By Stuart Washington
THE Bank of Queensland is being sued for almost $400,000 in losses and damages in the first legal action linked to the collapse of Storm Financial.
Bank of Queensland allegedly told 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, to be lodged in the Queensland Supreme Court today, is a test case that attempts to prove Bank of Queensland culpability in providing loans for investments made through Storm. It is believed there are at least another 300 similar cases awaiting the outcome of the action.
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, deceptive and unconscionable conduct and made negligent misstatements.
It also alleges the bank breached its fiduciary duty by persuading Ms Rubin, from Townsville, to take out the loan and to invest through Storm Financial's Challenger index funds, using a margin loan from Macquarie Bank.
The $184,000 loan represented 80 per cent of the value of her home. Since entering into the 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 $930,000 to $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's Townsville suburban branch at Kirwan after Ms Rubin was interviewed by its 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.
At the peak, Ms Rubin had borrowed $602,000 through margin loan facilities with Macquarie Bank.
But the statement of claim details how margin calls on October 29 and October 31 last year had resulted in a forced sale of her investments in Challenger index funds, leaving her with about $30,000.
In claiming a breach of contract, 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 her original Bank of Queensland loan to be set aside.