Bahadori v Permanent Mortgages Pty Ltd - [2008] NSWCA 150

No judgment structure available for this case.

Reported Decision: 72 NSWLR 44

New South Wales

Court of Appeal

CITATION: Bahadori v Permanent Mortgages Pty Ltd [2008] NSWCA 150

HEARING DATE(S): 5 February 2008

JUDGMENT DATE:
26 June 2008

JUDGMENT OF: Giles JA at 1; Tobias JA at 8; Campbell JA at 198

DECISION: In matter CA No. 40140/07
(a) Appeal dismissed;
(b) Subject to the orders made in relation to matter CA No. 30023/08, below, each party to pay their or its own costs of the appeal;
(c) Order that the appellants pay the costs of the first and second respondents of the Notice of Motion filed on 18 February 2008.
In matter CA No. 30023/08
(a) Declare that the Consumer Trader & Tenancy Tribunal (the Tribunal) has jurisdiction to hear applications COM04/52375, COM04/55473, COM04/55476 and COM05/32128 (the said applications);
(b) Order that the decision of the Tribunal dated 2 May 2006 whereby it determined that it did not have jurisdiction to hear the said applications be quashed;
(c) Order that the Tribunal hear the said applications;
(d) Order that the first and second defendants pay the plaintiffs’ costs of the summons filed on 7 March 2008 which are to include the costs of the written submissions filed in CA 40140/07 and one half of the costs of the hearing before the Court of Appeal on 5 February 2008;
(e) Order that the appellants pay the costs the first and second defendant with respect to the hearing before the Court of Appeal on 6 March 2008.

CATCHWORDS: Consumer Credit Code – Appeal from Consumer, Trader and Tenancy Tribunal – Prerogative relief – Whether Tribunal had jurisdiction to hear application – Court of Appeal able to make findings of fact – Purpose of Code – Whether Code applied to transactions – Whether provision of credit for personal, domestic or household purposes – Whether provision of credit for business or investment purposes – Whether borrower declarations as to purpose valid – Whether there was a credit contract – When credit contract was formed – Series or combination of contracts, or contracts and arrangements – Whether credit provider or other relevant person knew or had reason to believe borrower declarations were false

LEGISLATION CITED: Commercial Tribunal Act 1984
Consumer, Trader & Tenancy Tribunal Act 2001 (NSW)
Consumer Credit (New South Wales) Act 1995 (NSW)
Consumer Credit (New South Wales) Code 1995 (NSW)
Consumer Credit Regulations 1995 (NSW)
Legal Profession Act 1987 (NSW)
Medical Practice Act 1992 (NSW)
Oaths Act 1900 (NSW)
Supreme Court Act 1970 (NSW)

CATEGORY: Principal judgment

CASES CITED: Canham v Australian Guarantee Corporation Ltd (1990) 20 ALD 361; (1990) ASC 55-984
Chapman v Taylor [2004] NSWCA 456
Codelfa Construction Pty Ltd v State Rail Authority NSW [1982] HCA 24(1982) 149 CLR 337
Dale v Nicholls Construction Pty Ltd [2003] QDC 453
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Grygiel v Baine [2005] NSWCA 218
Health Care Complaints Commission v Karalasingham [2007] NSWCA 267
Jonsson v Arkway Pty Ltd [2003] NSWSC 815; (2003) 58 NSWLR 451; (2003) ASC 155-060
Kalokerinos & Anor v HIA Insurance Services Pty Ltd [2004] NSWCA 312
Linkenholt Pty Ltd v Quirk [2000] VSC 166; (2000) ASC 155-040
Maconachie v Kullenberg [2005] NSWCA 294
Park Avenue Nominees Pty Ltd v Boone [2001] NSWSC 700; (2001) ASC 155-052
Rafiqi v Wacal Investments Pty Ltd (1998) ASC 155-024
Smith v Collings Homes Pty Ltd [2004] NSWCA 75
Sullivan v Waltons Credit Ltd (1990) ASC 56-023
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165; (2004) 79 ALJR 129; (2004) 211 ALR 342

PARTIES: Navid Bahadori
Khosrow Bahadori
Monir Bahadori
Permanent Mortgages Pty Ltd
10 Conway Avenue Rose Bay Pty Ltd
Super City Finance Pty Ltd
Consumer Trader & Tenancy Tribunal

FILE NUMBER(S): CA 40140/07; 30023/08

COUNSEL: A: J Stoljar / J K Taylor
1R: S Jacobs
2R: A Rogers
3R: N/A
4R: Submitting

SOLICITORS: A: Legal Aid Commission of NSW
1R: Kells The Lawyers, Sydney
2R: R L Kremnizer & Co
3R: N/A
4R: Submitting

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC 30081/06

LOWER COURT JUDICIAL OFFICER: Harrison Ass-J

LOWER COURT DATE OF DECISION: 16 February 2007

LOWER COURT MEDIUM NEUTRAL CITATION: Bahadori & 2 Ors v Permanent Mortgages & 3 Ors [2007] NSWSC 79

CA 40140/07
CA 30023/08

GILES JA
TOBIAS JA
CAMPBELL JA
Thursday 26 June 2008

NAVID BAHADORI & ORS v PERMANENT MORTGAGES PTY LTD & ORS

Judgment

1 GILES JA: As explained by Tobias JA, the appellants’ appeal under s 67(1) of the Consumer, Trader and Tenancy Tribunal Act 2001 (“the Act”) was overtaken by their summons for relief in the nature of prerogative relief.

2 In my opinion, it is preferable in the circumstances of this case to resolve the issue of the Tribunal’s jurisdiction under the summons. The dealing with the issue in the Tribunal was on a narrow factual and legal basis, one which did not provide for satisfactory resolution of the issue and gave rise to unnecessary complexities in determining what matters of law had been decided. That (limited) appeal rights are available is relevant to whether discretionary relief should be granted under the summons, but in this case the desirability of proper resolution of the jurisdictional issue is such that the parties should not be left to the appeal. Accordingly, I only observe that identification in the appeal of the Tribunal’s decision(s) of a question with respect to a matter of law, and confining the appeal to the question or questions of law so decided, were not prominent in the proceedings before the trial judge or the submissions in this Court. It is of the first importance, where an appeal is limited as provided in s 67(1) of the Act, that this be done.

3 Tobias JA has described under the heading “The relevant facts” the course of events as more fully established in the proceedings under the summons. His Honour has held that a credit contract was entered into upon acceptance of Kreminzer’s 13 November letter, in the case of Conway it then being the undisclosed principal or being nominated as the lender prior to 15 November. The credit contract was entered into because the acceptance of the 13 November letter gave rise at the least to an arrangement part of a “series or combination of contracts, or contracts and arrangements”, and thus a contract (sch 1 of the Consumer Credit Code (“the Code”), definition), and the contract was one under which credit was or might be provided (s 5 of the Code, definition). The credit contract was entered into at that date because that was the first arrangement in the series.

4 I agree with his Honour’s reasons for that conclusion, which is in accord with the purpose or object of the Code of enabling protection of consumers of credit. It has the consequence that the credit contract was entered into before the appellants made the statutory declarations, and so s 11(2) of the Code does not apply.

5 Permanent and Conway have not established that the credit was in fact provided or intended to be provided wholly or predominantly for business or investment purposes, and s 6(1)(b) of the Code is satisfied. That is so on any understanding of those words in s 6(1)(b). When the credit contract was entered into the appellants’ purposes were plainly personal, despite the declarations; as described by Tobias JA, Permanent and Conway were on notice of matters which objectively showed the loans were for personal purposes, despite the declarations, and they did not give evidence of belief in the declarations despite the objective circumstances.

6 Whilst the orders requested in the summons should be made, the appeal need not be decided and should be dismissed. I agree, however, that leaving the trial judge’s costs order standing and disposing of the costs of the proceedings in this Court in the manner proposed by Tobias JA is a just costs outcome between the parties.

7 I agree with the orders proposed by Tobias JA.

8 TOBIAS JA: On 28 November 2002 the appellants borrowed the sum of $338,000 from the first respondent, Permanent Mortgages Pty Ltd (Permanent), and $52,000 from the second respondent, 10 Conway Avenue Rose Bay Pty Ltd (Conway). The term of each loan was 12 months. The loans (to which I shall refer as the “Permanent loan” and the “Conway loan”) were secured by a first mortgage in favour of Permanent and a second mortgage in favour of Conway over the appellants’ property at No. 69 Meurants Lane, Glenwood (the property). Erected upon the property was a dwelling house in which the second and third appellants resided.

9 In 2004 the appellants filed three applications in the Commercial Division of the Consumer, Trader & Tenancy Tribunal (the Tribunal) seeking relief under ss 72(1) and 102(1) and (2) of the Consumer Credit (New South Wales) Code 1995 (the Code). A further application was filed on 17 June 2005 seeking relief under s 70(1) of the Code.

10 As a preliminary issue before the Tribunal, Permanent and Conway submitted that it did not have jurisdiction to hear the applications on the ground that the Code did not apply to the credit contracts and mortgages between the parties as, before entering into those transactions, the appellants had declared for the purposes of s 11(2) of the Code that the credit to be provided by Permanent and Conway thereunder was to be applied wholly or predominantly for business purposes.

11 On 2 May 2006 Senior Member Durie of the Tribunal upheld the submission and ruled that the Tribunal did not have jurisdiction to hear and determine the subject applications. Pursuant to s 67(1) of the Consumer, Trader & Tenancy Tribunal Act 2001 (NSW) (the Tribunal Act) on 13 June 2006 the appellants filed a summons in the Supreme Court seeking an order setting aside the decision of the Tribunal denying jurisdiction (the s 67 summons). That summons was heard by Associate Justice Harrison who, in a judgment delivered on 16 February 2007, affirmed the decision of the Tribunal and dismissed the summons with costs. On 15 June 2007, after having first filed a holding appeal on 16 March 2007, the appellants filed within time a Notice of Appeal with Appointment to this Court against the decision of the primary judge. An Amended Notice of Appeal was filed on 12 September 2007.

The competency of the appeal is challenged

12 The appellants filed an affidavit of Phillipa Rosemary Martin sworn 28 August 2007 in which she set out facts which, if accepted, would establish that the appeal involved either directly or indirectly a claim or demand amounting to $100,000 or more and, accordingly, that s 101(2)(r) of the Supreme Court Act 1970 (NSW) did not apply and leave to appeal was not required.

13 By Notice of Motion filed 29 January 2008 Conway sought an order that the appeal be struck out as incompetent upon the ground that leave to appeal was required as the amount in issue did not exceed $100,000. In this respect, some of the assertions and calculations contained in Ms Martin’s affidavit were challenged.

14 Although the parties filed written submissions with respect to the issue raised by the Notice of Motion, as will appear it is unnecessary that that issue be resolved.

The nature of the appeal from the Tribunal to the Supreme Court

15 The appellants’ appeal to the Associate Judge was made pursuant to s 67(1) of the Tribunal Act which is in the following terms:

“(1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the Supreme Court against the decision.”

16 Section 67(3) sets out the relief which the Supreme Court can grant “[a]fter deciding the question the subject of … an appeal”. It is in these terms:

“(3) After deciding the question the subject of such an appeal, the Supreme Court may, unless it affirms the decision of the Tribunal on the question:

(a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or

(b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal.”

17 The present case involved a ruling by the Tribunal that it did not have jurisdiction to hear and determine the appellants’ applications. In this context s 67(8) provided as follows:

“(8) A reference in this section to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal.”

18 There have been a number of authorities in this Court relating to the proper construction of s 67(1) and of similar provisions in other statutes. Whether or not s 67(1) should be given a wide construction was the subject of detailed analysis by Bryson JA, with whom Santow JA agreed, in Kalokerinos & Anor v HIA Insurance Services Pty Ltd [2004] NSWCA 312. There, his Honour considered authorities with respect to s 20(5) of the Commercial Tribunal Act 1984 which is similar in terms to s 67(1). Having set out the observations of Carruthers J in Sullivan v Waltons Credit Ltd (1990) ASC 56-023 and in Canham v Australian Guarantee Corporation Ltd (1990) 20 ALD 361; (1990) ASC 55-984, Bryson JA observed (at [47]):

“In my opinion both of Carruthers J’s observations in [Sullivan] and [Canham] are applicable to s 67(1). A decision on ‘“a question with respect to a matter of law‘ in s 67(1) must be a decision on something which arose or was in issue or was debated in the proceedings; something which had to be decided in order to dispose of the proceedings, whether or not it was expressly referred to in the decision. The Tribunal may decide on such issue without overtly referring to it. Consistently with Carruthers J’s observations, express advertence to the matter of law is not necessarily required, and the decision might be with respect to a matter of law even though the matter of law is not mentioned, if some decision with respect to it was necessarily involved in the decision.”

19 His Honour then concluded in these terms (at [56]):

“On the occasions known to me where Judges of the Supreme Court and the Court of Appeal have made observations on s 67(1) they have consistently treated the right of appeal as confined to a question of law, and have not treated the words of the subsection as giving any wider right of appeal.”

20 It should be noted that Kalokerinos did not involve a question relating to the jurisdiction of the Tribunal. Bryson JA did not discuss the extent to which, if at all, s 67(8) of the Tribunal Act impacted upon the width of s 67(1).

21 Chapman v Taylor [2004] NSWCA 456 involved a decision by the Tribunal on the preliminary point as to whether a building contract had been frustrated. The Tribunal found that it had been frustrated. An appeal under s 67(1) was instituted to the Supreme Court. Master Harrison, as her Honour then was, concluded that the facts of the case were not such as to enable the doctrine of frustration to be invoked, whereupon she upheld the appeal. One of the grounds of appeal to this Court was that the appeal to the Master was not with respect to a matter of law within the meaning of s 67(1) of the Tribunal Act. It was submitted that the question whether the contract had been frustrated was a question of mixed fact and law and, therefore, could not be the subject of an appeal under that provision which was confined to a “pure” question of law. It was contended that the question depended on a judgment as to whether the frustrating event was such as would render performance “radically different” from that contracted for, and that that question had a large factual content.

22 On the other hand it was submitted by the respondent that the Tribunal had erred in law in stating the relevant test as to when a contract was frustrated, notwithstanding that the Senior Member constituting the Tribunal had set out the submissions of counsel which included reference to the tests stated by Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 as well as to those of the High Court in Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337.

23 It was submitted to this Court in Chapman that the decision in Codelfa substantially adopted two alternative statements of the relevant test being that of Lord Radcliffe in Davis and that of Lord Reid in the same case. Nevertheless it was submitted that Lord Reid’s statement was preferable and that the question of whether the relevant contract was wide enough to apply to the new situation or whether that situation was “radically different” raised a pure question of law. To this submission Hodgson JA, with whom Beazley JA and I agreed, responded in the following terms:

“32. … In my opinion, at least in circumstances such as the present, the question whether the circumstances would render performance ‘radically different’ from that promised does involve a substantial factual element; and in my opinion, the question posed by Lord Reid also does so, because in deciding whether a contract is ‘wide enough’, one must take into account the relevant surrounding circumstances and their impact on this question. It could be argued that, if one had a precise and exhaustive statement of all the surrounding circumstances and all the factual inferences that were to be drawn (including inferences as to reasonable expectations), then one would be left with a pure question of law; and indeed, it would be argued that this would also remove the factual element from the question whether performance would be ‘radically different’. One did not have such a statement in this case; and in my opinion it is unrealistic to expect that there could in cases such as the present be a precise and exhaustive statement of all surrounding circumstances and factual inferences, as an exercise distinct from that of reaching a conclusion, of mixed fact and law, in terms of either test.

33 Accordingly, in my opinion, to establish an error of law by the Senior Member, it was necessary to show that he applied a wrong principle of law. That could be shown either from what he said, or because the ultimate result, associated with the facts that he expressly or impliedly found, indicates that he must have applied the wrong principle of law.”

24 The question of the restrictive nature of an appeal pursuant to s 67(1) was dealt with in some detail by Basten JA, with whom Mason P agreed, in Grygiel v Baine [2005] NSWCA 218. Again the case did not involve any question of the Tribunal’s jurisdiction. The issues for determination in this Court were whether the Tribunal had erred in refusing an application by the appellant to join a third party and in its refusal to allow a claim by the appellant of negligent legal advice against a solicitor. Accordingly, the Tribunal’s decision was of an interlocutory nature. His Honour held (at [29]) that s 67(1) permitted an appeal with respect to an interlocutory decision of the Tribunal, a conclusion which supported that in Kalokerinos that s 67(1) should not be given an expansive construction. His Honour continued in these terms:

Kalokerinos

It is not necessary that the matter of law be separately identified by the Tribunal and expressly addressed as such: it is sufficient that the Tribunal reaches a conclusion with respect to some matter which requires for its determination the identification of a relevant matter of law and that error is alleged with respect to that matter of law

Smith v Collings Homes Pty Ltd

‘It does seem clear, on any view, that the section prevents a new point of law being taken for the first time on appeal.’

Of course, a decision of the Tribunal could be seen to depend expressly upon a matter of law, even though the issue had not been argued before the Tribunal in those terms: I do not understand his Honour to be referring to such a case, which must be common in a Tribunal where the parties frequently have no legal representation. However, a matter which was not addressed by the Tribunal, because a decision within jurisdiction was made on other grounds, cannot be the subject of an appeal pursuant to s 67.” (Emphasis added)

25 In Health Care Complaints Commission v Karalasingham [2007] NSWCA 267, Basten JA with the agreement of Giles JA and Bergin J, although dealing with s 90 of the Medical Practice Act 1992 which provided for an appeal to the Supreme Court against the decision of the Tribunal with respect to a point of law, nevertheless observed (at [14]):

“Although it may be conceded that there is a singular lack of linguistic uniformity between statutes providing rights of appeal restricted in some manner to questions of law, the proposition advanced by the Respondent is not consistent with established principle in relation to provisions of this kind. It is not necessary that a matter of law be separately identified and decided by the Tribunal: it is sufficient that a Tribunal needs to identify and apply a principle in reaching its decision and, in doing so, makes an error with respect to a point of law.”

26 What is clear from this line of authority is that on an appeal to the Supreme Court under s 67 of the Tribunal Act, the claimant is confined to the facts that have been agreed or expressly or impliedly found by the Tribunal and that the Court has no remit to find facts for itself.

27 Neither before the primary judge nor this Court on the hearing of the appeal, whether in written or oral submissions, was any reliance placed by the appellants upon the provisions of s 65 of the Tribunal Act which, so far as is presently relevant, are in these terms:

65 Review by prerogative writ etc generally excluded

(1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of:

(a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or
(b) a declaratory judgment or order, or
(c) an injunction,

(2) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the jurisdiction of the Tribunal to determine the matter was disputed if the ground on which the relief or remedy is sought is that:

(a) the Tribunal gave an erroneous ruling as to its jurisdiction, or

(b) ...”

28 The s 67 summons filed by the appellants sought orders setting aside the whole of the judgment of the Tribunal dated 2 May 2006 and remitting the matter to the Tribunal to be dealt with according to law. Clearly the summons did not purport to invoke the supervisory jurisdiction of the Court under s 65(2). Nor was it initially invoked before this Court.

29 The difference between seeking relief under s 65(2) of the Tribunal Act on the one hand and under s 67(1) on the other is not of mere academic interest. There are number of significant practical differences. Thus in Smith v Collings Homes Pty Ltd [2004] NSWCA 75, Mason P, with the concurrence of Handley JA and Campbell J (as his Honour then was), stated at [25] of his judgment that, apart from the language of s 67(1):

“it is to be observed that the very presence of s 65, which provides for judicial review if there is excess of jurisdiction or denial of procedural fairness, provides additional support for a narrower, literal reading of s 67.”

30 Furthermore, the grant of relief under s 65, being analogous to a grant of prerogative relief, is discretionary whereas if the Tribunal’s decision was erroneous with respect to a matter of law then no question of discretion with respect to the grant of relief would arise. That point of difference was highlighted by McColl JA, with the concurrence of Giles and Basten JJA, in Maconachie v Kullenberg [2005] NSWCA 294 at [59] where her Honour said:

“If an error of the kind provided for by s 67(1) is identified, the grant of relief is not discretionary… On the other hand, if the relief sought is by way of prerogative relief, the remedy is discretionary… Again the importance of identifying the nature of the process invoked is demonstrated.”

31 Her Honour also noted (at [58]) that it was not entirely clear whether in that case the proceedings in the Common Law Division of the Supreme Court constituted an appeal under s 67 of the Tribunal Act against a decision “with respect to a matter of law” or whether there was a claim for relief in the nature of certiorari under s 65(3)(b) on the basis that the Tribunal had no jurisdiction to make an order against the claimant or that it had denied him procedural fairness. She observed that the claimant asserted that relief was sought on both grounds and that consistent with that view, the Tribunal had been joined as a party to the proceedings, a course which was inappropriate unless prerogative relief was sought.

32 In this respect, it is to be noted that in the present case the Tribunal was joined as fourth defendant to the s 67 summons and is the fourth respondent before this Court, albeit filing a submitting appearance. No doubt its joinder cannot be said to be inappropriate even if the proceedings were confined to an appeal under s 67(1) given that it was being asserted that it had wrongly denied jurisdiction to hear and determine the appellants’ applications. Nevertheless, I would not regard its joinder under s 67 as a necessity. If the appeal with respect to the Tribunal’s denial of jurisdiction is upheld, then s 67(3) would empower the Court to make an order to the effect that the Tribunal had jurisdiction or to otherwise remit the matter to the Tribunal to re-determine the question of jurisdiction according to law.

33 As I have already observed, it is clear that an appeal under s 67(1) is confined to matters of law with the consequence that it is not open to the Supreme Court on any such appeal to make any findings of fact not agreed or expressly or inferentially made by the Tribunal or to substitute findings of fact for those made by the Tribunal. This is so even though such findings may be relevant to and determinative of the issue that is before the Tribunal and in respect of which error of law is alleged. On the other hand, invoking of that Court’s jurisdiction under s 65 would enable it to make such findings of fact as were necessary in order to establish that the Tribunal’s ruling that it had no jurisdiction to determine the applications was erroneous.

34 This is a matter of some significance in the present case no doubt because both before the Tribunal and the primary judge the appellants’ case was confined to asserting that the relevant credit contract was entered into prior to 15 November 2002, being the date upon which a declaration for the purposes of s 11(2) of the Code was made. It was argued by Permanent and Conway that the documents relied upon by the appellants as constituting a “credit contract” entered into on 13 November 2002, although possibly constituting a contract, was not one which fell within the definition of “credit contract” as defined by s 5 of the Code – a matter to which I shall return. They contended that although there was a credit contract it was not entered into until 28 November 2002, well after the making of the declaration by the appellants for the purposes of s 11(2).

35 In this context reliance was placed by the appellants upon the definition of “contract” in Schedule 1 to the Code which is the following terms:

Contract

36 It was therefore submitted that in the present case the relevant credit contract included a series or combination of contracts, or contracts and arrangements constituted not only by the contracts which were entered into on 28 November 2002 but also by those entered into on 13 November 2002. If this was correct, so it was submitted, then for the appellants’ declaration under s 11(2) of the Code to be effective, it had to be made prior to the last-mentioned date – which was not the case.

37 These submissions were not expressly made either before the Tribunal or the primary judge. They were said to be a new point of law taken for the first time on appeal which was impermissible where the appellants’ challenge to the ruling of the Tribunal on the question of jurisdiction was confined to an appeal under s 67(1), a point made by Handley JA in Smith at [61], cited in the passage from the judgment of Basten JA in Grygiel recorded by me at [24] above.

38 After referring to Handley JA’s remarks in Smith, his Honour in the passage referred to made observations which might be understood as permitting a point of law to be taken for the first time on appeal where the relevant matter of law sought to be raised, although not expressly argued before the Tribunal in the terms then sought to be advanced, nevertheless was one upon the determination of which the Tribunal’s decision depended.

39 Accordingly, it might be argued in the present case that as the matter of law in issue before the Tribunal was whether a “credit contract” had been entered into before 15 November 2002, the Tribunal’s decision that it had no jurisdiction to determine the applications depended upon its finding that no such contract had been entered into prior to that date. That finding required it to determine on the facts whether the documents relied upon by the appellants as constituting a contract entered into on 13 November 2002 was a “credit contract” within the meaning of s 5 of the Code because of the extended definition of “contract” in Schedule 1.

40 The difficulty which this Court initially had with the foregoing argument was that the parties in the present case, including the appellants, were legally represented yet, no argument was advanced to the Tribunal based upon the extended definition of “contract” in the composite phrase “credit contract”. However it was sought to be advanced before the primary judge but was rejected by her (at [21]) as being “a new point … raising new issues on appeal should not be encouraged”.

41 Except, possibly, on the question of whether the Court should provide relief under s 65(2) on discretionary grounds if otherwise there was a relevant error sufficient to ground such relief, the failure of the appellants to rely upon the extended definition of “contract” before the Tribunal had no relevance to the question of whether the Tribunal erred in declining jurisdiction to determine the applications.

42 Accordingly, after judgment had been reserved on the appeal on 5 February 2008, the appellants were asked whether they wished to seek the Court’s leave to file a new summons claiming relief under s 65 of the Tribunal Act and, if they did, to provide submissions as to why such leave should be granted. At the same time Permanent and Conway were provided with the opportunity of opposing the grant of such leave of which Conway availed itself, providing written submissions in support of that stance, and notwithstanding that it was common ground that the question of whether the extended definition of “contract” in the Code could be determined without recourse to any material evidence other than that which was already before the Tribunal, the primary judge and this Court.

43 By Notice of Motion filed on 18 February 2008 the appellants sought leave to file a summons seeking prerogative relief pursuant to s 65(2) of the Tribunal Act in the form of the Amended Summons attached to their Notice of Motion. The Court heard the Notice of Motion on 6 March 2008. Permanent did not oppose the grant of leave but Conway did. In particular, it submitted that it would be prejudiced if leave were granted as had a summons seeking s 65(2) relief been filed before the primary judge, Conway would have wished to file further evidence. However, the Court made it clear that on the hearing of a s 65(2) summons it would be open to the parties to file further evidence in addition to that before the Tribunal and the primary judge so that no prejudice would result, subject to any question of additional costs incurred because of the grant of leave.

44 After hearing argument the Court granted leave to the appellants to file what I shall refer to as the s 65 summons (which was then filed on 7 March 2008) directions were then made as to the filing of further evidence. Evidence was duly filed on behalf of Conway and the appellants together with supplementary submissions by all parties and the matter came back before the Court for the hearing of the s 65 summons on 9 April 2008 when the Court again reserved its decision.

45 Conway’s evidence comprised two affidavits of Mr Robert Kremnizer, sworn 26 February 2008 and 31 March 2008; an affidavit of Ms Janice Khoury, the solicitor in the office of R L Kremnizer & Co (Kremnizers) having carriage of the matter on behalf of both Permanent and Conway, sworn 8 April 2008; and that of Mr Sidney Helprin, a director of Conway, also sworn 8 April 2008. The appellants filed an affidavit of Ms Phillipa Martin, their solicitor, sworn 4 April 2008 which, amongst other things, annexed some 18 documents taken from a file in the offices of Kremnizers entitled “Sale of Helprin Pty Ltd to Bahadori” but which were not before the Tribunal or the primary judge.

46 Accordingly, this judgment deals with the submissions made with respect to both summonses as well as with the totality of the evidence in respect of which it was agreed that the evidence before the Tribunal and the primary judge was to be evidence on the hearing of the s 65 summons, together with the new evidence filed with respect thereto.

The relevant statutory provisions

47 The Code obtains statutory force in New South Wales by virtue of s 5 of the Consumer Credit (New South Wales) Act 1995 (NSW) (the Consumer Credit Act) which provides a follows:

“The Consumer Credit Code set out in the Appendix to the Consumer Credit (Queensland) Act, as in force for the time being:

(a) applies to the law in New South Wales; and

Consumer Credit (New South Wales) Code

48 Section 8(1) of the Consumer Credit Act provides that the jurisdiction expressed to be exercisable by the “Court” under the Code is exercisable by the Tribunal.

49 Section 4(1) of the Code defines the term “credit” in the following terms:

credit

(a) payment of a debt owed by one person (the debtor) to another (the credit provider) is deferred; or

(b) one person (the debtor) incurs a deferred debt to another (the credit provider).”

50 Section 5 of the Code defines the term “credit contract” in these terms:

credit contract

51 Section 6 sets out the circumstances in which the Code applies to the provision of credit. Relevantly, it is in the following terms:

“(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.

…

(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.”

52 Schedule 1 sets out the principal definitions of various terms and expressions in the Code. Relevant to the present case are the following:

● “ contract ” includes a series or combination of contracts or contracts and arrangements.

● “ contract document ” means the document or documents setting out the terms of a contract.

credit provider

53 Section 11 of the Code sets out a number of presumptions relating to its application. Those provisions are as follows:

“(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 relevant person who obtained the 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. For the purposes of this subsection, a relevant person is a person associated with the credit provider or a finance broker (or a person acting for a finance broker) through whom the credit was obtained.

(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.”

54 Section 12 mandates the form of a credit contract. Relevantly, it provides:

“(1) A credit contract must be in the form of –

(a) a written contract document signed by the debtor and the credit provider; or

(b) a written contract document signed by the credit provider and constituting an offer to the debtor that is accepted by the debtor in accordance with the terms of the offer.”

55 Finally, Schedule 2 to the Code contains miscellaneous provisions relating to its interpretation, of which cl 7 is presently relevant. It provides as follows:

“(1) In the interpretation of the provisions of this Code, the interpretation that will best achieve the purpose or object of this Code is to be preferred to any other interpretation.

(2) Subclause (1) applies whether or not the purpose is expressly stated in this Code.”

56 Section 8 of the Code provides that it applies to a mortgage if the mortgagor is a natural person and it secures obligations under a credit contract.

57 It is common ground that the purpose of the Code is to protect consumers of credit by, amongst other things, requiring a number of matters to be contained in the contract documents (see s 15). Part 2 of the Code sets out various mandatory requirements with respect to a credit contract including the imposition of obligations upon a credit provider with respect to pre-contract disclosures. Section 20, which is part of Div 1 of Pt 2, provides that it is an offence for a credit provider to enter into a credit contract that contravenes a requirement of that Division.

58 Division 2 of Pt 2 deals with the consumer’s monetary obligations but in a manner which imposes restrictions and prohibitions on the credit provider rather than the consumer. Thus, for instance, s 21(1) provides that a credit contract must not impose a monetary liability on the consumer in respect of a fee or charge exceeding the amount that may be charged consistently with the Code or in respect of an interest charge that may be charged consistently with the Code.

59 Division 3 of Pt 2 deals with interest charges and, for instance, in s 26 sets out the maximum amount of interest that may be charged under a credit contract.

60 Division 4 deals with fees and charges and provides in s 29 that the Regulations may specify credit fees or charges or classes of credit fees or charges that are prohibited for the purposes of the Code.

61 Division 5 of Pt 2 contains a number of provisions relating to a credit provider’s obligation to account to its debtor including the provision of statements of account which are, by s 32, to contain the detailed information there set out.

62 Part 3 of the Code deals with mortgages and guarantees which secure obligations under a credit contract or a related guarantee and, again, imposes restrictions to protect the interests of the mortgagor or guarantor. Again, it is an offence for a credit provider to contravene the requirements of those provisions: see for instance, ss 49 and 57.

63 Part 4 of the Code relates to changes to obligations under credit contracts, mortgages and guarantees and, again, imposes restrictions to protect the debtor and prohibiting unilateral changes by the credit provider on pain of criminal prosecution: see, for instance, s 63.

64 Division 3 of Pt 4 provides, in s 66, for a debtor who is unable reasonably for various reasons to meet the debtor’s obligations under a credit contract to apply to the credit provider for an appropriate change in those obligations which, if not granted, may be granted by the Tribunal pursuant to s 68. Section 70 empowers the Tribunal to re-open unjust transactions including those which are unconscionable, harsh or oppressive: see s 70(7). Under s 72 the Tribunal may review unconscionable interest and other charges and annul or reduce them.

65 Part 5 of the Code deals with ending and enforcing credit contracts, mortgages and guarantees and, again, imposes significant obligations upon a credit provider. Division 2 of that Part imposes requirements upon a credit provider which are to be met before a credit contract or mortgage can be enforced against a defaulting debtor or mortgagor.

66 Part 6 of the Code deals with civil penalties for the defaults of credit providers. Thus s 102 empowers the Tribunal to make an order requiring a credit provider to pay an amount as a civil penalty if, in its opinion, that credit provider has contravened a “key requirement”, a term defined in s 100 and including many of the provisions in Pt 2 of the Code to which I have referred.

67 All in all, it is clear from the foregoing summary of the relevant Parts of the Code that its purpose or object is to place significant restrictions on credit providers who provide credit to debtors who are natural persons and where that credit is provided for personal, domestic or household purposes. It is in that context that the provisions of the Code relevant to the issues in this appeal are required to be construed.

The relevant facts

68 At all material times the property was mortgaged to Perpetual Trustee Company Ltd (Perpetual) and as at 28 November 2002, the amount secured was $343,155.82. That amount had been borrowed by the appellants to enable them to purchase the property in March 2001 for $359,950.

69 The appellants encountered some financial difficulties resulting in their not being able to meet their house mortgage payments to Perpetual. It therefore became necessary for them to borrow money to assist with those repayments. The third appellant saw an advertisement by Super City Finance Pty Ltd (Super City) and approached that company with her husband (the second appellant) for assistance.

70 At first there were discussions about borrowing $30,000 to be covered by a second mortgage over the property and on 14 October 2002 a loan application was made for that sum for a term of 2 years. By letter dated 15 October 2002 from Kremnizers to Super City that loan application was approved. By a further letter dated 29 October 2002 Ms Khoury of Kremnizers forwarded to Consolidated Lawyers, the appellants’ then solicitors, the mortgage documentation required to enable that loan to proceed to settlement. Those documents revealed the lender to be Sid Helprin Pty Ltd (SHPL). They included what was referred to as a “Loan Offer” and a Consumer Credit Code Declaration addressed to SHPL as the credit provider to be signed by the appellants pursuant to s 11(2) of the Code.

71 By letter dated 31 October 2002 Ms Khoury on behalf of Kremnizers wrote what appears to be a pro forma letter to Mr Helprin which relevantly stated as follows:

“The Managed Investments Act introduced Chapter 5C into the Corporations Act 2001 (NSW) relating to managed investment schemes. Such schemes were to be operated by what was referred to in Part 5C.2 as ‘the responsible entity’ which was to be a public company that held an Australian Financial Services Licence authorising it to operate and manage investment schemes.”

72 La Trobe Capital Mortgage Corporation Ltd (La Trobe) was, apparently, such an entity. The intention of Chapter 5C and related provisions in Part 9 of the Legal Profession Act 1987 (NSW) was to ensure that when a solicitor was involved in arranging a loan of moneys by a private investor to be secured by a mortgage, the funds for such a loan were not to pass through the solicitor but were to be paid to the responsible entity whose obligation it was to ensure that the moneys were lent for the purpose for which they were provided by the investor. However, there was nothing in Chapter 5C which in any way interacted with the provisions of the Code for the purpose of determining when a credit contract within the meaning of s 5 of the Code was entered into.

73 As the letter of 31 October 2002 makes clear, the responsible entity is required by law to register what is referred to as a “Part II Prospectus”. Part of the documentation required to be provided by a lender/investor to the responsible entity was one headed “Investor Approval Authority” addressed (in this case) to La Trobe as “Lender (in Trust)” and containing an acknowledgement by the investor (in this case, SHPL) of its receipt of an Advisory Services Guide provided by La Trobe together with a Fund Prospectus lodged by it with Australian Securities & Investment Commission. Such an authority was executed by Conway in respect of the Conway loan on 29 November 2002. It was suggested that Kremnizers, who apparently acted for clients prepared to lend money for residential properties secured by first or second mortgages, had no authority to act for Conway until the Investor Approval Authority had been so executed.

74 Although a submission to this effect was initially advanced, it was ultimately abandoned and, in my view, properly so. Its abandonment is explained by the filing of Mr Kremnizer’s affidavit of 31 March 2008 in which he deposed to the relationship between he and Mr Helprin with respect to those occasions when he became aware that a person or persons such as the appellants were seeking funds. In such an event he would contact one of a number of people he thought might have some money available to lend on mortgage securities, including Mr Helprin.

75 Although Mr Kremnizer had no specific recollection of the circumstances leading up to the making of the Conway loan, he stated that following his normal practice, he would almost certainly have telephoned Mr Helprin and asked him whether he would be interested in lending $52,000 to some borrowers to be secured by a second mortgage. Mr Helprin would either say yes or no. If the former, he would forward to Mr Helprin what he referred to as a Product Disclosure Statement (PDS) with the Part II Prospectus referred to in Ms Khoury’s letter to Mr Helprin of 31 October 2002. Once he had forwarded the PDS to Mr Helprin he would have regarded he or his company as the likely lender and inserted their name on the papers associated with the proposed loan such as the Consumer Credit Code Declaration.

76 In his affidavit Mr Helprin acknowledged that he had previously advanced monies to borrowers through Kremnizers although he had no particular recall of the circumstances leading up to the Conway loan. He stated that he would receive a telephone call from Mr Kremnizer who would advise him that he had people wanting to borrow a nominated sum at a nominated interest rate on a property which he would describe and which was the subject of a valuation in respect of which he would indicate the loan to value ratio. If he were interested he would inform Mr Kremnizer either then or later of the particular manner in which the funds were to be advanced. After such a conversation he would receive from Kremnizers a PDS which he would complete and return if he wished to proceed with the loan.

77 Mr Helprin deposed that he never gave permission to Kremnizers to advance funds nor to enter into any arrangements on his behalf without his written consent being given by him completing the PDS.

78 Although in the present case Ms Khoury forwarded a PDS to Mr Helprin under cover of her letter of 31 October 2002, there was no indication that he returned it duly executed by SHPL. Whether or not he did so, there is no doubt that the mortgage documents were forwarded by Ms Khoury to Consolidated Lawyers under cover of her letter dated 29 October 2002, some two days before she forwarded to Mr Helprin the Part II Prospectus or, as Mr Helprin understood it, the PDS.

79 It would be reasonable to infer from the foregoing sequence of events that Kremnizers had authority from Mr Helprin to proceed with the $30,000 loan to the appellants prior to him receiving the PDS from Ms Khoury and returning it to her duly executed. The documentary evidence is inconsistent with Mr Helprin’s assertion that he never gave permission to Kremnizers to enter into any arrangements on his behalf to lend monies without his written consent constituted by his completion of a PDS.

80 By letter dated 5 November 2002 Consolidated Lawyers wrote to Kremnizers returning the mortgage documents duly executed and noting that they were in the process of obtaining Perpetual’s consent to the registration of the second mortgage to SHPL.

81 On 7 November 2002 Ms Khoury forwarded a letter by facsimile to Consolidated Lawyers requesting them to confirm the progress status of the matter. By letter of the same date headed “HELPRIN MORTGAGE TO BAHADORI” it was noted that the matter could not proceed until various documents then listed were provided. It is noteworthy that of the $30,000 to be advanced, the appellants would receive only $21,042.20, the balance being absorbed in legal fees, brokerage and other expenses.

82 Finally, on 12 November 2002 Ms Khoury forwarded a letter by facsimile to Consolidated Lawyers noting that several documents were still outstanding and that their client was “eager to settle this matter”. It is at this point of time that Ms Khoury must have been informed that Perpetual would not consent to the registration of the proposed second mortgage to SHPL. It was apparently then decided to refinance the whole of the appellants’ borrowings on the property. Whilst the evidence does not reveal the source of this proposal, it may be inferred that Kremnizers was a willing, if not the moving, party with respect to the refinancing.

83 Thus by letter dated 13 November 2002, Kremnizers wrote to Mr Helprin at 10 Conway Avenue, Rose Bay under the heading “HELPRIN MORTGAGE TO BAHADORI”, in the following terms:

“We refer to the above matter.

This was, as you will remember a Second Mortgage behind an outside first. The outside first would not consent to a Second Mortgage so we have redone the loan on the basis that we are doing both the First and the Second. This will mean that the Second Mortgage is now going to be $52,000. Can you handle it, if not please let me know.”

84 The evidence does not reveal whether this letter was posted, faxed or couriered to Mr Helprin or whether he attended Kremnizers office at Double Bay and picked it up. Further, the evidence does not reveal whether Mr Helprin had been telephoned either by Mr Kremnizer or Ms Khoury either before or after the letter was prepared. Unlike other correspondence in evidence which was forwarded by facsimile, it was not clear if the contents of the letter of 13 November 2002 were faxed to Mr Helprin or not.

85 However, it is clear that Mr Helprin agreed to “handle” the increase of the loan from $30,000 to $52,000. So much can be inferred from the fact that on the same day, 13 November 2002, Kremnizers forwarded to Super City a document described as a “Letter of Offer to Bahadori dated 13 November 2002" to which I further refer below.

86 I pause in this chronology to note that although Kremnizers’ letter to Mr Helprin dated 13 November 2002 would seem to indicate that it was not until that day or the day before that it became apparent that Perpetual would not consent to the registration of a second mortgage, the evidence before the Tribunal included two letters dated 7 November 2002 from Mascot Taxation & Accounting Services (the appellants’ accountants) addressed to La Trobe in which the author certified that he understood that the appellants had applied for an interest only loan amounting, in the case of the one letter, to $338,000 repayable in monthly instalments of $2,549.08 over 12 months at an interest rate of 9.05% and in the case of the other, to their application for an interest only loan amounting to $52,000 repayable in monthly instalments of $715 over 12 months at an interest rate of 16.50%.

87 Furthermore, the evidence included a document on La Trobe’s letterhead addressed to the appellants and dated 28 October 2002, endorsed “448.95100 Kremnizer Private” with Ms Khoury’s initials and which was headed “R L KREMNIZER & CO – APPLICATION – LOAN OFFER”, the opening paragraph of which was as follows:

“We are pleased to advise that your Application for Loan has been approved and is now offered to you by La Trobe (Lenders representative) on the terms set out below.”

88 Under the heading “Total Loan” appeared “$52,000 which is not to exceed 80.00% of sworn independent valuation”. The period of the loan was stated as one year at an indicative interest rate of 16.50% per annum fixed. Next to the heading “Loan Purpose” appeared “Refinance – Investment”. Next to the heading “Lender” appeared “The Mortgagee is: As Specified By R L Kremnizer & Co” who were then identified as the “Mortgagee’s Solicitor”. The security was stated to be a registered second mortgage over the property. After the foregoing details appeared the following:

“Please advise your Solicitor of this Offer of Loan IMMEDIATELY and seek Independent Legal Advice. Your signed acceptance of this Offer must be returned to our Solicitors, R L Kremnizer & Co, within forty-eight (48) hours of receipt to avoid withdrawal of the Offer or reassessment of the interest rate offered which results in having to reapply and pay additional fees.”

89 An identical letter dated 28 October 2002 was also sent by La Trobe to the appellants with a “Total Loan” of $338,000 which was not to exceed 70.00% of a sworn independent valuation and which identified the “Lender” as Permanent. A copy of the letter in evidence is headed

90 One thing appears clear from the foregoing, namely, that as at 13 November 2002 Permanent was identified as the proposed lender to the appellants of $338,000 and Kremnizers was authorised to act as their solicitors. As I understand Permanent’s submissions, Kremnizers’ authority in this regard was not in issue.

91 However, although it was not in contest that Kremnizers had authority prior to 13 November 2002 to act on behalf of SHPL with respect to the proposed loan to the appellants of $30,000, there was an issue as to whether as at 13 November 2002 or, in any event, prior to 15 November 2002, Kremnizers had authority to act on behalf of Conway notwithstanding that Mr Helprin was the principal of each of those companies.

92 On 13 November 2002 Kremnizers forwarded two letters to Super City with respect to the proposed loans of $338,000 and $52,000 respectively. Each commenced with the following:

“We advise that the following application for finance has been approved subject to the following indicative terms and conditions:”

93 There were then set out some 23 “indicative terms and conditions” which I set out below with respect to the letter relating to the Permanent loan:

1.	Loan Advance:	The lesser of $338,000.00 or 65.00% of valuation.
2.	Interest Rates:	11.05% reducing to 8.55% upon payment within seven days, monthly on the total amount to be advanced. The Lender reserves the right to vary this rate at any time prior to settlement of this advance.
3.	Term:	12 months.
4.	Security:	1st Mortgage over the property known as 69 Meurants Lane, Glenwood.
5.	Repayments:	Unless advised to the contrary the Borrowers are to provide the Lender’s Solicitor on or before settlement with a periodical payment authority. A standard form will be made available prior to loan settlement.
6.	Loan Purpose:	I/We declare that the credit to be provided to me/us by the Credit Provide (sic) is to be applied wholly or predominantly for business or investment purposes (or for both purposes): 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 protection under the Consumer Credit Code.
7.	Adequate and proper ranking security required:	The Lender’s Solicitors must be satisfied on all matters which in their opinion are necessary to give the Lender adequate and proper ranking security including the signing and execution by you of all mortgage and offer documents as required.
8.	Mortgage documents shall prevail:	Should any provision of the mortgage documents or associated security documents, including the formal Letter of Offer, be inconsistent with this indicative offer the terms of the mortgage, security documents and formal Letter of Offer shall prevail.
9.	Legal Costs:	The Borrower(s) shall be responsible for the costs of the solicitor for the Lender agreed to be $1,814.00. The costs shall be payable whether or not the matter proceeds or does not proceed for any reason other than the Lender’s default. The Borrower(s) waives any right to have this amount assessed and agrees that it is a reasonable charge.
10.	Legal Disbursements:	In addition to the fee above the Borrower(s) agree to pay the Lender(s) legal disbursements, being stamp duty (if any) and any other disbursements properly incurred by the Lender’s solicitors which will be deducted from the mortgage advance on settlement.
11.	Searches:	All searches and investigations are to prove satisfactory to the solicitors for the Lender.
12.	Valuation:	The Lender will commission a valuation of the security from a valuer approved by the lender’s solicitors. The valuation must be satisfactory to the lender and such valuation is to be addressed to the Lender and the solicitors for the Lender.
13.	Valuation Fee:	A valuation fee of $500.00 is payable upon signing this letter of offer. This fee is non-refundable.
14.	Ownership of the valuation:	The Valuation always remains the property of the Lender.
15.	Insurance:	The improvements on the property are to be insured for the sum stated in the Valuation noting the lender’s interest thereon.
16.	Early Redemption:	In the event the Borrower repays the loan in full within the term of the loan interest shall be paid to the date of discharge together with a further 1 month’s interest thereon.
17.	Commencement of Interest:	Interest commences 21 days from the date of this letter.
18.	Establishment Fee:	There is to be an establishment fee of $2,000.00 payable to Bleier Mortgage Corporation.
19.	Deposit:	Upon the signing of this letter of offer the Borrower shall pay a non-refundable deposit on the establishment fee and legal expenses of $1,814.00. Should any matters provided for in this letter not prove satisfactory to either the Lender or the Solicitor for the Lender this amount will be forfeited.
20.	Inspection must be satisfactory:	The Lender reserves the right to withdraw should the Lender’s inspection of the property prove unsatisfactory to the lender. In which case the deposit will be refunded provided there has been no misrepresentation by the borrower or by the borrower’s agent.
21.	Accountant’s Letter:	It is a condition that the Borrower’s Accountant must provide a letter stating that in the Accountant’s opinion the Borrower can afford to pay the interest under the loan and can make arrangements to repay the principal at the end of the term. Please note the Lender’s solicitor will provide an Accountant’s Certificate as part of the mortgage documentation which must be returned prior to settlement.
22.	Director’s Guarantees in the case of a Company:	Guarantees will be required from the Directors of the borrower if it is a Company.
23.	GST payable on all charges:	The borrower must pay GST on all charges contained in this letter.

94 The letter then set out what it termed a summary of the monies payable in accordance with “this indicative letter of offer”. That summary was as follows:

“	Fee	GST	Total
Valuation Fee	$500.00	$50.00	$550.00
Establishment Fee	$2,000.00	$200.00	$2,200.00
Legal Fees	$1,814.00	$181.40	$1,995.409
Total payable	$4,314.00	$431.40	4,745.40
Less
Deposit	$1,814.00	$181.40	$1,995.40
Valuation Fee	$500.00	$50.00	$550.00
Payable on acceptance of this letter	$2,314.00	$231.40	$2,545.40
Balance payable on settlement*	$2,000.00	$200.00	$2,200.00

*To this figure will be added disbursements and any third party brokerage fees collected by us on settlement.

$2,545.40

“This offer is open for forty-eight (48) hours, but in any event the Lender reserves the right to withdraw this letter of offer prior to acceptance, prior to the forty-eight hours.

When returning this acceptance please advise your solicitors name, address and telephone number.

RL KREMNIZER & CO

WE:

$2,545.40

DATED:

***You must sign and return every page

RL Kremnizer & Co. Letter of Offer to Bahadori dated 13 November 2002

1.	Loan Advance:	The lesser of $52,000.00 or 75.00% of valuation.
2.	Interest Rate:	19% reducing to 16.5% upon payment within seven days, monthly on the total amount to be advanced. The Lender reserves the right to vary this rate at any time prior to settlement of this advance.
3.	…
4.	Security:	2nd Mortgage over the property known as 69 Meurants Lane, Glenwood.
…
9.	Legal Costs:	The Borrower(s) shall be responsible for the costs of the solicitor for the Lender agreed to be $850.00. The costs shall be payable whether or not the matter proceeds or does not proceed for any reason other than the Lender’s default. The Borrower(s) waives any right to have this amount assessed and agrees that it is a reasonable charge.
…
18.	Establishment Fee:	There is to be an establishment fee of $1,000.00 payable to Bleier Mortgage Corporation.
19.	Deposit:	Upon the signing of this letter of offer the Borrower shall pay a non-refundable deposit on the establishment fee and legal expenses of $850.00. Should any matters provided for in this letter not prove satisfactory to either the lender or the Solicitor for the Lender this amount will be forfeited.

this indicative letter of offer

Fee	GST	Total
Valuation Fee	TBA	$0.00	$0.00
Establishment Fee	$1,000.00	$100.00	$1,100.00
Legal Fees	$850.00	$85.00	$935.00
Total payable	$1,850.00	$185.00	$2,035.00
Less
Deposit	$935.00	$85.00	$850.00
Valuation Fee	TBA	$0.00	$0.00
Payable on acceptance of this letter	$850.00	$85.00	$935.00
Balance payable on settlement *	$1,000.00	$100.00	$1,100.00
* To this figure will be added disbursements and any third party brokerage fees collected by us on settlement
Please confirm your acceptance of the above terms by signing every page of the duplicate hereof and returning it to us together with a cheque for $935.00.
------------------------------------------------------------ (Borrower must sign here)

99 The Tribunal found that a copy of each of those letters was signed on the date they bore, 13 November 2002, by each of the appellants at the bottom of each page and otherwise where the documents provided for the signature of the “ Borrower ”. Although there was no evidence that the duplicate letters signed by the appellants were returned to Kremnizers, there was no evidence that they were not and it would be proper to infer that they were together with the cheques for $2,545.40 and $935 required by the respective letters to be enclosed with the signed duplicate of each. As will appear, I would also infer that they were received by Kremnizers prior to 15 November 2002.

100 It was the appellants’ case both before the Tribunal and the primary judge that by signing a duplicate of each of Kremnizers letters of 13 November 2002 and paying the deposits and valuation fees mentioned therein, the offer contained in each letter was duly accepted and there thereby came into existence on that date a “ credit contract ” with the meaning of s 5 of the Code. The relevance of the foregoing becomes apparent from the following events which occurred both before and after 13 November.

101 Although the appellants’ case was based on the credit contract being constituted by the offer and acceptance embodied in the Kremnizers letters of 13 November 2002, the documentary evidence before the Tribunal included two prior letters of offer addressed to the appellants at the property on the letterhead of La Trobe. Each letter was headed “Kremnizer Private” and “ R L KREMNIZER & CO APPLICATION – LOAN OFFER ”. One related expressly to the Permanent loan and the other related to what became the Conway loan.

“We are pleased to advise that your Application for Loan has been approved and is now offered to you by La Trobe (Lender’s representative) on the terms set out below.

Borrower(s) Names:	Khosrow Bahadori & Monir Bahadori & Navid Bahadori
Total Loan:	$52,000.00 which is not to exceed 80.00% of sworn independent valuation
Loan Purpose:	Refinance - InvestmentCredit Code: NO
Period of Loan:	1 year(s) (“The Term”)
Indicative Interest Rate:	16.50% per annum Fixed for one (1) year(s) commencing on the date of the loan advance. This rate includes a standard Loan Management Fee. This rate is indicative only and will be set at the date of initial drawing of the loan.
Late Payment Fees:	2.50% p.a. calculated as per Related Charges Schedule herein.
Description of Security:	Registered Second (Real Estate) Mortgage over 69 Meurants Lane GLENWOOD NSW 2766
Repayment Schedule:	Property Insurance ($0) Contents Insurance ($0) Interest Only Repayment Total Monthly Loan Repayment Due Monthly in Arrears$0.00 $0.00 $715.00 $715.00
Lender:	The Mortgagee is: As Specified By RL Kremnizer & Co
Mortgagee’s Solicitor:	R L Kremnizer & Co P.O. Box 191 DOUBLE BAY 1360

“ RL KREMNIZER & CO PRIVATE LOAN OFFER
RELATED CHARGES SCHEDULE ”

“La Trobe Capital & Mortgage Corporation Limited -6- Offer of Loan

ACCEPTANCE OF OFER OF LOAN (DUPLICATE) (To be returned to La Trobe)

Before you sign, read this Offer so that you know exactly what contract you are entering into and what you will have to do under the contract. Once you have signed this Offer you are bound by it. If you deliberately give false or misleading information to get credit you can be taken to court.

This Offer of Loan is made subject to the General Terms and conditions detailed in this letter including any Special Conditions listed below. Certain General Terms and Conditions and all of the Special Conditions need to be satisfied prior to the loan being made. Where there is any divergence between the General Terms and Conditions and the Special Conditions contained in this letter, the Special Conditions will apply.

acknowledge your acceptance by signing and dating the Acceptance of Offer of Loan (Duplicate) page 6 attached and return it to our Solicitors R L Kremnizer & Co within forty-eight (48) hours of receipt

Yours faithfully,

La Trobe – Where Australia Goes for Home Loans

together with the General Terms and conditions pages and Schedule of Related Charges page and Special Conditions listed below, which I/we have received, which have been read and are understood. I/We declare the loan will be used for the purpose(s) stated in the Letter of Offer.

I/We declare that the credit to be provided to me/us by the Credit Provider is to be applied wholly, or predominantly for business or investment purposes (or for both purposes).

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 protection under the Consumer Credit Code.

Borrower: Khosrow Bahadori Borrower: Monir Bahadori

Signature:_____________________ Signature:______________

Date: 15/11/02 Date: 15/11/02

Borrower: Navid Bahadori

Signature:

15/11/02 ”

105 There then followed some eight special conditions which were required to be satisfied before the loan could proceed to settlement and which included completion of the original application form and satisfactory assessment of the application as well as receipt of the Letter of Offer duly signed by the borrowers. The document was signed by each of the appellants on 15 November 2002, apparently in the presence of a Mr Salem Kassem of Consolidated Lawyers.

106 The equivalent letter with respect to the Permanent loan was relevantly in identical terms to that with respect to the $52,000 loan subject to a different loan amount and indicative interest rates. Further, under the heading “ Description of Security ” it referred to a registered first mortgage over the property and, importantly, it expressly identified the “ Lender ” as Permanent.

108 The amended date of 25 November 2002 was reflected in, first, Special Condition (h) which provided for receipt “of signed Amended Letter dated 25/11/02” and the fact that the document was dated 28 November 2002 and presumably signed by the appellants on that date. It is unknown whether the original letter dated 28 October 2002 in respect of the Permanent loan was signed by the appellants on 15 November 2002 when they signed and dated the letter with respect to the $52,000 loan.

“ CONSUMER CREDIT CODE DECLARATION

TO:	PERMANENT MORTGAGES PTY LIMITED (CREDIT PROVIDER)

We declare that the credit to be provided to us by the credit provider is to be applied wholly or predominantly for business or investment purposes (or for both purposes).

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.

AND WE MAKE this solemn declaration conscientiously believing the same to be true pursuant to the Oaths Act, 1900.”

110 This declaration was duly subscribed and declared by each of the appellants on 15 November 2002 before Mr Kassem. An identical document addressed to Conway and relating to the $52,000 loan was signed at the same time.

111 The evidence before the Tribunal by the appellants was that on 15 November 2002 they attended an appointment at Mr Kassem’s office late in the afternoon where each signed a large bundle of documents which had already been completed. The documents were produced by Mr Kassem but were not read by any of the appellants. Mr Kassem merely held the bundle in his hand at the corner and opened it up at the pages where there were “sign here” tabs and instructed each appellant to sign where he had opened it. He then witnessed their signatures and dated the documents after they had been signed. According to the appellants, Mr Kassem was in a hurry and did not in any way explain the documents to them.

DECLARATION BY BORROWER

“1. We are the Mortgagor named in certain loan and security documents in favour of 10 CONWAY AVENUE ROSE BAY PTY LIMITED relating to property located at 69 MEURANTS LANE, GLENWOOD.

2. We have received independent legal advice regarding the loan and security documents referred to in paragraph 1.

3. After receiving that advice We have freely and voluntarily signed the following documents:

1	Mortgage
2	Declaration by Borrower (Schedule 1 to the Solicitors Rules) Memorandum 5719619
3	Acknowledgement Of Legal Advice By Proposed Borrower (Schedule 4 Part 1 to the Solicitors Rules)
4	Direction, Authority to Complete & Undertaking
5	Consumer Credit Code Declaration
6	Declaration regarding security property
7	Loan Offer
8	Application for Finance
9	Quick-Pay/PD-C Form”

TO:	10 CONWAY AVENUE ROSE BAY PTY LIMITED
AND:	R L Kremnizer & Co
FROM:	KHOSROW BAHADORI and MONIR BAHADORI and NAVID BAHADORI
SECURITY:	69 MEURANTS LAND, GLENWOOD

1	Loan Offer from La Trobe to KHOSROW BAHADORI and MONIR BAHADORI and NAVID BAHADORI
2	Mortgage document over property situated at 69 MEURANTS LANE, GLENWOOD
3	Memorandum 5719619
4	Direction, Authority to Complete and Undertaking
5	Consumer Credit Code Declaration
6	Declaration regarding security property

114 The above documents relate to the Conway loan. Although not in evidence, I would infer, and no submission was made by Permanent to the contrary, that identical documents were signed relating to the Permanent loan. One of those documents was described as “ Loan Offer from La Trobe to ” the appellants and was, in my view, a reference to the La Trobe “ Loan Offer ” dated 28 October 2002 referred to at [106] above.

115 As I have already observed, no issue was raised by Permanent to suggest that Kremnizers did not have its authority to send the 13 November 2002 letter of offer. As the evidence establishes, the identity of Permanent as the proposed lender of $338,000 was known since La Trobe’s loan offer of 28 October 2002. Accordingly, when Kremnizers sent the 13 November letter of offer with respect to the Permanent loan, it was doing so as agent for a disclosed principal.

116 On the other hand, Conway hotly contested the proposition that when sending the 13 November letter of offer with respect to the $52,000 loan, Kremnizers were acting as agent for Conway whether as a disclosed or undisclosed principal. True, Conway had been identified as the lender in the documents signed by the appellants on 15 November 2002 in the presence of Mr Kassem. But, so it was submitted, Conway had not been identified as the lender of the $52,000 prior to then.

117 Yet Conway must have been so identified prior to the time when the documents signed on 15 November were prepared by Kremnizers and, relevantly, Ms Khoury who had the carriage of the matter. I see no reason why, in the absence of evidence to the contrary from Mr Helprin, Mr Kremnizer or Ms Khoury, it should not be inferred that Mr Helprin responded to Kremnizers’ letter to him of 13 November 2002 and referred to at [83] above on that date and prior to the letter of offer of the same date being sent by Kremnizers to Super City.

118 The drawing of that inference is further supported by the following. First, the 13 November letter of offer from Kremnizers refers in many places to “ the Lender ”. The use by the author of the proper noun rather than the common noun would indicate that a “ lender ” has been identified. Second, I would not be prepared to infer that Kremnizers would communicate to borrowers a formal letter of offer acknowledging that their application for finance had been approved without the firm having instructions from the “ Lender ” to do so. This is a matter to which I shall return.

119 Leaving to one side the issue of authority, it is to be noted that there is no evidence as to the order in which the documents listed at [112] above were signed. Mr Kassem was not called at the hearing before the Tribunal so that there is no evidence that the Consumer Credit Code Declarations in respect of both loans were signed before the “ Loan Offer from La Trobe ” with respect to those loans. This is important as s 11(2) of the Code requires such a declaration to be signed by the debtor before entering into the credit contract.

APPLICATION FOR MORTGAGE FINANCE

“Is the loan purpose predominantly (more than 50%) for investment or business purposes (or for both purposes)?”

121 The significance of these documents is that they set out a statement of the assets and liabilities of the appellants without differentiating between them except as to income. In terms of assets, the applications revealed that they constituted the property valued at $550,000, with an existing first mortgage to Perpetual under which the amount owing was $334,000; three motor vehicles worth in total $42,000; savings of $500; superannuation of $25,000 and furniture and personal effects of $60,000. In terms of liabilities, the applications indicated $5,500 owing on credit cards and $10,000 on lease/hire purchase.

122 In terms of the appellants’ income, the second appellant was shown as having a gross weekly income of $780, having been employed by OST International for four years. The third appellant was shown as having a gross weekly income of $520 having been an employee of the same company for three years. The first appellant was shown as having been employed for four months by Freedom Furniture at a gross weekly income of $201. Of particular relevance is the fact that the employment history and the statement of assets and liabilities of the appellants do not indicate that they were in receipt of any income other than wages from their employer and, in particular, from any business or investments. Further, the statement of assets and liabilities did not indicate that the appellants were the proprietors of any business or that they had any assets in the nature of investments. A very similar application for mortgage finance containing the same financial information was made on 14 October 2002 and 4 November 2002 with respect to the earlier proposed loan of $30,000. There is no reason to do otherwise than infer that that information was the subject of the applications for finance approval which were notified by Kremnizers to Super City in their letters of offer of 13 November 2002.

155 Permanent and Conway submitted that no “ credit contract ” was entered into prior to 15 November 2002 although, on acceptance by the appellants of Kremnizers’ 13 November letters of offer, a contract may have been entered into which was not a “ credit contract ” as defined.

156 To the extent to which the appellants relied upon the extended definition of “ contract ” in Schedule 1 to the Code, it was submitted first, that that definition did not apply to the expression “ credit contract ” where appearing in s 11(1) and (2) of the Code. Second, if it did so apply there would be odd consequences: for example, where by inadvertence a credit provider entered into one credit contract without a s 11(2) declaration it would be impossible for that credit provider to ever obtain a valid declaration in respect of subsequent credit contracts entered into with the same borrower as they would all be deemed to be one contract. Third, from the perspective of a borrower, where a credit provider obtained a bona fide declaration, it would be entitled to engage in a series of credit contracts (possibly over many years) with the same borrower without attracting the provisions of the Code and notwithstanding that after obtaining the original declaration, it became aware that that declaration was false.

(a) a declaration made under s 11(2) protects a credit provider in relation to the actual credit contract entered into after the making of the declaration and arguably protects that credit provider in relation to subsequent contracts except where, prior to entering those subsequent contracts, the credit provider became aware that the original declaration was false; and

158 In addition, Conway submitted that in view of the evidence of Mr Kremnizer and Mr Helprin as to their general practice, the Court should accept that at least so far as the Conway loan was concerned, no credit contract was entered into by the appellants with Conway prior to 15 November as it was unlikely, given their practices, that Mr Helprin had, prior to that date, nominated Conway as the credit provider of the loan the subject of Kremnizers’ letter of offer of 13 November.

159 The appellants relied upon the presumption referred to in s 11(1) of the Code that in any proceedings in which a party claims a credit contract is one to which the Code applies, it is presumed to apply unless the contrary is established. However, in my opinion, that begs the question as to whether and, relevantly, when a “ credit contract ” has been entered into. Once it is established that it has then, and only then, does the presumption apply.

160 There can be no doubt that the “ credit contract ” must be one to which the credit provider, against whom relief is sought under the Code, is a party. But that does not require that where the extended definition of “ contract ” applies, the credit provider, in this case Conway, must have been a party to each and every contract or arrangement that formed the relevant series.

161 As was pointed out during the course of argument, there is much to be said for the view that where the relevant credit contract is comprised of a series or combination of contracts or contracts and arrangements which have closely connected parties, it matters not that each of those contracts or arrangements must involve the ultimate credit provider so long as, at the end of the day, it can be said that that credit provider is a party to the credit contract.

162 It is apparent that one mischief to which the extended definition of “ contract ” was directed was the necessity to avoid a situation where the requirements of the Code could be avoided by having a last minute switch of credit provider or lender. In other words, the legislature could not have intended that the provisions of the Code could be rendered inapplicable in circumstances where a credit contract had been entered into between a borrower and Lender A without first obtaining a s 11(2) declaration but then the identity of the credit provider or lender was changed to one which, although related to Lender A, was a different legal entity and before the change, a s 11(2) declaration was obtained.

163 In this respect, it is to be noted that the document signed by the appellants on 15 November 2002 and referred to at [113] above contained a provision authorising Conway to insert into the mortgage documentation the name of a mortgagee other than that stated in that documentation at the time it was signed by the appellants where the monies were to be advanced by that other person. Accordingly, a different lender could be substituted for the original lender.

164 On Conway’s submission the credit contract would then be with that other lender. If this be correct, then it would be open to the lender who operated, as did Mr Helprin, through a number of corporate vehicles to substitute a different corporate vehicle for the original lender where no s 11(2) declaration had been obtained prior to the entry into of the credit contract with the first corporate vehicle but where such a declaration had been obtained prior to the substitution.

165 Although Conway relied upon the practice of Messrs Kremnizer and Helprin to which they had deposed in their affidavits, that practice must give way to any inconsistent inferences which can be drawn from the documentary evidence. Although their evidence tended to suggest that it was not until Mr Helprin received, completed and returned a PDS to Mr Kremnizer that he had committed to advancing funds and that he retained the right to withdraw from the transaction at any time, the objective theory of contract requires the issue of the existence or non-existence of a credit contract between Conway and the appellants to be determined upon the objective evidence as to the parties’ conduct with respect to each other.

166 That evidence, in my opinion, establishes either of the following propositions: first, that at the time Kremnizers forwarded their letter of offer dated 13 November 2002 to Super City, Mr Helprin had already nominated Conway as the proposed lender so that that offer was made by Kremnizers on behalf of Conway as an undisclosed principal; second, that even if Mr Helprin had not, at the time the letter of offer was sent on 13 November 2002, identified Conway as the proposed lender, nevertheless he had authorised the sending of that letter on the basis of a corporate vehicle to be notified, which he had done prior to 15 November 2002 when the mortgage documentation referred to at [113] was forwarded to the appellants’ solicitors. That documentation identified Conway as the credit provider and mortgagee which leads to the inevitable inference that Mr Helprin must have identified Conway as the proposed lender prior to the preparation of that documentation: see [117] to [119] above.

167 Accordingly, if it be proper in accordance with the first proposition to infer that Kremnizers forwarded the 13 November letter of offer on behalf of Conway as an undisclosed principal, then it would follow that upon acceptance of that offer a “ credit contract ” came into existence. If this be so, then the s 11(2) declaration signed by the appellants on 15 November 2002 was ineffective.

168 On the other hand, if that is not the case, then in accordance with the second proposition a contract was nevertheless entered into by the appellants’ acceptance of Kremnizers’ 13 November letter of offer under which Kremnizers warranted that it had the authority of an identified lender to make the offer. In this respect, I have already referred at [118] above to the use by Kremnizers in those documents of the proper noun “ Lender ” rather than the common noun “ lender ”. In these circumstances, the acceptance by the appellants of the letter of offer with respect to the $52,000 loan resulted in a contract coming into existence whereby Kremnizers warranted that it had authority from an undisclosed but identified lender to provide a loan of $52,000 in accordance with the terms of the offer. That contract was followed two days later by the tender by Kremnizers to the appellants (via their solicitors) of the mortgage documentation to which I have referred at [113] in which Conway was identified as the credit provider or lender. By executing those documents which reflected the terms of the 13 November letters of offer which the appellants had accepted, there thereby came into existence a “ credit contract ” within the meaning of s 5 of the Code.

169 In these circumstances it cannot be gainsaid that there was other than a series of contracts or arrangements within the meaning of the extended definition of “ contract ”. It was not disputed that if the extended definition applied to the expression “ credit contract ” in s 11(1) and (2), then that contract came into existence on 13 November 2002 or, at the very latest, prior to the making of the s 11(2) declaration by the appellants on 15 November. Of course, as I noted at [119] above, the evidence does not establish whether that declaration was signed before or after the appellants executed the mortgage documentation. The onus, however, is on the credit provider to establish that the declaration was made before the credit contract was entered into. That onus was not discharged by either Permanent or Conway.

170 In my opinion Conway’s submission that the extended definition of “ contract ” has no application to s 11 should be rejected. The examples of unintended consequences advanced in support of Conway’s submissions do not, in my view, have the consequences alleged and in any even would carry limited weight. So far as the first example is concerned, if one credit contract is entered into without a s 11(2) declaration, there is no reason why a valid declaration cannot be obtained before a subsequent credit contract is entered into where both contracts relate to different loans. The extended definition of “ contract ” applies only to a series of contracts or arrangements with respect to a particular loan. Where the loan is different albeit between the same parties, then a different contract or series of contracts and arrangements arises.

171 As to the second example, the same problem arises. Where a lender has obtained a bona fide s 11(2) declaration before a credit contract is entered into with a particular borrower, then that borrower would be protected where a subsequent credit contract (albeit comprising a series of contracts or arrangements) is entered into with respect to a different loan without first obtaining a further declaration with respect to that loan.

172 Each credit contract (whether it be constituted by one or a series of contracts and arrangements) relates only to the loan to which it refers. Conway’s submissions have no application where there are different loans which must be the subject of different credit contracts. Even where a loan is “ rolled over ” at the end of its initial term, there is much to be said for the view that a new credit contract is entered into at the time of rollover which, if the credit provider wishes to avoid the application of the provisions of the Code thereto, would require it to obtain a s 11(2) declaration prior to any such rollover being effected. Of course, the obtaining of any such declaration would be ineffective if, prior to the rollover, the credit provider ascertained that the s 11(2) declaration obtained prior to the entering into of the original credit contract was false for then it would have reason to believe that at the time of the subsequent declaration the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes within the meaning of s 11(3). I see no difficulty with such a consequence given the beneficial and protective nature of the Code.

173 For the foregoing reasons, therefore, in my opinion a credit contract within the meaning of s 5 of the Code was entered into between Conway and the appellants before the latter made their s 11(2) declaration at the time they executed the mortgage documentation on 15 November 2002.

174 So far as the Permanent credit contract is concerned, there was no issue but that Permanent was an undisclosed principal at the time of Kremnizers’ 13 November letter of offer with respect to that loan. Nevertheless Permanent submitted that no binding credit contract came into existence between it and the appellants until 26 November 2002, being the date upon which the loan funds were actually advanced. It was further submitted that although a contract came into existence on 13 November 2002 when the appellants accepted the terms of Kremnizers’ letter of offer of that date, that contract was no more than an agreement to process an application for a loan and was not an agreement which bound Permanent to actually advance funds, even if all conditions of the offer were satisfied. This submission was made notwithstanding that it was conceded that the reference to the “Lender ” in the 13 November letter of offer was a reference to Permanent.

175 The difficulty with Permanent’s submission is that it leaves out of account the extended definition of “ contract ”. If that definition applies, as I consider it does, then it follows that the credit contract between Permanent and the appellants was constituted by a series of contracts or arrangements which commenced with the acceptance by the appellants of the 13 November 2002 letter of offer solely to the loan of $338,000. If this be so, as I consider that it is, then it follows that Permanent is not protected by the s 11(2) declaration made by the appellants on 15 November.

176 Accordingly, in my opinion, credit contracts within the meaning of s 5 of the Code were entered into between the appellants and Permanent and Conway on 13 November 2002 or, at the very latest in the case of Conway, prior to the time the appellants executed the s 11(2) declarations on 15 November 2002, as a consequence of which those declarations were ineffective to avoid the application of the Code to those contracts.

177 In the foregoing circumstances it is strictly unnecessary to consider the appellants’ subsidiary argument founded on s 11(3) of the Code that Permanent and Conway or persons associated with them such as Kremnizers and/or La Trobe, knew or had reason to believe that at the time the s 11(2) declarations were made, the loans being sought by the appellants were in fact to be applied wholly or predominantly for personal, domestic or household purposes. However, as the issue was fully argued I shall express my views thereon.

178 Permanent and Conway submitted that one could not go past various documents signed by the appellants in which they had stated that the purpose of the respective loans was wholly or predominantly for business or investment purposes. In this respect, much reliance was placed upon passages from the joint judgment of Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 182 [47] where reference is made to the significance which the law attaches to the signing of a contractual document so that where a person signs a document knowing that it is a legal document relating to an interest in property, that person is in general bound by the act of signature and that to undermine that assumption “ would cause serious mischief ”.

179 The principles so adumbrated by the High Court in Toll relate to the proposition that a person who signs a document which is known by that person to contain contractual terms and to effect legal relations, is bound by those terms, it being immaterial that the person has not read the document. In my opinion this has little relevance to the issue to which s 11(3) of the Code is directed. That is not to say that the signed assertions of the appellants that the subject loans were for business or investment purposes carry no weight. But the weight to be attributed to those assertions depends on the circumstances known to the credit provider or its agent at the time they were made.

180 In the present case Kremnizers were aware from some time in October 2002 that the appellants only needed to borrow $30,000 for a term of two years. The amount of the loan increased as a consequence of the refusal of Perpetual to permit the registration of a second mortgage to secure a loan of $30,000. A loan was therefore sought to enable Perpetual to be repaid the amount owing to it in circumstances where it held a first mortgage over what Permanent, Conway and their agents knew to be the appellants’ home. Furthermore, the applications for finance to which I have referred at [121] to [123] above to support a finding which, in more neutral terms, I made at [124] to [126] above that both Permanent and Conway had reason to believe at the time the s 11(2) declarations were made on 15 November 2002 that the appellants’ assertion that the loans were to be applied wholly or partly for business or investment purposes, was clearly not the case.

Is the Code rendered inapplicable to the credit contracts between the appellants and Permanent and Conway by the provisions of s 6(1)(b) of the Code?

182 Relevantly, s 6(1)(b) of the Code provides that it applies to a credit contract if, when a contract is entered into or (in the case of pre-contractual obligations) is proposed to be entered into, the credit is intended to be provided wholly or predominantly for personal, domestic or household purposes.

183 In this context, s 11(1) is relevant insofar as it provides that in any proceedings in which a party claims that a credit contract is one to which the Code applies, it is presumed to do so unless the contrary is established. It follows that for the purposes of s 6(1)(b) of the Code, there is a rebuttable presumption that when the subject credit contracts were entered into, the credit to which they referred was intended to be provided wholly or predominantly for personal, domestic or household purposes. The issue which then arises is whether Permanent and Conway have established the contrary. In my view they have not.

184 I accept for the purposes of this exercise that the test most favourable to Permanent and Conway is an objective one based upon what a reasonable person would, in all the circumstances, consider to be the purpose for which the loans were intended to be provided. Such a person would be entitled to take into account all the objective circumstances which would otherwise fall for consideration under s 11(3).

185 Conway submitted that the use of the expression “ provided or intended to be provided ” required the issue to be determined from the perspective of the credit provider. This was because a lender “ provides ” credit whereas a borrower “ obtains ” it. Accordingly, it was contended that the only objective circumstances which are relevant are those known to the credit provider.

186 There is some force in this submission and for present purposes I am prepared to accept it. However, in my view it makes no difference to the outcome. For reasons which I have set out in [180] above, in my opinion a reasonable person in the position of Permanent and Conway would as a consequence of the knowledge of Kremnizers and/or La Trobe, have concluded that notwithstanding the assertions of the appellants that the loans were to be applied wholly or partly for business or investment purposes, in fact they were to be provided wholly or predominantly for personal or domestic purposes.

187 Further, the history of the loan applications and the circumstances under which it became necessary for the Perpetual mortgage to be discharged by a loan from Permanent as well as the circumstance, which would have been tolerably obvious, that the appellants were seeking to do no more than refinance the existing loan on their home, all tend to support a finding that the loans were to be provided for personal purposes. The appellants’ statement of assets and liabilities of which Permanent and Conway had or were deemed to have knowledge, more than bore this out.

188 Furthermore, the fact that the original loan sought by the appellants was only $30,000 and was applied for at a time when the appellants were all employed by third parties and were not purporting to carry on any business, when coupled with what was clearly a Kremnizer standard form letter of offer which was intended, given the terms of the “ Loan Purpose ” (see at [93] above), to take the loan contract outside the terms of the Code, would immediately cast some doubt upon the mind of the reasonable credit provider that, in truth, the loan was being sought by borrowers in the position of the appellants for the purpose of a business or for investment.

189 It is of concern that such persons seeking such loans in the private non-bank lending market and who are often desperate to obtain the loan, are required, in effect as a condition of the loan being provided, to declare that the funds are to be used for business or investment purposes where that is clearly not the case.

190 One reasonably suspects that such borrowers are informed that if they want the money they must sign the necessary declaration to render the Code inapplicable to the transaction. In many cases that is not much of a choice for persons who are desperate to obtain the funds on pain of possibly losing their home.

Conclusion

192 In my opinion the appellants are entitled to succeed on their s 65 summons upon the basis that the Tribunal committed an error of law on the face of the record when it found that it had no jurisdiction to entertain the appellants’ applications. Although relief under s 65 is discretionary, no submission was advanced by either Permanent or Conway to suggest that if otherwise entitled to relief, as a matter of discretion it should be refused.

193 In the circumstances it has been unnecessary to deal with the appeal with respect to the appellants’ s 67 summons. However, in my opinion but for the s 65 summons the appellants would have failed on the s 67 summons given the limited findings of fact which were made by the Tribunal. Under the s 65 summons this Court has been free to make findings of fact. I have found facts which go beyond those found by the Tribunal. In these circumstances, had the proceedings been confined to the appellants’ appeal against the decision of the primary judge on the s 67 summons, they would have failed. Accordingly that summons should be dismissed. The effect of such an order is that the primary judge’s order for costs against the appellants will stand.

194 The appellants have nevertheless succeeded on the s 65 summons and I see no reason why they should not generally obtain their costs of the hearing of that summons before this Court. In this respect a good deal of the written submissions filed with respect to the appeal on the s 67 summons were relevant to, and were relied upon by the parties on the hearing of the s 65 summons and to the extent that that is so, the appellants should be entitled to the costs of preparing those submissions.

195 The question of costs becomes complex because the original hearing of the appeal on 5 February 2008 was confined to the appeal from the primary judge’s decision with respect to the s 67 summons. On one view of it the costs of that day were thrown away by subsequent events. However, this is not entirely so as some submissions made on that day were relied upon for the purpose of the s 65 summons. Nevertheless difficulties are likely to arise in determining the costs which might be payable in respect of those parts of the written submissions on the appeal which were relied upon on the hearing of the s 65 summons. As I have said there was at least some degree of overlap.

196 Therefore, in attempting to determine an appropriate costs order which is fair and reasonable to all parties in the circumstances, I have come to the view that the costs order made by the primary judge in favour of Permanent and Conway will be allowed to stand but that those parties should pay the appellants’ costs of the proceedings in this Court except with respect to the hearing on 5 February 2008. The appellants should receive one half of their costs of that hearing.

In matter CA No. 40140/07

(a) Appeal dismissed;

(b) Subject to the orders made in relation to matter CA No. 30023/08, below, each party to pay their or its own costs of the appeal;

(c) Order that the appellants pay the costs of the first and second respondents of the Notice of Motion filed on 18 February 2008.

In matter CA No. 30023/08

(a) Declare that the Consumer Trader & Tenancy Tribunal (the Tribunal) has jurisdiction to hear applications COM04/52375, COM04/55473, COM04/55476 and COM05/32128 (the said applications);

(b) Order that the decision of the Tribunal dated 2 May 2006 whereby it determined that it did not have jurisdiction to hear the said applications be quashed;

(c) Order that the Tribunal hear the said applications;

(d) Order that the first and second defendants pay the plaintiffs’ costs of the summons filed on 7 March 2008 which are to include the costs of the written submissions filed in CA 40140/07 and one half of the costs of the hearing before the Court of Appeal on 5 February 2008;

CAMPBELL JA

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Citations

Bahadori v Permanent Mortgages Pty Ltd [2008] NSWCA 150

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Cited Sections

CITATION:	Bahadori v Permanent Mortgages Pty Ltd [2008] NSWCA 150
HEARING DATE(S):	5 February 2008
JUDGMENT DATE:	26 June 2008
JUDGMENT OF:	Giles JA at 1; Tobias JA at 8; Campbell JA at 198
DECISION:	In matter CA No. 40140/07 (a) Appeal dismissed; (b) Subject to the orders made in relation to matter CA No. 30023/08, below, each party to pay their or its own costs of the appeal; (c) Order that the appellants pay the costs of the first and second respondents of the Notice of Motion filed on 18 February 2008. In matter CA No. 30023/08 (a) Declare that the Consumer Trader & Tenancy Tribunal (the Tribunal) has jurisdiction to hear applications COM04/52375, COM04/55473, COM04/55476 and COM05/32128 (the said applications); (b) Order that the decision of the Tribunal dated 2 May 2006 whereby it determined that it did not have jurisdiction to hear the said applications be quashed; (c) Order that the Tribunal hear the said applications; (d) Order that the first and second defendants pay the plaintiffs’ costs of the summons filed on 7 March 2008 which are to include the costs of the written submissions filed in CA 40140/07 and one half of the costs of the hearing before the Court of Appeal on 5 February 2008; (e) Order that the appellants pay the costs the first and second defendant with respect to the hearing before the Court of Appeal on 6 March 2008.
CATCHWORDS:	Consumer Credit Code – Appeal from Consumer, Trader and Tenancy Tribunal – Prerogative relief – Whether Tribunal had jurisdiction to hear application – Court of Appeal able to make findings of fact – Purpose of Code – Whether Code applied to transactions – Whether provision of credit for personal, domestic or household purposes – Whether provision of credit for business or investment purposes – Whether borrower declarations as to purpose valid – Whether there was a credit contract – When credit contract was formed – Series or combination of contracts, or contracts and arrangements – Whether credit provider or other relevant person knew or had reason to believe borrower declarations were false
LEGISLATION CITED:	Commercial Tribunal Act 1984 Consumer, Trader & Tenancy Tribunal Act 2001 (NSW) Consumer Credit (New South Wales) Act 1995 (NSW) Consumer Credit (New South Wales) Code 1995 (NSW) Consumer Credit Regulations 1995 (NSW) Legal Profession Act 1987 (NSW) Medical Practice Act 1992 (NSW) Oaths Act 1900 (NSW) Supreme Court Act 1970 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Canham v Australian Guarantee Corporation Ltd (1990) 20 ALD 361; (1990) ASC 55-984 Chapman v Taylor [2004] NSWCA 456 Codelfa Construction Pty Ltd v State Rail Authority NSW [1982] HCA 24(1982) 149 CLR 337 Dale v Nicholls Construction Pty Ltd [2003] QDC 453 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 Grygiel v Baine [2005] NSWCA 218 Health Care Complaints Commission v Karalasingham [2007] NSWCA 267 Jonsson v Arkway Pty Ltd [2003] NSWSC 815; (2003) 58 NSWLR 451; (2003) ASC 155-060 Kalokerinos & Anor v HIA Insurance Services Pty Ltd [2004] NSWCA 312 Linkenholt Pty Ltd v Quirk [2000] VSC 166; (2000) ASC 155-040 Maconachie v Kullenberg [2005] NSWCA 294 Park Avenue Nominees Pty Ltd v Boone [2001] NSWSC 700; (2001) ASC 155-052 Rafiqi v Wacal Investments Pty Ltd (1998) ASC 155-024 Smith v Collings Homes Pty Ltd [2004] NSWCA 75 Sullivan v Waltons Credit Ltd (1990) ASC 56-023 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165; (2004) 79 ALJR 129; (2004) 211 ALR 342
PARTIES:	Navid Bahadori Khosrow Bahadori Monir Bahadori Permanent Mortgages Pty Ltd 10 Conway Avenue Rose Bay Pty Ltd Super City Finance Pty Ltd Consumer Trader & Tenancy Tribunal
FILE NUMBER(S):	CA 40140/07; 30023/08
COUNSEL:	A: J Stoljar / J K Taylor 1R: S Jacobs 2R: A Rogers 3R: N/A 4R: Submitting
SOLICITORS:	A: Legal Aid Commission of NSW 1R: Kells The Lawyers, Sydney 2R: R L Kremnizer & Co 3R: N/A 4R: Submitting
LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC 30081/06
LOWER COURT JUDICIAL OFFICER:	Harrison Ass-J
LOWER COURT DATE OF DECISION:	16 February 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	Bahadori & 2 Ors v Permanent Mortgages & 3 Ors [2007] NSWSC 79