Loan row sparks ASIC call Ben Butler
The Age
December 27, 2011 A SUPREME Court judge has asked the corporate watchdog to investigate a company run by Richmond football club director John Matthies over its pursuit of an illiterate woman for a $23,000 application fee for a loan that was never actually taken out.
Justice Clyde Croft said Mary Knowles did not have to pay the fee, claimed by Mr Matthies' finance company, Victorian Mortgage Investments (VMIL).
''The fact that a borrower is illiterate should, obviously, be a matter of concern to a lender and a fact that one would hope and expect good lending practices to identify,'' Justice Croft said in a judgment handed down last week. ''The approach of the defendant [VMIL] was, however, to cast responsibility on the finance brokers and her solicitor and to take procedural points in the proceedings and to attack the plaintiff's credit.
''None of this reflects well on the defendant.''
Justice Croft said he would send the evidence in the case to the Australian Securities and Investments Commission, which took over as credit regulator on July 1, ''with a recommendation that they review them with a view to taking such further action as thought appropriate''.
In addition to being VMIL's managing director, Mr Matthies, who gave evidence in the hearing, is a lawyer and nursing home developer. He has been a Richmond director since 2004, when he ousted Tigers premiership player Tony Jewell, and was re-elected to the struggling club's board in December last year.
Ms Knowles had owned the property at the centre of the dispute, a large block of land on Duncans Road, Werribee South, that hosts her family home, two factories, a market garden and a cool-store, since 2004.
In 2010, she asked VMIL about taking out a $1 million loan to pay off debts and legal costs run up in a County Court battle with another creditor.
She did not take out the loan, but VMIL slapped a caveat over the property and demanded $31,000, made up of the application fee, legal costs and interest.
Lawyers for Ms Knowles argued that the loan was covered by the national consumer credit code, which provides more protection than normal commercial law, because part of the property was used as a home.
They also argued that Ms Knowles was not given enough warning that when she agreed the loan was for commercial purposes she would lose the extra protections offered by the credit code.
Justice Croft agreed, saying part of the loan was to be used to pay off the mortgage on the family home and the words of the agreement contained ''nothing remotely resembling'' the warning required by the credit code.
He said VMIL pursued the debt with ''dogged determination'' despite failing to properly warn Ms Knowles or show the court evidence the fee was reasonable.
He ordered the entire loan agreement set aside, saying it was ''unjust'' because VMIL took no measures to make sure Ms Knowles understood it.
Land title records show Ms Knowles sold the property in August.
http://www.theage.com.au/business/loan-row-sparks-asic-call-20111226-1pag1.html#ixzz1hehdeGAU
