTkREST |
CHF cr4t+~*2,997,000,00 r+r7.0000000 *****Hi07,226.00 *i**+:
PAYMENT AT MATURITY DATE TO OUR A/C W3TH PAYMENT AT VALUE DATE B)
| UNI.BK.SUITZ.ZURICH | UNI.BK.SWITZ.ZURlTH |
| NOSTRO | NOSTRU |
| PAYMENT BY | PAYMENT r0 |
UNION BK SUITZERLAND
| \ | WE AWAIT YOUR ADVICE |
ZURICH
-,
| FOR ACCOUNT OF | -3 |
COHN. BK OF AUSTRALIR '?~ .
-.
--,
SPECIAL INSTRIICTIONS
| FISHER I A N HAnILTON h JUAN ROSEtlARY | REF 911088147 |
| . | C/O CBA SYDNEY BOX 3719 G.P.O. SYDNEY NSW 1003 , nUSTKALIA |
-
| CONFIRMATION | knlmrlnd Smmun |
By letter dated 1 April 1985, the Bank wrote to Mr. and
NrS Fisher as follows:
COMMONWEALTH BANK OF AUSTRALIA
FORmER NSW 1418
| , | , | , | , | Kerrie Coddard : | JH |
1 April 1985
| r | 7 |
Mr & Mrs I H Fisher
| ' | , |
nkhatabundahn
| LVIA WINCHAM NSW 2423 | -I |
Dear Mr & Mra Fiaher
FOREIGN CURRENCY LOAN $1500000-
We advise that the settlement for the purchase of the Town House Motor Inn at Cowra was effected on 25/3/85 and that settlement with the National Australia Bank at Wingham NSW was effected on 26/3/85.
Loan proceeds of $1500000 were credited to your account No
129-867 and the following settlement amounts were subsequently
drawn on this account.
| Montgomerie, as directed by your Solicitors, E R Stack & Sons, | The amount of $975700-61 was paid to Solicitors, Craden and |
| for the purchase of the Hotel/Motel. | |
| The amount of $101018-53 was paid to the National Australia Bank, Wingham NSW to clear debts at that office. | |
| A settlement fee of $100- has been deducted from your cheque account No 129-867 today. |
| . and NW & CJ Parton has today been cleared by funds provided | The debit balance of $82674-20 on account of IH & JR Fisher | |
| ||
| today been ordered and will be forwarded to you tomorrow. |
Mortgage document$ have today been forwarded to Sydney for
Registration and Duty Stamping.
The fees applicable are as follows:
. $ 67- Bank Production Fee for Registration, charged to your
account today.
. $ 43- Bank Production Fee for Duty Stamping, also charged to
your account today.
| . $360- Registration Fee,charged by the Registrar General's | Office, which will be deducted from your account in |
| the near future. |
Stamp Duty fee applicable was aavised in our letter of 13th
March 1985.
| A Facility Fee of 0.5%. | advised in our approval letter, was |
deducted from your account on 26/3/85 and totalled $3750- for ,
the first six month period of your loan.
We enclose a statement from the Commonwealth Bank of Australia,
Singapore Branch advising details of your Foreign Currency Loan.
We also enclose a statement of your cheque account with details of payees on the cheques processed to 22/3/85, noted for your information.
As a portion of funds from your loan were today placed on a Term Deposit we require the enclosed lodgement authority to be signed where indicated and to be returned to this office as
| soon as possible. | We enclose receipt no 128775 for your |
| retention. |
We have received up to date Insurance Policies on your Mt Thorley and Pulteney Street properties and a new Policy on the Hotel/
| Motel at Coma. | However, we have not received an up dated |
Policy on your *Khatabundah* property. Kindly advise this office when we may expect to receive an up to date Policy.
We are happy to have been of assistance on this occasion, bf you have any further queries please do not hesitate to contact us for further discussions.
Yours faithfully
| Mr P H SKELTON | i S h |
| Loans Manager |
15. The lunch with Mr Isaacs in Aprll 1985
In Aprll 1985, Mr Isaacs invlted Mr and Mrs Flsher and Mr Parton to lunch. Mrs Skelton joined them.
(1) MT Fisher's version
Mr Fisher's account of the conversation was as follows:
.I
"Can you tell us what was said to Mr. Isaac and what he said to you at this lunch?---I said to M c Isaac, "Joan and I hope to go on a trip to Amerlca with the Cattlemens Union to attend this four nations beef conference in Canada at Calgary and then we will be attending meetings in America as well as that and we could be away for some weeks, it could be six or seven weeks. Is there anythlng special that we have to do about this loan before we go?" He said, "Ian, you go and enloy your trlp and let us worry about the loan".
(ii) Mr Parton's version
Mr Parton could not recall the discussion.
(iii) Mrs Fisher's version
Mrs Fisher gave the following version:
"Who said what and what was said?---Ian told Mr Isaac and Mrs Skelton that we were golng cverseas for a few weeks and would there be any problem, you know, with our loan in that we would need to rancel that or whatever; and Mr Isaac sald. 'Vo, go ahead. "
(iv) Mrs Skelton's version
Mrs Skelton did not remember anything about the
discussion at the lunch.
16. flr and MC6 Fisher's overseas visit in mid 1985
Mr and Mrs Fisher were overseas in July and August 1985. In late July 1985, Mrs Skelton wrote to them as follovs:
COMMONWEALTH BANK OF AUSTRALIA
FORSTER NSW 1428
THE MANAGER
m Box 59
| 26 July 1985 | -ONE | S4 601 1 |
-
M r & Mrs I H Fisher
W Box 120
WINCHAM NSW 2423
L
Dear M r & Mrs Fisher
YOUR FOREIGN CURRENCY LOAN WITH BILLS DISCOUNT FACILITY OPTION
Review of this loan indicates t h a t i f the AUD exchange r a t e
remains a t its low l eve l , movement agains t you w i l l amount
t o around $298,000 and i n terms of our loan agreement we would
| be | looking f o r a pa r i t y addustment. | ||
| We |
|
| p a r i t y adjustment w i l l be | sought a t ro l lover , | i f the AUD |
| exchange | r a t e remains | a t i t s present l eve l o r depreciates |
f u r t h e r , so that you can make adequate provisions t o cover
t h e adjustment should it be necessary.
| We | should be pleased i f you would c a l l t o discuss the matter |
| a s soon as convenient. | Kindly telephone before ca l l i ng t o |
arrange a mutually agreeable time.
| Yours | f a i t h f u l l y |
| ~ 4 s - p | H SKELTON |
Loans Manager
17. The discussion with Mrs Skelton in August 1985
(i) Mr Fisher's version
According to Mr Fisher, the following conversation
occurred:
Did you go and see Mrs Skelton on 14 August
19857---Yes.
Did you have a conversation with her?---Yes.
Who went?---My wife Joan and I and Neville Parton.
What was the conversation and what did you say to Mrs Skelton and what did she say to you?---I said, "Pan, why on earth did not the bank bring us back on shore as they said they would if the parity moved beyond 5 per cent and we did not top it up with cash?" She said, Van, I don't known.
Was anything else said?---I said, "Well, what on earth can we do? This is a dreadful situation, what can we do?" She said, "Don't vorry, the dollar will go up again".
| was anything else said on that occasion?---Yes. | I |
said, "What happens if it does not go up?" She to be losing against the US as fast as it is against the Swissw.
said, "1 have been talking to Sydney about it and
they suggest that we move the loan into US currency.
What did you say, if anything, to that?---I said,
"We have to try something".
(ii) MC Parton
Mr Parton was not asked about this occasion.
(iii) Mrs Fisher's version
Mrs Fisher gave the following account:
| And do you recall when it was that you spoke to Mu- | Skelton7---l4 August. | |
| ||
| Mrs Skelton, "How could'such a thing have happened. | ||
| Why didn't the bank bring us back onshore as they said they would if there was a five percent drop in the value of the Australian dollar and we did not | ||
| ||
| ||
| ||
| told Mrs Skeltonl---Yes. | ||
| ||
| ||
| out''. |
What did Mrs Skelton say, if anything?---She said,
"1 donlt know how this has happened".
And was anything else said?---Ian said to Mrs Skelton, "What can ve do now to try and rectify this dreadful situation?"; and Mrs Skelton said, "I've been told by the bank to let you know, to tell u not to worry about but the Australian dollar w i g
| risen. | c |
(iv) Mrs Skelton's version
Mrs Skelton denied Mr and Mrs Fisher's version. She prepared the following memorandum at the time:
DIARY MOTE
| - . .L | ?'&/as | ||
| ~ ' L S H E R I W & J H | |||
| FCL $1,500,000 SEC $2,338.W + R/T/B/s | |||
| |||
| Mr & Mrs Fisher and t h e i r loan broker Neville Parton called | |||
| |||
| |||
| a pa r i ty adjustment w i l l 3e required. | |||
| |||
| |||
| be $327.139. | |||
| |||
| |||
| - | |||
| adjustment as per o r ig lna l application U | |||
|
| Term freposit | $288 000 |
| In te res t due | 1/10 | 20,160 | (Less f o r prepayment) |
| A180 A E F C RmdS | 8 40.000 |
| $3'48,160 |
Less possible p s r i t y difference $327.439
$20,721
| Possible | In t e re s t Due | $65.381 |
| To be met froni Euildbg | W , G G O |
| Society Funds |
| The Fishers h o ~ e d | t o r e t a in come | of | t l . e i r funds and be | advised |
thst we caul& 10 k a t this again say 2 weeks before rol lover a d could recommend it. However, increasing the debt by say $100,000 vould mean
| .. Security now | $2 338,000 |
| Less | ( r e t e i n say $100000) | $ | 1BE.OOC | P a r t T.D. |
$2e150,000
Loan Sls600,000 - xargins 75% Probably unacceptable Margins.
-
he Fishers were obviously disappointed and concerned about
the m3ssive mvemont i n t h e exchange rates.
| The | pos s ib i l i t y of | t r ans fe r r ing t o another | currency | (US$) | was |
a l so discussed and I advised t h a t I would contact JoLanKnezevic
regarding tr.18 and as10 dgges ted they do t h e same.
Mr Fisher agseed and I arranged f o r Mr & Mrs Pisher to phone
JoLrnat l l am on Thursday 94/8/85.
Continued 14/8/82
Contacted the Dealing Room and spoke to B u r y Sanderson. with US Dollars which had been maving downhill.
| Barry advised t h e t the forward r a t e f o r 25/9/85 | i is hers |
| Rollover day) i s 2.2773 | and a s these customers converted |
| t o US S a t approx 2.4 | t h i s means a possible 2% benef i t to them. |
| - | LATER |
Jaban U e z w i c phoned and advised he had hod a conversation
| with b l r Fisher. | Jov-n | sa id t h e t he v l l l noni tor the r..tes | auk&- |
| i f the r s t e drops t o 2.15 | by Honday o r Tuesday of next w e e k r k x k c q |
he will contact Ian Fisher -ho mey wish to convert to US Currency.
' e w i l l F/U again 22/8.
18. The rollover in September 1985
On 25 September 1985, the loan was rolled over and converted into U.S. dollars.
19. The alleged discussion between Mr Fisher, Mrs Fisher and Mr
| ~ c ~ e o a | in September 1985 |
(i) Mr Fisher's version
According to Mr Fisher, in September 1985, he and Mrs
Fisher spoke with Mr McLeod, the new manager of the Forster branch as follows:
Do you recall what Mr McLeod said and what you
said?---Mr McLeod said, "The bank is creating a
foreign currency advisory cell specifically to
assist and advise the borrowers of foreign currency,
loans and these people are the most skilled with
| foreign currency loans that the bank possesses and | I |
| relying on the advice from these people borrowers | |
| are to trade-in forward contracts with a view to | \ |
| recouping previous losses and to mitigate against |
| future lossesoo | and I said, "That is very good." |
Did you say anything else to Mr McLeod or did he say anything else to you?---He told me, he said, #*Ring these peopleoo - mentioning a couple by name, as I recall - "at least once a day, preferably frequently throughout the day and they will keep you abreast of the situation on the foreign currency scene and advise you when it is time to traden.
Did he say anything else to you?---Not that I recall at this moment.
So have you exhausted your recollection of that conversation?---I am sorry, I have.
Was anything said about the cost of trading?---Yes, it was.
What was said? Who said it and what was said?---I said, "Wal, how much will it cost us to trade?" And he said. "It will cost you $15 for each contractn and that is all that I recollect.
a
(ii) Mrs Fisher's version
Mrs Fisher gave the following account:
Do you recall what, if anything, Hr McLeod were a lot of skillful people there and it was set up so that the borrowers could ring them and find out how their loans were going and also get advice on how to trade.
said?---Mr McLeod was telling us about a foreign
currency advisory cell which had recently been set
UP.
Did Mr McLeod say anything else?---He said Ian was to keep in contact vith the advisory cell and they would - and he could find out how to trade and then
the advisory cell would proceed with the actual
deal; and he also told us that each contract would
cost $15.
Do you recall what your husband or you said in response to that?---Well, we said we were very pleased that there was something set up to help us,
and it was some positive vay that we could be able
to help with the loan.
Now, was that all that was discussed at that meeting?---I cannot remember.
(iii) Mr McLeod's version
Mr McLeod said that he did not become manager of the Forster branch until December 1985. In any event, he denied M r and Mrs Fisher's version of the discussion, even if i t had occurred at a later point of time.
20. The meeting with Mr Edwards, M r Rogers and Mr Tuskan in
February 1987
(i) Mr Fisherrs version
According to M C Fisher, he, Mrs Fisher and Mr Parton met
with Mr Edwards, M r Rogers and Mr Tuskan, officers of the Bank in
February 1987 and the following discussion took place:
Who else was present from the bank?---There was John Edwards whom I understood to be the state manager; there was John Rodgers who I understood to be area manager and another gentleman called David Tuscan who I understood to be the senior man from the foreign currency cell or the dealing room from Sydney.
What was said at this meeting?---The spokesman
seemed to be Mr John Edwards and he said, IoIan, we
are very pleased to see that you have crossed the
psychological barrier and are actively trading. You
know that the only way you can recoup your losses
you have made up to date and to mitigate against
future losses is active tradingn and I said to him,
"We have bought then - "Neville Parton has bought a
computer and a printout and he subscribed to Viatel,
I am assisting him with the costs as we have had no
| success with the advice from the r l s k | management |
advisory people, only continued lossds; we are
going to do our best to do our own ttadingw and he
sald that was excellent.
(ii) Mrs Fisher's version
Nrs Fisher's account was as follows:
Do you recall any of what was said at the January 87
| meeting?---Yes. | I remember Ur Edwards saying how |
pleased that we had crossed the psychological to improve our position and mitigate our losses.
barrier to trading and that it was the only way that
we could improve our position: and all the officers
said how, you know, they were pleased that we had
decided to trade, that we had been trading; and Mr
(iii) Mr Edwardsl version
Mr Edwards' version was as follows:
Nav could you tell us vhat you recall vas said, to the best of your racolloction and
| IIR B | : | - |
| putting your r.coll.ction | into d i r e speech as h s t |
you arm able, by all tho prsons at the interviov
you had vith Xr and Nrs Fishor7---Well, firstly, I
have got to .ay tho interviev vent for one and a
| half hourr. | Tho pattorn of tho intorview was that I |
vould opur tho intonriov by saying that 1 was John
Ward., I vas tho chiof manager from the bank's
| haad offia, that v0 war. | talking to our formign |
currency loan borravers throughout Australia no as
| those poop10 vould understand tho bank's | attitudm to |
a loan8 I vould oxplain that attitude by saying
that nubor OM, I got paid to protoct the bankon
position and tho bank had a loan agreement with
borrovars, v0 voro sooking to fulfil our obligations
| in t o ~ | of that loan agreuent providod the |
boncuorr fulfil thoirs and to underpin that loan
agreonnt vo voro sooking to have a, what WO call a
stop loss agroonnt oxocutod by tho borrowers and
that stop loss agreuent could only be executed if
WO could agroo on the contents of it specifically
the amount at vhich the stop 1088 might be
triggered. I would then introduce John Rodgera as being the person directly fron the New South Wales group who would be reeponaible for the day to day
communication with the borrower on such things as
rollovers and any technical information relating to
the loan and I would introduce David Tuskan as bein
a man fron the bank8# information service where
borrowers could phona in and talk about trends in
the foreign exchange mrket and if necessary close
out their exposure by writing forvard exchange
contracts.
| Did Ur Rodgers then nay | something?---Yes, | c e r t a l n l y . |
| l& | Rodgers then spoke probably for half to three |
quarters of an hour on mtters to do with the loan
agreement and specifically the atop loss agrosmant:
| how the stop loss would operate: | how it could be |
prevented from oper#$ing, specifically by tha uma of
harnessing cash flow and Raking funds available to
avoid triggering, specifically by the pommiblllty of
making greater securities availabla and certainly he
| would emphasise it in a day to day sense. | Ha vas |
the pornon for contact vith tha - here to contact in
term of technical ratters to do with the loan.
And do you recall Xr Tuskan saying anything7---Yam. when that was over, David would set out his role and his role was specifically to provide borroverm vith information on what might driva the foreign exchanqe markat8 in a day to day sensa and in a longer ranam.
| He would point out that it would so~etines | b. |
difficult for borrcwars to contact hir becausa many
borrouers wanted to phone in at tha mar. t i u ,
particularly around pressura points in the mrket
and ha vould explain the final way that a borrwor
could avoid triggering the stop loss and that vas by
uea of the forvard axchanga mrkat to close out
thair urposure before the stop loss point was
raached.
NW, do you racall anything that nt Fisher said
| that noting?---I do. | I was - tha thinq that |
recall is that vhon we ware discusslrq - or v h m John Rodgers spCifiC8lly - vas discussinq the variau aloment. of 8ecurity and hov those
| b u i n u m antarprisms v a n travalling, bacausa | that |
vas important to sea if that. vas any camhflow that could b. harnassd to help the mituation, Ur Fisher indicated that th. Covra ltotal n s on the rarket and
that therm might b. an intorutad purchaser and in
tha evant that it sold, he was interested to knw
uhathar the bank would accapt tha proceeds on t o m
daposit in Australian dollar8 as security rather
than partially or totally axtinguish the debt.
Yes and vhat did you say about that?---My rasponss
to that was that wa would b. k w n to see tha debt in
foreign currency decroase rather than tha continued
mpeculation by virtue of having the proceed placed
in Australian dollars.
Do you remember, did Hr Parton say anything that you
recall, or do anything you recall at the
meeting?---W Parton seemed to be there in - - -
| No, do not worry about that, no. | What did Ur Parton |
do or say?---He produced - specifically when David which vere graphs of movements in the foreign exchange market which he indicated they had been tracking at some length with a view to better managing the expoeure created by the borrowing.
Yes. Was there anything said about a Viatel eubecription, or a computer that you recall?---I
| cannot really recall. | I do have an impression that |
the graphs that Ur Parton had might have been
produced on a computer but - - -
Now, I want to ask you vhather words to this effect
were maid: did you say to Ur Fisher: "Ian, ve are
very pleased to see that you have crossed the
psychological barrier and are actively
| tradingw?---No, I would not have said that. | I did |
| not say that. |
Ye.. Did you say anything like this: "You know
that the only way you can recoup your losses you
| I have made to date and mitigata against future losses | im active tradingm?---No, I did not say that. | |
| ||
| X r Fimher may anything like this to you, that you | ||
| recall: mNeville Parton has bought a computer and printout and ha8 subscribed to Viateln?---I cannot recollect. | ||
| ||
| assimting him vith the comts as v0 have had no muccus with the advice from the risk management advisory paople only continued los8esw?---Certainly | ||
| ||
| visa. |
| ( i v ) | Mr | Rogers v e r s i o n |
| Mr. | Rogers | gave | s i m l l a r | evidence. | A t | t h e | t ime , | ~ r |
| Rogers | p r e p a r e d | t h i s n o t e | of | t h e meet ing: |
| F/:/L | FIS. -R IH & J R |
| FORSTER | NSW | BRANCH |
| Mr | 8 | Mrs | F i s h e r | t o g e t h e r | w i t h N e v i l l e | P a r t o n | c a l l e d | f o r | d i s c u s s i o n s |
| a t Ta ree NSW | branch. |
| A | b r i e f | rev iew | of | t h e | F i s h e r ' s | b u s i n e s s | o p e r a t i o n s | a r e | a s f o l l o w s : - |
| Farm | O p e r a t i o n s |
| I n | t h e | p r e s e n t | r u r a l | c l i m a t e , | t h e | form | i s runn ing | a t a | l o s s and |
| p r o s p e c t s | a r e t h a t | i t w i l l c o n t i n u e | t h i s way | f o r t h e | immediate |
| f u t u r e . |
| 0 wra | Trading | pe r fo rmances | o v e r | r e c e n t | t i m e s | h a s | been | somewhat |
| Motor | I n n | ( H o t e l / M o t e l ) |
| i n d i f f e r e n t . | I t ha s | been | c l a imed | t h a t | t h i s was | a t t r i b u t a b l e t o t h e |
| employment | of | a Manager. | However, | t h i s h a s now | been | r e c t i f i e d w i t h |
| t h e | h o t e l | be ing | managed | w i t h i n | t h e | f ami ly . |
| The Hote l | i s s a i d t o be | on t h e market | f o r $1.8M. | We | a r e t o l d | t h a t |
| t h e y | have | a | very | i n t e r e s t e d | p u r c h a s e r | b u t | a t t h i s s t a g e no | d e f i n i t e |
| n e g o t i a t i o n s | have | been | e n t e r e d | i n t o . |
| M t T h o r l e y | C r i c k e t | C e n t r e |
| P r e s e n t l y l e a s e d a t $1 ,000 p e r week | t o SBP F, CA G i l l . | However. | we |
| unde r s t and | t h e | c e n t r e | i s n o t | t r a d i n g | ve ry | w e l l | and | i n | f a c t | l e a s e |
payments have n o t been met f o r some f o u r months.
| The | p r o p e r t y | i s on | t h e market | a t $350,000 | b u t | p r o s p e c t s | of | s a l e a r e |
| n o t | e n t i r e l y encourag ing . | A s | an | a l t e r n a t i v e | t o a | s a l e , | t h e | F i s h e r s ' |
| s | l ook ing t o l e a s e t h e p remises | t o t h e Department of | Defence f o r |
| @ o r a g e | pu rposes . |
| We | have | s i n c e found o u t t h a t he may | be e n t e r i n g i n t o negotiations | t c |
| swap | t h e C e n t r e f o r a | f a rm | ( P u r c e l l - | o u r F/C/L | cus tomer | a t Moree | - |
| P u r c e l l | a p p a r a n t l | owns | a | number | of | C r i c k e t | c e n t r e s | i n v a r i o u s |
| Country | l o c a t i o n s 7 . |
| Commercial | P r o p e r t y | a t P u l t e n e y | S t r e e t , | T a r e e NSW |
| P r e s e n t l y | r e t u r n i n g | r e n t s | o f | $60 ,000 | pa | l e a s e e s | meet | o u t g o i n g s . |
| FACILITIES: | F/C/L | - B a s i c |
| +' | F / C / L | - | P a r i t y * |
| P a r i t y | i s | a s s e s s e t | a t USD | $ 1 , 5 1 3 , 0 3 8 | AUD | $ 2 , 2 9 2 , 4 8 1 |
| @ | 0 .6600 |
| L e s s | B a s i c | L / - | A U D | 1 , 5 0 0 , 0 0 0 - |
| AUD | $ 7 9 2 , 4 8 1 |
SECURITY:
| 1 | R/M | o v e r R u r a l | P r o p e r t y |
| "Kha t abunda" | Wingham |
| B / V | 1 / 8 5 (Whingham | Bch) |
| 2 | R/M | o v e r Commercial |
| P r o p e r t y | a t T a r e e NSW |
| B / V | 8 / 8 5 | "By | Branch) | 4 2 0 , 0 0 0 | 4 5 0 , 0 0 0 |
| 3 | R/M | o v e r | C r i c k e t | C e n t r e |
| Complex | a t M t T h o r l e y NSW |
| B / V | 1 / 8 5 | ( S i n g l e t o n NSW | Bch) | 2 7 0 , 0 0 0 | 3 5 0 , 0 0 0 |
| 4 | R / M | o v e r | "Town | House | M o t o r |
| Inn" | H o t e l / M o t e l | a t Cowra |
| NSW | B/V | 9 / 8 5 | (PVD) | 1 , 1 6 0 , 0 0 0 | 1 , 8 0 0 , 0 0 0 |
| 5 | R/T/B/S | t o encompass g o i n g | |||
| c o n c e r n |
|
| M o t o r | Inn" | R/T/B/S | - |
| 6 | Term | D e p o s i t s | 355 ,949 | 355 ,949 |
| $ 2 , 6 5 5 , 9 4 9 | $ 3 , 4 6 5 , 9 4 9 |
N o t e :
| - | . | On | p r e s e n t | e x c h a n g e | r a t e s , | b o r r o w i n g s | r e p r e s e n t |
| 86.3% of | s e c u r i t v . |
| . | As | v a l u a t i o n s | a r e somewhat | d a t e d and | c o m p l e t e d | by |
| l o c a l | b r a n c h | s t a f f | a t | t h e | t i m e | We | h a v e | a r r a n g e d |
| w i t h | PVD | t o u n d e r t a k e | r e v a l u a t i o n | o f | S e c u r i t i e s |
| 2 , | 3 a n d | 4. | Tbg,rfarm | ( S e c | 1 ) w i l l o n l y b e |
| r e v a l u e d | i f | v a l u e s | f a l l s h o r t | o f | o u r |
e x p e c t a t i o n s .
| REDUCTION | F/C/L | - | F i v e ( 5 ) | y e a r term | - | m a t u r l n g March | 1990 |
| 'RANGEMENTS: | K ~ o l l o v e r | 2 9 May | 1987 . |
; *
-
| PROFITABILITY: | B a s e d | on | f i n a n c i a l | s t a t e m e n t s t o 3 0 J u n e | 1 9 8 6 , | t h e |
| f o l l o w i n g | income | p o s i t i o n | emerged : - |
| Farm |
| Net | L o s s | ( $ 1 7 , 9 4 5 ) |
| Add | Back: |
| D e p r e c i a t i o n | $ 7 , 1 9 7 |
| I n t e r e s t | 1 5 , 6 4 9 |
| O p e r a t i n g | S u r p l u s |
| N o t e : | A p p e a r s | t h e r e | i s | some | income | s c o p e | i n |
| t h e w r i t i n g | o f f | o f | T r a v e l l i n g | and |
| Accommodation | e x p e n s e s | o f | $14 ,940 | compared |
| t o $ 2 , 0 9 9 | t h e | p r i o r y e a r . |
| R e n t s |
| P u l t e n e y | S t r e e t |
| Net | P r o f i t |
Add Back:
I n t e r e s t
| O p e r a t i n g | S u r p l u s | $ 4 8 , 2 0 9 |
| Town | House | M o t o r | I n n |
| Net | P r o f i t | $22 ,464 |
Add Back:
| D e p r e c i a t i o n | $ 3 3 , 1 3 4 |
| Management | F e e s | 2 8 , 0 9 5 |
| R e n t | 71,500 |
| $ 1 3 2 , 7 2 9 | 1 3 2 , 7 2 9 |
| O p e r a t i n g | S u r p l u s | $155 ,193 |
| C r i c k e t | C e n t r e |
| $ 1 , 0 0 0 | pw | $ 5 2 , 0 0 0 | p a |
| A s | r e n t s a r e i n a r r e a r s and | f u t u r e |
| p r o s p e c t s a r e unknown | income | f r o m |
| t h i s | s o u r c e | h a s | n o t | b e e n | e x t e n d e d |
| Term | D e p o s i t | S e c u r i t i e s |
| $ 3 5 5 , 9 4 9 | @, | s a y , | 142 |
| FCL | I n t e r e s t Commitment |
| USD | $ 5 4 , 0 2 3 | @ | 0.6600 | AUD | $ 8 1 , 8 5 3 |
| W i t h h o l d i n g | Tax | 9 , 0 5 6 |
| F a c i l i t y F e e | 0 . 5 % , | s a y | 5 , 7 3 1 |
| Per | h a l f | V P - r i r | 2 1 |
| On | a p e r annum b a s i s = $193,280 p e r annum | |||
| On |
|
41
| bor rowers | shou ld | be | i n a | p o s i t i o n | t o meet | r o l l o v e r |
| c o s t s whereas | f i n a n c e on | Domes t ic | r a t e s would | be |
| beyond | t h e i r reach . |
| Provided | r e s u l t s | a r e | m a i n t a i n e d | a t | t h i s l e v e l | they |
| shou ld | be | a b l e | t o p r o v i d e | c o n t r i b u t i o n s | o f , | s a y , |
| $16 ,000 p e r month | toward | a | s i n k i n g | fund | ( d o e s no t |
| i n c l u d e | i n t e r e s t | on | term | d e p o s i t s , | which | would |
| accoun t | f o r a | f u r t h e r $4 ,000 | p e r month | i n |
| c o n t r i b u t i o n s - | i e , | $20,000 | p e r month | i n t o t a l ) . | n |
.
| Irrespective | a t l e a s t $16,000 | p e r month | is n e c e s s a r y |
| t o meet | r o l l o v e r | c o s t . |
GENERAL:
| We | d i s c u s s e d | w i t h | bo r rower s | t h e | Bank's | g e n e r a l | p o l l c i e s w i t h | regard |
| t o f u t u r e conduct | o f | F o r e i g n | Currency | Loans. | The | work ings | o f |
| F o r e i g n Currency and | t h e wisdom | of | c l o s e management | of | exposu re was |
| W by Dave Tuskln of RMIS. | c,,&ra | |||||||
| ||||||||
| ||||||||
| ||||||||
|
| e nagement. | n fo rma t ion | on | t h e | s u b j e c t | o u t s i d e | t he | c o n f i n e s of | RMIS. |
| They | a r e endeavour ing | t o map | o u t t r e n d s and | a r e s eek ing |
IN SUMMARY:
| S a l e of | t h e Motor | Inn and | t h e C r i c k e t C e n t r e | w i l l , | of | c o u r s e , | pu t | z |
| d i f f e r e n t complexion | on | t h e borrowing. | However, | pending | t h e s e |
| s a l e s , | we | need | t o p i n t h e AUD l i m i t t o avo id | any p o s s i b l e blow ou t |
| of | t h e p r i n c i p a l . | We | have | i n mind | t o n e g o t i a t e a n AUD | L i m i t o f , |
| s a y , | $2 ,570 ,000 | which | would | e q u a t e | a | t r i g g e r | r a t e | of | a p p r o x i m a t e l y |
| 0.588 | t o t h e USD. | Knowing | t h e i r a t t i t u d e s toward | FX management, | W C |
| a r e | c o n f i d e n t | a | l e v e l | below | t h e | p s y c h o l o g i c a l | b a r r i e r | of | 0 .60 | woulc |
| be | s u f f i c i e n t | t o encourage | e x e c u t i o n | of | t h e Agreement. |
| Also | t h e | e s t a b l i s h m e n t | of | a | s i n k i n g | fund | a t | t h e | l e v e l s | s u g g e s t e d |
| e a r l i e r would | be | p r e s s e d | f o r and | b e s i d e s | a r e e s s e n t i a l | t o e n s u r e |
| f u t u r e | r o l l o v e r | commi t m e n t s , a r e | met. |
| W- | a r e c o n f i d e n t | t h e y | w i l l meet | t h e | Bank's | r e q u i r e m e n t s . |
| a | is r e v a l u a t i o n s | u n c l e a r | what | t h e | Bank ' s | s e c u r i t y p o s r t i o n w i l l b e | u n t i l |
| a r e t o hand. | I t would | be | r e a s o n a b l e | t o e x p e c t | t h a t | i f |
| t h e Hote l /Mote l | i s r e t u r n i n g | some | $155,000 | p a | t h a t | a | v a l u a t i o n | of |
| some | $1.55M | c o u l d | be | e x p e c t e d | (10% r e t u r n ) . | On | t h e | same | b a s i s , |
| P u l t e n e y | S t r e e t | shou ld | be | wor th $480,000. |
| Borrowers | have | been | w r i t t e n | t o a long | t h e s e | l i n e s ( copy | a t t a c h e d ) . |
| Copy | of | t h i s memorandum | t o b e forwarded | t o b ranch f o r i n f o r m a t i o n |
| p u r p o s e s | and | t h e | f o l l o w | up | of | developments | a s a p p r o p r i a t e . |
77 .
FINDINGS
I now make the following findings of fact in the areas where there is a conflict of evidence.
(In making these findings, I have taken into account that, with the exception of Nr Shaw, each of the witnesses has an interest in the outcome of the proceedings. For this reason, I have primarily had regard to the probabilities, considered in the light of the whole of the ekidence. When I indicate that I find that something was said, I mean to indicate that the substance of what is alleged to have been said was, in fact, said.)
3. The meeting in Taree in August 1984 (see page 8 above).
(a) Mr Fisher's version
(References are to the earlier paragraph numbers.)
| (l), ( 2 ) and ( 3 ) : | I find that this was said. |
(4): I do not find that this was said, although it is possible
that Mr Green may have said that a number of Taree residents had taken overseas loans and that their interest rates were, relatively speaking, cheap.
(5) and ( 6 ) : I find that this was said.
| ( 7 ) : | I do not find that this was said. |
(8): I find that this was said.
( 9 ) : I do not find that this was said, notwithstanding Mr Green's "concession" that it was said.
| ( 1 0 ) , | ( 1 1 1 , | ( 1 2 ) and ( 1 3 ) : | I do not find that this was said. |
| ( 1 4 ) , | ( 1 5 ) , | ( 1 6 1 , | ( 1 7 1 , | ( 1 8 ) , | ( 1 9 ) and | ( 2 0 ) : | I | find | that | this |
was said.
( 2 1 ) : I find that Mr Green said that the Bank had the right to require the loan to be brought onshore.
| ( 2 2 1 , | ( 2 3 1 , | ( 2 4 ) , | ( 2 5 1 , | i 2 6 ) , | ( 2 7 1 , | ( 2 8 ) and | ( 2 9 ) : | I find | that |
this was said.
| ( 3 0 ) and ( 3 1 ) : | I do not find that this was said. |
| ( 3 2 ) , | ( 3 3 ) , | ( 3 4 ) , | ( 3 5 1 , | ( 3 6 1 , | ( 3 7 ) and | ( 3 8 ) : | I | find that | this |
was said.
(b) Mr Green's version
(1) I find that Mr Fisher enquired about the availability of a
Swiss franc loan.
| ( 2 ) , | ( 3 ) , | ( 4 1 , | ( S ) , | ( 6 ) , ( 7 ) , | ( a ) , | ( 9 ) and | ( 1 0 ) : | I find that |
this was said or done, as the case may be.
(11): I find that, with the exception of the reference of the
application to the solicitor, this was said.
(15): I find that the telephone discussion occurred.
5 . The meeting(s1 with Mr Shaw in October 1 9 8 4 (see p.23 above)
I find that two meetings and a telephone discussion took place and I entirely accept Mr Shaw's evidence.
| 6. | The meeting in Forster in December 1 9 8 4 (see p.25 | a b o v e ) |
I find that the discussion took place along the llnes of the version of Mrs Skelton, whose evidence I accept as generally reliable.
It appears that, prior to the discussion with Mrs Skelton, there was a brief discussion between Mr and Mrs Fisher, Mr Parton and Mr Isaacs. I am not satisfied by the evldence of the terms of anything said by Mr Isaacs on this occasion. It appears to have been insignificant - Mr Parton described it, accurately I think, as "small talk" (transcript p.169).
9. The alleged meeting in February 1985 (see p.44 above)
Although an increase in the amount of the loan to $3 m. must have been discussed by Mr Fisher with the Forster branch prior to 24 January 1985 (when the revised loan application was submitted to N.S.W. Branches Administration), I am not satisfied
of the specific terms of any such discussion. I do not E i n d that
Mr Isaacs said what is attributed by Mr Fisher to M r :saacs at p.44, above. I also reject what is attributed to Mrs Skelton by
| Mr Fisher at p.45, above. | 9 |
11. The meeting with Mr Vanner in February 1985 (see p 4 3 ~ ~ o v e )
I accept entirely M Vanner's version ? I this
discussion.
15. The lunch in April 1985 (see p.59 above)
It appears that nothing significant was said on this
informal occasion. The version given by Hrs Fisher is probably
accurate.
17. The discussion in August 1985 (see p.62 above)
I find that the substance of the discuss~on is
accurately recorded in Mrs Skelton's contemporary diary note (see
pp.64-5, above).
19. The alleged discussion with Mr McLeod In September 1985 (see
p.66 above)
I am not satisfied that this discussion took place.
20. The meeting in February 1987 (see p.68 above)
I accept Hr Fisher's version as a reasonably accurate
' I
summary of a lengthy discussion.
I hereby certlfy that thls and the
preceding 80 pages are a true copy of
the flndings of fact wlth respect to the
express representations alleged in the second
further amended statement of c l a m of hls
Honour Mr. Justice Beaumont dated 16 May 1990.
Assoclate
10 August 1990
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