Yang v Westpac [2011] NSWSC 180

Supreme Court New South Wales

Medium Neutral Citation: Yang v Westpac [2011] NSWSC 180 Hearing dates: 28 February 2011, 1, 2 March 2011 Decision date: 24 March 2011 Before: Gzell J Decision: Statement of claim struck out. Judgment for defendant. Catchwords: TRADE PRACTICES - Consumer Protection - Australian Securities & Investments Commission Act 2001, s 12GM and s 12GF - relief dependent upon alleged representations - no representations found - No principle involved Legislation Cited: Australian Securities & Investments Commission Act 2001 (Cth) Category: Principal judgment Parties: Michael Kar Yiu Yang (Plaintiff) Westpac Banking Corporation (Defendant) Representation: Counsel: C Birch SC (Plaintiff) G Lucarelli (Defendant) Solicitors: Raymond Lee & Co Solicitor (Plaintiff) Sparke Helmore Solicitors (Defendant) File Number(s): 2009/289197

Judgment 1Michael Kar Yiu Yang, the Plaintiff, invested $2.5 M in a Protected Equity Loan product (PEL) of Westpac Banking Corporation, the Defendant. 2Mr Yang borrowed $2.5 M from Westpac interest only for five years. The interest rate was fixed. On 14 August 2007 he purchased a portfolio of approved shares for that amount. On maturity of the loan the shares will be sold and the loan repaid. If a parcel of shares is sold at a higher price than the purchase price, Mr Yang will retain the profit. The equity protection feature arises if a parcel of shares is sold at less than the purchase price. The Bank is obliged to buy the shares from Mr Yang at their purchase price. 3Westpac manages this risk by going into the market and buying put options with respect to each parcel of shares at their purchase price. This leads to a higher rate of interest as the cost of the options is factored into the interest charged, most of which is said to be tax deductible. 4The issues in the proceedings are twofold. First, it is alleged that prior to entering the loan agreement Westpac represented to Mr Yang that the interest rate on the loan would be a variable interest rate. Secondly, it is alleged that in October 2007 Mr Yang requested Westpac to sell the shares and terminate the PEL but Westpac represented that it was not possible to terminate the facility before the expiry of the term. 5Both issues depend in large measure upon findings of credit with respect to Mr Yang on the one hand and Debbie Wong, the financial planner employed by Westpac who advised Mr Yang to invest in the PEL product on the other hand.