National Bank Bastardry – Part III – Greed.

Money and Greed Conquer All — Including the Law?

So who in this land of the free protects the weak and poor, like the Cronin family, from the financially strong like Ferrier Hodgson and the National Australia Bank? The answer is nobody, at least nobody that we have been able to find—we are still looking.

Man walks up to jewellers shop window, chucks a brick through it, grabs a couple of trays of diamond rings and then an hour or two later finds himself wearing steel bracelets and in the back of a Paddy Wagon.

His mate, who the robber had taken into his confidence, had hidden around the corner, took a video of the robbery, sold it to the police and collected the reward.

No excuses for the NRL player recently videoed behaving very badly, but the cockroach, the traitor who took and sold the pictures got something like $40k from the media scum is different. That cockroach deserves a punishment far worse than that metered out to the player.

The other one dobbed in his mate and if he has any vestige of a conscience will have to live with his treachery all of his life.

What motivated the two video enthusiasts? Greed. Greed caused the Global Financial Crisis and few if any ‘on Wall Street’ who caused that crisis were punished, they took their government funded retirement packages and disappeared as wealthy men.

Money Never Sleeps – Neither do the Greedy.
Gordon Gekko

Perversely the 2010 film ‘Wall Street-Money Never Sleeps’ the sequel to the famous 1987 film ‘Wall Street’ starring Michael Douglas became almost cult films. Both stories concentrated on greed and both, apparently, caused a rush of graduate applicants both in America and the UK wanting to work in the banking industry.

One of the few advantages of being over a three quarters of a century young is (thankfully) I can still look back with a deal of clarity and compare yesteryear with today. Don’t jump to conclusions—this is not about the good old days. I have only reached this age because there are cures for what killed many of my ancestors. ‘Jack the Magic Dancer’ is not the man he was and I continue, helped by some very clever people, to beat him. I cannot help but compare our wonderful health system with our antiquated legal system. It is as if we are frightened to change, little realising that an antiquated legal system increases the cost of the health service. Think about it.

My age and my experience were on my mind a lot while was writing the last two episodes of the Global Farmer. I have contemplated if the world has changed or whether I have? Whenever I have started to write this series, the word GREED has materialised on the screen—so I thought this month I should pay it some attention.

I should also declare I have only been to one mortgagee’s sale in my life. I only went to fly the flag. I was a farm manager so the chequebook wasn’t all mine but there was nothing to stop me, for a mate, pushing the bidding if needed.

I saw the mortgagor’s wife in tears while she was serving tea and sandwiches with the other ladies from the CWA. I didn’t stay for the sale. The mortgagor had borrowed to pay a family member out who was a ‘sleeper’ in the family farm. Then we had two dry years and he had a fire over half the farm. I learned later they had a good sale, the neighbours rallied round so he didn’t need me after all. Someone bought his farm ute and gave it back to him.

Then I heard that a neighbour had bought the farm from the receivers and leased it back to the original owner. That was back in the 70s. Maybe many of us were still pulling chains and rakes around clearing land, just like those before us had done going back generations? Maybe there were too many ‘battlers’ there to kick a ‘mate’ when he was down? There were the exceptions of course, there were the ‘greedy’ ones hunting a bargain, but the neighbours outbid them.

The Incompetence Compounds

jokersIn the December 2015 and January 2016 issues of the Global Farmer I told, as well as I am able, of the treatment that has been metered out to the Cronin family of Ravensthorpe by the National Australia Bank (NAB) and the receiver managers Ferrier Hodgson (FH). The saga continues — I thought I knew everything that had happened, some things in detail and others less so; I was mistaken.

I haven’t got the whole story yet, but you will recall that the clearing sale of plant and machinery valued at about $2 million, was sold for $279,013, a figure which in itself speaks volumes for the receivers and their agent and the buyers—greed again?

This time it was the buyers kicking a man when he’s down, wallowing with glee in another’s misfortune. From the farm budgets I saw around 2013 how easily it could have been many of those same buyers having a clearing sale. That meeting of 1000 in Merredin in April 2013 was not because everyone was rolling in money was it? There were not many gloaters at that meeting.

What I didn’t know until a few days ago was that what wasn’t sold at the total clearing sale was left in the paddock for all and sundry to scavenge around and take what they wanted. Now don’t misunderstand me, it wasn’t the usual stuff left after a clearing sale, like boxes of nuts and bolts and second hand rusty fencing wire or bits from horse drawn machinery and half a hand piece—far from it!

The idiots that conducted the sale left behind fully working items of modern farm machinery like a truck and a header and a heap of fittings and attachments for same. A neighbour, concerned it would get vandalised, removed the Louisville truck and parked it at his place. It was eventually sold by FH, long after the sale — but when the day came FH didn’t know where the truck was because the paddock was bare. Can you believe that? I don’t know what the truck was sold for, but it was valuable enough for someone from Queensland to buy it and collect it.

The Cronin’s are entitled, by law, to the full details of this clearing sale. Both the NAB and FH have refused to provide those details. They have thumbed their nose at the law over this and many other serious matters we have raised with them. We have quoted legal opinions and precedents and it hasn’t made any difference, they still refuse full disclosure. Do they consider themselves above the law?

That is just one example of how Ferrier Hodgson earned their $704,660 fee, which of course the Cronins paid.

The best FH could do was sell the Cronin’s plant and machinery for 14% of its book value. Now we know why, they walked away and left goodness knows what to the scavengers – because they were getting paid no matter what they did. Remember the receiver is the agent of the mortgagor (Darbyshire – Kott Gunning: Part I) so what  motivated FH to treat their client in this way? Is this an example of their version of a ‘duty of care’? The law says they must achieve a fair price for the mortgagor’s property. You be the judge as to whether they have complied with the law.

There is also the matter of several road trains of scrap metal taken off the Cronin’s farms around sale time, the removal of the scrap was presumably authorised by FH. There is no mention of scrap metal on the sale schedule of plant and machinery we received from the NAB, just one line; Plant and equipment proceeds  $279,013. No details of what was sold for how much. Wasn’t sold really, they nearly paid people to take it away. If the two road trains of scrap metal is part of the receipts for plant and equipment, then that 14% of the book value achieved in the sale is diluted!  Again, so much for ‘duty of care’; are they laughing at the law? I wonder what happened to the proceeds from those road trains of scrap?

There is another aspect to this business of the clearing sale. The NAB wrote off over $4 million at the end of this exercise. Had FH sold both the Cronins plant and machinery and their farms for a fair market value, the Cronins debt to the NAB would have been easily settled —there would have been a surplus. The Cronins would still have been farming and the NAB would have recovered their debt and the Cronins would not have been declared bankrupt. There are so many unanswered questions many are to do with competence or the lack of it.

Downright Robbery.
Ned Kelly

To settle a debt to a bank a firm of receivers and managers is commissioned by the court to sell property valued by the bank at over $1 million. The receiver eventually sells that property for $550,000, which appears to be in breach of at least section 420A(1) of the Corporations Act because they did not sell at market value — we know that from sales of comparable property sold at about the same time and in the same district.

What is market value?

The starting point for describing market value comes from the decision of Griffith CJ in Spencer v The Commonwealth:

“In my judgement the test of value of land is to be determined, not by enquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by enquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?” 13 (emphasis added)

The Mortgagee must also act in ‘Good Faith’.

What does it mean to act in good faith?
The courts have said that to act in good faith is to act honestly and not fraudulently.3 Another way to put it is to say that the mortgagee’s duty is to not cheat the mortgagor.4 There would be a clear failure to act in good faith if there was deception, corruption, collusion or actual fraud in the sale process. (Australian Banking Industry Ombudsman Bulletin 38)

The receivers and managers were FH, the farm was one of the Cronin’s farms. FH sold that farm for 56% of its sworn value. What is the difference between smash and grab a tray of diamond rings and this farm sale? Answer: A man with a video and the police. In this case we don’t need a video and the police have nothing to do with matters like this. Imagine getting a million dollar property for a little over half its value. Wonder what your conscience would be like, knowing it was a mortgagees sale? Good luck, virtual  robbery or Greed? Certainly two of those, maybe three.

Who monitors civil law and ensures compliance in Australia? Break the criminal code and the police arrest the perpetrators. If the accused can’t afford a lawyer, the State provides one, it’s called Legal Aid.  So in criminal law one can be as poor as a Church mouse and corrupt as all hell, yet, presumably because of some old law about fair play and the presumption of innocence, everyone has the right to be represented by a lawyer.

Why isn’t there a policeman keeping an eye on the apparent breaking of the Civil Law of this land? Who monitors compliance with the Corporations Act? ASIC? Who helps those who believe they have been wronged and have no money?

ASIC have always been there, but not being lawyers makes our work twice as difficult. We have just ‘found’ ASIC have a complaints form. It’s been there all the time like a golf ball in the rough—you have to look in the right place to find it. We were on the other side of the hill, so it took a while.

We have filled in the forms–now we wait and see if ASIC have any interest in us. We are but minnows when we read about the tanks of sharks ASIC has to deal with. I hope ASIC do show an interest in our case considering what we believe is very strong prima facia evidence that the Corporations Act as we understand it, has been broken.

To digress for a moment – some of you may not know but (most) lawyers charge their time by the ‘unit’. A ‘unit’ is six minutes, so all you Einsteins will have worked out by now there are ten ‘units’ in an hour. Junior lawyers time is charged out at about, say $250/hour or $25/unit. In some cases this method of charging extends to secretarial and typing, in other cases it doesn’t. You may even get charged by the page for fax transmissions so beware of extras.

800px-Monkey_family_in_moss_treeThe further up the tree the monkey climbs the more it shows its backside’. No one could ever accuse the legal profession of being modest, quite the opposite–think about wigs and gowns. So expect to pay anywhere between $25 and $100 per unit or six minutes or $250 to $1000 per hour (or a lot more) for a lawyers time. The price depends on the position in the tree.

It would have been negligent of me, the Cronin family and others closely associated with them if we hadn’t kept a weather eye on the potential legal costs facing the Cronins.

How much would it cost to take a case like this to court? I have been advised it will be a lot. Certainly a lot to us but not to others like the NAB and FH.

If that is how it turns out then we shall raise the money, otherwise it will mean that the NAB and FH will get away with what they have done, which we and others believe should go before the court and let the court decide if they were right. If we do nothing the Cronin family will be left wondering and they will remain with the pension as their only income having watched FH and the NAB fritter away their life’s work on an action which is increasingly appearing to be an ill conceived, poorly planned, badly researched and executed, whim.

Would it make any difference if we had a lawyer working for us writing letters asking for information? I suppose it would but it shouldn’t. The NAB and FH no doubt have bottomless legal pockets. What is intriguing is that they seem to believe that by ignoring us we will go away. They are wrong.

There is some satisfaction when one realise that the NAB in spite of their greed made some very bad decisions when they moved against the Cronins – and they proved it by writing off over $4 million when it was over. Ferrier Hodgson compounded the NAB’s loss when they walked away with $704,660 in fees for making an unholy mess of the job. I only claim it was an unholy mess because it beats me is why it took so many years to sell six farms for a bit over half their value.

Who Can Afford Advocacy – Who Can Afford Lawyers?

The short answer is the rich.  The long answer is the rich.

The second question is, ‘If the rich are the minority, what do the majority do?’

The short answer to that is ‘lose’. The long answer is ‘lose everything’—and if you are like the Cronin family you don’t need to go to court to lose everything.

Even the leaders in the judiciary agree with me — I’m not on my own with these views; I found the following comments in a very readable document called ‘Unaffordable and Out of Reach’. The problem with the Australian Legal System.
A report by Community Law Australia published in 2012.

In the pages of the report, which I commend to you – read it please, so you can appreciate the problems the Cronins and I, and all those who support us are now facing. Our challenges seem insurmountable – but they are not – we shall prevail – persistence is the key.

The skill of the stonemason in splitting a big rock exactly where he wants it to split is not achieved with one almighty blow – it is achieved by striking again and again and again in the same place until the crack and then the break occurs.

Man’s capacity for justice makes democracy possible, but man’s inclination to injustice makes democracy necessary.

Reinold Niebuhr 1892 – 1971.

Scales of Justice Dublin

Some of the best legal brains in the country share our concerns about justice being unavailable to and out of the reach of the average man and woman; they understand our predicament.

They know that big business; high fees and greed have contaminated the justice system in Australia. They know that the financially weak, no matter how or why they became weak, no matter whether they have a case or not, will never be able to get their day in front of a judge or a judge and jury without a lot of money.

The most powerful legal brains in this land are aware that the average man and woman in Australia is made powerless, rendered helpless, by the cost of the legal system which is the very heart of our society and so of our democracy.

What famous and highly respected Australians say about the affordability of our legal system and the system in which they work.

A first class court system and a first class legal profession are of no avail to a person who cannot afford to access them.”

Judge of the Family Law Court, The Honorable Justice Robert McClelland.

If you are from middle Australia and you want to embark on a substantial piece of litigation, you really have to put your house on the line”

Sir Anthony Mason, former Chief Justice of the High Court of Australia.

“Unless you are a millionaire or a pauper, the cost of going to court to protect your rights is beyond you.”

Senator The Hon George Brandis QC. Attorney-General.

The difficulties experienced by middle income earners in accessing the justice system [are] a long-standing failure.”

John Doyle, former Chief Justice of the Supreme Court South Australia.

The cost of litigation in the Supreme Court…has for most South Australians become unattainable.”

Ralph Bonig, President, South Australia Law Society.

“Big business can afford access to the courts, but the ordinary Australian can’t.

Wayne Martin, Chief Justice of the Supreme Court of Western Australia.

What prominent Australians say about the availability of help for people who can’t afford a lawyer.

Legal aid has been “grossly underfunded.”robe-wigs-judges.f8e8684c44c1ce39b8ee09350d41fc38

Judge of the Family Court The Honorable Justice Robert McClelland

“When it comes to measures to ameliorate the cost of access to justice, the record is truly lamentable.”

Senator The Hon George Brandis, QC. Attorney-General

“The reality is we are a long way short of what we would say is a reasonable amount of funding to be able to even provide the most basic services…We really are at a point, almost at crisis point, in terms of our ability to be able to respond.”

George Turnbull, Director, Legal Aid, Western Australia.

“There is a complete failure [in the 12/13 Federal Budget] to address the chronic underfunding in legal assistance. All Australians have a fundamental right to access legal advice and services, regardless of their means…the Government’s legal assistance sector spending…is now vastly inadequate to meet a real need.”

Cathy Gale, President, Law Council of Australia

“When [people] do come to the legal profession – particularly the profession working in the legal aid sector – they find a myriad of different services which are often shrouded by an almost impenetrable fog of stringent funding and case criteria, guidelines, and means and merits tests that have been put in place to manage and prioritise legal aid expenditure because the level of government funding is so hopelessly inadequate, so hopelessly disproportionate to the need.

Tony Parsons, Former Managing Director, Victoria Legal Aid.

(All quotes from:‘Unaffordable and Out of Reach’. The problem with the Australian Legal System. A Report by Community Law 2012)

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