Taranaki farmers v ANZ - the fight continues

The Taranaki dairy farmers who celebrated an historic court victory against the ANZ Bank earlier this year have learned the fight isn’t over yet. They will have to continue the battle in the Supreme Court.

In June, three Appeal Court judges ruled staff at National Bank (owned by ANZ) gave “false and misleading” information to farmers Bill and Sharon Coomey when they sold them complicated and risky interest rate hedge products before the global financial crisis in 2007. Check out Newsroom's earlier story: The Taranaki farmers who took on an $81 billion bank - and won. 

The bank told the Coomeys that swaps were like fixed rate loans, only with more flexibility and lower costs.

They didn’t warn them about the huge risks if, instead of interest rates going up as expected, they went down. 

We had more arguments, distress, sleepless nights worrying about how to survive.

Sharon Coomey told Newsroom the bank was aggressive in its push to consolidate the couple’s farm debt and get them into swaps.

“Stuart Esquilant from [National Bank’s] treasury team came out and he bought a flip chart and just talked away. He told us he would manage the whole thing and we couldn’t lose. Swaps are up and down, but he said he’d make sure we never lost on our account.”

The Coomeys didn't lose their farm, but it was touch and go, and the stress was enormous, Sharon says.

"We had more arguments, distress, sleepless nights worrying about how to survive. There were times when you couldn't feed the kids, couldn't pay people, when people were saying we were going under."

They estimate their losses from the swaps at close to $10 million. 

And they were far from the only ones affected. According to one estimate, up to 2000 farmers may have lost up to $1 billion. 

Taking on the ANZ

Bill and Sharon Coomey, after turning down a $155,000 Commerce Commission-brokered settlement in 2013, decided to take on New Zealand’s biggest bank.

People told them they were mad to fight a $81 billion organisation, but they kept on.

“It’s about principles. Farmers have lost their lives. We don’t like what they’ve done to us and what they’ve done to other people and we thought: ‘If we can win this case and stop them from doing it to other people we’ll be happy.”

The Coomeys lost their case in the High Court, but then won in the Appeal Court. The judges ruled that ANZ had given every impression the bank would look out for them, including giving them options around the best time to get out of (“break”) the swaps.

But when the world’s financial markets got into big trouble, Bill Coomey says, the bank ignored its farming customers.

“In 2009 I wanted to break the swap. I looked at GFC and the turmoil going on overseas and I asked them. But they would never get back to us. Back then, when we applied for a break fee, they would have had to pay us $1.6 million to get out.

“But by the time they got back to us 2-3 months later, we had to pay them $1.6-$1.7 million to get out.”

And by that time it was too late. No other bank would take them on.

Someone has to stand up to them

Short-lived victory

They say winning in the Court of Appeal was exciting, but any celebrations were muted and short-lived. They guessed the bank would continue fighting - and that’s what happened.

Last month, ANZ was given leave to appeal, with the next hearing in the Supreme Court on March 12 next year. 

Bill and Sharon estimate the case will have cost them close on $1 million by the time it has been heard in the Supreme Court. To fund their legal bills the Coomeys have sold land, cut down forests, even welcomed an oil company onto the farm to do some drilling.

“Someone has to stand up to them, don’t they?”

Bill says it’s frustrating that at the time they were being wooed by ANZ over the swaps, they had good offers from other banks to consolidate their debt.

“But we chose to stay with ANZ Bank because we had been with them for a long time and we trusted them. In hindsight, that’s the worst mistake we ever made.”

They are also angry that the bank has also included their former lawyer, Robert England, in the court action.

“If we win, they will sue him for the money. That’s not right. He stuck up for us. He’s one of the better fellas.”

ANZ, which has a market capitalisation of $81 billion, made almost $2 billion last year from its New Zealand operations.

No comment

The Australian-owned company would not talk to Newsroom, but corporate affairs manager Stefan Herrick sent an email. 

“We’d rather not comment as settlements were reached years ago with businesses, either individually or through the Commerce Commission process, which concluded in 2014. We also have an appeal before the courts which makes it inappropriate to comment.”

Meanwhile, the NZ Bankers’ Association also issued a statement, saying that bank conduct had improved over the last 10 years, with an increased focus on customer outcomes “aimed at avoiding a similar situation as that which occurred over ten years ago”.

“Interest rate swaps remain a legitimate tool for helping to manage interest rate risk as long as those risks and benefits are well understood,” communications director Philip van Dyk wrote to Newsroom. “They are a product used by many businesses to manage their interest rates.”

Meanwhile Sharon and Bill and their Hamilton-based lawyer Murray Branch, are gearing up for another tough court battle. 

They are, against the odds, optimistic. What’s kept them going?

“I’m buggered if I know,” Bill says. “We just don’t like losing, I suppose.”

And do they think they are going to win?

“Yes, we do.”

For more harrowing stories about farmers caught up in the interest rate swaps deals, listen to the next Two Cents Worth podcast, due soon.

Help us create a sustainable future for independent local journalism

As New Zealand moves from crisis to recovery mode the need to support local industry has been brought into sharp relief.

As our journalists work to ask the hard questions about our recovery, we also look to you, our readers for support. Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.

With thanks to our partners