A couple who “equated” Australia’s largest bank with an insurer bearing a similar name, has defended the bank’s mortgage recovery proceedings on the basis that it failed to maintain their mortgage default insurance.
Steven and Carmel Seagrott conceded they were in arrears to the Commonwealth Bank of Australia by $18k and that the total outstanding under the loan agreement as at the date of hearing in the Supreme Court this month was $201k.
They had first taken loans from the CBA in 1995 with associated mortgage protection policies which terminated when the loans were finalised in 2003.
In April 2005 they entered into a further loan agreement that was the subject of the recent District Court trial. It went into arrears in July 2009.
In the intervening period they applied for a further mortgage protection policy to Comminsure, the trading name of Colonial Mutual Life Insurance Society Ltd but declined the option for disablement and unemployment cover.
However when Comminsure notified it would not insure Carmel – apparently because of her health or employment situation they cancelled the application and no further application or attempt to obtain mortgage insurance was ever pursued
The court pointed out that there was absolutely no connection between the CBA and Comminsure. there was no obligation on CBA’s part to offer mortgage protection insurance . the borrowers allegation that mortgage insurance premiums had been deducted from their CBA bank account could not be substantiated .
Her Honour saw no prospect of a valid defence of the CBA’s claim and allowed summary judgement in its favour against the borrowers.
Whether or not the similarity in the trading names of the two financial institutions was likely to mislead or deceive, was not argued.