The declaration
15 In the present case under the Credit Code the prescribed form of the declaration (Regulation 10) is as follows.
"'I/We declare that the credit to be provided to my/us by the credit provider is to be applied wholly or predominantly for business or investment purposes (or for both purposes).'
10(2) The declaration is to contain (immediately below the above words) a warning in the following form-
IMPORTANT
You should not sign this declaration unless this loan is wholly or predominantly for business or investment purposes.
By signing this declaration you may lose your protection under the Consumer Credit Code.
10(3) The declaration is to contained-
(a) the signature of each person making the declaration; and
(b) either the date on which the declaration is signed or the date on which it is received by the credit provider."
16 The actual form signed by Mr Weir Snr (AB 32) in relation to the first transaction is reproduced below.
" CONSUMER CREDIT CODE
…
…
I/We, THOMAS WEIR (Senior) of 1 Bridge Street, Lawrence in the State of New South Wales, do hereby solemnly and sincerely declare as follows:-
1. I/We am/are the Registered Proprietors or am entitled to be the registered proprietors of the property situated at 1 Bridge Street, Lawrence
2. I/We declare that the credit to be provided to me by the Credit Provider, Park Avenue Nominees Pty Ltd is to be applied wholly or predominantly for business or investment purposes (or for both purposes).
3. I/We declare that this declaration was executed prior to me/us entering into the Mortgage and associated documents.
__________________________________________________________________
IMPORTANT
You should not sign this declaration unless this loan is wholly or predominantly for business or investment purposes.
By signing this Declaration you may lose you protection under the Consumer Credit Code.
__________________________________________________________________
We make this solemn declaration conscientiously believing same to be virtue and by virtue of the provisions of the Oaths Act 1900.
DECLARED AT Lawrence by the) x signed
abovenamed Declaration(s) this ) …………………….
31st day of July 1997 )
in the presence of; ) ……………………..
Signed
A Justice of the Peace ."
17 Thus the important note does not appear directly underneath paragraph 2. An additional paragraph, paragraph 3, which is not stipulated in the prescribed form has been inserted after paragraph 2 and before the box marked 'IMPORTANT'. The nexus between paragraph 2 and the warning has been broken. In relation to the second transaction, it is similar to the above except that it refers in paragraph 2 to "the credit that was provided to me" and in paragraph 3 the declaration has executed, that is paragraphs 2 and 3 refer to the verb "was" indicating the past tense.
18 The Tribunal Member's reasoning on this issue is as follows:
"Section 11 requires that the Declaration be 'substantially in the form required by the Regulations' . Schedule 2, clause 11 further provides that where a form is prescribed under the Code 'strict compliance with the form is not necessary and substantial compliance is sufficient' .
Section 11 and Regulation 10 set out the form in which a declaration as to the purpose for which the credit is to be provided is to be effected. The specify the words to be used and their placing in relation to each other. Regulation 10 required that the boxed 'IMPORTANT' warning is to be placed 'immediately below' the words of the declaration.
It is necessary to reconcile the relevant legislative directive as to 'substantial compliance' with the specific provision that the warning on the section 11 declaration is to appear ' immediately below' the declaration itself. Schedule 2 of the Code assists in interpretation of the Code and provides that 'an interpretation which promotes the purpose of object of the Code is to be preferred' .
The term 'substantial compliance' has also been the subject of much judicial consideration."
19 The Tribunal Member referred to Comcorp and the High Court decision in Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28, 28 April 1998.
20 In Comcorp, the Federal Court considered the principles of substantial compliance and statutory intent. The matter involved Part 53A Division 5 of the Corporations Law. Essentially Comcorp was a company under administration and the administrator called a creditors' meeting. Section 439A(4) of the Corporations Law provides that the calling of such a meeting must be accompanied by copies of specified reports and statements by the administrator. While there were irregularities in the providing of the necessary documents, the trial judge exercised his discretion under s 445G(3) of the Act and held that as the irregularities did not prejudice or contravene the effect of the Act the meeting and therefore the deeds of arrangement agreed on in the meeting were valid. There was an appeal from this decision.
21 In Comcorp, Carr and Lockhart JJ held that the submissions of the Commissioner of Taxation failed to pay regard to the commercial practicality of the case at hand as their submissions contained arguments that, if successful, placed a burden of precision on the administrator was not within the contemplation of the legislature when framing the Act.
22 In Comcorp their honours at 363 relevantly stated that in a number of provisions the word "must" is used and as such an emphatic obligation on behalf of those effected by the provisions is applied. However they stated that it was necessary to look to the intent of the Parliament who, when framing the language and the words of the statute would have had certain effects in mind. Lockhart and Carr JJ found the definition of substantial compliance provided by Stephen J in Victoria v the Commonwealth and Connor; New South Wales v the Commonwealth; Queensland v the Commonwealth; Western Australia v the Commonwealth (1975) 134 CLR 81 to be helpful. The passage is as follows:
"Sometimes the stipulation which has not been complied with is, in its context, so relatively unimportant to the attainment of that general object that, although there has been total non-compliance, a directory construction may be appropriate. In such cases it may not matter that the non-compliance is complete, not partial. Indeed the stipulation in question may be of a kind which is incapable of partial compliance; to give to such a stipulation a directory interpretation recognizes that it may be wholly disregarded without prejudice to validity because of its relative unimportance in the attainment of the general statutory object and also, perhaps, because of the far-reaching and undesirable consequences of treating its non-observance as invalidatory.
Where, on the contrary, a stipulation may be seen to be of importance in attaining the general object of the statute its total non-observance cannot besought to be excused, and its intended effect circumvented, by the adoption of a directory construction. A directory construction may none the less be given to such a stipulation if it is of a kind capable of degrees of non-compliance and if some degree of non-compliance can be seen as not necessarily prejudicing the substantial carrying into effect of the general object. If in such a case a directory construction be adopted, the extent of non-compliance in the particular case must then be examined to determine whether what has in fact occurred nevertheless gives effect to the general object of the statute."
23 In Comcorp, their honours had the benefit of applying s 445G of the Corporations Law, which provides that a court may determine that a provision is valid, despite only be substantially compliant, if the provision gives effect to the general object of the legislation.
24 Blue Sky was a corporation with the aim of encouraging profitable growth in the New Zealand television and film industries while the ABA was charged by the legislature, with the task of developing, and ensuring compliance with, standards and codes of practice for similar industries within Australia. The appellants challenged the validity of a determination by the ABA on the grounds that it was not consistent with the Protocol in Trade in Services to the Australian New Zealand Closer Economic Relations Trade Agreement. The case essentially concerned inconsistencies between instructions given to the ABA that had the effect of instructing the ABA to, concurrently, give preference to products originating in or consisting of Australian content and also give products from both Australian and New Zealand equal weighing. The case of Project Blue Sky while relevant to the issue of substantial compliance, holds little relevance to this case as it is concerned with consistency between, as well as within, statutory instruments.
25 In paragraph 54 the tribunal member considered the meaning and interpretation of substantial compliance as per McHugh, Gummow, Kirby and Hayne JJ in the High Court in Project Blue Sky. The court decided that the best interpretation is ascertained by asking whether a breach of a provision has the result of an action being contrary to the general effect and purpose of the Act. Their honours also stated that focusing on the question of whether a provision should be given a directory or mandatory construction will lead the court away from the relevant factors.
26 The Tribunal Member in her decision continued:
"The consequence of effecting a Section 11 Declaration are significant for the borrower. The intention of the legislation in setting out the specific form which a Section 11 Declaration must take is to ensure that borrowers are clearly aware, and informed of, the consequences of losing the protections of the Code. The Regulations sets out the exact form of words which are to be used and the placing of those words in relation to each other. In my view the legislature intended that a Declaration which, as in this case, inserted other words between the declaration and the 'warning' should not be effective. Regulation 10 uses the words 'immediately below' and to give these words there ordinary meaning there must not be text between the declaration and the 'warning'.
In summary, I find that the intention of the legislation, when considered in terms of the language of the relevant provisions and the scope and object of the Code, is that unless the words of the warning (IMPORTANT) appear 'immediately below; the words of the Declaration then it is not effective to exclude the application of the Code.
It follows from the above that I find the Section ss Declaration to be ineffective in rebutting the presumption that the code applies to the transaction. It remains for the Respondent to rebut this presumption by evidence which establishes that the purpose of the transaction was 'business or investment' and thus the transaction is unregulated by the Code."
27 The general purpose of the Act is to, as quoted by the tribunal member from the 1994 Explanatory Notes of the Queensland Act, facilitate "truth in lending which will allow borrowers to make informed choices when purchasing credit". Given this general purpose and when combined with Schedule 2 Part 2(7)(1) which states:
In the interpretation of a provision of this Code, the interpretation that will best achieve the purpose or object of this Code is to be preferred to any other interpretation."
28 However, s 11(4) of the Code specifically stipulates that a declaration under s 11 is to be substantially in the form required by the regulations and is ineffective for the purposes of this section if it is not.
29 Considering firstly the language of the statute; the requirements are that the warning must be "immediately below the above words". This requirement was not fulfilled. In fact with a provision such as this one the word "immediately" conveys a clear meaning to the placement of the declaration and contravention of this provision cannot be said to be substantial compliance. The purpose of this provision is to ensure that the borrower is warned, comprehensively, of the consequences of the declaration and the warning is to be placed directly under paragraph 10(2) and stated and shown in the provisions.
30 In the present case, the defect in the Consumer Code s 11 declaration was the placement of the warning within the credit agreement. The warning was not to sign declaration unless the loan is wholly or predominantly for business or investment purposes. The effect of moving the warning was to separate it from the actual declaration to which it refers. It distorts the warning's effect. The warning was not immediately below the declaration in clause 2.
31 The warning is to be placed in a position that reinforces the provisions requirement. The placement of the warning was insufficient to comply with the provisions of the Code and its effect is invalid. This was referred to by the tribunal member at pp 17 and 18 of her decision. The credit provider added an extra paragraph to the declaration which is not included in the prescribed form. The placement of these additional words had the effect of distorting the intended importance of the warning because the nexus between the warning and the statement to which it relates had been severed. It is my view that the Tribunal Member was entitled to come to the view that there has not been substantial compliance and that credit was conclusively presumed. Further, and of lesser importance, the Tribunal Member's interpretation best achieves the object of the code. There is no error of law. Consequently the appeal on this aspect of the tribunal member's decision fails.