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The title of this chapter is the theme of the whole exercise and I am sorry for its repetition. The following leaflet is one of the many which I have used to try to spread the story. Banks, politicians and bureaucrats deny it, of course, but it is really pretty simple. Equally, their denial says it all.

I am not legally trained nor qualified. When the variable interest scam swung into operation in the 80s, I wrote letters to newspapers complaining it wasn't fair that banks could change the interest rates on loans and generally bitched to managers for whom I feel great sympathy. Being a bank manager used to be a position of prestige in the community but that image rapidly disappeared and some left the profession because of their downgraded and tarnished role.

In one letter I wrote in February 1988, I complained that I had paid, in installments in two years, $37,692.10 on a 15-year loan of $94,000.00 and yet the balance owing had risen to $98,138.56.

Others suffered far more than I to the eternal shame of our representatives in government who were supposedly elected to protect the people. Bank assets skyrocketed while the people and the country plummeted into debt. Politicians betrayed the nation and still refuse to admit guilt or make amends.

Always there was this feeling that it just wasn't fair or right. I started searching for a legal angle at the nearby Macquarie University Law Library. On the third visit I was browsing the shelves and came across a small, battered, soft-covered version of "The Australian Legal Dictionary "by S. E. Marantelli and under the word, "contract", found the eight essential elements required by common law to create a contract and Number 8 said, "certainty of terms" EUREKA!

Then came books on contract law and the pieces of the jigsaw came together to form the picture which the banks have been trying to hide.

More letters to newspapers which were actually published.

Approaches to parliamentarians resulted in the familiar "Thank you for bringing this to my attention" and the merry-go-round of referrals with no intention of doing anything.

Out of frustration, I stood as an independent. Then joined a new party which promised to reform and restore but they were "easy meat" and were quickly undermined when they threatened by achieving record membership growth and started scoring at the polls. I was expelled when I suggested changing its name from the Confederate Action Party to the Constitutional Australia Party to improve voter appeal.

Anyway, I was invited to join the Liberal Party and, after an interview before a panel of the local branch, was voted by 12 to 1 to be allowed to take up membership.

The local branch supported my campaign to wipe out variable interest rate loans and I presented motions at two State Conventions. However, support of grassroot Liberals and acceptance by the executive are two entirely different things. At the executive level, one comes up against politicians and lawyers ... need I say more?

I resigned from the Liberal Party after a formal debate in their rooms in Parramatta when a lawyer proudly said, "There is certainty. The certainty is the uncertainty." A sick joke which revealed the criminality to which the Liberal Party had sunk.

The only course of action left was to go to court using one of my loans as the test case. Surely judges wouldn't lie! How wrong I was.

The following is a leaflet entitled "Variable Interest Rates Means Stealing "explaining severance and the bona fides method of transacting a loan contract.

(1) they are ILLEGAL. Under common law, for there to be a contract created, there must be "certainty of terms" as an "essential element". This certainty does not exist if the interest rate is not known and not specifically written into the contract. To have a formula whereby a future interest rate is to be applied constitutes lack of certainty and the contract is void. There is no contract binding the borrower to repay the money. A bank misrepresenting such a document to be a contract is guilty of fraud and taking money by fraud is stealing. Legislation which allows variable interest rates, e.g.: the Consumer Credit Act, etc., is repugnant to common-law and is void and inoperative.

(2) they CONTRAVENE the principles of economics. When a loan is transacted," the level of interest rates is determined by the forces of demand and supply for finance in the money market." "The rate of interest charged for any particular transaction will depend on such considerations as the purpose and duration of the loan, the amount borrowed, the collateral security offered (if any), and the credit worthiness of the borrower, all factors influencing the degree of perceived 'risk' involved in making the loan by the lender." (Collins Dictionary of Economics. Second Edition.) Different interest rates being applied subsequently are levied on the outstanding balance of a loan transacted previously to which the determinants were established at the time, i.e.: there is no new loan to which the principles for the reckoning of interest rates can be imposed.

Might I suggest that a lawyer be consulted with a view to asking for "SEVERANCE",", i.e.: "The separation of the good parts of the contract from the bad, which are rejected. The doctrine of severance applies to any contract that is void by statute or common law, or even, in some cases, illegal, provided there is no "public policy grounds against severing (see void contract). The courts will, if possible, save the contract from total invalidity by severing the offending part." (Oxford Reference. A Dictionary of Law. New Edition.)

("Public policy. The interests of the community. If a contract is (on common law principles) contrary to public policy, this will normally make it an illegal contract.")

Written by J.Wilson, P.O. Box 4520, North Rocks, NSW 2151.

amortising (extinguishing) a loan (i.e.: without interest being varied):

Example No. 1: a 10-year loan


% of total interest paid*

% of principal paid*





15.5 (32.1)

6.8 (12.9)


14.3 (46.4)

7.5 (20.4)


13.0 (59.4)

8.3 (28.7)


11.5 (70.9)

9.1 (37.8)


19.9 (80.8)

10.1 (47.9)


18.0 (88.8)

11.1 (59.0)


16.0 (94.8)

12.3 (71.3)


13.8 (98.6)

13.6 (84.9)


11.4 (100)

15.1 (100)

*each year and running totals

Example No. 2: a 25-year loan


% of total interest paid*

% of principal paid*





5.8 (11.7)

1.3 (2.5)


5.8 (17.5)

1.4 (3.9)


 5.7 (23.2)

1.5 (5.4)


5.6 (28.8)

1.6 (7.0)


5.5 (34.3)

1.8 (8.8)


5.4 (39.7)

1.9 (10.7)


5.3 (45.0)

2.1 (12.8)


5.1 (50.1)

2.3 (15.1)


5.0 (55.1)

2.5 (17.6)


4.8 (59.9)

2.8 (20.4)


4.7 (64.6)

3.0 (23.4)


4.5 (69.1)

3.3 (26.7)


4.3 (73.4)

3.6 (30.3)


4.1 (77.5)

3.9 (34.2)


3.8 (81.3)

4.3 (38.5)


3.5 (84.8)

4.7 (43.2)


3.2 (88.0)

5.1 (48.3)


3.0 (91.0)

 5.8 (54.1)


2.6 (93.6)

 6.1 (60.2)


2.2 (95.8)

6.6 (66.8)


1.8 (97.6)

7.3 (74.1)


1.3 (98.9)

7.9 (82.0)


0.8 (99.7)

8.6 (90.6)


0.3 (100)

9.4 (100)

*each year and running totals

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