The Unpleasant Truth About Australian Banking

Selwyn Krepp’s story


My name is Selwyn Krepp and I have been trying to resolve disputes with Commonwealth Bank. This has proved difficult.

In 2009, I had two investment properties in Queensland, units located at Cairns and a house nearby. Both investments were in good condition and the Bank required me to use them as securities.

I discussed my concerns with other small businesses that attended Parliament House meetings in August 2018. I noted that they also had concerns that their Banks had not provided them with the 2004 Code of Banking Practice which was an essential part of all loan contracts.

I was experiencing difficulties with the Bank in 2021. On 29 September 2021, I contacted Commonwealth Bank Moonee Ponds’ Manager, James Dargin because, under the Code of Banking Practice, I was entitled to believe the Bank would treat me respectfully. It had to provide ‘effective disclosure of information’ to customers like me and without the Code of Banking Practice, it did not.

Mr. Dargin should have been sufficiently well trained to have ‘an adequate knowledge of provisions in this Code.’ He understood my complaints related to the Internal Dispute Resolution (IDR) procedures in clause 35 of the 2004 Code of Banking Practice but did not explain whether the Bank had complied with them.

In late 2021, I obtained a financial loss report carried out by a professional forensic accountant. On 26 January 2022, I forwarded a copy to Commonwealth Bank’s Managing Director, Mr. Matt Comyn. He did not respond and therefore I arranged to have a copy of it hand-delivered to his office on 1 April 2022.

I asked him to deduct $4.5M that I owed the bank from my damages of $11,080,103 stated in the financial loss report. This should have happened and any further concerns in relation to my associations with Commonwealth Bank would have ceased.

By providing the report to Mr. Matt Comyn, the Bank now had 21 days, or under exceptional circumstances 45 days to complete an investigation and ‘provide written reason for its decision on the dispute.’ Comyn did not meet these requirements.

Background to my case

I registered a company Rakaia Pty Ltd (‘Rakaia’) as a Proprietary Company on 4 October 2005. It held the leasehold business and Management Letting Rights (MLR) of Inn Cairns Boutique Apartments (‘Inn Cairns’), acquired for $2.2M and funded by National Australia Bank Limited (‘NAB’). Inn Cairns is comprised of 38 fully self-contained apartments and management of downstairs car parking and 3 commercial premises.

In late 2008, Jonathan Tobata and I (‘Tobata’) bought all of the remaining share capital in Rakaia. I borrowed $667,100 from Commonwealth Bank, via Better Business Loan facility  (‘BBL 3’), to payout the other shareholders. Knight Frank had valued Inn Cairns, MLR, and the manager’s unit at $2.6M.

During the 2009 financial year, Rakaia borrowed $1,350,000 and $72,500 from Commonwealth Bank and reduced its NAB loans from $2,139,562 as of 30 June 2008 to $775,613 as of 30 June 2009. BBL loan terms were for 12 months although I requested longer-term loans, enabling sufficient time to pay down the principal.

On 6 December 2010, in our capacity as Directors of Rakaia and Guarantors, we received Commonwealth Bank’s Letter of Offer to refinance the BBL 1 and BBL 2 facilities of $1,350,000 and $72,500. We signed these on 31 December 2010. The loan terms were for 6 months and maturity date of 31 May 2011. Security was provided over the whole of Rakaia’s assets and Director guarantees limited to $1,422,500 over my personally held residential property.

On 6 December 2010, in a personal capacity, I received the Bank’s Letter of Offer to refinance the BBL 3 facility of $667,100. I signed it on 29 December. The term was for 6 months and matured on 31 May 2011. Security was provided over the whole of Rakaia’s assets and the Director guarantee was limited to $1,422,500 over my personally held residential property.

On 18 May 2011, I received Valuation Report from Knight Frank, valuing the MLR and Manager’s Unit at $1.9M and $400,000 respectively.

The property, plant and equipment increased from $961,090 in 2008 to $1,087,835 in 2009. Overall, the balance sheet, on paper, remained stable and consistent from 2007 to 2011, with no evidence of Rakaia being not able to meet its obligations.

From May 2011 to December 2012, the Bank extended the existing BBL facilities, with no longer-term options. By the end of 2012, the BBL facilities had been in existence for 4 years.

On 30 March 2012, I received a Finance Proposal from Suncorp Bank to payout BBL 1 ($1,350,000), 2 ($72,500), and 3 ($667,100), along with refinancing a home loan on a personally held property. The proposed facilities for refinancing BBL 1, 2, and 3 were on an interest-only basis, with 4 years terms for BBL 1 and 3 and 30 years for BBL 2.

On 23 January 2013, the Commonwealth Bank issued me notices, advising of actions required to be taken to remedy purported my defaults, with respect to the BBL facilities. Prior to these notices, I had never missed a loan repayment on BBL facilities, nor had any defaults, arrears, or contract breaches. The Bank proceeded to charge default interest, for which I continued to service.

On 7 February 2013, Anthony Jonsson and Gerard Miller of KPMG Chartered Accountants (‘Receivers and Managers’) were appointed by the Bank over the assets of Rakaia, and they a signed Deed of Indemnity relating to the latter’s appointment.

The financial loss report stated the Bank did not act in good faith or ethically in failing to extend the BBL facilities, to allow suitable time for the refinance from it. Instead, the Bank issued default notices and appointed Receivers over Rakaia’s assets.

On 3 May 2013, I received a letter from Commonwealth Bank B M Gordon, following our discussions in relation to the Bank’s notices and defaults which had not been remedied.

On 14 November 2013, I received Commonwealth Bank’s letter, advising that the BBL facilities and offer of forbearance had expired on 31 October 2013. Because the Deed of forbearance was offered and the option to execute remained open, the appointment of Receivers and Managers was not in good faith or ethically, they damaged me financially and emotionally.

The Receivers and Managers rewrote the MLR, which had an unexpired term of 12.5 years, which was less favourable to Rakaia and the Bank consented to the new MLR.

On 14 February 2014, the Receivers and Managers sold Inn Cairns MLR for $1.1M. The MLR was valued previously at $1.9M.

In April 2014, the Receivers and Managers sold the manager’s unit for $180,000, which was valued previously at $400,000.

In May 2014, my 6 units were sold by the Receivers and Managers for $531,000, which was lower than sales at the same time for almost identical units.

During the period Inn Cairns was under the Receivers and Managers’ control, they mismanaged the business, causing significant financial loss, and also received various complaints from patrons. This is evidenced by the large drop in revenues, profits, and occupancy rates subsequent to the Receiver and Manager’s appointment (over the 12 months from April 2013 to March 2014).

To quantify this loss and to make a statement of claim with Commonwealth Bank, a forensic accountant report was commissioned. On 4 May 2015, via my lawyers Nicolaides & Associates, I received Consulting Expert Forensic Accountant Report, from Michael Rosner FCPA, stating that my total estimated loss was $1,414,472.

On the same day, 4 May 2015, Nicolaides & Associates filed a submission with the Bank noting that Trading loss ($258,639); Reimbursements, rebates, and trade debts ($45,102); under sale of M&LR ($935,833); under sale of real property ($288,000), which was totally $1,527,574.

On 11 December 2014, the Receivers and Managers lodged a notification of ceasing to act with ASIC

On 1 June 2021, Matthew Joiner and Bruno A Secatore of Cor Cordis were appointed as Agents for the Mortgagee in Possession over several of my personal properties.

Since February 2013, I have been in dispute with Commonwealth Bank and the Receivers and Managers. I have filed a number of claims with the bank and its Directors, the Financial Ombudsman Service (FOS), ASIC, the Australian Financial Complaints Authority (AFCA), and the Senate, with no success. I have sent more than 35 letters to Commonwealth Bank Management, I received only one response.

As of today’s date, in my own capacity and as guarantor, I have received a number of Notice of Demands from Commonwealth Bank in relation to debts outstanding on BBL 1 and 3 facilities;

On 5 October 2021, BBL 1 facility balance was $2,053,033. On 16 December 2021, BBL 3 facility balance was $1,714,855.

As of today’s date, Rakaia is in liquidation, by Court order, in relation to another matter and has NIL assets. As company assets were sold by Receivers and Managers, my shareholder loan of $935,389 has been lost. The Receivers and Managers and Enforcement (Legal) fees were $345,000 and $196,000 respectively. My costs in relation to this matter were $597,260, for which the bank did not act prudently or diligently.

According to the financial loss report provided to Comyn and the bank’s directors, Commonwealth Bank had:

  • provided pure asset or ‘predatory’ loans without considering serviceability requirements
  • provided short-term high interest-bearing loans, not suited to my circumstances, not suitable for the underlying assets;
  • breached the loan contracts by withholding documents pertinent to my rights;
  • not acted in good faith or ethically when appointing the Receivers, which caused material losses in lost trading, and under sale of assets;
  • caused material financial losses and irreparable reputational damage.

Because of these practices, I suffered damages amounting to $11,080,103 as of 19 December 2021 inclusive of Commonwealth Bank debt and costs.

This information confirmed Commonwealth Bank’s directors did not intend to resolve disputes as set out in the loan contracts I signed.

For your information





This story has been prepared for and at the request of Mr. Selwyn Krepp. In preparing this story, I have relied on the source information provided to us by Mr. Selwyn Krepp and have believed this information is accurate and complete.

I have also supplemented the source documentation provided with publicly available information, where appropriate.

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