BTF 5950 ASSIGNMENT
BTF 5950 ASSIGNMENT
QUESTION 1B
In order to check whether Eastpac can sue BNZ bank or not, a test of negligience would have to be done. Based on what we have learned in the textbook, 3 steps should be taken: Step 1: Was there a duty of care owed? According to the question, Eastpac bank manager required that Melissa and Fernando had to provide “evidence of their ability to pay their repayments to the BNZ Bank” in order for him to assess whether or not Eastpac would lend the couple money. This requirement from the manager has proven that Eastpac was relying on BNZ’s letter in their decision making process. Furthermore, the fact that Eastpac had stated that the company “would never have lent Melissa and Fernando the money to buy the house had they known their true credit history and financial situation”, and that Eastpac only agreed to lend out the money “After reading the letter from BNZ Bank” have also reinforced the reliance of Eastpac on BNZ Bank’s evaluation. And as the case of L Shaddock and Associates Pty Ltd v Parramatta City Council suggested, BNZ Bank can owe a duty of care to Eastpac when it provided information and advice regarding Melissa and Fernando’s credit status.
Regarding the purpose of the letter itself, there is another case that we can infer: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No.5). Similar to that case, it is clear that the main purpose of such a letter is to prove that the couple had the ability to pay back the amount of loan lent out. Finally, although not very clearly stated, it is safe to assume that Melissa and Fernando had required BNZ Bank to specifically prepare the letter for Eastpac’s reference, as the bank wrote the letter “Upon their request”. Moreover, the fact that in the last paragraph of the question BNZ Bank confessed that its advice towards Eastpac “was incorrect because Melissa and Fernando had missed several loan repayments and were likely to be sued by the BNZ Bank to recover those
QUESTION 1B
In order to check whether Eastpac can sue BNZ bank or not, a test of negligience would have to be done. Based on what we have learned in the textbook, 3 steps should be taken: Step 1: Was there a duty of care owed? According to the question, Eastpac bank manager required that Melissa and Fernando had to provide “evidence of their ability to pay their repayments to the BNZ Bank” in order for him to assess whether or not Eastpac would lend the couple money. This requirement from the manager has proven that Eastpac was relying on BNZ’s letter in their decision making process. Furthermore, the fact that Eastpac had stated that the company “would never have lent Melissa and Fernando the money to buy the house had they known their true credit history and financial situation”, and that Eastpac only agreed to lend out the money “After reading the letter from BNZ Bank” have also reinforced the reliance of Eastpac on BNZ Bank’s evaluation. And as the case of L Shaddock and Associates Pty Ltd v Parramatta City Council suggested, BNZ Bank can owe a duty of care to Eastpac when it provided information and advice regarding Melissa and Fernando’s credit status.
Regarding the purpose of the letter itself, there is another case that we can infer: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No.5). Similar to that case, it is clear that the main purpose of such a letter is to prove that the couple had the ability to pay back the amount of loan lent out. Finally, although not very clearly stated, it is safe to assume that Melissa and Fernando had required BNZ Bank to specifically prepare the letter for Eastpac’s reference, as the bank wrote the letter “Upon their request”. Moreover, the fact that in the last paragraph of the question BNZ Bank confessed that its advice towards Eastpac “was incorrect because Melissa and Fernando had missed several loan repayments and were likely to be sued by the BNZ Bank to recover those