The brief respecting the action of Maurice Vollar against the M. Bank landed on my desk just a few weeks before my wife and I migrated back to Singapore. It was the first interesting case referred for my opinion during my nine years in Australia. I was also pleased that it had been sent to me at the advice of Jack Wilson, a former student of my days in Wellington, who was to be the lead Counsel in the case.
It pleased me to accept the brief. Still, I had to ask that all the documents respecting the case be sent to my new address in Singapore. I promised Jack Wilson that, upon my arrival at my destination, the case would be given my full attention.
The bundles of documents that waited for me in Singapore made me gasp. It would take any legal consultant a few weeks to peruse it meticulously. Strange to say, though, the basic facts were simple. Vollar had retired from his real estate business in Bruges and settled with his family in West Australia. Being too young to opt for full retirement he looked around for suitable business which he could acquire in full or in part. He went through local papers and eventually came across an advertisement of a ‘general business’ that looked for an investor and partner.
Vollar asked his own bank to obtain a reference on that business’ standing. That bank, in turn, sought a reference from that business’ bank and asked that it be conveyed directly to the enquirer.
The reference, composed by the relevant branch manager, and read out to Vollar by a clerk stated:
The [business’] main outlet is a small department store with a fast foods counter. It is situated in a popular location and has suitable off street parking. It is owned by East European migrants, who are competent managers, run the shop effectively and are patronized by a regular clientele. They have been our customers for some three years and usually have kept well within the limit of the facilities granted to them. We consider them good customers.
I read the reference several times. Its general tone was, no doubt, favourable. Still, a few significant details were missing. No advice was given as regards the capital or funding of the business or that it was run profitably. Further, the reference suggested that, from time to time, cheques were drawn for amounts beyond the approved overdraft limit. An additional point made me raise my eyes. The business had maintained its account with the relevant bank for just three years. When had the business been established?
If I had received a reference of this type about a business in which I considered investing a substantial amount, I would have consulted an accountant or a business adviser. In any event, banks usually communicated their reference orally and disclaimed liability. Did the relevant bank do so in the instant case? After all, the bank rendered the service involved without levying a charge.
A perusal of the pleadings and legal correspondence gave me a clearer comprehension of the issues. The clerk, who had read out the reference, left the bank a few months later and got married. She gave birth to two sons and became a full time housewife. She had no recollection of the case in question. Still, her own notes agreed with Vollar’s except on one point. Vollar maintained that no exemption of liability had been communicated to him. The clerk stated that it was her practice to add at the end of any reference a formula emphasizing that the reference was given gratuitously and without responsibility on the bank’s part.
The branch manager, Bruce Smith, affirmed that he composed the reference from notes readily available to him from the files. He had not investigated the business’ records and maintained, unequivocally, that this was in accord with the bank’s regular practice.
Vollar asserted that he relied on the reference as if it were given by a Belgian bank. Further, on the basis of its favourable tone he had seen no need to consult an accountant or business adviser. He went on to allege that the bank had deceived him. He had not been informed that the owners of the business had been declared bankrupts in South Australia and that one of them – the husband – was imprisoned for contravening Western Australian law. When he had filled in and submitted the local Business Registration Form he had hid the fact that he was an undischarged bankrupt. His wife escaped conviction on a technical ground.
A further perusal of the documents submitted to me indicated that the branch manager, Bruce Smith, had dealt mainly with the ‘female owner’, Rena Katz. There was no shred of evidence to affirm that he – or, indeed, any other of the bank’s employees – was aware of the ‘male owner’s’ – Yuri Katz’s – conviction and imprisonment.
These facts made me reflect. What was the basis of the count respecting deceit? Vollar’s lawyers alleged that Bruce’s failure to investigate the business’ position at the time he composed the reference involved gross negligence. Such behaviour was – at law – tantamount to deceit. The Bank denied the allegation and disputed Bruce’s duty to investigate. The Bank went on to emphasise that the reference was given without responsibility.
I concluded that the issues had crystallised. Any further exchange of pleadings would be a waste of time. All the same I was perturbed by one element that emerged from the bundle of documents forwarded to me. Both Vollar’s and Bruce’s communications were marked by bitterness and anger. In one of his early emails Bruce had told Vollar: “You harp on the nature of bank references in Belgium. I know nothing about those but have followed local practice. You have resided here for some five years. You should have known!” Vollar replied: “I thought Australian banks cared for their customers [sic] as much as Belgian banks. You should have told me that you did not care about my interests.”
This objectionable correspondence – an some revolting messages – went on and on for weeks. I was not surprised that Vollar’s last note read: “Mr. Smith: I have now placed the matter in the hands of my legal advisers.”
The acrimonious tone of these exchanges appeared unusual for seasoned men of business. Both Bruce Smith and Vollar had been trained to control their tempers and words. Why had they lost control in this case? I decided to get to the bottom of it. Naturally, this could not be done from the perusal of documents received in Singapore. I hoped to get a clearer pictures when, a few weeks after my arrival in the City of the Lion, I flew over the Perth.