The Premier of Queensland,

Parliament of Queensland, and

Executive Building,

Brisbane.

Dear Sir,

Re: LJB/SP- TF/13/12584- DOC/13/103971.- Lynton Freeman

Your acknowledgement- 12 June 2013, your reply- 1 July 2013

Your letter to Mrs ClUlllingham MP 27. 3.2014 - re; our meeting.

Two additional letters of even date enclosed.

With reference to the above letters please find an index at the front of the material.

The purpose of these letter based reports is that the previous material was handed to you to

permit your Government to malce several important policy decisions after a meeting with

myself and Mrs. Cunningham. Then make proper considerations for submission on when

self- litigants convicted as vexatious persons are stopped from representing the State and

Commonwealth interests. This occurring before courts against major financiers when the

financier has admitted the material facts of its' cases are incorrect publicly, but denies them

in the courts and alters its evidence to cover-up the trail. These practices are against good

Government and destroys access to justice established by a Australian Securities Investment

Commission "Enforceable Undertaking" established where the same institution made refunds

to those not in litigation. Some refunds and admissions being incorrectly stated to avoid

liability to Government Claims for refunds of incorrectly claimed funds by the institution.

Whilst there is no dispute the matters are able to be heard in the court the incorrect

and unlawful use of vexatious orders can stop the process. This effectively means along with

bankruptcy of the self- litigant, the judiciary accepting false evidence has effectively made

the Govermnents the responsible entities for corrupt use of Government schemes corrupted

by de-facto financier control of payments. With public knowledge of how the corruption

works exposed by previous Govenunent Inquiries and submissions tabled in Parliaments, the

1

Commonwealth sought to clarify policy with a Productivity Commission Inquiry into Access

to Justice. With terms of reference including the material facts of when a self-litigant

representations in courts will effectively support Government policy and legal interpretation

against another party including financiers. I bring to your attention that the inquiry was called

jointly by the Commonwealth Attorney General and the Treasury. Perhaps your Attorney

General could make a submission on this point as the period for submissions on identified

headings is still open on the Draft Report dated 8 April, 2014.

Mrs Curmingham has supported Farmer problems with lenders and generally. At stake

in my dispute with National Australia Bank is the compensation that may be claimed by

farmers for incorrect interpretation of previous and current drought and productivity schemes.

My argument has been the banlc falsified my accounts and endeavoured to sabotage a

viability assessment in which I traded the four years their expert said I could not and that they

accepted my interest for a period greater than their refused subsidy period of twelve months.

During that 12 months the bank falsified my interest and consequently interest overpaid no

less than 20 monthly account deductions, incorrect default interest, incorrect Bills of

Exchange values dating back to 1993 and Bills of Exchange interest from December 1997

and did not put interest payments to my account appropriated by me in writing on the date

paid. This allowed the falsification of the account to issue demand and ultimately a writ.

This gives rise to certain claims in the court all refused with the corrupted practices

advised to you and some published by academics Professors of Law and Political Economics.

This is I believe is a serious attempt by the Commonwealth, to consider changes in practice

that will bring justice to many entities battling third party organisations, that corrupt

Government schemes for their own ends, against policy and government intention and use the

courts unethically and unlawfully to support the corrupt acts.

Yours faithfully,

L. Freeman. (MBA (Adv) , Dip RBN, Dip Ag,

P 0 Box 1476, Gladstone, 4680.

T. 0431 069 866

11.4.2014.

2

INDEX

1. Letter to the Premier 11.4.2014 re- Meeting- Mrs Cunningham MP

2. Letter to the Premier 11.4.2014- re Drought Interest Subsidies and Government

Liability and jurisdiction inequity as defmed by the Productivity Commission

2008 and currently applying to Queensland.

3. Letter to the Premier 11.4.2014 - re Exceptional Circumstances liability and

bank accounting effecting Queensland liability including at 2.

The Premier of Queensland,

Parliament of Queensland, and

Executive Building,

Brisbane.

Dear Sir,

rt 4ce" , ~ t:/1~ 7L #! /1

~rr~<­L;!,___. 21: · y · ::Zo ft;·

Re: LJB/SP- TF/13/12584- DOC/13/1 03971.- Lynton Freeman

Your acknowledgement- 12 June 2013, yam reply- I July 2013

Your letter to Mrs Cmmingham MP 27. 3.2014- re; our meeting.

I. With reference to the above and your letter to Mrs Cunningham. I thank you for

considering a meeting between us. However there was no intention to have you

become involved in supporting me against the National Australia Bank (NAB) in

recovery a flosses associated with my property. I hope you considered the situation

that my struggle arose out ofthe misapplication ofthe previous Government Drought

Scheme and NAB manipulation to obtain unlawfl.!l funds from the scheme and when

the opportunity arose to identify those funds and repay all concerned NAB failed to

do so and blamed the innocent customer.

2. I enclose a copy of the British Financial Conduct Authority, Final Notice showing

how they dealt with one of the account issues in my situation. NAB subsidiary

Clydesdale Bank was fined 8,904,000 pounds and ordered to refund 42,500 customers

where the bank knew since 2005 it had undercharged customers but did not inform

customers until20!0 and attempted to obtain funds fi·om the 42,500 customers as a

customer responsible mistake in their accounts.

3. The point of my letters was if I did not win in the courts or NAB settles with me your

Government is exposed to multi- million dollar payouts because of the misapplication

of interest subsidies by QRAA. The unlawfi.1l interest subsidy practices were when

NAB falsified their customers' accounts certificates and viability. Best practice

guidelines in the courts have not been followed by NAB and thus they win the

2

judgments by the prefened credibility of banks against customers' evidence. I gave

you sufficient infonnation to show these facts.

4. The banks' lawyers do not make business or public administration decisions they are

there to win for the bank any way they can against any threat. If you now choose to

try to settle the matters in the interests of good government, bm1k lawyers may hide

their ignorance with anogance and mm1ipulated power over third parties is their

preferred method of operation.

5. One way to settle the situation is I am pursum1t to Section 60(2) of the Bankruptcy

Act (1966) (Cth) entitled to a mediation or mbitration to be paid for by NAB under

the Bm1king Code of Practice of2004. Because the identification of the NAB

malpractices in my accounts only happened after 2004 and the identification of the

law of one manipulation of my being underchm·ged interest and unlawful recovery by

incremental deduction, in September 2013, with the last appearm1ce on those facts,

denied by NAB Solicitors in Affidavit and representation in the Federal Comt in

2012.

6. I have been through a tenible experience but you were informed for future tasks how

the misstatements were carried out and used. My correspondence to you commenced

a few weeks before the Commonwealth announced the Productivity Commission

Enquiry into Access to Justice. This enquiry will investigate some of my experiences.

During the process of the comis, contact was kept between myself m1d the

Commonwealth and the previous Attorney's' General (AG). I note your AG had an

interview with the Productivity Commission before the relevant Draft Report of 8

April, 2014 was published.

7. In Queensland after a meeting with Kerry Shine AG, myself m1d Mrs Cunningham,

NAB paid $32M plus to the Smart Queensland Program from the social support

section of their Balance Sheet. This corresponded with $35M lost to the Queensland

Government from Drought Assistance funding (Wardill, S. "Ministers agree to

disagree" Courier Mail, Brisbane April, 2005) after corruption had been identified in

the Queensland process partly highlighted by my contact, with then Federal Minister

responsible for the scheme and Commonwealth investigation, through in camera

enquiries. This contact proceeded for some time through the previous Liberal Member

for Forde and drew the situation to the notice of 5 Ministers portfolios ending in 2013

with an apology from the Attorney Generals' Department because of their inability to

3

help. There is now an access to justice inquiry where self- litigants being responsible

for an outcome that will aid Govermnent are being partly addressed.

8. In April, 2005 the Commonwealth handed the responsibility for the bad practices

back to the States and their rural authorities. This was highlighted in the 2008 Draft

Report into Drought Policy by the Productivity Commission where it stated the bank

customers could apply in Victoria for interest subsidy and be refused and receive

subsidy from the New South Wales authority. I believe the same applied between

Queensland and New South Wales where fanners owned land in both jurisdictions.

Queensland and Victoria allowed the bank to decide on receipt of the customers'

subsidy payment until in 2007 the judgment McDonald v Holden made a more

inclusive definition of viability and made QRAA responsible for the decision.

9. NAB had kept $85,000 in subsidies out of my accounts and advanced the fw1ds

themselves commencing August, 1996 and in April, 1997. I traded through August,

1997 where they refused to renew my accounts but continued to collect default

interest (admitted unlawful,28-9-2006) with renewal in December,l997, with further

unlawful interest thereafter (incorrect interest on Bills and unlawful default interest),

all without missing payments therefor creating wilful defaults by NAB causing

damage in unlawful sales and interest paid to NAB. However whilst QRAA had ruled

me viable a NAB requested consultant had not after the $85,000 had been withheld

from my accounts. If NAB had allowed my funds to come into my account on time

NAB would have been paid out totally by 2000. However they forced me to sign a

Mediation Deed and proceeded in the court on that issue. But after its signing they

falsified the accmmt values and the Bill Facility to bring my debt up to the value of

my facilities authority, $1,020,000. This has not yet been heard but a case commenced

with first judgment against me but not including the above evidence admitted in 2005

and NAB had not made its' admission of37 incorrect charges approximately 7

applying and 4 others presently being examined by the Australia Prudential

Regulation Authority with the wliawful default interest refund, redacted from the list.

10. As stated I was a self- litigant struggling on behalf of the Commonwealth and

Queensland Government and myself with unlawful acts avoiding legislation and good

practice. Some of these were made law through McDonald v Holden QSC [2007].

The viability law has still not been adequately included by QRAA as it now

commonly appears to be advancing funds iftbe farmers' Commercial Lenders gives

first security to QRAA. I have made submissions to Minister Joyce and these are

4

published in summary by "Crikey" regarding a fanner mortgage guarantee process or

similar.

II. However in 2003 in a report to the Commonwealth I was able to define the process

that would be used in the McDonald v Holden situation as the way the banks would

manipulate the Vegetation Management Payments of $180,000, to Fatmer Exit

payments of $180,000 and recover claiming the customer unviable, because QRAA

withheld the bank customers Vegetation Compensation of$180,000. This bank

process was implemented by QRAA hence the action was against QRAA specifically

Mr Holden. The process where the Bank ruled the customer unviable and received his

$180,000 exceptional circumstances exit package of $180,000 was exposed and the

viability decision was forced on QRAA.

12. In 2006 we had tried to settle the matters but when I attended Mallesons' Offices, the

bank solicitors. They were represented by a very aggressive young woman and as a 50

yeat· old man. It was not very wise to be in a situation of compromising myself either

by her intimidation or my resisting her aggression.

13. NAB had already charged me with stealing as a mortgagor, by falsifYing the evidence

before the court, when withholding cattle sale documents where the receivers had sold

some of the cattle I was accused of stealing, NAB having the court of appeal registry

incorrectly complete the court record book index to hide other evidence and the Police

involved resigned and the Chief Justice embarrassed (letter to Judge Robin showing

Police withholding evidence and an attempted fraud to steal cattle held in custody).

14. In the following hearings NAB solicitors made false accusations and denied issuing

false bank statements commencing in 1993 and including incorrect unlawful default

interest to make me vexatious and falsify debt claims. It was admitted between the

date ofthe vexatious hearing and judgment but the specifics withheld until II months

later and 5 more judgments all going the way of NAB.

15. In order to cover-up the NAB manipulation and corruption of the Exceptional

Circumstances Interest Subsidy Scheme, NAB used a Queens's Counsel, Robert

Douglas as Mediator, who later became Judge Douglas to inform me the bank held

control, when in fact they did not but I signed the Mediation Deed so I could get away

(being ill on the day) but they still refused to allow me to shift. Thus at least pmt of

the reason for falsifying my accounts was to control the conuption of Government

Interest Subsidies.

16. The process was to force me to Mediation and control the situation with incorrect

facts that my lawyers would accept and override me by manipulation.

5

(a) Defend the Mediation agreement in the court instead of the true facts of account

wilful defaults. By retaining sale of cattle evidence force me to a criminal action to

destroy my credibility.

(b) Force me to Bankruptcy by false representation of the account values and use that

process to stop further litigation lulling the judge into an incorrect judgment by

claiming I had stolen fi-om NAB.

(c) After the stealing was shown it could not have happened, and the 3 years of

Bankruptcy, make me vexatious to cover-up NAB false accounting to gain unlawful

interest payments and subsidies through my accounts, pennanently.

(d) During this entire period NAB retained control of my account pursuant to the

Secured Account provisions ofthe Bankruptcy Act 1966 (Cth) poorly understood by

Queensland Judges at the time.

17. The $35M was the reported fees the Government lost when the Commonwealth was

able to define bad NAB, QRAA practices. However there is at least another $300M

outstanding and at least 100,000, possible outstanding complaints against the

Govenm1ent and banks by fanners. With a possible 47.500 before 1999 and 50,000

thereafter in NAB and I would suggest class actions are possible. I enclose my

submissions to the Productivity Commission Access to Justice Enquiry.

18. I gave you sufficient information to show the NAB inconect facts and Registry

involvement and part of the material issued by the Commonwealth AG to settle the

matters. Where all processes were denied to exist by NAB in the courts and this was

suppmied by various Judges.

19. Unfortunately the Queensland Judiciary showed they could not tell the truth from

fiction when bank legal practitioners faced a self- litigant and refi.rsed to accept the

evidence of corrupt accolmting even when it was identified by Parliamentary

Committees published reports. APRA have recommended a bank internal settlement

process but that may need to be supported by additional process such as prosecution

against NAB representatives for falsifying bank evidence a criminal act (Section 126

ofthe Code) and vicarious liability.

20. However Wayne Carlson who was deeply involved in the NAB situation both as my

bank manager for part of the incorrect interest charges and State Manager for NAB

became a Director of QRAA and is now Chairman. The system in QRAA was

6

employees were able to handle any claims. Thus staff investigated previous employers

customers' accounts at will (eg. myself and McDonald v Holden.) Therefor I suggest,

any collection of material to confirm or deny the above in QRAA be collected by your

auditors on a statistical claims basis, where subsidies were refused, for Support of any

future Commonwealth litigation if Queensland is to offset litigation, fi·om unlawful

interest subsidy claims practice, where banks certified the debt and interest payable.

As you would realise from this situation ifi do not win in the courts your Government

could be liable for the banks, in QRAA customer compensation.

Yours faithfully,

L. Freeman. MBA (Adv.), Dip. REM, Dip. Ag. P 0 Box 1476, Gladstone. 4680 T. 0431 069 866 11 April, 2014.

Encl.

Submission 9- Productivity Commission Access to Justice Enquiry.

Submission (Supplementary) 12- Productivity Commission Access to Justice Enquiry.

A1mexure to Submission 12.

Financial Conduct Authority FINAL NOTICE to NAB Subsidiary Clydesdale Bank PLC 24 September, 2013.- showing bank admissions not made under the NAB "Enforceable Undertaking" of20 October, 2004 but occurring in the writers bank accounts.

Executive Summary

(i)This submission adapts the litigation between a secured creditor (bank) and customer where

mediation, supreme court civil actions, federal cowi bankruptcy, failed criminal charges and

conviction as a vexatious litigant is involved. Where during the process the bank was offered the

whole of its funds and refused to accept, then partial repayment and it refused even with bank Officers

setting the value.

(ii)It appears the banks preferred method of securing control of unlawful acts eventually admitted in

part was to force the customer to secrecy and obtain the whole of his book debt even when the bank

was aware it had acted unlawfully. During the whole of this process the bank continually used

unlawful economic power to force the customer to accept the banks' unlawful conduct. Eventually

this bank, misusing, court record books, compromising discovery in criminal prosecution, to try to

convict the writer, and misusing the charges, as a system to discredit him in all facets of his life and in

judicial process even after a failed criminal prosecution and the customer's discharge.

(iii)This bank has denied at all relevant times the compromise of their defendant customers' accounts.

Firstly after mediation appointing a substitute rural bank manager to his area to correct other

customers' accounts and follow up and correct unlawful processes used to skew those accounts. Then

denying discovery and hiding documents from courts and compromising appeal comi record books by

not attending the hearings and demanding their withdrawal of documents from the book after it had

been settled, with the Registrar obliging. In others submitting evidence ruled out as inaccurate by

previous courts and accepted as evidence in vexatious proceedings in the Federal Court of Appeal

without question even when not presented in the original action. All this after it had publicly admitted

after the vexatious hearing but before judgment and then appeal it had used incorrect default interest

and the material facts affected the writers' accounts. This is a clear indication of justice denied by a

major corporation using a court for another purpose.

(iv)By these methods this bank was successful in not having actions for unviable trading, refusal to

accept interest subsidies from a government scheme and unlawful interest charges levied and failure to

credit interest to an account to avoid section 96 of the Property Law Act 1974. The farmer I customer

had not missed a payment. Unreliable convictions for bankruptcy, vexatious prosecution and orders to

uphold the mediation deed are in doubt, because the bank admitted under the provisions of an"

Enforceable Unde1iaking" with ASIC and APRA , that default interest fees and other deductions. were

incorrect and the material facts applied to the customer's account were advised to APRA and ASIC

Following the bank refusing to settle actions between us quoting their reports to ASIC and ACCC as

sufficient to support their position. Forty- seven acts of inappropriate and/or unlawful acts with

customers' accounts were admitted including default interest.

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

(v)Statistically this bank after mediating with this customer realised it had the possibility of

compromise in all the accounts of one rural manager and this remedial action involved appointing a

reviewing bank manager to Gayndah, Queensland. Actually it had incorrect and unlawful deductions

in over 400,000 customer accounts and 47 possible refund heads to account holders amounting to an

estimated all up cost of over $IBn. Where incorrect claims for fanner interest subsidies and incorrect

viability assessments for an estimated 97,500 customers may be required to be investigated and

compensated. The easiest method to close the problem down was to totally destroy their customer's

credibility by criminal charge and conviction where the evidence, the bank had collected the sale

proceeds of some cattle stated to be stolen remained undiscovered, by receivers and their agents. Then

Bankrupt him when they knew his accounts were incorrectly stated to over claim the quantum of debt.

Thirdly when he pursued litigation to prosecute these points have him made vexatious against the

bank and its lawyers to control future prosecutions and disclosures.

The financial advantages for this bank with the disadvantages for the customer, government and comi

service are detailed hereunder:

Summary: Initial Loss to the writer $84,500 unaccepted deposits + unaudited incorrect interest -fees

$180,000 +and replacement sales and interest overcharged on the withheld deposits.

Sufficient losses to cover an audited debt and bank legal costs at trial.

Costs of mediation

Costs of travelling etc. estimated & legal fees

5,000

320,020

960,000 Loss of Property and recoveries at the time of sale (estimated)

Costs to bank, legal etc. (estimated)

Other Farmers accounts adjusted after mediation (write down)

$1,000,000

undefined

Other farmer account adjustments and compensation avoided

(approx. 25% of rural industry Accounts.) (intangible profit) no cost

Refund to Governments of overcharged interest etc now admitted

incorrect back to 1992 (estimate) $250M plus

Estimate saved refunds to farmers accounts after 1992 $100M plus

Profit for the Bank from asset sales and failed precedents CR $350.960M (estimated)

Costs to the bank DR $1 M. (est)

Loss to the writer DR $1,549,520 +

Disputed, refused deposits and substituted sales $264,500

Loss to Govt Revenue (Farmer schemes) DR$350.96 M (estimated)

Provision of court facilities and mounting criminal trial etc. $500,000 (Estimated)

4

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20!3.

(vi)Net result.

This bank used Government provided services valued an (estimated) DR $500,000 to obtain an actual

and intangible gain ofCR$350,960M (estimated) fortbe bank from alleged inappropriate use of

Government Schemes. That may have been corrected by the litigation or "Enforceable Undertaking"

follow-up.

This figure does not include losses to other fanners. The writer lost DR$1,549,520 without

adjustments for sale at undervalue and other entities property compensation for the bank retaining

their livestock sales. The banks power over small business was secured through misplaced

(Government) legislative and judicial enforcement allowing corrupting subsidy process.

(Opinion: The banks' power over small business (Dr Evan Jones)

newsweeldy.com.au/article.php'?id=760 and

Boule, Laurence "The dog that did not bark: mediation style" The ADR Bulletin vo/4 no. 2,

June 2001)

Partly adjusted and identified for investigation at Council of Australian Governments, Agricultural

ministers conference 2005. Partly identified in judgment McDonald v Holden [2007] QSC 54 Mullins

J (15 March 2007).

(vii)Adjunct;

As an adjunct to the litigation the writer requested the bank and its lawyers settle the dispute when the

bank admitted its corporate culture in March, 2004 after he had identified and informed the bank in

August, 2003 of the cultures existence. The bank refused the request and the facts were supplied to

appropriate authorities and the Bank was required to refund an estimated over ( 400,000) customers

and a total cost estimated at $1 billion+ with inclusion of individual account audits in its "Enforceable

Undertaking" 20 October 2004. These were similar headings to those commenced prosecution in the

Irish High Court against the banks Irish subsidiaries between 1998 and its' Officers' disqualifications

for 9 years commencing 2007 reduced in 2012.

Cviii)The decisions of the lawyers to prosecute this customer, cost the bank,

DR $IBn+ legal costs of$1M (estimated) in refunds and administrative costs for47 incorrect

charges.

CR Recoveries about $960,000.

DR possible future refunds now identified of$350 M (estimated)

The customer/ writer,

DR The customer writer $1,549,520 (banks sale recoveries+ legal costs)

5

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

Other entities affected by failed access to justice.

DR Other entities- $1M +for livestock+ bankruptcy creditors + other customers etc. =justice denied.

Government and Courts,

DR Government- for the provision of Comis, infrastructure, Police and legal aid- $500,000 plus.

CR Provisional estimated refunds available $350M from interest subsidy refunds incorrectly granted

and other subsidies provided to fanners and small business lost between 1992 (incorrect default

interest commenced), partly defined viability decision in March 2007 and lost taxation revenue.

(ix)This submission identifies how corporations move to have police enforce civil jurisdictions when

evidence is withheld of property sales in debt recovery operations to make a criminal complaint by a

receiver. This was addressed by the Queensland Government in 2008 with the Pro petty Law Act 1974

(Mortgagors' Protection Act) 2008. Produced in the Propetiy Law Act (Qid) at Sections 85 (I )-(1 0).

Where receivers appointed by mortgagees and mortgagees are required to give full information in

property sales.

(x)There has been 4 major areas addressed by Government after unfavourable court judgments against

the writer commencing with

• 2000; Inaccurate evidence of debt and failure to discover accurate bank statements by banks.

Parliamentary Joint Statutory Committee on Corporations and Securities' Shadow Ledgers"

Report 2000.

(Mediation under the ACCC and ASIC mediation agreement was ignored by the bank and not

upheld by the courts either in discovery of accepting evidence of incorrect accounting.)

• 2004; ASIC and APRA "Enforceable Undertaking" provisions were ignored in court actions

by the bank making the undertaking.

(The announcement of the default interest refund affecting the writers' accounts was made on

I 0 November 2005 and affected all judgments thereafter. However when the writer was forced

to return to court the bank denied the facts admitted and redacted its' web site, to withdraw

those facts from publication between the date of the serving of the application and the date of

the hearing, and the court found for the bank.

• 2004- Commonwealth Inquiry into Drought and Productivity Subsidies and in 2005 the

Interest Subsidy was reported as not being properly used and the Queensland Government lost

$35M in funding and some services to Centt·elink.

6

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

• 2008; Evidence and discovery inquiry by the Queensland Government and various acts

changed including the Property Law Act 1974 as above.

• 2008: Productivity Commission Inquiry identifies different implementation of Exceptional

Circumstances Interest Subsidies between states making the refunds.

• 2010: Senate Inquiry into the Judiciary and the Role of Judges and the Access to Justice

Inquiries.

(Best Practice Guidelines arc introduced but from the materials above are ignored by the bank

concerned. The Judicial Inquiry leads to Judicial Complaints processes).

Banking Competition is introduced as a method of stopping banks from causing customers to

exonerate the bank from liability before cooperation to shift accounts to another financier.

• 20 II- Commonwealth enacts legislation to make Vexatious Litigants orders apply to all

jurisdictions.

(One submission shows how a vexatious declaration against one customer complaining about

inc\')rrect bank statements, fees and interest charges (where the bank dispossessing him stated

in the court the facts may be true) caused violence as other customers reacted against their

banks to avoid the same fate.)

• Class actions commence under the Banking Code of Practice contract between customer and

banker.

• 2013. Court fees increase again. Productivity Commission inquiry into- Access to Justice and

the Costs of Access to Justice, viability and the Social Impacts of accessing justice.

This submission addresses the above with particular emphasis on failed discovery and failure

to act within the requirements of alternative dispute resolution by the bank with the failure by

the courts to accept evidence from self -litigants. Creating inequities between the parties,

government, judicial practice and other bank customers affected, by bad banking practice.

Some social impacts for the victims of inequity in the courts are identified.

7

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

Executive Summary

Contents

Introduction

CONTENTS

1. real costs of legal representation and trends over time

2. level of demand for legal services

3. factors that contribute to the cost of legal representation in Australia

Pages

3-7

8

9

10-14

14-15

15-18

4. whether the costs charged for accessing justice services and for legal representation

are generally proportionate to the issues in dispute 18-20

5. the impact of the costs of accessing justice services, and securing legal representation,

on the effectiveness of these services 20-22

6. economic and social impact of the costs of accessing justice services, and securing

legal representation

7. Social Impacts

22-27

27-34

8. impact of the structures and processes of legal institutions on the costs of accessing

and utilising these institutions, including analysis of discovery and case management

processes 34-36

9. alternative mechanisms to improve equity and access to justice aud achieve lower cost

civil dispute resolution, in both metropolitan areas and regional and remote

communities, and the costs and benefits of these

10. reforms to lower costs.

36-38

38-40

11. data collection across the justice system that would enable better measurement and

evaluation of cost drivers and the effectiveness of measures to contain these.

12. Attachments, Judgments- web publications 41

8

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

INTRODUCTION.

This submission identifies how the access to justice is manipulated by frequent users of the court with

credibility and influence over infrequent users and how the practitioners, court officers and judiciary

are influenced by cultures already identified as bad, but ignored. It identifies how the Australian

Competition and Consumer Commission and the Australian Securities and Investment Commission

cannot cope with the volume of complaints and how class actions are the most suitable system to deal

with the thousands of complaints not dealt with by any alternative dispute resolution process.

It goes further and identifies how the role of the codes of practice is negated by corporations and

identifies the use of"Enforceable Undertakings" and how this process should allow the

implementation of class actions irrespective of the admission of a corporate culture situation. The

impact of restricted access to justice has supported legal lockouts through failed discovery and

corporate cultures where themes involve failure to cooperate with investigations both internal and

external to protect profit and outsourced and unlawful acts. It raises the necessity for removing

indemnity in contracts in debt collection processes.

Qui- tam is raised as a method of Government to recover losses from failed publicly accessed schemes

that have been manipulated by corporations and others to benefit their interests at the expense of the

integrity and public benefit of the scheme. It raises the points associated with identification by

submission to the productivity commission of problems with legal interpretation as used by financial

institutions and supported by failed implementation (Submission 324). Then how judgments years

after identification of the possible problems are then unavailable to individuals to obtain access to

justice and suffer life destroying losses to possible corruptive processes by the ultimate beneficiaries

of the Government compensation schemes.

It raises incorrect debts used by bankrupting petitioners to force bankruptcies and how the account

falsifier is untouched by law and where discovery would allow proper identification of false facts in

bankruptcies and how this failure is encouraged by appropriate courts. This involves the falsification

of bank accounts identified by Parliamentary Committee but ignored by financial institutions to retain

incorrect judgments. Because these are facts involving simple legal decisions they are ignored by the

High Court allowing the financial institutions to retain the benefit of their incorrect facts presented to

obtain the benefits of the bankruptcy act and other acts. Access to Justice in a society dominated by

9

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTfVITY COl'vll'viiSSION- 13 June 2013.

corporations with profit as their motive can be discriminatory consequently customer justice not just

corporate citizen social responsibility should be part of the corporate bottom line.

1. Real costs of legal representation and trends over time.

1, 1 This section includes 1997 to today. In 1997 a major bank withheld deposits from my account

twice in one year amounting to $85,550. The background was the Government was paying interest

subsidies to farmers financiers and my accounts had been misrepresented to allow the bank to claim

maximum interest through the use of default interest. The material facts of this misuse have been

admitted by the bank concerned back to commencement of the scheme in 1992 and farmers and others

refunded back to 1999 after the bank was committed to an "Enforceable Undetiaking" by Australian

Securities Investment Commission (ASIC) and "Australian Prudential Regulation Authority" (APRA)

but I have no personal knowledge of an account refunded or paid including damages where the default

interest was used as leverage.(93AA, ASIC Act Vic National Australia Bank Ltd lvfedia release 04-

343 017029136 20 October 2004).

1.2 The issue being that when the bank realised it could by withholding my interest subsidy force me

to a category "B" credit rating and increase interest by nearly the same amount as default interest they

pursued this path by advancing me the funds I would normally obtain from interest subsidy. They

issued a demand for the first advance of the funds for $30,000 but this was after the second refusal to

accept of$54,550. The bank refused to accept my subsidy and refused to accept my viability

assessment even though the Queensland Rural Adjustment Authority (QRAA) informed the bank I

was viable. To allow me to transfer my accounts I was forced to mediation and the bank officers gave

incorrect facts to the mediation of which the incorrect material facts are now publicly admitted but

redacted in from the banks web site February, 2012. (www.independentaustralia.net/ .. ./national­

australia-bank-redacts-website-)

1.3 I was ill at the mediation diagnosed with delta- horse toxin possibly created by Organophosphate

contact. This has been analysed in Boule, Laurence "The dog that did not baric mediation style" The

ADR Bulletin vo14 no. 2, .June 2001. After mediation the bank appointed a new rural manager to

Gayndah and he contacted all effected customers and controlled the situation. The mediation costs

$5000 and the bank obtained an agreement for full payment of my debt as they presented it on or

about 21 December 1997 after mediation. On 5 February !998 the bank claim it would not support my

account until that date was proven false as they accepted interest for the twelve months they said they

IO

ACCESS TO JUSTJCE ARRANGEMENTS- PRODUCTJVJTY COMMJSSJON- 13 June 2013.

would not. By the time the matter was appealed in 2001 I had paid $170,000 plus mediation costs and

the account problems had still not been presented to the court. This style of shutting down corporate

unlawful acts by using their power at mediation is encouraged by some legal practitioners. (!'he banks'

power over small business (Dr Evan Jones) newsweekly.com.aularticle.php?id=760)

In this instance the bank was able to turn a now found and admitted incorrect accounting and possible

fraud into a recoverable debt a common legal process and a previously defined misuse of legal and

court process. (The principle in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156

ALR 169)

In order to support the claim of a recoverable debt the bank staff and practitioners acted to defend and

pursue every legal avenue against the writer. This process caused the bank extraordinary funding, the

original losses through failure to accept my interest subsidy including the cattle sold to compensate

was $180,000.

(a) The bank had to identify and appoint a new bank manager to a closing branch (Gayndah) to

control and shut down other customers' situations before they realised the facts.

(b) They had to force the matter to court and bankruptcy, appoint a receiver and pay his costs and

a bankruptcy trustee and appear in over 40 court appearances and trials.

(c) In 2004 the bank concerned was forced into an "Enforceable Undertaking" by APRA and

ASIC with individual account audits. I had applied to the bank directly to have them settle

with me because I had identified their corporate culture in 2003 but they refused stating the

facts had been investigated by ASIC and the A CCC. Their reports had been written by their

lawyers and by the bank staff lawyer both had been shown incorrect by bank public

admissions.

(d) Neither the ACCC or ASIC continued because the Parliamentary Joint Statutory Committee in

to Corporations and Securities (PJSCCS) had conducted an inquiry into "Shadow Ledgers"

bank statements in litigation and the Australian Bankers' Association had agreed to mediate

the circumstances this bank refused to mediate even though judicial interpretation of section

60(2) of the Bankruptcy Act allowed a commercially contracted mediation or arbitration to

proceed after bankruptcy. This included the Banking Code of Practice.

(e) The letter to the Judge shows how the Supreme Court of Appeal Registry by their method of

completion ofthe Court Record Book aided the bank and its receiver to bring a criminal action

against me for stealing as a mortgagee for cattle owned by others on my property. Even though

the bank had processed the funds of the sales and been advised of the sales and the receiver

11

ACCESS TO JUSTlCE ARRANGEMENTS- PRODUCTlVlTY COMMlSSlON- l3 June 20[3.

had collected the information of ownership, they manipulated the evidence in the couri by not

presenting the livestock sales accounts where the receiver had sold the other entities livestock

and some as unbranded. I was acquitted and one person with knowledge of the ownership of

the livestock stated to me before trial. 'The trial is a waste oftime". The costs for this situation

fell to me, legal aid and the Department of Public Prosecutions (DPP) and Police. All Police

involved are now resigned, the original bank manager and the Deputy Registrars involved and

the Bankrupting Judge, the Mediator is deceased, the original bank Queen's Counsel no longer

practices and the bank second counsel and other judges all deceased and the banks' solicitor at

mediation was not practising at the time of trial.

(f) In !989 the cattle owned by some of the entities had been ruled as owned by them in the

Federal Co uri and this bank also knew. The Federal Court refused to rule on the cattle in the

Bankruptcy but in order to tell the Bankruptcy Judge of the circumstances of the criminal

action they endorsed on the bottom of the Certificate of Debt recoveries under the criminal

action. The Judge found me bankrupt

*by extending an out of date petition for the bank,

*without discovery and knowledge of my true debt,

*without ruling on the livestock ownership including those identified by the Federal Court

years before,

*without accepting evidence of a sale at undervalue in common law but

Using Section 85 (I) of the Property Law Act 1974 (Qld) which was not pleaded.

(g) In Bankruptcy the Court refused to accept my evidence on any matter and the Bankruptcy

Trustee received $30,000 from the Inspector General to defend the judgments. This being a

wasted payment because the PJSTSC bad ruled on mediation in my bank accounting and the

problems had continued after mediation both continuously and separately, including the failure

to put appropriated interest to my accounts after mediation, possibly avoiding section 96 of the

Propetiy Law Act l966 so the bank could issue a demand.

(h) By this time the bank and its receivers and the bankmptcy trustee had manipulated my

defending or making application in the Mediation, the Supreme Court at Trial and Appeal, the

District Court Criminal Complaint, the Federal Court in Bankruptcy, Appeal and Annulment,

and the High Court where discovery and accounting were ruled as not important enough to

make a judgment.

• The Government had supplied Judiciary and Court facilities.

[2

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 20!3.

• Bank lawyers both internal and external refused to disclose their costs but the bank may

have given indemnity to other bankruptcy trustee's lawyers, the receivers and paid

witnesses and so had I.

• $30,000 had been given to the bankruptcy trustees by the Inspector General to defend the

bankruptcy.

• Criminal Prosecutions had been brought by Police and agistment paid to holding properties

on cattle held as evidence and DPP had launched an unsuccessful prosecution and the

witnesses had been paid by the DPP.

• My other creditors at bankruptcy had lost their funds and a company I was director of have

lost their assets because the Police held onto their cattle for 2-3 years. This company's

bank accounts were with the bank concerned, and it by telephone call, and followed up in

writing, transferred the moneys between my accounts and the company for cattle sales and

this is shown on the bank statements. The bank wanted to sell the company's assets and

part of that was forcing me to bankruptcy after pressure to mortgage the assets failed.

(i) We proceeded in every court with fi.uther manipulations of evidence some of which have been

advised to the Chief Justices of the Supreme Court and the Federal Court but in 2005 the Bank

and the trustees made an application to make me vexatious against them. By then they had

realised it was my evidence that caused some of the refunds and audit on their accounts so I

wrote to the Chief Justice of the Federal Court and advanced how the incorrect evidence in that

action would be negated in the future because of the corporate culture and its system of

covering up corrupted accounts being investigated. Once again the court ignored my evidence

of corrupted accounting but the bank, trustee and its practitioners did not inform the court of

its public admission on I 0 November 2005 judgment was 22 December 2005 of the incorrect

default interest charged to my account and how it was used to put pressure on me at mediation

and not debited to the account until after mediation.

G) In the appeal of the vexatious orders the bank practitioners used the incorrect certificate of

debt from the bankruptcy trial as evidence again knowing or ought to have known it was

incorrect and refused as evidence before the bankrupting judge. The court found against me

and the high court refused the special leave. However I had detailed the corruption of a

judgment in the District Court where the bank had refused to have sales of cattle given to them

under the civil action for ownership following the criminal trial for cattle stealing. Once again

the facts of the cattle sales were investigated but the sale dockets showing the bank and

receiver knew who in truth owned the livestock were not used. l subpoenaed those sale records

in another action and they were covered up by the presiding judge by r·efusing to hear the

l3

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

matter at that time and allowing the bank the date for hearing they demanded and the

remaining police involved were stated to have resigned.

(k) The vexatious orders statutorily extended to the Supreme Court but the judge made an order

restricting them to one action. Attached is the banks (Enforceable Undertaking, admission of

regulatory necessity to correct accounts a list of the refunds made to customers and a published

account of how the bank redacted its web site to hide the default interest and certain bank fees

from the court and Government inquiries

(I) Also enclosed is pmt of a judgment in QCA 329/06 on 1 September 2006 where the bank

refused to acknowledge the default interest and bank statements were incorrect and where the

evidence of other falsities was denied by their practitioners. The court accepted their

submissions on law which may also be found incorrect by investigation.

(m)On the 28 September 2006 the bank admitted the facts of the default interest refund and

announced payment only on the refund not on the following unlawful or illegal acts possibly

covering up their liability.

(n) The bank has still not identified or admitted the true facts in the court system and the last

actions were last year where the Federal Court made it clear that the bankrupting judge could

be liable if they gave me a fraud at trial judgment and informed the bank and myself to settle

the matter. The bank is still refusing to settle without going to court.

(o) The true costs of this banks' behaviour is now available for analysis and I would consider all

costs, both their internal and legal representatives, Government and mine and other persons

effected such as the owners of the livestock who as yet have not received their compensation

should be placed under this heading of real costs of legal representation.

(p) All because the bank did not want to pay the $180,000 they had lost me unlawfully pursuant to

the interpretation in McDonald v Holden (2007] QSC 54 (15 March 2007) dealing with

viability, interest subsidy and Native Vegetation compensation. A submission was made to the

Productivity Commission Inquiry into Native Vegetation Compensation and this judgment

accepts the material facts stated there where the misuse of viability rulings would be used to

allow banks to sell up eligible customers and receive the funds and a further $180,000 from the

Farmers Exceptional Circumstances Fund after unlawful accounting.

( q) Letters outlining the processes of corrupting each judgment are available and can be provided

if required. All judges and some government authorities have been informed and in appropriate

situations some legislation has been changed or introduced.

14

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

2. Level of demand for legal services.

2.1 As can be seen from above the demand for legal services may be forced by individual

corporations but access to justice is denied by judicial interpretations and practitioners not being

correct in presentations. (Submission 36 to the Inquiry into the Judiciary and the Role of Judges,

Senate Legal and Constitutional Committee 201 0). The refunds caused under this banks Enforceable

Undertaking has identified the necessity for Class Actions to at least make corporations honest in

some instances with vulnerable customers. Some of these 47 refunds were over $100M and it could be

that the total refunds and costs associated therewith would exceed $1 Bn and estimated over 400,000

accounts. This bank refused to mediate under Australian Banking Industry agreement with ASIC and

ACCC and the courts failed to enforce it. Consequently claims under "Shadow Ledgers" and

Enforceable Undertaking audits have gone unnoticed against individuals, legitimising class actions

where these claims overwhelmed ASIC and ACCC resources.

2.2 It is noted in all the court appearances, the banks' practitioners have not admitted or

acknowledged the facts of the account inaccuracies and in fact denied their existence in all actions

between 10 November 2005 and today. Five of the refunding headings including debit tax, fees and

default interest were all advised to authorities by me from my accounts and included after

investigation but still denied in the courts by the bank concerned and accepted by the judiciary.

2.3 As can be seen from the facts at "I" the Bank concerned is a frequent user of the court and

demands preferential evidence acceptance and registry processes on their requests and how much

these factors when considered have contributed to legal demand? In such a situation it is hard to deny

the banks' corporate culture has not continued into the courts and until today. Where it is preferred

policy to force every dispute to court and then pressuring government to legislate the banks' required

changes to allow them the future outcome. eg. Fanners' exceptional circumstances grant where it has

been recently approved to be available to bankruptcy and consequently secured creditors. (Submission

to the Senate Economic Inquiry into Exceptional Circumstances- Bankruptcy Act Amendments-20 II.)

2.4 The themes of the corporate culture have been identified by APRA and admitted by the bank.

Thus the demand for legal services has been advanced by corporations not accepting their

responsibilities under alternative dispute resolution (ADR) or their customer contracts such as the

Banking Code of Practice or the Best Practice Guidelines. In the case of criminal actions corporales

and their appointees continue to increase avoidance of their responsibilities by using ADR. (The Hon

Paul de Jersey AC, Chief Justice, presentation to the Queensland Law Society Symposium 2013 at the

Brisbane Convention and Exhibition Centre 15 March 2013).

IS

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

3. Factors that contribute to the cost of legal representation in Australia.

3.1 One common practice contributing to the cost oflegal representation is the use of the system to

force submission through financial capacity to pay. This is escalated by the courts , where:

(a) practitioners are given preference and credibility in legal argument,

(b) presentation of evidence and

(c) preferred credibility of the contents of evidence.

(d) In instances with frequent users of the court this has become a culture where all credibility

goes to frequent users' practitioners' advantage.

(e) Consequently many dispute resolution processes have been misused by the overzealous

desire to win by some practitioners.

3.2 The failure of discovery and correct documents and accounting presented to courts. (PJSCCS

Shadow Ledgers Report, NAB "Enforceable Undertaking" 20 October 2004, and refunds list). To

the writers' knowledge no admission and refund or recognition of unlawful acts has been made by

the bank required to audit accounts under its enforceable undertaking referring to "Shadow

Ledgers" four years before or cowt judgments.

3.3 Both failure to discover and incorrect evidence create repeated appearance in courts with those

deceived often being victimised by the other parties, the registries and judicial practice. In the

above initial action the quote was $50,000 total expected value $55,000 but actual costs after

monthly call overs $170,000 to trial and $50,000 for trial and appeal estimated similar value, but

the writer then appeared for himself all up costs to November 200 I $270,000. Banks costs are

unknown. Bank advantage is retaining the interpretation variation between Victoria, Queensland

and New South Wales on Farmer Interest Subsidies including incorrect viability definitions

favouring the banker. This was spread over 25% of Australia's' rural market as stated by that

bank.

3.4 Other factors include,

a. distance to representation and courts,

b. cooperation between parties,

c. desire to settle

d. corporate policy demanding disputes be filed in the court,

e. desire of corporales to use third parties to escalate disputes.

16

ACCESS TO JUSTICE ARRANGEtvlENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

f. desire of financiers to force the factors of the dispute to their advantage so that all

disputes become recovery actions and consequently given evidentiary preference to the

financier. The P JSCCS " Shadow Ledgers Report showed the method of corruption of

accounts irrespective of the responsibility of the financier to issue correct records of

debt and this has continued using actual bank statements.

g. The practices of corporales and others to remove evidence from their publicly available

information.

h. The practices of corporales in alternative dispute resolution processes to use pressure

that has been regarded as legitimate, but later admitted after the corporate has won

judgments based on that pressure to be an illegitimate practice (using incorrectly

debited interest including default interest by financiers and incorrect viability

assessments.

1. Methods of charging out time to increase earning capacity of legal staff.

J· Representation at call overs by barristers for agreed orders.

k. Judicial failure to have knowledge of the law involved.

I. Failure to discover by manipulation of representation.

m. Judge Shopping.

n. Failure by legal representatives to use the Best Practice Guidelines both State and

Commonwealth and established practices when dealing with self-litigants.

o. Failure by the Judiciary to enforce Best Practice Guidelines in dealing with legal

representatives against self-litigants and weaker parties in anyway.

p. Use of incorrect evidence from previous actions known by the corporate but not

declared in court, to make victims of their legal practices abuse,

vexatious. http://www.aph.e:ov.au/Parliamentarv Business/Committees/Senate Committees?uri=Jegco

n ctte/completed inguiries/2010-13/access to iustice federaljurisdiction/submissions.htm 5 and 6)

q. Legislators changing the law to suit major corporales eg. Fanner exceptional

circumstances grants of $180,000 could not be included in bankruptcies previously.

But now an incentive is available to secured creditors to overcharge accounts with

Non-Accrual interest charges (not taxable but debited to the disputed account) to

receive the

$180,000. http://www.aph.gov.au/Parliamentary Business/Committees/Senate Comm i

ttees?url=economics cUe/completed inguiries/20 10-

3/bankruptcv_amendment 201 l/submissions9.htm. Pursuant to the Bankruptcy Act

1966 (Cth) these funds should be divided 50% interest and 50% capital. When does the

secured creditor apply the subsidy 50% to its taxable income? Secured creditors will

17

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

not discover current account values or debits and credits and the courts do not enforce

the practice. Consequently courts force up the costs of recoveries and aid legal policy

breaches against Government when a secured creditor is non-compliant.

r. Secured creditors attribute all costs against the defending patty at their choice of cost

and representative charges even when the secured property holder succeeds. This does

not create any incentive for honest cost effective legal representation by after judgment

fees, legal firms.

s. Secured creditors provide indemnity to their appointed receivers and sometimes

bankruptcy tntstees. The Commonwealth Inspector General provides his funds to

bankruptcy trustees in legal actions so there is no incentive for trustees to investigate

and provide proper services to other creditors against secured creditors' accounts. Thus

incorrect debt values are allowed to continue in bankruptcy regardless of the

responsibility under the Bankruptcy Act 1966 (Cth) for secured creditors.

t. Generally the greatest contributor to legal costs is the behaviour of the practitioners,

court officers and judiciary. Monthly call overs can be replaced by agreed orders and

restricted representations thus forcing agreement avoiding court appearances.

u. Mediation processes can be committed to legislation with in built safeguards to restrict

costs to the value of the dispute. This is discussed further under the following heading.

4. Whether the costs charged for accessing justice services and legal representation are

generally proportionate to the issues iu dispute.

4.1 In the litigation described above the financial institution could have settled the matter in 1997 for a

write down ofthe account a taxation deduction for $180,000 but used the value of the incorrect

account to force mediation and used that as legitimate pressure. It's proffered value at mediation

being less deposits for interest refused $84,550 approximate adjustment for incorrect charges and

interest undefined, livestock sold to replace the refused deposits and false charges approximately

$100,000.

4.2 It is described by Professor Boule on the admission ofthe mediator (a judge) that he stated "the

bank had the upper hand" and I was at a disadvantage. But it is admitted by the bank that its

accounts were incorrect through unlawful, interest and fees charges and by Judgment in McDonald

v Holden QSC 54 (15 March 2007) the law at mediation was incorrect in its definition of viability

the banks definition now being substituted by my viability inclusions in the mediation definition.

The mediator's words related to the bank claiming if I did not sign the mediation they would sell

18

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

me up, which was also wrong in law. I had not missed a payment so Section 96 of the Property

Law Act 1974 may have applied.

4.3 Thus the costs to enforce the legal process are known for the writer at $220,000 plus and the bank

expected to be over $1M.

4.4 Patily because the bank wished to avoid the precedent of applied legal principles in Past Refund

Activities, the incorrect viability judgment, the incorrect use of false accounting by secured

creditors in mediations, Certificates of Debt in litigations and Bankruptcy. The important issue

being the bank concerned did not refund alleged deceived customers for the whole period of the

deceit in some instances only 6 years) but another bank has admitted and refunded accounts for the

whole period (9 years) of its possibly defi·auded customers (Walsh Liam, "Bo to refund $46M as

old bugs disrupt bank system" Courier Mail Brisbane, 16 August, 2013.)

4.5 Consequently the secured creditor outlaid over $1M to avoid an initial write down of about

$230,000 and ownership of its responsibilities. Against an initial account write down of about

$230,000 and no viable recoveries considering it sold the secured properiy for less than its legal

fees. This being necessary to bankrupt the customer and discourage identification of its incorrect

practices also part of its corporate culture admitted and identified in the Walsh article. The

Queensland Government addressed some of these practices at Section 85(1)-(10) of the Property

Law Act 1974 in2008.

4.6 Thus legal costs and representation are disproportionate to the value of the property involved.

Further the bank representatives denied any legal costs were debited to the account but bank

records showed some were, obviously discrepancies in accounting existed.

4.7 Summary: Loss to the writer $84,500 +unaudited incorrect interest -fees $180,000+

Costs of mediation 5,000

Costs of travelling etc. estimated & legal fees 320,020

Loss of Properiy and recoveries at the time of sale (estimated) 960,000

Costs to bank, legal etc. (estimated) $1,000,000

Other Farmers accounts adjusted after mediation (write down) undefined

Other fam1er account adjustments avoided (approx. 25% of

rural industry Accounts.) (Intangible profit) no cost

Refund to Government of overcharged interest etc. now admitted

incorrect back to 1992 (estimate) $250M plus

Estimate saved refunds to farmers accounts after 1992 $100 M plus

Profit for the Bank from asset sales and failed precedents CR $350.960M (estimated)

Costs to the bank DR $1 M. (est.)

I9

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 20 I3.

Loss to the writer DR $1,549,520

Loss to Govt Revenue (Farmer schemes) DR$350.96M (estimated)

Provision of court facilities and mounting criminal trail etc. $500,000 (Estimated)

Net result.

This bank used Government provided services valued an (estimated) DR $500,000 to obtain an actual

and intangible gain of CR$350,960M (estimated) for the bank from inappropriate use of Government

Schemes unidentified and/or may have been corrected by the litigation or "Enforceable Undertaking".

This figure does not include losses to other farmers.

The writer lost DR$1 ,549,520 without adjustments for sale at undervalue and other entities properiy

compensation for the bank retaining their livestock sales.

The Productivity Commission Draft Report into Drought Aid at EC Interest Subsidy interpretations.

The banks power over small business was secured through misplaced (Government) legislative

and judicial enforcement for corrupting snbsidy process. (Opinion: The banks' power over

small business (Dr Evan Jones) newsweekly.com.au/article.php?id=760.

4.9 As an adjunct to the litigation the writer requested the bank and its lawyers settle the dispute when

the bank admitted its corporate culture in March, 2004 after he had identified and informed the bank

in August, 2003. The bank refused the request and the facts were supplied to appropriate authorities

and the Bank was required to refund an estimated over ( 400,000) accounts and a total cost estimated at

$1 billion with inclusion of individual account audits in its "Enforceable Undertaking".

5. The impact of the costs of accessing justice services, and securing legal representation, on

the effectiveness of these services.

5.1 The impact oflegal representation must be cost effective for a pariy. ln these circumstances as

detailed above the cost of access to representation gave the secured creditor unmeasurable advantage.

It is an undeniable fact that courts give advantage to individual practitioners on aspects of law and

fact. As seen from above practitioners do not always follow the Best Practice Guidelines,

Commonwealth or State and the reason those Guidelines were introduced therefore is abandoned. As

stated previously the Cost of enforcing the will of the Secured creditor was immaterial. Their need

was to force a (White Industries situation) where the real dispute was negated by a legal process that

20

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMJVIISSION- 13 June 20I3.

made the secured creditor a debtor in pursuit. The purpose for this approach is explained as the banks'

corporate culture where the first theme relates to maximising profit from any situation and the second

is to avoid detection for any wrongdoing and in fact more effort is put into covering up the facts than

would have been made to satisfy the problem. This is amply demonstrated here so the access to legal

support is very limited by resources and these can be lost in protracted situations where the judiciary

accepts the submissions from corporate 1!\wyers against all others.

5.2 Therefore the experience and credibility of the legal representation is upmost in a situation

where a corporation has a culture of the above themes. The second theme is described as Factors

where the Bank admits it: (Freeman v National Australia Bank [2006] QCA 329 (06/0219) Brisb

McMurdo P Jerald JA Holmes JA (1109/2006) at

a. failed to discover documents, [38]

b. to discover documents at the incorrect time but at a later date to the advantage of the bank [39]

c. to issue incorrect bank statements, [ 40]

d. to give incorrect information to the courts. [38][39][40][41][43].

But denies these material facts before the judiciary and because they are represented by a practitioner

receive untold credibility for incorrect facts, now admitted. This puts the judiciary and the system at

serious risk of losing its credibility and it is accepted generally that the failed factors are ordinarily

part of bank litigation, which may be practice for banks generally in dispute. ("Shadow Ledgers"

Inquiry).

Consequently the impact in this situation of legal representation was lost funds and recoverable funds

to the secured creditor, and loss of my business, home, my own family's security and other entities

livestock. In any action involving a bank in Queensland most Judges appointed are Judges who bank

with that bank or have represented it as a practitioner previously or hold shares in that bank.

In this situation the effectiveness for all parties including the court service of [ega[ representation has

been nil. Lawyers are not all knowledge persons and consequently can- not foresee the ultimate result

of litigation to either pariv. Thev do tend to present their personal feelings at a time appropriate to

them.

The bank paid more in legal fees than it recovered when it could have obtained more than its' equity

value at mediation and by considering the present claims for falsifying my accounts, by using the

themes of its corporate culture. I lost my life's work, home, family home and children's security with

21

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

other entities being affected through incorrect sales of their livestock by the banks' appointed

receivers and to incorrect facts presented to legal processes. Consequently legal representation is only

as effective as the mediator, arbitrator or judiciary allow it to be.

Other bank customers all 400,000 obtained unforseen refunds from forced audit of incorrect and/or

unlawful bank practices. The outstanding feature, being the banks' outlay of $1M to stop the possible

detection of the use of unlawful default interest, in farmer subsidy schemes, for the whole 18 years of

the scheme and its application even now and the incorrect farm viability decisions until2007.

6. Economic and the social impacts of the costs of accessing justice services, and securing

legal representatiou.

6.1 These impacts are the most appropriate for justifying class actions and how they support

individual claims against major corporations that misuse their power or operate with corporate

cultures that foster unlawful acts by seeking to turn them into profit. They also support the use of qui­

tam actions where legal firms can proceed against entities in breach of legal policy and recovering

these should be extended by agreement with government on the fruits of that litigation.

6.2 This situation is unusual in that some of the effects have led to social impacts beyond normal

I itigation outcomes. I have tried to counter any representation banks have made to obtain inequitable

legislative outcomes against factual outcomes. Thus where the judiciary has failed to give judgments

for myself I have advised the public or legal policy and other issues to the appropriate authority for

follow up. Some of these have made fruit and that is reflected in out- comes produced hereunder.

Obviously there will be further outcomes I am unaware of for other parties. None of these outcomes

would have occurred if the bank had not forced me to lose my financial reserves. Thus they are

impacts out of accessing justice services.

6.3 Listed outcomes to date.

6.3.1 Writer:

1998- The bank at mediation continued to create further ruses.

2000-All financial resources were lost after judgment in 2000 including income and home.

At the same time the PJCCS advised the banks accounting in litigation was flawed and the ACCC

completed a document to request mediation from the bank. This was refused.by the bank even when

they admitted some intentional failures to credit funds on time.

2000-The writer became a self-litigant.

22

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

2000-He was charged criminally, on receiver's complaint, evidence withheld by the bank and

receiver's agents to cause the complaint.

2001- Appeal from original action lost.

2001 --Discovery was refused in the Federal Court.

2002- Bankrupted after self- representation.

2002- Criminal action- writer found not guilty and discharged.

2003- Receivers obtain a split judgment on livestock stated to be stolen.

2004- Federal Comt appeal and annulment,

2004- Bank admits corporate culture and refuses to settle with the writer and others.

The writer advises APRA of the facts of bank corrupted accounting for his court actions.

2004- APRA causes the bank to an "Enforceable Undertaking" and the bank commences refunds.

2005- Bank identifies the writer's account corruptions and applies to make him vexatious. The writer

discovers the hidden documents from the criminal hearing and hearings to claim other entities

livestock.

2006- found vexatious and appeal fails but the bank uses the incorrect evidence and it is accepted by

the judges.

The bank denies their identified facts of the accounts in every court, but admits the material facts of

the account corruption after the hearings on 28 September 2006.

2007- Bank refuses to mediate under the Banking Code of Practice.

2008- Various actions are unheard by the courts relying on incorrect facts to deny the hearings.

Queensland Government implements an inquiry into bank discovery processes and finds the process

flawed and changes the Property Law Act with the (Mortgagor's Protection) Act 2008 to statutorily

force disclosure. This may stop receivers, banks and agents from falsifying criminal action and

profiting by non-disclosure.

20 I 0- Bank refuses to settle the actions even after the true facts have been admitted on accounts and

livestock sales and manipulated evidence.

Writer's submission at 36 of the published submission.

The Senate conducts an inquiry into The Judiciary and the Role of Judges and Access to Justice.

Legislation to conduct judicial responsibility is introduced and the Best Practice Guidelines are

published.

2012- In the Federal Court the bank denies the facts of the incorrect accounts. It then redacts it

website to hide its liability as it did not pay refunds for over 6 years for default interest.

2013- Another bank publishes it refunds for incorrect interest in accounts and that is to the date of the

first mistake nine years out.

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ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

6.3.2 Writer's legal practitioners

The legal practitioners claimed over $250,000 in charges and costs.

*The first at mediation $5000 plus mediator $3000.

*the second $170,000,

*the third and subsequent over $75,000.

*the defence finance in the criminal trial came from Legal Aid.

6.3.3 Secured creditor (bank)

1997- Mediation costs, fees and bank fees to bank demand, $15,000 approx.). Solicitors then involved

in the (White Industries affair with Abuse of process for bringing an unsubstantiated action as a

defence) and did not appear again.

1998- The bank has had the same solicitors but various counsel and estimated costs over $1M.

*All recoveries were available to the bank and the receivers and were manipulated to be within

$50,000 of the original debt. By refusing offers for the propetiy above the value the receivers sold it

for.

*That debt is now shown and admitted to be incorrect since the first year of the relationship between

the bank and the writer, and the bank refuses to settle.

*This will force the matter back to court.

6.3.4 Secured creditors'-legal practitioners.

First Solicitors and mediation admitted costs $15,000 (approx.)

Second solicitors and subsequent costs were denied to be charged to any of the writers' realisation

account.

Second solicitors estimated costs over $1M.

6.3.5 Bankruptcy Trustee.

The bankruptcy trustee was involved with the bank in continuing litigation without investigating the

Secured Creditors' account. Consequently he paid legal fees but applied to the Inspector General for

relief and received $30,000 (approx.).

6.3.6 Bankruptcy Trustees'- legal practitioners

The bankruptcy trustee maintained the relationship with the same Solicitor after he become a separate

practitioner and thus had two solicitors and one counsel.

Inspector General produced $30,000 to those practitioners.

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ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

Other legal expenses considered to be covered by the bank.

6.3.7 Receivers- appointed by the secured creditors.

All receivers costs and accounting are covered by the mortgage except those charged to the writers'

account which are not identified by the process.

This has been corrected by the application of Section 85(!)- (!0) of the Property Law Act 1974 (Qld)

where details of the receivers and bank relationship are required to be produced.

6.3.8 Other entities

One of the greatest financial losses occurs where debt collection processes are manipulated by secured

creditors facilitating through their accounting their own ends. Consequently the bankruptcy hurt some

monthly account holders and other secured creditors and employees.

The entities, agisting cattle on the properiy where the bank and receiver charged the writer with

stealing and did not acknowledge the sale of their cattle, then withheld the records of the sales from

the court processes, both criminal and civil.

6.3.9 Other entities -legal representation

All other entities were forced to legal process and were disadvantaged by the withholding of the

evidence of the receivers selling their livestock and so lost those and others that were held by the

Court as evidence in a civil action for ownership.

6.3.10 Courts

The Courts generally have lost credibility and the effects on individual judges and their credibility

with the legislature and others. It is imporiant to note the only entities making any money out ofthis

whole situation are the lawyers, who have continuously kept these matters before the courts without

admission of their clients' own identified and published material facts that affect the outcomes against

a self- litigant. Perhaps being:

A. outside of legal ethics,

B. against practice guidelines,

C. contrary to the best practice guidelines, and

D. contrat·y to the judgment in James Laferla v Birdon Sands Pty Ltd (1998)

NTSC (20 August 1998)

6.3.11 Queensland Government

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ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

Following the admission by the secured creditor and refund of default interest some of which applied

to interest subsidy and business subsidy accounts, no announcement or enforcement procedures have

been identified where a refund of the unlawfully collected subsidy by the bank, has been returned to

either the Queensland or Commonwealth Governments. (Wardill, Steven "Ministers agree to

disagree", Courier Mail Brisbane. 5 Apri/2005.) This being effective because the bank collected

ordinary interest and forced customers into its' desired actions when previously unlawful default

interest was added to principle for interest charges on which subsidy is claimed.

In 2001 the writer made the Chief Justice aware of the incorrect evidence in his debt pursuant to the

incomplete facts disclosed and the PJSCCS "Shadow Ledgers: inquiry of October 2000. This has been

renewed and expanded with the publication of the incorrect default interest charges by the bank

concerned under its past refund activities arising from identification of its auditing of individual

accounts pursuant to its "Enforceable Undertaking" with ASIC and APRA.

Settlement by the bank at mediation forgiving the $240,000 now identified as a bank write off

situation would have saved the Queensland Government inquiries into discovery and legislative

changes, overheads and fixed costs and variable costs for over 30 appearances in the Supreme Court

and 5 in the District Court and 3 in the Court of Appeal and investigations by Police (all of the

investigating Officers in the first instance have now resigned.)

Estimated value cannot be accurately completed because of unpublished relationship between public

service fixed and variable costs.

6.3.12 Commonwealth Government.

The Federal Court appearances are over 20 with 20 appearances in the Federal Court of Appeal. The

Federal Court also now has a problem of credibility as the failing to give the writer discovery of his

bank accounting records and the bank manuals was shown to be ineffective. The Chief Justice being

advised of the incorrect charges associated with his account in July, 2005.

A. By the Shadow Ledgers lnguiry and the refusal by the secured creditor to mediate the account

value and incomplete and incorrect bank statements under the ABA agreement both before and

after bankruptcy. This was agreed by the Australian Bankers Association with the ACCC and

ASIC where the ACCC supplied a sample application to the bank concerned and this was

supplied.

B. In 2005 the same prosecuting bank admitted the common facts and unlawful charges to

accounts of some of complaints of the writer but did not publish the details, discover or admit

the details until26 September 2006 where 6 vital court appearances in both single judge and

court of appeal jurisdiction had been heard. In each of these circumstances the practitioners

26

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- l3 June 2013.

failed to admit the facts that were pleaded and refunded to other customers on 28 September

2006. A vital point in litigation against self- litigants.

C. Bankruptcy proceedings and all other actions could have been avoided by the Judge at

Bankruptcy permitting discovery and/or the bank admitting the facts of the incorrect

accounting and incorrect quantum of debt being charged to the writer's account and failure to

credit appropriated interest payments to allow issue of demand.

D. All costs both fixed and variable after publication of the "Shadow Ledgers" Inquiry and

agreement to mediate un-provided and incorrect bank statements must lie with the bank

concerned. Perhaps in circumstances such as these where the bank irrespective of the law or

independently identified facts continues prosecution of a customer to bankruptcy and beyond

the Government should have the right to ask such a regular user of the court for reimbursement

on admission of facts denied in courts. In this instance affecting bankruptcies since 1982 and

including legal policy concerns;

• because the bank concerned misused government supplied courts, staff and facilities,

• caused damage to individuals and services to victims who may never replace their lost

lives, including suicides, and cause extraordinary outcomes, including

violence. http://www.aph.gov.au/Parliamentarv Business/Committees/Senate Committees

?url=legcon ctte/completed inguiries/20 1 0-

13/access to justice federaljurisdiction/index.htm Subs 5-6.

7. Social Impacts- Community Impacts- individual impacts- family impacts.

7.1 Community Impacts

A. It has long been known but unsaid the biggest social impact in access to justice is the judicial

decision or alternative dispute resolution agreement.

B. There are several social impacts under this heading that are major in fact and law.

B. I This litigation shows that financial institutions will firstly appropriate unlawfully

gained funds to their own use.

B.2 They will seek to avoid responsibility tl-om these facts at management and board level

by using economic power to negotiate at government level for ad vantage.

B.3. Financiers will use alternative dispute resolution and the comt system against

customers and government and employ whatever methods they can to win any dispute.

27

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

B.4 They will not make restitution in full where it can be avoided and will not admit and

resolve disputes against individuals even where they have made an "Enforceable

Undertaking" to do so.

B.5 In the instance of legislative interpretation and government funds they may seek to

employ lawful or unlawful means to obtain the most beneficial outcome for the

institution. Irrespective of the intention of legislation and their customers' financial and

personal wellbeing,

C. The productivity commission interim report into government drought strategy of 2010 details

at page 143 the difference in interpretation of the Commonwealth Interest Subsidy and drought

program between states and that accepted applications in one state were refused in another.

C.! In the circumstances above the writer found himself facing a false viability assessment

and this was confirmed by the Queensland Rural Adjustment Authority and by his

detailed reply. The whole of the bank process in alternative dispute resolution and

appointing a rural bank manager to Gayndah Queensland appeared to be to correct

customer accounts and thus isolate the situation.

C.2 This control continued with unfavourable judicial decisions in Victoria and Queensland

until the judgment McDonald v Holden [2007] QSC 054 Mullins J 15/03/2007

including all assets and income in rural viability assessments. Previously where

consultants had no expertise in one area others could be ignored for viability purposes.

Eg. An agronomist may not include, timber royalties, livestock income, on property

contracting income and that would skew the result. When this was taken up with this

bank in reply the bank ignored the facts and continued to use the incorrect report.

C.3 This variation in legislative interpretation had the social impacts associated with

forcing thousands of Queensland and Victorian farmers in particular, off the land. It

allowed banks, cmdit creating capital and to rearrange their credit facilities irrespective

of scheme intentions and legislation.

C.4 Other bank defences included,

a. failed recognition in bankruptcy of the PJSCCS "Shadow Ledgers "inquiry

agreement with the Australian Bankers Association with ASIC and ACCC to

mediate incorrect and unsupplied bank statements in litigation. The social

impact being that many bankrupt fam1ers and small business pet·sons and their

creditors were not receiving the benefits of this financial institutions

"Enforceable Undertaking'' when refunds were appwpriated but redacted from

28

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

the web site, stopping claims other those refunded.

http :1/wvlW .independentau stral ia. n et/20 12/in dependent -australia­

journal/investigations/national-australia-bank-redacts-website-to-hide­

customer-refunds/

b. This undertaking had identified about 47 incorrect charges to accounts with the

account audit process being prompted by advice to APRA of the financial

institution unlawfully deducting,

* debit tax,

* various account keeping fees,

* unlawful default interest,

* unlawful and excessive charges,

* not following taxation legislation, and

* and bankrupted and persons with unfavourable judgments are forced to return

to court to obtain account remediation even when these account adjustments,

showed they would no longer be bankrupt or the judgment unfavourable.

c. This style of behaviour in litigation gives rise to necessity for class actions and

the use of the Bankruptcy Act 1966 (Cth) where pursuant to Section 60 (2)

arbitration and mediation may be available between commercially contracted

parties, where the contract includes remedies such as the Banking Code of

Conduct arbitration between the customer and the bank.

d. Courts are ignoring this interpretation of the Bankruptcy Act creating

unnecessary anxiety and social impacts on those affected by Bankruptcy

including the bankrupts creditors, family and associates. In the instance of

professionals bankruptcy may disqualify them from their profession ..

( www. in depen den !australia. net/tag/] vnto n-freeman)

D. Individual Social Impacts

0.1 One of the aims of access to justice may be to provide an adequate service without

placing the litigant in financial peril. By this process,

a. the litigant may be able to retain their assets and livelihood irrespective ofthc

outcome.

b. litigation for the individual quoted above involved,

* failure to purchase the correct food to treat an illness,

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ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

*failure to afford some medications for a scientifically diagnosed physical disease that

affected his ability to function,

* being a victim of bank financial blackmail, and the restricted income from that

process,

*knowing and witnessing the suicide of persons known to him because of the same

(now admitted) corrupt acts he was prosecuting,

* losing his livelihood,

* losing his home,

* losing his property,

*his life's work and associates,

*being homeless, and

*when the financial institution requested, Centrelink refused his application for

assistance.

* being locked out from other professions and occupations he was qualified for,

* not settling with or having the bank deal honestly with his accounts at any time

commencing 1992_ (The bank admitted incorrect default interest charges to that date)

*when the bank did settle with others, because of his identifications of the corrupting

of government schemes.

c. Facing social, humiliation, and isolation and the loss of natural justice by having the

agents of the bank make unfounded criminal complaints against him after Court

Officers were misusing evidence procedures to create evidence and circumstances.

* The first affect being police intrusion into honest business dealings to try to find

something unlawful,

*knowing the bank wanted to destroy him, businesswise, personally and physically

by having him convicted for an offence when the same bank made the transactions

between entities accounts and where taxation was identified on the result of those

transactions.

* having the bank's practitioners support his application for discovery then realising it

would give him an advantage with their solicitors not appearing at a hearing and their

counsel appearing, objecting to his affidavit and discovery being refused.

* A judge upheld this decision and consequently the person was bankrupted.

*The property in the criminal action belonged to other entities and the judge in

bankruptcy extended a petition out of time and refused to accept his evidence on any

30

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

defence including the third party propetiy and where funds had been in appropriately

applied to his secured creditors account to issue demand and commence court actions.

*All of these factors create a situation where this organisations corporate culture of

not admitting fault unless it is the lesser of the liabilities and in apparent

circumstances seek to obtain a financial advantage even from those circumstances by

not correctly refunding the customers effected and then redacted web sites to hide

these facts. ( www .i nde pend e nta ustra lia. net/ .. .In at ion a 1-a uslra I ia-ba 11 k -redacts-website)

D.2 Impacts when facing situations where judges could desire judgments to be maintained to

protect their reputations and not to show they were incapable of detecting truthful

persons before them and accepting incorrect evidence and facts tl·om practitioners

opposed to self-litigants.

a. In these circumstances where a bank has used an action to enforce a mediation deed

made after the bank has acted unlawfully, it is seen as a bank enforcing its debt.

b. This falls into the category of banks bankrupting and charging someone with a

criminal offence to exonerate and cover up their own unlawful acts.

c. This in itself creates social impacts on the individual and his family beyond normal

unpaid debts. Especially where the bank concerned had refused deposits from third

parties and advanced the funds those deposits would have covered and used those

advances to force legal process. Then force the process when funds are provided to

settle the account absolutely with illegalities included but they refuse to allow the

person to shift without exonerating the bank in writing.

Where no access to justice is clearly identified

* in instances where bank statements and accounts are clearly incorrect and other

persons face the same prospect of being made vexatious for pursuing the same facts, it

is shown these impacts are shown to turn individuals violent

(access_to justicejederaljurisdiction/submissions.htm 5 and 6)

*to protect their families from identified unjust acts against themselves,

* where persons opted to suicide at the bank managers' door,

*held the bank manager at gunpoint and demanded retum of their mortgage,

*the bank was forced to withhold legal action and deal honestly with their customer.

3[

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

03 The system is skewed to defuse applications for hearings against self -litigants and

those suing, the heavy users of the court system. The social effects from this practice is

creating community disadvantage and as above in cetiain instances violence.

0.3.1 In the litigation above is stated 4 major situations that affected the public and specific

bank account holders that the litigation revolved around but remains unheard.

a. Whether mediations can be overturned was heard and found in favour of the

mediation deed however the facts of this litigation now lends itself to a different

approach where a secured creditors account in this mediation may be incorrect in

bankruptcy . This is challenged by Professor Boulle in 2001 "where the mediator

stated the bank had the upper hand" to the writer at mediation. Justice de Jersey CJ

in 2013 was critical of mediations, discovery and criminal action processes

(http://archive.sclqld.org.au/judgepub/20 13/dj 150313.pdf).

b. Bankers withholding government scheme deposits from farmers' accounts and

using that process to lend further funds to the same farmer and then using that

process to sell the farmer up, clearly not in the spirit ofthe government fanner

scheme. But forcing the farmer to mediation to exonerate the banks' behaviour.

This viability approach went to trial in McDonald v Holden [2007] QSC 054

Mullins J (5.3.2007) and was found by the Comi in favour ofthe fanner.

The social impacts were put amongst the community during the period of the first

unheard evidence between 1997 and 2007, with identification of banks' and

government schemes using this unlawful practice in the Productivity Commission

in the Native Vegetation Inquiry until2007 and beyond.

c. The 'Shadow Ledgers' Inquiry by the PJSCCS was produced one week after

judgment in 2000 and identified that banks were using this accounting to

disadvantage customers in dispute and the bank admitted it had not properly

credited funds to the writers' accounts between trial and appeal. This bank refused

the ACCC generated mediation practice and refused to admit these facts before the

court of appeal against the writer a self-litigant.

In the following bankruptcy process discovery of the missing bank statements

under "shadow Ledgers" was denied by the court. This circumstance was therefore

not investigated and had the social impact that the bank concerned refused to

cooperate with other effected person and gave conflicting accounting versions

between state and federal jurisdictions in defining bankruptcies.

32

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

To lessen the social impact of these acts by the bank concerned was addressed by

the Queensland Parliament by changing the Property Law Act 1974 (Qid) at

Section 85 (1)-(10) and making the mortgagee and receivers responsible for

discovery of documentation in receiver sales when tl1e receiver is appointed by the

mortgagee. This was titled Property Law (Mortgagors Protection) Act 2008.

This change also reflected the circumstances where the receiver, the bank and their

agents withheld evidence from the court that affected a case for stealing as

mortgagor when other entities property had been sold that showed the mortgagors

innocence and the banks' influencing a civil action to obtain the other entities

property.

The social impact is that access to justice may be denied by various methods

including incomplete police investigations and those willing to withhold evidence

from comts. These practices affect all parties not just those before the court but

others and practices as shown above which hopefully will have a major impact on

all social impacts associated with debt collection.

d. The facts of incorrect quantum of debt produced by a secured creditor were

produced to the Federal Court after the bank "Enforceable Undertaking" on 20

October, 2004. Ail applications by the bank were granted by the courts irrespective

of the facts and the ASIC and APRA undertaking had no effect afforcing the bank

to admit the true facts ofthe account inaccuracies in the court process. There were

6 actions in various jurisdictions that raised these facts in all the actions the bank

protested the accuracy of the accounts and the court found for them. However the

last opportunity to appeal to the High Cowt was in September 2006 and the bank

admitted the facts of the incorrect default interest that affected all stages of the

litigation on the 28 September 2006.

The social impacts commence with the bank not refunding litigants in previous

actions or admitting any default in court actions even where between the dates of

advice to the Stock Exchange was 10 November 2005 and admission of the

common material facts and refunds on the 28 September 2006. The courts do not

want this happening but will not overturn previous judgments easily even when it is

written in the judgment that the default interest and bank statements were incorrect

after bankruptcy by a secured creditor where the creditor is responsible for the

account. Then when this was returned to court the bank concerned redacted its

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

website to hide the facts of the refund even though its Enforceable Undertaking

continued until20!1 of thereabouts.

Consequently this refund for incorrect interest charges is a corollary with the

identification of incorrect interest payments by another bank and they have

refunded their customers for the whole period of the mistake going back 9 years

and where the default interest overcharge was only refunded to 6 years. Further

social impacts arise out of this situation with the problems associated with the bank

customers knowing their bank may be deceiving them and paying record profits to

its shareholders and executives.

e. In these instances it may be stated that access to justice is denied because of the

familiarity between the judiciary, regular practitioners and the regular user of the

court. One thing to consider is that in some jurisdictions it is a fact that judges who

previously represented a bank or are customers of a regular litigating bank are

appointed as the presiding judge. This may arise because the jurisdiction is in

competition for the regular users, actions and this practice encourages business. It is

important to note that this practice was in action before the recent increases in comt

fees and that the previous Chief Justice of the Federal Comt identified legal costs

for similar actions in the Federal Court were $250,000 opposing the Victorian

Supreme Court as $25,000.

8. Impact of the structures and processes of legal institutions on the costs of accessing and

utilising these institutions, inclnding analysis of discovery and case management processes.

8.1 This impact can be summed up as an admitted corporate culture where the themes are

• The profit motive or pe1jormance culture and its skewing of the 'business partnerships'

balance between risk management and decision making: and

• A close management of information flows that discourages the escalation of issues of

concern to the board or to relevant external parties. (APRA Report 23.3.2004, Page 72)

8.1.1 This banks lawyers following instructions directly from the bank CEO bank replied they

had provided rep01ts to APRA and ASIC and refused to settle matters after correspondence

showing the factors effecting litigation between us would be shown unlawful. These were:

A. Failure to discover documents including bank statements,

B. Discovering documents at a time disadvantageous to the opponent bur advantageous to

the bank.

34

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

C. Issuing incorrect documents including bank statements.

D. Providing incorrect statements to courts.

8.1.2 The writer then contacted ASIC and APRA and the bank were forced by APRA pursuant

to Section 93AA of the ASIC Act to an "Enforceable Undertaking" to complete audits into

individual accounts. These audits showed incorrect deductions of 47 items to accounts

involving an estimated over 400,000 accounts and estimated total cost exceeding$! Bn

with refunds for incorrectly deducted for Government Fees , Interest, default interest, Bank

Fees, taxation and incorrect account values for the purposes of Government Subsidy

Schemes.

8.1.3 None of these incorrect deductions have been paid to any customer with court proceedings

to the writers' knowledge. This litigating bank had ignored the "Shadow Ledger" Inquiry

to settle matters between the parties and now was self- confessed and making refunds to

parties that were eligible under "Shadow Ledgers" but still refused to acknowledge any

incorrect accounting in the writer's accounts in any court.

8.2 This bank has now put at risk the credibility of every court facilitating its actions. It is rapidly

moving into exposure as an institution that relies on incorrect evidence and the failure of courts to

support processes, of discovery and case management. This banks' solicitors resisted any

applications to case management.

In the Federal Court even after the "Shadow Ledgers" Report the court denied discovery of

documents against this bank. The issue being that the solicitors agreed certain bank statements

should be provided but at the hearing the solicitors did not appear and the banks' counsel refused

to accept the writers' affidavit showing the agreeing letter and discovery was denied even when

the parliamentary report on "Shadow Ledgers" was in evidence and the writer gave specific

evidence of the missing documents.

8.3 Clearly this bank was following the factors the Corporate Culture identified by APRA. The value

of supplying the requested evidence was negligible but it was vital to the writers' bankruptcy and

the material in this section identifies the interaction. Court policies avoiding discovery for

defendants in both the Federal and State jurisdictions, therefor have played absolutely

disadvantaging personal and litigating situations.

• In the State Jurisdiction documents of the sale of cattle by the banks' receivers were

withheld to cause the writer to be charged with stealing those same cattle.

35

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 20I3.

• In Federal jurisdiction the refusal of discovery of bank statements where some bank

records allowed the bank to claim an incorrect quantum of debt and bankrupting the writer.

8.4 Disadvantages of self-litigants facing a banks well known legal firm means the credibility of the

defending self-litigant is not considered and so his case is down to when the bank makes a rare

mistake. As is shown above this banks' corporate culture has infected couri processes and

irrespective of the costs involved these failures to discover were clearly aimed by ruthless legal

process to firstly charge and convict for stealing and secondly to bankrupt a customer where the

customer had identified the bank had incorrectly dealt with Government Schemes.

8.5 Queensland has changed section 85(1 )-(1 0) of the Property Law Act 1974 to correct this

problem through legislating to support judicial discretion where person's liberiy is put at risk by

undiscovered property sales records. A contracted part of most mortgages is responsible for their

appointed receiver's records of account and a motigagor indemnifies the receiver and this is legal

policy continued by the High Comi.

The Federal Comi is yet to address the problem of a corporate culture such as above being

identified and its themes infect court process and how to deal with the problem of the corporation

retaining incorrect judgments.

8.6 In this situation the costs of the bank providing discovery were negligible but the failure to provide

spell catastrophe for their opponent and the costs extended to legal aid at the criminal trial, legal

costs for 5 civil actions for livestock ownership with applications to discover the missing

documents in the Magistrates and District Comito the Cowi of Appeal. Then in another action

they were subpoenaed and discovered 5 years later. The bank has still not settled the incorrect

judgment and defended a fully resourced action for malicious prosecution and this was successful

when the relevant documents were withheld from the comi by the Registry on bank request.

9. Alternative mechanisms to improve equity and access to justice and achieve lower costs

civil dispute resolution, in both metropolitan areas and regional and remote communities,

and the costs and benefits of these.

9.1 In this instance and in many instances alternative dispute resolution has been misused to advantage

the secured creditor but is denied when it favours the account holder and courts will not force the

matters to mediation or arbitration. These practices forced the writer to bankruptcy, facing

criminal charges and allowed an Enforceable Undertaking to be ignored when the secured creditor

was aware its' account in Bankruptcy was incorrect. Its' representatives denied all knowledge of

36

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

incorrect accounting in the court at the same time it was admitting and refunding 47 incorrect

account values, 7 of which applied to the writer. These amounting to estimated costs of over $IBn

and affected over 400,000 customers.

9.2 Access to Justice and alternative dispute resolution is thus ignored by that secured creditor and its'

disregard for its' customers life and others is ruthless to the point where it may be said "its

prefeJTed outcome is the customers' demise". Consequently no dispute resolution process is

insulated ti·om dishonesty or any court from judicial failure and in the case of powerless self­

litigants, just another customer to be denied his compensation and replacement of losses and

generally disregarded. Where honesty at the original mediation would have resulted in an

appropriate outcome, this institution used mediation and its' unlawful account value to force a

proposition now enforced by judgment. In this instance academics have placed at least part of the

inequitable dealing on the statements of the mediator. This brings into consideration the behaviour

of mediators and arbitrators and gives rise to the argument they should come under suitable

mediation and /or arbitration legislation.

9.3 OTHER PERSONS IN THIS POSITION SUCH AS OMBUDSMAN HAVE A PATH TO

SUITABLE LEGISLATION TO GUARANTEE FAIRNESS IN DECICION. However it is fair to

say that where frequent users of these services exist such as banks, the consistent decision making,

by an unnamed person other than the appointed Chairman in APRA and the appointed

Ombudsman, in the Financial Ombudsman service, can lead to disputable decisions by those

statutory organisations.

9.4 It is the writer's experience that the Banking Code of Practice is ignored by some banks as a

method of guidance to decisions and it remains to be seen how it has affected business, since being

the originating contract between the bank and the customer, complained of in the Storm mediated

settlement with one major bank. Where bankrupts made applications for refunds of their lost

investments potentially unlawfully appropriated by that bank. It is sufficient to say that individuals

would have found it impossible to fund such cases and it could be expected denied justice for the

same reasons as stated previously.

9.5 Of the 47 refunds after the Enforceable Undertaking of2004, only one is now the subject of class

action. However it is a fact that thousands of court cases, lawyers and judges were so blind that

they did not even consider incorrect bank accounting to obtain the banks' desired results in

litigation. Clearly all of the refunds may qualify for class action.

a. The writer received legal aid for the criminal case only.

b. The Shadow ledgers inquiry proposition ohm-provided and incorrect bank statements and

quantum of debt may be actionable in Class Action.

37

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 20I3.

c. The 7 items that applied to the writer's account may all have been actionable under class

action but only one is being pursued.

d. It is noted the Bank of Queensland has admitted a possible fraud in interest calculations and

appropriation to accounts and is now refunding all customers affected over 9 years. Advice

whether any persons where litigation has been involved are affected and refunded or the

account adjusted is yet to issue.

e. It is clear from the violence generated from the threat of a bank using incorrect debt values and

manipulating accounts to default and dispossess cttstomers with immunity that these practices

by lenders are now causing community wide social effects. It is for that reason alone all

alternative dispute resolution processes need to be available but justice needs to be seen as

well as done. The social impacts of the perceived unlawful activity would outweigh secured

creditors court applications and may satisfy class action requirements.

10. Reforms to lower costs.

10.1 Properly enforce alternative dispute resolution procedures and practitioner's liability with

opportunities to put unsatisfactory resolutions aside in a cooling off period is essential to

mediations. (Judgment McDonald v Holden).

10.2 Some consent orders and call overs can be produced by correspondence and regulation in the

writers' case this would have saved $5000 per month over a two year period for call over

representations.

10.3 Affidavits of debt need to carry a provision for immediate recall to court where subsequent

incorrect values apply. Thus equity provisions need to be inserted in the Bankruptcy Act 1966

(Cth) regarding the value of secured creditor accounts. Clearly these accounts are operated out of

the Bankruptcy Act by the secured creditor consequently provisions excluding that account should

apply when the secured creditor is the applicant for bankruptcy.

If legislation and contracts through courts give enforceable rights in bankruptcy to secured

creditors then it must be that the right to reject and identify incorrect evidence must exist for a

bankrupt. The secured creditors' Enforceable Undertaking audits, admissions and refunds, and the

Bank of Queensland refunds, give rise to better legislation to stop the manipulation of accounting

evidence by secured creditors to obtain a desired result. Or the fundamental rule in law that judges

expect their facts from evidence to exist absolutely in all courts when they first examine witnesses

or evidence becomes extinct.

10.4 Vexatious Orders should not be imposed to force closing down of litigation when any evidence

between the parties is a material fact and subsequent evidence may show the facts to be incorrect.

38

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- 13 June 2013.

Incorrect evidence should not be rewarded, community effects from bankruptcies is bad enough,

without the added reward to false evidence producers of being immune from further prosecution.

10.5 It must be considered that the admissions under the Enforceable Undertaking of20 October

2004 were still being made in 20 II. Perhaps when an enforceable undertaking or other statutory

requirement to audit accounts is imposed specifically the date for liability of the subject

organisation in civil matters should commence from the extinguishing date of the enforceable

undertaking. That enforceable undertakings requiring audits of accounts should include provisions

that in the case of any person being convicted and the facts of the audit show unlawful acts

affecting that person they are immediately reimbursed, exonerated and compensation applies.

Australian law demands that bank account records are correct and the responsibility is on the bank

concerned to accurately keep fhe account and make and provide accurate statements.

10.6 Access to Justice is constantly a moving target however improvements such as the requirement

the judiciary impose best practice guidelines into litigation may create some even handedness

across practices. A much improved system of legal discipline needs to be implemented that stops

the use of incorrect facts unconditionally by practitioners against self- litigants and generally to

complement best practice guidelines and when such occurs there is a statutory remedy beyond

judicial reach such as suspension of the practitioner immediately.

10.7 Australia needs to recover the loss of credibility in legal process through adequate access to

justice. Shortcuts such as disclosing criminal defences before court hearings will only help justice

where prosecutions have complete evidence and force matters to appeal and extra provision of

resources. It is very doubtful that prosecutions will be dropped because of disclosure of defence

and in fact it is shown that Police Forces around Australia may adjust evidence provided to

circumstances when required to gain certain convictions. Justice is no longer the intent of

prosecutors and courts, gaining the conviction, truth in conviction are being lost to dubious

methodologies.

10.8 Judges could make immediate orders to alternative dispute resolution after any judicial process

would solve the problems associated with frequent users ofthe court avoiding the results of

Government Inquiries including bankruptcies to decide at least evidence issues to canvass

similarly to court of appeal record books but including discovery. It is noted that this bank

representatives did not appear at the record book hearing but later requested the Registrar remove

certain documents which the Registrar did and skewed the appeal hearing in favour of the bank.

The High Court refused to hear the issue.

39

ACCESS TO JUSTICE ARRANGEMENTS- PRODUCTIVITY COMMISSION- I3 June 2013.

11. Data collection across the justice system that would enable better measurement aud

evaluation of costs drivers and effectiveness of measures to contain these.

No contribution.

[The Commission notes that Mr Freeman provided a number of attachments and other information to support this submission]

40

Financial Conduct Authority

FINAl NOTICE

To: Clydesdale Bank PLC

Firm Reference Number: 121873

Address: 40 St Vincent Place

Glasgow

Strathclyde

Gl 2HL

Date: 24 September 2013

1. ACTION

1.1. For the reasons given in this notice, the Authority hereby imposes on Clydesdale

Bank PLC (Clydesdale) a financial penalty of £8,904,000 for breaching Principle 6

of the Authority's Principles for Businesses (the Principles).

1.2. Clydesdale agreed to settle at an early stage of the Authority's investigation.

Clydesdale therefore qualified for a 30% (Stage 1) discount under the Authority's

executive settlement procedure. Were it not for this discount, the Authority

would have imposed a financial penalty of £12,720,000 on Clydesdale.

2. SUMMARY OF REASONS

2.1. The penalty relates to Clydesdale's conduct from April 2009 to April 2012 (the

Relevant Period). Clydesdale failed to pay due regard to the interests of its

customers and treat them fairly after it discovered an error in how it had

calculated some of its customers' mortgage repayments.

2.2. In January 2005, Clydesdale implemented a new mortgage repayment calculation

system for its customers with variable rate mortgages. There was an error in this

system which caused monthly interest and capital payments to be calculated

incorrectly whenever there was an interest rate change. Clydesdale did not

discover the error until April 2009.

2.3. Clydesdale identified over 42,500 customer accounts that were affected by the

calculation error. Approximately 25,000 of these accounts were capital repayment

mortgage accounts and approximately 17,500 were interest only mortgage

accounts.

2.4. The error had the greatest impact on customers with capital repayment mortgage

accounts. The majority of these customers made repayments that were

insufficient to repay their mortgages by the end of their agreed terms (i.e.

underpayments). Clydesdale considered that it was generally entitled to recover

the capital shortfalls that had accrued on these accounts. These customers

therefore faced increases in their monthly mortgage repayments to correct their

mortgage payment and make up for the shortfalls caused by Clydesdale's error.

2.5. Following discovery of the error, Clydesdale took steps to investigate the nature

and cause of the error and to ensure that all future repayment calculations would

be accurate. However, Clydesdale took too long to complete these steps. This

delay prolonged the impact of the error, significantly increasing the amount of the

capital shortfalls which Clydesdale generally sought to recover from customers.

In the interim, Clydesdale continued to send its customers mortgage account

statements which incorrectly suggested that if they continued making the

minimum repayments on their accounts, their mortgages would be repaid by the

end of their mortgage terms.

2.6. Clydesdale accepted that, in certain circumstances (in particular where customers

had acted to their detriment in reliance on the accuracy of Clydesdale's

repayment calculations), it was not entitled to recover the capital shortfalls from

its customers. However, the communication exercise that Clydesdale

2

implemented to notify its customers of the error was unclear and unfair and gave

rise to a significant risk that customers who should not have been required to

cover the capital shortfall were not identified. In particular:

(1) Clydesdale's letters to customers who had made underpayments failed to

make clear that, depending upon their individual circumstances, they

might not necessarily have to cover any capital shortfall arising from the

calculation error. On the contrary, the letters gave customers the

impression that they had no option but to cover the shortfall in full.

(2) Clydesdale's explanation in the letters did not make clear that the capital

shortfall was solely caused by Clydesdale's calculation error.

(3) Although the letters gave customers a telephone number to call

Clydesdale's customer services team to discuss their repayments, there

was a significant risk that customers would not call as they were unaware

that they might not necessarily have to cover their capital shortfalls.

(4) For the approximately 8,000 customers who did call, Clydesdale's

customer services team was not instructed to enquire proactively into

customers' individual circumstances and similarly failed to make it clear

to all customers that they might not necessarily have to cover their

capital shortfalls. Instead, they only assessed customers' individual

circumstances if the customers themselves indicated that they may have

suffered detriment.

(5) Where the customer services team internally escalated cases for

assessment, the assessors rejected claims for redress on the basis that

there was no evidence of customer detriment (in circumstances where

enquiries of the customer had not properly been made) or applied a test

which was too strict. It agreed in some cases not to collect the shortfall,

but in other cases it rejected claims where redress ought to have been

made (e.g. by Clydesdale writing-off all or part of the capital shortfall).

(6) As a result of the above, there was a significant risk that customers who

should have received redress did not receive redress. The Authority

considers that most customers who made underpayments would have

spent the 'savings' they made each month as a result of the error (but

did not know about). The Authority therefore considers that it would

have been unfair to require those customers to make good their capital

3

shortfalls. Clydesdale paid or credited £3,638,448 in redress to affected

customers. However, the final capital shortfall for underpaying

customers was £21.2 million in total: had 'Clydesdale carried out a clear

and fair communication exercise, it is likely that the sum paid or credited

in redress would have been far greater.

2.7. Approximately 22,000 accounts had capital shortfalls as a result of Clydesdale's

error, 84% of which were capital repayment mortgage accounts. In addition there

were approximately 21,000 accounts that were affected by the error but which

did not have capital shortfalls, 68% of which were interest only mortgage

accounts. Whilst the impact of the error was greatest for customers who had

capital shortfalls some of whom faced substantial increases to their monthly

mortgage payments when the error was discovered, some customers who did not

have capital shortfalls may also have suffered detriment. Clydesdale's

communication exercise should have made clear to these customers the differing

ways in which the error may have affected them and the possibility that they may

have been entitled to redress, but it failed to do so.

2.8. Clydesdale also failed to appreciate that over 5,000 customers who had repaid or

remortgaged their accounts by the time that the communication exercise was

rolled out may have also been adversely affected by the error. It therefore did

not contact these customers.

2.9. The Authority views these failings as particularly serious for the following

reasons:

(1) Customers relied on Clydesdale to calculate the correct amount of their

mortgage repayments, which are typically a household's largest monthly

outgoing.

(2) Due to the time taken by Clydesdale in investigating the calculation error,

notifying customers of the error and adjusting their repayments, the total

capital shortfall on the approximately 22,000 accounts that underpaid

increased substantially to £21.2 million at its peak.

2.10. Clydesdale's failures therefore merit the imposition of a substantial financial

penalty.

2.11. Clydesdale accepts that it should have dealt with this issue differently. In order

to demonstrate its commitment to treating customers fairly, Clydesdale has

4

voluntarily decided to provide redress over and above that which the Authority

would have compelled it to provide, by writing off the capital shortfalls accrued by

all customers who underpaid as a result of the error. These customers will be

automatically compensated without having to participate in a further

communication exercise. This approach is welcomed by the Authority.

Clydesdale has also agreed to contact all other customers affected by the error to

give them an opportunity to seek compensation if they believe they have suffered

detriment or, if they still have a mortgage with the Firm, to ask for a return of

previous overpayments (meaning their mortgage balances will increase) (see

further from paragraph 6.22 below). This will include some customers who were

excluded from the original communication exercise because, for example, they

had already repaid their mortgages.

3. DEFINITIONS

3.1. The definitions below are used in this Final Notice:

(1) the "Act" means the Financial Services and Markets Act 2000;

(2) the "Authority" means the body corporate previously known as the

Financial Services Authority and renamed on 1 April 2013 as the Financial

Conduct Authority of 25 The North Colonnade, Canary Wharf, London,

E14 5HS;

(3) "Clydesdale" means Clydesdale Bank PLC, trading under both the

Clydesdale and Yorkshire Bank brands;

(4) "DEPP" means the part of the Authority Handbook entitled "Decision

Procedure and Penalties Manual";

(5) "DISP" means the part of the Authority Handbook entitled "Dispute

Resolution: Complaints";

(6) "ENF" means the part of the Authority Handbook entitled 'Enforcement',

in force during the Relevant Period up to 27 August 2007;

(7) "FOS" means the Financial Ombudsman Service;

(8) "Group" means National Australia Bank Group;

(9) "Princ'iples" means the Authority's Principles for Businesses;

5

(10) "Relevant Period" means the period between April 2009 and April 2012;

and

(11) "TCF" means treating customers fairly.

4. FACTS AND MATTERS

Background

4.1. Clydesdale is a subsidiary of National Australia Bank Ltd and part of the Group.

4.2. Clydesdale provides retail and commercial banking services, and offers a variety

of mortgages to its retail customers. As at 30 September 2010, the value of its

variable rate mortgage portfolio (total loans outstanding) was £9,824 million.

Mortgage repayment calculation system

4.3. customers rely on Clydesdale to calculate accurately the minimum repayments

that they need to make to ensure that the total capital and interest due is repaid

by the end of the mortgage term. For variable rate mortgages, customers'

monthly mortgage repayments increase or decrease depending on whether the

referenced interest rate (for example, the Bank of England base rate) increases or

decreases. For the majority of customers who have set up direct debits in

relation to their mortgage repayments, Clydesdale recalculates the amount of

their repayments and debits this sum directly from their chosen bank accounts.

4.4. Some customers chose to make additional payments to their mortgage accounts

(overpayments) with the intention of reducing the terms of the mortgages.

Customers could choose to make a one-off overpayment or a monthly

overpayment For customers making monthly overpayments, following any

change in the mortgage interest rate, Clydesdale would calculate a new monthly

payment amount which included the agreed overpayment

Implementation of the new calculation system

4.5. On 17 January 2005, Clydesdale implemented a new repayment system to

calculate its variable rate customers' mortgage repayments.

4.6. When interest rates changed, this repayment system immediately recalculated a

customer's mortgage repayments. However, the formula used in the new system

was flawed. It calculated a customer's new repayment solely by adjusting the

previous month's interest in accordance with the interest rate change, without

6

also adjusting any repayment of principal or taking into account the different

number of days in the month preceding the month in which the change occurred.

Consequently, Clydesdale's customers' mortgage repayments were calculated

inaccurately.

Detection of the calculation error

4. 7. The error went unnoticed until April 2009, when a group within Clydesdale's

technology function discovered it while investigating a series of unrelated issues.

4.8. The impact of the calculation error differed for capital repayment and interest only

mortgage accounts:

(1) For capital repayment accounts, interest rate rises tended to result in an

overpayment and interest rate falls tended to result in an underpayment.

Each miscalculation was compounded when successive interest rate

increases or decreases took effect because the repayment system

assumed that previous calculations were accurate. The Bank of England

base rate dropped overall from 4. 75% in January 2005 to 0.50% in April

2009. As a result of the cumulative effect of the interest rate changes in

this period, particularly from April 2008 to March 2009 when the Bank of

England base rate dropped from 5.25% to 0.50%, the majority of

Clydesdale's capital repayment mortgage customers affected by the error

did not make repayments at a level sufficient to repay their mortgages by

the end of their terms.

(2) For interest only accounts affected by the error, when interest rates rose

or fell the error sometimes had the effect of causing overpayments and

sometimes resulted in underpayments. However, the over or under

payments on these interest only accounts were relatively small in

comparison to those on capital repayment accounts affected by the error.

4. 9. Clydesdale identified that the calculation error affected 42,648 of its mortgage

accounts, around one third of Clydesdale's mortgage book. Of these accounts,

Clydesdale identified that 21,844 had capital shortfalls as a result of

underpayments, 18,374 (or 84%) of which were capital repayment mortgage

accounts and 3,470 (16%) of which were interest only mortgage accounts. The

impact of the error varied significantly between different underpaying customers.

For example, one customer had a capital shortfall of £18,501, whilst another had

7

a shortfall of less than £20. The average capital shortfall was £970, with a

median of £497.

4.10. As a result, underpaying customers were faced with varied increases to their

monthly repayments:

(1) For 3,719 mortgage accounts, there was a monthly increase of under £2;

(2) For 1,907 mortgage accounts, there was a monthly increase of between

£2 to £5;

(3) For 1,815 mortgage accounts, there was a monthly increase of between

£5to£10;

( 4) For 7,040 mortgage accounts, there was a monthly increase of between

£10 to £50;

(5) For 3,535 mortgage accounts, there a monthly increase of between £50

to £100;

(6) For 2,409 mortgage accounts, there was a monthly increase of between

£100 to £200;

(7) For 1,247 mortgage accounts, there was a monthly increase of between

£200 to £500; and

(8) For 172 mortgage accounts, there was a monthly increase of over £500.

4. 11. Clydesdale identified that the remaining 20,804 accounts affected by the error did

not have capital shortfalls, 14,181 (68%) of which were interest only mortgage

accounts and 6,623 (32%) of which were capital repayment mortgage accounts.

These accounts did not accrue capital shortfalls either because the error resulted

in customers making overpayments (rather than underpayments), or because

customers had deliberately made overpayments to reduce the terms of their

mortgages which were instead used to cover capital shortfalls that otherwise

could have accrued. The impact of the error was greatest for accounts that had

capital shortfalls because the customers involved were being asked to increase

their monthly mortgage payments to correct the error and so make up for their

shortfall. By contrast the monthly payments being made by customers whose

accounts did not accrue capital shortfalls were already at sufficient levels to

ensure full repayment by the end of their contractual terms. Furthermore, the

majority of the accounts which did not accrue capital shortfalls involved interest

8

only customers for whom the impact of the error was relatively limited, with

many paying only a few pounds more each month than they needed to pay.

However, it is possible that some customers who did not have capita I shortfalls

nevertheless suffered detriment (see paragraph 4.46).

Clydesdale's response to discovering the calculation error

FOS guidance on mortgage underfunding

4.12. Following consultation with the banking industry, including Clydesdale, the FOS

published guidance in June 2001 describing its approach to determining

complaints involving 'mortgage underfunding'. This covered situations where the

borrower had made a regular repayment quoted by the lender, but the lender (in

this case Clydesdale) had quoted too low a figure.

4.13. The FOS guidance stated the following 'where the lender was 100% to blame':

'Ordinarily, we will tell the lender to write off the capital shortfall that has built up

to the date the mistake was sorted out - and we will not deduct notional past

savings. Exceptionally, we will deduct notional past savings (without interest)

from the capital shortfall:

• to the extent the lender can show that the past savings are still retained by

the borrowers as identifiable and readily-realisable assets;

unless the borrowers can show that it would be unreasonable to do so in the

particular circumstances.'

4.14. The FOS guidance was updated in August/September 2010 but the position where

lenders were entirely to blame did not materially change.

4.15. While the FOS guidance was not strictly binding on Clydesdale, it was a significant

factor to consider. Moreover, DISP provided that guidance published by the FOS

and decisions by the FOS concerning similar complaints were two factors that

may have been relevant in the assessment of any complaints that Clydesdale

received from customers.

Clydesdale's decision to recover the capital shortfall

4.16. Clydesdale decided not to follow the approach set out in the FOS guidance. For

customers who had been making underpayments on their mortgage accounts,

9

Clydesdale considered that it was generally entitled to recover from them any

capital shortfalls that had accrued.

4.17. Clydesdale decided to conduct a communication exercise with its affected

customers to explain the calculation error and its impact; confirm the amount of

customers' new mortgage repayments and the date from which this would take

effect; and invite customers to call its customer services free of charge for further

information and assistance.

4.18. For the accounts that Clydesdale identified as having capital shortfalls, Clydesdale

notified customers it would increase their monthly mortgage repayments (i) to

cover the capital shortfalls that had accrued; and (ii) to correct the levels of their

future mortgage repayments.

4.19. Clydesdale acknowledged that it was not entitled to recover customers' capital

shortfalls where:

(1) in reliance on Clydesdale accurately calculating customers' mortgage

repayments, they acted to their detriment (for instance, by making a

purchase that they otherwise would not have made) and it would be

unfair for Clydesdale to require them to cover the capital shortfall that

had accrued; or

(2) the new mortgage repayments would result in customers experiencing

financial hardship.

4.20. However, as described in paragraphs 4.26 to 4.44 below, Clydesdale's

communication exercise did not make it clear that customers might not have to

cover the capital shortfall and was insufficient to identify customers who should

not have to cover the capital shortfall.

4.21. In formulat'mg its strategy in response to the error, Clydesdale wrongly sought to

balance its own commercial interests in securing repayment of the capital

shortfall against the requirement to treat customers fairly. For example, one

email of 3 August 2009 stated: 'We all agreed that the issue is very complex and

difficult to get right from all perspectives. We were all very aware of TCF, FOS

position, but also the commercial view -if we basically said "sorry for the mistake

and we have adjusted your account, but going foirward [sic] your payment will be

Ex" then the costs could be as much as £25m ... I realise that there are TCF

considerations but the amounts for the majority are relatively low, so we should

10

be able to point out our error as part of the review and move the cases back to a

correct payment strategy going forward.'

Fixing the calculation error

4.22. Changes to the repayment system were implemented in late September 2009,

thereby preventing a capital shortfall accruing on any of Clydesdale's new

customers' mortgage accounts. However, the capital shortfalls on the existing

affected mortgage accounts continued to grow until the respective customers'

repayments were adjusted. Clydesdale did not put in place any interim measures

after it discovered the error. This meant that customers who signed up for

variable rate mortgages between April and September 2009 were potentially

exposed to the error. However, as there were no changes to the Bank of England

base rate in this period, these customers were not adversely affected in practice.

4.23. Following work to resolve the error, Clydesdale did not start the roll-out of its

communication exercise, to inform customers of the issue and tell them the

amount of their adjusted mortgage repayments, until 8 March 2010. The

adjusted mortgage repayments took effect approximately three months after

notification.

4.24. In the time between Clydesdale's discovery of the error and its adjustment of

customers' mortgage repayments, the total capital shortfall for underpaying

customers increased substantially to £21.2 million at its peak.

Mortgage account statements

4.25. Throughout the Relevant Period, Clydesdale issued annual mortgage account

statements to all customers who had capital repayment mortgages which stated,

'Should you make the minimum repayments on this contract, the amount

outstanding on this account will be repaid in full in [x} months and [y] years.

This does not take into consideration any overpayments you may have been

making.' However, from April 2009 (when the calculation error was discovered by

Clydesdale) to at least March 2010 (when the communication exercise started),

the statements issued were inaccurate, at least for underpaying customers,

because, as Clydesdale was aware, the minimum repayments had been calculated

incorrectly and were not sufficient to pay off customers' loans by the expiry of

their mortgage terms. Clydesdale did not wish to amend the statements until it

had investigated the cause of the error, was fully confident that any new

calculations would be accurate and had prepared its customer communication

I 1

exercise. However, this meant that Clydesdale continued to send out incorrect

statements after it discovered the error.

Clydesdale's communication exercise

4.26. From discovery of the calculation error in April 2009 through to February 2010,

Clydesdale formulated detailed plans for dealing with the calculation error,

including the design of a customer communications strategy as described in more

detail below. This included the drafting of tailored template letters which would

be sent to separate categories of customer, the setting up of a dedicated call

centre to deal with customer queries, the drafting of detailed scripts for handling

calls, the establishment of a panel of senior staff to assess claims for redress and

the formulation of the principles that would be applied in dealing with claims.

Roll-out of letters to customers

4.27. Clydesdale's communication exercise started from 8 March 2010 with letters

being sent to affected customers on a rolling basis. The last of the letters were

sent in October 2010.

4.28. Between April 2009 and March 2010, at least 5,366 Clydesdale customers who

had variable rate mortgages closed their accounts. However Clydesdale failed to

appreciate that the customers involved may have been affected adversely by the

calculation error and so did not contact these customers at all.

Contents of letters sent to customers

4.29. Clydesdale's customers could only assess properly how to respond to the

calculation error if the nature of the error, its impact and the options available to

them were explained clearly and fairly in Clydesdale's communication letters.

4.30. Clydesdale's letters adopted a similar structure for all of the different categories

of customer involved.

Clydesdale's explanation of the calculation error

4.31. A typical letter for a customer with a capital shortfall explained:

'We recently undertook a review of your mortgage that has revealed an

inaccuracy in the way your repayments were calculated. The effect of this, when

combined with last year's unprecedented rapid reduction in interest rates, is that

your minimum payment has fallen below the level required to repay your

!2

mortgage within the agreed term. We would like to sincerely apologise that this

situation has occurred.'

As a responsible lender we always aim to treat our customers fairly, so please

rest assured that we have done our utmost to ensure this inaccuracy is corrected

on your account as quickly as possible.'

4.32. This explanation did not make clear that the capital shortfall was solely caused by

Clydesdale's calculation error.

Clydesdale's options for its customers

4.33. In its letters to customers with capital shortfalls, Clydesdale stated that it

intended to increase customers' monthly repayments to ensure the mortgage

balance would be repaid within the original contractual terms. It explained that

the 'new amount will also cover the shortfall on your account (on which you also

pay interest)'. Clydesdale informed customers that their direct debit payment

would be automatically adjusted from a specified date (approximately 3 months

from the date of the letter).

4.34. The letter further went on to state:

'In the event our proposed solution is not suitable for your particular

circumstances, please do not hesitate to contact our Customer Care Team on the

Freephone number above. Our advisers will be able to discuss other ways that

you can bring your mortgage repayments up to date with the minimum of fuss;

for example, making a one off payment or extending the term of your mortgage

to repay the underpayment.'

4.35. Clydesdale's letter would have suggested to underpaying customers that there

was no alternative to bringing their mortgage repayments up to date.

Clydesdale's letters did not make clear that, depending on individual

circumstances, customers might not have to repay their capital shortfalls.

4.36. Accordingly, there was a significant risk that customers would not contact

Clydesdale's customer services team, even if they had suffered detriment as a

result of the calculation error.

13

Customer calls

4.37. Clydesdale set up a dedicated unit to deal with telephone calls from customers

who were affected by the calculation error. Clydesdale provided all of its call

handlers with training and guidance when dealing with such telephone calls.

4.38. When explaining the calculation error to its customers who had been making

underpayments, call handlers were instructed to explain:

'What we are trying to do is resolve this matter quickly and amicably, to get you

back on course to pay off your mortgage within the agreed term and to ensure

you are put back in the position you would have been had the inaccuracy in your

payment not occurred. To help achieve this we have a variety of options in order

to find the right one for your situation, which we can work through with you, such

as extending the term, making a lump sum payment option, or perhaps a

different mortgage product. We will work with you to find the one that is best for

you.'

4.39. These instructions, in a similar way to Clydesdale's customer letters, implied that

there was no option but for underpaying customers to cover their capital

shortfalls. There was again no reference to customers not necessarily having to

do so or being asked to provide details of their personal/financial circumstances

for further assessment.

4.40. Customers who, unprompted, described personal/financial circumstances which

suggested to the call handlers that they should not have to cover their capital

shortfalls were referred to specialists for further assessment. However, call

handlers only assessed customers' individual circumstances if the customers

themselves indicated that they may have suffered detriment. The onus was on

customers to provide details of circumstances that would lead to a referral.

Claims assessment

4.41. Since call handlers were not instructed pro-actively to elicit customers'

personal/financial circumstances, specialists did not always have sufficient

information to consider adequately whether customers were entitled to redress

and claims were rejected on the basis that there was no evidence of customer

detriment.

4.42. In assessing claims for redress, specialists also applied a test which was too strict

and unfair to customers. Clydesdale would agree to write-off the capital shortfall

14

where, for example, a customer could provide evidence of significant capital

expenditure or the taking out of additional loans on the basis of lower monthly

mortgage repayments. However, Clydesdale wrongly rejected claims where there

was evidence that customers had changed their day-to-day expenditure on the

basis of lower monthly repayments but had not made any major capital

purchases.

4.43. A number of customers were dissatisfied with the rejection by Clydesdale of their

respective claim to have their capital shortfalls written-off and referred their cases

to the FOS. Generally, the FOS dealt with such complaints in accordance with its

publications and determined that the capital shortfall should be written-off.

Nevertheless, Clydesdale did not modify its approach following these FOS

determinations.

4.44. Clydesdale closed its dedicated unit dealing with telephone calls from customers

affected by the calculation error in April 2012.

Communications with overpayers

4.45. The letters that Clydesdale sent to customers referred to in paragraph 4.27 above

included letters to customers who did not have capital shortfalls on their accounts

because they had made overpayments. While the impact of the calculation error

was greatest for customers who underpaid, some customers who made

overpayments may have suffered detriment and been entitled to redress.

4.46. Those customers who made overpayments solely as a result of the error (i.e.

inadvertently) may have suffered detriment if, for example, they incurred

overdraft charges on another account that they would not have incurred if they

had saved the overpayments involved in that account. Those customers who

deliberately overpaid to shorten their mortgage terms but whose overpayments

were utilised to cover the capital shortfall may have suffered detriment by, for

example, increasing their day-to day expenditure or buying a one-off item in the

belief that they had paid off more of their mortgages than they actually had.

4.47. Clydesdale's letter should have made clear the differing ways in which the error

may have impacted on these customers and the possibility that they may have

been entitled to redress. Instead, Clydesdale implied that there was no option

but for any deliberate overpayments made by these customers to be utilised to

cover any capital shortfall that would otherwise have accrued. It did not address

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at all the fact that customers may have made overpayments inadvertently as a

result of the error.

4.48. Furthermore, whilst not referred to in the scripted training and guidance,

Clydesdale's call handlers also incorrectly told a number of customers who had

made deliberate overpayments to their mortgage accounts that they were not

affected by the calculation error.

Redress paid by Clydesdale

4.49. The total number of mortgage accounts in respect of which a telephone call was

made to the dedicated unit was 8,155, approximately one fifth of the total

number of affected accounts. Of the 8,155 telephone calls, 1,227 cases were

referred to specialists for further assessment. In total, Clydesdale paid or credited

£3,638,448 in redress to its affected customers.

4.50. Had Clydesdale carried out a clear and fair communication exercise, it is likely

that a greater number of customers would have made contact with the firm in

order to have their personal/financial circumstances assessed, and a greater

number of customers would have received redress.

5. FAILINGS

5.1. Principle 6 states:

'A firm must pay due regard to the interests of its customers and treat them

fairly.'

5.2. Between April 2009 and April 2012, Clydesdale breached Principle 6 because, in

its handling of the calculation error, it failed to pay due regard to the interests of

its customers and treat them fairly. This included the following failings:

(1) Having decided in principle to recover the capital shortfall from its

affected customers, Clydesdale did not notify its customers of the error

and their adjusted repayments in a sufficiently timely manner. This

resulted in an increase in the amounts customers were required to repay

to make up their capital shortfalls, with the total capital shortfall for

underpaying customers reaching £21.2 million at its peak.

(2) Despite having discovered the calculation error in April 2009, Clydesdale

continued to send affected customers who had capital repayment

mortgages account statements which, at least for underpaying

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customers, were inaccurate. They incorrectly stated that, should

customers meet their minimum repayments, their loans would be paid off

in full by the end of their respective mortgage terms.

(3) Clydesdale's customer communication exercise was inadequate:

(a) Clydesdale's letters to customers were unclear and unfair:

Clydesdale did not explain clearly to its customers the nature of the

calculation error, its impact and the options available to them.

Therefore, customers were not in a fair position to consider properly

their response. Moreover, Clydesdale implied that there was no

option but for its underpaying customers to cover their capital

shortfalls. As such, there was a significant risk that customers who

should not have had to cover their capital shortfalls did not have

their personal/financial circumstances assessed to determine

whether this was the case.

(b) Clydesdale failed to deal with its customer calls adequately. For

any customers who did call, Clydesdale's customer services team

was not instructed to enquire proactively into a customer's

individual circumstances. These instructions again implied that

there was no option for underpaying customers but to cover their

capital shortfalls.

(c) Where claims were referred for specialist assessment, they were

not always dealt with fairly. Clydesdale rejected claims for redress

on the basis that there was no evidence of customer detriment.

However, Clydesdale applied too strict a test in assessing customer

claims and so did not provide redress in all appropriate cases.

(d) As a result of the above, there was a significant risk that customers

who should have received redress did not receive redress. The

Authority considers that most customers who accrued capital

shortfalls would have spent the 'savings' they made each month as

a result of the error and, accordingly, it would have been unfair to

require those customers to make good the capital shortfall.

(4) In addition to the approximately 22,000 accounts that had capital

shortfalls as a result of Clydesdale's error, there were a further

approximately 21,000 accounts that were affected by the error but which

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did not have capital shortfalls. It is possible that some of the customers

involved also suffered detriment. Clydesdale's communication exercise

should have therefore made clear to these customers the differing ways

in which the error may have affected them and the possibility that they

may have been entitled to redress. It failed to do so.

(5) Clydesdale also failed to appreciate that over 5,000 customers who had

repaid or remortgaged their accounts by the time that the communication

exercise was rolled out may have also been adversely affected by the

error. It therefore did not contact these customers.

6. SANCTION

Imposition of financial penalty

6.1. The Authority has considered the disciplinary and other options available to it and

has concluded that a financial penalty is the appropriate sanction in the

circumstances of this particular case.

6.2. On 6 March 2010, the Authority's current penalty policy for determining financial

penalties came into force. Clydesdale's misconduct took place before and after 6

March 2010. However, as the Authority considers that Clydesdale's roll-out of an

unclear and unfair customer communication exercise from 8 March 2010 was the

most serious aspect of its misconduct, it has determined the appropriate financial

penalty under its current penalty policy.

6.3. DEPP 6.5A sets out a five step framework to determine the appropriate level of

financial penalty.

Step 1 - disgorgement

6.4. Pursuant to DEPP 6.5A.1G, at Step 1 the Authority seeks to deprive a firm of the

financial benefit derived directly from the breach where it is practicable to

quantify this.

6.5. Given that Clydesdale has agreed to a further customer contact and remedial

redress exercise covering all customers affected by the calculation error, as

described from paragraph 6.22, the Authority has not identified any financial

benefit that Clydesdale derived directly from its breach. Therefore, Step 1 is £0.

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Step 2 - the seriousness of the breach

6.6. Pursuant to DEPP 6.5A.2G, at Step 2 the Authority determines a figure that

reflects the seriousness of the breach. Where the amount of revenue generated

by a firm from a particular product line or business area is indicative of the harm

or potential harm that its breach may cause, that figure will be based on a

percentage of the firm's revenue from the relevant products or business area.

However, the Authority recognises that there may be cases where revenue is not

an appropriate indicator of the harm or potential harm that a firm's breach may

cause, and in those cases the Authority will use an appropriate alternative.

6. 7. The Authority considers that the revenue generated by Clydesdale from its

mortgage book is not an appropriate indicator of the harm or potential harm

caused by its breach of Principle 6 in this case.

6.8. In considering an alternative metric to use at Step 2, the Authority has focused

on the most serious aspect of Clydesdale's breach, namely its implementation of a

customer communication exercise that was unclear and unfair. The greatest

impact of this was on those customers whose mortgage accounts had capital

shortfalls (and who were unfairly required by Clydesdale to increase their monthly

mortgage repayments to make up their capital shortfalls). The Authority therefore

considers that the total capital shortfall that accrued on these accounts is the

most appropriate indicator of the harm or potential harm caused by Clydesdale's

breach of Principle 6. The total capital shortfall amounted to £21.2 million.

6.9. Having determined that the total capital shortfall is the most appropriate metric

to use at Step 2, the Authority must decide on a percentage of this amount that

will form the basis of the penalty. DEPP 6.5A.2G (13) provides that in those

cases where revenue is not an appropriate ·Indicator of harm, the Authority will

adopt a similar approach, and so will determine the appropriate Step 2 amount

for a particular breach by taking into account relevant factors, including those set

out in DEPP 6.5A.2G. However, in such cases the Authority may decide not use

the 0 to 20% percentage levels that are applied in cases in which revenue is an

appropriate indicator of harm.

6.10. The Authority considers it likely that the majority of customers who had a capital

shortfall will be entitled to redress, and that the 0 to 20% percentage levels

referred to in DEPP 6.5A.2G (3) are therefore too low when using total capital

shortfall instead of revenue. The percentage levels that the Authority considers it

appropriate to use in this case are as follows:

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(1) Level 1- 0%;

(2) Level 2 - 25%;

(3) Level 3 - 50%;

(4) Level 4- 75%; and

(5) Level 5- 100%.

6.11. DEPP 6.5A.2G (11) lists factors likely to be considered level 4 or 5 factors. Of

these, the Authority considers that the following factor is particularly relevant to

this case:

(1) 'The breach caused a significant loss or risk of loss to individual

consumers, investors or other market users.' Clydesdale paid or credited

£3,638,448 in redress. However, the final capital shortfall for

underpaying customers was £21.2 million in total: had Clydesdale carried

out a clear and fair communication exercise, it is likely that the sum paid

or credited in redress would have been far greater.

6.12. The Authority also considers the following factors to be relevant:

(1) Clydesdale's inadequate customer communication exercise affected over

42,500 mortgages, which are typically a household's largest financial

commitment.

(2) Clydesdale did not modify its customer communications strategy even

after a number of dissatisfied customers referred their cases to the FOS

and the FOS determined that their capital shortfalls should be written-off.

6.13. The Authority considers that the appropriate level to reflect the seriousness of

Clydesdale's breach of Principle 6 is level 4.

6.14. Therefore, Step 2 is 75% of £21.2 million, i.e. £15.9 million.

Step 3 - mitigating and aggravating factors

6.15. Pursuant to DEPP 6.5A.3G, at Step 3 the Authority may increase or decrease the

amount of the financial penalty arrived at after Step 2, but not including any

amount to be disgorged as set out in Step 1, to take into account factors which

aggravate or mitigate the breach.

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6. 16. Clydesdale has agreed to undertake a further redress exercise, the details of

which are set out from paragraph 6.22. Had Clydesdale not agreed to undertake

an appropriate redress exercise, the Authority would have taken steps to compel

it to do so and would have regarded this as an aggravating factor. However,

given that Clydesdale has voluntarily decided to provide redress beyond that

which the Authority would have compelled it to provide, by writing off the capital

shortfalls accrued by all customers who underpaid without subjecting them to the

inconvenience of a further customer communication exercise, the Authority

considers it appropriate to reduce the financial penalty at Step 2 by 20%.

6.17. Therefore, Step 3 is £12,720,000.

Step 4 - adjustment for deterrence

6.18. Pursuant to DEPP 6.5A.4G, if the Authority considers the figure arrived at after

Step 3 is insufficient to deter the firm who committed the breach, or others, from

committing further or similar breaches, then the Authority may increase the

penalty.

6.19. The Authority considers that the Step 3 figure of £12,720,000 represents a

sufficient deterrent to Clydesdale and others. Therefore, Step 4 is £12,720,000.

Step 5 - settlement discount

6.20. Pursuant to DEPP 6.5A.SG, if the Authority and the firm on whom a penalty is to

imposed agree the amount of the financial penalty and other terms, DEPP 6. 7

provides that the amount of the financial penalty which might otherwise have

been payable will be reduced to reflect the stage at which the Authority and the

firm reached agreement

6.21. The Authority and Clydesdale reached agreement at Stage 1 and so a 30%

discount applies to the financial penalty at Step 4. The total financial penalty

after this Stage 1 discount is 70% of £12,720,000 i.e. £8,904,000.

Further communication and redress exercise

6.22. Following publication of this Notice, the Firm will conduct a further customer

communication and redress exercise, as set out below.

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Letters to customers

Underpayers

6.23. The Firm has voluntarily decided to write off the capital shortfalls accrued by all

customers who underpaid as a result of the error. These customers will be given

redress without having to participate in a communication exercise.

(1) Where such customers have open mortgage accounts with the Firm, their

accounts will be automatically credited by the amounts to be paid to

them. They will also receive a letter from the Firm to confirm this.

(2) Where such customers no longer have mortgage accounts with the Firm,

they will be sent letters inviting them to contact the Firm to confirm how

they would like to receive the payments the Firm has agreed to make to

them.

overpayers

6.24. The Firm will also send letters to customers affected by the error who did not

accrue capital shortfalls on their accounts because of overpayments to give them

the opportunity:

(1) to seek compensation if they believe that they may have suffered

detriment; andjor

(2) if they still have a mortgage with the Firm, to ask for a return of previous

overpayments (meaning their mortgage balances will increase).

Customers not contacted in 2010

6.25. The Firm will also send letters to customers who were affected by the error but

who had repaid or rernortgaged their accounts between January 2008 and March

2010 and so were not contacted by the Firm as part of its communication exercise

in 2010. These customers may be underpayers or overpayers and will be invited

to contact the Firm to find out whether they are entitled to compensation.

Customers who previously received redress

6.26. Customers who previously received full redress from the Firm will not be included

in this further exercise.

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Customer support team

6.27. Customers who are invited to contact the Firm will be asked to call the Firm's

dedicated customer support team. Customers may be asked questions about

their financial circumstances to enable the Firm to determine whether they are

entitled to compensation.

6.28. Customers do not need to do anything until they receive a letter from the Firm.

In the meantime, further information about the Firm's further customer

communication and redress exercise can be found on its website at

www.cbonline.co.uk.

7. PROCEDURAL MATTERS

Decision maker

7.1. The decision which gave rise to the obligation to give this Notice was made by the

Settlement Decision Makers.

7.2. This Final Notice is given under, and in accordance with, section 390 of the Act.

Manner of and time for Payment

7.3. The financial penalty must be paid in full by Clydesdale Bank PLC to the Authority

by no later than 8 October 2013, 14 days from the date of the Final Notice.

If the financial penalty is not paid

7.4. If all or any of the financial penalty· is outstanding on 9 October 2013, the

Authority may recover the outstanding amount as a debt owed by Clydesdale

Bank PLC and due to the Authority.

Publidty

7.5. Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of

information about the matter to which this notice relates. Under those provisions,

the Authority must publish such information about the matter to which this notice

relates as the Authority considers appropriate. The information may be published

in such manner as the Authority considers appropriate. However, the Authority

may not publish information if such publication would, in the opinion of the

Authority, be unfair to you or prejudicial to the interests of consumers or

detrimental to the stability of the UK financial system.

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7.6. The Authority intends to publish such information about the matter to which this

Final Notice relates as it considers appropriate.

Authority contacts

7. 7. For more information concerning this matter generally, contact Guy Wilkes (direct

line: 020 7066 7574) of the Enforcement and Financial Crime Division of the

Authority.

Tom Spender

Head of Department

Financial Conduct Authority, Enforcement and Financial Crime Division

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