A TOWNSVILLE woman is suing Bank of Queensland for $400,000 in losses and damages in the first legal action to be launched following the collapse of Storm Financial.
Bank of Queensland allegedly told Ms Helen Rubin an investment through Storm Financial would be safe and allowed her to borrow $184,000 against her house to make the investment.
A statement of claim alleges the bank made the loan knowing Ms Rubin was 56 years old, had given up full-time work, had little income and almost no tolerance for risk.
Ms Rubin's statement of claim, due to be lodged in the Queensland Supreme Court today, is a test case being run by Slater & Gordon that attempts to prove Bank of Queensland's culpability in providing home loans for investments made through Storm. It is understood there are about 300 similar cases awaiting the outcome of Ms Rubin's claim.
Bank of Queensland has said there is no evidence of improper or dishonest conduct or practices by the bank in relation to Storm clients and has denied it has engaged in either unconscionable conduct or misleading and deceptive conduct. It has refused to enter into mediation with its Storm-affected clients.
Ms Rubin's statement of claim alleges the bank breached its contract with her, engaged in misleading and deceptive conduct, unconscionable conduct and made negligent mis-statements.
It also alleges the bank breached its fiduciary duty by persuading Ms Rubin to take out the home loan and to invest through Storm Financial in Storm-badged Challenger index funds, using a margin loan from Macquarie Bank.
The $184,000 home loan represented 80 per cent of the value of her home. Since entering into the home loan in July 2005, Ms Rubin is said to have paid $49,325 in fees to Storm, $48,225 in interest to Bank of Queensland and $116,720 in margin loan fees and interest to Macquarie Bank.
Now Ms Rubin has been left with a $184,000 mortgage and her investments have dwindled from a peak of $930,000 to a low of $26,000.
"By reason of the bank's breach of its fiduciary duties, Ms Rubin suffered loss and the bank made a gain," the statement of claim says.
The original loan was provided by the Bank of Queensland's Kirwan, Townsville branch after Ms Rubin was interviewed by its branch manager, Matthew Buchanan. The statement of claim relies on this conversation to make allegations about the bank's involvement in Ms Rubin's subsequent Storm-related losses.
"About June 2005, the bank represented to Ms Rubin that the Storm investment strategy was a good approach and would lead to increased wealth, [and] … she should invest through Storm in order to increase her wealth," the statement of claim says.
It is also alleged Ms Rubin was told her investment in Storm would be safe, she should borrow 80 per cent of the value of her home and her investment would not place her home at risk.
At the peak, Ms Rubin had borrowed $602,000 through margin loan facilities with Macquarie Bank.
Ms Rubin argues that before offering a loan the bank should have used the "care and skill of a diligent and prudent banker" in forming its opinion of her ability to repay the loan.
Ms Rubin is seeking damages of about $400,000, including asking for the original Bank of Queensland loan to be set aside.
