Park Avenue Nominees Pty Ltd v Boon

Park Avenue Nominees Pty Ltd ACN 010 286 674 (Plaintiff) PARTIES : Karen Boon (on behalf of Thomas Weir Snr) (First Defendant) Fair Trading Tribunal of New South Wales (Second Defendant) JUDGMENT OF : Master Harrison

LOWER COURT Fair Trading Tribunal JURISDICTION : LOWER COURT FILE NUMBER(S) : LOWER COURT Senior Member Gabrielle Fleming JUDICIAL OFFICER :

Mr P T Russell (Plaintiff) COUNSEL : Mr P Batley (Solicitor) (Respondents) Michael Boyce (Plaintiff) SOLICITORS : Fiona McMullen Legal Aid Commission (First Defendant) CATCHWORDS : Appeal decision of Fair Trading Tribunal - meaning of personal, domestic and purposes, substantial compliance with prescribed form. Fair Trading Tribunal Act 1998 (NSW) Consumer Credit (NSW) Code Fair Trading Act 1998 (NSW) LEGISLATION CITED : Consumer Credit (NSW) Act Consumer Credit (Qld) Act Corporations Law Consumer Credit (NSW) Regulation Mining Regulations 1981 (WA) Commissioner of Taxation v Comcorp Australia Limited & Anor (1996) 70 FCR 356 Hunter Resources Ltd v Melville & Anor (1987-88) 164 CLR 234 Equipment Investments PTy Limited Pty Limited v M J Dowthwaite & CO Pty Limited [1969] FLR 23 CASES CITED : Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28 Victoria v The Commonwealth & Connor; New South Wales v The Commonwealth; Queensland v The Commonwealth; Western Australia v The Commonwealth (1975) 134 CLR 81 Rafiqi & Anor v Wacai Investments Pty Ltd (1998) ASC 1550-024 Linkenholt Pty Ltd v Quirk [2000] VSC 166 DECISION : (1) Appeal allowed; (2) The decision of the Tribunal Member dated 31 January 2001 is set aside. The court declares that s6 of the Credit Code does not apply to the 1999 transaction; (3) The defendants are to pay the plaintiff's costs.

THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION

30012/2001 - PARK AVENUE NOMINEES PTY LTD ACN 010 286 674 V KAREN BOON (on behalf of Thomas Weir Snr) & ANOR

JUDGMENT (Appeal decision of Fair Trading Tribunal; meaning of personal, domestic and purposes, substantial compliance with prescribed form)

1 MASTER: By summons filed 22 February 2001 the plaintiff seeks, firstly, an order pursuant to s 61 of the Fair Trading Tribunal Act 1998 (the FTT Act) that the decision and orders of Senior Member Gabrielle Fleming dated 31 January 2001 in proceedings CM2000/1464 be set aside; and secondly, pursuant to s 61 of the FTT Act that the proceedings below be dismissed. Both Mr Weir Snr and Mr Weir Jnr are named Thomas Weir. Mr Weir Snr is the father of Mr Weir Jnr. They are the defendants. The second defendant, the Fair Trading Tribunal of New South Wales filed a submitting appearance. 2 On 31 January 2001 the Senior Tribunal Member made two orders, namely, that the Fair Trading Tribunal had jurisdiction in this matter and that the application to transfer the matter the Supreme Court was refused. The second order refusing to transfer the matter to this court is not the subject of challenge in this appeal. 3 The grounds of appeal are firstly, that the Tribunal erred in law in findings that the declarations (the declarations) executed by Thomas Weir (Snr) on 31 July 1997 and 15 January 1999 were ineffective for the purposes of s 11 of the Consumer Credit (New South Wales) Code (the Code); secondly, that the Tribunal erred in law in finding that by the loan transactions (the loan transactions) between the plaintiff (as lender) and Thomas Weir (Snr) and Thomas Weir (Jnr) (as borrowers) in September 1997 and January 1999 credit was provided predominantly for personal, domestic or household purposes within the meaning of s 6(1)(b) of the Code; thirdly that the Tribunal erred in law in failing to find that by the loan transactions credit was provided wholly or predominantly for business or investment purposes in the refinancing, improvement and operation of a cattle stud; and fourthly, the Tribunal erred in law in finding that the plaintiff had not rebutted a presumption in s 11(1) of the Code that the Code applies to the loan transactions. 4 On the day of the hearing in this court the defendant filed a notice of contention which put in issue whether the declaration dated 15 January 1999 was effective because it was not in accordance with the prescribed form. Additionally the declaration was expressed in the past tense rather than the present tense. 5 At the outset it is helpful if some general observations of the function of the Tribunal are made. The Fair Trading Act 1998 established a Tribunal to adjudicate consumer and commercial disputes. The objects of the Act are set out in s 3. They are to ensure that the Tribunal is accessible, its proceedings are efficient and effective and its decisions are fair, and to enable proceedings before the Tribunal to be determined in an informal, expeditious and inexpensive manner. 6 An appeal to this court from the Referee's decision is only in relation to a question of law, (s 61 Fair Trading Act 1998). A party to proceedings before the Tribunal may appeal to this court on a question of law which includes (but is not limited to) an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard an decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of this court. 7 The short undisputed facts are as follows.

(1) In 1946 Mr Weir Snr became the registered proprietor of 1 Bridge Street, Lawrence.

(2) In 1991 Mr Weir Jnr became the registered proprietor of two properties, namely Cnr Rutland and Richmond Streets, Lawrence and a property at March and Tenterfield Streets, Lawrence.

(3) On 24 June 1996 Hector John MacKinnon advanced the sum of $60,000 to Thomas Weir Snr and his son Thomas Weir Jnr as mortgagors and debtors. The loan was an interest only loan and was secured by three registered mortgages, one of which is a registered mortgage over Mr Weir Snr's home at 1 Bridge Street, Lawrence. Mr Weir Jnr's two parcels of land were also security for the loan. The mortgagee was Hector John MacKinnon, the principal sum of $60,000, the terms 12 months and the interest rate 17.5% per annum reducing to 12.5% per annum.

(4) On 31 July 1997 a Consumer Credit Code Declaration was signed (this declaration is reproduced later in this judgment).

(5) On 24 September 1997 Park Avenue Nominees advanced $75,000 to Mr Weir Snr and Mr Weir Jnr. The loan was an interest only loan for a period of 12 months. The security was three mortgages over the same three properties that were given for the earlier loan. The mortgagee was Park Avenue Nominees Pty Ltd, the principal sum of $75,000 the term 12 months and the interest rate 17% per annum reducing to 12% per annum for prompt payment (the first transaction).

(6) On 2 October 1997 the mortgage to Hector John MacKinnon was discharged.

(7) On 17 December 1998 Boyce and Associates wrote to Mr Weir Snr and Mr Weir Jnr.

(8) On 15 January 1999 a second Credit Code Declaration was signed by Mr Weir Snr.

(9) On 27 January 1999 the loan was extended until September 1999. A variation of mortgage was executed (the second transaction).

(10) On 14 February 2000 Mr Weir Snr commended proceedings in Fair Trading Tribunal (CM2000/1464). 8 The Consumer Credit (NSW) Act 1995 confers jurisdiction on the Tribunal in relation to matters under the Consumer Credit (New South Wales) Code. The Code commenced operation in New South Wales on 1 November 1996. The Code forms uniform legislation throughout the States of Australia. The Code forms an Appendix to the Consumer Credit (Queensland) Act 1994 and is incorporated into New South Wales law by s 5 of the Consumer Credit (NSW) Act 1995. The Code deals comprehensively with all aspects of consumer lending, from pre-contractual disclosures to the form of credit documentation, changing and enforcing credit contracts, civil penalties, related insurance contracts and remedies for non-compliance. The Consumer Credit (New South Wales) Regulation 1995 (The Regulation) similarly reflects uniform regulation throughout Australia.

(1) Whether the s11 declaration was in substantial compliance with the prescribed from 9 The plaintiff submitted that the Tribunal member found that strict compliance with the prescribed form was necessary. The plaintiff submitted that the Tribunal erred at law in that such finding is contrary to the express statutory intention that a declaration is to be substantially in the form (if any) required by the Regulations and that the express statutory intention that if a form is prescribed or approved by or for the purpose of the Code, strict compliance with the form is not necessary and substantial compliance is sufficient. 10 According to the plaintiff, the Tribunal ought to have assessed what had been lost by each respective contravention in the form of the declarations compared to what would have been if there had been no contravention. The Tribunal then should have determined whether the difference between the two is such that one cannot fairly say that the provision was "substantially complied with" (see Commissioner of Taxation v Comcorp Australia Limited & Anor (1996) 70 FCR 356 at 395C-396B per Carr J, with whom Lockhart J concurred). 11 The defendant referred to Hunter Resources Ltd v Melville & Anor (1987-88) 164 CLR 234. This case is unhelpful because it held that the doctrine of substantial compliance has no application of Regulation 59 of the Mining Regulations 1981 (WA). Under the Credit Code Parliament has determined that the doctrine of substantial compliance does apply to the Code. The defendant also referred to a decision of Gibbs J in Equipment Investments Pty Limited v M J Dowthwaite & Co Pty Limited [1969] 16 FLR 23 at 31 where His honour stated: "A divergence from the form would be substantial or material if it caused the statement to convey less information than the form requires or to confuse or mislead the prospective hirer as to the matters which the form is designed to bring to his notice. The dealer is not entitled to abandon the form completely, and to claim the right to present the relevant information to the hirer in quite a different way, but in my opinion he does not substantially or materially depart from the form simply by including additional words, unless their presence in some way distorts or obscures or minimizes the information which the form is designed to give." 12 It is common ground that the two contracts are credit contracts (see ss 4 and 5 of the Act). Section 6 of the Code defines the credit contracts to which the Codes applies. It states: "Provision of credit to which this Code applies 6(1) This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of pre-contractual obligations) is proposed to be entered into; (a) the debtor is a natural person ordinarily resident in this jurisdiction or a strata corporation formed in this jurisdiction; and (b) the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and (c) a charge is or may be made for providing the credit' and (d) the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider, (4) For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose." 13 The plaintiff relied on s 11 certificates executed by the borrowers in relation to both transactions. If a valid s 11 certificate has been executed, the credit contracts are not ones which fall within the provisions of the Credit Code and the Fair Trading Tribunal does not have jurisdiction. The issue before the Tribunal Member was whether the credit provider discharged its onus and established that the certificate substantially complied with the prescribed form. 14 Section 11 provides as follows: "Section 11 Presumptions relating to application of Code 8(1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established. (2) Credit is presumed conclusively for the purposes of this Code not to be provided wholly or predominantly for personal, domestic or household purposes if the debtor declares, before entering into the credit contract, that the credit is to be applied wholly or predominantly for business or investment purposes (or for both purposes). (3) However, such a declaration is ineffective for the purposes of this section if the credit provider (or any other person who obtained the declaration form the debtor) knew, or had reason to believe, at the time the declaration was made that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes. (4) A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not."

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.

(2) Whether the credit provided or intended to be provided wholly or predominantly of the personal, domestic or household purposes 32 The plaintiff submitted that the Tribunal Member erred in law in finding that Thomas Weir Snr's subjective actual purpose in obtaining credit at the time when the credit contract was entered into was relevant to determining whether "the credit is provided or intended to be provided wholly or predominantly for the personal, domestic or household purposes". 33 The plaintiff submitted that the Tribunal Member erred in law in relying in any way upon Mr Weir Snr's personal reasons or aspirations for entering into the credit contract in determining whether one of the specified purposes of s 6(1)(b) of the Code existed. 34 The plaintiff referred to a passage from Rafiqi & Anor v Wacai Investments Pty Ltd (1998) ASC 1550-024, Brabazon DCJ, District Court of Queensland where s 6 of the Code was discussed. His honour stated that s 6 is a threshold provision which sets out the factors that must be satisfied for the Credit Code to apply to the parties agreement. Once a particular purpose can be isolated, it must then be shown that the intention of the credit provider was that it be provided wholly or predominantly for that identified purpose. The meaning of the words "predominant purpose" can be gauged from s 6(5). The predominant purpose is that purpose for which more than half of the credit is intended to be used. 35 Brabazon DCJ then stated: "The reason why the credit was provided or intended to be provided can be determined by referring to ss 6(1) and 6(5). One needs to examine what was communicated to the credit provider by debtor. The fact that in s 6(5) the words "purpose for which the credit will be used " appear, puts the emphasis on the information given by the debtor to the creditor provider." (His honour's emphasis added) 36 His Honour referred to the text "Application of the Consumer Credit Code and the Purpose Test" (1996) Vol 11 Australian Banking Law Bulletin 85 by the authors Edwards and Sweeney. 37 His honour concluded: "any other interpretation would put an intolerable burden on the credit provider." The difference between s 6(1) and (5) seems to be that 6(1)(b) allows an objective approach to be adopted to allow the court to decide that the relevant intention for the purpose of the Credit Code will be that which a reasonable person standing in the shoes of the credit provider would have understood the predominant purpose for which the credit is provided ." (His honour's emphasis added) 38 According to Rafiqi, the intention for which credit was sought is to be determined by an objective test that is what a reasonable person standing in the shoes of the credit provider would have understood the predominant purpose for which the credit is provided. To apply a subjective test would create a legal fiction that a borrower could claim the protection of the Code by satisfying what he or she subjectively intended to do with the finances. 39 At p 21 the Tribunal Member made a finding that in 1997 Thomas Weir Jnr presented the purpose of loan to the broker and subsequently the lender as the financing of the purchase of stock and improvements to his cattle stud. In 1997 the loan application (Ex A before the Tribunal Member) disclosed that Mr Weir operated his property as a small cattle stud and that he currently had a business loan with Elliott and Harvey. He wished to pay them out ($60,000) and purchase some additional stock. 40 The Tribunal Member stated: "The words 'personal, domestic or household; are not defined in the Code and are to be determined in accordance with their ordinary meaning. In Linkenholt Pty Ltd v Quirk [2000] VSC 166 (5 May 2000) Justice Gillard stated that: 'The interpretation of the Code is a question of law. Hence it is a question of law for the court to decide what is meant by "personal purposes" in s 6(1)(b) of the Code. However, having construed the provision it is a question of fact whether at the time when the credit contract was entered into, the credit was provided or intended to be provided for the personal purposes?' This phrase 'personal, domestic or household' has a counterpart in section 52 of the Trade Practices Act (Cth) in relation to 'goods and services' and it is well understood in that context (see State Bank v Sullivan [1999] NSWSC 596 (14 July 1999). The words should be given their ordinary meaning." On balance, I am not satisfied that the Respondent has rebutted the presumption of the application of the Code. The evidence before me suggests that the predominant purpose of Mr Weir senior, in the refinancing of the loans, to the extent that it can be said that he had one, was to repay his sons debts. It was not investment in the cattle stud. The evidence suggests that Mr Weir junior had a similar purpose but was also using the funds to operate his cattle stud. Had Mr Weir junior and Mr Weir senior both been working the 'cattle stud' during that period it may be that my conclusion would be different. In the ordinary course of conducting a business it might be expected that loans might be refinanced without changing the nature and character of the transaction ( Linkenholt Pty Ltd v Quirk [2000] VSC 166 (5 May 2000)) . However I am not satisfied that this is the case here. In giving the terms 'personal domestic or household' purposes there ordinary meaning I am satisfied that in entering into a loan contract solely to help his son out of financial difficulty Mr Weir senior acted within the intended meaning of each of these words. Such an interpretation is consistent with the objectives of the Code. I am satisfied that the loan was predominantly for a 'personal, domestic or household purpose'. Having made the above findings it follows that the Consumer Credit Code applies to these transactions." 41 The Tribunal Member found that the predominant purpose of Mr Weir Snr in obtaining the loan was to repay his son's debt. She characterised the loan as personal in nature, that is the action of a father aiding a son, and consequently the Code applied to the transaction. The Tribunal Member at paragraph 68 of her decision opined that this was not an investment in the cattle stud. This position is justified by the Tribunal Member stating that if Mr Weir Snr had been, as well as Mr Weir Jnr, both working the cattle stud then her finding may have been different. The Tribunal Member concluded that Mr Weir Snr entered into the contract to help his son out of financial difficulty and his actions conformed to the provision of the Code, as interpreted given its ordinary meaning, that the loan is to be for personal, domestic or household purposes. 42 The plaintiff submitted that the Tribunal Member erred in finding that the defendant satisfied the s 6(1)(b) requirements for two reasons; firstly, the transaction in question refinanced an earlier loan the nature of which was commercial and that the second transaction adopts the characteristics of the first; secondly, as previously stated, that the Tribunal Member should have objectively analysed the purpose to which the money was used for rather than subjectively analysing Mr Weir Snr's reasons for obtaining the money. 43 In Linkenholt, in addition to the passage quoted by the Tribunal Member, Gillard J stated not only that in the ordinary course of a business it might be expected that loans might be refinanced without changing the nature and character of the loan. Additionally, his Honour stated: "In the present matter on an objective basis the transactions were one and the same and all that occurred was the substitution of a new agreement for what was an obligation to repay money which had been lent for business purposes." 44 He also stated, at paragraph 98: "It is appropriate to consider what the money was used for in order to determine the purpose of the provision of the credit. In considering the question it is important to consider the substance of the transaction in the context of its importance." 45 The Tribunal Member, in deciding the purpose of the loan at 62 of her decision, applied Linkenholt in which it was stated that the court must consider the substance and reality of the transaction. The Tribunal Member then found, at paragraph 64, that the purpose of the original loan was the financing of the purchase of stock and improvements to his cattle stud and that all negotiations were initiated by Thomas Weir Jnr. Both the Tribunal Member and Mr Weir Jnr accepted that the predominant purpose of the loan arrangements of 1997 was the attainment of credit for business purposes. However, the Tribunal Member opined that by the time of the refinancing in 1999 the nature of the loan had changed as he had to keep borrowing just to repay earlier loans. The Tribunal Member then stated, at paragraph 66, that Mr Weir Snr, while reluctant to facilitate such arrangements, entered into the loan transactions "solely to support his son by alleviating his debt". The Tribunal Member found that such an action fell within the ordinary meaning of the terms 'personal, domestic or household use' and as such the Code applied to the transaction initiated by Mr Weir Snr. 46 If the correct objective test is applied, the relevant intention will be that which a reasonable person standing in the shoes of a credit provider would have understood the predominant purpose for which the credit was provided. Mr Weir Snr's subjective reasoning for lending the money was never conveyed to the lender. However, under s 11 the onus lies on the credit provider to establish that the code does not apply to the 1999 contract. There was evidence before the Tribunal Member, namely a letter from Boyce & Associates, Solicitors addressed to both Mr Weir Snr and Jnr. It does not refer to what the credit was to be used for other than the term loan and that it is to be extended to 24 September 1999. Likewise the other two documents created in relation to the 1999 advance, namely "Particulars of the Proposed Loan" and "Changes to Obligations under the Mortgage" do not refer to the purpose for which the credit was to be used. These documents can fairly be described as neutral in that they do not assist in determining objective intention. These documents do not rebut the presumption that the Credit Code applied. While Linkenholt suggests that a refinancing contract is the substitution of a new agreement for what was an obligation to repay money which had been lent for business purposes, this too is not enough to rebut the presumption. 47 However, at para 28 the Tribunal Member summarised the evidence of Mr Gallagher, a solicitor who furnished certificates of independent advice in relation to both the 1997 and 1999 transactions. The Tribunal Member stated "Mr Gallagher told the Tribunal that Mr Weir and his son were known to him prior to 1996 but that he could not recall exactly how. He also prepared loan documentation in 1999 for refinancing of the loan (discussed below). He stated that '… on both occasions [of their attendance at his office] Thomas Weir (senior) confirmed to me that he understood the nature and effect of these documents and the transactions involved' . He told the Tribunal that he understood Mr Weir senior was assisting his son in 'some cattle enterprise' . 48 Mr Weir Snr was unwell and was unable to give evidence to the Tribunal. 49 Mr Weir Jnr gave evidence that he: "'talked [his] father into helping' him with the loan by telling him he was going to lose his farm. He said his father 'did not want to do it' but that he was 'harping at him for a couple of weeks' and then he agreed. He promised his father that he would pay back the loans and that 'nothing would happen' . He said that each year as the loans came to an end he was unable to repay them and just 'kept borrowing money every year until [he] couldn't do it any more' . His father knew that he had brought [sic] a farm and knew 'about the cattle stud' ." 50 Mr Weir Snr told his solicitors to believe that the moneys were to be used in "some cattle enterprise" and Mr Weir Jnr said that his father knew about the cattle stud. 51 I have reluctantly come to the view that if the objective test is applied to the evidence adduced at the Tribunal a reasonable person in the shoes of the credit provider would have understood the predominant purpose for which the credit was provided was for running a cattle enterprise. The lender had established the contrary, that is that the credit was not provided wholly or predominantly for personal, domestic or household purposes. The defendant has discharged its onus and established that the code does not apply. 52 It is my view that the Tribunal Member erred in law. The Credit Code does not apply to the transaction of Mr Weir Snr and son. The transaction does not fall within the provisions of s 6(1)(b) of the Act. The decision of the Tribunal Member of 31 January 2001 is set aside. 53 Costs are discretionary. Costs should follow the event. The defendants are to pay the plaintiff's costs as agreed or assessed. 54 The orders I make are as follows:

(2) The decision of the Tribunal Member dated 31 January 2001 is set aside. The court declares that s 6 of the Credit Code does not apply to the 1999 transaction.

(3) The defendants are to pay the plaintiff's costs. **********

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