Victorian Civil and Administrative Tribunal|2008-01-22|Before: Mr P

The Applicant (Mrs Slaveska) alleges that two credit contracts showing her and her son (Mr Slaveski) as joint and several debtors and the Respondent (the Bank) as credit provider, are unjust within the meaning of section 70 of the Consumer Credit (Victoria) Code (the Code). She asks that the transactions which led to these contracts should be reopened and that the contracts be set aside as against her. In the alternative, she claims that under these credit contracts she was a guarantor and not a primary debtor, and that the Bank has breached certain key requirements of the Code concerning guarantees. She seeks a declaration to this effect and the imposition of a civil penalty under Part 6 of the Code. Alternatively, she alleges that the Bank has engaged in unconscionable conduct in breach of the Fair Trading Act and the Trade Practices Act 1974 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth).
The Bank has applied to strike out or dismiss the claim on the basis that the Tribunal has no jurisdiction to entertain it. This is because the Code does not apply to the relevant credit contracts.
Under s75 of the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act), the Tribunal can at any time strike out or dismiss a proceeding for a number of specified reasons. One of them is them is that the proceeding is misconceived. This is what the Bank asserts.
The principles which the Tribunal applies to applications under s75 are relevantly these. The section permits the summary termination of a proceeding. The Tribunal should be cautious before doing this and so depriving the litigant of the chance to have the case heard in the ordinary course. It should only do so where, on a ground mentioned in the section, it is satisfied that the case is manifestly hopeless, undoubtedly untenable, obviously unsustainable or doomed to fail. If all that a respondent does is to deny what an applicant asserts, this is not enough to justify the termination of a claim under this section. Rather, the disputed issue should go to a full hearing where evidence about it can be called and tested by cross-examination.

Section 4(1) defines when 'credit' is provided for the purposes of the Code. There is no dispute that the Bank provided credit to Mrs Slaveska and Mr Slaveski under the relevant credit contracts.
Section 5 of the Code defines 'credit contract' for the purposes of the Code. In brief, it is a contract under which 'credit is or may be provided, being the provision of credit to which this Code applies'.
Section 6 of the Code explains to what provision of credit the Code applies. It relevantly provides -

'(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

(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.

(2) If not all the debtors under a credit contract ordinarily reside, or are strata corporations formed, in this jurisdiction, this Code applies only if credit is first provided under the contract in this jurisdiction.'

There is no dispute that these credit contracts fall within paragraphs (c) and (d) of s6(1). The Bank made a charge for providing credit and the Bank provided the credit in the course of a business of doing so. There is no dispute that Mrs Slaveska and Mr Slaveski were ordinarily resident in Victoria at the time of entering into the credit contract. The parties are in dispute about whether s6(1)(b) of the Code applies.
The effect of s6(2) is relevantly this. If not all the debtors under a credit contract ordinarily reside in this jurisdiction (here, Victoria), the Code applies only if credit is first provided under the contract in that jurisdiction.
The effect of s6(4) is that, for the purposes of the section, investment by the debtor is not a personal, domestic or household purpose.
Section 6(5) provides -

'(5) For the purposes of this section, the predominant purpose for which credit is provided is -

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

(b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.'

Section 11 concerns two presumptions. The first is that, if a party to a proceeding claims that a credit contract, mortgage or guarantee is one to which the Code applies, it is presumed to be such unless the contrary is established. The second presumption applies if, before entering into the credit contract, the debtor declares that the credit 'is to be applied wholly or predominantly for business or investment purposes (or for both purposes)'. In these reasons, I call this declaration a 'business purpose declaration'. If a business purpose declaration is made in these circumstances, credit is conclusively presumed for the purposes of the Code not to be provided wholly or predominantly for personal, domestic or household purposes. Accordingly, the Code will not apply.
Section 11(3) and (4) provide that a business purpose declaration is ineffective for the purposes of the section in two situations. In other words, in these situations, it is ineffective to found the conclusive presumption I have mentioned. The first situation is where the business purpose declaration is not substantially in accordance with the relevant regulations. The second is where the credit provider or a relevant person who obtained the business purpose declaration from 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. 'Relevant person' is broadly defined to include people such as a person associated with a credit provider, a finance broker or a person acting through a finance broker.
I mention three other groups of provisions which shed light on the meaning of s6 in its context. The first are ss 8 and 9. They concern, respectively, mortgages and guarantees to which the Code applies. It is clear that each provision contemplates that a mortgage might secure, or a guarantee might guarantee, both obligations under a credit contract to which the Code applies and also other obligations. If a mortgage or guarantee is of this kind, the Code only applies to it to the extent that it secures or guarantees obligations under a credit contract to which the Code applies.
The second group of provisions concern joint debtors. Schedule 2 of the Code contains general provisions relating to application and interpretation of the Code. Among other things, clause 13(4) provides that, in the Code, words used in the singular include the plural. In other words, 'debtor' in the Code includes 'debtors'. Section 171 refers specifically to joint debtors. The section deals with the giving of notices and documents for the purposes of the Code. Among other things, it provides that, where there are joint debtors, mortgagors or guarantors, a notice or document must be given to each unless some or all of the debtors, mortgagors or guarantors have nominated a particular debtor, mortgagor or guarantor to receive notices on their behalf. The Consumer Credit (Victoria) Regulations (the Regulations) provide a form for this nomination. Where that nomination is in place, a notice or document need only be given to the nominee and not each of the nominators.
The third set of provisions concerns credit providers and their agents. The effect of s176(1) and (5) is relevantly this. The conduct of a credit provider's officer, employee or agent (acting within actual or ostensible authority) is imputed to and taken to be the conduct of the credit provider. But a credit provider is not taken to know or have reason to believe something because its officer, employee or agent does so, unless that knowledge or reason to believe is acquired acting in that capacity and in connection with the transaction concerned.

I have before me the original application and an affidavit by Mrs Slaveska. I also have an affidavit by Mr Slaveski in connection with his application to be joined as an applicant. From the Bank, I have its strike-out application and affidavits from its solicitor, Ms Gaber, and its manager, Mr Peloso. I also have written and oral submissions from the parties. This being a strike-out application which has not involved the hearing and testing of evidence through cross-examination, I take Mrs Slaveska's case at it highest and assume that she will be able to prove the facts she asserts. I also note that for the purposes of this proceeding, Mrs Slaveska does not dispute the truth of the various documents exhibited to Mr Peloso's affidavit and the assertions in that affidavit about the use to which various monies were put.

Mrs Slaveska was born in 1936. She is now 71 years old. In 1998, she was 62 years old. In 2002, she was 66. She has very little formal education, limited reading and writing skills in her native language of Macedonian, and is illiterate in English. In 1998 and 2002, she was retired and receiving a Centrelink pension. She has a son, Lupco (Mr Slaveski). I take her case at its highest and accept that, if this matter went to hearing, she will be able to prove the truth of her assertion that she entered into the transactions I am about to describe to benefit her son and her son's children. She has limited knowledge of business matters. In 1998 and 2002 she was under the influence of her son in the sense that she would do what he asked her to and would defer to him.
In 1986 Mrs Slaveska and Mr Slaveski bought, as tenants in common, a property at 10 Whitehall Place, Lalor (the Whitehall Place property) and borrowed about $120,000.00 to assist with this purchase. Although some of the material before me suggests to the contrary, most of the documents in the material suggest that Mrs Slaveska and Mr Slaveski bought this property to live in. For example, the Whitehall Place property is shown as Mrs Slaveska's and Mr Slaveski's residential address on a loan application made in April 2002, on a loan statement for the period July-December 1999, on a loan application dated 5 October 1998 and in a letter to the Bank from Domus Property Financiers dated 31 March 1998. On the material before me, it is arguable that the Whitehall Place property was purchased for Mrs Slaveska and Mr Slaveski to live in, and they lived there for a significant period. It is also therefore arguable that the loan to assist in the purchase was predominantly for personal, domestic or household purposes and was regulated by the Code.
In 1993, Mrs Slaveska and Mr Slaveski bought, as tenants in common, a property at 66 Heyington Avenue, Thomastown (the Heyington Avenue property). They borrowed about $65,000.00 from the Bank to assist with that purchase. The loan was secured by a registered mortgage over that property. The letter from Domus Property Financiers dated 31 March 1998, to which I have already referred, states that the Heyington Avenue property was a residential investment property and gives details of rental income. A letter in the material from Shawn and Debra Brain dated 11 April 2002 states that they have been tenants of 66 Heyington Avenue for the past three years. On the material before me in this proceeding, I am satisfied that the Heyington Avenue property was a residential investment property, and that the loan to assist in its purchase was provided predominantly for investment purposes. I call this loan 'the 1993 loan'.

In October 1998, the Bank lent to Mrs Slaveska and Mr Slaveski $50,000.00 (the October 1998 loan). The loan application shows that the loan purpose was to fund the construction (by Mr Slaveski as owner/builder) of a unit on the Heyington Avenue property. This application was filled in by a bank officer and is dated 5 October 1998. In the heading 'Home Loan/Investment Home Loan' the words 'Home Loan' are crossed out. The type of loan is said to be an 'investment home loan'. The loan contract was signed by Mrs Slaveska and Mr Slaveski on 14 October 1998. On 15 October 1998, they signed a business purpose declaration complying with the requirements of the Regulations. The Bank concedes that this declaration was ineffective to found the conclusive presumption that the loan was not predominantly for personal, domestic or household purposes, because it did not comply with the requirements of s11(2) of the Code. It was not signed before the loan contract was entered into. However the parties agree that this document, together with all the other material, can be taken into account to determine the purpose of the loan.
The material before me includes a letter from Mr Riaydh Al Qaisy dated 11 April 2002 indicating that he rented a unit at the Heyington Avenue property, the address of which is 66A Heyington Avenue.

The parties are in dispute about whether there was a third loan from the Bank to Mrs Slaveska and Mr Slaveski. The Bank asserts that, in 2002, it refinanced the 1993 loan. In her application, Mrs Slaveska asserts that, in 1998, the Bank refinanced the loan which had been used to purchase the Whitehall Place property. Some support for this assertion can be found in the undisputed fact that the Bank (among other things) secured the October 1998 loan by a mortgage over the Whitehall Place property. For the purpose of this proceeding, I take her case at its highest and assume that she will be able to prove what she asserts. I call this refinancing loan 'the July 1998 loan'.
Since the refinancing of a loan does not change its initial character, and the initial loan was to purchase the Whitehall Place property as a home for Mrs Slaveska and Mr Slaveski, I treat the July 1998 loan as having the same purpose.

The Bank's manager involved throughout the processing of this loan was a personal friend of Mrs Slaveska and Mr Slaveski. He had visited them regularly, attended family functions and was trusted and relied on by Mrs Slaveska. I accept that, when he processed the loan for the Bank, he knew of Mrs Slaveska's limited formal education, limited ability to read and write in her native language, illiteracy in English, and limited business knowledge. I accept that he knew that her purpose for obtaining the loan was to assist her son. Mrs Slaveska asserts that she signed the documents without understanding them and without getting independent advice.
The 'loan application' is dated 19 April 2002 and was completed by the bank manger, Mr Halley. In the heading 'Home Loan/Investment Loan Application' the words 'Home Loan' have been crossed out. The purpose is said to be 'refinance existing loan/s' and 'to finance home improvements'. In answer to the question whether the loan applicants would live in the home, the optional answer 'no-investment home loan' is ticked. The loan applicants are Mrs Slaveska and Mr Slaveski. The application indicates that Mrs Slaveska has no income and also that loan repayments are to be made from Mr Slaveski's business overdraft account. The application includes a comment that he makes payments on 'CBA home loans'.
Mrs Slaveska and Mr Slaveski signed the loan contract on 30 April 2002. The amount lent was $196,147.00, which included an establishment fee of $100.00. The contract is headed 'Investment Home Loan'. It includes a statement headed 'Things you should know about your proposed credit contract'. This is a statement required by the Regulations to be included in credit contracts to which the Code applies. A similar statement was included in the contract for the October 1998 loan.
The $196,047.00 lent by the Bank to Mrs Slaveska and Mr Slaveski (excluding the establishment fee) was applied in this way during the period from about 10 to 15 May 2002. $43,319.18 was used to pay out the balance owing under the October 1998 loan. $54,014.70 was used to pay out another loan from the Bank to Mrs Slaveska and Mr Slaveski with account number 387286807. The Bank asserts that this was the 1993 loan, and Mrs Slaveska asserts that it was the July 1998 loan. I take her case at its highest and accept that this amount paid out the July 1998 loan. $98,813.12 was paid into an account with the Bank in Mr Slaveski's name, showing him as trading as Sky TV and Video Service. I am satisfied that this was his business overdraft account.
I do not have all the statements for the business overdraft account before me, but it is submitted for the Bank (and Mrs Slaveska does not dispute in this proceeding) that payments on the various loans from the Bank to Mrs Slaveska and Mr Slaveski were made out of this account, together with various business payments by Mr Slaveski. Of the $98,813.12 paid into this account from the 2002 loan, $58,012.75 cancelled out the debit balance in that account. Of the remainder ($40,800.37), $40,000.00 was paid into a cheque account in the name of Sky TV and Video Service. I accept that this was a business account. That payment cancelled out a debit balance in that account, which had been caused by the withdrawal on the previous day of $33,200.00 which had been paid into a 'Better Business Loan' account of Mr Slaveski with the Bank by way of reduction of loan principal.

The form of the contract for the October 1998 and 2002 loans

I have said that the contracts for both these loans included the statement headed 'Things you should know...' required to be included for contracts to which the Code applies. The Bank's 'Uniform Terms and Conditions for Consumer Lending' were also part of both contracts. Those terms and conditions state that they apply to consumer lending, which is said to include 'loans for investment purposes'. The conditions contain two information statements. Section G sets out the statement headed 'Important Information for Loans Provided for Business or Investments or Both'. Section F sets out the information statement required by the Regulations to be included in credit contracts to which the Code applies.
Each of these loan contracts also comprised a contract schedule. That schedule states 'borrowers predominantly for business or investment purposes or for both purposes do not have the protection of the Code'.
For the October 1998 loan, Mrs Slaveska and Mr Slaveski completed and signed a form headed 'Acknowledgement and consent/nomination to receive notices/proof of identity details'. Section B of that form is the form (prescribed by the Regulations) required to be completed for the purposes of s171 of the Code by joint debtors who wish to nominate one of their number to receive notices and documents under the Code on their behalf. I mentioned this provision under the heading 'The Code - what does it apply to?'. A note on this form states 'if the borrowing or guarantee is not regulated by the Code section B should have a line ruled through it with the words "not applicable"'. There is no such line.
There is no dispute that the 2002 loan fell into arrears. The Bank served on Mrs Slaveska and Mr Slaveski a document dated 26 February 2007 which, according to its heading, was a combined notice under ss80 and 85 of the Code and s76 of the Transfer of Land Act 1958. It is a default notice indicating an intention to commence enforcement proceedings and complies with those sections of the Code.

In June 2005, the Bank commenced proceedings in the Supreme Court against Sky Empire Pty Ltd (a company of which Mr Slaveski was the sole director and share holder), Mr Slaveski himself, Mr Slaveski's wife, and Mrs Slaveska (the applicant in this proceeding). The Bank sought to recover various loans which it alleged were owed to it and to enforce mortgages which it alleged secured those loans. Among other things, the mortgages it sought to enforce were those over the Whitehall Place property and the Heyington Avenue property. The Bank has now applied to the Court to amend its statement of claim to include a claim for recovery of money which it says is owed to it under the 2002 loan. That application has been adjourned pending the outcome of this proceeding.

The Bank first submits that I cannot consider the October 1998 loan. It says that this loan contract has been fully performed. The loan has been paid out. Even if the Code applied, ss70 and 71 do not permit the reopening of a loan which is not currently on foot. I do not agree. Sections 70 and 71 in clear terms permit the reopening of a transaction. This must include a transaction which has been either partially or wholly 'closed' because it has been fully performed. This conclusion is consistent with the remedies that the Tribunal can order under s71 when it finds a credit contract to be unjust and reopens the transaction that gave rise to it. They include relief from payment, setting agreements aside, and reopening accounts. The remedies are expressed to apply despite any settlement or agreement of accounts or creation of new obligations.

The Bank submits that the Code does not apply to the October 1998 and 2002 loans. It says that they were wholly or predominantly for business or investment purposes. This is so whether the relevant test is what the credit provider or a person in the shoes of the credit provider ought reasonably to have known or knew about the purposes of the loan, or whether it is the use to which the loan money was put.
It is submitted for Mrs Slaveska that the Code applies. It is said that, because Mrs Slaveska and her son were joint and several debtors under the loan contract, I should look at the purposes of each independently. The only purpose relevant for Mrs Slaveska is her own purpose. Her purpose was always to help her son - a personal purpose to which the Code applies. The Bank knew this purpose.
In my view, the Code does not apply. I explain why.
The starting point must be the words of the Code. Section 5, when defining 'credit contract' speaks of a contract under which 'credit is or may be provided, being the provision of credit to which this Code applies'. Section 6(1)(b), in setting out one criterion which determines to what 'provision of credit' the Code applies, speaks of credit which is 'provided or intended to be provided' predominantly for domestic, personal or household purposes. Since these are credit contracts and pre-contractual obligations are not in issue, the relevant time to determine this purpose is when the contract is entered into.
The purpose of s6(2) to (5) is to clarify situations where it may be uncertain how one of the criteria in s6(1) applies. Section 6(2) is an example. It clarifies s6(1)(a) and answers the question: what if there are several debtors and not all of them are ordinarily resident within the jurisdiction? Its answer is to use a different test in this situation - namely, where is credit first provided under the contract?
Section 6(5) provides a similar clarification. It clarifies situations where the application of s6(1)(b) (as to purpose) gives an uncertain result. If the loan purpose is still uncertain, one can look to s6(5). The tests which s6(5) then applies are: what was the purpose for which more than half the credit is intended to be used or (if the credit is used to obtain goods, for example), what was the purpose for which the goods are intended to be most used?
The differences in the language which Parliament has used in ss6(1) and (5) and s11 are not inadvertent. Section 6(1)(b) speaks of the purpose for which credit is or is intended to be 'provided'. Section 6(5) speaks of the purpose for which credit is intended to be 'used'. Section 11(2) speaks of the business purpose declaration declaring that credit 'is to be applied' for certain purposes. Section 11(3) makes that declaration ineffective if the credit provider or another relevant person knew or had reason to believe that, at the time that the declaration was made, the credit 'was in fact to be applied' for personal, domestic or household purposes. Parliament does not use these words synonymously. In s6(1)(b), the words are not 'the purpose of the credit provider' or 'the purpose of the debtor'. The whole substance of the transaction at the time the contract was entered into must be considered. The substance of the transaction is important, rather than its form[2]. An approach which looks at substance rather than form is also consistent with the way in which s11(2) and (3) operate. A debtor may complete a business purpose declaration in the appropriate form. But if the credit provider or a relevant person knows that the transaction was in substance for personal, domestic or household purposes, the declaration is ineffective to found the conclusive presumption that (in effect) the Code does not apply.
There are lines of authority which, in the context of s6(1)(b), emphasise the debtor's purpose and others which emphasise the credit provider's purpose or that of a reasonable person in the shoes of the credit provider[3].
In my view, the proper approach to s6(1)(b) is this. A credit contract is a transaction between parties. One must look at the purpose for which the credit was provided which was known to the parties or could by reasonable inquiry have been known to them. One cannot only look at the purpose of the debtor and ignore what was known or ought, by reasonable inquiry, to have been known by the credit provider. A lender cannot, without reasonable inquiry, assume that credit is provided for a particular purpose. There is no inconsistency between this approach and s11. Section 6 is concerned with purpose. Section 11 is concerned with presumptions. If the application of s(6)(1)(b) does not give a clear answer as to the purpose for which credit is provided or intended to be provided, one must then look at s6(5). In my view, s6(5) relates to how the debtor intended to use the credit, goods or service. This intention is to be determined at the time of entry into the contract. If a debtor later changes his or her mind and uses the credit for some different purpose, that different purpose is irrelevant to the s6(5) test.
I do not consider that the Code permits me to reach a conclusion that the Code applies to one debtor under a credit contract (because the debtor's purpose was personal) but does not apply to the other (because the other's purpose was investment). Sections 5 and 6, in my view, look at the contract as a whole. Either the Code applies to the whole contract or it does not. This is to be contrasted with the case of mortgages and guarantees, where sections 8 and 9 of the Code clearly contemplate that the Code may apply to some obligations but not to others.
I now apply these principles to the October 1998 and 2002 loans.
As far as the October 1998 loan is concerned, I accept that Mrs Slaveska's purpose was to help her son and that her son's purpose was to use the loan money to build an investment unit on a property jointly owned by him and his mother. It might be said that part of Mrs Slaveska's purpose was investment. She was a joint owner of the property on which the unit was built. But there is nothing to show that she benefited from rental income received from units on that property. I take her case at its highest and assume that her predominant purpose was personal. Her son's purpose was investment. It is impossible to rank these two quite different purposes in importance or priority. Because the test is the purpose for which credit is or is intended to be provided, one cannot ignore one purpose and take into account only the other. I accept that the Bank knew of both these purposes.
Since the application of s6(1)(b) gives an uncertain result, I then apply s6(5)(a). More than half of the credit was intended to be used to built an investment unit. The effect of s6(5) is, then, that the loan was not wholly or predominantly for personal, household or domestic purposes. The Code does not apply to the loan.
I now come to the 2002 loan contract. For similar reasons to the ones I have given concerning the October 1998 loan, the application of the test in s6(1)(b) gives an uncertain result. If s6(5) is then applied, $98,813.12 (more than half the total loan of $196,047.00, excluding the establishment fee) was intended to be used and was used by Mr Slaveski for business purposes. The loan was not wholly for business purposes, because it is arguable that the part used to pay out the July 1998 loan was provided for personal, domestic or household purposes.
Finally, it was submitted for Mrs Slaveska that it was clear that the Bank intended and believed that the Code applied to these loans, and that this was evidence that the loans were for personal, domestic or household purposes. The Bank, it was said, had included an information statement required by the Code in each of the loan contracts, had obtained the debtor's signatures on a nomination form for the purposes of s171 of the Code in relation to the October 1998 loan, and had issued default notices under the Code for both loans.
I do not accept this submission. If in fact, because of s6, the Code does not apply to a loan, a lender cannot make the Code apply by mistakenly requiring a debtor to sign documents in a form complying with the Code. The wording of the Code itself governs its application. I would add that the form of the two loan contracts is equivocal about the application of the Code.
I would also add that I regard as artificial a submission by the Bank that payment of some of the 2002 loan monies into Mr Slaveski's business overdraft account could be characterised as the discharge, by Mrs Slaveska, of a liability in her for contribution to loan repayments earlier made by Mr Slaveski. There is nothing in the material to support such a characterisation.

I conclude that the October 1998 and 2002 loans were provided predominantly for business or investment purposes. The Code does not apply to them. Because of this, the proceeding (insofar as it claims breaches of the Code and asks for relief under it) is misconceived. These claims should be struck out.
The proceeding should also be struck out insofar as it claims relief under the Trade Practices Act. VCAT has no jurisdiction under that Act. A similar conclusion applies concerning the Australian Securities and Investments Commission Act.
To the extent that the proceeding makes claims under the Fair Trading Act, Mrs Slaveska should have a right to apply for its reinstatement in VCAT's Civil Claims List. The application would need to be revised in a way that would make it appropriate for that List.
Since this proceeding has been struck out completely, there is nothing to which Mr Slaveski can be joined as a party. I have therefore struck out his joinder application.
I make some final comments. First, it appears that the business purpose declaration concerning the October 1998 loan was obtained after, and not before, the loan contract was entered into. One of the important requirements of the Code has not been complied with. If this is any part of the Bank's current practice, the practice should be reviewed immediately.
Second, there is, in my view, unfortunate ambiguity in the Bank's loan contracts for the October 1998 and 2002 loans. A reader, particularly a debtor, may well be confused as to whether or not the Code applies to the contract. The potential confusion arises from the attempt to draft the contract and the terms and conditions in a way that can cover consumer loans which are, and which are not, regulated by the Code. If contracts in this form are still being written, they should be re-drafted urgently so as to prevent them being misleading, and in a way that makes it clear to debtors when they will have the protection of the Code.
Third, the material contains some 'loan applications' which have not been signed by the debtors. They have simply been filled in by the relevant Bank officer or agent. While I accept the Bank's submission that these documents were for internal Bank use only, they relate to important matters which are relevant to the application of the Code. An example is the purpose of the loan. Debtors ought be required to sign these 'loan applications'. If it is still the practice to use 'loan applications' of this kind, the practice should be urgently reviewed.
Fourth, I note that in her application Mrs Slaveska makes a number of very serious allegations concerning the conduct of one of the Bank's officers in relation to the 2002 loan. They relate to failure to protect a customer's interests and failure to act professionally. If the Bank has not already investigated these, it should do so urgently. I say no more on this subject because the matter may be revisited if this proceeding is reinstated in the Civil Claims List.

[1] See State Electricity Commission of Victoria v Rabel [1998] 1 VR 102; Taylor v Third Szable Holdings Pty Ltd [2001] VCAT 1841; (2001) ASC 155-050

[2] Linkenholt Pty Ltd v Quirk [2000] VSC 166

[3] Compare for example Permanent Mortgages Pty Ltd v Cook [2006] NSWSC 1104; Park Avenue Nominees v Boon [2001] NSWSC 700; (2001) ASC 155-052; Jonsson v Arkway Pty Ltd & anor. [2003] NSWSC 815

Securities and Investments Commission Act 2001

Civil and Administrative Tribunal Act 1998

Slaveska v Commonwealth Bank of Australia (Credit) [2008] VCAT 110 (22 January 2008)

Slaveska v Commonwealth Bank of Australia

At a glance

Court

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Before

Source

Judgment (27 paragraphs)

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Legislation Cited (5)

Cases Cited (1)

Slaveska v Commonwealth Bank of Australia (Credit) [2008] VCAT 110 (22 January 2008)