Court backs BoQ in franchise row

While it continues to back the franchise model, BoQ in 2009 announced plans to cut almost 20 per cent of its NSW branches. It is facing at least 10 legal actions from former franchisees.
September 16, 2010

Court backs BoQ in franchise row
Liam Walsh


DISGRUNTLED: Leicester Ramsey and his family are about to lose their home of 20 years to the Bank of Queensland.

BANK of Queensland has won a crushing victory in the first round of courtroom battles involving disgruntled former branch owners.

A Federal Court yesterday ruled that a former branch owner had not been able to establish any misrepresentations by the bank in his decision to set up a business in NSW.

Justice Robert Buchanan pointed out that BoQ documents were ''consistently emphatic'' that branch owners would be making their own judgement in entering a franchise agreement.

He also found former branch owner Leicester Ramsey relied upon his own assessments in deciding to start a BoQ venture in NSW's Campbelltown in 2004.

But Brisbane-based BoQ also comes under fire in parts with Justice Buchanan questioning supervision of managing some arrangements and referring to his ''distaste for the unnecessary and heavy-handed drafting in some of the bank's documents''.

He said BoQ almost had a ''split personality'' with some insiders wanting to help the branch while others were ''equally intent on imposing every conceivable form of legal obstacle to any possible disadvantage or future prejudice to the bank's position''.
Mr Ramsey had launched an action in 2006, claiming misrepresentations by BoQ.

It came amid a backlash at BoQ's plans to expand.

While it continues to back the franchise model, BoQ in 2009 announced plans to cut almost 20 per cent of its NSW branches.

It is facing at least 10 legal actions from former franchisees.

Sources close to the cases suggested Mr Ramsey's action had different legal aspects to other cases.

Justice Buchanan rejected all of Mr Ramsey's claims against BoQ and backed the lender's counterclaims.

Mr Ramsey and his private company owe more than $1 million to BoQ. He now faces losing his house.

His lawyer, Peter King, said an appeal was likely.

BoQ chief operating officer Ram Kangatharan, speaking on the outskirts of the RBS Morgans Institutional Conference, said yesterday's ruling was significant as it was the first case to be handed down.

''This is a good vindication of what we've been saying all along,'' he said.

The court heard that the Campbelltown branch had been underperforming, only writing $2.6 million in loans in the 11 months after the branch opened.

Justice Buchanan ruled that Mr Ramsey did not seem to have appreciated he had depended on others for basic banking and was not ''well-fitted'' to pulling in customers.

Justice Buchanan also criticised some aspects of his testimony, and ruled he had been ''less than forthright'' with two disclosures to BoQ.

Mr Ramsey had alleged misrepresentations were made on areas, including whether $4 million could be earned by a branch and about marketing support.

But Justice Buchanan found: ''There is no evidence that a general marketing campaign would have had any influence on the (branch's) performance.''

The court also heard Mr Ramsey had, in 2005, repeatedly failed parts of a BoQ exam.

Mr Ramsey told the court a BoQ employee had suggested he print out screens of multiple choice exams, to help him isolate the correct answers, and he eventually passed the test over three days by eliminating the incorrect answers.

Comments on this story

1. Tangaroa Nga Iwi Posted at 12:12 PM September 16, 2010
Caveat emptor

2. scroge of perth Posted at 12:39 PM September 16, 2010
sucked in by the Bank again

3. john Posted at 12:47 PM September 16, 2010
Failing the exam doesn't sound like a good start.

4. peter of sydney Posted at 12:52 PM September 16, 2010
never trust a bank or a banker.

5. CA Posted at 1:07 PM September 16, 2010
There will be more to come out in the future . Banks have the idea that as they have the most money and access to the best Legal Teams that they have no need to lose sleep over legal action against them. In the end they will wear down the complainants and send them broke as well. A true David and Goliath contest .

6. Matt of Sydney Posted at 2:27 PM September 16, 2010
managers- bank managers, maccas managers and even the managers of supre usually start at the bottom and work their way up. Usually spending years in the industry, become and assistant manager then manager. It's not an entry level job. Double this with the responsibility of running your own multi-million dollar business. Retail banking is a sales job, as much as it's a finance job. Doesn't sound like this guy had a clue, given the failed exam and maybe 5 homeloans in a year. You can't just buy yourself a job. All these failed francisees need to stop whinging. An idea would be actually applying for the job in the market, with a corporation. If you can't get it, you probably dont have the skills

7. Charles Darwin of Sunshine Coast. Posted at 3:59 PM September 16, 2010
The banks are all misleading and deceptive and they get away with it because they have the resources to cover it up.Corporate people in the main lack moral courage.Thats what happens when you have people earning six figure salaries and excessive Super benefits on retirement…they will lie their heads off to protect their Nest Eggs !!!

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