1. That the proceeding by the Applicants against the Respondent is dismissed.

For the Applicant: Mr P.A. Mummery, on behalf of Applicant

[1] I am now in a position to hand down my decision on this application and it is that the substantive proceeding, that is, the Mummerys' application is dismissed. I now give my reasons.

[2] The applicants, Margaret and Peter Mummery, have applied to this Tribunal under various sections of the Consumer Credit (Victoria) Code, ("The Code"). The respondent is IMMS Financial Services ("IMMS"). The claims relate to a loan obtained by the Mummerys from McDonalds Securities Pty Ltd, secured by first mortgage over the land in certificate of title volume 10070, folio 892 located at 262 Maroondah Highway Narbethong and known as the Black Spur Motel and Caravan Park.

[3] It appears from the material before me that sometime in late December 2000 or January 2001 McDonald Securities transferred its interest to IMMS. The Mummerys' claim that IMMS has failed to provide statements of account. They asked the Tribunal to order statements of account to be provided under ss.34 and 35 of the Code. They also asked the Tribunal to determine a dispute which they say has arisen between them and IMMS in relation to this loan under s.36 of the Code. They asked the Tribunal under s.77 of the Code to determine the payout figure necessary to discharge the loan.

[4] There is no dispute that the loan was taken out in October 1998 and that the amount of the credit provided was $129,000. The Mummerys' claim that when the loan was re-financed by Maroondah Credit Union in October 2001 the amount requested by IMMS to discharge the loan exceeded what the Mummerys say they owed under it. There is no need for me, on this application, to give details of the overpayments that are claimed.

[5] IMMS now applies under s.75 of the Victorian Civil and Administrative Tribunal Act 1998, ("the VCAT Act"), to strike out or dismiss the claim.

[6] That section permits the Tribunal to strike out or dismiss a proceeding which it considers vexatious, frivolous, misconceived, lacking in substance or an abuse of process. The principles to be applied in considering applications of this kind are set out by the Victorian Court of Appeal in Rabel v. State Electricity Commission 1998, 1 VR 102 and have been applied by this Tribunal in many cases. (For example, Taylor v. 3rd Szable Holdings Pty Ltd, a decision of VCAT dated 28 August 2001).

[7] So far as relevant, these principles are these. The Tribunal should be cautious before terminating a proceedings summarily under this section and so depriving the litigant of the chance to have the case heard in the ordinary course. It should only do so in cases such as this where the application is made by the respondent, the respondent satisfies it that the case is undoubtedly hopeless, manifestly untenable or doomed to fail.

[8] IMMS here says that this application is manifestly hopeless because the code does not apply to this loan. I first summarise the material before me and then deal with the submissions made by the parties. The only basis on which IMMS argues that the code does not apply is that the loan was not predominantly for personal, domestic or household purposes. I only summarise the material before me relating to the purpose of the loan. Where there is a dispute I indicate this.

[9] The loan was obtained for the purpose of purchasing the property at 262 Maroondah Highway. On that property are located a caravan park and motel and a residence in which the Mummerys live. The motel and caravan park operate as a business. I should summarise something that has been said to me by Mr Mummery concerning the property itself. He says the property is ten acres in area, that the caravan park is located on part of it and that a motel is located on another part. The motel comprises five units.

[10] The residence and the gardens of the residence comprise approximately one acre and are enclosed by a fence. The caravan park is used for short-term accommodation only such as weekend getaways. Those who visit the motel and caravan park can walk through any part of the property they wish except for the house and garden area enclosed by the fence.

[11] During the last financial year the property earned a gross income of approximately $32,000 although after deductions of maintenance, repairs and mortgage payments, the net income was significantly less.

[12] IMMS submits that the residence is intended for occupation together with the business as an integral part of business and is not separable from the business.

[13] The Mummerys argue that the residence is the most important part of the property and indeed that they bought the property as a home because it was located in a beautiful forest and that the existence of the motel and caravan park on the property was not their major reason for purchasing it. They say that the business is a subsidiary to the use of the property as a residence and compare it to the sale of plants from a home garden or the establishment of an office in a home garage.

[14] IMMS includes in its submissions a letter from David Manders, valuation manager, with the firm Killen & Thomas Australia Pty Ltd to the effect that where residences are included in a caravan park for occupation by the owner/

operator or manager, the building is included in the valuation of the whole property. This letter has been given little weight by me in considering this matter.

[15] First there is nothing to indicate what were the questions asked of this valuer in response to which the letter is written.

[16] Second there is nothing to indicate what was this valuer's knowledge of this particular loan and its circumstances and whether or not he had inspected the relevant property.

[17] There is no dispute that at the time of entering into the loan agreement, the Mummerys signed a statutory declaration that the credit was to be applied wholly or predominantly for business or investment purposes or for both.

[18] The Mummerys did not say in their material that when they signed the declaration they did not understand it or did not say truthfully what the purpose for the loan was. The declaration, as well as stating the business purpose of the loan, also acknowledges that the declarants do not receive the benefits of the safeguards under the Consumer Credit (Victoria) Act 1995. The declaration did not contain in terms the warning required by Regulation 10(2) of the Consumer Credit (Victoria) Regulations.

[19] The declaration stated the signatories' understanding that they were not getting the benefit of the safeguards under the Consumer Credit (Victoria) Act but did not contain the warning required in Regulation 10(2) which deals with what a debtor ought to know before signing the declaration.

[20] It was submitted for IMMS that in fact the declaration substantially complied with that regulation. I do not agree. In my view the warning in that regulation is different from the statement in the declaration. The warning alerts a person proposing to sign the declaration that they may lose the protection of the code if they do.

[21] What the Mummerys signed was a declaration that they had already lost the protection of the Consumer Credit (Victoria) Act. What is in the declaration is so different from the warning required by that regulation that I am satisfied that there was no substantial compliance with that regulation. Accordingly, under s.11 of the Code, the declaration is ineffective for the purpose of s.11.

[22] As I said in Taylor v. 3rd Szable, this means that the declaration cannot found a conclusive presumption that the loan is provided predominantly not for personal, domestic or household purposes. But as I also said in that case, this does not mean that the declaration cannot be evidence together with all the other available evidence of the purpose for which credit was provided.

[23] There is no dispute that the Mummerys also signed a letter of offer dated 25 September 1998 in connection with the loan. That letter is in the material before me. It sets out the terms and conditions of the loan and states that the loan is to be applied predominantly for business and/or investment purposes. It states that if the loan is to be for personal or domestic use, the Mummerys ought to advise the office of Holt & McDonald who were the solicitors for the mortgagee so that appropriate documentation could be prepared. There is nothing in the material before me to indicate that the Mummerys gave such advice.

[24] The next matter concerns a note or a statement in relation to this loan from the Maroondah Credit Union, the body to which IMMS's interests were transferred. That statement notes that the loan is a commercial loan. I give little weight to this statement.

[25] First the Mummerys dispute it saying that the Credit Union has given them the rate of interest normal for domestic residential premises.

[26] Second, the time when the purpose for which the loan is provided is relevant for the application of the Code is the time at which the loan was entered into. The transfer of IMMS interest occurred long after this date.

[27] Third, in the absence of material to the contrary, I infer that it is more probable than not that the Credit Union's classification of the loan as a commercial one was based on IMMS classification of the loan as commercial.

[28] I now come to the application of the Code. IMMS has only raised the application of one of the criteria which relate to the Code itself. That is s.6(1). It relates to the purposes for which the credit was provided.

"This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into...

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

[30] The effect of s.6(4) is that for the purposes of s.6 investment by the debtor is not a personal, domestic or household purpose.

"For the purposes of this section, the predominant purpose for which credit is provided is -

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

(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".

[32] The effect of s.11(1) is that if in a proceeding a party claims that a credit contract, mortgage or guarantee is subject to the Code, the Code is presumed to apply unless the contrary is established. This is in fact what the Mummerys have done.

[33] Section 11(2) contains the conclusive presumption about the credit not being provided for personal, domestic or household purposes, if a declaration has been signed, that it is to be applied wholly or predominantly for business or investment purposes.

[34] I've already said that I am satisfied that the declaration which the Mummerys signed was ineffective under this section and that this conclusive presumption did not apply. I have also said that the declaration however can be evidence together with all the other evidence of the purpose for which credit was provided.

[35] Here, the loan was provided to purchase the property. That property was used for different purposes. The Mummerys say that nine out of the ten acres were available for users of the caravan park and motel on the property and that one acre was available as a residence. They also say, however, that the primary reason they purchased the property was because of the residence and not the business.

[36] In my view it is not the correct approach to artificially divide up the loan into parts and attribute one part of it to the purchase of that part of the property used as a residence and another part to the purchase of that part of the property used as a motel and caravan park. This being so, s.6(5)(a) has no application for determining the purpose for which credit was provided.

[37] It is clear that the property was purchased to be used for different purposes and that the majority of the property is used for a caravan park and motel business. It may well be therefore, that s.6(5)(b) means that the loan was predominantly for business purposes. Nevertheless, taking into account what has been said by the Mummerys about purchasing the property mainly as a residence, I look again primarily to s.6(1)(b).

[38] As I said in Taylor v. 3rd Szable, this paragraph speaks of credit intended to be provided rather than of credit obtained, used or applied. The paragraph looks to the purpose for which credit was provided by the credit provider. The purpose for which credit was being provided by the credit provider is to be looked at from the point of view of a person in the shoes of the credit provider. What is relevant is what was known to the credit provider or to agents, employees or others whose knowledge is imputed to the credit provider under s.176 of the Code or what a credit provider in these circumstances ought reasonably to have known at the time of entering into the credit contract. (See also Park Avenue Nominees v. Boon (2001), NSWSC 700).

[39] On the material before me I am satisfied that there is nothing in the material sent by the Mummerys to the lender including the declaration and the letter of offer that would have alerted the lender or a reasonable lender in this lender's circumstances to the fact that the purpose of the loan was other than for business or investment. I am not satisfied therefore that the credit was provided wholly or predominantly for domestic, personal or household purposes.

[40] This means that one of the critical criteria for the application of the Code is not met. The presumption raised by the Mummerys by asserting that the Code applied has been displaced. The Code does not apply to this loan. This application is therefore manifestly hopeless. It is not curable by amendment and should be dismissed.

[41] In the material the Mummerys suggest that I should treat the application as coming within the Civil Claims List of this Tribunal. There is no doubt that in its Civil Claims List jurisdiction, this Tribunal has jurisdiction over certain civil claims under the Small Claims Act and also certain claims under the Fair Trading Act.

[42] But this application was based squarely on provisions of the Code. To treat it as a civil claim and look at its transfer to the Civil Claims List I would either need to ignore much of the application or in effect to redraft it in a different form. In my view this is not the Tribunal's task. I would add, however, that I see no reason why if the Mummerys conclude that their claim might fall within this Tribunal's civil claims jurisdiction, an appropriately worded application might not be made to that list.

[43] This application, it must be remembered, has not been dismissed after a hearing on the merits. It has been dismissed because it is an application under the Code and the Code does not apply to the relevant loan.