The ANZ Bank made a debt extension agreement with a farming family that gave them only one day to leave their home if they couldn’t sell it within a six-month period, the financial services royal commission has heard.

Evidence to the commission showed that WA farmers Steve and Janine Harley had been ordered in September 2013 to repay $2.3 million to the bank by March 30, 2014. The Harley family had been on the same land for more than 100 years.

The couple had been struggling for some years, with the bank giving them extensions as they had tried to sell down their land holdings. One had been sold in mid-2012, yielding $170,000, which they had paid to the bank.

One of the conditions to the extension was that if they could not repay the loan they would have to move out of their house on April 1, the day after it expired.

That fact drew Commissioner Kenneth Hayne into the discussion. “Was one day a reasonable period?” he asked ANZ executive Benjamin Steinberg.

Commissioner Kenneth Hayne intervened in the questioning over ANZ loan conditions.

“I believe it’s reasonable,” Mr Steinberg replied. The Harleys had agreed to the conditions and knew they had six months to sell, he said.

“That’s premised on the understanding that the client had some choices. What choices did the client have?” the Commissioner responded.

“That’s a very difficult question for me to say yes to, Commissioner,” Mr Steinberg said.

The Harleys tried to meet ANZ’s earlier repayment demands running auctions for their sheep and property in early 2013 but these failed to flush out buyers. ANZ did not act immediately to enforce a deadline of March 30, 2013, which they had breached, but the situation meant the couple were under pressure.

Mr Harley suffered a heart attack in May 2013 and was flown to Perth by the Royal Flying Doctor Service. A few weeks later the bank declared them in default and counsel assisting Rowena Orr QC questioned the timing of the default notice.

“It would have been better had that not gone out when it did,” Mr Steinberg said.

In September 2013 the bank reached the formal settlement agreement with the Harleys that gave them until March 30 the following year to pay or face eviction a day later.

By March 2014 they had sold five of their nine farm blocks and reduced their mortgage to $1.6 million from $2.5 million.

They asked the bank for an extension to December 2014 to allow them to sell in spring, but the bank refused.

ANZ eventually took legal action to demand the repayment of outstanding loans plus interest, and external administrators were called in to sell the remaining property.

The Commissioner questioned that decision in a business sense as opposed to what he ironically referred to as “mere matters of humanity”.

Mr Steinberg could not say whether the administrators could have got higher prices for the assets than the Harleys themselves. The Commissioner cast doubt on the decision, observing “bank realisation takes time and money”.

The administrators sold the remaining properties, including the Harley family home, in late 2014 and the Harley 100-year connection to the land there was over.

“I believe we have met community standards and expectations in the manner we have managed this file,” Mr Steinberg said.

However he agreed with Ms Orr that the bank had not given the Harleys the option of mediation despite that being available in WA at the time.

Mr Steinberg said the bank would make different decisions about the Harley case if it was happening today.