Jonsson v Arkway Pty Ltd and Anor

CITATION : Jonsson v Arkway Pty Ltd and Anor [2003] NSWSC 815 HEARING DATE(S) : 08/08/03 JUDGMENT DATE : 16 September 2003

JUDGMENT OF : Shaw J DECISION : (1) Set aside the decision and orders of the Tribunal of 25 November 2002; (2) Direct the parties to file short minutes in conformity with these reasons within 7 days.

CATCHWORDS : Appeal - question of law - whether Tribunal had jurisdiction to hear and determine matter - whether purchase of house for parents is a 'personal' purpose - construction of the Consumer Credit Code LEGISLATION CITED : Consumer Credit (New South Wales) Code 1995 s 6; Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147; Craig v South Australia (1995) 184 CLR 163; Mattinson v Multiflow [1977] 1 NSWLR 368; Minchello v Ford Motor Co of Australia Ltd [1988] VR 251; Le Cras v Perpetual Trustee Co Ltd [1967] 2 NSWR 706; Linkenholt Pty Ltd v Quirk [2000] VSC 166; Mandalidis v Artline (1999) 47 NSWLR 568; CASES CITED : Park Avenue Nominees Pty Ltd v Boon [2001] NSWSC 700; R v Coldham; Ex parte Fitzsimons (1976) 137 CLR 153; R v Findlay; Ex parte Commonwealth Steamship Owners' Association (1954) 90 CLR 621; R v Hull; Ex parte Page [1993] AC 682; R v Kelly; Ex parte Victoria (1950) 81 CLR 64; R v Shoreditch Assessment Committee; Ex parte Morgan [1910] 2 KB 859; Rafiqi v Wacal Investments Pty Ltd [1998] ASC 155-024; Re Cram; Ex parte NSW Colliery Proprietors' Association Limited (1987) 163 CLR 117; Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55; Georgina Lucille Jonsson - Plaintiff PARTIES : Akway Pty Ltd (ACN 010 719 856) - First defendant Consumer, Trader and Tenancy Tribunal - Second defendant FILE NUMBER(S) : SC 30112/02 COUNSEL : P Batley (Sol) - Plaintiff P Russell - Defendant SOLICITORS : Legal Aid NSW - Plaintiff Rowley & Ross Lawyers - Defendant

LOWER COURT Consumer, Trader and Tenancy Tribunal JURISDICTION : LOWER COURT 00/74593 FILE NUMBER(S) : LOWER COURT Mr A Durie JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

30112 of 2002 Georgina Lucille Jonsson (Plaintiff)

Arkway Pty Limited (ACN 010 719 856) (First defendant);

Consumer, Trader and Tenancy Tribunal of New South Wales (Second defendant)

JUDGMENT 1 Shaw J: This is a matter in which the plaintiff (Ms Jonsson) challenges a decision of the Consumer, Trader and Tenancy Tribunal of NSW ("the Tribunal") asking that this Court set aside the orders of the Tribunal. 2 The issue is whether that Tribunal had the jurisdiction to hear and determine the plaintiff's application under the Consumer Credit Code, "the Code", adopted into New South Wales law by the Consumer Credit (New South Wales) Act 1995 (NSW). 3 The application, in attempting to specify the details of the claim, alleged: Arkway Pty Ltd has a mortgage over the applicant's house. The applicant is not aware of the circumstances in which Arkway was given the mortgage and did not intend to give a mortgage. Arkway alleges that the mortgage secures a loan to the applicant. The applicant has received no benefit from the alleged loan. The provision of credit on 1 March 1997, 1 March 1998 and 1 March 1999, allegedly secured by variations to the mortgage did not comply with the key disclosure requirements of the Consumer Credit Code. The transactions are unjust and the applicant seeks to have them set aside. The applicant seeks the imposition of a civil penalty on Arkway Pty Ltd. 4 It is said by the plaintiff that there was an error of law made by the Tribunal in finding that it had no jurisdiction to hear her application for relief under the Code, and in particular, an error of law in finding that the transactions between the plaintiff and the first defendant on or about 12 May 1998 and also in June 1998 and September 1999 were not transactions to which the Code applied. A number of other errors of law are detailed in the plaintiff's grounds of appeal. 5 An appeal only lies to this Court on a question of law (pursuant to s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001) and, accordingly, there is no general right to a rehearing or a reconsideration of factual issues. 6 On 24 November 2000 the Fair Trading Tribunal, constituted by Senior Member G Fleming decided on the papers and without a hearing of the matter, that the Tribunal had jurisdiction to hear the matter. The reasons for the Senior Member's decision ([2000] NSWFTT 2) indicate that the Senior Member found, prima facie, that the respondent had not satisfied her that the variations of the credit contracts of 12 May 1998 and 8 September 1999 were not transactions to which the Code applied. Critically, the Senior Member noted that this conclusion was 'subject to the Tribunal's determination in relation to the 'purpose' of the provision of credit'. 7 With the enactment of the Consumer, Trader and Tenancy Tribunal Act 2001 the Fair Trading Tribunal was reconstituted as the Consumer, Trader and Tenancy Tribunal. 8 On 25 November 2002 the Tribunal determined that it did not have jurisdiction to entertain the plaintiff's application made on or about 2 November 2000 because it was not satisfied that the purpose for which the credit was supplied was one covered by the Code. 9 The central question in this matter therefore concerns the construction of s 6 of the Code. That issue is whether the jurisdictional provision in s 6 of the Code that applies to credit provided for 'personal, domestic or household purposes', means that the Code does not apply to credit obtained for the purpose of providing a home for the borrower's parents as beneficiaries under a trust. 10 It is difficult to see that the words 'domestic' or 'household' advance the argument in favour of jurisdiction in the Tribunal but the focus of the argument before this Court concerned what was meant by the word 'personal' in the context of the Code. In other words, the argument was whether that term is to be given a narrow construction which means that it only pertains to the debtor's personal, domestic or household purposes or whether a more expansive or liberal reading of the text means that it is contemplated that the Code covers the circumstance of providing a home on trust to benefit the parents of the borrower. 11 As I understand it, this legislation was enacted as part of an integrated and coherent national scheme of consumer protection which would commence in NSW on 1 November 1996. Hence, the issue of construction is attended by some degree of importance. 12 In my view, the appeal to this Court does raise a question of law in that it concerns an issue of statutory construction that goes to the jurisdiction of the Tribunal under the Code. 13 Jurisdiction, in any controversy before a statutory tribunal, is always an issue. In most cases this issue will not arise, or be easily dealt with: it will have jurisdiction or it will not. The tribunal may commit an error of law by exceeding that jurisdiction, or by failing to exercise it. A tribunal can make a determination as to its own jurisdiction however any such determination is subject to review by a superior court. 14 It is for this reason that a finding on jurisdiction, in my opinion, cannot amount to an issue estoppel between the parties, at least in a statutory tribunal like the CTTT. The plaintiff submits that the judgment of the Senior Member constituted such an estoppel so that the defendant was estopped from raising the issue before the Tribunal at trial. I reject that submission. 15 Just as parties cannot, by agreement, confer jurisdiction on a court or tribunal that does not have that jurisdiction, I think that a finding of jurisdiction is, inherently, subject to review, whether by that court or tribunal, or in a supervisory jurisdiction: see R v Shoreditch Assessment Committee; Ex parte Morgan [1910] 2 KB 859 at 880 per Farwell LJ. 16 The basis of the English deviation from Australian administrative law is grounded in the proposition that all errors of law involve jurisdictional errors (see R v Hull; Ex parte Page [1993] AC 682; Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147), but in Australia, it is still the case that a court of judicial review may only correct jurisdictional errors: Craig v South Australia (1995) 184 CLR 163. In Australia, only certain issues will be jurisdictional issues in the context of inferior courts or statutory tribunals with a jurisdiction limited by statute, but those questions remain live throughout the proceedings. For example, a tribunal limited to matters involving adjudication of disputes over topic 'x' will always be concerned with the question of whether the subject of the controversy is 'x' or 'not-x'. This may be a matter of consent between the parties however a wrong finding of either of these options as a matter of law, or a wrong finding of fact or a misapplication of a legal test that leads to such a finding of fact or law, may all amount to jurisdictional errors rendering the proceedings amenable to judicial review and prerogative relief: Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55; Craig v South Australia. 17 The Tribunal took the view that the expression in the code, 'personal, domestic and household purposes' was, in effect, compendious and should be subject to the principle of statutory construction of ejusdum generis: see Pearce and Geddes, Statutory Interpretation in Australia (4th Ed) Butterworths (1996) at 100; Mattinson v Multiflow [1977] 1 NSWLR 368 at 375. 18 The Tribunal was concerned with the apparent fact that the original loan and mortgage between the first defendant and the plaintiff on 1 March 1995 was used to refinance prior business debts to the State Bank, and to provide funds to purchase the property at Broadbeach Waters, for the plaintiff's parents, Roy and Noelene Davis. 19 Hence, it is said by the first defendant that the purpose of the transaction was not for the 'personal' purposes of the plaintiff. 20 However, the first defendant fairly concedes that it had the burden to prove that the Code did not apply and also it accepts that there is no evidence that any part of the original loan on 1 March 1995 was used to re-finance any existing debts owed to the State Bank, which were apparently discharged in 1994. Whilst defending the Tribunal's ultimate conclusion, the first defendant concedes that the Tribunal erred in finding that a provision of credit must be either for a purpose which is wholly or pre-dominantly for a personal, domestic or household purpose, or for a business or investment purposes. It comes down to a question as to whether the purpose of the application or use of credit was 'personal'. The first defendant says that 'personal' means the plaintiff's own purposes, and on that basis, contends that the decision of the Tribunal should be affirmed. 21 However, it seems to me that the plaintiff is correct in suggesting that there is a dichotomy in the Code between two classes of purpose for the provision of credit; that is, business or investment purposes on the one hand and 'personal, household or domestic' purposes on the other. 22 This dichotomy, in the context of a jurisdictional issue, mirrors the example I have given. A finding of jurisdiction under s 6 of the Code involves an analysis of whether credit has been provided for a 'personal, domestic or household' purpose or whether the credit was not provided for a 'personal, domestic or household purpose. The Code gives the tribunal some direction on the latter point by indicating that an investment purpose is not a 'personal, domestic or household' purpose. A 'business' purpose may also fall within the latter inquiry. 23 There is a distinction between consumer transactions, to which the Code is principally directed, and business transactions. I would apply the observation of the Full Court of the Supreme Court of Victoria in Minchello v Ford Motor Co of Australia Ltd [1988] VR 251, when dealing with a question whether the Trade Practices Act 1975 (Cth) applied to the purchase of a prime mover, said: Although the words ' domestic or household ' have a similar connotation, ' personal ' use is clearly intended to cover a wider field, but the primary contrast intended to be drawn is with commercial or business use, whatever other personal activities a vehicle may be used for. 24 However, if a tribunal is satisfied that a transaction is not an investment or business purpose that may not be the end of the matter. A wrong finding in this respect is amenable to review. It is therefore also necessary for the tribunal to consider whether it is satisfied that the credit was provided for a 'personal, domestic or household' purpose. 25 The word 'personal' means 'pertaining to the person': Le Cras v Perpetual Trustee Co Ltd [1967] 2 NSWR 706 at 715. What pertains to something includes matters which are accessory to it, and appropriate or which have reference or relation to it: Shorter Oxford Dictionary (5th Ed). Pertaining to means 'belonging to' or 'within the sphere of': R v Kelly; Ex parte Victoria (1950) 81 CLR 64. It is a concept of extension and should, in my view, be construed broadly. 26 In the context of industrial law, the meaning of 'pertains' (in defining whether there is the requisite employment relationship enlivening the jurisdiction of an industrial tribunal) has been accorded a wide connotation: see, for example, R v Coldham; Ex parte Fitzsimons (1976) 137 CLR 153 at 162. The subject matter of an industrial demand may include: …much that is outside the contract of employment and its incidents and the work done under it.

See R v Findlay; Ex parte Commonwealth Steamship Owners' Association (1954) 90 CLR 621 at 630 per Dixon J. This was so even though it was a jurisdictional requirement that the demand ' pertain ' to the present and future relations of employers and employees. The High Court also confirmed that the concept of ' pertaining to ' means ' belonging to ' or ' within the sphere of ' in Re Cram; Ex parte NSW Colliery Proprietors' Association Limited (1987) 163 CLR 117 at 134. 27 In my opinion, the adjective 'personal' in the context of beneficial legislation has separate and independent work to do, that is to say, connotations distinguishable from the other concepts contained in the same section of 'domestic' or 'household' purposes. Each of the adjectives in that section should be given their full meaning and, in my opinion, something can be said to be characterised as 'personal' if it involves a transaction designed to benefit the person by providing for her parents. 28 Regrettably, there has been some divergence of judicial interpretation in relation to this provision. It seems to me that insufficient attention has been given to the need to broadly and liberally interpret beneficial legislation of this kind. The Tribunal has observed the principles articulated in a number of judgments, in particular, Rafiqi v Wacal Investments Pty Ltd [1998] ASC ¶155-024 (QDC) per Brabazon DCJ; Linkenholt Pty Ltd v Quirk [2000] VSC 166 per Gillard J; and Park Avenue Nominees Pty Ltd v Boon [2001] NSWSC 700 per Harrison M. 29 In contrast to the distinction drawn by the learned District Court Judge in Queensland, Brabazon DCJ, in Rafiqi, I would prefer the approach taken by Gillard J in Linkonholt. His Honour said at [98]: It is appropriate to consider what the money was used for in order to determine the purpose of the provision of the credit. In considering the question it is important to look at the substance of the transaction in the context of its performance… 30 His Honour's emphasis was that the Court should consider the substance and reality of the transaction (at [121]). 31 I accept the plaintiff's submission that where credit is obtained both for personal purposes and an investment purpose the Code will apply if more than half of the credit is used for personal purposes. 32 The contemporary principle of statutory interpretation is to apply a purposive approach to ascertain the meaning of the statute: see Mandalidis v Artline (1999) 47 NSWLR 568 at 585 per Austin J. The Code should not, in my opinion, be interpreted so that it excludes non-business and non-investment borrowing to purchase a home and hold it on trust for one's parents. The position may be different if the trust had a business or investment objective, as distinct from the provision of a benefit for a close family member. 33 However, it has been noted: …the trust was not in its origin and perhaps never has been primarily a device of commerce. It was from earlier times and has continued to be an instrument of family settlement. Meagher and Gummow, Jacobs' Law of Trusts in Australia (6th Ed) Butterworths Sydney (1997) at lxxxvii . 34 It seems to me that the accommodation of one's parents can reasonably be characterised as belonging to or within the sphere of personal matters, especially within the context of a statute which should be construed beneficially, that is, in favour of a jurisdiction conferring rights of access to courts and tribunals. 35 Whether or not such orders should be granted would involve an investigation of the facts and circumstances of the case but different considerations arise when considering whether a claim should be excluded as a threshold or jurisdictional issue. For this reason I am not satisfied that I should, on the invitation of the plaintiff, make evidentiary or procedural rulings to bind the Tribunal. 36 In all of these circumstances, I accept the submissions of the plaintiff that the substance and reality of the relevant transaction was to re-finance a debt incurred for the personal purpose of providing a home for the parents of the plaintiff and the subsequent changes to the loan or mortgage also reflected the re-financing of the debt was 'predominantly' incurred for the purpose of providing a home for the plaintiff's parents. In the context of the nature and scope of the legislative scheme I think that this can be fairly and reasonably characterised as 'personal' and therefore that the Tribunal had jurisdiction to hear and consider the matter. Of course, the merits are an entirely different matter and fall very much within the discretion of the Tribunal, but I do find that there has been an error of law in declining jurisdiction to hear and determine the controversy on its merits. 37 Accordingly, I order: That the decision and orders of the Tribunal of 25 November 2002 be set aside. 38 The parties have indicated a desire to compose orders in accordance with my findings. Accordingly, I direct the parties to file further short minutes of order in conformity with these reasons within 7 days. The matter can then be listed for making those orders by arrangement with my Associate.

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