Page 4712 - Week 15 - Wednesday, 7 December 1994
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The drawee, of course, is the bank. In Financial Institutions Law, the chapter headed "Signatures on Bills of Exchange", at page 430, states, under "Necessity for signatures":
It seems trite to say that a party will not be liable on a bill of exchange unless he has signed it, and that a bill is invalid unless signed by the party giving it.
During a 2½-year period, the bank claimed that they provided 34 bill facilities for the Riggs. I will table a copy of one of these bills, for $750,000, to show that it was not signed or endorsed by the CBA. There is simply nothing on the left-hand side. It was certainly signed by Mrs Rigg. Apparently, none of the other bills was signed by the bank. The "bills" were not bills; they were, in fact, promissory notes. The bank obviously knew this, but represented the promissory notes as bills to attract greater fees and other benefits to the bank. The CBA misrepresented how the loan would be made and its form. I do not believe that the bank ever had the slightest intention of providing a bills facility to the Riggs; nor, it would appear, did they have any intention of supplying a simulated foreign currency loan option. It would appear that the bank has different financial responsibilities under the two different methods of loan. They certainly have different fee charges. One is an acceptance fee for the bill facility. If the bank keeps the bill and does not put it out on the open market, that fee is fraudulently obtained.
The loan contract between the Commonwealth Bank and the partnership of A.T. and D.A. Rigg was agreed on 17 July 1985. Because of three months of rain, the building project ran behind schedule and accumulated additional interest of some $40,000. However, as the bank said, the company was sound. There was no logical reason why it could not have effectively traded out of this temporary setback, if the bank had not compounded the economic problem by removing operating funds from the company account of Tony Rigg Welding and Manufacturing Pty Ltd. That was a different account. The details are that, on 14 August 1985, the CBA, apparently without authority, transferred the $485,000 debt from the Rigg partnership account to the company account and began to debit interest payments. The Riggs stated that they strongly objected to this and did so repeatedly. In discussions I had with the bank, they admitted that they had made an error in debiting the company account for $750,000 but later corrected the error. They told me that they could not say why it took 13 to 14 months to do so. Obviously, the Rigg company account was a different legal entity to the partnership. If the bank says that they had the authority to draw on the company account, where is their written authority? I have not seen any. The Riggs say that they gave no such authority.
What was the result of all this? Because the company could not buy materials to make its prefabricated products, it could not service existing orders of approximately $200,000. Debiting the interest costs to the company operating account had the effect of absorbing the profits of the company and, along with the interest increases and general economic troubles, resulted in the business being crippled. An analysis of the company account done during that time by the Riggs' lawyer showed that, if these debits were removed, the company was in credit. Nevertheless, the CBA dishonoured cheques drawn against the company. The Riggs took court action and attempted to get the bank to release
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