In Patrick John Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186 the NSW Court of Appeal upheld a decision that Mr Ford was entitled to rely on the plea of non est factum and the loan agreement and mortgage over his home were therefore found to be void.

The plea of non est factum is made out when a signer’s mental incapacity prevents any understanding at all about what he or she is signing.

Mr Ford has a congenital intellectual impairment. He is illiterate and was found by the primary judge to have had no understanding at all of the transaction of purchase and the loan and mortgage.

Mr Ford, placed his signature on a loan agreement and mortgage with Perpetual Trustees Victoria Ltd (Perpetual), for the loan of $200,000 secured over Mr Ford’s residential property. The loaned funds were used to purchase a cleaning business in Mr Ford’s name. The business was to be for the benefit of Mr Ford’s son, who manipulated his father’s entry into the transaction. The business subsequently failed and Mr Ford defaulted on the loan agreement. Perpetual commenced proceedings for possession of the property.

Mr Ford was not liable in restitution to repay the loaned funds, except for the $24,857 he received into his personal bank account.

As proposed here the financial sector levy rates for 2009-10 have increased by about 12%.

Final details here.

UPDATE: APRA Determination

The Code Compliance Monitoring Committee for the Code of Banking Practice has published its report on its review of bank compliance with direct debit rules.

The aim of the review was to identify whether:

• Banks have adequate policy and procedures to ensure they comply with the requirements of the Code; (cl.19);

and

• Banks receive and process cancellation requests for direct debits without first referring customers to the business or service provider.

The review concluded that while appropriate policies and procedures were documented, 8 out of 10 of the Committee's “shadow” shoppers received incorrect or partially incorrect information. The result was similar for call centres and branches.

Overall the results did not meet the CCMC expectations of what would be reasonable considering the strong commitments expressed in the Code.

As part of the review process the Committee has met with all of the Banks concerned. The banks have undertaken a range of activities to improve performance relating to this aspect of the Code.

In addition the Committee has consulted with the Australian Payments Clearing Association (APCA), who oversee the direct entry system for payments. APCA have resolved with their members to undertake additional steps to improve direct debit cancellations and the obligations under both the Code of Banking Practice and their own Rules.

The Mutual Banking Code of Practice has similar provisions relating to the cancellation of direct debits and some of the initiatives undertaken by APCA will have an impact on Mutual ADIs.