Bernie Madigan's battle with the Commonwealth Bank commenced with a fight over his mortgage and a closed bank account, and has now escalated to the bank seeking $145,000 in costs from him. If the bank succeeds, he will lose his house. But how did it get to that point?
The story starts on October 15, 1999, when the bank obtained an ex-parte injunction freezing Madigan's savings account in demand for the total outstanding balance of his mortgage. Four days later Justice Hodgson modified the orders allowing Madigan to pay the debt in full.
On October 22, 1999, he paid out the mortgage with a final payment of $752.87 and was served with the mortgage discharge authority. Having paid off the loan Madigan closed his account on November 10.
On November 16 he went to court to apply for orders compelling the bank to surrender the certificate of title which it was withholding. The court ordered the return of the certificate.
However, five days after he had closed his account, on November 15, the bank had debited it with $65.
He demanded to know how a closed account could be re-opened, on whose authority and what the amount was for.
He was told it was for a court transcript that the bank said was provided to the Land Titles Office to acquaint it with the issues raised and, as such, it was a cost associated with his mortgage and must be paid by him.
Madigan objected to this and the dispute escalated from there.
Much was made that the transcript was of the hearing on November 16, but Madigan's debit was dated November 15.
Madigan wrote to the Land Titles Office and received a reply from it which said it could not find a copy of the transcript of the November 16, 1999 proceedings.
Madigan saw red and took the bank's solicitor to court over what he claimed was the unauthorised access to his closed account and billing thereof.
In 2000 the bank's solicitor stated that the mystery transaction was to purchase an earlier transcript, but Madigan claimed that it was not purchased on November 15, there was no court order to purchase it and it was never sent to the Land Titles Office.
In the interim the CBA continued to withhold the closing statement of Madigan's account, causing the account to attract fees and interest.
He was unable to obtain a final statement of his account, even though it had been closed and the mortgage had been discharged.
In March 2000 the bank demanded Madigan pay $20,000, the result of an action started by Madigan to get his final statement.
He lost that action. The bank obtained an order for indemnity costs which is thousands of times more than the amount owing in the first place.
The matter went on to the NSW District court in August 2000. In the same month, Madigan testified about the bank's refusal to surrender his final statement to the federal parliamentary joint statutory committee on corporations and securities.
The next month, the hearing about the CBA's cost claims commenced in the court and three months later, with the court accepting the bank's version of events, awarded costs in favour of the bank. Madigan had represented himself.
In January 2001, Madigan filed a summons for leave to appeal that decision. Again the bank won.
Madigan, a dogged person to say the least, took the matter to the High Court in August last year, but the court refused to overturn the court of appeal judgement.
After that decision the CBA served the bill of costs for all the actions on Madigan. It was calculated on the indemnity basis and is seeking $145,000 from him.
It shows that an ordinary borrower just can't win. Take on the bank over this sort of issue, and as this case shows, up against the bank's legal counsel and representing yourself, an aggrieved customer is likely to lose and pay far more in costs than the original disputed amount. On the other hand, says Madigan, what are we supposed to do, just wear additional costs put on a closed account and not argue?
The bank has confirmed that the loan was repaid and that Madigan's bank manager confirmed to Madigan that his account was closed.
It acknowledges that Madigan did not give it the authority to charge the $65 to a closed account, but says that it has the authority under covenant E14 in the mortgage which he had repaid.
The high legal fees, it says, arose because Madigan took the bank to court over the $65 post-closing charge and represented himself.
