PART 20: THE EVIDENCE OF MR HULBERT GIVEN IN CROSS-EXAMINATION
1175 I have already mentioned some aspects of Mr Hulbert's evidence given in cross-examination. However, I will address this aspect of his evidence in this separate part as Mr Hulbert was taken to some of the particular transactions and particular documents relevant to the consumers the subject of these proceedings. In other words, in these respects Mr Hulbert was taken from the general to the particular.
1176 As to that, Mr Hulbert accepted that so far as he was aware, all of the documents held by Channic and CBPL for the period June 2010 to June 2012 relevant to the borrowers in these proceedings, had been produced to ASIC (and there were no other records or working documents) including all manuals for each company (and there were no other manuals): T, p 952, lns 9-18; lns 20-27. Mr Hulbert gave evidence that the files from Channic and CBPL "should be complete" (subject to the difficulty of large scale copying) and the files should reveal what was done and the information obtained and what was not obtained: T, p 952, lns 40-44.
1177 Mr Hulbert accepted that Channic produces a number of documents in the course of its business including a Credit Suitability Assessment; a Loan Inquiry Checklist; and a Verification Checklist.
1178 As to the bank statements upon which CBPL was to rely in formulating its preliminary assessment, Mr Hulbert accepted that no bank statements had been obtained from Brim, Harris, Noble and Yeatman. Mr Hulbert also accepted that it was "possibly" correct that if a copy of a bank statement was not on either the Channic or CBPL file, no bank statement had been obtained: T, p 953, ln 26-28. Mr Hulbert also accepted that it was "possibly" correct that if any one of the relevant borrowers had obtained a loan from another financier (such as Cash Converters) and no statement for the loan was on either the Channic or CBPL file, no such statement had been obtained: T, p 953, lns 30-35. Mr Hulbert did not accept that there were no bank statements on the Channic or CBPL files relating to Ms Kingsburra, Ms Dabah and Ms Mudu: T, p 956, lns 3, 15, 17.
1179 As to Ms Kingsburra, Mr Hulbert was taken to Channic's Verification Checklist (Folder 3, Tab 23) which identifies the documents used for verification. That document notes, as the source documents, a loan application form, Centrelink statements, a driver's licence and a Veda credit report. The checklist does not tick or note any reference to a bank or credit card statement as a source document. Mr Hulbert also accepted that he would check "very carefully" what source documents he was looking at when making his assessment: T, p 957, lns 3-4. Mr Hulbert accepted that if a bank statement had been on the file it would have been produced to ASIC: T, p 957, lns 10-11. Mr Hulbert gave evidence that the absence of a bank statement in the files produced to ASIC "could be an oversight": T, p 957, ln 16.
1180 As to Ms Dabah, the files produced to ASIC do not contain a bank statement. The Channic Verification Checklist (Folder 4, Tab 23) records that the source documents used by Channic were a loan application form, Centrelink Statements, a driver's licence and a Veda credit report. Mr Hulbert accepted that the checklist does not identify or tick any use of bank or credit card statements as a source document: T, p 957, lns 46-47. Nevertheless, both in relation to Ms Kingsburra and Ms Dabah, Mr Hulbert believed that a bank statement had been obtained. He accepted that if that was so, the Verification Checklist in each case was incorrect. Mr Hulbert also accepted that in the case of the joint applicants, Ms Dabah and Ms Harris, the letter from Mr Humphreys for CBPL does not make any reference to a bank statement (Folder 4, Tab 1). Mr Hulbert also accepted that the credit application form for Ms Dabah did not identify a bank statement as a supporting document. The application form does not identify any other document: T, p 958, lns 14-30; ln 44.
1181 As to Ms Raymond, Mr Hulbert gave evidence that Channic went directly to Ms Raymond rather than dealing with her through an application made by CBPL. Mr Hulbert accepted that when Channic lent monies to her, she was in default on a previous loan and had been in default for a long time. Her car was repossessed. She had not made good on the loan repayments. Mr Hulbert subsequently "signed her up again for a new loan": T, p 955, lns 1-20.
1182 Mr Hulbert also gave evidence that he did not have "any real specific recollection of the individuals and the occasion when [he] went through the loan contract with the [consumers]" relevant to these proceedings. Mr Hulbert gave evidence that he did not believe that he had any notes on any of the files about going through the "loan contract debt" with the consumers. He accepted that there was no note identifying a "standard spiel" he might have said to each individual consumer: T, p 955, lns 22-35.
1183 Mr Hulbert gave evidence that when consumers came to the car yard, he would generally pass them over to Mr Humphreys. Mr Humphreys would talk to them about finance. A credit application form would be prepared. If Mr Hulbert believed that "the loan would go through", a deposit would be taken from the consumer although generally deposits were taken after a credit application form was submitted. A lot of consumers would come back later with a deposit: T, p 960, lns 39-45. Some consumers paid a deposit "on the very first day" and that was before Channic undertook its obligations under the NCCP Act: T, p 961, lns 4-5. Generally, consumers did not pay a deposit until after the loan was approved: T, p 961, lns 8-9.
1184 Mr Hulbert accepted that in the case of the consumers relevant to these proceedings, the deposits represented about a quarter of the purchase price of the cars. Mr Hulbert accepted that the deposit was a significant amount for most people: T, p 961, lns 40-43.
1185 Mr Hulbert accepted that by the time he came to speak to the consumers about the credit contract, they had already parted with their deposit monies and, by then, there was little point in starting to speak to the consumers about their expenses or their usual living expenses.
1186 Mr Hulbert gave evidence that, before then, he had spoken with the consumers and generally met with them in his office.
1187 Mr Hulbert gave evidence that the purpose of the loan was "obvious" and he well knew the purpose for which the consumer sought the loan. Mr Hulbert gave evidence that if any of the consumers did not wish to proceed with the loan contract, they were free not to go ahead with it, and if they did not wish to proceed, the deposit would be refunded. Mr Hulbert gave evidence that they were never at risk of losing their deposit: T, p 962, lns 40-47; T, p 963, lns 1-2.
1188 Mr Hulbert accepted that not many of the consumers test-drove the car before buying the car. Mr Hulbert did not accept that the consumers in this case were "desperate" to purchase a car: T, p 963, lns 30-34.
1189 As to the use of the sign, advertising finance from the site of the dealership with "20 minute on site approvals", Mr Hulbert gave this evidence: "We implied … that we could possibly do a 20 minute approval after we collected and verified all our data. You couldn't possibly do a 20 minute application": T, p 964, lns 24-26. Mr Hulbert accepted that people came to the car yard based "on a recommendation" and that "it was [Mr Hulbert's] habit to pay people money who gave recommendations [a spotter's fee]": T, p 965, lns 24-30. Mr Hulbert also gave this evidence: "What we conveyed with the sign [was that] we would look at all these people as an applicant. It didn't say we would approve them". As to this matter, the following exchange occurred with ASIC's counsel at T, p 966, lns 33-45; T, p 967, lns 14-23:
Q: So the 20 minutes would relate to Channic making reasonable inquiries, verifications and performing a credit suitability assessment, is that right?
A: After Channic had carried out its work, we could give an approval within 20 minutes … [after] it's carried out its work verification … Channic could give an approval within 20 minutes after - relayed to the customer that the loan had been approved.
Q: After what?
A: Channic had carried out its verifications and [assessed] suitability. Yes.
Q: That's the point, Mr Hulbert. It has got to carry out all of those?
A: That's right.
Q: And once it has done that, it has reached the end?
A: Yes.
[emphasis added]
1190 As to the Veda credit checks, Mr Hulbert gave evidence that they were conducted over the internet. Mr Humphreys was provided with forms to undertake the credit check. He would ask consumers to sign the privacy form and he would then undertake the credit check. Channic paid for the credit check. Mr Humphreys was "doing it for his own purposes as well [as] for [CBPL]". Mr Hulbert thought that the Veda credit check documents would be in each of the CBPL files for a consumer, and if it was not, CBPL might have "moved them on to Channic". Mr Hulbert accepted that in the case of the application for finance put to Channic by Mr Humphreys for Ms Dabah and Ms Harris, the application letter (Folder 4, Tab 1) contains no reference to a credit check having been undertaken: T, p 968, ln 28. Although none of the forms of letters sent by Mr Humphreys for CBPL (for the consumers relevant to these proceedings) contains a reference to a credit check having been undertaken, Mr Hulbert says that Mr Humphreys sent the credit checks to Channic. Mr Hulbert did not accept that he had undertaken the credit checks after receiving the application from Mr Humphreys: T, p 968, lns 30-39. Mr Hulbert explained that, to the best of his recollection, the credit check was "done by Mr Humphreys for Cash Brokers": T, p 969, lns 20-21.
1191 Mr Hulbert was then taken to the Preliminary Test document (Folder 4, Tab 9) concerning the loan to Ms Dabah and Ms Harris. Mr Hulbert recognised the document. He said that it was "something performed by Mr Humphreys". Mr Hulbert gave evidence that there was a document used by Channic and another used by CBPL and although the Preliminary Test might have had "Channic" on the template, CBPL nevertheless carried out the assessment. Mr Hulbert said that CBPL and Channic had their own computers "and different templates for Cash Brokers and Channic". Mr Hulbert gave evidence that although the Preliminary Test may have had Channic's name on it, Mr Humphreys may have "picked up" a Channic form "by accident": T, p 969, lns 32-46. Apart from the case of Ms Raymond where Channic undertook the Preliminary Test itself, every Preliminary Test relating to the consumers in this proceeding displays Channic Pty Ltd at the top of the document notwithstanding that the document is said to originate with the broker, CBPL.
1192 Mr Hulbert did not accept that this circumstance suggested that Channic and CBPL were not operating separately. Mr Hulbert asserted that the Preliminary Test was in each case (apart from Ms Raymond) carried out by Mr Humphreys for CBPL.
1193 As to the content of the Preliminary Test (in the case of Ms Dabah and Ms Harris as an example), Mr Hulbert accepted that the document recited a motor vehicle purchase as the loan purpose at $6,990.00; a cash deposit of $1,800.00; income capacity statistics for each borrower taken from Centrelink statements; deductions from that income in the form of expenses including rent; and a repayment of a Centrelink advance at $55.51. Mr Hulbert also accepted that but for those expenses just mentioned, the Preliminary Test does not include the actual living expenses of the borrower and that CBPL did not seek to make an assessment of the borrower's actual living expenses, that is, their day-to-day expenses, "because we had it in our cost of living": T, p 971, lns 22-26.
1194 Mr Hulbert accepted that some "fixed expenses" such as "utility bills" and things "like that" were not listed and not taken into account because "we include it in our benchmark": T, p 972, lns 1-9. Mr Hulbert gave evidence that the benchmark or notional living expenses, based on the standardised expenses model, included "all their extras like their food and those other expenses": T, p 972, lns 27-28. Mr Hulbert gave evidence that although he did not try to ascertain the actual expenses of the borrower, he did make inquiries "just to see if there was anything outstanding there": T, p 972, lns 40-41.
1195 As to the Credit Application Form, Mr Hulbert was taken to the example of that form in the files relating to the application by Mr Gordon and Ms Stanley (Folder 7, Tab 2). Mr Hulbert gave evidence that the form used by Mr Humphreys had been supplied by Mr Hulbert. Mr Humphreys had been instructed by Mr Hulbert as to how the form was to be filled out. Mr Hulbert generally knew the way in which Mr Humphreys filled out the form. In the case of the form filled out at Tab 2, Mr Hulbert thought that the writing was that of Mr Humphreys: T, p 973, lns 23-31. Mr Hulbert accepted that, in this example at Tab 2 concerning Mr Gordon, no information is recorded in relation to expenses including living expenses. Similarly, Mr Hulbert accepted that in the example at Tab 3 concerning Ms Stanley, no expenses are recorded including living expenses: T, p 974, lns 1-7. Mr Hulbert accepted that these documents in the ordinary course are forwarded to him and that he received those documents as attachments to the CBPL letter from Mr Humphreys to Channic (Tab 1). However, Mr Hulbert gave evidence that he spoke directly to Mr Gordon and Ms Stanley after seeing the credit application forms. Mr Hulbert thought it odd that the forms contained no entry for rent. Ms Stanley explained that he lived on his own land and paid no rent. He had built "his own place there": T, p 974, lns 21-29. Mr Hulbert accepted that the Channic Verification Checklist (Folder 7, Tab 21) contains a section identifying one source of information as "Personal interview with customer". He also accepted that the checklist contained no note that an interview had been carried out with either borrower. However, Mr Hulbert gave evidence that "the interview was carried out": T, p 974, lns 35-43. Mr Hulbert did not accept that because the Verification Checklist did not refer to a personal interview, that he had not carried out such an interview: T, p 975, lns 1-4. The following exchange then occurred at T, p 975, lns 6-26:
Q: Mr Hulbert, do the documents that you've produced from Cash Brokers and from Channic, in terms of what they purport to indicate, have any connection with reality at all?
A: Please explain that. Reality?
Q: … do you think they purport to record the reality of the processes you went through?
A: They - it doesn't report all the processes we went through, no.
Q: And in none of the Channic files do you ever check - so in the files which are the subject of this action where Channic has purportedly prepared the verification checklist, is the personal interview with the customer ever ticked?
A: That's probably correct, yes.
Q: Because it's never carried out?
A: I'm telling you we carried out personal interviews.
Q: When they came back to sign?
A: We carried out interviews before as well …
[emphasis added]
1196 Mr Hulbert was taken to the application letter from Mr Humphreys to Channic (Folder 7, Tab 1, Mr Gordon and Ms Stanley). Mr Hulbert accepted that the letter is dated 29 September 2010. Mr Hulbert also accepted that the Credit Suitability Assessment records that it was made on 24 September 2010. Mr Hulbert asserted that the date of 24 September 2010 was a typographical error: T, p 975, ln 37.
1197 Mr Hulbert was taken to the files in relation to Ms Dabah (Folder 4) and, in particular, the Credit Application Form (Tab 3). Mr Hulbert recognised the handwriting of Mr Humphreys on that form in the box headed "Financial Information". Mr Hulbert accepted that the number of expenses identified in that box was "derisory" and that Mr Humphreys had recorded "very few details": T, p 976, lns 14-17. In answer to the proposition that Mr Hulbert was not really interested in the living expenses of the consumer borrowers, Mr Hulbert said: "We took note of some of their living expenses to make sure they weren't out of the ordinary": T, p 976, lns 20-21. This exchange then occurred:
Q: Now, just so you understand what I'm putting to you, you accepted - in the way in which these forms were filled out - in your capacity as a director of Cash Brokers?
A: Correct.
[emphasis added]
1198 Mr Hulbert thought that Mr Humphreys had prepared each of the letters from CBPL to Channic for each of the relevant consumers in the sense that he probably typed them up unless he requested someone in the office to do it for him: T, p 976, lns 31-37. Mr Hulbert was taken to Folder 3 concerning the documents in relation to Ms Kingsburra and, in particular, Tab 1 by which Mr Humphreys tells Channic that Ms Kingsburra has requested a loan for $7,290.00. Mr Hulbert accepted that he therefore understood that that was the amount Ms Kingsburra was wishing to borrow depending upon whether she "wanted the brokerage fee added": T, p 976, lns 45-46. Mr Hulbert accepted that the application letter made no mention of a brokerage fee: T, p 977, ln 1. Mr Hulbert was taken to the Credit Application Form at Tab 2. Mr Hulbert accepted that the form contains no details of the price of the car or the deposit or the amount of any weekly payment. Mr Hulbert gave evidence that "the customer is given the price of the car when they've received their money" [emphasis added]. Mr Hulbert added this: "The customer is given at least three points [as to] what they're paying for the car. When they've paid their deposit they're told what the payment is" [emphasis added].
1199 Mr Hulbert was taken to p 2 of the Credit Application Form. He accepted that the form contained "not much information about expenses" and that the form was "much the same as most of the other forms". He also accepted that under the "Supporting Documents" part of the form on p 3, nothing is ticked and, in particular, the "Bank Statement" box is not ticked: T, p 977, lns 37-46. This exchange followed at T, p 978, lns 28-30:
Q: … I want to suggest to you, Mr Hulbert, that this is the extent of the inquiries about the financial - the expenses of the customer?
A: That's right in most cases.
1200 As to the use of the bank statements, this exchange occurred at T, p 980, lns 6-30:
Q: And you said yesterday, did you not - I'm paraphrasing - you're primary sources were Centrelink statements and bank statements?
A: Yes.
Q: Well, I've already put to you that you didn't get bank statements in the majority of the loans …?
A: On some of the loans.
Q: Now, is it the case that when you got the bank statements, you generally obtained them for bank details and nothing else?
A: When we got the bank statements?
Q: Yes.
A: We would be checking to see what other loan contracts may be on there … or other income that may be on there … Because these people … would get other income that wasn't disclosed at the time on their Centrelink statements.
Q: So you didn't obtain them for the purposes of trying to work out their expenses?
A: No. I told you about expenses … We didn't have a table where we itemised every expense.
[emphasis added]
1201 Mr Hulbert also gave evidence that he looked at the balance on the bank statement and he looked to see if the consumer had a habit of withdrawing monies at known places "where poker machines are and things like that, we would be looking for that type of thing as well": T, p 980, lns 34-37.
1202 Mr Hulbert was then taken to the Preliminary Test concerning Ms Kingsburra (Folder 3, Tab 9). In that document, the standardised expenses formula is deployed based on expenses of $950.00 for a single person for a month and a loading of $325.00 for each child. Mr Hulbert accepted that, using the formula, he attributed to a single person living expenses of $950.00 a month. Mr Hulbert also accepted that he did not make any assessment of the expenses encompassed within the figure of $1,300.00 for a de facto couple because Mr Hulbert took into account the total number of people involved once the formula was engaged. Mr Hulbert accepted that he did not compare the formula he used with any other indexes like the "Henderson Poverty Index". The proposition was put to Mr Hulbert that in the period 2010 to mid-2012, he did not know what expenses the figures of $950.00 or $1,350.00 was intended to cover. Mr Hulbert said that he did not use the formula throughout that period and changed over to a different approach in 2011. As to the period up to the time when Mr Hulbert ceased to use the formula, Mr Hulbert said that he had received some training on the items intended to be covered by the formula. Mr Hulbert thought that insurance expenses were probably covered by the formula: T, p 984, ln 18. He thought that expenses related to gas would form part of utilities and would be covered by the formula. He also thought that pharmaceutical expenses for families would be covered by the formula. Mr Hulbert did not have any document which might tell him the expenses incorporated within the figures of $950.00 and $1,300.00.
1203 Mr Hulbert referred to a "buffer" arising out of an excess of income over expenses: T, p 985, lns 1-2. Mr Hulbert gave evidence that he did not have any written down figure which would identify a sufficient surplus or buffer. He said that the buffer did not have to be "significant" although "we would use more than a dollar". Mr Hulbert said: "We would like to see a buffer": T, p 985, lns 32-42. This exchange then occurred (T, p 985, lns 44-46):
Q: Well, did you have any protocol in place for determining from whether or not there was an excess of income over expenses, whether the loan was suitable?
A: There was a lot of things taken into account [in determining whether] the loan was suitable.
1204 Mr Hulbert seemed to accept that on 10 January 2012 in an interview with ASIC he had expressed the opinion that so long as the buffer was "positive", it was acceptable to him for the purposes of lending: T, p 986, lns 5-6. Mr Hulbert also seemed to accept that if there was a surplus then it would be "reasonable" to lend "but there [were] other loans which were rejected even that had surpluses": T, p 986, lns 19-21. Mr Hulbert was asked whether it had been his view that the presence of a surplus was his "main criteria" for lending. He said that it was not "the main criteria". This exchange then occurred at T, p 987, lns 3-5:
Q: Mr Hulbert, can you answer my question?
A: All right.
Q: Did you ever believe it to be - was it ever your view that so long as there was a positive amount shown on the preliminary test, that that would be sufficient?
A: No.
[emphasis added]
1205 Mr Hulbert was taken to a series of exchanges with Ms Egan in the course of an interview on 10 January 2012 in which Mr Hulbert expressed the position that any positive amount over "our formula" would be considered by him as sufficient for lending purposes. Mr Hulbert accepted that when he was considering the Preliminary Test, the matter he was seeking to determine was whether or not the loan is "not unsuitable" for the borrower. The proposition was put to Mr Hulbert that his evidence to ASIC was that if there was a "positive amount" in the Preliminary Test then he would consider that the loan was "not unsuitable". Mr Hulbert accepted that "it is a point towards not being unsuitable": T, p 988, lns 11-13. Mr Hulbert also accepted that there was no "buffer" spoken about in those exchanges with ASIC: T, p 988, ln 15. Mr Hulbert was taken to pp 128, 129, 242 and 243 of the Transcript of Interview of 10 January 2012 (Folder 24, Tab 1, Ex 41) in which, in relation to the Preliminary Test, Mr Hulbert had said: "When I see the surplus there I believe the loan is suitable" and in response to the question put to him: "That's all you look at? The surplus at the bottom?" Mr Hulbert answered: "Yes". Further, in answer to the question then put to him: "Is that reasonable?" Mr Hulbert responded: "That's reasonable for me". Mr Hulbert accepted that he had answered those questions in that way "at the time" but added: "That's not my evidence", in these proceedings: T, p 989, lns 5-8. Mr Hulbert explained that he went into the examination on 10 January 2012 without knowing the questions that would be asked of him over a lengthy period. Mr Hulbert was taken to further answers he gave in the course of the interview with Ms Egan in relation to income and expenditure. In that transcript, Mr Hulbert said that he looked at the surplus and having done that, he would look at the income and the expenditure. He was then asked, in that interview: "And you make no other inquiries? And you can purely make a decision that this loan was suitable based on looking at the income, the expenditure and the surplus?" Mr Hulbert responded: "Well, that's the main criteria … yes".
1206 Having been taken to those matters, Mr Hulbert agreed that having read the transcript he had accepted that a surplus was his main criteria in determining the lending. When the proposition was put to him that he had earlier said in cross-examination that the presence of a surplus was not the main criteria, he said: "It was one of the criterias". He added that even though a proposed borrower had a surplus that did not mean that every loan "went through": T, p 990, lns 36-45.
1207 Mr Hulbert was then taken to the Channic and CBPL files for Ms Kingsburra "as an example of your files generally" (Folder 3). Tab 1 is a copy of the letter from Mr Humphreys for CBPL to Channic. Mr Hulbert accepted that the letter is dated 6 July 2010 and that he would expect that date to be "about the day" that Mr Hulbert received the letter "unless there's a typographical error". Mr Hulbert added that there may be a typographical error: T, p 991, lns 14-19. The letter refers to five attachments including a completed finance application and "Income verification Centrelink Statements". Mr Hulbert was then taken to Tab 10 which is Mr Hulbert's letter in reply to Mr Humphreys. The reply letter is dated 6 July 2010. The reply letter says, among other things: "Please be advised [that] the assessment we made [was] to decide the credit contract referred to above [Kingsburra] was not unsuitable for the client/s". Mr Hulbert accepted that he would not have sent that letter without having undertaken "the verifications" although he thought that the letter might have "the wrong date on it". Mr Hulbert thought that "someone else might have prepared" the reply letter. He said that office staff "quite often" prepared these reply letters. Mr Hulbert initially gave evidence that sometimes, although not always, office staff prepared the checklists as well, but then, on reflection, gave evidence that only he "did the checklists". He added that although office staff prepared the reply letter, he always prepared the checklists: T, p 992, lns 14-32. Mr Hulbert added that if he had "overlooked things that hadn't been ticked, then it's my responsibility".
1208 Mr Hulbert was then taken to Folder 3, Tab 21 which contains Channic's "Credit Suitability Assessment". Mr Hulbert gave evidence that this document "could be prepared by an office staff [member]": T, p 992, ln 45. He accepted that this document could have been prepared by someone else. He accepted that he had signed the document and that, on the front page, it is dated 6 July 2010. Mr Hulbert said that "that was prepared by someone else" and added that the presence of that date did not mean that the assessment was done on that date: T, p 993, lns 10-14. Mr Hulbert gave evidence that the period covered by credit suitability assessments undertaken by him was "a period up to 90 days, or something like that".
1209 Mr Hulbert was then taken to Folder 3, Tab 22 which contains Channic's "Loan Inquiry Checklist". Mr Hulbert accepted that that document is signed by him and it bears the date 6 July 2010. Mr Hulbert gave evidence that: "Someone else probably prepared it": T, p 993, lns 43-46. Mr Hulbert was then taken to Folder 3, Tab 23 which is Channic's "Verification Checklist". He accepted that he had signed that document and it bears the date 6 July 2010. Mr Hulbert gave evidence that, in the case of this document, "it wasn't the correct date possibly": T, p 994, lns 11-12. Mr Hulbert said that he would "not necessarily" have prepared this document and, again, it could have been prepared by one of "the office staff", with "documents sent over from Cash Brokers": T, p 994, lns 14-20. Mr Hulbert was asked what he had done, in this case, to verify the information received from Cash Brokers and said that he "probably spoke to [the borrower] at some period" and "didn't tick it" on the Verification Checklist.
1210 As to personal reference checks, in this case, he could not remember whether he had undertaken that step.
1211 Although Mr Hulbert believed that he had received a bank statement relating to Ms Kingsburra, he accepted that Channic's Verification Checklist did not record any bank statement as a source document for verification: T, p 995, ln 6. Mr Hulbert gave evidence that as to the "ticking" of source documents, he did the "actual ticking" and then signed it. He accepted that he signed it above the date, 6 July 2010. Mr Hulbert accepted that he had ticked, as one source document, "Centrelink statements". Mr Hulbert also accepted that the Centrelink statements were not delivered until 13 July 2010 and thus the date of 6 July 2010 was "another date error": T, p 996, lns 12-15. Mr Hulbert said that the Verification Checklist could not have been done until 13 July 2010 and the document was probably not filled in until 13 July 2010. Mr Hulbert thought that Mr Humphreys might have made an error in the date: T, p 996, lns 27-28. This exchange then occurred:
Q: And that the letter you wrote back had an error in the date?
A: That's right.
Q: And the verification checklist had an error in the date?
A: That's right.
Q: As did the loan inquiry checklist?
A: Yes.
Q: And the credit suitability assessment?
A: Yes.
Q: … and your letter to Mr Humphreys also contained the error?
A: … if that's the case.
Q: And I think you suggested that this [the reply letter at Tab 10] was prepared by office staff.
A: Sorry, the document probably is supplied, yes, by the office staff. Yes.
Q: So all three of you made errors in the dates?
A: That's correct, yes.
[emphasis added]
1212 Mr Hulbert was then taken, again, to Folder 3, Tab 9 which contains the Preliminary Test document signed by the broker. Mr Hulbert accepted that (apart from the application by Ms Raymond) the Preliminary Test was forwarded to Channic by CBPL as correct, in the format reflected at Tab 9. Mr Hulbert also accepted that this was the form in which he, as a director of CBPL, "wished it to be forwarded": T, p 997, lns 25-31. Mr Hulbert accepted that the Preliminary Test makes no attempt to suggest that the proposed loan identified in the test "was not unsuitable for the borrower" and explained that, taken in conjunction with "our discussions", Mr Humphreys was sending the document to Channic "in the belief that it was suitable": T, p 997, lns 33-37. Mr Hulbert accepted that he was aware that the test contained no statement that the loan was not unsuitable. Mr Hulbert also accepted that he knew that the Preliminary Test did not purport to cover the period in which the loan "might be entered into": T, p 997, lns 46-47; T, p 998, ln 1. Mr Hulbert thought that because there was no Centrelink statement on 6 July 2010, Mr Humphreys must have come back to the template and then "continued to proceed with the - the full assessment" by inserting information.
1213 Mr Hulbert was then taken to Folder 3, Tab 77 which contains a copy of Ms Kingsburra's bank statement for the period 27 February 2010 to 31 May 2010. Mr Hulbert thought that, although there is nothing in the documents before the Court to suggest that Ms Kingsburra's bank statement was on the files of Channic or CBPL, he nevertheless had the bank statement before him. Mr Hulbert accepted that an examination of the bank statement shows that the pattern of her income receipts and expenditure of monies is that money comes in on day one and is "all out the same day, and into deficit": T, p 1000, lns 34-35. However, Mr Hulbert gave this further evidence: "Yes, but what I'm saying is that it's not the total criteria that someone has got to have X amount of money in their bank account all the time": T, p 1000, lns 37-39. Mr Hulbert also said this: "Well, I've spoken to a lot of customers and a lot of customers run their accounts this way, that they don't keep money in their accounts, and this customer still made a lot of payments, regardless of the way she ran her bank account": T, p 1000, lns 44-46. This exchange then followed:
Q: But, by necessity, they are presently spending each week more than they're receiving. Do you agree?
A: That's what they choose.
Q: Yes. That's right?
A: That's what they choose.
Q: Well, when you say "choose" their expenses exceed their income and that's what you pick up from this though, do you not?
A: No. I don't pick that up.
Q: You don't pick that up?
A: No. Their expenses - I don't know what they spend their excess money on.
Q: And you don't inquire?
A: I don't know what they spend their excess money on.
Q: And you don't inquire?
A: What they spend their excess money on?
Q: Yes.
A: No.
[emphasis added]
1214 Mr Hulbert was then taken to Folder 9 which contains the documents relating to Mr and Mrs Noble. Mr Hulbert accepted that the files do not contain a bank statement for them. Mr Hulbert was taken to a bank statement obtained by ASIC for the period 29 September 2010 to 1 December 2010. Mr Hulbert accepted that had such a bank statement been obtained, the first thing that he would look at is the spending patterns and income patterns reflected in the statement. Mr Hulbert gave evidence that Channic always tried to "get the loans payable in conjunction with the payment they [borrowers] received": T, p 1002, lns 1-2. In this example, Mr Hulbert accepted that on 1 October 2010, the account is in credit of only $3.89 and that it stayed that way until 5 October 2010 when a Centrelink Parenting Payment was received of $131.60. Mr Hulbert accepted that on 5 October 2010, the money was expended with the result that by 6 October 2010 the account was overdrawn by $63.98 and that there remained no money in the account until an AusGov Families Payment on 12 October 2010. The proposition was put to Mr Hulbert that in relation to the consumers the subject of this proceeding, if those consumers are taking money out on the day and spending it, they will not have any demonstrated excess funds to repay a loan. Mr Hulbert thought that conclusion was not correct because people had subsequently proven that they could make the repayments. This exchange then occurred:
Q: It's not a question of whether they can; it's whether or not it's suitable. Understand that?
A: I'm sure the people think that it's suitable …
Q: And, Mr Hulbert, that's the way it is with the borrowers, what with that - in this case, that largely the money went out of their accounts almost immediately it's received from Centrelink, or all of their wages, in the case of Yeatman.
A: If that's what they wish to choose to do.
[emphasis added]
1215 Mr Hulbert, in these exchanges with ASIC's counsel, seemed to accept that if he had examined the bank statements available to him, for the purpose of understanding the patterns of income and expenditure of the potential borrowers, before he made a loan to any one of them, the clear pattern which would have emerged was that they were all spending their money "very quickly". However, Mr Hulbert was of the view that "not everyone kept their money in their bank account": T, p 1003, lns 13-31. Mr Hulbert accepted that so far as he could recall (apart from Yeatman), all the other borrowers relevant to this proceeding defaulted on their loans.
1216 Mr Hulbert gave evidence that in order to try and comply with the NCCP Act, he had retained a firm in Sydney to prepare policy manuals for Channic and CBPL and prior to that date, those companies had "a different system" in place although Mr Hulbert could not recall the elements of that system. However, it "probably" involved "different documents entirely" to the ones provided in the manuals.
1217 Mr Hulbert was taken to Folder 22 which contains policies and procedures manuals for Channic and CBPL. Tab 1 is a policy document for CBPL described as "Fit and Proper/Organisational Competence Policy and Procedures". It bears the date 14 November 2010 which is the date Mr Hulbert approved it for CBPL. The Document Version Control Table recites a Board approval date of and an "Effective date" of 14 November 2010. Tab 2 is a CBPL document entitled "Compliance Plan". It is also dated 14 November 2010. Mr Hulbert said that CBPL was "using the documents before that date", or at least "supplements from it" although he could not remember the supplements he thinks he was using. Mr Hulbert gave evidence that these documents had to be lodged with ASIC as part of the "credit licence applications". CBPL lodged its application, electronically signed by Mr Hulbert, on 22 December 2010 and Channic lodged its application, electronically signed by Mr Hulbert on 13 December 2010.
1218 Mr Hulbert was then taken to Tab 12 which is a CBPL document entitled "Loan Inquiry Checklist". The document was approved by the Board (Mr Hulbert) on, and had an effective date of, 14 November 2010. At the back of the document is an Appendix attaching a pro forma Loan Inquiry Checklist. The policy document itself sets out the reasonable enquiries to be made about a consumer's financial situation and identifies nine areas of inquiry including the consumer's current amount and source of income or benefits, the extent of the consumers fixed expenses, the consumer's variable expenses, the extent to which any existing debts are to be repaid from the credit advanced, the consumer's credit history, the consumer's circumstances, assets (and their value) and any significant changes to the consumer's circumstances that are reasonably foreseeable. Mr Hulbert accepted that by lodging the documents with ASIC he was telling ASIC that the Board had approved their use and that the documents would be used: T, p 1006, lns 34-39.
1219 In this context, Mr Hulbert was taken to Folder 10 which contains the CBPL and Channic documents relating to Ms Kerryn Smith. The letter of application by Mr Humphreys to Channic for Ms Smith (Tab 1) is dated 6 April 2011. Mr Hulbert believed that if the Loan Inquiry Checklist had been used by CBPL in relation to Ms Smith's application, the document would be on the CBPL file: T, p 1007, lns 8-9. However, Mr Hulbert gave evidence that if ASIC did not receive a copy of the Loan Inquiry Checklist from CBPL's file, it might perhaps have been "lost or something like that" due to "a lot of changes and movements": T, p 1007, lns 37-40.
1220 Mr Hulbert was taken to Tab 13 of Folder 22 which is a CBPL document entitled Verification Checklist. The document is dated 14 November 2010 and it recites that the Board approval date and the Effective date is 14 November 2010. It attaches as an Appendix a pro forma Verification Checklist. Mr Hulbert was taken to Tab 14 which is a CBPL Suitability Assessment Form also dated 14 November 2010. It recites a Board approval and Effective date of 14 November 2010. It attaches as an Appendix a pro forma Credit Suitability Assessment Form.
1221 The proposition was put to Mr Hulbert that in the case of the CBPL file for Ms Smith, the file does not contain a Verification Checklist or a Credit Suitability Assessment. Mr Hulbert responded: "Right. It could have gone missing … the file could have gone missing": T, p 1008, lns 20-24. Mr Hulbert rejected the proposition that even though he had indicated to ASIC that he was adopting these policies, he simply did not follow the policies: T, p 1008, lns 26-28.
1222 Mr Hulbert was then taken, again, to Folder 9 which relates to Mr and Mrs Noble. The CBPL Application Letter to Channic for them is dated 2 March 2011. Mr Hulbert accepted that the CBPL file contains no Loan Inquiry Checklist, Verification Checklist or Credit Suitability Assessment, being the three forms adopted by CBPL on 14 November 2010. Mr Hulbert accepted that if these forms had been completed, they would "probably" have been sent to him by Mr Humphreys. He accepted that there is no mention of any of these forms in the letter of 2 March 2011 from Mr Humphreys (Folder 9, Tab 1): T, p 1009, lns 14-24.
1223 Mr Hulbert was then taken to the policy procedures and documents adopted by Channic.
1224 Mr Hulbert accepted that Channic had adopted a similar set of documents to those adopted by CBPL. Tab 29 of Folder 22 contains a policy document for making reasonable inquiries about a loan applicant's financial situation and requirements and objectives. It attaches a pro forma Loan Inquiry Checklist. Tab 30 is a policy document concerning reasonable steps to be taken to verify a loan applicant's financial situation. It attaches a Verification Checklist. Tab 31 is a policy document establishing a form to be used to conduct an assessment of the suitability of credit for a customer. It attaches a pro forma Credit Suitability Assessment document. Each document recites that the Board approval date and Effective date for the policy and the relevant attachment is 14 November 2010. The policy document (Tab 29) for confirming that reasonable inquiries have been made about an applicant's financial situation, requirements and objectives for the loan recites that ASIC says that, depending on the circumstances, reasonable inquiries about a customer's requirements and objectives could include inquiries about the amount of credit needed or the maximum amount of credit sought. Mr Hulbert took the view that the objective of each of the consumers in issue was that "they wanted to borrow money for the balance of the payment of the car": T, p 1011, lns 19-20.
1225 Mr Hulbert was taken to Folder 4 which contains the CBPL and Channic documents concerning Ms Muriel Dabah and Ms Estelle Harris. The CBPL Application Letter to Channic for them is dated 9 July 2010 (Tab 1). Mr Hulbert was taken to Tab 21 which contains Channic's Credit Suitability Assessment document. Mr Hulbert said that this was one of the very first loans Channic made when it started in July 2010. The Credit Suitability Assessment document is dated 9 July 2010 and signed by Mr Hulbert. The form reflects the pro forma elements of the Credit Suitability Assessment document adopted by the Board on 14 November 2010. Mr Hulbert gave evidence that the documents might have been used earlier than 14 November 2010 and that "we used various types of forms … applications and that": T, p 1012, ln 3. This exchange then occurred at T, p 1012, lns 5-8:
Q: Mr Hulbert, are you sure that these forms weren't filled out much, much later than the dates they bear?
A: I don't believe so.
Q: You don't believe so?
A: No.
Q: Was it the case that you got from the Sydney firm of solicitors the policy documents and some standard forms and then sometime later when you realised that, gee, you had to have your documentation up to date, you went back and did the forms to try and make your files complete?
A: I don't believe so.
Q: And isn't it he case that these documents, the loan inquiry checklist, verification checklist, and the credit suitability assessment weren't done; weren't signed off by you before the contracts - the loan contracts to which they related were entered into?
A: Is there a possibility?
Q: No, I'm saying isn't that generally the case?
A: I don't believe so.
Q: Wasn't it your general practice to sign them after the contracts were entered into?
A: After they were entered into?
Q: Yes?
A: At times they could have been, yes.
[emphasis added]
1226 Mr Hulbert accepted that in the course of an interview with Ms Egan and Mr Foo on 14 May 2013, he "possibly" may have said that it was his general practice to sign documents such as the Loan Inquiry Checklist after the contract was issued: T, p 1012, lns 39-41. Mr Hulbert gave evidence that his recollection of the general practice was that "we signed them before and we signed them afterwards too". Mr Hulbert was then taken to the interview transcript of the examination of 14 May 2013 at pp 109-110 and taken to an example of a Loan Inquiry Checklist (barcoded). This exchange occurred as reflected in the examination transcript:
Q: Do you recall when you completed this document?
A: No.
Q: Did you complete the document?
A: I didn't complete the document, no.
Q: Do you recall when you signed the document?
A: I don't recall.
Q: Would you have signed it on the date next to your signature?
A: Not necessarily.
Q: What could have made you sign it on a different day?
A: It could have been signed after the contract's issued.
Q: Was it your general practice to sign them after the contract was issued?
A: Yes.
Q: Just with the timing of the signing, just talking about general practice, was it that you signed them immediately after entering the loan agreement, or …?
A: No.
Q: Days later?
A: Probably within - usually they're within the next day.
Q: The next day?
A: Yes.
Q: That's the general practice?
A: The general practice, the same day, next day, yes.
[emphasis added]
1227 In the course of the interview on 14 May 2013, Mr Hulbert was then taken to an example of a Verification Checklist relating to the Dabah/Harris files. The following exchange occurred between Mr Hulbert and Ms Egan and Mr Foo at pp 110-111:
Q: I'm going to show you a verification checklist [the document at Folder 4, Tab 23 relating to Ms Dabah and Ms Harris]. It's in the name of [Channic]. Is your signature on the last page?
A: Yes.
Q: What does it say there?
A: 9 July.
Q: Did you complete this document?
A: No.
Q: Who would have completed this document?
A: One of the staff.
Q: Did you read this document before you signed it?
A: Not necessarily, no.
Q: Was it your general practice to read verification check lists before you sign them?
A: Not necessarily, no.
Q: Was it your general practice to consider whether or not the verifications that the check list talks about were reasonable before you signed the document?
A: These are standard format documents that'd be completed.
Q: Did you turn your mind to whether or not the statements in this document were true before you sent [sign] it?
A: I rely on the staff to enter the appropriate boxes.
Q: And you described that before as a clerical task?
A: Yes.
[emphasis added]
1228 In the light of that transcript set out at [1227] of these reasons, the following exchange occurred in cross-examination at T, p 1013, lns 34-46; T, p 1014, lns 1:
Q: [Do you agree that the answers in the transcript to questions about your general practice … after the contract was issued are] different to your evidence now?
A: As far as did I sign?
Q: After the contract was issued, yes?
A: I said on some cases, yes, we did.
Q: Your general practice?
A: Wasn't general practice. It could be 50/50.
Q: So your evidence is wrong there, is it?
A: That's right.
Q: Yes?
A: Yes.
Q: Your evidence is incorrect?
A: Yes. Well, that's right, yes.
[emphasis added]
1229 Mr Hulbert gave evidence that it was his belief at the time that he answered the questions asked of him by Ms Egan and Mr Foo concerning the Loan Inquiry Checklist at [1226] of these reasons that it was his general practice to sign Loan Inquiry Checklists after the contract was issued which was "only saying the general practice of a very long period": T, p 1014, lns 19-28.
1230 As to the Verification Checklist and the sequence of answers Mr Hulbert gave as set out at [1227] of these reasons, Mr Hulbert was taken to his answers that he had not completed the document but rather one of the staff had done so, and the following exchange occurred in cross-examination at T, p 1016, lns 1-33.
Q: Okay, well, … your evidence today [is that], you completed the document.
A: … signed the document, yes.
…
Q: Well, I'm asking … about the question at line 21 [of the interview transcript], "Did you complete this document?"
A: Did I sign the document? Yes.
Q: … the question at line 21 is "Did you complete this document?"
A: And what do you mean by complete?
Q: Well, you obviously understood it then because …
A: I don't know what …
…
A: [Mr Hulbert continues his explanation of his understanding] … so we're talking about who could have created the document. When you say "completed" that's the way I'm interpreting it.
Q: Mr Hulbert, this is talking about filling the document in, isn't it?
A: Yes, that's right.
Q: It's what you understood it to be about?
A: Yes.
[emphasis added]
1231 Mr Hulbert was taken back to the sequence of questions and answers set out at [1227] of these reasons concerning the Verification Checklist. He accepted that he had given the answers set out at [1227] of these reasons and the following exchange occurred in cross-examination at T, p 1017, lns 33-40:
Q: And that's your answer, and that's your evidence isn't it?
A: That was for this document, yes.
Q: Well, it was for all the documents, wasn't it?
A: No. They - they asked about this document. No, it's not all the documents.
Q: So you are saying that this particular file was somehow special?
A: No. This is the file that was presented to me. They didn't say every document. This is the particular file that was presented to me.
[emphasis added]
1232 Mr Hulbert was then taken again to the sequence of questions and answers concerning the Loan Inquiry Checklist set out at p 109 of the interview transcript as set out at [1226] of these reasons. In that transcript, Mr Hulbert accepted that he began talking about his general practice. He also accepted that in giving the answers to questions in relation to the Verification Checklist he was also talking about his general practice: T, p 1018, lns 26-34. Mr Hulbert did not accept that it was his general practice that staff would enter the information in the "appropriate boxes" although that may have been the position "just in this case" (Dabah and Harris). Mr Hulbert accepted that he could not point to anything which would suggest to him that the documents in the particular transaction were any different to the other like documents more generally: T, p 1019, lns 1-7. Mr Hulbert did not accept that the processes were simply about ticking boxes by someone with no relevant inquiries actually being made. Mr Hulbert gave evidence that there were "other inquiries made" and "I would carry out other inquiries if need be": T, p 1019, lns 9-13.
1233 Mr Hulbert was again taken to Folder 22 which contains the policies and procedures documents and manuals for CBPL and Channic. Mr Hulbert was taken to Tab 12, the Loan Inquiry Checklist with attached Appendix 1. The checklist identifies 12 possible areas of inquiry. They include inquiring into the fixed expenses of the borrower and the variable expenses. Mr Hulbert seemed to accept at T, p 1012, lns 43-47 that he had not "actually" checked the fixed and variable expenses of the borrowers and the explanation for that was that the document is a template produced for use in connection with a number of lenders and brokers and not all things reflected in the areas of inquiry are applicable to all loans. He also added that he had adopted "a cost of living standard" as well, although he accepted that there was "no board resolution or policy document that adopts that" position: T, p 1022, lns 1-5.
1234 The proposition was put to Mr Hulbert that no verification of financial information had been undertaken by CBPL. He gave this evidence: "There were certain checks carried out. They carried out the income, and a certain amount of expenses and fixed loans etc". This exchange then occurred:
Q: You didn't use it at all, did you?
A: We did use it. If you want me to say there were certain deficiencies in the way we filled out some of these documents, yes. If you want me to run through every document we've ever done, you can.
[emphasis added]
1235 Mr Hulbert accepted that he did not necessarily check the references given by the applicant borrowers. He said that those references were required for other purposes later on.
1236 As to rental statements, Mr Hulbert said that it was "very hard to get [them] from Yarrabah". Mr Hulbert accepted that he did not ask for copies of utility statements.
1237 Mr Hulbert gave evidence that he did not use "all the checklist". Mr Hulbert said that "we relied on a lot that came from Cash Brokers". Mr Hulbert accepted that he was saying that Cash Brokers was verifying the information as far as he was aware. As to the expenses, Mr Hulbert reasserted his evidence that he did not verify expenses which were "built into the cost of living". He accepted that the way of verifying income was to obtain Centrelink statements or wages slips: T, p 1023, lns 34-47; T, p 1024, lns 3-12.
1238 As to the interest rates, Mr Hulbert gave evidence that he spoke with Mr Humphreys about the interest rate for the loans. He accepted that there was nothing that came from CBPL to Channic to suggest that interest rates had been discussed with the borrowers. Mr Hulbert gave evidence that he pointed out the interest rate to the customer because "[he] did the loan contract" and in some cases he negotiated the interest rate with consumers. Mr Hulbert said that at Channic, the customer was told the term of the loan. Mr Hulbert asserted that he made inquiries of the customer as to the term of the loan and that they knew the length of the loan when doing the documents with him. Mr Hulbert asserted that that was not too late in the events because the consumer could still "walk out the door" or the documents could be changed if something was not suitable.
1239 The proposition was put to Mr Hulbert that he did not ask the consumers "for their requirements for the length of the loan": T, p 1025, lns 32-33. This exchange then occurred at T, p 1025, lns 35-47:
Q: You say you did.
A: As far as - I told them. I didn't ask them did they want the loan to run one year, two years. A lot of them gave [an] indication, "I'd like to pay it off in two years or -" etc. If the - it worked out with their affordability, I've had situations where people have had the loan approved and then they wanted the payments increased afterwards.
Q: Well, I'm asking you about in your discussions with the consumers, the borrowers, you say - I'm putting it to you, you didn't ask them about their requirements as to the length of the loan. And your answer is that you didn't; is that right?
A: I didn't ask them their requirements of the length of the loan? No.
Q: No. Thank you. And you didn't discuss with them what interest rate they wanted to have?
A: No.
Q: No.
A: But we offered a - we offered to them - that was our offer to them … that's what we put forward as an offer.
Q: Yes?
A: Which was with the 48% interest rate.
[emphasis added]
1240 As to the Channic documents rather than the CBPL documents, Mr Hulbert was taken to the files in relation to Ms Kingsburra (Folder 3).
1241 Mr Hulbert accepted that as to the letter at Tab 10 which is the type of letter on all files relevant to these proceedings by which Channic affirmed that its assessment was that the loan was not unsuitable for the borrower, Mr Hulbert accepted that these letters might have been prepared by someone in the office and they might have been prepared after the contract had been completed: T, p 1027, lns 37-47.
1242 Mr Hulbert was taken again to the document at Folder 3, Tab 22, Channic's Loan Inquiry Checklist. He accepted that it might have been filled out by someone in the office rather than Mr Hulbert. Mr Hulbert accepted that in relation to all the loans before the Court, so far as Channic was concerned, Channic was not interested in identifying fixed expenses or variable expenses.
1243 Mr Hulbert accepted that even though the area of inquiry on p 2 of the Checklist, "Fixed expenses" and "Variable expenses", are both ticked on the Loan Inquiry Checklist, those matters were not "in our thoughts" because they were taken up in the standardised expenses formula used and applied by CBPL in undertaking the Preliminary Test: T, p 1028, lns 20-29. The assessment was in the CBPL Preliminary Test: T, p 1028, lns 33-36. To the extent that any "secondary check" was necessary, Mr Hulbert gave evidence that: "We would do some secondary checks if I needed to do more": T, p 1028, lns 38-39. Mr Hulbert gave evidence that no document, such as the Preliminary Test, was prepared by Channic and that Mr Hulbert "just accepted the figures that were produced as part of the assessment from Cash Brokers [the Preliminary Test]": T, p 1029, lns 9-12.
1244 Mr Hulbert was not able to identify from the Loan Inquiry Checklist whether, and if so, what, additional inquiries might have been made. Mr Hulbert also gave evidence that if inquiries had been made by Channic "we didn't then note it necessarily on the checklist": T, p 1029, lns 16-17; lns 28-30; T, p 1030, lns 18-21.
1245 As to Verification Checklist (Folder 3, Tab 23), Mr Hulbert accepted that the matters that are checked on that list are only those documents that came from CBPL: T, p 1030, lns 40-41. Mr Hulbert accepted that there is no additional matter that was undertaken "for either acquiring the information or verifying the information which appears on the verification checklist": T, p 1031, lns 3-8. Channic paid for the credit report and it was obtained and provided by CBPL. Mr Hulbert says that sometimes Channic "got some documents" and if they did so "they should appear on the checklist": T, p 1031, lns 16-21.
1246 Mr Hulbert accepted that when Channic undertook its assessment, its inquiry and its verification steps, in respect of all of the borrowers the subject of these proceedings, "there's no specific consideration of additional costs in relation to owning and maintaining vehicles": T, p 1031, lns 42-45.
1247 As to Channic's Credit Suitability Assessment for Ms Kingsburra (Folder 3, Tab 21), Mr Hulbert accepted that he had signed the document reciting that the amount of credit regarded as "suitable" is $8,301.50 which was more than the credit sought by Ms Kingsburra by the letter from Mr Humphreys of 6 July 2010 which requested a loan of $7,290.00 and that was so because the amount of credit included a brokerage fee of $990.00 (and some costs).
1248 Mr Hulbert gave evidence that he believed that prior to his explaining the loan contract to each consumer, Mr Humphreys had already told each consumer of the brokerage fee: T, p 1034, lns 23-27.
1249 Mr Hulbert accepted that in relation to all of the loans before the Court, there was no written agreement between the borrowers and CBPL "for Cash Brokers to provide services for a fee" and that "the first time a borrower might see a reference to brokerage on any document would be the contract when they sign it": T, p 1034, lns 36-44.
1250 Mr Hulbert also accepted that none of the borrowers received an invoice for brokerage: T, p 1034, ln 45.
1251 Mr Hulbert accepted that the Credit Suitability Assessment for Ms Kingsburra, for example, recites available income per month of $3,623.49. That entry follows this statement (common to all assessments):
Customer's financial situation
Based on the information from our inquiries, which we have taken reasonable steps to verify and which we have reason to believe is true, we consider that the customer has available income as follows to repay the credit during the period covered by this assessment. This takes into account special circumstances (if any) listed below that we found when making our inquiries:
1252 The period covered by the Kingsburra assessment is from 6 July 2010 to 6 August 2010. Mr Hulbert accepted that the "available income" figure of $3,623.49 did not take into account any expenses. Mr Hulbert said that he had "already taken account of their expenses in our formula … the benchmark we use": T, p 1036, lns 1-7. Mr Hulbert accepted that apart from Ms Kingsburra's matter, "we picked up the figure off the preliminary test [that] was the income": T, p 1036, lns 37-38. Mr Hulbert said that he believed, at the time, that this income figure "had to go in the document". Mr Hulbert accepted that on p 2 of the assessment, he recites the amount of credit ($8,301.50), the timeframe for which credit is required (110 weeks), the purpose of the loan (purchase of vehicle), particular product features of the loan (which simply recites "Daily Reducible") and that these matters conclude with this observation: "We further concluded that the customer understands any costs or additional risks associated with any product features specified above". The proposition was put to Mr Hulbert that at this point the customer had not been told of "any features of the loan" and Mr Hulbert responded: "I believe they were told about the brokerage": T, p 1037, lns 18-23. This exchange then occurred at T, p 1037, lns 36-46; T, p 1038, lns 1-2:
Q: How do you know the customer understands these risks or additional costs?
A: That's like saying - do I believe the customer understands the loan.
Q: I see.
A: That's - unless the customer comes back to me after I've said things to them and needs more explanation, we would think that they would understand.
Q: Okay. Now, but I want to put to you, the same process by Channic of filling in the documents was adopted in every case before the Court where Channic filled in these forms?
A: Channic or someone from Channic, yes.
Q: Someone from Channic, yes?
A: Yes.
Q: Yes, and you were provided with them regularly by people who filled them out and you signed them off?
A: Yes.
[emphasis added]
1253 As to the Credit Contract, Mr Hulbert did not accept that the process he adopted was one of trying to get the consumers to sign up the contract "as fast as possible" and nor did he accept that he simply pointed to the bottom of the page and told the consumers to "just initial here, initial there, sign here, sign there". Mr Hulbert was taken to the explanation he gave to the Court of the process he went through in explaining the contract and securing the execution of it. He was taken to his evidence that he explained the contract first and then went to the signing process. Mr Hulbert was asked whether he was "sure about that" sequence and he answered: "I'm not 100 per cent sure. That's the best of my recollection … I can't remember every contract": T, p 1039, lns 15-18. Mr Hulbert added this at T, p 1039, lns 21-29:
My recollection is as I've told his Honour. Sometimes we would have some variance and explain it to the customer on a page by page basis and they initial and sign that - that did happen sometimes. But the customers always had the figures and everything … as I explained all the features, pointed out to them.
[emphasis added]
1254 Mr Hulbert accepted that he had told ASIC examiners on 13 May 2013 that the point at which the customers signed and initialled the contract was as Mr Hulbert was going through the contract. Mr Hulbert said this at T, p 1039, lns 33-34: "Sometimes we do that. I said that then. I said sometimes we do it that way, sometimes we explain it. It wasn't always 100 per cent one way".
1255 As to the signing process, Mr Hulbert accepted that earlier in his evidence he had said that he explained the contract to the consumer/borrower and then they "got into this mode of initialling and signing" and it "wasn't a matter of me explaining and then initialling". He explained that he took the consumer(s) through the whole document and then asked whether they needed any further explanation. Mr Hulbert also accepted that he had told the examiners that the signing and initialling of the contract occurred "as we are going" and that in response to the question by the examiners, "So after you explain a page, they sign it?", he answered: "Yes, of course". Mr Hulbert gave evidence that he had made an error (T, p 1040, lns 30-31) in giving his earlier oral evidence in these proceedings because: "There [were] situations like that [explaining and signing as you go] and there [were] situations where we went through the contract and then went back and signed and initialled [it] … But one way or another, the customer was explained the contract": T, p 1039, lns 36-45. As to the PAMD Act documents, Mr Hulbert put it this way: "You show them the document, explain, sign. Turn the next page, explain, sign. Next page, explain, sign: T, p 1040, lns 37-38.
1256 The proposition was put to Mr Hulbert that the consumers in these proceedings had a limited ability to understand the legal terminology of the Credit Contracts. Mr Hulbert gave evidence that none of them had said that they did not understand the contract. He recognised, again, that the contract is a complex document and added this: "I believe that most of them didn't even want to listen but we still went through the process": T, p 1041, lns 24-25. This exchange then occurred at T, p 104, lns 30-43:
Q: You didn't believe that you had an obligation to tell them [explain the contract], did you?
A: I'm not sure. I'm not sure of what - no … our belief. I only found out later as we've gone further into this inquiry. It wasn't my belief at the time.
Q: Exactly? …
A: I mean, the thinking at the time is that you would explain this because our upbringing sort of through the car yards was whenever you presented a car contract to a customer, you explained and pointed out to the customer. So the same which had been going on for years, so the same process was there for the loan contract.
[emphasis added]
1257 Mr Hulbert also said this at T, p 1042, lns 17-19: "I don't say that people understand the contract. I've never said that". Mr Hulbert accepted that for the people of Yarrabah the contract "would be complex": T, p 1044, lns 7-9. Mr Hulbert gave evidence that if any consumer wanted to sit down "in the corner" with the contract and read it, he or she was "quite welcome" to do so. Mr Hulbert accepted that the chances of any one of the borrowers in this case sitting down in a corner and reading the contract were minimal although he thought this was the case "with every customer" and "very few of them - kind of have - sat down and read the contracts, even when they've had an opportunity": T, p 1050, lns 28-35.
1258 Mr Hulbert accepted that he had a "standard spiel" about the contract but said that he explained "every page as we go": T, p 1044, lns 23-24; ln 8. Mr Hulbert also accepted that he did not explain to the borrower that the loan contract operated as a "mortgage. He accepted that the mortgage was the substance of Channic's security": T, p 1044, lns 31-36.
1259 As to interest, Mr Hulbert gave evidence that sometimes he "would point to it and say, 'this is the amount of interest you're paying' with my finger right beside it. Yes … In some cases": T, p 1045, lns 15-16. Mr Hulbert did not accept that the borrowers relevant to these proceedings were of "limited education" or that it was "obvious" that they were of "very limited education and experience". Mr Hulbert regarded them as having about the "same standard" of education as him although he accepted that they "would probably have less commercial experience" than him: T, p 1047, lns 4-5; lns 13-17. Mr Hulbert did not accept that it was apparent to him that these consumers were easily confused or that he had "shut his eyes to their circumstances". Nor did he accept that they did not understand that security had been taken over the car (although they might not have understood the notion of a mortgage) and that they had a loan and interest to pay: T, p 1047, lns 25-27.
1260 Mr Hulbert accepted that the Yarrabah consumers who gave evidence in the proceedings were people who would "tend to agree" with most of what was put to them although Mr Hulbert thought this was "fairly common" with all customers. Mr Hulbert accepted that the Yarrabah consumers "required" a car but were not "desperate" for a car. As to whether the Yarrabah consumers exhibited a "preparedness" to simply take the car that Mr Hulbert or Mr Humphreys told them "they were to take and at the price" nominated, Mr Hulbert gave evidence that "an offer" was put to the consumer and it was "up to them to accept the offer or not": T, p 1049, lns 27-28.
1261 Mr Hulbert accepted that "in some cases" the car sold to a particular consumer was "above the market price", although not generally so. Mr Hulbert did not accept that some of the cars, in terms of kilometres travelled, had exceeded their useful life. Mr Hulbert accepted that in some cases the car "broke down even before the customer got it home" (T, p 1049, lns 39-40) although "any problems" a customer had, whether within or outside the warranty period, "were fixed", according to Mr Hulbert: T, p 1049, ln 44. The following exchange then occurred at T, p 1049, lns 46-47; T, p 1050, lns 1-19:
Q: Mr Hulbert, it doesn't matter whether you've fixed it or not. The fact that the car sold doesn't make it to the customer's home really is a matter that indicates the car was defective when sold?
A: It's not the case at all. Because you've got to remember when we got these cars roadworthied they were only driven maybe one or two blocks around in Cairns. They weren't taken out on the highway and driven for 30/40 minutes.
Q: I see. So the car was okay if you drove it five minutes around town … but not if you took it on the highway?
A: No. Well I would say … a different problem could come up when subjected to high-speed motoring and things like that … which we didn't get the opportunity to carry out on the vehicle.
Q: You're saying - the person who provided you with roadworthy certificates wasn't capable of certifying a vehicle which would travel along highways at high speed?
A: Well, - it's not the general way they do the roadworthies. It's - they take it for a test drive. But … their test drive is not involving a 30 minute drive down the highway.
[emphasis added]
1262 As to the loan repayments, Mr Hulbert gave evidence that he calculated the repayments although "that was all generated by the computer". Mr Hulbert emphatically did not accept that he had largely recouped his costs through the receipt of the deposit or that with a few payments received from the borrower, he was "well ahead". Mr Hulbert accepted that in addition to the deposit and the loan repayments, he also received through CBPL a brokerage fee. As to the continuing obligation of the borrower to pay each repayment instalment notwithstanding repossession of the vehicle, Mr Hulbert gave evidence that Channic, in those circumstances, "wrote the loans off" and "didn't pursue them": T, p 1052, lns 12-15.
1263 As to the rate of interest at 48%, Mr Hulbert did not accept that a rate of 48% was not necessary to run his business profitably: T, p 1052, lns 17-19.
1264 Mr Hulbert gave evidence that apart from his cost of acquisition of each car and the cost of repairs, he incurred overheads attributable to "each car" sold to a consumer relevant to these proceedings. Those overheads included the costs of operating the car yard and all its overheads such as rent, wages, licensing fees and other things (which Mr Hulbert described as about 40 different items) and the costs payable to independent workshops which purchased parts during the course of undertaking repairs: T, p 1052, lns 34-39. Mr Hulbert says that some of these workshop costs were not necessarily applied to the costs of the car: T, p 1052, ln 41. Mr Hulbert accepted that he had not put on any expert knowledge of all of these distributed costs and added this at T, p 1053, lns 13-19:
I'm aware what my overheads are, what we're spending on vehicles, but not all costs were attributed directly to the car when the workshop is spending money on repairs as well.
1265 Mr Hulbert accepted that "we", which must be a reference to Channic and Supercheap (and presumably CBPL where relevant), would accept applications from people on Centrelink payments, single parents, people with a bad credit history and ex-bankrupts (T, p 1054, lns 5-12) and that accepting applications from people in such circumstances was consistent with his advertising. Mr Hulbert, however, said that that advertising "didn't really work" and that "you will find only one person … responded to that form of advertising" with the result that "[o]verall, we didn't get much reply": T, p 1054, lns 14-17.