Mr Doherty told the hearing that in approving the deal in 2008, CBA used a $64.59 million valuation on the property, which took into account the fact it was a "mixed use" development.

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By 2009, Mr Doherty said the bank started to have concerns about its financial performance and  in 2010 he received a letter from the bank outlining new conditions, including a higher interest rate.

"Well, that was putting up the interest rate, which again drew cash that we had to finish the building out of our loan. So it was a cash grab," Mr Doherty said.

Mr Doherty said he asked about the charge and was "brushed off", with a banker telling him  “it’s a credit issue” but giving no other explanation.

In 2011, he said he was told by the bank he needed another valuation and this time the valuer was given "strict" instructions to use a different valuation methodology. This valuation assumed the property would be sold in one package, rather than taking into account the different potential buyers of the apartments, penthouses, retail space and car park. Mr Doherty repeatedly raised his concerns with the bank over the switch in valuation methodology.

“We could see that it was set for doom. It was setting it up and we are saying hang on, you can't do it,” Mr Doherty said.

Although Mr Doherty paid for that valuation, he said he was refused a copy. It was revealed later in the hearing that this valued the project at $55 million - almost $10 million less than the bank's valuation 2008.

After the valuation was completed, Mr Doherty was told the project had “well exceeded” its loan-to-valuation ratio limit and that “Bankwest no longer had an appetite” for its business.

Also facing a cashflow squeeze and with debts to the tax office,  Mr Doherty negotiated a deal with Mantra, which owns Peppers, to run the serviced apartments and open them as Peppers Hobart. But this plan collapsed because Peppers required a three-way "non-disturbance" agreement including Bankwest, which the bank would not sign.

Attempts to refinance ultimately failed, and receivers were appointed in February 2012. Mr Doherty was later declared bankrupt.

The case study came as the commission investigates banks' reliance on "non-monetary" clauses in loan documents to default customers. Counsel assisting the commission Albert Dinelli drew attention to the bank's use of different valuations over the property.

However, CBA’s chief credit officer, Peter Clark, told the hearing the valuation issue was "moot".

“It sort of seems a little moot to me, because I’m not sure at the end of the day it was actually relevant to the outcome here,” Mr Clark said.

Mr Clark said he suspected one reason why the bank had shifted its valuation methodology was that lenders were being “very conscious” of pre-sales of apartments or penthouses.

Mr Clark said rather than the valuation, the key issues were that the loan had expired and the bank had concerns about where the project was headed, its creditors and how long it would take to complete.

“The LVR in itself was a factor, it was relevant, but it wasn’t the reason.”

Mr Clark added that CBA was “very loath” to agree to non-disturbance agreements such as the one proposed by Peppers, because it would have meant the bank would be able to sell the security to only one buyer - Peppers.

Mr Clark acknowledged the risk of the project had “diminished significantly” by the time CBA did not renew funding because it was largely complete.