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The Banking Royal Commission has been a long time coming

Illustration by David Rowe Illustration by David Rowe

Recently my collaborator John Salmon discovered in his papers a letter he had written to then Queensland Chief Justice Paul de Jersey. The date is December 2002. The letter is reproduced below. As preliminaries, it is necessary to provide a context for the letter. EVAN JONES & JOHN SALMON

Salmon worked for the National Australia Bank in Queensland from 1950, retiring in December 1986, and for well over half that time at managerial level. By his retirement, Salmon was thoroughly familiar with NAB procedures, its culture, and the evolution of its modus operandi over those decades. Salmon claims that the ethical standards started to slip during the 1970s after lending managers had been given discretion with their lending practices under a new system of ‘delegated lending authority’ on loan applications. Comes the 1980s and general financial deregulation, ethical standards went out the window.

While working at the NAB, Salmon had been privy to NAB personnel peccadilloes. But soon after retirement he was asked to advise on a case involving litigation against his former employer. Salmon was shocked by what he was exposed to. This particular case brought home to Salmon the extent of the NAB’s capacity for corrupt practices. The case was Somerset / Kabwand v NAB, outlined in fine detail on in April 2017

For some years, Salmon continued to advise victims of bank corruption, mostly small to medium businesses and farmers, and also mostly victims of the NAB.

In the litigation that Salmon was observing at first hand, familiar with the documentation and sometimes present in the courtroom taking notes, one judge in particular made more than an occasional appearance – that of Paul de Jersey. Paul de Jersey was appointed judge of the Queensland Supreme Court in 1985, and Chief Justice in early 1998, which position he held until mid-2014 (following which he was made Governor of Queensland). de Jersey was the lead judge in the Appeal decision for Westpac (de Jersey’s school contemporary and friend John Dowsett providing the majority) against Lionel Potts in a foreign currency loan litigation on 16 April 1992. Salmon’s legal acquaintances were of the opinion that the de Jersey / Dowsett judgment was the worst in the Appeal jurisdiction that they could remember. The Potts v Westpac Litigation and de Jersey’s involvement is outlined in detail in my article on in March 2014

Before being elevated to the bench, de Jersey had acted for Westpac. de Jersey even acted for Westpac before the Costigan Royal Commission, 1980-81 – some banks being part of the investigation suspected of having set up fictional bank accounts for money laundering purposes. During that process, de Jersey was elevated from junior to senior counsel status. de Jersey has also admitted (March 2006) to being on a retainer when he was acting as a barrister for Westpac.

On the bench, following his decisive intervention in favour of Westpac. de Jersey has been involved in presiding over cases, whether at trial or in directions hearings, involving the NAB. de Jersey acknowledged in at least one court case (Freeman v NAB, Queensland Supreme Court, no. 2285 of 1995) that the NAB was his personal banker. Both Freeman and Salmon heard the acknowledgement in the courtroom. The acknowledgement was initially reproduced in the hearing transcript, but when Salmon returned to the Registrar for a copy, the relevant text had been deleted from the transcript.

Salmon found one dimension peculiar (among others) – that de Jersey chose to preside over lesser hearings or trials below his station, where assignation to a judge of lower status would have been entirely appropriate. The case of Bernstrom v NAB is representative. In September 2001, de Jersey flew to Cairns to give summary judgment to the NAB over Bernstrom’s property, ignoring Bernstrom’s claim.

In the process, de Jersey had admitted ‘evidence’ gained outside the courtroom from Bernstrom’s son to be used against the mother as plaintiff. A comparable ploy had earlier been used in Doneley v NAB, also under de Jersey, where a party was interrogated outside the courtroom then released from litigation, which prevented Justin Doneley from examining him in the witness box.

Another anomaly is that some NAB litigation transcripts and judgments involving de Jersey that have been made available publically have been doctored. Worse, the transcript of de Jersey’s scandalous summary judgment against Sante & Rita Troiani, 19 March 2001, was denied to the Troianis in spite of the Registrar’s previous claim that it would be accessible to them.

On 15 August 2002, Salmon sent Chief Justice de Jersey a 29 page document. It was titled ‘Banking Malpractice and Resulting Litigation Relating Thereto’. It highlighted an extremely parlous situation regarding bank malpractice in Queensland and outlined thirteen recommendations for reform.

The driving motivation was Salmon’s regular exchanges with Lionel Potts concerning Potts’ treatment in the 1992 Appeal Court judgment and his ongoing attempts to achieve justice and compensation.

In this document, Salmon also referred to a number of victim cases involving the NAB. Some of the cases involved de Jersey, and some of the cases Salmon had observed at first hand. Those covered included Keith Smith (1984, guarantor), Ned & Joy Somerset / Kabwand (1984 and subsequent, rural properties), Justin & Anne Doneley (1987 and subsequent, farming), Nobile & Martelli (1987, guarantors), Sante & Rita Troiani / Wide Bay Bricks (1994 and subsequent, brickworks), Alan & Wilma McMinn (1997, child care centre), Lynton Freeman (1997, grazing property), and Hyperno Investments v NAB (1998, strata title unit development).

The Smith, Freeman, McMinn and Somerset/Kabwand cases are summarised in my April 2004 Working Paper on NAB victims, titled ‘The Banks and Small Business Borrowers: case studies of adversity’, available my university website.

An exchange between de Jersey’s associate and Salmon subsequently occurred. Its import can be encapsulated in a response by the associate to Salmon dated 4 November 2002:

“I did not intend to convey by letter of 19th August 2002 that the Chief Justice would make further response to your recommendations. It would not be appropriate for him to do so. Insofar as you refer to cases which have come before the court, he is grateful for your view, but any avenue for challenge in respect of those rests of course with the parties, by the appeal process. Insofar as you make other observations in relation to the conduct of banking institutions, the Chief Justice simply wished to convey that he had read your material. He does not think that it is in the purview of his office that he should pursue the matter in the manner you mention in your letter of 31st October 2002.”

It is pertinent that the associate conveys to Salmon the presumption that the court system is all in perfect working order by virtue of an appeal process. High farce indeed, not least in the light of the manifestly corrupt victory of Westpac on appeal over Lionel Potts, as above, over which de Jersey presided.

The associate notes that [de Jersey]’does not think that it is in the purview of his office that he should pursue the matter in the manner …’. In the event, Chief Justice de Jersey subsequently did not pursue Salmon’s matter in any manner. He did, however, continue to make public speeches on what an admirable system, if needing minor tweaking on the margin, was the legal system in Australia.

Given this impasse, Salmon proceeded doggedly to attempt to interest various Queensland authorities in the overdue matter of litigation reform, with special reference to banking, and not least where the then Chief Justice Paul de Jersey was concerned. Salmon approached successive Attorney Generals, the Crime & Misconduct Commission and the Parliamentary Crime & Misconduct Committee.

The concluding work to an extended correspondence was a 30,000 word document labelled ‘Problems Experienced by Bank Litigants in the Jurisdiction of the Supreme Court of Queensland’, dated December 2009. A shorter 12,000 word document was produced and distributed in July 2010.

All to no avail. The paper trail is summarised in my ‘The Sliding Scales of Justice’ on July 2013

As a diversion, one notes that the current High Court Chief Justice Susan Kiefel hails from Queensland. Kiefel was appointed to the Queensland Supreme Court in May 1993, but stayed there a mere 17 months. Apparently Kiefel J applied to be appointed to the Federal Court of Australia, to which bench she moved in October 1994. Legal circles rumour has it that Kiefel found some happenings at the Supreme Court to be unsavoury – thus the move to the FCA. A sensible decision, should the rumour have substance. Nevertheless, Kiefel J’s judgments when presiding over bank litigation have shown her equally as unsympathetic to bank litigants as her fellow Queensland judges, regardless of the jurisdiction.

It is with this background that Salmon’s concluding paragraph of his December 2002 letter was pertinent then and is pertinent now, fifteen years down the track:

“I further consider that it is only a question of time before the banks’ bag of dirty tricks – ably acquiesced in by the legal profession in the general sense, will become aware to the Australian public at large (my italics). The consequential public knowledge will undoubtedly induce more criticism of the legal industry in which you play a prominent role. If this happens, are you prepared to accept partial responsibility?”

A banking Royal Commission was overdue in 2002. The current interest is not that a banking Royal Commission has actually been established (terms of reference here)  but that it took so long for a government to order it. The delay is attributable to an establishment that fears a genuinely independent and comprehensive investigation. That fear, and the ultimate acceptance,10984 by the Big 4 banks that they could no longer hold it off, highlights that one should expect, a priori, that the establishment and the banks will attempt to compromise the workings of the Royal Commission and its ultimate findings. The Terms of Reference lend themselves to that interpretation.

Before passing to John Salmon’s letter, several passing references in the letter deserve elaboration.

The ‘Baker Johnson fiasco’ in Salmon’s letter refers to a long running saga concerning the Brisbane law firm Baker Johnson. Baker Johnson, a reputedly ‘no win – no fee’ firm had a long reputation for brutal treatment of its clients, appropriating any winnings, suing their clients (over two hundred) and often for bankruptcy for supposed unpaid and certainly excessive legal costs. The firm and its behaviour appeared perennially in the Courier Mail over a long period, courtesy of the investigative reporting of Hedley Thomas.

Baker Johnson received a major setback when it lost a case in the District Court in July 2002, Baker Johnson v Jorgensen. Jorgensen had gone to Baker Johnson after a work injury and brutal treatment by her employer. The unfortunate Mrs Jorgensen then received brutal treatment by Baker Johnson. That firm then sued to claim Jorgensen’s home.

The firm acquired legendary status for multiple reasons. In 1998, a partner was struck off for professional misconduct. The brother of the partner struck off, a clerk in Baker Johnson but performing much of the personal injury work, was charging solicitors’ fees at a high rate but was exposed as having no legal qualifications.

In addition, myriad complaints to the Queensland Law Society, supposedly the legal profession regulator, went nowhere. The Law Society itself was thus exposed as complicit. Thus the broader public significance of the imbroglio. This from Hedley Thomas, ‘Law Society ways blasted by watchdog’, Courier Mail, 15 August 2002:

“[Queensland Legal] Ombudsman Jack Nimmo said the Law Society's culture and inherent conflict of interest in investigating members meant people with legitimate complaints were disregarded.

“Mr Nimmo, who is investigating for Attorney-General Rod Welford the Law Society's handling of complaints against Brisbane law firm Baker Johnson, said … it was difficult to disagree with the notion that the Law Society behaved more like a ‘post office box’ instead of an investigative unit because it rarely tested evidence independently. It was routine for the society to refer complaints from aggrieved clients to the solicitors, then refer the replies back to the clients and take the matter no further, he said.

“’There is no question that the media has been more rigorous in investigating lawyers than the Law Society’, Mr Nimmo said. ‘They do not investigate the way I believe they should investigate. Their systems and processes are inadequate. I have shared the frustrations of many complainants.’

“Legal professionals throughout Queensland have expressed disgust in recent days at the failure of their Law Society to address serious concerns, including claims of fraud and deceit involving prominent Brisbane ‘no win no fee’ firm Baker Johnson Lawyers. Many former clients of the firm had complained to the Law Society years ago but to no avail.”

It was in this context that Chief Justice Paul de Jersey belatedly entered the fray, mid August, recommending the establishment of an independent body to (Thomas) ‘thoroughly investigate complaints against lawyers’. It appears that ultimately nothing came of this idea.

Further background to key personnel involved at Baker Johnson was brought to light in an article in Richard Ackland’s Justinian legal newsletter, February 2005.

The context of Duncan’s July 1999 article, referred to by Salmon, was the revelation that radio ‘shock jock’ John Laws “… was paid a hefty sum by the Australian Bankers Association in return for good publicity. … I guess the banks think it is easier to stifle debate than to deal with our discontent.”

Here follows John Salmon’s letter, transcribed. It was pertinent in 2002, and it is just as pertinent in 2018. There is much material arising in Queensland worthy of consideration by the banking Royal Commission.

Evan Jones
* * *

3 December 2002
John A. Salmon

The Honourable Paul de Jersey AC
Chief Justice of Queensland
Queensland Supreme Court
304 George Street BRISBANE Queensland 4000

Dear Sir

Re: Banking Malpractice and Resulting Litigation Relating Thereto

I acknowledge receipt of your Associate’s letter dated 4th November 2002. I am, however, very disappointed to be informed that you will not address even the more blatant socially unacceptable concerns within the recommendations which were placed before you.

It would seem a social requirement for the head of judiciary in respect to unconscionable administrative behaviour within the tentacles of justice without our society, given that the citizens of Australia have allowed judges the latitude and privilege to interpret the Australian Constitution, and to administer their deliberations as they see fit.

It would seem that with the granting of this great responsibility and liberty to the judiciary by the people, judicial services should therefore pay their utmost attention to just and impartial behaviour of the legal fraternity, so the industrious minded labored, small business proprietors and individual citizens can be assured of fair and just treatment. This has certainly not happened in litigation involved our four major banks in this country.

It would seem that the judiciary seek to demand judicial judgment on matters of law, but refuse to be the custodians of decent honourable process when administering the law through the courts of Australia. My experience of the past fifteen years confirms this.

The recommendations placed before you in my Report of the 15th August 2002 were accumulated over fifteen years of experience in litigation involving banking institutions, and I believe their diligent acknowledgement deserved attention. Please re-read my Report under mention.

The Baker Johnson fiasco has created havoc in the legal industry. Your public commentary indicates this. I would suggest that more public criticism of the legal industry will continue.

It is well to remember that in mid 1994, the Australian Federal Police Commissioner Mick Palmer told the Australian public:

“I have a real interest in those crimes that impact on Australia in a wide sense – and it is hidden crime, like corporate fraud which so often cannot be mentioned.”

Some fourteen months later, in September 1995, we have the Chairman of the National Crime Authority Tom Sherman also informing the Australian public that:

“Bankers are among the top crims.”

More recently, 19 July 1999, we have an article published in The Australian (‘Service with a smirk’) written by James Duncan, wherein he told readers:

“I think our banks have a dark side. Like a movie character who has been hiding a terrible secret, the truth has finally come out.”

One month later we have Janet Holmes â Court incorporating a statement in address to the Brotherhood of St Laurence, (Misha Schubert, The Australian, 10 August 1999) that she held banks to be:

“… bad corporate citizens.”

The first leader of the Australian Democrats Don Chipp highlighted to readers in his Sunday Telegraph article, 17 September 1995 (‘Standards of our morality in free fall’):

“At the corporate level, criminals in white collars (too few of whom are now in jail) conspired with crooked bankers (none of whom is now in jail) to rip off millions of dollars of innocents’ savings.”

My background experience clearly indicates that the aforementioned quoted remarks attributed to four Australians of unquestionable integrity are 100 per cent correct. From my perspective, I consider that this attributed bank status can be partially related to the ‘dirty trick factor’ in bank litigation.

I further consider that it is only a question of time before the banks’ bag of dirty tricks – ably acquiesced in by the legal profession in the general sense, will become aware to the Australian public at large. The consequential public knowledge will undoubtedly induce more criticism of the legal industry in which you play a prominent role. If this happens, are you prepared to accept partial responsibility?

As I see the situation, TV Current Affairs programs are highlighting banking malpractice on a regular basis.

I will leave to with three advices and look forward to your response in due course.

Yours sincerely,
John A Salmon (signed)

Last modified onThursday, 18 January 2018 21:24

1 comment

  • Marlene McBain-Miller
    Marlene McBain-Miller Friday, 19 January 2018 01:17 Comment Link

    Australians have no hope in stopping our banks practicing their blatant corruption while our judiciary are free to continue doctoring court transcripts. The doctoring of court transcripts ensures the victims have no chance of receiving justice, and the extent of the corrupt activities in the banking sector remain concealed. To see more on what our honourable judiciary get up to, go to the Facebook page, Australians Against Courts Doctoring Court Recordings.


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