The recent appeal decision in Bendigo and Adelaide Bank Ltd v Howard1 may have significant precedent in relation to the enforceability of thousands of loan documents, and represents another hit to a bank’s attempts to recover loans related to a collapsed managed investment scheme.
The decision of a single judge of the New South Wales Supreme Court rejected all 23 grounds of appeal advanced by the bank.
The borrower’s strategy of putting the bank to proof in relation to the making of a loan advance and the assignment of the debt from a predecessor bank to the plaintiff proved to be very effective in circumstances where, at first instance inadequate evidence had been adduced by the bank and the documents relied upon were not sufficient to establish the fact of:
This decision shows the importance of ensuring evidence is carefully considered prior to the commencement of enforcement action against borrowers and raises questions about the enforcement action taken against borrowers whose loans were governed by the same or similar documentation which, as the plaintiff’s Senior Counsel identified in a hearing for the matter there are “many thousands of transactions”.2
The decision is also a reminder to practitioners to carefully consider the efficacy of any purported assignment of debt prior to enforcement, or else the assignor may find that, what they thought was an enforceable loan is not actually even a loan.
  NSWSC 383.
 We note that this decision will not assist those who entered the settlement deed in Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed)(In liquidation)  VSC 516 due to the acknowledgment of debt contained in that deed.