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Legal and accounting advice an unsafe product in Australia

A party of thirty officers from the Sheriff's Office arrived on Wednesday 29th May 1991 on the farm of Barry Wilson. Mr Wilson was not at home at the time but his wife was and she was physically carried from her dwelling and placed on the roadway together with all their private belongings.

On Monday 17th June, 1991 Barry's son Matthew (aged 2) was with Barry in the cabin of a tractor. The child lent against the door which had not been properly closed and fell out under the wheel of the moving tractor. Matthew was killed. This tragedy is a direct consequence of the terribly stress both psychologically and emotionally for Barry Wilson when his life was thrown into turmoil by the action of eviction.

Barry Wilson had operated his farming enterprise profitably and at least as successfully as any other farmer in the district. In 1979 he also commenced a business separate from his farming activities. That business was the import of farming equipment from Canada and the retailing of same as a distributor. That business was immediately successful and he expanded by the end of 1982 in that he had on floor machinery totalling in value $500,000.00.

The 1982/83 drought hit. Not only did Mr. Wilson's farm have no returns from farming activities in that year, he got no orders for the machinery held and ran into difficulties servicing the company's commitments. Those commitments were floor plan lease commitments secured by the machinery held by the business and the personal guarantee of Mr. Wilson. There was no security directly over his farm. In mid 1983 Mr. Wilson explained his position to his bank manager.

With the advice and assistance of his bank manager transactions took place that reduced the commitments of Mr Wilson's company but substituted an equal debt directly into his own name.
As a result of that advice debts were secured against Mr. Wilson's land. This had the direct effect of turning unsecured debts of a company into a direct debt of Mr. Wilson and secured over his farm. Barry Wilson had taken all the company's debt onto his own shoulders against his farm.
As at the and of 1984 Mr Wilson owed the bank $380,524.00

In March of 1985 Westpac wrote to Mr.Wilson as follows:

"We are sorry to advise that the Bank have declined to provide additional carry on for the coming season or refinance your debt structure on a long term basis. The Bank considers that large lease and hire purchase commitments make your overall operations unviable and suggest you contact your accountant for another opinion."

Mr Wilson approached the Rural Finance Corporation for help. Their reply was:

"We will be prepared to defer at this time payment of the principal portion of your drought carry on loan and allow a further period for these funds to be paid."

The letter then goes on to say that Rural Finance required immediate payment of $6,062.02.

Over the period 1986 to 1990 correspondence was as follows:

A letter (17th August, 1987 ) from Rural Finance under the protective "without prejudice" notation which culminates in the following sentence: "it is becoming clear that your creditors, including this Commission will be forced to rely upon their securities, unless genuine and early efforts are made to negotiate a settlement of your debts".

The evidence discloses fairly bluntly at least 3 attempts by Wilson evidenced in writing to make settlement arrangements with Rural Finance. Each attempt was greeted with a flat "no". No counter-offer was ever made. No guidelines on what it might, could or would accept have ever been forthcoming. There has been no hand of help extended to Mr. Wilson by Rural Finance at anytime since 1983 when the sum of $40,000.00 was granted to him (fully secured by mortgage) for drought carry on assistance.

A response letter dated 25th September, 1987 from Mr. Wilson's then solicitors, set out what is unarguably a genuine and early attempt to negotiate a settlement of his debts. That letter was circulated to all of Mr. Wilson's creditors. It is fact that that proposal was accepted by in excess of 80% of Mr. Wilson's sundry and finance creditors. The only two major creditors who refused to accept the proposal were Rural Finance Commission and Westpac Bank. Because those two refused to accept the proposal it could not be proceeded with.

This is extraordinary since Rural Finance is a corporation invested with the duty under the State Grants (Rural Reconstruction) Act to actively mediate in debt reconstruction and to assist farmers to retain their land.

Rural Finance Commission acted in total disregard of its obligations under that Act and refused to accept a scheme proposed by the farmer to all creditors. Not only did it fail to assist in the scheme it actively vitiated it since there was no further attempt made by Rural Finance Commission to "negotiate" a position with Mr. Wilson, to subsidise him, to reconstruct him or to do anything with him. At Wilson's request he made appointments with both Westpac and Rural Finance Commission in 1988 to negotiate a position. Further meetings occurred in 1989 with no result. In late 1989 both Rural Finance Corporation and Westpac commenced debt recovery proceedings and/or recovery of possession.

The years 1990 and to date have been occupied in legal process. Rural Finance and Westpac have acted separately (but in co-operation) to remove Mr. Wilson from his farm. Affidavit material filed by Rural Finance Corporation officers complain of Mr. Wilson's "attitude" because he defended the proceedings. At all material times there has been a significant degree of moral protestation by the Commission and Westpac along the lines: "How dare he defend these proceedings after we have been so good to him".

Statement by Mr Wilson's previous barrister:

"I could go on for some time about the impact of the legal advice that Mr. Wilson had (before me) upon his management of his position. Simply put, a number of barristers were briefed to review his position and advice on his legal rights. Those efforts of the legal profession embarrass me. I examined his materials very carefully. The upshot of it is, there is a path of destruction of Mr. Wilson's position by inadequate advice, negligent advice, inadequate performance of the officials of Rural Finance and abrogation of responsibility in terms of investigation, advice and assistance of those officials of Rural Finance. At the end of the day Mr. Wilson has been evicted from his farm. He is a shattered man and then suffers the total tragedy of the death of his son."

"I am a solicitor of 15 years standing. I have seldom been so personally affected by a history of mismanagement as I have seen in this case. I am adamant that this client of mine has been extremely wronged over a long period of time."

Some key aspects of the history of this matter

  1. Wilson used various facilities from Rural Finance Commission (as it was then called) between 1972 and 1983. There were three loans each of $40,000.00, one in 1972, one in 1975, and one in 1983. The last was a special drought assistance loan.
  2. Wilson banked at Westpac and during the same period obtained facilities from the bank totalling approximately $150,000.00.
  3. In 1983 and 1984 Wilson made rearrangements for his financial position through Westpac Banking Corporation bringing his total indebtedness to Westpac Bank to approximately $350,000.00.
  4. In 1985 and 1986 Wilson made application to Rural Finance Corporation for assistance under the States Grants (Rural Reconstruction) Act 1971 as amended and the States and Northern Territory Grant (Rural Adjustment) Act 1985.

The Schedule to both Acts (which are very similar) state that the States are given a charter set forth in the Schedule to the Act for the provision of a financial accommodation to farmers. The key principle of the 1971 Act is stated in Part I of the Schedule paragraph B which reads:

"The general principal to be applied is to distribute the available resources as widely as practicable, but the overriding objective is to help restore to economic viability those farms and farmers with the capacity to maintain viability once achieved."

A second important general principle is in paragraph E which states:

"In cases of assistance under the heading of debt reconstruction or by way of advances for carry on expenses, plant, livestock and property development in farm build up cases, it is an essential part of the Scheme that adequate supervision of property management and the financial affairs of the assisted farmer is maintained

Under Part 2 of the Scheme headed "Debt Reconstruction" the stated purpose is:

"To assist a farmer who although having sound prospects of a long term commercial viability, has used all his cash and credit resources and cannot meet his financial commitments.'

In the case of Wilson, acting under the advice and with the co-operation of his Bank Manager he took on large finance, hire purchase and lease commitments, that previously had been existing in a company "Wilson Frigstaad Pty. Ltd." with which he was associated, were transfered out of that company on to straight mortgage debt on his farm. The Bank then declared his farming operation not viable. The complaint against both Rural Finance and Westpac is the following:

(a) Neither of them made any proper or adequate investigation of his financial affairs in 1985 and1986 to establish the root causes of his problem :- being the farm machinery wholesaling business operated through Wilson Frigstaad Pty. Ltd. and the transaction brought about in large part by the Bank Manager to transfer debt from that company onto his farm.

(b) Neither Rural Finance nor Westpac gave him any carry on assistance despite Rural Finance's clear obligationto do so under the provisions of the Act and the principles outlined in the Schedule to the Act. Rural Finance made no attempt to make adequate independent assessment of the viability of his farming operation and relied on the advice of the Bank Manager (having loaded Wilson's farm with unnecessary debt) that his farming operation was non-viable.

(c) Given that both Westpac and Rural Finance refused carry on facilities to Wilson (after a drought in1982/1983 and poor seasons bordering on drought in1984/1985) Wilson was unable to maintain his commitments to both Rural Finance and Westpac and defaulted on same. Both Rural Finance and Westpac then sat on their hands from 1986 right up to 1990 when they issued Writs within months of each other seeking recovery of the debt and possession of his property.

Matters before the courts are treated as high secrets in Australia resulting in vital facts being kept out of the public view sometimes for decades, while disinformation is leaked into the public domain. Also facts about the oppression of ordinary Australians by the powerful may become classified by some as 'distasteful' , as damaging to the required offical image of Australia , and as not fit to be placed in public view, particularly if they expose truths about how Australian 'due process' operates. Nevertheless at least part of the truth about the plight of the Wilsons' was able to be noted by their federal member in the Senate. Documented evidence shows that the substantive complaints made by Mr. Wilson are justified and that violations of local statute law and international covenants appear to be involved.

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