Perpetual Trustees Victoria Ltd v Monas

CATCHWORDS : PROCEDURE - amendment - application to amend Defence and Cross-Claim - whether proposed amendments are futile - application for separate questions - separate questions involving factual matters overlapping with other issues - no utility in ordering separate questions. CONSUMER CREDIT - credit protection - regulated contracts - hardship provisions - monetary thresholds - date at which threshold operates - floating thresholds - carried over instruments from uniform Credit Code - whether threshold determination different under National Credit Code.

Civil Procedure Act 2005 Consumer Credit (New South Wales) Code 1995 Contracts Review Act 1980 LEGISLATION CITED : National Consumer Credit Protection Act 2009 (Cth) National Consumer Credit Protection Regulations 2010 (Cth) National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) National Credit Code 2009 (Cth) Real Property Act 1900

AJX v BKY Ltd (Credit) [2010] VCAT 38 Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 Allco Principal Finance Nominees Pty Ltd v Stojanovic (Credit) [2007] VCAT 1245 CASES CITED : Bank of Queensland Ltd v Dutta [2010] NSWSC 574 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Harding v National Australia Bank Ltd (Credit) [2007] VCAT 1234 National Australia Bank v Mullins [2006] ACTSC 116 Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444

PARTIES : Perpetual Trustees Victoria Ltd (Plaintiff) Bianka Monas (Defendant)

COUNSEL : S B Docker (Plaintiff) J Moratelli (Defendant)

SOLICITORS : Kemp Strang (Plaintiff) Legal Aid NSW (Defendant)

1 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION POSSESSION LIST

2009/293578 PERPETUAL TRUSTEES VICTORIA LTD V MONAS

JUDGMENT 1 These proceedings, which were commenced on 1 April 2009, claim possession of land at 27 Charles Street, Liverpool arising out of a default under a loan contract entered into in May 2004. The amount advanced was $330,000. 2 In her Further Amended Defence filed 4 June 2010 the Defendant has raised 2 substantive defences. The first is that a notice served by the Plaintiff in purported compliance with s 80 of the Consumer Credit (New South Wales) Code 1996 ("the NSW Code") did not comply with the requirements of s 80. Secondly, she says she is entitled to relief under s 70 of the NSW Code and under the Contracts Review Act 1980. The particulars in relation to the Contracts Review Act and s 70 of the NSW Code appear in a cross-claim against the Plaintiff filed at the same time as the Further Amended Defence. 3 By Notice of Motion filed 9 September 2010, the Defendant seeks to file an Amended Cross-Claim and a Second Further Amended Defence relying on the hardship provisions of the National Credit Code 2009 (Cth). In addition, the Defendant asks to have determined as a separate question, if the Amended Cross-Claim and Defence are allowed, the issue raised by the hardship application as well as the issue of compliance by the Plaintiff with the requirements of s 80. 4 At the same time, the Plaintiff applies by Notice of Motion filed 7 September 2010 to be authorised to begin these proceedings nunc pro tunc. The purpose of that Motion is to overcome any defect in the s 80 Notice. The Plaintiff is content to have all of the issues touching s 80 heard as a separate question. 5 The parties have agreed on the terms of separate questions touching the s 80 issues as follows: (1) Has a Notice complying with s 80(3) of the NSW Code been "given" to the Defendant/Cross-Claimant within the meaning of s 80(2) of the NSW Code before the commencement of enforcement proceedings? (2) If the answer to (1) is no, can the Court now authorise the Plaintiff/Cross-Defendant, pursuant to s 80(4)(c) of the NSW Code (or s 88(5)(c) of the National Credit Code, as the case may be), to begin these proceedings and should it do so? (3) If the answer to (1) is no, what is the consequence for the Plaintiff's claims in the proceedings? Separate question on s 80 6 The s 80 Notice is dated 29 January 2009. It stated that it was a Default Notice pursuant to s 57(2)(b) of the Real Property Act 1900, as well as being a Default Notice within the meaning of s 80 of the NSW Code. 7 The Notice identified the mortgage, the property, the arrears and the total amount outstanding under 2 credit contracts as of 27 January 2009. The Notice then recited the provision for financial accommodation pursuant to the credit contracts and the defaults. It required the borrower to remedy the defaults by paying the arrears within 31 days of receipt of the notice. That period was called the Grace Period. 8 The notice them went on to provide: 3. If you do not remedy all the Default(s) within the Grace Period, or if a default of the same type as specified in this notice occurs during the Grace Period, then, in respect of the Credit Contract(s) for which Arrears remain unpaid: 3.1 The Total Amount Outstanding plus Lender's costs and charges will automatically be due and payable and the Lender may commence proceedings for the Total Amount Outstanding; and 3.2 In respect of the Property securing that Credit Contract, the Lender proposes to: commence proceedings for or otherwise take possession of the Property exercise power of sale in respect to the Property 3.3 The Lender may take such other action under the Credit Contract(s) and the Mortgage(s) as it sees fit. 9 Section 80(3) deals with the requirements of the Default Notice under the section. It provides: Default notice requirements. A default notice must specify the default and the action necessary to remedy it and that a subsequent default of the same kind that occurs during the period specified in the default notice for remedying the original default may be the subject of enforcement proceedings without further notice if it is not remedied within the period. 10 It can be seen that one of the requirements is that the Notice must specify that a subsequent default of the same kind occurring during the Grace Period may be the subject of enforcement proceedings "without further notice" if it is not remedied in the period. The Notice served by the Plaintiff omitted the words "without further notice". 11 Section 80 relevantly provides: (1) Enforcement of credit contract. A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless the debtor is in default under the credit contract and - (a) the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and (b) the default has not been remedied within that period. Maximum penalty - 50 penalty units. (2) Enforcement of mortgage. A credit provider must not begin enforcement proceedings against a mortgagor to recover payment of money due or take possession of, sell, appoint a receiver for or foreclose in relation to property subject to a mortgage, unless the mortgagor is in default under the mortgage and - (a) the credit provider has given the mortgagor a default notice, complying with this section, allowing the mortgagor a period of at least 30 days from the date of the notice to remedy the default; and (b) the default has not been remedied within that period. Maximum penalty - 50 penalty units. 12 No arguments were addressed to the issue whether s 80 had been complied with. The Plaintiff's submissions were put forward on the basis that there was no defect in the Notice but even if there was, the consequence should not be the dismissal of the proceedings. 13 Initially, the parties only wished to have question (1) decided in advance of the final hearing. However, it seemed to me that the determination of that question alone resolved very little in substance. Not only because of the provisions of s 80(4) but also because of my decision in Bank of Queensland Ltd v Dutta [2010] NSWSC 574, there was an available argument that even if the Notice was found not to comply with the section the Plaintiff might still be permitted to continue with the proceedings or to commence new identical proceedings nunc pro tunc. For that reason, questions (2) and (3) were added. 14 I am not persuaded that the questions relating to the s 80 issue are appropriate to be determined separately. As far as Counsel's researches went, and as far as I know, the decision in Dutta is the only decision dealing with strict compliance with s 80 and the effect of a failure to comply strictly with its provisions. Mr. Moratelli, who appeared for the Defendant, said that at the hearing of any separate question he would be arguing that the decision in Dutta was wrong, and he drew attention to the fact that Mr Dutta was not legally represented in his proceedings. 15 The result is likely to be that whatever I determine in this case with regard to the effect of the non-compliance with s 80 an appeal would result. That would unnecessarily delay the final hearing in the proceedings and would not, in any event, resolve the whole of the issues in the case even if amendment is not permitted to plead reliance on the hardship provisions. Further, a resolution of question (2) is likely to involve a consideration of a number of factual matters associated, at least, with the reasons the Notice was served in the form it was. I discussed some of the matters relevant to the facts in Dutta in that regard in my judgment at [157]-[158]. 16 For these reasons, it does not seem to me that ordering a separate determination in relation to the s 80 Notice will be of any practical benefit, nor would it be giving sufficient attention to the purposes and obligations referred to in s 56 Civil Procedure Act 2005. The approach least likely to be productive of expense and delay is for the final hearing in these proceedings to take place as soon as possible.

Should the hardship amendment be allowed? 17 The amendment sought to be made to the Cross-Claim is as follows: 3. The Cross Claimant is unable reasonably because of injury, unemployment or other reasonable cause to discharge her obligations under the Credit Contract. Particulars 3.1 The Cross-Claimant was injured in a car accident ("the first accident") in or about December 2000 which caused damage to her vertebrae.

3.2 The Cross-Claimant fractured both her heels in a subsequent accident at a friend's home some years later.

3.3 The Cross-Claimant has been unable to secure ongoing permanent employment since the first accident. 3.4 The Cross-Claimant worked briefly as an introducer for Yes Mortgages in or about 2004, however this work has not continued and some commission remains unpaid. 3.5 The Cross-Claimant was receiving financial assistance to meet her obligations under the Credit Contract and this assistance ceased with the death of the person providing the assistance on or about November 2005. 3.6 The Cross-Claimant has received financial assistance from her family since the death of the person providing assistance and was employed for one month in 2008 with Steel Furnishings Australia Pty Ltd. (a) The earlier application 18 On 20 April 2010 the Defendant filed a Notice of Motion seeking leave to file a Cross-Claim, which included an application in substantially the same terms as the current proposed amendments to the Cross-Claim to vary the loan contract pursuant to the hardship provisions of the NSW Code. The application turned on the provision of s 66(3) of the NSW Code. Section 66 itself gave the right to a debtor in the circumstances set out to apply to the credit provider for a change in the debtor's obligations. If the credit provider is not prepared to accede to that request, an application can be made to the Court pursuant to s 68. 19 Section 66(3) provides: Application. This section and sections 67 to 69 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than $125 000 (or such other amount as may be prescribed by the regulations). 20 Regulation 22A made pursuant to the power in s 66(3) provided for a floating threshold amount from 5 November 2004. It provided: (1) For the purposes of section 66(3) of the Code, sections 66 to 69 of the Code do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than an amount equal to 110% of the amount of the average loan size for new dwellings in New South Wales.

(2) In this section - average loan size for new dwellings in New South Wales means the average loan size for the purchase of new dwellings in New South Wales as set out in the Table of Housing Finance Commitments in the publication entitled Housing Finance, Australia, as published from time to time by the Australian Bureau of Statistics. The threshold at that date was raised to $316,800. It seems that that was based on Australian Bureau of Statistics figures derived from house prices and finance associated with mortgages on houses. The figure of $316,800 is calculated on ABS figures of $288,000 to which 10% was added. Thereafter, the threshold was calculated as 110% of the ABS figure for the average home loan size for new homes in New South Wales. So, for example, on the date the Defendant made her hardship application, the threshold was $350,240. On 20 April 2010, the day the Defendant's first Notice of Motion for leave to amend to add a hardship claim was filed, the threshold was $336,270. On 21 May 2010, the day the application came on for hearing before me, the threshold was $361,790. 21 The issue on that earlier Notice of Motion was whether the relevant threshold was that which operated at the time the loan contract was made ($125,000), or whether it was the threshold in force at the date the hardship application was made. As can be seen, if it was the latter, then the Plaintiff was entitled to make the application because the loan ($330,000) was less than the threshold in both April and May 2010. If the date the loan contract was made was the significant one, the Plaintiff could not make the application. 22 In fact, on the day the application was due to be heard by me the Defendant abandoned her hardship application. Consent orders were made giving her leave to file a cross-claim which asserted that the loan agreement was unjust and should be reopened under ss 70 and 71 of the NSW Code, those provisions not being governed by any threshold. The Cross-Claim did not, however, include a claim for hardship.

(b) The National Credit Code 23 On 1 July 2010 the National Credit Code (which is Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth)) came into force with the effect that any application is now made under that Code. Accompanying the enactment of the National Credit Code was an Act entitled National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth). The position the Plaintiff takes is that the new Code and the Transitional Provisions leave the Defendant in the same position in relation to the hardship provisions as the Defendant was in under the NSW Code. The Defendant contends that the National Credit Code has altered the landscape giving her the right to make a hardship application even if she did not have such a right previously. 24 Sections 73 and 74 are now similar sections to ss 66 and 68 under the NSW Code. Section 72(5) provides: Application

(5) This section and sections 73 to 75 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than: (a) $500,000; or (b) if the regulations prescribe a higher amount - that amount.

It can be seen that the wording of sub-s (5) is, but for the amount, relevantly identical to the wording of s 66(3) of the NSW Code. 25 Part 2 of Schedule 1 to the National Consumer Credit Protection (Transitional and Consequential Provisions) Act deals with the transition of what are described as the old Credit Codes to the new National Credit Code. Clauses 2, 2A, 3 and 4 relevantly provide: 2 Object of this Part

(1) The object of this Part is to provide for a smooth transition from the regime provided for in the old Credit Code of a referring State or a Territory to the regime provided for in the new Credit Code, so that natural persons, bodies corporate and other bodies are, to the greatest extent possible, put in the same position immediately after commencement as they would have been if: (a) that old Credit Code had, from time to time when it was in force, been valid Commonwealth legislation applying in that State or Territory; and (b) the new Credit Code (to the extent it contains provisions that correspond to provisions of the old Credit Code as in force immediately before commencement) were a continuation of that old Credit Code as so applying. Note: The new Credit Code contains provisions that correspond to many of the provisions of the old Credit Code.

(2) In resolving any ambiguity as to the meaning of any of the other provisions of this Part, an interpretation that is consistent with the object of this Part is to be preferred to an interpretation that is not consistent with that object. 2A Application of the new Credit Code (1) The new Credit Code applies from commencement.

Note: The new Credit Code does not apply before commencement. It also does not apply in relation to contracts or other instruments that were made before commencement, unless they are carried over instruments (see item 3). 3 Application of the new Credit Code to contracts or other instruments made before commencement (1) The new Credit Code does not apply in relation to a contract or other instrument that was made before commencement. (2) Despite subitem (1), the new Credit Code applies in relation to a carried over instrument. … (5) Despite subitem (2), subsection 72(5) of the new Credit Code does not apply in relation to a carried over instrument. Instead, the following provision applies from commencement in relation to a carried over instrument as if the provision were subsection 72(5) of the new Credit Code: Application (5) This section and sections 73 to 75 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than an amount equal to 110% of the amount of the average loan size for the purchase of new dwellings in New South Wales as set out in the Table of Housing Finance Commitments in the most recent publication entitled Housing Finance, Australia , as published from time to time by the Australian Bureau of Statistics. (emphasis added)

4 Treatment of proceedings brought in a court under the old Credit Code before commencement (1) This item applies to proceedings (the old proceedings ) in relation to which the following paragraphs are satisfied: (a) the proceedings were brought in a court before commencement in relation to a carried over instrument; (b) the proceedings were brought in relation to a provision (the old provision ) of the old Credit Code of a referring State or a Territory; (c) the proceedings were not enforcement proceedings, or appeal or review proceedings, in relation to an order of a court; (d) the proceedings had not been concluded or terminated before commencement; (e) either: (i) if the proceedings are primary proceedings - final determination of any of the existing rights or liabilities at issue in the proceedings had been made before commencement; or (ii) if the proceedings are interlocutory proceedings - this item applies to the primary proceedings to which the interlocutory proceedings relate. Note: This item does not apply to proceedings in a tribunal that were brought under the old Credit Code before commencement. For proceedings in a tribunal, see item 6. (2) Proceedings (the new proceedings ) equivalent to the old proceedings are, on commencement, taken to have been brought in the same court, exercising federal jurisdiction under the provision of the new Credit Code that corresponds to the old provision. Note: This means that the new proceedings will stay in the same court as the old proceedings, but the court will now be exercising federal jurisdiction for the new proceedings. (3) To the extent that the old proceedings, before commencement, related to old rights or liabilities, the new proceedings relate to the substituted rights and liabilities in relation to those old rights or liabilities. Note 1: See items 11 and 12 for the creation of substituted rights and liabilities. Note 2: In all cases, there will be a provision of the new Credit Code that corresponds to the relevant old provision, either because the new Credit Code actually contains a provision that corresponds to the relevant old provision or because the new Credit Code, because of item 12, is taken to include the relevant old provision. (4) The following provisions apply in relation to the new proceeding: (a) the parties to the new proceedings are the same as the parties to the old proceedings; (b) subject to subitems (5) and (6) and to any order to the contrary made by the court, the court must deal with the new proceedings as if the steps that had been taken for the purposes of the old proceedings before commencement had been taken for the purposes of the new proceedings. (5) If: (a) an interlocutory order was made before commencement for the purpose of, or in relation to, the old proceedings; and (b) that interlocutory order was in force immediately before commencement; the rights and liabilities of all persons (including rights and liabilities arising wholly or partly because of conduct occurring before commencement) are taken to be, for all purposes, the same as if the interlocutory order had instead been made by the same court, in the exercise of federal jurisdiction, for the purpose of, or in relation to, the new proceedings. (6) The court may make orders doing all or any of the following: (a) cancelling or varying rights or liabilities that a person has because of subitem (5); (b) substituting other rights or liabilities for rights or liabilities a person has because of subitem (5); (c) adding rights or liabilities to the rights or liabilities a person has because of subitem (5); (d) enforcing, or otherwise dealing with conduct contrary to, a right or liability a person has because of subitem (5) in the same way as it could enforce, or deal with, the right, liability or conduct if the right or liability had arisen under or because of an order made by the court in the exercise of federal jurisdiction under the new Credit Code. 26 The dictionary contains the following relevant definitions: carried over instrument means a contract or other instrument that:

(a) was made before commencement; and (b) was in force immediately before commencement; and (c) the old Credit Code of a referring State or a Territory applied to immediately before commencement. enforcement proceedings , in relation to an order made by a court or tribunal, means: (a) proceedings to enforce the order; or (b) any other proceedings in relation to a contravention of the order. substituted right or liability : see subitem 11(2) or 12(3) of Schedule 1 to this Act. 27 The one difference between cl 3(5) of the Transitional Provisions and reg 22A made under the old Code is that before the word "publication" the words "most recent" appear.

(c) The parties' submissions 28 The Plaintiff's argument is simply that on any proper construction of s 66(3) the relevant date for determining whether the credit exceeds the threshold is the date on which the credit was obtained. Because, the Plaintiff submits, the new section under the National Credit Code and the particular provision in the Transitional Provisions are worded in relevantly the same way, the same construction should apply, with the result that the present loan exceeds the threshold which was relevantly $125,000. 29 In her written submissions filed in May 2010 in support of her first application to amend, the Defendant pointed to the beneficial nature of the legislation and matters such as cl 7 of Schedule 2 that provided: A provision of the code, the interpretation that will best achieve the purpose or object of this Code is to be preferred to any other interpretation. Clause 8(2)(b) of Schedule 2 that provided: If the ordinary meaning of the provision leads to a result that is manifestly absurd or is unreasonable consideration may be given to extrinsic material which will assist in the interpretation of that provision. 30 The Defendant accepted at that time, and continued to accept on the present application, that the wording of s 66 was not without ambiguity. However, the Defendant pointed to the decision of the Deputy President of the Victorian Civil and Administration Tribunal in Harding v National Australia Bank Ltd (Credit) [2007] VCAT 1234 as supporting the Defendant's contention that the relevant date was the date of the application and not the date of the credit contract. 31 The Defendant further argued that because the provision was ambiguous, a liberal interpretation which would best achieve the purpose and object of the Code, having regard to the fact that it is beneficial legislation, should be preferred. 32 The Defendant now submits that, as a result of the enactment of the National Credit Code and particularly because of the terms of the Transitional Provisions, it is clear that the Defendant's argument previously made in relation to the relevant date for the application of the threshold, finds support in the new legislation. The Defendant points in particular to what appears in cl 3(5) of the Transitional Provisions. That provision makes clear that sub-s 72(5) of the National Credit Code does not apply to a carried over instrument. The credit contract between the Plaintiff and the Defendant is a carried over instrument. The Transitional Provisions provide for a provision in identical terms to cl 22A of the regulation made under the NSW Code, except for the addition of the words "most recent". 33 The Defendant's argument is that if the relevant date for determining the hardship application is the date of the credit contract, there would be no need to have inserted the words "most recent" in cl 3(5). That is because any credit contract entered into after 1 July 2010 would be subject to the thresholds in s 72(5) of the National Credit Code. Any carried over credit contract would not need to concern itself with the "most recent" publication showing the housing finance because the relevant enquiry date must necessarily precede 1 July 2010. 34 The Defendant also points to 2 documents having some sort of official sanction that strengthen the argument based on the use of the words "most recent". The first is the Form 12 of the forms provided for under the National Consumer Credit Protection Regulations 2010 (Cth). Form 12 deals (inter alia) with hardship applications. The Form refers to contracts taken out before 1 July 2010 and says: The amount you have borrowed is less than the relevant threshold. There is then a footnote reference which says this: You can find out what the relevant threshold is by contacting us or referring to ASIC's website at http://www.asic.gov.au or contacting ASIC on 1300 300 630.

If one then goes to part of the ASIC website, the thresholds are published starting from 9 November 2004 and going through to 11 October 2010 (at least on the printout at the time the site was accessed before the hearing). 35 The Defendant again points to the fact that if thresholds are published, for dates after 1 July 2010, that must be an indication that the relevant enquiry date is the date the hardship application is made. It must concern carried over instruments because the new Code makes clear (as does the information on Form 12 and the part of the website referred to) the threshold for credit contracts made after 1 July 2010 is $500,000.

The position under the NSW Code 36 In the first place, it is necessary to consider the position in the absence of the National Credit Code and associated legislation. The question is what, on the proper construction of s 66(3), is the relevant date for determining the threshold for hardship application. In my opinion, the following matters point to its being the date of the credit contract. 37 First, s 66(3) speaks of the "maximum amount of credit that is or may be provided" under a credit contract. That suggests that the enquiry is directed to the time at which the credit contract is made because that is the only date on which it can be ascertained what "is or may be provided". 38 Secondly, similar words are used in s15(B) which prescribes what must be contained in the contract document. That section provides: (B) Amount of credit. (a) If the amount of credit to be provided is ascertainable - (i) that amount; and (ii) the persons, bodies or agents (including the credit provider) to whom it is to be paid and the amounts payable to each of them, but only if both the person, body or agent and the amount are ascertainable. (b) If the amount of the credit to be provided is not ascertainable, the maximum amount of credit agreed to be provided , or the credit limit under the contract, if any. (c) If the credit is provided by the supplier for a sale of land or goods by instalments, a description of the land and its price or of the goods and their cash price. (emphasis added)

39 What is being spoken of in s 15(B) is the credit that "is to be paid" or "is to be provided" under the credit contract and not any other amount. It would be unusual and not in accordance with ordinary principles of statutory construction to read the same or similar words in s 66(3) as meaning something different. 40 Thirdly, the notion that the relevant threshold is whatever the figure is on the date an application is made would produce arbitrary results. Neither debtor nor creditor would know at the time the contract was entered into if the hardship provisions would apply to the credit contract. It is in the interests of both parties that the application of those provisions is known. Obviously, if the credit provider can face the prospect that the terms of the loan are varied by reason of hardship on the part of the borrower and not through any "wrongdoing" on its part (as for example, if a s 70 application or an application under the Contracts Review Act 1980 or one based on equitable principles of unconscionability was successful), the credit provider can factor that into the arrangements it makes. On the other hand, a borrower may want the security of knowing at the time a contract is entered into whether, if hardship intervenes, he or she will be entitled to make an application under ss 66 or 68. 41 A further ramification of that uncertainty is that, with the threshold moving upwards and downwards depending on external financial and economic forces, neither a debtor nor a creditor would know from one day to the next whether the borrower was entitled to make an application. The borrower may at a given time be over the threshold but shortly thereafter be under the threshold because of a change brought about by those economic and financial forces. Even if one strained to interpret the legislation beneficially, it is difficult to see how such uncertainty could have been intended by the Legislature. 42 Fourthly, there is the added difficulty that if the date for the entry into the contract is not the relevant date, it is not immediately apparent what the appropriate date would be. It might be the date application is made to the creditor under s 66(1). Alternatively, if that application is rejected, it might be the date when application is made to the Court under s 68. Further, if the credit provider makes an application under s 69, is the relevant date the s 66(1) date, the s 68 date or the date on which the credit provider makes application under s 69? Certainly if the proper date for the purposes of s 66(3) is the date application is made to the credit provider under s 66(1), nothing in logic suggests that that date remains the relevant one for the purposes of ss 68 or 69. Rather, the logical outcome would be that there would be 3 different dates depending which section formed the basis for the application. The legislation must be interpreted coherently and consistently. Any date other than the date the credit contract was entered into is likely to produce not only a greater degree of illogicality but a greater degree of uncertainty as well. 43 The Plaintiff pointed to the decision in National Australia Bank v Mullins [2006] ACTSC 116 where Master Harper appeared to take the view at [86] that the relevant date was the date of the making of the contract. It does not appear that argument was addressed to him in the manner it was addressed in the present case. The Defendant was unrepresented. I find this case of very limited support. 44 On the other hand, the Defendant pointed (as I mentioned earlier) to the decision of the Victorian Civil and Administrative Tribunal in Harding v National Australia Bank. Certainly, the Deputy President took the view in that case that the relevant date was the date of application to the credit provider under s 66, partly because he considered that Division 3, Part 4 (which contains the hardship provisions) represented a mini-Code not concerned with contract formation. He also set out some examples of what he said were absurd results if interpretations of other than the ones he preferred were to be adopted. 45 With the greatest of respect to the Deputy President, I do not agree with his reasoning on either basis. The starting point for any of the applications provided for in Division 3 is the contract as formed which includes the credit provided under that contract as well as its other terms. 46 Moreover, none of the so-called absurd results he exemplifies would occur if the threshold were fixed at the date the contract was made. It could not be absurd simply because the threshold had moved up or down since the date the contract was made relative to when the application for hardship relief was made. The parties would know at the time the contract was formed whether or not a hardship application could be entertained. The fact, in those circumstances, that the threshold may have moved by the time the application was made would not be absurd - it would simply be the necessary result of the Legislature having imposed a floating threshold. 47 The Defendant points to 2 further decisions of the Victorian Civil and Administrative Tribunal that have followed Harding. They are Allco Principal Finance Nominees Pty Ltd v Stojanovic (Credit) [2007] VCAT 1245 and AJX v BKY Ltd (Credit) [2010] VCAT 38. 48 The Tribunal consisted of the same Deputy President who merely followed his earlier decision in Harding, although in both cases the issue did not arise because the amount of the credit was well under $125,000 in any event. I do not consider that those decisions provide any further support for the Defendant's argument. 49 In my opinion, the proper construction of s 66(3) is that the relevant date for considering the threshold is the date the credit contract is made and not the date when the application under s 66(1) is made.

Has the National Credit Code made a difference? 50 The next issue to be determined is whether the enactment of the National Credit Code and the Transitional Provisions alters the time at which the threshold is to be considered. 51 Clause 3(1) of Schedule 1 provides that the National Credit Code does not apply in relation to a contract or other instrument that was made before the new Code commenced. Sub-clause (2) then provides that the despite sub-clause (1) the new Credit Code applies in relation to a carried over instrument. A carried over instrument is a contract that was made before the commencement of the new Code, was in force immediately before the commencement of the new Code, and the old Credit Code of the State of Territory applied to it immediately before the commencement of the new Code. On the face of it, cl 3(2) appears to have little work to do, except in relation to a contract made not under the old Credit Code of the referring State or Territory, if there are any such contracts, or those made under the old Credit Code but which are no longer in force. 52 More significantly, cl 3(5) then qualifies sub-clause (2) by providing that s 72(5) of the National Credit Code does not apply in relation to a carried over instrument. Instead, a provision which is then set out as the substituted s 72(5) applies. As I have said, that sub-section is in identical terms to cl 22A of the old State regulations, except for the inclusion of the words "most recent". 53 In endeavouring to ascertain whether the words "most recent" have the effect of altering what I have held to be the regime operating under s 66 of the old Code, regard must be had to cl 2 of Schedule 1 of the Transitional Provisions. In particular, cl 2(2) provides: In resolving any ambiguity as to the meaning of any of the other provisions of this Part, an interpretation that is consistent with the object of this Part is to be preferred to an interpretation that is not consistent with that object. 54 The object of the relevant part of the Transitional Provisions in cl 2(1) is: (1) … that natural persons, bodies corporate and other bodies are, to the greatest extent possible, put in the same position immediately after commencement as they would have been if: (a) that old Credit Code had, … been valid Commonwealth legislation applying in that State or Territory; 55 I do not consider that the words "most recent" are ambiguous. In my view, the plain meaning of the words in the context in which they appear is that resort is to be had to the most recent publication of Housing Finance, Australia, relative to the date of the making of the credit contract. The words "as published from time to time" aid that construction of those words. The words refer to the particular edition of the publication before the date of the making of the credit contract. 56 The argument that "most recent" must be a reference to the most recent publication at the time of the making of the hardship application has been derived from the fact that ASIC on its website updates the threshold amount by reference to the formula in s 72(5) (as substituted by cl 3(5) of Sch 1 of the Transitional Provisions) from time to time. However, it is not appropriate to use Regulations made under an Act to construe the provisions of the Act: Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444 at [21]. It is certainly not permissible to rely on a publication by reason of a tenuous reference in a Form prescribed under the Act. The publication itself (the material on the website) is no more than ASIC's own interpretation of the Transitional Provisions. 57 But if there was an ambiguity by the inclusion of the words "most recent", I consider that the object set out in cl 2(1) of the Transitional Provisions should be applied so that the parties to the present loan contract should be in the same position immediately after the commencement of the National Credit Code as they were in before. On that basis, it would take a great deal more than the inclusion of 2 ambiguous words into an existing provision to indicate that the proper construction of the Act had been completely altered. 58 The result is that neither before nor after the enactment of the National Credit Code was the Defendant entitled to apply for hardship relief. Accordingly, the application to amend the Cross-Claim to claim under either s 68 of the NSW Code or s 72 of the National Consumer Credit Code would be futile. The matter of futility is to be judged by reference to the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at [129] - see in that regard Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2006] NSWSC 1073 at [11]. 59 I do not consider that there is any issue of fact to be determined in relation to the matter to justify allowing the amendment to go forward so that the matter could be more properly dealt with at the final hearing. The construction of the legislation is a matter of law which it is appropriate to determine on an application for leave to amend. 60 In the light of my conclusions, it is not necessary to decide whether a separate question should be allowed in relation to the hardship claim. However, if I am wrong in my construction of s 66(3) and s 72(5) of the National Credit Code (as substituted by cl 3(5) of the Transitional Provisions), I would not order a separate hearing on the hardship claim. This is for 2 principal reasons. First, most of the particulars provided in para 3 of the proposed Amended Cross-Claim relate to matters that pre-date the making of the loan contract. It is likely in those circumstances that there would be some crossover with the claims made under s 70 of the NSW Code and the claims under the Contracts Review Act. In any event, these involve issues of fact, about which agreement is unlikely, that are not suitable to be determined at the separate hearing. 61 Secondly, Mr Moratelli frankly told me that the hardship application was an attempt to buy further time to enable the Defendant to sell the property and pay out the Plaintiff. If that happened, he said, there would no longer be any issue between the parties except, possibly, a proper accounting. Claims under the Contracts Review Act, the NSW Code, the National Credit Code and the hardship application would all fall away. In those circumstances, there would be no utility involved in having a separate hearing just for the purposes of delaying the making of final orders in the proceedings.

Conclusion 62 The result is that the Defendant's Notice of Motion seeking leave to amend the Cross-Claim and Defence, and seeking the separate questions must be dismissed. Because the issues associated with the s 80 notice are not to be determined by separate question, the Plaintiff's Notice of Motion in relation to commencing fresh proceedings contingent on determination of the s 80 issues must be stood over to the hearing of the proceedings. The greater part of the hearing on the Motions concerned the proposed hardship defence and Cross-Claim and the proper construction of the legislation. In those circumstances, the Defendant should pay the costs of the Notice of Motion. 63 I make the following orders:

(1) The Defendant's Notice of Motion filed 9 September 2010 is dismissed.

(2) The Plaintiff's Notice of Motion filed 7 September 2010 is stood over to the hearing of the proceedings.

(3) The Defendant is to pay the Plaintiff's costs of the Defendant's Notice of Motion.

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