A $400k NAB loan taken out in February 2004 was restructured in 2008 into a redraw facility on strict instructions that the borrower’s wife not be allowed access to the account and the bank never provide her any information concerning it.

Borrower Joul Swed also held an associated “key card” account.

The loan fell into arrears and by January 2012 the bank demanded the whole of the balance outstanding.

When he eventually obtained his missing bank statements – which his wife had intercepted at the post box – he found the debit balance was much higher than expected and filed a complaint with police.

Mrs Swed later swore – on condition her admissions could not later be used to incriminate her – that she had systematically transferred funds between March 2008 and December 2009 via her husband’s phone banking portal without his knowledge and had used the money for gambling.

She already knew his customer-specific ID number (NIN) because it was pre-printed on the back of his “keycard” and on the bank’s correspondence.
NAB thought the story concocted, solely to avoid repayment of the debt. It sued.

She had memorised his password from the phone pad entries that appeared on the phone’s LED screen when her husband had entered it to check account balances from time to time and his PIN, by observing him – from a distance – at ATMs.

Mr Swed defended its claim on the basis that he had been a victim of fraud and that the funds had been stolen, albeit by his wife.

While he thought that her problems were “largely under control” Swed was ever cautious putting – for that reason – the family home into his sole name and had put his wife “on a register to exclude her from gaming venues”.

Justice David Davies rejected the bank’s claim that their story was a conspiracy. Every factor in their account demonstrated, in his view, that it was genuine.

NAB nevertheless argued that the account holder should bear responsibility because he had acted – contrary to the terms & conditions of the phone banking facility – “with extreme carelessness” in relation to the PIN, password and NIN.

Swed agreed he was required under the terms of the facility to keep the PIN and password secret but denied the same obligation applied to the NIN as it was already printed on the back of the keycard.

He also denied he had given his password or PIN to his wife or to anyone else.

After fully considering all the circumstances, the NSW Supreme Court decided he did all he could to prevent his wife being able to see what he was doing at the ATM and on the phone.

It refused the bank’s “extreme carelessness” argument and ordered judgement in favour of the borrower.

Mrs Swed was ostracised by her husband and daughters after the episode but having not yet been prosecuted, but it is unclear whether any prosecution may occur in the future.

He is cleared of all obligations to re-pay the funds misappropriated by his wife, but NAB can still act on the home loan in relation to any other defaults.

National Australia Bank Ltd v Swed (No. 2) [2015] NSWSC 1322, Davies J 18/09/2015
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