Credit Loans Australia Pty Ltd v Viera

The facts

1. By loan agreement dated 2 December 2013 the plaintiff agreed to advance to the defendant monies in return for interest and a mortgage over her property at Eastlakes (which was second in priority to a first registered mortgage in favour of Westpac Banking Corporation) to secure the loan. She also executed a general retainer agreement with SME'S R US (NSW) Pty Ltd, the third cross-defendant, which was alleged to be for financial services.
2. In the statement of claim filed on 8 December 2014, the plaintiff claimed possession of the property as well as judgment in a monetary sum. By reason of the claim for possession, the proceedings were properly brought in this Court.
3. In her defence filed on 18 September 2015, the defendant alleged that the plaintiff was in breach of Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth) (the National Credit Code) and claimed, accordingly, that neither the loan agreement nor the mortgage ought be enforced against her. She also pleaded the Contracts Review Act 1980 (NSW) as a defence to the mortgage and loan agreement: Commercial Banking Co. v Pollard [1983] 1 NSWLR 74.
4. The defendant also filed a cross-claim on 18 September 2015: against the plaintiff (first cross-defendant); Stephen O'Neill, SME's R US (NSW) Pty Ltd and William McKay, being persons associated with the plaintiff. Of present relevance the defendant sought: 1. orders pursuant to s 76 of the National Credit Code to reopen the loan agreement and mortgage; 2. orders pursuant to s 77 of the National Credit Code setting aside the loan agreement and mortgage and giving the defendant a discharge of mortgage; 3. an order requiring repayment of the $25,000; 4. an order pursuant to s 74 of the National Credit Code varying her obligations under the loan contract; 5. orders similar to (1) to (4) above pursuant to s 7 of the Contracts Review Act; 6. a declaration pursuant to s 113 of the National Credit Code that the plaintiff (first cross-defendant) breached specified requirements of the Code, including in relation to the loan agreement, the mortgage and the general retainer agreement; 7. an order that the plaintiff (first cross-defendant) pay a civil penalty to the defendant in respect of each breach of a "key requirement" of the Code; 8. compensation orders against all cross-defendants pursuant to s 178 of the National Consumer Credit Protection Act; and 9. an order pursuant to s 179 (or in the alternative s 180) of the National Consumer Credit Protection Act declaring the loan agreement, mortgage and retainer to have been void ab initio.
5. Subsequently, an amended statement of claim was filed on 14 December 2015 from which the claim for possession was removed. The only relief sought by the plaintiff in the amended statement of claim was judgment with interest and costs, which, as at the date of filing, amounted to $32,333.90. On the basis that its claim was a money claim within the jurisdictional limit of the Local Court, the plaintiff moved by motion, referred to above, to have the matter transferred to that Court.

Relevant legislative provisions

1. Section 146 of the Civil Procedure Act 2005 (NSW) provides that if this Court is satisfied in relation to proceedings before it that the proceedings could have been brought in the Local Court and that any cross-claim could have been brought in the Local Court, it may order that the proceedings, including any cross-claim, be transferred to the Local Court.
2. Section 149 of the Civil Procedure Act provides: 149 Jurisdiction of lower court The lower court has, and may exercise, all of the jurisdiction of the higher court in relation to any proceedings to which a transfer order relates, including jurisdiction to determine any question arising in any such proceedings.
3. Section 9 of the Local Court Act 2007 (NSW) provides that the Local Court has civil jurisdiction consisting of the jurisdiction conferred on it by Part 3. Part 3 of the Local Court Act (ss 29-42) provides for its civil jurisdiction. Section 29 provides that the jurisdictional limit of the Local Court, when sitting in its General Division, is $100,000. Section 29A defines "money claim" as "a claim for recovery of any debt, demand or damages (whether liquidated or unliquidated)".
4. Section 30 of the Local Court Act relevantly provides: (1) Subject to this Part, the Court sitting in its General Division has jurisdiction to hear and determine: (a) proceedings on any money claim, so long as the amount claimed, whether on a balance of account or after an admitted set-off or otherwise, does not exceed the jurisdictional limit of the Court when sitting in that Division, and . . . (c) proceedings that, pursuant to any other Act, are required to be dealt with by the Court sitting in that Division.
5. Section 32 of the Local Court Act relevantly provides: 32 Jurisdiction in proceedings for review of contracts (1) The Court has the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, to refuse to enforce any or all of the provisions of a contract under section 7 (1) (a) of the Contracts Review Act 1980. (2) This section applies only if application for the exercise of the jurisdiction is made in proceedings concerning the contract that have previously been commenced in the Court but have not been determined.
6. Section 33 of the Local Court Act lists matters in respect of which the Local Court "does not have jurisdiction under this Part [Part 3]", including proceedings for passing-off, wrongful arrest, infringement of copyright etc.
7. Section 187(1) of the National Consumer Credit Protection Act confers federal jurisdiction in relation to civil matters under that Act in the following terms: Civil jurisdiction of courts (1) Jurisdiction is conferred on a court referred to in an item in the following table in relation to civil matters arising under this Act, subject to the limits on the court's jurisdiction (if any) specified in the item: Civil jurisdiction of courts Item Court on which civil jurisdiction is conferred Limits of jurisdiction 1 The Federal Court No specified limits. The court does not have jurisdiction to award an amount for loss or damage that exceeds: 2 The Federal Circuit Court (a) $750,000; or (b) if another amount is prescribed by the regulations--that other amount. 3 A superior court, or lower court, of a State or Territory The court's general jurisdictional limits, including limits as to locality and subject matter.

1. It is common ground that the definition of "lower court" in s 5 of the National Consumer Credit Protection Act includes the Local Court. Accordingly, s 187 has the effect of vesting judicial power of the Commonwealth (federal jurisdiction) in the Local Court: see ss 71 and 77(iii) of the Constitution.
2. Section 7 of the Contracts Review Act provides: Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.

Summary of the parties' submissions

1. It is common ground that the plaintiff's proceedings (as presently constituted by the amended statement of claim) could have been brought in the Local Court. It is also common ground that the limitation on the operation of s 32(1) of the Local Court Act that is contained in s 32(2) does not constitute a barrier to the exercise of jurisdiction by the Local Court in the present case. The question is whether the cross-claim could properly have been brought in that court.
2. Mr Lee, who appeared on behalf of the plaintiff and the four cross-defendants, submitted that the effect of s 30 of the Local Court Act, when read together with s 187 of the National Consumer Credit Protection Act, was to confer jurisdiction on the Local Court in respect of all the relief the defendant claimed in the cross-claim. Although he accepted that the Local Court did not have power to grant such relief under the Contracts Review Act, he submitted that the defendant had not actually pleaded a claim for such relief in the cross-claim. Furthermore, he argued that there was no need for the defendant to seek such relief given that there was a parallel source of power to grant relief (under the National Consumer Credit Protection Act) in respect of which the Local Court had jurisdiction.
3. Mr Batley, who appeared on behalf of the defendant, submitted that s 30 did not materially add to the jurisdiction of the Local Court. He contended that s 187 of the National Consumer Credit Protection Act ought not be construed as broadly as Mr Lee contended. He submitted that s 187 of the National Consumer Credit Protection Act expressly confines the conferral of jurisdiction to the existing limits of the Local Court's jurisdiction. He argued that s 187 was a general conferral of federal jurisdiction under the National Consumer Credit Protection Act on State Courts and was not intended otherwise to augment their jurisdiction to grant relief, except consistently with their existing jurisdiction.

The pleading

1. I am satisfied that, having regard to the pleaded cross-claim, the defendant seeks relief in parallel under the National Consumer Credit Code as well as the Contracts Review Act. She relied on the same circumstances (set out in [34] a. to s.) as providing a foundation for such relief under both Acts ([34] for the National Consumer Credit Code and [45] for the Contracts Review Act). She pressed the claims for relief on both footings.
2. Accordingly, before an order for transfer can be made, I must be satisfied that the Local Court would have jurisdiction for both aspects of the cross-claim: the relief sought under the National Consumer Credit Protection Act and the National Credit Code; and the relief sought under the Contracts Review Act.

The jurisdiction of the Local Court

1. The Local Court is an inferior court of record with statutory jurisdiction. As such it has no jurisdiction beyond that which has been conferred by statute: Grassby v The Queen (1989) 168 CLR 1 at 16-17 per Dawson J.

Whether s 187 of the National Consumer Credit Protection Act confers jurisdiction on the Local Court to grant the relief claimed in the cross-claim

1. The question whether federal jurisdiction is conferred on the Local Court by s 187 to make orders such as: an order reopening the loan agreement and mortgage; an order requiring the plaintiff to give a discharge of mortgage; a declaration of breach; and an order imposing a civil penalty, is a question of statutory construction.
2. The provenance of the National Consumer Credit Protection Act is relevant. It constitutes one of a suite of Commonwealth Acts which were designed to create a national consumer credit regime. According to the Explanatory Memorandum to the bill (which became the National Consumer Credit Protection Act), the new regime gave effect to the Council of Australian Governments' (COAG) agreements of 26 March and 3 July 2008 to transfer responsibility for regulation of consumer credit, and a related category of additional financial services, to the Commonwealth. The regime also replicated the Uniform Consumer Credit Code (UCCC), which was enacted in the Consumer Credit (Queensland) Act 1994 (Qld) and which had applied in the States and Territories since 1996.
3. According to the Explanatory Memorandum: "Other key provisions in the Credit Bill to promote accessibility in terms of location, procedural simplicity and costs of dispute resolution include: • access to all relevant Commonwealth, State and Territory courts;"
4. I take this extract to be a reference to the conferral of federal jurisdiction effected by s 187 of the National Consumer Credit Protection Act. It indicates that one of the significant aspects of the Commonwealth Act was to confer federal jurisdiction, not only on the Federal Court and the Federal Circuit Court, but also on the State courts, within the limits of their existing jurisdiction.
5. The wording of s 187 of the National Consumer Credit Protection Act is to be contrasted with that of another conferral of federal jurisdiction, under the Competition and Consumer Act 2010 (Cth), s 86 of which relevantly provides: (2) The several courts of the States are invested with federal jurisdiction within the limits of their several jurisdictions, whether those limits are as to locality, subject‑matter or otherwise, and, subject to the Constitution, jurisdiction is conferred on the several courts of the Territories, with respect to any matter arising under Part IVB or section 55B in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission. (3) Nothing in subsection (2) shall be taken to enable an inferior court of a State or Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory.
6. Section 86(3) of the Competition and Consumer Act removes any doubt that may arise from the wording of s 86(2) as to whether the power of the court to grant remedies is intended to be enlarged. However, the absence of a like provision in the National Consumer Credit Protection Act does not, in my view, have the effect that s 187 should be construed so as to enable an inferior court of a State, such as the New South Wales Local Court, to grant a remedy other than a remedy of a kind that it is able to grant under a law of New South Wales. In my view, s 86(3) is in the category of provisions which are inserted for the avoidance of doubt. As such, I regard it as adding little or nothing to the substantive provision, s 86(2).
7. In my view, having regard to the provenance of s 187, it was intended that disputes arising under the National Consumer Credit Protection Act be dealt with by State courts within the limits of their jurisdictions, including as to remedies. If s 187 is construed in this way, any claim under the National Consumer Credit Protection Act which is a "money claim" for no more than $100,000 could be brought in the Local Court; as well as any claim for relief under s 7(1)(a) of the Contracts Review Act (which operates as a defence). However, the present cross-claim could not be brought in the Local Court, because the court has no jurisdiction to order civil penalties or make declarations and orders in the nature of injunctions, both restraining and mandatory. It is beyond the jurisdiction of the Local Court to grant such remedies.
8. This construction, in my view, takes proper account of the words "limits as to . . . subject matter" in item 3 of s 187. The relevant "subject matter" which to which the Local Court's jurisdiction is relevantly limited is the subject matter of "proceedings on any money claim".
9. The effect of the imposition of a civil penalty is, in part, to order the payment of money. However, the money ordered to be paid is a "penalty" for contravention of a key requirement. I do not regard the imposition of a civil penalty under s 113 or 115 of the National Credit Code as a "money claim" as defined in s 29A of the Local Court Act since an application for a civil penalty is neither "a claim for recovery of any debt, demand or damages". Therefore the limits as to the subject matter of the Local Court prevent its imposing a civil penalty.
10. Apart from the claim for compensation under s 178 of the National Consumer Credit Protection Act, the defendant's claims under the Act and the National Credit Code are not properly characterised as "money claims". Nor do they fall within the other categories of civil jurisdiction set out in s 30 of the Local Court Act addressed further below.

The effect of s 30 of the Local Court Act

1. As referred to above, the plaintiff contended that s 30 picked up s 187 which had the effect of conferring on the Local Court all the jurisdiction required to grant relief under the National Consumer Credit Protection Act. I accept Mr Batley's submission that, if it had that effect, the reference to "subject matter" in item 3 in s 187 would be self-fulfilling. The New South Wales Parliament, by enacting s 30, did so within the restrictive framework of the limited money claim jurisdiction of the Local Court. Section 187 of the National Consumer Credit Protection Act expressly confines its conferral of jurisdiction to the existing subject matter limits of the Local Court jurisdiction.
2. Accordingly, s 30(1)(c) does not have the effect of enlarging the Local Court's jurisdiction to grant relief under the National Consumer Credit Protection Act except in so far as the relief claimed is a "money claim".

The effect of s 149 of the Civil Procedure Act

1. The plaintiff also submitted that s 149 of the Civil Procedure Act has the effect that, if the matter were transferred to the Local Court, the Local Court would have all the jurisdiction of the Supreme Court to determine the issues between the parties. I do not accept this submission. Section 149 is premised on the assumption that the requirements for making an order for transfer under s 146 have been met. It cannot be used to circumvent such requirements: Ge v River Island Clothing Pty Ltd [2001] NSWSC 935 at [20]-[29] per Studdert J. The Act must be read as a whole.
2. For these reasons the defendant's cross-claim could not properly have been brought in the Local Court, in so far as relief is sought under the National Consumer Credit Protection Act (except in so far as the relief is confined to damages or monetary compensation).

Whether Local Court has jurisdiction to grant the relief claimed pursuant to s 7 of the Contracts Review Act in the cross-claim

1. There is no inconsistency within the meaning of s 109 of the Constitution between the Contracts Review Act and the National Consumer Credit Protection Act: ss 23(1) and 25 of the National Consumer Credit Protection Act. Accordingly, the defendant is entitled to bring parallel claims for relief under both statutes.
2. I am, for the reasons given above, persuaded that the cross-claim includes claims for relief under s 7(1)(b), (c) and (d) of the Contracts Review Act and therefore does not come within the jurisdiction to grant relief under s 7(1)(a) of the Contracts Review Act conferred by s 32 of the Local Court Act. This provides a separate and independent reason to refuse the order for transfer.

Orders

1. For the foregoing reasons I make the following orders: 1. Dismiss the plaintiff's notice of motion filed on 16 March 2016. 2. Subject to an application for a different order being made to my Associate within seven days hereof, order the plaintiff to pay the defendant's costs of the motion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 April 2016