Commonwealth Bank of Australia Ltd (ABN 123 123 124)

Davies v Commonwealth Bank of Australia Ltd (Credit) [2009] VCAT 90

1. Pursuant to section 75 of the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act) the following claims by the Applicants are struck out -
   • (a) The claims of breaches of the Australian Securities and Investments Commission Act 2001 (Cth) and the Privacy Act 1988 (Cth);
   • (b) The claims of breaches of the Code of Banking Practice, except to the extent that the Code forms part of the loan contracts the subject of this proceeding;
   • (c) The claim of negligence;
   • (d) The claims that this Tribunal should grant relief for breaches of the Transfer of Land Act 1958 (Vic);
   • (e) The claims that persons (including organisations) other than the Applicants are entitled to relief against the Respondent;
   • (f) The claims concerning the way in which the Banking and Financial Services Ombudsman dealt with the Applicants' complaints, including claims seeking review of that process;
   • (g) The claims under ss58, 62 and 114 of the Consumer Credit (Victoria) Code (the Code) or under Division 1 of Part 6 of the Code;
   • (h) The claims under s70 of the Code, to the extent that they relate to the two loan contracts and associated mortgages the subject of this proceeding from their inception. The claims concerning changes to those contracts and mortgages are not struck out;
   • (i) Claims that the loan contracts the subject of this proceeding are void or voidable from their inception;
   • (j) The claim for loss of good will;
   • (k) The claim for interest on the amount of $9465.00, but not the claim in respect of that amount of $9465.00 itself;
   • (l) The claim that, by changing the frequency of payments under the loan contract dated 2 August 2001 from fortnightly to monthly in October 2005, the Respondent breached that loan contract. But the claim concerning change in the frequency of that payment is not struck out as a claim under s70 of the Code.
2. Otherwise, the Respondent's application under s75 of the VCAT Act is dismissed and the claims survive.
3. The Respondent's application under s78 of the VCAT Act to strike out or dismiss the proceeding is dismissed.
4. By 11 March 2009 the Applicants must file and serve fresh particulars of their claim.
5. The proceeding listed for further directions at 10.00 am on 18 March 2009 to consider the further course of this proceeding including (as the Tribunal's directions dated 9 December 2008 foreshadow) whether the Applicants' application filed on 27 November 2008 (to the extent that the application raises fresh material not dealt with in the Respondent's application under s75 of the VCAT Act or the decision on that application) is pursued.
6. The parties' costs of and incidental to the Respondent's application under ss75 and 78 of the VCAT Act are reserved.

1. The Applicants' (the Davies) proceeding is struck out in part. The Respondent (the Bank)'s application to strike out or dismiss the Davies' claims under s78 of the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act) is dismissed. I have ordered the Davies to file and serve fresh particulars of their claim. The matter has been listed for a further directions hearing. I have reserved costs.

The Davies' application and the Bank's strike out applications

1. In April 2008, the Davies applied to VCAT for various kinds of relief. Their application is divided in two claims or sub-applications. One is a claim under s88 of the Consumer Credit (Victoria) Code (the Code). It seeks to have VCAT stay or postpone proceedings commenced by the Bank as plaintiff against the Davies as defendants in the Supreme Court of Victoria in February 2008 (the Supreme Court proceeding).
2. The other part of the application seeks various kinds of relief under a number of statutes and the general law.
3. The Bank has applied to strike out this proceeding on a number of different bases. One is that the Code does not apply to the loans and mortgages which are the subject of the proceeding. Others have to do with the applicability of statutes and the general law.
4. There have been a number of changes in the timetable I set for the Bank's written submissions on its strike out application. This occurred because the Bank has a number of times asked that the Davies provide better particulars of their claims, arguing that it could not sensibly make submissions on the strike out application until it fully understood the claims. The Tribunal on three occasions has made directions that the Davies further particularise their claims. At two of the directions hearings which led to these directions, I explained to the Davies the need for their claims to be particularised, and what particulars they must provide. Each time, the Davies have (in my view) done their best to provide what they thought were the required particulars, but those particulars have not been adequate. The Bank still claims that the particulars of claim are inadequate but has nevertheless made extensive written submissions on its strike out application. On the basis of what it says is the failure to particularise the claims, it has also applied to strike out or dismiss the claims under s78 of the VCAT Act.
5. The Davies have not been represented by a lawyer at any time during the VCAT proceeding. Their original application and later particulars of claim are sometimes vague, and sometimes repetitive, and are not in the form in which a lawyer would draft particulars of claim. This vagueness and repetition, together with the complexity of the Davies' case, have created some difficulties. However, the VCAT Act is framed in a way that helps VCAT to determine cases where one or both parties represent themselves. Section 98 requires VCAT to act fairly and according to the substantial merits of the case. Sections 101 and 102 permit VCAT to determine a case with as little formality and technicality as the proper consideration of the case permits. VCAT is not bound by the rules of evidence and may regulate its own procedure.
6. As the Supreme Court pointed out in Tomasevic v Travaglini & anor[1], a court or tribunal must adopt a special approach when dealing with an unrepresented litigant. It needs to ensure that the litigant understands the procedures to be followed and has a proper chance to put his or her case. Extra information and assistance need to be given, but the court or tribunal is not an advocate. In some cases, an unrepresented litigant will only be able to tell his or her story, and will not be able to fully characterise that story in terms of the law. If the Tribunal insisted that an unrepresented litigant could only proceed if he or she could characterise his or her claim in terms of the applicable law, this may well shut out an unrepresented litigant altogether. It would deprive that litigant of access to justice. I have borne this in mind in this case. But I have also been mindful that there must come a point beyond which the lack of particularisation of the claim can become so unfair to the other party that the claim ought not to proceed.
7. Broadly, the Davies seek in their general claim to have various contracts and mortgages set aside as unjust, and the transactions which led to them reopened. They seek compensation under various provisions of the Code and under the general law. They make claims under the Privacy Act 1988 (Cth) (the Privacy Act) that the Bank has breached their privacy. They claim that the Bank has breached the Australian Securities and Investments Commission Act 2001 (the ASIC Act) by engaging in fraudulent, misleading, deceptive and unconscionable conduct. They make similar claims under the Fair Trading Act 1999 (Vic) (the Fair Trading Act). They make claims in negligence and breach of contract. They also claim that the Bank has breached certain provisions of the Code of Banking Practice. They seek compensation.
8. The Bank argues that the whole proceeding should be struck out under s75 of the VCAT Act on the basis that it is frivolous, vexatious, misconceived or lacking in substance. It argues that the Code does not apply or (alternatively) that the claims under it are misconceived or lacking in substance, that VCAT has no jurisdiction to entertain a number of the other claims, and that the claims for relief are misconceived. The Davies oppose the application.
9. I first say something about the law. I then summarise the material before me. Finally, I consider each of the issues in turn and determine whether or not various claims should be struck out. I note that the Bank has indicated that it will take no further step in the Supreme Court proceeding until its application has been determined.

1. The Bank's applications are made under the VCAT Act. The Bank's submissions rely in large part on the Code. I consider the relevant provisions of each of these here.

The purpose for which credit is or is intended to be provided

1. Except for one matter, the Bank has not denied that it provided credit to the Davies in the ordinary course of a credit business or other business carried on by it. It is common ground that, when the Davies entered into the relevant loan contracts, they were ordinarily resident in Victoria. Apart from this one matter, the Bank does not dispute that it is a credit provider or that the relevant loan contracts are credit contracts within the meaning of the Code. But the Bank says that the Code does not apply because the credit was not provided wholly or predominantly for personal, domestic or household purposes. Section 6(1) of the Code relevantly provides -

(1) This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into -

(b) the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes;

1. Section 5 explains what a credit contract is. It is 'a contract under which credit is or may be provided, being the provision of credit to which this Code applies'. Under Schedule 1, 'contract' includes 'a series or combination of contracts, or contracts and arrangements'.
2. The effect of s6(4) is that 'investment by the debtor' is not a personal, domestic or a household purpose. Section 6(5) provides -

(5) For the purposes of this section, the predominant purpose for which credit is provided is -

(a) the purpose for which more than half of the credit is intended to be used;

(b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.

1. Section 11 contains some important presumptions about when the Code does and does not apply. Section 11(1) provides -

11 Presumptions relating to application of Code

(1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established.

1. Section 176 casts more light about when the conduct or knowledge of a credit provider's agent, officer or employee is imputed to the credit provider.
2. The effect of s176 is relevantly this. The conduct of an agent, officer or employee of a credit provider acting within actual or ostensible authority is imputed to and taken to be the conduct of the credit provider. For the purposes of the Code, a credit provider is not taken to know or have reason to believe something because an agent, officer or employee of the credit provider does so, unless the knowledge or reason to believe that thing is acquired by that agent, officer or employee acting in that capacity and in connection with the transaction concerned.
3. I now say something about s6. In Slaveska v Commonwealth Bank of Australia[2] I considered the effect of the provisions about the purpose for which credit is provided, in the light of two lines of cases. The first line emphasised the purpose of the credit provider or a reasonable person in the credit provider's shoes. The second line emphasised how the debtor used or intended to use the credit provided. I said that s6 was written in the context of a contract. This meant that the purpose of the contracting parties was relevant. The transaction must be looked at in substance and in the context of its performance. The purpose of s6(2) to (5) was to provide clarification where the application of the general rules about the application of the Code in s6(1) gave an uncertain result. So, as far as concerns the purpose for which credit is provided, s6(4) and (5) provide clarification where the application of s6(1)(b) gives an uncertain result. The question which they answer is - was the credit wholly or predominantly provided for personal, domestic or household purposes? Section 6(4) makes it clear that investment by the debtor is not such a purpose. Section 6(5) looks at the intended use of the credit by the debtor.[3]
4. Caution must be exercised before drawing analogies between the facts of one case and another in this area. The purpose of the credit must be determined according to the particular facts of each case, including a particular transaction and the knowledge of the parties. Analogies are only of general help.

1. Under s8(1), the Code applies to a mortgage to the extent that it secures obligations under a credit contract or related guarantee, and (relevantly) if the mortgagor is a natural person. In considering whether the Code applies to a mortgage, what is determinative is not the purpose of the mortgage, but whether the credit contract secured by the mortgage is a credit contract to which the Code applies.

Reopening transactions and setting aside unjust contracts and mortgages (s70)

(1) Power to reopen unjust transactions. The Court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change.

(4) Unforeseen circumstances. In determining whether a credit contract, mortgage or guarantee is unjust, the Court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable when the contract, mortgage or guarantee was entered into or changed.

(5) Conduct. In determining whether to grant relief in respect of a credit contract, mortgage or guarantee that it finds to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the contract, mortgage or guarantee since it was entered into or changed.

1. Section 70(1) must be read in the light of s70(4) and (5). When read in this context, the effect of s70(1) is that the only circumstances relevant in determining whether a contract or mortgage or a change in a contract or mortgage is unjust are those relating to the contract or mortgage at the time it was entered into or changed. It is clear that these circumstances can be related to what happened at the time or to the terms of the contract or mortgage or change. Generally, circumstances since the formation of the contract or mortgage or since the making of the change cannot be considered unless (according to s70(4)) where they were reasonably foreseeable at the time of entering into the contract or mortgage or changing it. That subsequent conduct can, however, be considered where the Tribunal found a contract, mortgage or change to be unjust and is considering whether or not to grant relief. Section 70(2)(l) is consistent with this interpretation. It permits the Tribunal, among other factors, to consider whether, at the time a contract or mortgage is entered into or changed, the credit provider knew or could have ascertained by reasonable enquiry of the debtor at the time that the debtor could not pay in accordance with the terms or not without substantial hardship. This factor looks to a future event (inability to pay) but only to the extent of what is known or could reasonably have been ascertained at the time the contract was entered into or changed.
2. Section 70(7) defines 'unjust' inclusively and not exhaustively. It includes unconscionable, harsh or repressive.
3. The remedies which the Tribunal may order under s71 if it finds that a contract, mortgage or change to a contract or mortgage is unjust are broad. The orders permit the Tribunal to reopen the relevant transaction (that is the contract, mortgage or guarantee), reopen accounts, relieve the debtor or guarantor from payment of certain amounts, and set aside, revise or alter any agreement or mortgage in connection with the transaction. They permit the Tribunal to order a mortgagee to take specified steps, or to give judgment for any amount justly due to a party under a contract, mortgage or guarantee.[4]

1. The Davies also make claims under ss 58, 62, 88 and 114 of the Code, and for a civil penalty (Division 1 of Part 6 of the Code). I say something about each of these in turn.

Unilateral changes to credit contracts (ss58 and 62)

1. Sections 58 and 62 of the Code occur in Division 1 of Part 4. Part 4 concerns (among other things) changes to obligations under credit contracts and mortgages. Division 1 is headed 'Unilateral changes by credit provider'.
2. Section 58 is not a provision under which relief can be claimed. It is a section which describes when the division applies. Its effect is that the division only applies to changes made unilaterally by a credit provider, but excluding (among other things) an increase in the amount of payments if the increase occurs automatically (as specified by the contract) and the amount of the increase and when it takes effect are ascertainable from the contract. The effect of s58(3) is that the division does not confer more rights or powers to change the credit contract than those in the contract.
3. Section 62 concerns various changes to continuing credit contracts. Broadly speaking, continuing credit contracts (as defined by the Code) are contracts under which the amount of credit available increases as amounts are repaid - for example, credit cards. Section 62 deals with a credit provider's obligations where the credit provider decides not to provide any further credit under a continuing credit contract. It deals with the effect of the credit contract where that decision is made, and requires notice of that decision to be given. Failure to comply with the section is an offence punishable by a fine.

Postponing enforcement proceedings (ss 86-88 of the Code)

1. Under s86, a debtor, mortgagor or guarantor who is given a default notice or a demand under s82, may at any time before the end of the period specified in the notice or demand, negotiate with the credit provider a postponement of 'enforcement proceedings or any action taken under them'. Broadly speaking, s80 of the Code provides that a credit provider must not commence enforcement proceedings under a credit contract or exercise any right under a mortgage unless a credit provider has given to the debtor or mortgagor a default notice complying with the section, and the default has not been remedied within the period specified in the notice. One of the requirements for a default notice is that it must state a period of at least 30 days from the date of the notice within which the default may be remedied. Among other things, s82 allows a credit provider to call on a guarantee if the credit provider has obtained a judgment against the debtor under the credit contract and, by the end of 30 days after the credit provider has demanded the money owing under that judgment, that judgment debt remains unsatisfied. These are the periods referred to in s86.
2. Under s88, a debtor, mortgagor or guarantor who is unable to negotiate a postponement with the credit provider under s86 may apply to the court, and the court may order or refuse to order the postponement. There is also a power to make consequential orders. In this context, and in ss70 and 114 and Division 1 of Part 6, 'court' means VCAT.[5] This is to be contrasted with other provisions of the Code where 'court' means any court or VCAT.
3. Sections 86 to 88 only apply if the maximum amount of any credit which may be provided under the credit contract does not exceed an amount specified in the Consumer Credit (Victoria) Regulations 1995 (the Regulations.[6] The ceiling is 110 per cent of a figure specified by reference to an Australian Bureau of Statistics publication as published from time to time. The ceiling, then, varies from time to time. Under schedule 1 of the Code 'enforcement proceeding' means (relevantly) proceedings in a court to recover payments under a credit contract, or taking possession of property or exercising any other right to enforce a mortgage. Sections 86 to 88 cover not only enforcement proceedings but 'actions' taken under them - a very broad concept.

Civil penalties, compensation and restitution (Part 6 of the Code)

1. Division 1 of Part 6 of the Code concerns civil penalties for breaches of key requirements of the Code. Section 100 sets out what these key requirements are. If a debtor applies to have the Tribunal impose a civil penalty on a credit provider, and the court (VCAT) is satisfied that the credit provider has, in connection with the credit contract breached a key requirement of the Code, the Tribunal may order the credit provider to pay to the debtor an amount by way of civil penalty. Broadly speaking, that amount must not be more than the total interest charges payable by the debtor under the credit contract, from the date it was made. However, an additional amount can be awarded if the debtor has suffered loss. Section 107 also permits the debtor to apply to the court (VCAT) for compensation for loss which the debtor satisfies the court arose from the credit provider's breach of a key requirement. This application is separate from a civil penalty application. But, under s107(3), a debtor cannot apply for a civil penalty and under s107 in respect of the breach of the same key requirement.
2. Section 114 of the Code concerns breaches of requirements of the Code which are not key requirements. A person affected by a breach of this kind may apply to the court (VCAT) for restitution or compensation.

Striking out or dismissing the proceeding (ss75 and 78 of the VCAT Act)

1. As I have said, the Bank applies to strike out this proceeding under s75 of the VCAT Act on the ground that it is frivolous, vexatious, misconceived or lacking in substance. These are all grounds under which the Tribunal may, under that section, strike out or dismiss all or part of a proceeding.
2. The principles which the Tribunal applies to applications under s75 are relevantly these.[7] Section 75 permits the summary termination of a proceeding, usually before any evidence has been heard. The Tribunal should be cautious before bringing a proceeding to an end in this way and so depriving the litigant of the chance to have the proceeding heard in the ordinary course. It should only do so where satisfied that, for a reason mentioned in the section, the case is manifestly hopeless, undoubtedly untenable, doomed to fail, or on no reasonable ground can justify relief. I take the Davies' case at its highest and assume that, if the matter went to a full hearing, they will be able to prove what they assert.
3. In this case, by applying under various provisions of the Code, the Davies have asserted that the Code applies and, under s11(1) the Code is then presumed to apply. It is for the Bank, who wants the claim dismissed because the Code does not apply, to establish that this is so. The application under s75 must be determined in the light of s11(1) of the Code.
4. Section 78 applies where a party conducts a proceeding in a way that unnecessarily disadvantages another party. Section 78(1) gives examples of conduct of this kind. They include failing to comply with a direction of the Tribunal without reasonable excuse. Under s78(2), if the section applies, the Tribunal may do a number of things. I mention two of them. If the party causing disadvantage is the applicant, the Tribunal may strike out or dismiss the proceeding. The Tribunal may also order costs.
5. In Bell Corp Victoria Pty Ltd v Stephenson [8], the Victorian Supreme Court emphasised the importance of not using the power under s78 in a way that shuts out a party from putting his or her case, and that use of power to strike out or dismiss a proceeding under the section must be a last and not a first resort.

1. I have before me written and oral submissions from the parties. I have three affidavits from the Bank in support of its application. Two are from a current manager of the Bank, Mr Pouki. One is from a former employee of the Bank - who was at the time a mobile lending manager - Mr Ridgeway. There is a very substantial amount of documentary evidence exhibited to these affidavits.
2. In their written and oral submissions, the Davies refer to all of the material in their application and all of their further particulars of clam subsequently filed. I have had regard to all of this material. At the hearing of oral submissions, Ms Davies' oral submissions (made on her own behalf and on behalf of Mr Davies) included both evidence and argument. Because of this, her submission was given in the form of sworn evidence. She was cross-examined on this evidence. Mr Ridgeway also gave oral evidence on the application. Ms Davies cross-examined him.
3. The Bank urged me to prefer Mr Ridgeway's evidence to that of Ms Davies on the basis that it was more consistent with the documentary evidence and more credible. Ms Davies urged me to prefer her evidence to that of Mr Ridgeway, on the basis that her evidence was more consistent with the documents before me, more credible and also that Mr Ridgeway had no specific recall of events and conversations, but simply relied either on what he said was his usual practice or on what was in the documents.
4. My approach to the evidence is this. This is evidence given in the context of a hearing of an application to determine whether or not the Davies' claim should be struck out as manifestly hopeless. While not discounting the whole of Mr Ridgeway's evidence, I find much of it unsatisfactory. He had no specific recall of relevant events and discussions, but instead relied on what he said was his general practice. To the extent that he was able to recognise his signature and handwriting on documents, I accept that part of his evidence. His evidence that he must have followed his general practice and recorded what was said to him by the Davies during their discussions about the relevant loans, and then transferred his notes of what was said into the loan application, is substantially undercut by his evidence that he made one error in that transcription and was reprimanded for it. This must cast doubt on the accuracy of his transcription. What he wrote in the loan applications to the Bank was never checked by the Davies before Mr Ridgeway sent it to the Bank. I give no weight to a page headed 'Particulars of security' which is contained in a document exhibited to Mr Ridgeway's affidavit and which the affidavit says is a loan application prepared by Mr Ridgeway. Mr Ridgeway did not recognise this part of the application. I have treated his evidence with caution.
5. There were some difficulties with Ms Davies' evidence. In my view, she was sometimes reluctant to answer questions directly, and her evidence about when a flat was built on the property at Lara on which the Davies' home was located was inconsistent. However, in my view, this did not make the whole of her evidence untruthful or unreliable. Her recollection of events and discussions was more specific than Mr Ridgeway's, and I prefer her evidence to his where there is inconsistency.
6. I have not, as Ms Davies asked me to do, disregarded the whole of Mr Pouki's affidavit evidence because he failed to exhibit all relevant documents to his affidavit. His affidavit is made in support of the Bank's strike out application, and doubtless includes documents which the Bank considered supported that application. There is nothing to suggest that there was any attempt to mislead the Tribunal. I have, however, taken into account Ms Davies' submission that there were other documents before the Banking and Financial Services Ombudsman (BFSO) during his investigation of complaints made to him by the Davies. Indeed, some of the BFSO's correspondence exhibited to Mr Pouki's affidavit refers to these other documents. On all the material before me, I now summarise what the Davies claim and what they seek. In the summary, I include relevant material from the affidavits of Mr Pouki and Mr Ridgeway.

1. On 26 June 1999, the Davies and the Bank entered into an agreement under which an existing loan from the Bank to the Davies which was then secured over a property owned by the Davies at Plover Street in Lara was transferred and secured by a mortgage over a property at Lara on which the Davies' home was located (the Lara property). This agreement was made because the Plover Street property was to be sold. The agreement is not in the material before me but its existence is not disputed by the Bank. The loan, the security for which was transferred to the Lara property, was called an Access Advantage Loan. On the material before me, it seems to have been a contract under which credit was available on a rolling basis up to a specified limit. A loan of this kind is a continuing credit contract within the meaning of the Code. The Davies say (and the Bank does not deny) that the Access Advantage Loan was for personal, domestic or household purposes and, at the time of transfer, was $19,700.00 (to the nearest dollar). The Davies explained that the loan was used pay such things as personal bills and repayments on a car loan (a loan for personal purposes).

2. The material is not entirely clear but it appears that, in about March 1995, the Davies had obtained a loan from the Bank to enable them to build a home on the Lara property. They began to live in the home on this property in 1997 or 1998.
3. There is nothing in the material to suggest that any additional mortgage was registered over the Lara property when it became the substitute security for the Access Advantage loan. It may be that the parties agreed that the Access Advantage loan agreement was to be a secured agreement for the purposes of the mortgage over the Lara property, but this is not clear from the material.
4. The Davies say that they paid off the Access Advantage loan in December 1999. It is clear that they believed that this loan was then at an end. But the material does not include any formal acknowledgment by the parties that the Access Advantage contract was discharged or cancelled or that the mortgage over the Lara property was discharged to the extent that it covered the Access Advantage loan.
5. In November 1999, the Davies paid a deposit on an apartment in Collins Street, Melbourne (the Collins Street property). A planning permit had recently been issued authorising the change of use and redevelopment of the building on that land into apartments. The apartments were being sold 'off-the-plan' - that is, on terms under which the purchaser paid a deposit with the balance payable on completion of the redevelopment. It seems that final settlement occurred in September or October 2001. The total purchase price (including the deposit) was $345,000.00.
6. In August 2001, the Davies signed two loan contracts with the Bank. Each contract comprised a document called 'Consumer Credit Contract Schedule' and a document called 'Usual terms and conditions for consumer lending'. Both contracts state 'the borrowers of credit provided wholly or predominantly for business of investment purposes (or for both purposes) do not have the protection of the Consumer Credit Code'.
7. The disclosure date of the first contract was 2 August 2001 (the Collins Street loan contract). It is headed 'Investment home loan'. The amount of credit was $314,000.00. It included a redraw facility. The borrowers were charged interest at a fixed rate for 12 months and then at the investment home loan standard variable late. The loan term is 30 years. Item K of the consumer credit contract schedule states that the security was a registered mortgage over the Collins Street property and a registered mortgage over the Lara property. The schedule states that when the borrowers signed the schedule 'you...acknowledge that any security stated at item K extends to cover your obligations under the contract'. At the end of the schedule is a statement headed 'Before you sign' and 'Important things you must know' - statements required by the Regulations to be included in contracts subject to the Code. I accept the Bank's submission that the mortgage which secures the Davies' obligations under this contract is not an 'all moneys' mortgage. The effect of the Memorandum of Common Provisions, which the mortgage incorporates, is that the mortgage only extends to an agreement if the parties acknowledge that it does.
8. The second contract has a disclosure date of 3 August 2001 (the Viridian Contract). It too comprises two documents - a consumer credit contract schedule and the usual terms and conditions for consumer lending. It relates to a line of credit called the Viridian Line of Credit. It contains the same warning to borrowers about losing the protection of the Code as is contained in the Collins Street loan contract. The credit limit under the contract is $180,000.00. The schedule provides that the Bank can, without the borrower's consent, change (among other things) the credit limit. Item K provides that the security is a registered mortgage over the Lara property. At the end of the schedule are the statements 'Before you sign' and 'Important things you must know' that the Regulations require for Code-regulated contracts.
9. It is clear from the usual terms and conditions for consumer lending that they include loans both for investment purposes and for personal, domestic or household purposes. The conditions note that the terms of the Code of Banking Practice 'may apply to the loan'. Clause 1 of the conditions is a definitions clause. Among other things, it defines 'security' as 'any security including any guarantee stated at item K or any security substituted for it at our request or with our prior written consent'. In this context, 'our' and 'us' means the Bank and 'you' and 'your' means the borrower. Under clause 1 'security property' means 'the property mortgaged or charged to us by the security'. Clause 3.2 provides that, if the security is in existence at the date of the contract 'by signing the contract you acknowledge that the security extends to cover your obligations under the contract.
10. Among other things, clause 10 permits the Bank to change the frequency of payments under the contract, but requires it to give the borrower notice of the change. Part G of the conditions is expressly incorporated into the Viridian contract but is not expressly incorporated into the Collins Street loan contract. That part includes the information statement required by the Regulations to be included in Code-regulated contracts.
11. I now summarise the allegations about what led to those contracts. There is no dispute that, at sometime in July 2001, Mr Ridgeway, then a mobile lending manager for the Bank, interviewed the Davies at the their home about obtaining loans from the Bank. Mr Ridgeway completed and submitted a loan application showing the Davies as borrowers. I accept his evidence that the Davies never saw or had a chance to check the accuracy of what he filled in. I accept his evidence that it was his usual practice to take notes of customer interviews and later to go home and transcribe the details into an application form, which he then sent to the Bank for approval. I find that he made at least one important error (in relation to Ms Davies' period of employment) either in making notes in his discussions with the Davies or in transcribing those notes into the application. This evidence raises the possibility that there may have been other important errors. I prefer Ms Davies' evidence about what was said at the interview.
12. Ms Davies did not deny that, at the interview between the Davies and Mr Ridgeway, there may have been some figures mentioned in relation to estimated rental income from the property in Collins Street to be purchased with the proposed loan. I accept her evidence that she also discussed with Mr Ridgeway that she had just commenced full time work in Melbourne, and that it was still undecided whether the Davies would live at the Lara property and rent the Collins Street property, or live at the Collins Street property and rent the Lara property.
13. The application form which Mr Ridgeway completed and signed as headed 'home loan/investment home loan application'. It stated that it sought an 'investment home loan' of $314,000.00 to assist with the purchase of the Collins Street property. It stated that it also sought a Viridian Line of Credit with a credit limit of $180,000.00. The purpose of this loan was to consolidate two existing loans - the Access Advantage loan with a credit limit of $20,000.00 (the loan secured over the Lara property earlier), and a home loan with a credit limit of $161,000.00. This earlier home loan was the home loan used to build the home on the Lara property. Under 'loan purpose' in the application, Mr Ridgeway ticked 'to buy a new house less than one year old'. In answer to the question 'will you be living in the home?', he writes 'no - investment loan'. There is a handwritten comment on the application which states the rental income for a flat on the Lara property, and an estimated rental income for the Collins Street property. The comments go on to say that finance was required to purchase an 'investment apartment'.
14. On 24 July 2001, the Davies signed a form headed 'Acknowledgement and consent, nomination to receive notices, proof of identity details'. Part B of this form is headed 'Consumer Credit Code', and contains references to the Code and the Regulations. This is the form which, under s171 of the Code, joint debtors may sign if they wish one or some of them to receive notices on behalf of all. Mr Ridgeway's evidence was that, although he did not recall this particular document, it was his practice to require prospective borrowers to sign this form.
15. The Davies allege that, in July 2001, they entered into a collateral agreement with the Bank under which the Bank agreed that, if they reduced their loan obligations to the Bank by $120,000.00, the Bank would treat the Viridian loan as secured only over the Lara property and the Collins Street loan as secured only over the Collins Street property. They allege that, in September 2001, they performed their part of this agreement, but the Bank did not disconnect the securities. It seems that the $120,000.00 was part of the proceeds of sale of a property unrelated to this proceeding, and there is a suggestion in the evidence that it was paid into the Viridian loan account, although this is unclear.
16. In September 2002, the Davies and the Bank agreed that the frequency of payments under the Collins Street loan contract would change from monthly to fortnightly. The Davies allege that, without their consent, and in October 2005, the Bank changed the frequency of payments under that contract from fortnightly to monthly.
17. The Davies say that the Collins Street property was not rented out for some nine months after settlement. They continued to live at the Lara property, and there is no evidence that they have ever lived at the Collins Street property. After the nine month period, the Davies rented out the Collins Street property and it provided rental income.
18. The Davies allege that in September 2005 (and perhaps, although the material is unclear, in October 2001), and without their knowledge or authority, the Bank by its representatives made handwritten alterations to the mortgage over the Lara property to extend that mortgage to the Collins Street property. The handwritten alterations were 'signed' (again without the Davies' knowledge or consent) by using the Davies' signatures to the mortgage over the Lara property - signatures given in June 1999 for the purpose of the transfer of the security for the Access Advantage loan to the Lara property. It seems that they say that the mortgage over the Lara property which secured the Access Advantage loan had, until September 2005, remained unregistered under the Transfer of Land Act 1958 (the Transfer of Land Act). The Davies allege that, not only was the alleged conduct in relation to the mortgage fraudulent, misleading, deceptive and unconscionable, but it also breached their collateral agreement with the Bank.
19. In 2005, the Davies attempted to refinance the Lara property with a lender called in the Davies' material La Trobe Financial Services but in the Bank's affidavit material La Trobe Australia Ltd (La Trobe). The Davies say that, in late 2005, the Bank (without their authority or consent) attempted to treat the refinancing of the Lara property and the associated discharge of that mortgage as a refinancing involving the discharge of mortgages both over the Lara property and the Collins Street property. They allege that the Bank required the amount of $9465.00 (to the nearest dollar) to be paid to it before it would agree to release only the Lara property from the mortgage over it.
20. The Davies also allege that, because of administrative errors of the Bank in relation to their loans, the Bank ought to pay them compensation of $5476.00 (to the nearest dollar) to compensate them for miscalculations resulting from the administrative errors. It is unclear to which of the loans the subject of this proceeding those administrative errors relate. The Davies do not give more information about these alleged errors, but instead rely on the findings of the BFSO. In the material, they quote extracts from letters received from the BFSO. The Bank in its material also includes correspondence with the BFSO. Neither party provided me with a document containing the initial findings of the BFSO, from which I would be able to understand what the administrative errors are alleged to be or how the amount of $5476.00 was arrived at.
21. I have already mentioned what the Davies claim was the Bank's unilateral change of the Collins Street loan contract in October 2005, the effect of which was that payments were thereafter to be made monthly and not fortnightly. The Davies claim that this change increased their liability under the loan by $100,000.00. I agree with the Bank that this cannot be read as a claim that the loan principle was unilaterally increased by the Bank by $100,000.00. But, taking into account that the Davies are unrepresented, and reading the claim broadly, I consider that the claim is capable of being interpreted in this way. Fortnightly repayments of principle and interest reduce the loan principle at a particular rate, with a corresponding reduction in the amount of interest. Since the repayment amounts are the same, and as the amount of interest progressively reduces, the principle component of the fortnightly repayment rises and the interest component of the payment reduces. If the frequency of the payments is changed to monthly rather than fortnightly, this process happens more slowly. The loan will not be repaid as quickly as with fortnightly repayments, and more interest will be paid. I treat this as the loss which the Davies claim they have suffered by the change from fortnightly to monthly payments.

1. The Davies ask for the Viridian loan contract (which was a consolidation of the Access Advantage loan contract and the Lara property building loan contract) and the mortgage securing that loan to be set aside from their beginning. They ask for the Collins Street loan contract and the mortgage securing it to be set aside from their beginning. They ask for a refund of all interest paid under those contracts and mortgages. They ask for compensation of $5476.00 in respect of the administrative errors by the Bank which I have already mentioned, and for compensation of $9465.00 for what they say were the amounts wrongfully demanded by the Bank during the refinancing transaction in 2005. I have already explained their compensation claim in respect of the change of payments in the Collins Street loan from fortnightly to monthly. They also ask for compensation for loss of 'goodwill' because their previous excellent relationship with the Bank has been destroyed. They seek compensation for what they allege is fraudulent, deceptive, misleading and unconscionable conduct of the Bank in relation to the loans the subject of this proceeding. They ask for civil penalties.
2. The Davies claim that the Bank has breached the Privacy Act 1988, the ASIC Act, the Transfer of Land Act and the Code of Banking Practice. They claim that the Bank has breached contract and has been negligent.

1. At some time in 2006, the Davies made various complaints to the BFSO about some of the matters I have just described. The BFSO's case manager to whom the complaints were assigned made initial findings and recommendations in March 2007. These are not before me. From the material before me, it seems that the Bank accepted these findings but the Davies did not.
2. The BFSO himself then reviewed the case manager's findings and recommendations. Essentially, he affirmed them. It seems that the Bank accepted these findings, but the Davies did not. The BFSO, as he was required to do by his terms of reference, closed the file and took no further action.

1. As I have said, in February 2008, the Bank as plaintiff commenced in the Supreme Court proceedings against the Davies as defendants. Broadly speaking, the Bank in its statement of claim sought payment of what was owing under the Collins Street loan. At the date of the Writ (14 February 2008) this sum was some $322,000.00. It sought possession of the Collins Street property under the mortgage securing that loan. It sought interest and costs. The statement of claim says that the Collins Street property mortgage was registered in September 2001 under the Transfer of Land Act, that the Davies are in default in respect of payments under the Collins Street loan contract and mortgage, and that under the contract and mortgage the whole of the loan balance is immediately due and payable.
2. With the court's leave, the Davies have filed a defence and an amended counterclaim. Broadly speaking, the counterclaim raises all the matters which they raise in the VCAT proceeding.

1. The Davies are not represented by a lawyer and have effectively left it to the Tribunal to deal with the Bank's submissions as to law.

Alleged breaches of the ASIC Act and the Privacy Act

1. VCAT only has the jurisdiction conferred on it by or under Acts of Parliament (called in the VCAT Act enabling enactments). These two Commonwealth Acts do not expressly confer jurisdiction on VCAT. To the extent that the two Acts confer jurisdiction on any court, 'court' is restricted to those courts which can exercise the judicial power of the Commonwealth under Chapter III of the Commonwealth Constitution. VCAT is not one of these.[9]
2. These claims are misconceived and must be struck out.

1. The Davies have not explained what, over and above the banker/customer relationship, exists to create the necessary closeness of relationship in their particular circumstances which would subject the Bank to a duty of care to avoid reasonably foreseeable harm to them. Use of the word 'negligent' is insufficient. This claim should be struck out.

1. I agree with the Bank that, insofar as this claim asks the Tribunal to award compensation for breach of the Code itself, the claim should be struck out. The Code of Banking Practice does not confer any jurisdiction on VCAT. I deal later with the possibility that the Code of Banking Practice might form part of the relevant credit contracts.

Claims under the Transfer of Land Act

1. I agree with the Bank that VCAT has no jurisdiction to deal with compensation for fraud in relation to the Register under the Transfer of Land Act. The claims that seek compensation for fraud under provisions of the Transfer of Land Act should be struck out. I note, however, that the Transfer of Land Act contains procedures dealing with fraud on the Register. But VCAT has no jurisdiction under those provisions. For example, section 110 of the Transfer of Land Act gives an entitlement to indemnity to people who have suffered loss because of errors or misdescriptions in the Register, and ss 111 and 116 permit applications in respect of this to the Registrar or the Supreme Court and (in some circumstances) the County Court.

1. To the extent that the Davies claim that La Trobe or persons other themselves have suffered loss and should be compensated by the Bank, these claims must be struck out. The Davies and the Bank are the only parties to this proceeding, and VCAT can only make orders in this proceeding against the parties.

1. The Bank submits that the Collins Street loan and mortgage are for business and investment purposes and the Code does not apply to them. It says therefore that VCAT does not have jurisdiction to entertain claims under the Code with respect to the Collins Street loan and mortgage, and that these claims to that extent should be struck out. The Bank submits that I should do this based on what is in the application for the Collins Street loan, Mr Ridgeway's evidence, the Collins Street loan contract, and in the Davies' description of the Collins Street property in the VCAT application and their various particulars of claim, and in the amended counterclaim in the Supreme Court proceeding as an investment property. The Bank also submits that I should rely on the references in these documents to the Collins Street loan as an 'investment' loan.
2. I do not accept this submission. In my view, the loan purpose is far from clear. Mr Ridgeway did not recall any of the discussions which preceded the loan application. The Davies never saw or checked what was in that application. I prefer Ms Davies' evidence. That evidence is that, at the time of the discussions with Mr Ridgeway, the Davies were uncertain whether they would live in the Lara property or the Collins Street property and that the Davies told Mr Ridgeway this.
3. I am not satisfied that Mr Ridgeway accurately transcribed into the loan application what the Davies told him. The loan application itself is equivocal. According to its heading, it could apply equally to transactions that are and are not regulated by the Code. The consumer credit contract schedule and the usual terms and conditions applying to the Collins Street loan contract are equally equivocal. It is true that the contract schedule states that the loan is for investment purposes. But, just before entering the loan contract, the Davies signed a form which is consistent with the contract being regulated by the Code. The loan contract schedule ends with a statement which is required by the Code to be included in contracts regulated by it.
4. The purpose of the loan was clearly to assist in the purchase of the Collins Street property. On the material before me, the purpose of the Davies and the Bank when they entered into the loan contract is uncertain. Since the application of s6(1)(b) of the Code gives an uncertain result, we must turn to s6(5). Section 6(5)(a) is inapplicable because it deals with the purpose for which more than half of the credit was intended to be used by the debtor. It is clear that the credit provided was intended to be used by these debtors to fund the purchase of the Collins Street property. Section 6(5)(b) has no application to the extent that it deals with goods. Although 'goods' are defined very broadly in Schedule 1 of the Code to include things such as aircraft, vehicles and minerals, there is nothing to indicate that they include real property. Section 6(5)(b) also applies to services. Schedule 1 defines 'services' to include rights or interests in real property. But s6(5)(b) can only help where we know the purpose for which the debtors intended the services to be most used, and this is uncertain. Given the equivocal documentation and the uncertainty of the Davies' purpose at the time the loan was entered into, s 6(4) does not clearly apply. It cannot be said clearly that the credit was provided for investment by the debtors.
5. The subsequent renting of the Collins Street property does not, in my view, provide a clear answer to the question of the loan purpose. This must be determined at the time of entering into the loan contract, not later. Nor does the use by the Davies in documents in this proceeding and in the Supreme Court proceeding of words such as 'investment property' (some seven years after the event) assist me to answer the question. One must remember that, at the time of the VCAT proceeding and the Supreme Court proceeding, and for several years before that, the Collins Street property was a rental property. It is little wonder, in these circumstances, that the Davies describe it in this way. The Bank correctly submits that the parties cannot, by saying so, either apply or disapply the Code. The application or otherwise of the Code must depend on the terms of the Code. But what the parties say in documents created at or about the time when they entered into the relevant contract, including what they say about the Code applying or not applying, can cast light on the purpose of the credit.
6. I am not satisfied that the claim that the Code applies is manifestly hopeless. To put it another way, the Bank has not displaced the presumption (triggered by the Davies making a claim under the Code) that the Code applies.
7. Before turning to the specific claims under the Code, I should add that it appears that the Bank does not argue that the Code does not apply to the Viridian loan contract. I agree. That contract is clearly called a home loan. The Davies say (and the Bank in this proceeding does not dispute) that the loan was used to refinance two other loans - an Access Advantage loan for personal, domestic or household purposes, and a home loan. I also note that the Supreme Court proceeding does not apply to the Viridian loan contract or the Lara property.

1. Apart from arguing that the Code does not apply, the Bank has not put forward any other basis on which the claim under s88 should be struck out. It therefore survives.

1. I begin with the claim under s58. Section 58 is an application provision. It confers no substantive right. The Davies' claims under this section are misconceived and should be struck out.
2. I next come to the claim under s62. That section deals with the effect of a credit provider's decision not to provide any further credit under a continuing credit contract and requires the credit provider to give notice of that decision to the debtor. On a broad reading of the Davies' material and taking their case at its highest, I treat their claim under s62 in this way. They allege that the Bank, by requiring the payment of $9465.00 before it would discharge the mortgage over the Lara property in 2005, effectively reduced their credit limit under the Viridian loan contract. It did this without prior notice to them and so breached s62.
3. But s62 relates to a decision by a credit provider not to give any further credit to a debtor under a continuing credit contract. The Davies do not suggest that the Bank decided not to provide them with any further credit at all under its Viridian contract. I agree with the Bank that s62 does not apply. The claim is misconceived and should be struck out.
4. The Davies seek civil penalties under the Code. As I have said, a debtor can only make application for a civil penalty under Division 1 of Part 6 of the Code in respect of a breach of a key requirement of the Code identified in s100. None of the sections I have previously mentioned are key requirements under s100. It follows that the Davies' civil penalty claim is misconceived and should be struck out.
5. The Davies make claims under s114. This section permits the Tribunal to order compensation or restitution to a person affected by a breach of a provision of the Code other than a key requirement. The only provision of the Code under which the Davies make a claim and to which s114 might apply is s62. I have already explained why the claim under s62 should be struck out. It follows, then, that the claim under s114 should also be struck out.
6. Finally, I come to s70. The Bank argues that the Davies' claim under s70 is misconceived. It interprets their claim as a claim to set aside the Viridian loan contract and the Collins Street loan contract from their inception and refund all interest paid under them. I note at this point that there is some confusion in the material as to whether two or three loan contracts and mortgages are involved. The better view is, I think, that two loan contracts are involved - the Viridian loan contract and mortgage, and the Collins Street loan contract and mortgage. The Viridian loan contract consolidated two existing loans. Even if (as the Davies allege) the Bank continued the Access Advantage loan account as a separate account, this does not affect the fact that there are only two loan contracts and mortgages. The way the Bank might treat a liability for accounting purposes, and the existences of loan contracts and mortgages, are two quite distinct issues.
7. The Davies do not deny that they entered into the Viridian loan contract and mortgage and the Collins Street loan contract and mortgage. They do not deny that they obtained loan funds under them and used that loan money. However, on a broad reading, the material speaks both of the original loan contracts and mortgages and of changes to those loan contracts and mortgages.
8. Section 70 of the Code applies, not only to initial loan contracts and mortgages, but also to changes in them. In an appropriate case, the section would permit the Tribunal to set aside as unjust changes to contracts and mortgages, and to reopen the transactions which led to the changes. As 71 shows, the Tribunal is permitted to do this even though accounts have settled and new obligations have been created. The Tribunal can adjust rights and revise contracts. But where a change to a contract or mortgage is concerned, VCAT is setting aside the change and not the original contract. It cannot backdate the change to the date of the original contract. This is not what s70 contemplates. The remedies which VCAT can grant under s71 where it sets aside a change in a contract as unjust can only relate to the change, and not the original contract.
9. The Davies allege that the mortgage over the Lara property was changed in 2005, and that the payments under the Collins Street loan contract were changed in that year. To the extent that the Davies seek to annul contracts and mortgages from their inception and to have refunded to them all interest payments made under them, these claims are misconceived and should be struck out. However, this does not apply to the extent that the Davies allege that the changes made to contracts and mortgages are unjust, that the changes should be aside, and that interest payments made under the contracts as changed should be refunded to them. To that extent, their claims under s70 of the Code survive. Otherwise, those claims are struck out.
10. I should add that I do not accept the Bank's submission that the claims under s70 concern the performance of contracts and nothing more. The proper view is that those claims concern changes to contracts and not their performance.
11. I also do not accept the Bank's submission that, since the Viridian loan contract and the Bank's mortgage over the Lara property have been discharged through refinancing, nothing is left that is regulated by the Code on which the Davies can base a claim under s70 against the Bank. In my view, this is not the proper interpretation of ss70 and 71. It is clear from those sections that they contemplate that matters may have settled, new obligations may have been created, and still s70 can apply. The broad powers given to the Tribunal under s71 support this conclusion.

1. VCAT has no jurisdiction to review the way in which the BFSO dealt with the investigation of the Davies' complaints. Given the course the investigation took, the BFSO's 'findings' were ultimately not binding on the Bank. The Davies rejected the BFSO's findings and recommendations, and the BFSO then had no choice but to close the file. To the extent that in this proceeding the Davies ask VCAT to review what the BFSO did, those claims are misconceived and are struck out. However, this does not prevent the Davies making claims about administrative errors by the Bank that may have been raised during the BFSO's investigation. But the determination of those claims must be on evidence presented to the Tribunal - not on the BFSO's findings or extracts from those findings. VCAT does not know on what material the BFSO based his findings.

Claims for breach of contract, and fraudulent, deceptive, misleading or unconscionable conduct

1. The Bank concedes that, under the Fair Trading Act, VCAT would have jurisdiction to deal with all of these allegations.[10] The Bank also concedes that, if the Tribunal found that the provisions of the Code of Banking Practice had been incorporated into the relevant credit contracts, VCAT would have jurisdiction to deal with breaches of the provisions of that code as part of its jurisdiction to deal with breaches of contract. In my view, the Tribunal's powers under Part 9 in dealing with consumer and trader disputes are so broad that they would permit the Tribunal to deal with claims in equity that might affect the relevant contracts or their performance or the parties' rights and obligations under those contracts.
2. Where VCAT finds that the provisions of the Fair Trading Act which prohibit unconscionable, fraudulent or misleading or deceptive conduct have been breached, the Tribunal's powers are similarly broad. The Tribunal may order compensation for loss or damage suffered as a result of the breach of the Act and, in circumstances specified by the Act, may also order that an agreement is void or cannot be enforced, or is to be varied.[11]
3. The Bank argues that, even if VCAT has jurisdiction to deal with the alleged breaches of contract and alleged unconscionable, fraudulent, misleading and deceptive conduct, the Davies' claims for relief are manifestly hopeless and, because of this, all those claims should be struck out. I now deal with relief.
4. The Davies first argue that I should declare that the relevant loan contracts are void from their inception because of the Bank's later fraudulent, deceptive, misleading or unconscionable conduct. I agree with the Bank's submission that, to be void or voidable from its inception, a contract must be affected by some conduct existing at its inception. Examples might be that the mind of a party which signed the contract did not go with his or her signature (non est factum), total absence of consideration, ultra vires (or beyond power) or that the contract is tainted from its beginning by fraud, unconscionability, or duress. This is not what the Davies say in the material. They rely on what they say the Bank did later to make the original contract void or voidable from their beginning. There is no arguable basis on which contracts can be unwound in this way. These claims should be struck out as manifestly hopeless. But the claims survive to the extent that they relate to the unwinding of changes to those contracts which the Davies say occurred because of fraud, unconscionable conduct or deceptive or misleading conduct.
5. There are two other respects in which, in my view, this part of the claim is manifestly hopeless and should be struck out. I agree with the Bank's submissions concerning these two matters.
6. First, the claim that the Bank breached the Collins Street loan contract by changing the payment frequency from fortnightly to monthly in 2005 is manifestly hopeless. The original loan contract clearly permits the Bank to make this change. This change cannot be a breach of contract. This does not mean, however, that section 70 of the Code may not apply to it as I have earlier mentioned.
7. Second, the claim that the Bank has somehow forfeited its right to 'discharge' the mortgage over the Lara property is not intelligible and should be struck out.
8. In all other respects, I am not prepared to say that the claims of breach of contract, or of fraudulent, misleading, deceptive or unconscionable conduct are manifestly hopeless. For example, if the provisions of the Code of Banking Practice are taken to be incorporated into the relevant loan contracts, some of those provisions might well make certain kinds of unethical conduct a breach of those loan contracts.[12]
9. The Bank argues that (except for two matters which I deal with later) the Davies have not alleged that the Bank's conduct has caused them loss in respect of which they are entitled to damages or compensation. I agree that their material is not clear on this point. There is some suggestion in the material before me that, even if one assumes that the Bank did fraudulently attempt to alter a mortgage document concerning the Lara property, that attempt may have been unsuccessful. There is also some suggestion in the material before me that the Bank's attempt to combine the discharge of the Lara property mortgage with the discharge of the Collins Street mortgage as part of the refinancing arrangement in 2005 may also have been unsuccessful. If indeed the Davies suffered no loss because these attempts were unsuccessful, their claims may not succeed. But further particulars are needed about this.
10. The Davies' claim for loss of goodwill because their relationship with the Bank was destroyed is too vague and intangible to be compensable. That claim should be struck out.
11. I come to the two matters where the Davies clearly allege that there has been loss for which they claim compensation. The first concerns the $9465.00. The Davies allege that this was money which the Bank required to be (in effect) paid to it before the Bank would release the mortgage over the Lara property during the refinancing. The Bank argues that there was no real net loss here because the money which it required to be paid reduced a liability of the Davies to the Bank. But, in my view, there is another way of characterising this claim. It is that the Bank required money to be paid off a loan when that repayment was not due. It required a liability to the Bank to be reduced when the Davies had no obligation to reduce that liability. The loss suffered by the Davies is arguably the loss of the opportunity to use that money. The Davies say in their material that they needed this money to fund an unrelated court proceeding, and were not able to pursue that proceeding because the money was not available to them. I am not satisfied that this is an unarguable claim and do not strike it out.
12. For similar reasons, I do not strike out the claim concerning the $5476.00. This was the money which the Davies say was involved in the administrative errors or miscalculations by the Bank. Again, it is arguable that the Davies were deprived of the use of that money because, due to the administrative errors, it was not available to them. There is a suggestion in the material (although this is not clear) that the money attributable to the administrative errors might have been deducted by the Bank from a redraw facility on one of the Davies' loans.
13. I note that the Davies do not claim interest on the $5476.00. They do claim interest on the $9465.00. In my view, the claim for interest on this amount should be struck out. I agree with the Bank that, because the $9465.00 was paid off the loan, the interest on that loan reduced accordingly. There is no real loss here which interest should compensate.
14. I would add that one way of characterising part of the Davies' claims for the relief is that the claim that equitable doctrines should apply to prevent the Bank enforcing against the Davies the Collins Street loan contract and mortgage and the Lara property loan contract and mortgage, because of what the Davies say is the Bank's misleading, deceptive and unconscionable conduct. The Davies' allegations concerning the Bank's conduct involve very serious matters, and I am unwilling to strike out this part of the claim (as I have characterised it) at this time.
15. The Bank submits that, to the extent that there was any collateral agreement between the Bank and the Davies to the effect that the Viridian loan contract and the Collins Street loan contract would not be cross-collateralised, that agreement falls away because it is inconsistent with the loan contracts as entered into. The Bank says that collateral agreement cannot therefore be relied on by the Davies.
16. I do not accept the Bank's submission. First, on the Davies' version of events, that collateral agreement was entered into in July 2001 at a time when they had already applied to the Bank for the Collins Street loan and the Viridian loan, and when all parties knew what the terms of the contemplated credit contracts were to be. In these circumstances, it might be said that the agreements between the Bank and the Davies were constituted by three contracts - the two loan contracts and the collateral agreement.
17. Second, it is unclear from the material when the collateral agreement arose. On one interpretation of the material, it might have arisen in July 2001, before the two loan contracts were entered into. On another interpretation, the collateral agreement might have arisen in September 2001, when the Davies reduced what they owed under the relevant loan contract - after the loan contracts were entered into. If the second interpretation is the correct one, the submission which argues that the collateral agreement falls away because it is inconsistent with the later loan contracts cannot apply.
18. Third, the terms and conditions which are incorporated into the Viridian loan contract and the Collins Street loan contract clearly contemplate that there may be substitute securities. In this way, it might be said that those agreements contemplate that the collateral agreement could operate as a variation of those loan contracts.
19. The Davies' claim is that the Bank breached the collateral agreement by attempting to treat (or treating) the Viridian loan and the Collins Street loan as cross-collateralised. I am not prepared to say that this claim is unarguable. It should not be struck out.
20. In respect of all the claims for breach of contract and the Bank's alleged conduct which I have not struck out under this heading, the Davies should be given the opportunity to specify exactly what loss they have suffered from the alleged breach of contract, how that loss was caused by that alleged breach, and whether (and if so what) equitable relief they seek.

Should the claims be struck out under s78 of the VCAT Act?

1. The Bank argued that I should strike out all the surviving claims under s78 of the VCAT Act. It said that the Davies had three times failed to comply with the Tribunal's directions to particularise their claim properly. By doing this, the Davies were conducting the proceeding in a way that unnecessarily disadvantaged the Bank. The Davies, the Bank said, continued to make serious but non-specific and open-ended allegations of fraud and unconscionable conduct. The vagueness of the claims made it impossible for the Bank to answer them, and this was affecting the progress and completion of the case. Because of the seriousness of the allegations which the Davies make, costs (the Bank said) were not an appropriate response to the disadvantage caused. Moreover, the striking out of their claims would not wholly shut them out from arguing their case. They had raised similar matters in their amended counterclaim in the Supreme Court proceeding and could still pursue them there.
2. The Davies submit that they want to continue their case at VCAT. They say that they could not afford to run their case in the Supreme Court. They say that, without the assistance of a lawyer, they have tried their best to comply with the Tribunal's directions and to particularise their claims.
3. I am not satisfied that this proceeding should be struck out at this stage under s78. It is a very serious thing to strike out a proceeding on procedural grounds such as the ones mentioned in s78, and so shut out the opportunity for the very serious allegations made by the Davies to be properly heard and determined. Such a course must be a last and not a first resort. The claims are complex and I accept that an unrepresented claimant would find them difficult to formulate with precision. I do not accept that the failure by the Davies to formulate every one of their claims with sufficient precision is deliberate. I accept that they have done their best. The disadvantage to the Bank caused by the lack of particularisation of the claims is not, in my view, of such a nature that I should strike out the claims. It is true that the lack of particularisation of the claims has led to at least two additional directions hearings in this case. But the Bank has not yet had to answer the claims.
4. In my view, the proper course is for the claims to be properly particularised in the light of what I say in my concluding comments.

1. The Davies' claims are struck out in part under s75 of the VCAT Act. Otherwise, the Bank's application under that section and under s78 of the VCAT Act is dismissed. I have directed the Davies to give further and proper particulars of their claims. Those particulars must only relate to the claims which survive. My orders make it clear which of the claims have been struck out. I make some final comments.
2. First, the further particulars of their claims which the Davies must now give must be specific and precise. They must state the facts on which the Davies rely and exactly what they ask the Tribunal to do. As far as they can, they must say what laws relate to their claim. But the Tribunal and the Bank must accept, because they are not represented by a lawyer, their statement about what laws may apply may well not be complete. But if the facts are clear, it will be possible for the Bank to answer them in particulars of defence, and for the Tribunal to characterise the Davies' claims at a full hearing. In my view, this is the way in which to ensure a fair hearing for all, as the Charter of Human Rights and Responsibilities Act 2006 (the Charter) requires.
3. Further particulars of claim must give details of names, dates, places and circumstances. Without these, the case cannot proceed. It cannot proceed because it would be unfair to require a respondent to answer the material in its current imprecise form. The Davies should now give these precise particulars. They should in effect start again. They should prepare a fresh version of their particulars with precise and specific details of what they allege and what they seek. Telling their story in chronological order might assist. In doing this, the summary of the material which I have included in my reasons might help.
4. Particulars set the framework for the future course of the case. It does not matter that a respondent might know much of the information in the particulars of claim. In fact, in most cases, this will be the case. What is needed is that the claim be formulated in a way that can be answered, so that the claim and the answers can then form the framework for the future course of the case and the hearing. Nor should it be thought that holding back information until the hearing is appropriate and will somehow strengthen the claimants' case. On the contrary, doing this is likely to result in an application for an adjournment and costs.
5. Second, if the fresh set of particulars from the Davies remain vague and non-specific, there is a risk that the Bank will either seek costs or will again seek to strike out the case. The more chances are given to prepare adequate particulars of claim and the greater amount of times that inadequate or vague particulars are provided, the greater will be the chance that the claim might be struck out. VCAT cannot forever make directions for further particulars. The longer that specific particulars are not given, the greater is the potential for unfairness to a respondent.
6. Third, given the complexity of the Davies' claims and that they are currently unrepresented by a lawyer, I propose to send a copy of these Reasons for Decision to the Director of Consumer Affairs Victoria. Under clause 8 of Schedule 1 of the VCAT Act, the Director or a person employed in the administration of the Consumer Credit (Victoria) Code may represent an individual in a proceeding like this. Of course, it is for the Director and not VCAT to decide whether or not representation would be appropriate here. But I would urge the Director to give this matter serious consideration.
7. There are also other avenues which the Davies might explore such as the Public Interest Law Clearing House, Victoria Legal Aid and the Consumer Action Law Centre. I propose to give a longer period for the preparation of fresh particulars of claim so that all these avenues might be explored.
8. Fourth, it appears from the material before me that the applications for the two loans which are the subject of this proceeding were prepared by a bank officer but not signed or checked by the borrowers. I have also made comment about the equivocal nature of some of the contents of the two loan contracts. In Slaveska's case (a case relied on by the Bank) I commented on similar matters to these. I do not need to repeat my comments now, but draw the Bank's attention to them.

[1] [2007] VSC 337

[2] [2008] VCAT 110

[3] Generally to these matters see also Taylor v Third Szable Holdings Pty Ltd [2001]VCAT 2219; Neuendorf v Rengay Nominees Pty Ltd [2003] VCAT 1732; and Linkenholt Pty Ltd v Quirk [2000] VSC 166

[5] See Consumer Credit (Victoria) Act 1995 s8. That section contains some exceptions to this general rule, but they do not apply here.

[7] See Rabel v State Electricity Commission [1998] 1 VR 102; and Norman v Australian Red Cross Society [1998] 14 VAR 243

[8] [2003] VSC 255

[9] See Beddoe v Mortgage Masters Pty Ltd & ors [2007] VCAT 957; Re: Maltall & ors [1998] 14 VAR 368; Houndalas & anor v Burnham [2006] VCAT 1308. By analogy, also see Trust Company of Australia v Skiwing Pty Ltd (2006) NSWLR 77

[10] See generally Part 9 of the Fair Trading Act

[11] See for example Fair Trading Act ss7-9, 11, 158(3) and 159

[12] The Davies mention a number of provisions including provisions relating to lack of effective disclosure, obligations to act in a consistent and ethical manner, and the requirement to have regard to prudential obligations; see for example Code of Banking Practice clauses 2.1 - 2.3 and 10.4