Enya eventually found out about the loan and saw her forged signature on the loan agreement. She complained to the bank, which replied that Timothy had signed the loan agreement on her behalf, saying she had granted him power of attorney over her. As a result, she was forced to concede in Family Court proceedings with Timothy that the loan was a legitimate matrimonial debt. This meant she was responsible for repaying half of the loan. 

Enya believed that, because other funds were available to finish the house, Timothy had used the loan for his own benefit. She remained very unhappy about the loan.  Some years later, she asked the bank for more information. After looking through its files, the bank discovered it had never sighted any power of attorney document when granting the loan, and acknowledged there were doubts about the legality of her signature on the loan document. 

Enya tried unsuccessfully through the Family Court to recover her half share of the loan from Timothy, after which she complained to us.

Our investigation

We found that Enya's signature had undoubtedly been forged, either by her husband or the bank officer overseeing the loan. It was equally clear there was no power of attorney. It followed that the loan was invalid as far as Enya was concerned, and that the bank could not have sought repayments from her. But having paid back half of the loan, she had suffered a loss of $65,000.

We found that:

• It was poor banking practice for the bank to have allowed Timothy to take home the loan documents, purportedly to obtain Enya's signature.
• The bank had failed to conduct any sort of investigation into the validity of the loan when it became aware, some years previously, that Enya knew nothing about it, and that her signature on the loan agreement might have been forged. The bank had also provided incorrect information at the time of the first round of matrimonial property proceedings between Enya and her husband by claiming Timothy had signed Enya's signature using his power of attorney.
• The bank had offered almost no help to Enya when she reopened her case against Timothy and sought to have the previous matrimonial property agreement set aside.

Because of a lack of information and financial records, it was very difficult to make any findings about how the loan money had been spent. It was possible some of the money was spent on building the house, but it was just as likely Enya's husband put aside the money for his own purposes after separation.

We could not define Enya's loss precisely, but we were satisfied the bank’s actions had significantly contributed to her unsatisfactory position. It had deprived her of the opportunity to dispute the validity of the loan and its status as a matrimonial debt, or to uncover the truth about what the money had been spent on.

We considered it reasonable to ask the bank to pay half of Enya's share of the loan, or $32,500. To buy a new property for herself, Enya had been forced unnecessarily to borrow an extra $65,000. It was reasonable the bank also paid half of the interest on this loan, or $16,750, and that it should contribute to her legal costs in pursuing Timothy through the Family Court, a sum of $23,782.60. Finally, there was enormous stress and inconvenience Enya suffered over eight years, for which we recommended compensation of $6,000. This brought the total settlement to $79,032.60.

Outcome

Enya and the bank agreed to settle on this basis.