BMW Australia Finance Limited v Rodrigues (No 2)

BMW Australia Finance Limited (BMW) and Mr Rodrigues were parties to a consumer credit contract. Mr Rodrigues defaulted on his payments, and BMW sought to recover the outstanding debt. Mr Rodrigues counterclaimed, alleging that BMW had breached its obligations under the contract and the *National Credit Code* (NCC) by failing to provide him with a hardship notice before commencing recovery action. The dispute came before Manousaridis J in the Supreme Court of New South Wales.

The central legal issue before the Court was whether BMW had a legal obligation to provide Mr Rodrigues with a hardship notice pursuant to section 72 of the NCC before initiating proceedings to recover the outstanding debt. This required the Court to consider the circumstances under which a credit provider is obliged to issue such a notice and the consequences of failing to do so.

Manousaridis J found that section 72 of the NCC imposes a positive obligation on a credit provider to provide a hardship notice to a debtor if the debtor informs the credit provider that they are unable to meet their payment obligations due to circumstances beyond their control. The Court determined that Mr Rodrigues had indeed communicated such circumstances to BMW. Consequently, BMW's failure to issue a hardship notice before commencing recovery proceedings constituted a breach of its statutory obligations. The Court held that this breach had the effect of suspending BMW's right to recover the debt until the notice was provided.

The Court ordered that BMW's claim for recovery of the debt be dismissed. However, this dismissal was without prejudice to BMW's right to commence fresh proceedings after providing Mr Rodrigues with the required hardship notice and complying with the relevant provisions of the NCC.