Official Trustee in Bankruptcy v Kent

The issue 6 The primary issue is whether Mr Kent's right to make the complaint under the AFCA scheme was his property within the meaning of s 5(1) of the Bankruptcy Act that vested in the trustee as property of the bankrupt, by force of s 58(1)(a) of the Act, at the time that he became bankrupt. There are also issues, first, as to whether the complaint has been resolved by the deed, secondly, if the complaint still exists so that Mr Kent still can pursue it and, thirdly, Mr Kent asserted legal rights in the complaint that were statute barred. 7 I will describe below the legislative context, the features of AFCA's scheme and the factual matrix before dealing with the parties' submissions and their resolution.

The legislative context 8 There are three Acts that affect the rights of the parties in this proceeding, namely, the Bankruptcy Act, the Corporations Act and the National Consumer Credit Protection Act 2009 (Cth) (the NCCP Act). I have set out below the principal provisions from each of those Acts that bear on the issues here. 9 Relevantly, the Bankruptcy Act provides: 5 Interpretation (1) In this Act, unless the contrary intention appears: property means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property. the property of the bankrupt, in relation to a bankrupt, means: (a) except in subsections 58(3) and (4): (i) the property divisible among the bankrupt's creditors; and (ii) any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt; ... 10 The property divisible among the bankrupt's creditors is defined in s 116. Under s 58(1) and (6), subject to the Act, the property of the bankruptcy vests forthwith in the trustee (or a registered trustee) and after acquired property (being property that is divisible amongst the creditors of the bankrupt) vests in the trustee or registered trustee as soon as it is acquired by, or devolves on, the bankrupt. I will refer for simplicity only to the trustee (being the official trustee in bankruptcy) in these reasons unless it is necessary to deal with the position of a registered trustee separately because, for the most part, there is no relevant difference in the operation of the Bankruptcy Act. 11 Then, ss 60(4), (5), 116(1) and (2) provide: 60 Stay of legal proceedings (4) Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt, his or her spouse or de facto partner or a member of his or her family; or (b) the death of his or her spouse or de facto partner or of a member of his or her family. ... (5) In this section, action means any civil proceeding, whether at law or in equity. 116 Property divisible among creditors (1) Subject to this Act: (a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and (b) the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge; … ... is property divisible amongst the creditors of the bankrupt. (2) Subsection (1) does not extend to the following property: ... (g) any right of the bankrupt to recover damages or compensation: (i) for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or (ii) in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person; (emphasis added) 12 In addition, s 134(1)(e) and (j) provide: 134 Powers exercisable at discretion of trustee (1) Subject to this Act, the trustee may do all or any of the following things: ... (e) compromise any debt claimed to be due to the bankrupt or any claim by the bankrupt; ... (j) bring, institute or defend any action or other legal proceeding relating to the administration of the estate; 13 Part 7.10A of the Corporations Act provides for the Minister to authorise an external dispute resolution scheme. Importantly, s 912A(1)(g)(i) and (2) and Pt 7.10A were enacted, and the AFCA scheme was established, after Mr Kent became bankrupt following the commencement of the Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth). 14 The Corporations Act provides in s 912A(1)(g)(i) and (2) that, where a financial services licensee, such as the bank, provides financial services to persons as retail clients, such as Mr Kent, it must have a dispute resolution system that consists of its own internal procedures. Those procedures must comply with the Corporations Regulations and requirements of the Australian Securities and Investments Commission (ASIC) so as to cover complaints by retail clients in connection with all financial services that the licensee provides and, importantly, include membership of the AFCA scheme that is established under Pt 7.10A (as defined in s 761A). 15 Under s 1051, an approved external dispute resolution scheme must meet numerous mandatory requirements. The scheme must be open to entities, such as the bank, required by law to be a member of it (s 1051(2)) and must be operated by a company limited by guarantee, such as AFCA, that also satisfies other criteria in s 1051(3) and (4). Relevantly, s 1051(4)(a)(e) provide: 1051 Mandatory requirements Operational requirements (4) The operational requirements are that: (a) the complaints mechanism under the scheme is appropriately accessible to persons dissatisfied with members of the scheme; and (b) complaints against members of the scheme are resolved (including by making determinations relating to such complaints) in a way that is fair, efficient, timely and independent; and (c) appropriate expertise is available to deal with complaints; and (d) reasonable steps are taken to ensure compliance by members of the scheme with those determinations; and (e) under the scheme, determinations made by the operator of the scheme are: (i) binding on members of the scheme; but (ii) not binding on complainants under the scheme; … (emphasis added) 16 Under s 5(1) of the NCCP Act, "consumer" is defined as meaning a natural person or a strata corporation. Chapter 3 of the NCCP Act is headed 'Responsible lending conduct' and contains s 133 in Div 4 of Pt 3-2, which provides: 133 Prohibition on entering, or increasing the credit limit of, unsuitable credit contracts Prohibition on entering etc. unsuitable contracts (1) A licensee must not: (a) enter a credit contract with a consumer who will be the debtor under the contract; or (b) increase the credit limit of a credit contract with a consumer who is the debtor under the contract; if the contract is unsuitable for the consumer under subsection (2). Civil penalty: 5,000 penalty units When the contract is unsuitable (2) The contract is unsuitable for the consumer if, at the time it is entered or the credit limit is increased: (a) it is likely that the consumer will be unable to comply with the consumer's financial obligations under the contract, or could only comply with substantial hardship; … … (3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer's financial obligations under the contract by selling the consumer's principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved. ... Offence (6) A person commits an offence if: (a) the person is subject to a requirement under subsection (1); and (b) the person engages in conduct; and (c) the conduct contravenes the requirement. Criminal penalty: 2 years imprisonment. Note: Sections 178 and 179 provide for remedies for anyone who suffers, or is likely to suffer, loss or damage because of a breach of this section. For example, if a consumer makes an unsuitable credit contract with a licensee, rather than making a not unsuitable credit contract for a reverse mortgage, a person who suffered, or is likely to suffer, loss as a result may be able to get court orders under section 178 or 179 to put the person in a position like the one they would have been in had the consumer entered into the contract for the reverse mortgage. (emphasis added) 17 Chapter 4 of the NCCP Act is headed "Remedies" and relevantly provides: 178 Compensation orders Court may order person to pay compensation (1) The court may order a person (the defendant) to compensate another person (the plaintiff) for loss or damage suffered by the plaintiff if: (a) the defendant has contravened a civil penalty provision or has committed an offence against this Act (other than the National Credit Code); and (b) the loss or damage resulted from the contravention or commission of the offence. The order must specify the amount of compensation. Note: An order may be made under this subsection whether or not a declaration of contravention has been made under section 166. When order may be made (2) The court may make the order only if: (a) the plaintiff or ASIC (on behalf of the plaintiff) applies for an order under this section; and (b) the application is made within 6 years of the day the cause of action that relates to the contravention or commission of the offence accrued. Applications for order (3) For the purposes of paragraph (2)(a), ASIC may make an application on behalf of the plaintiff, but only if the plaintiff has given consent in writing before the application is made. Recovery of compensation as a debt (4) If the court makes the order, the amount of compensation specified in the order that is to be paid to the plaintiff may be recovered as a debt due to the plaintiff. 179 Other orders to compensate loss or damage Court may make other orders to compensate loss or damage (1) If: (a) a person (the defendant) has contravened a civil penalty provision or has committed an offence against this Act (other than the National Credit Code); and (b) another person (the plaintiff) has suffered, or is likely to suffer, loss or damage as a result of the contravention or commission of the offence; the court may make such order as the court considers appropriate against the defendant to: (c) compensate the plaintiff, in whole or in part, for the loss or damage; or (d) prevent or reduce the loss or damage suffered, or likely to be suffered, by the plaintiff. Note: An order may be made under this subsection whether or not a declaration of contravention has been made under section 166. 184 Multiple remedies may be granted To avoid doubt, the court may make an order under a provision of this Act in addition to one or more orders under another provision of this Act or another Act. (emphasis added) 18 In addition, s 179(3) and (4) are materially the same as s 178(2) and (3) in specifying that the court may make an order under s 179 (or s 178) if the plaintiff (or ASIC with the plaintiff's prior written consent) applies for it to do so within six years of the accrual of the cause of action that relates to the contravention or commission of the offence. Likewise, s 179(5) is materially the same as s 178(4) in allowing the plaintiff to recover, as a debt, the amount specified in an order under s 179.

The AFCA scheme 19 Under cl 3.2(g) of AFCA's constitution, each member of AFCA (such as the bank) agrees to be bound by the rules. 20 At the time that Mr Kent lodged his complaint, the AFCA scheme operated under the Complaint Resolution Scheme Rules that the Minister had authorised to take effect on 25 April 2020. Relevantly, the rules provide that: the rules form part of a tripartite contact between AFCA, the complainant and the financial firm the subject of the complaint (A.1.2); a complainant is not obliged to use the AFCA scheme to pursue a complaint and can withdraw the complaint at any time (A.1.4); the rules apply to complaints submitted to AFCA from 1 November 2018 (A.1.5); a person can make a complaint by using, among other means, AFCA's online form and, by submitting a complaint, the complainant is deemed to have agreed to the complaint being considered under the rules (A.3.1); a complainant must be an eligible person, defined in rule E.1.1, as meaning, among others, "(a) an individual or individuals (including those acting as a trustee, legal personal representative or otherwise) … (d) a Small Business (whether a sole trader or constituted as a company, partnership, trust or otherwise)" (A.4.1); a complaint must arise from, relevantly, a customer relationship and within the AFCA scheme's time limits (A.4.3(a), (c)); AFCA can decide to join another financial firm as a party to a complaint, whereupon that firm has all the rights and duties under the rules as if it had been the original firm the subject of the complaint (A.6.2); if the parties agree to resolve a complaint or an AFCA decision-maker resolves it and the resolution becomes binding on it, the financial firm cannot commence or continue legal proceedings against the complainant that are inconsistent with that resolution (A.7.5); generally, AFCA will try to resolve a complaint by informal methods such as facilitating negotiations between the parties but if reasonable attempts to resolve it informally do not succeed, AFCA may proceed either to make a preliminary assessment under rule A.12 or to determine the complaint (A.8.1); subject to certain exceptions, parties must comply with any AFCA requirement to provide it with information within a specified time period (A.9.1); generally, AFCA will provide all parties with information provided to it by any of them and will do so, giving them an opportunity to make submissions, before an AFCA decision-maker determines a complaint (A.10.110.2); the AFCA scheme operates on an without prejudice basis so that information obtained through AFCA cannot be used in any subsequent court proceeding unless a court process so requires and, subject to certain exceptions, the parties must maintain the confidentiality of information provided to them in the course of a complaint (A.11.1-‍11.5); rules A.14.2-14.4 provide: A.14.2 When determining any other complaint [than one involving superannuation], the AFCA Decision Maker must do what the AFCA Decision Maker considers is fair in all the circumstances having regard to: a) legal principles, b) applicable industry codes or guidance, c) good industry practice and d) previous relevant Determinations of AFCA or Predecessor Schemes. A.14.3 An AFCA Decision Maker is not bound by rules of evidence or previous AFCA or Predecessor Scheme decisions. A.14.4 A Determination must be in writing with reasons. Any remedy must be within AFCA's jurisdiction as set out in Section D. (emphasis added) a determination of a complaint by an AFCA decision-maker is final and, if accepted by the complainant within 30 days of receiving the determination, first, is binding on the parties and, secondly, the financial firm can ask the complainant to provide it with a release limited to the subject matter of the determination that becomes effective on the date that the firm fulfils all its obligations under the determination (A.15.3); a complainant who does not accept the determination is not bound by it and can take any legal or other available proceedings against the financial firm (A.15.4); rule B.2.1 relevantly provides: B.2.1 A complaint (other than a Superannuation Complaint) must arise from or relate to: a) the provision of a Financial Service by the Financial Firm to the Complainant; b) the provision by the Complainant of a guarantee or security for, or repayment of, financial accommodation provided by the Financial Firm to an Eligible Person; … (emphasis added) a complaint must arise from a contract or obligation arising under Australian law, which includes privacy obligations (B.3.1); rule B.4.2.1 relevantly provides: B.4.2.1 Where a complaint relates to a variation of a credit contract as a result of financial hardship, an unjust transaction or unconscionable interest and other charges under the National Credit Code, AFCA will generally not consider the complaint unless it was submitted to AFCA before the later of the following time limits: a) within two years of the date when the credit contract is rescinded, discharged or otherwise comes to an end; … generally, AFCA will not consider a complaint unless it was submitted within six years of the date when the complainant first became, or reasonably should have become, aware that he, she or it had suffered the loss (B.4.3.1(a)); ordinarily, AFCA will not extend any time limit set out in rules B.4.1.1B.4.1.4 but may do so for (among others) a time limit set in rules B.4.2 and 4.3, if it considers that special circumstances apply (B.4.4); unless it is about, relevantly, maladministration in lending, loan management or security matters, AFCA must exclude a complaint about a financial firm's assessment of the credit risk posed by a borrower or required security for a loan (C.1.3); section D of the rules set out the remedial actions that an AFCA decision-maker has power to decide to award (chapeau to section D); an AFCA decision-maker may decide under section D that: • the financial firm or complainant take a course of action to resolve a complaint, including paying a sum of money, forgiving or varying a debt, or reinstating, varying, rectifying or setting aside a contract (D.2.1(a), (b), (e)); • the financial firm compensate the complainant for direct financial loss (and, in valuing the remedy, can consider monetary compensation, any other readily available remedy and waiver of a debt) (D.3.1); • additionally or alternatively, the financial firm compensate the complainant for indirect financial loss (D.3.2); or • the financial firm compensate the complainant for non-financial loss (other than for a complaint relating to an individual's privacy rights) for the occurrence of an unusual degree or extent of physical inconvenience, time taken to resolve the situation or interference with the complainant's expectation of peace of mind (D.3.3); the maximum amounts that an AFCA decision-maker can award for direct or indirect financial or non-financial loss in respect of a person in Mr Kent's position are set out in items 5, 7 and 8 in the table in rule D.4.3, namely: Type of claim Compensation amount limit per claim Monetary restriction on AFCA's jurisdiction 5 Claim arising from a credit facility that was provided to someone other than a Small Business or Primary Producer by a borrower $500,000 Amount claimed by Complainant must not exceed $1 million … 7 Claim for indirect financial loss $5,000 not applicable 8 Claim for non-financial loss $5,000 not applicable

the definitions in rule E.1.1 include that: complainant means a person who has submitted a complaint to AFCA; financial service means, relevantly, a product or service that is financial in nature including one that is, or is in connection with, a loan or any other kind of credit transaction, guarantee or charge to secure any moneys owing; and maladministration means an act or omission contrary to, or not in accordance with, a duty or obligation owed at law or pursuant to the contract between the complainant and the financial firm; a reference in the rules to a person includes a natural person, body corporate, partnership, joint venture, unincorporated body or association or an authority (E.2.2); and during the period between 1 July 2019 and 30 June 2020, AFCA would deal with legacy complaints, being complaints expressing dissatisfaction against a financial firm (such as the bank) about loss arising from its conduct that occurred on or after 1 January 2008 that would otherwise have been time barred under a time limit in rule B.4 (chapeau to section F, F.1.2, F.2.1, F.2.2).

The real property loan transactions 21 On 13 August 2010, Mr Kent and his then wife, Elizabeth, refinanced an existing loan with the bank and, at their request, it split the new loan into three. Mr and Mrs Kent entered into three consumer credit contract schedules (a CCC schedule) that stated that the bank would make home loans of (a) $290,000 (account number ending 7000), (b) $479,000 (account number ending 2702) and (c) $60,000 (account number ending 6901) secured by registered mortgages over their home and another property, both being located at Secret Harbour in Western Australia, with the first five years being on interest only terms and the remaining 25 years requiring principal and interest payments. The $60,000 loan was for a deposit on an off the plan purchase. The three loans were drawn down on 17 August 2010. 22 On 4 January 2011, Mr and Mrs Kent entered into a CCC schedule that stated that the bank would make a home loan of $500,000 (account number ending 0208) secured by registered mortgages over their two Secret Harbour properties and one in Hay Street, Perth, again with the first five years being on interest only terms and the remaining 25 years requiring principal and interest payments. This loan was drawn down on 14 January 2011. 23 On 12 July 2012, Mr and Mrs Kent entered into a CCC schedule that stated that the bank would make a home loan of $122,955 (account number ending 2218) secured by registered mortgages over their two Secret Harbour and the Hay Street properties with principal and interest payments over the 30-year term. This loan was to renovate an investment property and was drawn down on 2 August 2012. 24 On 15 August 2013, Mr and Mrs Kent entered into a CCC schedule that stated that the bank would make a home loan of $528,575 (account number ending 2618) secured by a mortgage over a property in Albert Park Road, South Melbourne with principal and interest payments over the 30-year term. This loan was to purchase the Albert Park Road property off the plan and was drawn down on 20 September 2013. 25 On 11 March 2015, when Mr Kent sought to redraw the full amount available on his loan accounts, the bank informed him that there were no available funds to do so because he had already redrawn the maximum possible. 26 On 18 March 2015, Mr Kent informed the bank that he had lost his job. 27 On 2 December 2015, the bank recorded that Mr Kent had begun to be in arrears on his loan obligations to it. 28 On 9 February 2016, Mrs Kent advised the bank that she and Mr Kent had separated. 29 On 16 February 2016, Mr Kent told the bank that he and his wife were heavily overcommitted. 30 On 28 December 2016, Mr and Mrs Kent signed a voluntary surrender to the bank of the two Secret Harbour and the Albert Park Road properties. 31 In March and April 2017, the two Secret Harbour properties were sold and the account numbers ending 0208, 2702 and 6901 were closed leaving a shortfall, after the sales, on account 2702 of $215,844.90.

The bankruptcy 32 On 10 April 2017, Mr Kent became bankrupt, as noted above, and, thereupon, the trustee became Mr Kent's trustee in bankruptcy. 33 In July 2017, the Albert Park Road property was sold with a substantial shortfall and account 2618 was closed. The bank also sold the Hay Street property, realising a further shortfall. 34 On 1 November 2018, the AFCA scheme commenced. 35 On 11 April 2020, Mr Kent was discharged from bankruptcy pursuant to s 149(3) and (4) of the Bankruptcy Act.

The AFCA fact sheet 36 AFCA published a two-page fact sheet entitled 'Bankrupt individuals' that expresses its current understanding of the roles of itself, a bankrupt complainant and his or her trustee in bankruptcy in dealing with complaints made to AFCA after a bankruptcy. The fact sheet stated that, in many cases, the ability of AFCA to consider a complaint made by a bankrupt depended on the consent of his or her trustee and stated: Seeking the consent of a trustee in bankruptcy Claims of financial loss require the consent of the trustee in bankruptcy A bankrupt individual's financial affairs has vested in their trustee in bankruptcy. This means the trustee in bankruptcy controls the bankrupt's right to bring a legal claim. This includes a bankrupt guarantor's claim that they should not be liable under their guarantee. AFCA can only consider a bankrupt's claim for financial loss if their trustee in bankruptcy consents. The trustee in bankruptcy may deal with AFCA directly, appoint a member of its staff as its agent, or appoint the bankrupt as its agent. AFCA will direct the financial firm to pay any award of compensation for financial loss to the trustee in bankruptcy. (emphasis added) 37 The fact sheet also noted that AFCA could ask, but not compel, a trustee to participate in settlement discussions and that: If the trustee in bankruptcy is unwilling to participate, settlement options may be limited. Only the trustee in bankruptcy can form a binding agreement with the financial firm about the loan or the security property. … If the trustee in bankruptcy's involvement is needed to determine the matter, AFCA may not be able to consider the bankrupt's complaint. (emphasis added)

The making of the complaint and its progression 38 On 29 June 2020, Mr Kent lodged the complaint electronically with AFCA. In it, Mr Kent claimed that: the bank had engaged in irresponsible lending that had precipitated his insolvency; in the period leading up to his bankruptcy, he had acquired four investment properties in addition to owning his family home by obtaining loans supported by mortgages from the bank and had incurred credit card debts to the bank and other financial institutions; he estimated that he had lost between $700,000 and $800,000 and included a table showing details of the five real property loans that he and his wife had with the bank as well as three credit card debts, a personal loan and two loans for his and his wife's car totalling about $130,000; his income was approximately $120,000 per year and his wife's was approximately $30,000 per year; his former employer was the vendor of the investment properties; as a result of his inability to meet the repayments, he had lost his home, then job and he and his wife separated in 2016 and later divorced; by 2020, he was living in Sydney, working in a new job, but his wife and two children lived in Perth; and he should receive compensation. 39 On 2 September 2020, an internal bank email noted that, among other issues with its loan approval process for Mr Kent, the bank records confirmed, as at 22 January 2016, that Mr and Mrs Kent had two children then aged 13 and 15 years. The email attached a detailed report examining the whole of Mr and Mrs Kent's relationship with the bank, including several home loan applications dating from 2003 that revealed that then the couple had two dependent children under 6 years old. However, the report stated that the dependent children had not been included in any loan applications from July 2010 and: It is noted that the clients changed lenders after the Retention team contacted them when they provided a discharge to refinance their loans. This is when the errors started. It is noted that the clients were told they could not afford to increase their loans by their initial lender and then when they were assisted by Direct lending, they no longer claimed any dependent children in their applications. This office cannot comment on whether this [w]as deliberate. … • Has the Customer suffered any loss as a result of an error by the Bank or staff? Yes • Has the customer any basis for claims of irresponsible lending by the Bank. Yes (emphasis added) 40 On 9 September 2020, the bank emailed Mr Kent with its response to his complaint to AFCA and further information that he had provided. The email explained that the bank's investigation into his real property loans had raised "concerns … from a responsible lending perspective". It said that in all (real property loan) applications from July 2010 "due to the non-inclusion of dependent children and later due to income errors, and omitting the ANZ liability are the result of the servicing fails". It then explained that the bank's Group Customer Relations, with which Mr Kent was corresponding, "seeks to place you back in the position you would have been in had the abovementioned accounts not been approved". 41 On 21 September 2020, the trustee wrote to AFCA advising that it did not object to Mr Kent making the complaint but sought to be advised about any award. 42 On 23 September 2020, an officer of the bank telephoned an officer of AFCA and informed her that its review of its credit card conduct had not shown that there were any issues that the bank needed to redress arising from that conduct. 43 On 11 October 2020, Mr Kent emailed AFCA and the bank with information showing that, as at November 2010, the bank knew that he had two dependent children and that Australian Government Families payments were being made into his Streamline account with the bank. He identified the bank employee with whom he negotiated his 2010 loan and said that the lender "came to my house many times and knew my whole family personally so there is no way he couldn't have known I had 2 children". 44 On 28 October 2020, the bank emailed Mr Kent and informed him that it was in the process of crystallising an offer and had calculated a total of $433,512.47 representing the interest, fees, opportunity costs foregone and other costs that Mr Kent had lost in respect of its irresponsible lending conduct in connection with all of his real property loans over the period between 13 August 2010 and 18 September 2020. The bank also informed him that it was conducting an irresponsible lending review in respect of credit cards that he had with the bank and would consider a suitable offer for his non-financial loss in relation to the issues raised in his complaint. The email gave detailed explanations for the above calculation. 45 On 29 October 2020, Mr Kent informed the trustee that the bank had offered $433,512.47 to settle the complaint "as there were numerous errors in their loan approval process". He enquired whether, since he was by then discharged from bankruptcy, he needed to pay any portion to his estate. 46 On 17 November 2020, AFCA wrote to Mr Kent informing him that it could not consider five of the six of his claims about credit card and bridging loans facilities which he had included in the complaint because those claims fell outside the AFCA rules. The letter described all his claims as "your responsible lending claims". It explained that, first, three of those relating to credit card lending before 1 January 2008 and, secondly, those relating to bridging loans, had not been lodged within two years of the rescission, discharge or other termination of those loans and so could not be resolved by AFCA because they were outside its rules, including any extensions under the legacy rules in section F. However, the letter informed Mr Kent that AFCA could consider one of his claims about a credit card that the bank issued in 2014 and its increase in the credit limit on that card that the bank granted on 20 March 2015. AFCA invited Mr Kent, if he wished it to reconsider those decisions, to make any submissions before 1 December 2020. 47 On 30 November 2020, AFCA wrote to Mr Kent to inform him that it had reviewed all the information that he had provided, including in his recent response, but had concluded that he had not provided any new and relevant information or identified any error in its 17 November 2020 decision and so it would not consider the responsible lending claims about three credit cards and two bridging loans further. 48 Negotiations about a settlement appear to have continued until 9 December 2020 when AFCA informed Mr Kent and the trustee of a draft deed of settlement that the bank had proposed on the basis that it was without admissions. The draft deed provided that the sum of $433,512.47 (the financial loss component) be paid to the bankrupt estate for distribution to its unsecured creditors under s 109 of the Bankruptcy Act (of which the bank had the largest debt) and a further sum of $20,000 (the non-financial loss component) be paid to Mr Kent representing "non-financial loss, including stress and inconvenience". 49 Later on 9 December 2020, Mr Kent told the trustee that he did not agree that any sum should be paid to his bankrupt estate because he had been fully discharged from bankruptcy and he did not accept the bank's offer. 50 On 16 December 2020, in response to the trustee's enquiry, AFCA stated that it had not made any recommendation or assessment in relation to either the complaint or the bank's offer. 51 On 18 December 2020, Mr Kent had a discussion with an officer of the trustee.

The trustee and the bank execute a deed to settle the complaint 52 On 21 January 2021, the trustee executed the deed with the bank that provided: 1 Mr Richard Thomas Henry Kent of … (the customer) has complained to The Commonwealth Bank of Australia (the bank) ref. CF-9511696C and the Australian Financial Complaints Authority ref. 735868 regarding: • The customer confirms the bank engaged in irresponsible lending in relation to the following loan accounts: • Home Loan ending in 7000 • Investment Home Loan ending in 2702 • Investment Home Loan ending in 6901 • Investment Home Loan ending in 0208 • Investment Home Loan ending in 2218 & Top Up • Investment Home Loan ending in 2618 & Top Up • The customer confirms the bank engaged in irresponsible lending in relation to all Credit Card accounts held with the bank. • The customer advised the bank on 18 March 2015 that he had lost his job and was placed in financial hardship. • The bank records confirm the arrears began on 2 December 2015. • The bank was advised on 9 February 2016, the customer and his wife were separated, and subsequently divorced. • The bank was advised on 13 April 2017, the customer declared bankruptcy on 10 April 2017. • The customer now resides in NSW and his two children reside in WA. • The customer lodged this AFCA complaint on 30 June 2020. (the complaint). 2 Without any admission of liability, the bank offers to resolve the complaint on a final basis as follows: Terms of Agreement Commercial settlement (a) The bank will provide the Bankrupt Estate of Mr Richard Thomas Henry Kent NSW 1297/17/0 with payment in the amount of $433,512.47. The settlement funds will be paid from the Bankrupt Estate of Mr Richard Thomas Henry Kent as a dividend to all creditors in equal ranking pursuant to section 109 of the Bankrupt [sic] Act 1966 (Cth). The bank will provide payment within 2-3 business days following acceptance of this Deed of Settlement. Please advise the applicable account details. (b) The bank will provide Mr Richard Thomas Henry Kent with payment in the amount of $20,000.00 in to his nominated account. This amount represents non financial loss including stress and inconvenience. The bank will provide payment within 2-3 business days following acceptance of this Deed of Settlement. Please advise the applicable account details. 3 The Official Trustee: • accepts the above offer from the bank in full and final settlement of all matters arising out of, or in relation to, the complaint; and • releases the bank, and all of its related bodies corporate, and all of their officers, employees, representatives, agents and assigns, from all liability in relation to the complaint; and • agrees to take no further action in any forum regarding matters arising out of, or in relation to, the complaint. 4 This offer is open for acceptance until 27 January 2021 when it will lapse unless the Official Trustee accepts the offer by 27 January 2021, which will form an agreement between the Official Trustee and the bank on the above terms. I, the Official Trustee, confirm acceptance of the settlement offer set out above. (emphasis added) 53 On 28 January 2021, the trustee wrote to Mr Kent. The letter informed him that the trustee had received the financial loss component from the bank as property of the bankrupt estate. It told him that amount would be sufficient to cause the annulment of his bankruptcy by enabling payment of his creditors in full and that, after discharging the estate's liability to remunerate the trustee and pay statutory charges, Mr Kent would receive a small surplus estimated at nearly $11,000. It also told Mr Kent that he could apply to the Court under s 90-15 in Sch 2 of the Bankruptcy Act if he were dissatisfied with the trustee's decision. 54 On 28 January 2021, Mr Kent emailed the bank forwarding the trustee's email and said that the latter had "knocked me for six". He sought from the bank a fair share of the settlement. 55 On 29 January 2021, Mr Kent spoke to an officer of the trustee and informed him that he did not agree to the trustee's action in entering into the deed and receiving the financial loss component.

AFCA decides to close the complaint 56 On 1 February 2021, AFCA wrote to Mr Kent informing him that, once the $20,000 non-‍financial loss component had been paid to him and the financial loss component paid to the trustee, it would close its file on the complaint. AFCA told him that, by accepting the bank's offer, "your trustee in bankruptcy has resolved the liability issues giving rise to your complaint against [the bank]" (emphasis added). The letter noted that the maximum amount that AFCA could award for non-financial loss was $5,000 for each claim and that, based on the available information, the bank's offer of $20,000 "is greater than what we would likely award if we were able to continue to consider your claims for non-financial loss compensation" (emphasis added). 57 On 4 February 2021, the bank emailed Mr Kent in response to his cri de coeur of 28 January 2021 saying that it was not legally entitled to provide the settlement funds to him and that the payment to his estate would result in a dividend being paid to all creditors under s 109 of the Bankruptcy Act. The email said that the trustee had accepted the deed and the bank was waiting to hear from AFCA about the non-financial loss component. 58 On 5 February 2021, AFCA wrote an email to Mr Kent seeking his preferred account details so that he could be paid the non-financial loss component. The email stated: Unfortunately, as we cannot continue the complaint about non-financial loss compensation, we will shortly close the complaint, even if we don't receive your account details. (emphasis added) 59 On 8 February 2021, Mr Kent replied to AFCA saying that the outcome had made him "quite ill" and that he had to wait for the trustee's decision "before I can accept the $20,000 payment direct to me". 60 AFCA replied to Mr Kent later on 8 February 2021 expressing sympathy for his being unwell and saying that "We will … have to close the complaint for the reasons we previously discussed". This email told him "You will receive a closure confirmation email once the complaint has closed". 61 Later on 8 February 2021, AFCA emailed the bank with copies of its email to Mr Kent of 5 February 2021 and his reply to it of 8 February 2021. AFCA said that, even though Mr Kent had not provided his account details so that the bank could pay him directly, "we will close our file (for the reasons outlined in our previous letter to Mr Kent)" (emphasis added). AFCA asked the bank to liaise directly with Mr Kent about his bank account details for payment of the non-financial loss component. 62 On 8 February 2021, AFCA sent two "system-generated email[s]", one addressed to Mr Kent and the other sent to each of him, the bank and, I infer, the trustee. The email addressed to Mr Kent stated that it was "to let you know that we have closed the above complaint" (emphasis added). The other email repeated that statement and added that the file had been closed "at the status 'Closed Case Management Level 2'", the outcome recorded as "Negotiation" and that the outcome types as "Monetary compensation in part (Negotiation) & Full/partial waver of debt/interest/fees (Negotiation)". 63 On 9 February 2021, the bank emailed Mr Kent attaching both of AFCA's system-generated emails of 8 February 2021. The bank wrote that the "outcome has been reached and finalised. AFCA have now proceeded to close your complaint". It sought his bank account details so that it could pay him the non-financial loss component. 64 On 23 February 2021, Mr Kent wrote to AFCA acknowledging its efforts, the limits on its jurisdiction and the fact that it "can't pursue this complaint any further to gain the desired outcome for me. With this in mind I would like to close the case with AFCA and continue with legal proceedings against the [bank]". He referred to the fact that he had received legal advice and would pursue multiple claims under various statutes against the bank in court proceedings. He also said that he would inform the bank of this decision. 65 On 24 February 2021, AFCA responded saying that what Mr Kent proposed was not a problem.

The trustee's legal advice 66 On 25 February 2021, Steven Golledge SC gave the trustee written advice that the right that the bankrupt, Mr Kent, exercised in making the complaint to AFCA was not property of the bankrupt that vested in the trustee as at either the date of the bankruptcy or otherwise as after acquired property. Golledge SC opined that the financial loss component of the settlement funds did not vest in the trustee and that Mr Kent could assert to AFCA that his complaint had not been resolved by the deed. Golledge SC opined that the trustee, as a statutory corporation established by s 18 of the Bankruptcy Act, could not fall within the definition of "eligible person" in the AFCA rules. He also opined that, by making his complaint to AFCA, Mr Kent was not exercising any right or chose in action but was asking AFCA to consider his circumstances as part of a dispute resolution scheme that did not depend upon, or give effect to, legal or equitable choses in action. 67 On 26 February 2021, Golledge SC gave further advice to the trustee that Mr Kent was "simply seeking an ex gratia payment" and his receipt of any such payment would not affect the trustee's ability to exercise any rights Mr Kent had against the bank that had vested in the trustee under the Bankruptcy Act. 68 On 9 March 2021, the trustee informed the bank of the substance of Golledge SC's advice. 69 Subsequently, the trustee sought another opinion from Catherine Gobbo. On 21 December 2021, Ms Gobbo advised the trustee that, in her opinion, when Mr Kent made the complaint, he exercised a right that was property of the bankrupt that had vested in the trustee and that it and the bank could enter into the deed to settle the complaint on the terms they had. She opined that "the rights he sought to exercise with his complaint … existed at the time [that] he was made bankrupt in 2017" and was after acquired property that had vested in the trustee under s 58(1)(b) and (6) of the Bankruptcy Act. Ms Gobbo also opined that Mr Kent could not avail of the exception, in s 116(2)(g)(i), of property that did not vest in the trustee other than to the extent the complaint comprised a claim for compensation for personal injury.

The Codes of Banking Practice 70 After I reserved judgment, the parties tendered each Code of Banking Practice that was in force between 12 August 2003 and 31 January 2014 (the 2003 code) and its replacement that was in force between 1 February 2014 and 30 June 2019 (the 2014 code). 71 The 2003 code provided in cl 25.1: Before we offer or give you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it. 72 The 2014 code provided in cl 27: Before we offer, give you or increase an existing, credit facility, we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay the credit facility. 73 In Gooley v NSW Rural Assistance Authority [2020] NSWCA 156 at [26], Meagher JA, with whom Macfarlan and White JJA agreed, summarised what the Court of Appeal of the Supreme Court of Victoria had held in Doggett v Commonwealth Bank of Australia (2015) 47 VR 302 at 306 [8] per Whelan JA, 342 [163] per McLeish JA and 354 [218] per Garde AJA as to the obligation of a banker in cl 25.1 of the 2003 code, namely that cl 25.1: requires care in the selection and application of credit assessment methods and in the formation of an opinion as to the borrower's ability to repay. It does not presuppose or require a bank to conclude that the borrower has the capacity to repay before deciding to offer a loan. In that case [Doggett 47 VR 302] the Court divided on the factual question whether, the bank having breached that obligation, the hypothetical "reworked" and careful assessment would have resulted in the loan not proceeding at all.

The history of this proceeding 74 On 14 April 2022, the trustee commenced this proceeding solely against Mr Kent. In light of the conflicting opinions of its counsel, the trustee sought judicial advice as to whether it would be justified in treating the financial loss component that it had received from the bank on 28 January 2021 as property of the bankrupt that had vested in it under s 58 of the Bankruptcy Act and, alternatively, a declaration that it would be justified in so acting. 75 By the time of the conclusion of the first day of hearing on 3 February 2023, it had become apparent that the trustee and Mr Kent needed to prepare further submissions for another hearing that I fixed for 5 May 2023 to deal with a substantial new issue as to whether Mr Kent's legal rights against the bank had been statute barred at the date of the complaint. 76 The argument on 5 May 2023 made it apparent that the bank and AFCA needed to be joined and given an opportunity to be heard on the question of whether the trustee could settle and, in fact, had settled the complaint on the terms of the deed, so that they also bound Mr Kent, or whether AFCA still had to resolve the complaint under its rules. 77 On 15 May 2023, the trustee filed an amended application joining the bank and AFCA as second and third respondents seeking the same relief as originally. 78 That led to Mr Kent filing, on 9 June 2023, a notice of cross-claim seeking declarations that, first, the financial loss component was not property of the bankrupt estate that had vested in the trustee, secondly, the complaint had not been compromised by the deed and, thirdly, the tripartite contract between AFCA, the bank and Mr Kent for the resolution of the complaint remains on foot. He also sought an order for specific performance of that contract. This led to the third hearing on 7 August 2023 when all parties completed the evidence and addressed their written and oral submissions. 79 On 18 August 2023, by consent, all the parties tendered the 2003 and 2014 codes.

The trustee's and the bank's submissions 80 The trustee argued that, to the extent that the right to complain entitled a bankrupt to a remedy sounding in a financial payment arising from his or her pre-bankruptcy dealings with a financial firm, the right was property of the bankrupt that vested in the trustee under s 58 of the Bankruptcy Act. However, the trustee's argument shifted as the hearing progressed. The trustee and the bank ultimately made their principal contention that the result of the process that the bankrupt initiated with his complaint under the AFCA scheme was the bank's agreement with the trustee to pay the settlement sum. They submitted that this was the appropriate starting point to analyse what, if any, rights the trustee or Mr Kent had to the financial loss component. They asserted that part of the consideration for the bank's offer to pay the settlement sum under the deed was given under cl 2, namely "to resolve the complaint on a final basis", without admission of liability, including Mr Kent's allegation of "irresponsible lending". They argued that the bank's offer in the deed, that the trustee had accepted under its power to compromise any debt claimed to be due to the bankrupt in s 134(1)(e) of the Bankruptcy Act, involved a payment to resolve "all matters arising out of, or in relation to, the complaint" and all liability in relation to it. They contended that this resolution could occur without it needing to be connected to, or dependent on, the form of any cause of action that the bankrupt or his estate may have had, but rather on the underlying factual circumstances of Mr Kent's pre-‍bankruptcy dealings with the bank. They argued that, as a consequence, the payment of the financial loss component that the bank agreed to make in the deed was after acquired property of the bankrupt that vested in the trustee. 81 The trustee and the bank noted (as was common ground) that the deed was not the product of any action or resolution by AFCA under the scheme, but rather a commercial settlement of any rights or causes of action that the bankrupt estate had or may have been able to assert and of all the matters comprehended in the complaint. They pointed to the general way in which Mr Kent had expressed the complaint. They submitted that it was not appropriate to analyse the complaint by reference only to any claim that Mr Kent might be able to make based on ss 133, 178 and 179 of the NCCP Act. 82 The trustee and the bank argued that it was fallacious to characterise the ability to make a complaint to AFCA as giving Mr Kent a remedy that was independent of the underlying cause or causes of action that, before his bankruptcy or after it, he or his bankrupt estate had or could have against the bank that sounded in monetary relief. They contended that, where the same facts supported a person's right to different remedies or causes of action against the same defendant (or respondent), the plaintiff or applicant could not recover more than once for the same underlying claims, relying on what Brennan J said in Port of Melbourne Authority v Anshun Pty Ltd (No 2) (1981) 147 CLR 589 at 610611. They relied on Mr Kent's concession in argument that most complaints about conduct have a remedy at law and that, accordingly, they submitted that it was necessary to look at the substance, and not the form, of what a complaint to AFCA concerned. They argued that it followed that, because the underlying facts could support a complaint to AFCA or a court proceeding, the mere fact that a person in Mr Kent's position had chosen to pursue the former course should not distract from the characterisation of the rights that he was pursuing in making the complaint as property of his bankrupt estate. 83 The trustee and the bank contended that the substance of Mr Kent's complaint to AFCA was a money claim for loss arising out of financial transactions involving loans and credit contracts which could not be characterised as a "personal" claim, such as for personal injuries, defamation or family provision. In other words, they submitted, Mr Kent was asserting a claim the underlying subject matter of which concerned ordinary commercial products that involved rights that accrued before he became bankrupt and had vested in the trustee on his bankruptcy. 84 The trustee and the bank argued that it was not necessary to decide whether a cause of action under ss 178 or 179 of the NCCP Act is assignable, because "irrespective of assignability, such a cause of action (which can constitute property) can still vest by way of statutory vesting". They noted that Mr Kent did not suggest that such a claim fell within the exception in s 116(2)(g) of the Bankruptcy Act and they asserted that, as a consequence, s 134(1)(e) gave the trustee power to compromise any debt claimed to be due to, or any claim of, the bankrupt. They argued that assignability is not a sine qua non for property, relying on what Mason J had said in The Queen v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 342343 so that Mr Kent's rights under ss 178 and 179, even if non-assignable, could still be property that vested in the trustee on his bankruptcy, despite decisions such as Pritchard v Racecage Pty Ltd (1997) 72 FCR 203. They also relied on the decision of Buss P and Mitchell JA in Chappell (as Executor of the Estate of Hitchcock) v Goldspan Investments Pty Ltd [2021] WASCA 205. The trustee argued that, if the ability to complain to AFCA were treated, as Mr Kent contended, as a standing offer to enter into a tripartite contract to resolve the complaint, then this ability vested in the trustee which could exercise it. 85 During argument, on the first day of the hearing, Mr Kent conceded that the cause of action under s 178 of the NCCP Act had vested in the trustee when he became bankrupt. After it had been joined, on the third day of the hearing, the bank sought to hold Mr Kent to that concession and he sought to withdraw it. I allowed Mr Kent to withdraw the concession since, having regard to the earlier course of argument, it involved a point of law, the trustee was seeking judicial advice and the concession itself appeared to be questionable. Given the significance of the issues and the fact that the subject matter of this concession, namely, whether the cause of action under s 178 could vest in the trustee, was assignable or was property, had been fully explored in detailed arguments, despite Mr Kent's view that the nature of that cause of action did not need to be resolved, I considered that it was in the interests of justice to allow Mr Kent to withdraw that concession, including in circumstances where no submissions were made that any party could be prejudiced by allowing Mr Kent to do so. The concession was made on the first day when the issues were not as clear as they were on the third day. All parties fully addressed me on the nature of the cause of action under ss 178 and 179 of the NCCP Act, their assignability and whether they could amount to property of the bankrupt. In my opinion, that issue is significant and requires resolution unconstrained by what, in my opinion for the reasons that follow, was an erroneous concession. 86 Next, the trustee and the bank argued that it was not necessary or appropriate for me to decide whether any limitation period had expired before Mr Kent lodged the complaint or they entered into the deed. However, they contended that, if this issue required determination, the cause of action under ss 178 and 179 of the NCCP Act did not necessarily accrue at the time of the contravention of s 133(1) because loss or damage resulting from the contravention could be suffered later. They submitted that s 178(2) should be construed as barring the remedy while leaving the claim extant. They argued that, in any event, Mr Kent had other possible causes of action for the recovery of the same or overlapping loss or damage as could have been the subject of his claims under ss 178 and 179 so that all of those claims could be resolved in the deed and lose their separate legal existence.

Mr Kent's submissions 87 Mr Kent argued that, at the time he made the complaint, all his claims against the bank were statute barred. That was because, he said, all of the loans the subject of his complaint had been made by 2013, being over six years before he lodged it with AFCA. He contended that, nonetheless, AFCA could resolve the complaint and the bank had engaged with it and him to do so, which, he asserted, supported his characterisation of the AFCA scheme as a bespoke, sui generis, mechanism that did not involve an assessment of existing legal rights. He asserted that, instead, the AFCA scheme was directed to considering the totality of a financial firm's conduct, the outcome of which depended largely on what the AFCA decision-maker considered "fair in all the circumstances". He submitted that the cause of action under s 178(2)(b) of the NCCP Act accrued when a licensee entered into an unsuitable credit contract in contravention of, or committing an offence under, s 133(1). Mr Kent argued that these considerations meant that there was no subject matter that the bank could provide as consideration to the trustee to support the deed or the payment to the trustee of the financial loss component. He contended that there was no valuable cause of action available to the trustee that it could give up in exchange for the payment of the financial loss component or to enter into the compromise in the deed and the trustee's release of the bank in cl 3 of the deed.

AFCA's submissions 88 AFCA, appropriately, took a neutral stance but made helpful submissions as to the construction of the AFCA scheme and its current processes for dealing with complaints made by bankrupts, including as set out in the fact sheet. It limited its role as being to assist the Court in accordance with the principle in The Queen v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 3536. There, Gibbs, Stephen, Mason, Aickin and Wilson JJ said that the role of an impartial decision-maker party to a judicial proceeding should not be as a protagonist but that, in exceptional cases where it appears, its role should be limited to making submissions going to its powers and procedures. 89 Here, all parties, including AFCA, recognised that the present issues are important and will have implications for AFCA and both the official trustee in bankruptcy and other trustees of bankrupt estates in relation to the ability to make and settle complaints under the AFCA scheme and its administration. In my opinion, AFCA acted appropriately in its conduct of the proceeding given its exceptional nature. 90 AFCA noted that it had not undertaken any preliminary assessment or made any determination of the issue as to whether the trustee had any entitlement to receive the financial loss component. It also observed that it was not a party to the deed which had been produced without its involvement. AFCA observed that it had followed the process outlined in the fact sheet in communicating the draft of the deed to each of Mr Kent and the trustee that the bank provided it and thereafter acted only as a "go between" the parties to the complaint and the trustee.

Consideration 91 I reject the trustee's and bank's argument. It confused the subject matter of a complaint by a bankrupt (or former bankrupt) to AFCA under the scheme and the resolution that, under the rules and the tripartite contract, AFCA can impose on the financial firm, if the complainant accepts that resolution, on the one hand, with the rights to the bankrupt's existing and after acquired property that vested in his or her trustee in bankruptcy by force of s 58(1) of the Bankruptcy Act, on the other. (I will refer simply below to "a bankrupt" for both statuses (present and former bankrupt) unless it is necessary to distinguish between them). The fact that the trustee may be able to sue the bank for a breach of a contractual term between it and the bankrupt, for example, in cl 25.1 of the 2003 code, does not mean that the bankrupt did not retain, first, a right to complain to AFCA about loss arising from the conduct of the bank that arose from a contract or obligation under Australian law or, secondly, a separate, personal or non-proprietary right of action against the bank for compensation in respect of similar conduct that did not vest in the trustee. AFCA can only resolve a complaint by a bankrupt about the latter two categories of right or complaint, not the former. 92 As I will elaborate below, that is because the trustee, as a corporation sole under s 18 of the Bankruptcy Act, is not capable of being an eligible person or a complainant, as defined in rule E.1.1, and so cannot be a party to the complaint in respect of conduct that occurred before the bankruptcy. 93 Importantly, rule A.15.3 demonstrates that, if AFCA resolves a complaint in a determination that the complainant accepts, the financial firm can ask the complainant for a release limited to the subject matter of the determination that will become effective on the date that the financial firm fulfils all its obligations under the determination. Thus, any determination by AFCA of Mr Kent's complaint that he accepted, and bound the bank, could not release the bank from any liability in respect of Mr Kent's rights that had vested in the trustee under s 58(1) of the Bankruptcy Act because those rights were not within either Mr Kent's capacity to complain about or the bank's contractual agreement to submit to AFCA's dispute resolution scheme in respect of complaints within AFCA's jurisdiction under the rules. 94 It follows that the deed could not "resolve" the complaint because there was no legal or equitable interest that the trustee had, or could have had, in any determination of it that AFCA might have made in accordance with the tripartite contract it had with Mr Kent and the bank.

The nature of the AFCA scheme 95 In Australia Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Ltd (2022) 164 ACSR 215 at 216 [3] and 217 [7][8], Bell CJ and Meagher JA explained that, as a consequence of cl 3.2(g) of AFCA's constitution (in which its members, such as the bank, agreed to be bound by the rules), once a complaint is made, a tripartite contract is formed under the rules between the complainant, the financial firm and AFCA under which AFCA has authority to make a determination of a complaint within the jurisdiction so conferred on it. Bell CJ and Meagher JA also held that, upon submission of a complaint to AFCA, the parties to it are contractually bound to observe the rules and each of the complainant and financial firm is entitled to require AFCA to proceed in accordance with them (at 217 [8]): see too AgriWealth Capital Ltd v Australian Financial Complaints Authority Ltd [2023] FCAFC 118 at [8][9] per Perry, Downes and Kennett JJ. 96 As rule A.15.3 provides, one contractual consequence of a complaint is that, if the complainant accepts a determination by AFCA for which it had jurisdiction within 30 days, that resolution is final and binding on both the complainant and the financial firm. This contractual outcome is a reflection of the legislative purpose of the AFCA scheme as expressed in s 1051(4)(e) of the Corporations Act, namely, that AFCA operate the dispute resolution scheme so that its determination of a complaint will be binding on members of the scheme, but will only be binding on a complainant if he, she or it subsequently agrees to be bound by it. A complaint will be within AFCA's jurisdiction under rule B.2.1 if it arises from, or relates to, matter outlined in that rule: AgriWealth [2023] FCAFC 118 at [52]. 97 The tripartite contract for the resolution of a complaint under the scheme requires the AFCA decision-maker to do what he or she "considers is fair in all the circumstances" within AFCA's jurisdiction set out in section D of the rules and having regard to legal principles, applicable industry codes or guidance, "good industry practice" and previous determinations by AFCA or predecessor schemes, without its being bound by such previous determinations or rules of evidence (rules A.14.214.4). Importantly, the AFCA decision-maker is not bound by the terms of the complaint as to the nature of the remedy that he or she decides to award: AgriWealth [2023] FCAFC 118 at [51]. 98 The contractual provisions of the rules cannot operate consensually beyond, or inconsistently with, any defined limit imposed by statute: MetLife Insurance Ltd v Australian Financial Complaints Authority Ltd (2022) 295 FCR 1 at 33 [178][180] per Middleton, Jackson and Halley JJ. The AFCA scheme constitutes a different resolution process than arbitration, as Colvin J observed at first instance in MetLife Insurance Ltd v Australian Financial Complaints Authority (No 3) (2022) 162 ACSR 366 at 379 [55]. In allowing an appeal from an earlier decision, the Full Court did not discuss or cast doubt on that subsequent observation and I agree with it. 99 This contractually agreed dispute resolution process does not involve any exercise of judicial power or the determination of existing legal rights: see Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189, 191 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. That is because the rules require that a determination be made having regard to a variety of factors that include not just legal principles but applicable industry codes or guidance and good industry practice by which the AFCA decision-maker forms a value judgment of a determination that he or she "considers is fair in all the circumstances". The resulting determination creates new legal rights and does not determine pre-existing legal rights and obligations, even though those pre-existing rights and obligations and the factual matrix in which they arose are matters to which the AFCA decision-maker must have regard. 100 The determination that rule A.14.2 mandates is one that the AFCA decision-maker "considers is fair in all the circumstances". The AFCA decision-maker does not need legal qualifications and his or her determination necessarily will involve questions of industry guidance and practice in the evaluation of the policy question of what he or she considers to be fair in all the circumstances. And, while the AFCA decision-maker has to have regard to legal principles, he or she is not bound to apply those principles, as Mitchell J held in Patersons Securities Ltd v Financial Ombudsman Service Ltd (2015) 108 ACSR 483 at 500 [88][91] in respect of a similar rule in a predecessor to the AFCA scheme. The AFCA decision-maker must consider and give fundamental weight to the factors listed in rule A.14.2 in determining what he or she "considers is fair in all the circumstances". But, having given those factors consideration and fundamental weight, where relevant, the AFCA decision-maker is not bound to arrive at any particular result as to what "is fair in all the circumstances". The four factors set out in rule A.14.2 may tend in different directions, depending on the circumstances before the decision-maker, and he or she can give one or more greater weight in making the determination than others. The determination is governed by the contractual requirement that it be "what the AFCA Decision Maker considers is fair in all the circumstances". Such a determination is not an administrative decision in a case like this (which does not involve superannuation issues) but a contractual one and is not susceptible to judicial review where well settled administrative law principles will apply: see eg Reg. v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 at 329 per Mason J and Telstra Corporation Ltd v Australian Competition and Consumer Commission (2008) 176 FCR 153 at 181183 [103][112] per Rares J. 101 If, and only if, the complainant accepts it within 30 days, the ultimate determination of a complaint by an AFCA decision-maker necessarily will create a new right or rights as between the complainant and the financial firm. Any such new right does not, of itself, merge with the existing legal, equitable or statutory rights of the complainant and the financial firm as they would if a court order created a res judicata, issue estoppel (as Dixon J explained in Blair v Curran (1939) 62 CLR 464 at 531533) or an estoppel based on the principle in Anshun (No 2) 147 CLR at 602603 per Gibbs CJ, Mason and Aickin JJ. That is because the determination is not a decision about the actual rights of the parties but the AFCA decision-maker's value judgment of a resolution that is "fair in all the circumstances". 102 And, if the complainant accepts the determination, he, she or it is bound by the tripartite contract to release a financial firm, that so requests, from liability limited to the specific subject matter of the complaint under rule A.15.3.

Was the complaint within the AFCA scheme's jurisdiction? 103 I reject the submission of the trustee and the bank that whatever rights or powers Mr Kent sought to exercise in his complaint were rights in relation to property divisible amongst his creditors (as defined in s 116 of the Bankruptcy Act) that had vested in the trustee. 104 Relevantly, under s 5(1) of the Bankruptcy Act, 'property' means personal property of every description and 'the property of the bankrupt' means, relevantly, his or her rights and powers in relation to property divisible amongst his or her creditors that would have been exercisable by him or her had the bankruptcy not occurred. By force of s 58(1), the property of the bankrupt vests in the trustee forthwith on him or her becoming bankrupt and all after acquired property vests in the trustee as soon as it is acquired by, or devolves upon, the bankrupt. 105 Next, s 116(1)(a) and (b) identify, subject, relevantly, to s 116(2)(g), that the property of the bankrupt divisible amongst his or her creditors includes all property that belonged to, or vested in, the bankrupt and after acquired property that devolves before his or her discharge, as well as the capacity to exercise and take proceedings for exercising all such powers in, over or in respect of property as the bankrupt might have exercised for his or her own benefit in the period beginning at the commencement of the bankruptcy up to his or her discharge. Thus, subject to any exception in the Act, including, as I explain below, s 116(2)(g)(i), ordinarily, a right to take legal proceedings for a breach of contract, tort or statutory claim, being a cause of action in respect of, or otherwise amounting to, property, will vest in the trustee immediately on the bankruptcy or when, if before the bankrupt's discharge, the right comes into existence as after acquired property. 106 However, s 116(2)(g)(i) excepts from property of the bankrupt, relevantly, any right that he or she has to recover compensation for personal wrong done to the bankrupt and any compensation awarded in respect of such a wrong. The provision applies to rights to sue for, first, personal injury and, secondly, personal wrong done to the bankrupt and the different possible remedies of damage or compensation. In Cox v Journeaux (No 2) (1935) 52 CLR 713 at 721, Dixon J considered an analogue of s 116(2)(g) in relation to a pleaded claim of a conspiracy to injure the bankrupt which his Honour found did not evince any cause of action based on the asserted facts. In that respect, Dixon J, relying on the reasoning in Wilson v United Counties Bank Ltd [1920] AC 102 at 111 per Lord Birkenhead LC and 128133 per Lord Atkinson, said: The plaintiff says that he himself is entitled to prosecute it under the proviso as an action for personal injury or wrong done to himself. The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property. (emphasis added) 107 In Wilson [1920] AC 102, the House of Lords upheld the jury's award of £7,500 damages to Major Wilson in respect of the United Counties Bank's breach of contract to maintain his credit and reputation while he was away on active service in World War I. His trustee in bankruptcy received over £45,000 from the jury in respect of Major Wilson's estate's financial loss for the same negligence. Lord Birkenhead LC agreed with Lord Atkinson and both applied what Erle J had given as advice to the House in Beckham v Drake (1849) 2 HLC 579 at 604; 9 ER 1213 at 1222. In that case, the bankrupt had attempted to sue for breach of a contract of service that provided for him to serve the employer for seven years at a fixed wage of 3 guineas per week which provided that any party in default had to pay the other £500. Their Lordships held that the right to sue for £500 damages passed to the bankrupt's assignees (ie equivalent to the modern trustee in bankruptcy). Lord Atkinson found (at 131, and see the similar findings at 111112 per Lord Birkenhead LC and at 136, 140 per Lord Parmoor) that the United Counties Bank's negligence "gave rise to two distinct causes of action, the one consisting of injury to the bankrupt's estate, the other personal and consisting of injury to his character, credit and repute; the first passing to his trustee, the second remaining vested in himself". 108 In Sands v South Australia (2015) 122 SASR 195 at 227 [124][125], Blue, Stanley and Nicholson JJ held that, in Cox 52 CLR at 721, Dixon J had not suggested that a single cause of action bifurcated upon bankruptcy. Rather, the Full Court recognised that, in Wilson [1920] AC 102, Lord Atkinson had found that Major Wilson had two distinct causes of action. Blue, Stanely and Nicholson JJ held (at 231 [137]) that, in contrast, where the bankrupt sued on one indivisible cause of action, involving both financial and personal claims, the bankrupt's ability to maintain control of the proceeding after bankruptcy depended on its characterisation as being predominantly a claim within or outside an exception such as is now found in s 116(2)(g)(i). Thus, in Re Dosanjh; Ex parte Duus (1995) 56 FCR 521 at 523C, Kiefel J analysed decisions, including that of Lockhart J in Faulkner v Bluett (1981) 52 FLR 115 at 119, and held that the characterisation of a cause of action, for the purpose of determining whether it vests in the trustee or remains with the bankrupt after the bankruptcy, depended on whether the claim to damages is assessed by immediate reference to the bankrupt's rights of property or his or her mind, body or character. 109 It follows that a proceeding involving a cause of action with more than one head of damage, at least one of which involves, predominantly, the bankrupt's mind, body or character, and another or others, only incidentally, his or her property, will be characterised as remaining with the bankrupt, as Lockhart J explained in Bluett 52 FLR at 119. The characterisation process includes examining the initiating process, pleadings and other relevant documents: Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545 at 549G, 554FG per Lockhart J, 557F558B, 564BD per O'Loughlin and Merkel JJ; Samootin v Shea [2010] NSWCA 371 at [79][81] per Campbell JA, with whom Beazley and Hodgson JJA agreed. And, as Barker, Moshinsky and O'Callaghan JJ held in Luck v Chief Executive Officer of Centrelink (2017) 251 FCR 295 at 300301 [19][25], the characterisation of whether an action falls within the exceptions in ss 60(4) and 116(2)(g)(i) requires consideration of the substance of the particular cause of action: see too Moss v Eaglestone (2011) 83 NSWLR 476 at 486497 [31][77] per Allsop P, with whom Campbell and Young JJA agreed. But, as Allsop P pointed out in Moss 83 NSWLR at 494 [68], the difficulty arises where property and personal damage arise from the same wrong or cause of action and the degree to which the personal claim is severable from, or directly related to, or consequential upon, the property claim. Characterisation of the essential nature of an indivisible cause of action will determine whether it is within the exception in s 116(2)(g) or not: see too Mannigel v Hewlett Phelps [1991] NSWCA 186 per Handley JA at 3, with whom Kirby P and Meagher JA agreed. 110 Importantly, the words of the exception in s 116(2)(g)(i) of the Bankruptcy Act are broader than the exclusion from the automatic stay in s 60(4)(a). The latter allows an action that the bankrupt had commenced before his or her bankruptcy to continue if it is "in respect of ... any personal injury or wrong done to the bankrupt" (emphasis added), whereas s 116(2)(g)(i) excepts from property divisible amongst the bankrupt's creditors "any right of the bankrupt to recover damages or compensation ... for personal injury or wrong done to the bankrupt". A right to recover damages or compensation may or may not be pursued by an action (defined in s 60(5) as meaning "any civil proceeding, whether at law or in equity"), that is, a curial proceeding, and can, for example, be settled by agreement or pursued in administrative proceedings or an alternate dispute resolution process such as mediation, arbitration or the AFCA scheme: see Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45 at 53F54B per Kirby P, with whom Samuels JA at 57BC and Clarke JA at 57DE agreed. 111 Here, if Mr Kent retained one or more causes of action that did not vest in the trustee by the time of the deed or had a basis to satisfy AFCA that his complaint related to the provision by the bank of a financial service to him and arose from a contract or obligation imposed by a law (in accordance with rules B.2.1 and B.3.1), the trustee had no power to resolve his complaint.

Is the right to make a complaint to AFCA or apply for an order under ss 133(1), 178 and 179 of the NCCP Act property of the bankrupt? 112 The complaint alleged that the bank engaged in irresponsible lending. This appears to be a shorthand or lay reference that could engage the concepts covered in Ch 3 of the NCCP Act (and so within the requirements of rule B.3.1). The heading of Ch 3 is 'Responsible lending conduct' and s 133(1) proscribes a licensee, such as the bank, entering into a credit contract with, relevantly, an individual consumer such as Mr Kent (and Mrs Kent) who will become a debtor under it, if that contract is "unsuitable" for him or her within the meaning of s 133(2). Relevantly, the proscription in s 133(2)(a) is that if, at the time of entry into the contract, it is likely that the individual either will be unable to comply, or could only comply with substantial hardship, with his or her obligations, then the contract is "unsuitable". In addition, s 133(3) creates a rebuttable presumption that the substantial hardship referred to in s 133(2)(a) will be established if the individual could only comply with his or her financial obligations under the contract by selling his or her principal place of residence. 113 A licensee who contravenes the norm of conduct prescribed in s 133(1) is liable to a civil penalty and also can commit a criminal offence. Importantly, s 178(1) confers jurisdiction on a court (defined in s 187(1) as including this Court and the superior court of a State or Territory) to order a defendant who has contravened a civil penalty provision or committed an offence under the Act to compensate a plaintiff for loss or damage suffered that resulted from that contravention or offence. Under s 179(1), the court has additional powers to make such order as it considers appropriate against the defendant where the plaintiff has suffered, or is likely to suffer, loss or damage as a result of the contravention or offence, including by compensating the plaintiff, in whole or part, for loss or damage suffered, or preventing or reducing the loss or damage suffered or likely to be suffered. 114 Critically, ss 178(2), (3), 179(3) and (4) provide that "The court may make the order only if" the plaintiff (or ASIC on his or her behalf and with prior written consent) applies for it and does so "within 6 years of the day the cause of action that relates to the contravention or commission of the offence accrued" (emphasis added). The only persons who can invoke the jurisdiction of a court to award compensation under s 178(1) or make an order under s 179(1) are an individual who actually suffered loss or damage resulting from entry into an unsuitable credit contract with a licensee or ASIC if it is acting as the individual's authorised agent. 115 Mr Kent had no right to make a complaint to AFCA before he became a bankrupt or at any time until the AFCA scheme came into operation on 1 November 2018 (see rule A.1.5). It follows that the source of any entitlement of the trustee to make a complaint to AFCA or to be vested with Mr Kent's rights to do so could only be if the entitlement constituted his after acquired property. But, the trustee could not exercise any rights that ss 178 and 179 conferred on the plaintiff to apply for an order under either section because ss 178(2) and 179(3) exclude anyone other than the person (or ASIC on his or her behalf with prior written consent) who actually suffered, or is likely to suffer, loss or damage as a result of the contravention or commission of an offence under s 133(1). 116 The right created by ss 178(2) and 179(3) of the NCCP Act is conferred exclusively on the plaintiff (directly or through ASIC as his or her agent) to recover compensation for personal wrong done to the plaintiff (or here, a bankrupt in Mr Kent's position) within the meaning of s 116(2)(g)(i) of the Bankruptcy Act. This right cannot vest in the trustee because its nature is inherently personal to the bankrupt and is incapable of assignment. Indeed, even when ASIC brings a proceeding under ss 178(2) or 179(3), it does so on behalf, and only with the prior written consent, of the plaintiff. Those provisions of the NCCP Act do not permit anyone else, including a trustee in bankruptcy, to apply for orders under ss 178 or 179, because no one, except the plaintiff, can satisfy the statutory criterion that only the plaintiff (or ASIC as agent) can apply for the order to be compensated under s 178(1) (or afforded an appropriate remedy under s 179(1)) "for loss or damage" actually, or likely to be, suffered by that plaintiff as a result of the licensee's contravention or offence against the NCCP Act. 117 After I reserved my decision, the parties jointly referred to item 19 in Sch 1 of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) (the Transitional Act) which provided that Ch 3 of the NCCP Act commenced in respect of a licensee in the position of the bank on 1 January 2011. They agreed that, as a result, s 133 of the NCCP Act did not apply to the conduct of the bank in making the first three loans in August 2010 in respect of the Secret Harbour properties. After I sought, through my associate, further submissions on how the Transitional Act and regulations made under it operated in respect of the commencement date of 1 January 2011 for Ch 3, the parties filed a detailed, helpful, joint submission on 9 October 2023. That elaborated that the legislative intention had been for there to be staggered commencement dates for different Chapters of the NCCP Act and for its application of specific provisions to classes of licences. The later submission reinforced the position that Ch 3 of the NCCP Act, including s 133, did not apply to the bank until 1 January 2011, being after it made the three August 2010 loans to Mr and Mrs Kent. 118 Accordingly, in its evaluation of the complaint, AFCA will not be able to have regard to ss 133, 178 or 179 of the NCCP Act as creating a cause of action for Mr Kent in respect of the three August 2010 CCC schedules or its loans. However, it will be a matter for AFCA to determine whether it otherwise has jurisdiction in respect of those loans, including whether Mr Kent retained other analogous personal causes of action. It may well be, also, that AFCA can consider the impact of the cross-collaterisation of the two Secret Harbour properties as securities for the bank's later loans (after 1 January 2011) secured over the Hay Street and Albert Park Road properties. None of those issues was the subject of argument.

What is "property" that can vest in the trustee? 119 In Yanner v Eaton (1999) 201 CLR 351 at 365367 [17][20], Gleeson CJ, Gaudron, Kirby and Hayne JJ discussed the meaning of "property" saying (at 366 [19]) that: "'Property' is a term that can be, and is, applied to many different kinds of relationship with a subject matter. It is not "a monolithic notion of standard content and invariable intensity (K Gray and SF Gray, 'The Idea of Property in Land' in Bright and Dewar (eds), Land Law: Themes and Perspectives (1998) 15, at p 16)". Their Honours noted that the word 'property' "is often used to refer to something that belongs to another" and is a description of a legal relationship with a thing (at 365366 [17]). They said that, while the concept of 'property' may be elusive, it refers to a degree of power or bundle of rights that the law recognises as power permissibly exercised over a thing. 120 The meaning of "property", "after acquired property" and "property of the bankrupt" in the Bankruptcy Act requires analysis of the thing that is said to be the "property" in question and the identification of the lawfully exercisable right or power that the bankrupt had (or will have when it comes into existence for the purpose of deciding if it is after acquired property) over the thing. 121 In Meneling Station 158 CLR at 342343, Mason J, with whom Gibbs CJ at 332 and Brennan J at 364 agreed on this issue, analysed whether a grazing licence granted under a statute created property or proprietary rights. Mason J applied the following statement of principle by Lord Wilberforce in National Provincial Bank Ltd v Ainsworth [1965] AC 1175 at 12471248: Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability. 122 Mason J then said (158 CLR at 342343): A right terminable in the manner permitted by reg. 71A lacks that degree of permanence of which his Lordship spoke. Assignability is not in all circumstances an essential characteristic of a right of property. By statute some forms of property are expressed to be inalienable. Nonetheless, it is generally correct to say, as Lord Wilberforce said, that a proprietary right must be "capable in its nature of assumption by third parties". (emphasis added) 123 Here, the text of ss 133(1), 178 and 179 of the NCCP Act suggests that the Parliament did not intend to create a proprietary right in a plaintiff to apply for compensation under s 178 or a remedy under s 179, as opposed to conferring a status or entitlement that is personal to that plaintiff, to make such an application to a court for an order in respect of loss or damage that the plaintiff has suffered, or is likely to suffer, as a result of a licensee's contravention or offence against the NCCP Act. 124 The expression "The court may make the order only if" in ss 178(2) and 179(3) defines the jurisdiction of the court by imposing an essential requirement of the right to obtain relief, being that only the plaintiff, as the individual who has suffered the loss or damage that resulted (s 178(1)), or is likely to result (s 179(1)), from the contravention or commission of an offence under s 133(1) (or ASIC, and only then on his or her behalf and with his or her prior written consent), can apply for an order for compensation to be paid to him or her (under s 178(1)) or as appropriate (under s 179(1)): Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477 at 486487 [22] per French CJ, Hayne, Kiefel, Bell, Gageler and Keane JJ. 125 In Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 133, Brennan CJ, Gaudron and McHugh JJ held that a right to appeal may be a substantive right "but it is another question whether such a right has the character of property". They explained there (of a claim that the bankrupt could appeal against a judgment imposing a liability that, after bankruptcy, fell on his or her estate): Nor does such a right to appeal answer the description of property divisible among creditors defined by s 116(1)(b), namely, "the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit". The powers referred to are powers "which are familiar to all conveyancers and are powers properly so called", as Farwell J pointed out in In re Rose; Trustee of the Property of E T Rose v Rose ([1904] 2 Ch 348 at 352; see, on appeal [1905] 1 Ch 94). In other words, the powers referred to are authorities to dispose of property or interests in property for the benefit of the donee of the power or of some other person. In this case, there is no property "over or in respect of" which the bankrupt is or would have been capable of exercising a power. As a matter of ordinary language, a judgment debtor's right to appeal against the judgment is not property. (emphasis added) 126 While the rights to apply for an order under ss 178(2) and 179(3) are not analogous to a right to appeal (in Cummings 185 CLR at 133), the point made by Farwell J which Brennan CJ, Gaudron and McHugh JJ applied, is apposite. That is because the trustee could not stand in Mr Kent's shoes, to apply for a remedy as a plaintiff for the purposes of ss 178 or 179 of the NCCP Act, since those sections provide that only Mr Kent (or ASIC as his agent with his prior written consent) could make that application. Moreover, only Mr Kent (as opposed to the trustee) could fall within the criterion prescribed in ss 178(1) and 179(1) that he had suffered, or was likely to suffer, the loss or damage that resulted from the bank's conduct for which he applied for an order to compensate or provide him with a remedy in respect of that loss or damage. Mr Kent was the only person who could have suffered any loss or damage as a result of the unsuitable credit contracts that the bank entered allegedly in contravention of s 133(1) because it was likely that, when those contracts were made, he would be unable to comply with his financial obligations under them or could only do so with substantial hardship. The trustee would be incapable of demonstrating that it had suffered substantial, or any, "hardship" which is a different concept to financial loss or damage. In the event, Mr Kent actually had to sell, or consent to the sale of, all of the properties he and Mrs Kent had mortgaged to the bank, including their family home or principal place of residence, before he became bankrupt. 127 It is important to understand that, first, a complaint to AFCA is not a process initiating one or more causes of action and, secondly, as Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ explained in Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 407 [44][45] in respect of analogues in the Trade Practices Act 1974 (Cth), the right conferred on a plaintiff under ss 178 and 179 of the NCCP Act to apply for orders against a licensee which has contravened or offended against that Act are not analogous to any particular form of claim under the general law. The remedies conferred on a plaintiff by ss 178 and 179 of the NCCP Act invite attention to whether the plaintiff has suffered one or more particular forms of detriment as a result of the licensee's contravention or offence against another provision of that Act. 128 Mr Kent asserted in the complaint that, as a result of the bank's conduct of which he complained, he had lost not only his home, but his job, his marriage and proximity to his children. In substance, he was concerned about a dramatic adverse impact on his life which also included being made bankrupt and all the very human trauma that this loss of status entailed. 129 For the reasons above, I am of opinion that a plaintiff's right to apply for an order under each of ss 178(1) and 179(1) of the NCCP Act is not capable of assignment to, or vesting in, the trustee in bankruptcy. This follows because only a plaintiff in Mr Kent's position can apply for that relief since only he or she can meet the criterion of having suffered, or being likely to suffer, loss or damage that resulted from the bank's alleged contravention or offence against s 133(1) of the NCCP Act: Racecage 72 FCR at 218FG per Branson J, with whom Spender and Olney JJ agreed; Murphy 216 CLR at 407409 [44][52]; cf Pentridge Village Pty Ltd (in liq) v Capital Finance Australia Ltd (2018) 58 VR 1 at 3637 [111][114] per Connock J; see too Chappell [2021] WASCA 205 at 65 per Buss P and Mitchell JA and see also at [54][58]; Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 at 732734 [49][55] per Rares J; Mijac Investments Pty Ltd v Graham (No 2) (2009) 72 ACSR 684 at 696 [32] per Gordon J; Re McGrath (2018) 133 ACSR 338 at 351 [40][42], 353 [47] per Brereton J.

Conclusion 130 Accordingly, I am of opinion that Mr Kent's rights to apply for orders under ss 178 or 179 of the NCCP Act was, first, not property at all and was therefore incapable of vesting in the trustee under any provision of the Bankruptcy Act or, secondly, if it were so capable, it was a right to recover compensation for personal wrong done to him within the meaning of the exception in s 116(2)(g)(i) of the Bankruptcy Act. Thus, the trustee could neither compromise the complaint using its powers under s 134(1)(e) of the Bankruptcy Act nor bring or initiate, under its power in s 134(1)(j), a claim for an order under ss 178 or 179 of the NCCP Act.

Had the limitation period for any cause of action still held by Mr Kent expired? 131 I reject Mr Kent's argument that the claims on which his complaint relied were statute barred. First, the AFCA scheme does not require that a complaint assert a cause of action or require that any cause of action exists at the time of the complaint. Secondly, or alternatively, s 178(2)(b) of the NCCP Act requires an application for compensation to be made within six years of the day on which the cause of action accrued. 132 The rules require that a complaint arise from a contract or obligation arising under Australian law (rule B.3.1). Here, the complaint arose, at least, from an obligation of the bank under s 133 of the NCCP Act not to enter into a credit contract with a consumer who will be the debtor under it if the contract is unsuitable for the consumer as provided in s 133(2). 133 It is difficult to understand the trustee's and the bank's reliance on the subject matter of the complaint being a breach of contract based on cl 25.1 of the 2003 code. That is because rule C.1.3 appears to exclude from AFCA's jurisdiction complaints about a financial firm's assessment of the credit risk posed by a borrower. Such a risk was the subject matter of the bank's obligation under cl 25.1 to exercise the skill and care of a diligent and prudent banker in selecting and applying its credit assessment methods and in forming an opinion about the borrower's ability to repay it. 134 The definition of legacy complaint in rule F.2.2 comprehended Mr Kent's complaint because it was "an expression of dissatisfaction, against [the bank], about loss arising from conduct by [the bank] that occurred on or after 1 January 2008 which would but for rule F.1 be excluded under the time limits set out in B.4". Mr Kent's complaint was an expression of dissatisfaction against the bank about loss that arose from its conduct that occurred after 2008. The right of a retail client to make a complaint that AFCA could determine arose as a condition of the bank's financial services licence and was not dependent on it being about currently justiciable causes of action. 135 The final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry conducted by the Hon Kenneth Hayne AC QC was tabled in the Parliament on 4 February 2019. That report and the earlier public hearings before the Royal Commission discussed many historical issues about the conduct of persons carrying on business in the banking, superannuation and financial services industry that are likely to have been the reason why the note in section F of AFCA's rules states that the Minister changed the authorisation conditions effective on 30 June 2019 to require AFCA to deal with (historical) complaints about conduct of financial firms bound by the AFCA scheme dating back to 1 January 2008 that had not been dealt with by a predecessor of AFCA, a court or tribunal. 136 Thus, it does not matter if a legacy complaint related to, or could be supported by, a cause of action that was statute barred provided that it arose from a contractual or statutory right and related to the provision of a financial service to the complainant (rules B.2.1, B.3.1). AFCA had contractual power under the scheme rules to determine Mr Kent's legacy complaint because it expressed dissatisfaction against the bank about loss arising from its irresponsible lending conduct that occurred on or after 1 January 2008. 137 If I were wrong in this construction of a legacy complaint, it does not appear that Mr Kent's complaint, to the extent it arose under, or relied on, the NCCP Act, was subject to the time limit in rule B.4.2.1 (which applied, first, not to the credit contract itself, but to a variation and, secondly, the National Credit Code, not the NCCP Act, to which that code was a schedule). Even if it were subject to such a time limit, rule B.4.4.2 allows AFCA to extend the two-year time limit if it considers that special circumstances apply. AFCA excluded some of Mr Kent's complaints about credit cards and bridging loans as out of time but appears to have decided that the complaints about the consumer credit loans over the two Secret Harbour (about which, at the time, no issue had arisen), the Hay Street and Albert Park Road properties were within its jurisdiction, as did the bank. 138 In my opinion, Mr Kent's complaint fell to be considered pursuant to rule B.4.3.1(a) and any (future) consideration by AFCA of an extension under rule B.4.4.2. 139 Mr Kent's cause of action involved the following elements: (1) a contravention or offence against s 133(1) or (6) of the NCCP Act by the entry into an unsuitable credit contract between the bank and Mr Kent (s 178(1)(a)); (2) Mr Kent suffering loss or damage resulting from that contravention or offence (s 178(1)(b)); and (3) an application for an order that the defendant (here, the bank) compensate the plaintiff (here, Mr Kent) for that loss or damage that Mr Kent suffered. 140 As the Court held in Murphy 216 CLR at 407408 [46] and in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526527 per Mason CJ, Dawson, Gaudron and McHugh JJ, the risk of loss is not itself a category of loss in respect of statutory provisions (ss 82 and 87 of the Trade Practices Act) relevantly analogous to ss 178 and 179 of the NCCP Act. Those decisions held that, where a plaintiff enters into a contract that exposes him, her or it to a contingent loss, liability or the possibility of suffering detrimental consequences in the future, the plaintiff "sustains no actual damage until the contingency is fulfilled and the loss becomes actual": Wardley 175 CLR at 532; Murphy 216 CLR at 408 [46]. As the Court said there: Wardley illustrates that it is necessary to identify the detriment which is said to be the loss or damage which has occurred (or, when considering the application of s 87, has occurred or is likely to occur). In that case, the mere entry into obligations which might, but need not, have had detrimental consequences in the future was held not to have occasioned loss or damage to the party making the contract. (emphasis added) 141 I am of opinion that s 133(2)(a) and (3) of the NCCP Act provide that mere entry into an unsuitable credit contract does not necessarily result in immediate loss or damage. Each of those provisions is forward looking to what is likely to happen to the consumer which may cause loss or damage. On the evidence, Mr Kent only fell into arrears with the bank on 2 December 2015, which was less than six years before he made the complaint on 29 June 2020. Relevantly, at least before he fell into arrears, Mr Kent did not articulate when he suffered any earlier loss or damage or what that was. And, as the Court held in Murphy 216 CLR at 408409 [47][52], esp at [49] and [52], and s 184 of the NCCP Act also suggests, loss or damage may not be singular and may be incurred at different times. Thus, the need for the plaintiff (or person seeking to assert accrual of the cause of action) under ss 178 or 179 to identify the precise basis on which the plaintiff suffered the loss or damage concerned. 142 In Wardley 175 CLR at 533, Mason CJ, Dawson, Gaudron and McHugh JJ said: It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled. (emphasis added) 143 Even if Mr Kent fell into arrears, it may have been that the early sale of one or more properties that Mr and Mrs Kent had mortgaged to the bank may have been able to release a profit that could have enabled them to retain others or be placed, overall, in a financial position in which they were no worse off in financial terms than before entering into the relevant CCC schedule or schedules. Given the lack of specification of (or evidence about) the loss or damage on which Mr Kent seeks to rely, it is not appropriate to decide that any cause of action under ss 178 or 179 had accrued within six years before he made the complaint or the bank and the trustee entered into the deed. 144 In any event, ss 178(2)(b) and 179(3)(b) do not operate to extinguish the cause of action as opposed to creating a defence: Price v Spoor (2021) 270 CLR 450 at 463 [23], 464 [25] per Kiefel CJ and Edelman J, 467 [40][41] per Gageler and Gordon JJ, 492493 [116][118] per Steward J. Accordingly, the bank would have to plead a defence under ss 178(2)(b) or 179(3)(b) before an issue arose as to whether Mr Kent could not maintain such a claim. However, the bank declined, correctly, to engage in its submissions with Mr Kent's hypothesis on this issue, in reliance on what Mason CJ, Dawson, Gaudron and McHugh JJ said in Wardley 175 CLR at 533, namely: We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question. (emphasis added)

Did Mr Kent withdraw the complaint? 145 I reject the trustee's and the bank's argument that Mr Kent withdrew the complaint. AFCA decided to close the complaint and did so on 8 February 2021 after telling Mr Kent both of its intention to close, and action in which it closed, its file (see [58][62] above). 146 Mr Kent's email to AFCA of 23 February 2021 (see [64] above) recognised what it had told him, namely that that it "can't pursue this complaint any further to gain the desired outcome for me". Neither the trustee nor the bank identified anything that Mr Kent did in sending that email that had, or could have had, any substantive legal effect. So far as AFCA was concerned, the complaint already had been resolved by the deed and it had closed its file. AFCA did nothing in reliance on Mr Kent's 23 February 2021 email to change its already settled position. The trustee and the bank likewise did not rely, or act to their prejudice, on his email. Mr Kent did not assert in it that AFCA had acted in breach of the tripartite contract in earlier closing its file. His suggestion that he would "like to close the case with AFCA" was as effective as shutting the stable door after the horse had bolted two weeks before when AFCA told him that, regardless of his wishes, it had done just that.

What role did the trustee have in the complaint? 147 For the reasons above, Mr Kent's right or entitlement to complain to AFCA so as to engage its functions under the AFCA scheme was not property of the bankrupt that vested in the trustee on Mr Kent's bankruptcy (because the AFCA scheme did not exist in 2017) or later when that right or entitlement to complain came into existence on 1 November 2018. That is because, first, the right or entitlement to complain was not property at all and, secondly, even if it were, so far at least as it concerned Mr Kent's legal rights to apply to the Court under ss 178(1) and 179(1) of the NCCP Act, it was a right to recover compensation for personal wrong done to him within the meaning of s 116(2)(g)(i) of the Bankruptcy Act. As a consequence, the trustee had no right to claim or receive any compensation to which Mr Kent was entitled or could recover under ss 178 and or 179 of the NCCP Act. 148 However, it was appropriate that Mr Kent, AFCA and the bank informed the trustee of the existence of Mr Kent's complaint. This was so that the trustee would be able to consider the impact of the complaint, and any resolution of it, on the administration of the bankrupt estate and whether, independently of the complaint, some other cause of action of Mr Kent against the bank was vested in the trustee. 149 The parties did not identify any basis on which AFCA could treat or join the trustee as a party to the complaint. AFCA only has power, under rule A.6.2, to join another financial firm as a party to a complaint. As I have explained, the trustee could not have made the complaint itself, first, because, as a corporation sole, it was not within the definition of "eligible person" in rule A.4.1 and, secondly, a trustee in bankruptcy could not satisfy the condition prescribed in rule B.2.1(a) that requires a complaint to arise from, or relate to, the provision to the complainant of a financial service by the financial firm. This construction of the rules is supported by the evident policy of the requirements in the Corporations Act for there to be a dispute resolution scheme to determine complaints by retail clients of a financial services licensee in accordance with Pt 7.10A of that Act. 150 Notably, nothing in any of the Corporations Act, the Bankruptcy Act or the NCCP Act suggests that a trustee in bankruptcy can exercise the right or entitlement of a retail client to make a complaint to AFCA under the AFCA scheme (or the operator of a scheme that the Minister authorises under Pt 7.10A of the Corporations Act). 151 The argument of the trustee and the bank that the relevant question is whether the bankrupt could have taken proceedings against the financial firm that could have resulted in recovery of damages or compensation ignored the text of the provisions of the Corporations Act to which I have referred and creation of the tripartite contractual relationship to which the bank, as a financial firm, was bound by force of ss 912A(1)(g)(i), (2) and 1051(4) of that Act and the AFCA scheme. That tripartite contract created the right for a complainant, such as Mr Kent, to a determination by AFCA of that individual's complaint and gave him or her the option, within 30 days, of treating it as binding whereupon a new set of rights would come into existence that were incapable of vesting in a trustee in bankruptcy. 152 Nonetheless, where AFCA determines a complaint by a present or former bankrupt against the conduct of a financial firm that occurred before the bankruptcy and the complainant accepts the determination so that it becomes binding on the financial firm, the fact of the determination may have relevance to the administration of the bankrupt estate. That is because the financial firm may still seek to assert rights as a creditor of the estate that, self-evidently, could affect the payment and amount of any dividends that the trustee would be obliged to make. Where, for example, as here, the bankrupt complainant and the financial firm informed AFCA that they had concerns about the firm's conduct and one or more possible contraventions or offences against s 133(1) or (6) of the NCCP Act and the complainant accepted AFCA's resolution of the complaint, an issue may arise if the firm then sought to prove in the bankrupt estate as an unsecured creditor in respect of the bankrupt's liability to it that the complaint concerned. 153 For example, had the bank proceeded with its suggested offer of 28 October 2020 to pay Mr Kent the equivalent of what became the financial loss component under the deed, it may still have sought to prove in his estate. If that were to occur, there may be issues as to whether the trustee could reject a proof of debt by the bank on the basis of some merger, estoppel in accordance with the principles in Anshun (No 2) 147 CLR at 602603, abuse of process or unconscientious conduct. After all, a trustee in bankruptcy can seek to go behind a judgment debt or, in the hypothesis above, an assertion of a legal or equitable right to relieve the estate from a claim that, in truth and reality, was not a debt due to the creditor: see Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 at 145146 [47][49] per Kiefel CJ, Keane and Nettle JJ. 154 It follows that the statements in AFCA's fact sheet, that it can only consider a bankrupt's claim for financial loss if his or her trustee in bankruptcy consents and that trustee may deal directly with AFCA, are too broadly stated. For the reasons I have given, some claims for, or that include, financial loss, such as those under ss 178 and 179 of the NCCP Act and some other statutory rights that, because of their non-assignable nature, can never vest in the trustee in bankruptcy and others, depending on this characterisation, under s 116(2)(g) of the Bankruptcy Act, may or may not vest in a trustee in bankruptcy. Unless the only rights the subject of a complaint under the AFCA scheme are necessarily vested in a trustee in bankruptcy by s 58(1) of the Bankruptcy Act, AFCA will be bound to perform its decision-making role under the tripartite contract created by the lodging of a valid complaint within the rules, although it may be possible, with the consent of the complainant and financial firm as the other parties to that contract, to bring the trustee into informal negotiations under rule A.8.1. Much will depend on the circumstances of any particular complaint.

Disposition 155 For the reasons above, I am of opinion that the trustee is not entitled to any of the relief it sought, while Mr Kent has established that the deed did not resolve the complaint and that AFCA was in breach of the tripartite contract in closing the complaint on 8 February 2021 and in failing to determine the complaint under the rules. 156 This was very much in the nature of a test case as to the interaction between the AFCA scheme and the rights of trustees in bankruptcy, bankrupts and financial firms under the Bankruptcy Act. Ultimately, Mr Kent has had substantial success, although not on, and perhaps despite, some of his arguments. 157 I will direct the parties to file and serve draft orders to give effect to these reasons within 7 days and, if they cannot agree, a marked up version of the orders they seek with written submissions limited to 2 pages. I certify that the preceding one hundred and fifty-seven (157) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Acting Chief Justice Rares.

SCHEDULE OF PARTIES NSD 272 of 2022 Cross-Respondents Second Cross-Respondent COMMONWEALTH BANK OF AUSTRALIA LTD Third Cross-Respondent AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY LTD