Westpac ordered to restore merchant services to blacklisted customer

Westpac, through its banking division St George, will have to restore the merchant acquiring facilities for the Volume Plus network of petrol stations in Sydney following a Federal Court order handed down late on Friday.

The court granted injunctions preventing Westpac from terminating Eftpos and credit card processing facilities for the 10 petrol stations in the network. St George had resolved to cancel these in February 2010, and in effect for the second time in nine months.

The reasons for Friday's ruling, published yesterday, shed more light on the claims and counterclaims of the bank's client and the bank over the termination of the service and the existence of an alleged bank "black list".

According to the judgement, Ivor Kueneman, a St George staffer, in mid 2009 advised Eddie Magar, of NA Retail Solutions (which operated the network of petrol stations) that St George had become aware that the Workplace Ombusdman was conducting an inquiry into the alleged non-payment of entitlements to NA Retail employees.

Kueneman cited guidelines from the bank's risk management group, and told Magar that: "NA Retail Solutions runs the risk of being blacklisted over this business with the Ombudsman. If that happens, you won't be able to get Eftpos facilities for the company in Australia again."

On Eddie Magar's version, Kueneman told him his compay had already been blacklisted, though Kueneman denies this. There is also a dispute as to whether the critical conversations took place in a coffee shop in Fairfield or over the phone.

In any event ANZ and Commonwealth banks soon turned down applications for merchant facilities from NA Retail. Volume Plus later obtained the facilities from St George under a related company, Tadoc Solutions.

When St George opted to terminate this service in February 2010, Magar arranged to apply for the same facilities from CBA but this time through yet another company, Felix Energy.

CBA at first indicated it would approve Felix as a client but then turned the company down.

St George finally terminated the Volume Plus payment services on 15 March 2010.

The judge, Dennis Cowdroy, found that damages (as proposed by Westpac) would not be an adequate remedy and granted the injunctions sought by the petrol station operators against the bank.