Boscolo and Secretary, Department of Education, Employment and Workplace Relations - [2009] AATA 794

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION

[2009] AATA 794

ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2009/1647

GENERAL ADMINISTRATIVE DIVISION )
ReKarina BOSCOLO

Applicant

AndSecretary, Department of Education, Employment and Workplace Relations

Respondent

DECISION

TribunalMr R P Handley, Deputy President
Date15 October 2009
PlaceSydney
DecisionThe decision under review is that the decision of the Social Security Appeals Tribunal dated 21 September 2006:
(1)is affirmed in relation to the 1994, 1995 and 1996 loan agreements; and
(2)is set aside in relation to the 1997 loan agreement, with the substitution of a decision that the 1997 loan agreement is unenforceable against Ms Boscolo by reason of the common law principle of non est factum.

..................[sgd]......................
Mr R P Handley
Deputy President

CATCHWORDS

SOCIAL SECURITY – Financial supplement contract with the Commonwealth Bank –– debt assigned to Commonwealth after five years – loan agreements fraudulently or unconscionably induced – applicant a minor when entering loan agreements – non est factum - whether loan agreements void or voidable - Parliament’s intention for Act to prevent students avoiding liability by reason of minority – decision under review varied

PRACTICE AND PROCEDURE - Jurisdiction – Tribunal’s power to review a decision conferred by enactment – whether original decision made under enactment – rights assigned to Commonwealth by operation of law – decision of authorised review officer in relation to those rights – Tribunal has jurisdiction

…

RELEVANT ACTS

Student Assistance Act 1973 (Cth): ss 12K, 12ZB, 12ZC, 12ZH, 12ZK, 309, 323

Social Security Act 1991 (Cth)

Administrative Appeals Tribunal Act 1975 (Cth): ss 3, 25

Student Assistance Amendment Act 1992 (Cth)

Contracts Review Act 1980 (NSW): ss 7, 9

…

CITATIONS

Re Sukkarieh and Secretary, Department of Education, Science and Training [2006] AATA 446

Re Collins and Department of Family and Community Services (2006) 44 AAR 3; [2006] AATA 820

Re Carrington and Secretary, Department of Education, Training and Youth Affairs (1996) 43 ALD 709; (1996) 23 AAR 517; [1996] AATA 329

Boscolo v R [2000] NSWCCA 356

Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203; (2007) 163 FCR 414; (2007) 243 ALR 606; (2007) 99 ALD 443

Gallie v Lee [1971] AC 1004

Petelin v Cullen (1975) 132 CLR 355; (1975) 6 ALR 129; (1975) 49 ALJR 239

Saunders v Anglia Building Society [1970] 3 ALL ER 961

Commercial Bank of Australia v Amadio (1983) 151 CLR 447; (1983) 46 ALR 402; (1983) 57 ALJR 358; [1983-84] ANZ ConvR 169; [1983] HCA 14

Da Yun Xu v Fang Lin [2005] NSWSC 569

Johnson v Johnson [2009] NSWSC 503

…

OTHER AUTHORITIES

Explanatory Memorandum, Student Assistance Amendment Bill 1992

Supplementary Explanatory Memorandum, Student Assistance Amendment Bill 1992

Student Assistance Amendment Bill 1992 (Cth)

Second Reading Senate Hansard, 5 November 1992

…

REASONS FOR DECISION

15 October 2009

Mr R P Handley, Deputy President

Karina Boscolo has applied to the Tribunal for the review of a decision of the Social Security Appeals Tribunal (SSAT) affirming a decision of a delegate of the Secretary of the Department of Education, Employment and Workplace Relations (the Secretary) requiring her to repay loans made under the Student Financial Supplement (SFS) Scheme. The issues for the Tribunal are, first, whether it has jurisdiction in this matter and, second, if it does, whether Ms Boscolo should be required to repay the loans.

Background

Ms Boscolo was born in 1977 and is now aged 32. On 24 May 1994, when she was aged 16, Ms Boscolo signed an application for an Austudy Supplement under the SFS Scheme requesting a $6,000 loan from the Commonwealth Bank of Australia (CBA). She signed further applications on 17 March 1995 for $7,000 and on 8 May 1996 for $7,000, and alleges that the signature on a fourth application for $7,000, signed on 23 May 1997, was forged by her mother after Ms Boscolo refused to sign the form. Ms Boscolo states that all four loans were paid into an account managed by her mother and to which Ms Boscolo did not have access. She did not personally receive any of the loan money.
Ms Boscolo states she was not aware that her mother had forged her signature and had lodged the application for the fourth loan until she found a bank statement on 9 July 1997. She contacted the CBA the next day and asked that payments under the loan be stopped. At that stage, $3,547.93 of the $7,000 loan had been paid.
Ms Boscolo says she was not aware that the applications she signed were for loans that would have to be repaid when she started earning an income. Because her mother filled in the forms and just asked Ms Boscolo to sign them without giving her the opportunity to read the forms, she assumed, because of the reference to AUSTUDY on the forms, that these were applications for grants as her mother had told her. Ms Boscolo had never had any dealings with Centrelink before, these matters having been handled by her mother, and Ms Boscolo had no reason not to trust her mother.
According to archived Centrelink documents, Ms Boscolo phoned on 28 March 2000 to query a letter from the Australian Taxation Office (ATO) about the recovery of the loans. On 5 June 2002, Ms Boscolo phoned Centrelink and said she was disputing liability for the loans and their recovery. Under the SFS Scheme, loans are recoverable once a person’s income reaches a certain income threshold, and the required repayment for a particular year is assessed by the ATO and included in the person’s Income Tax Notice of Assessment.
By letter dated 12 October 2002, Ms Boscolo formally notified Centrelink that she disputed the validity of all the loan agreements. Centrelink states it has no record of having received this letter. Ms Boscolo phoned Centrelink by way of follow up in February 2003 and sent a duplicate of her letter of 12 October 2002 under cover of a letter dated 27 November 2003. Having received no response, Ms Boscolo wrote a follow up letter dated 1 July 2004 and, on 30 July 2004, Centrelink notified her that the matter had been passed to an authorised review officer. Ms Boscolo wrote a further follow up letter dated 6 December 2004, and finally, by letter dated 16 March 2005, a review officer notified Ms Boscolo that the decision requiring her to pay the SFS Scheme debts raised in her name for 1994, 1995, 1996 and 1997 had been affirmed after a review.
Ms Boscolo sought a review by the SSAT, which, on 21 September 2006, affirmed the decision in respect of the first three loans, but varied the recoverable amount of the fourth loan to $3,547.93. On 23 April 2009, Ms Boscolo lodged an application for a further review by the Administrative Appeals Tribunal (AAT).

The Legislative Framework and issues

The relevant legislative framework for the SFS Scheme applicable in respect of the four loans was set out in the Student Assistance Act 1973 (Cth) (the SA Act). Under the Scheme, students eligible and wishing to take advantage of a loan applied to the CBA on the basis of terms set out in the Act. The acceptance of the application gave rise to a binding contract between the student and the CBA (s 12K(2)) which, at the end of the five‑year contract period, assigned its rights in the contract to the Commonwealth. The recovery of any outstanding repayments is then managed by the ATO through the taxation system, as stated above.
In 1998, the legislative provisions relating to the SFS Scheme in the 1973 Act were moved to the Social Security Act 1991 (Cth) (the 1991 Act) but, according to Centrelink, the essence of the Scheme remains the same. The AAT’s jurisdiction to review decisions derives from s 25 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). The AAT has jurisdiction where an ‘enactment’ provides that applications for review of decisions made in the exercise of powers conferred by the enactment may be made to the Tribunal. The word ‘enactment’ is defined in s 3(1) to include both primary and secondary (delegated) legislation.
Division 3 of the SA Act provides for a right of review of SSAT decisions by the AAT in respect “of all decisions of an officer” under the Act relating to the SFS Scheme (s 323(b)). The Secretary contends that because there was no decision by an officer under the Act, the AAT does not have jurisdiction. This is the first issue the Tribunal must consider.
If the Tribunal does have jurisdiction, the second issue is whether Ms Boscolo should be required to repay the four loans. Section 12K(7) of the SA Act states:
A financial supplement contract is not invalid, and is not voidable, under any other law (whether written or unwritten) in force in a State or Territory.

Ms Boscolo contends she should not be bound by the 1994, 1995 and 1996 loan agreements because she was fraudulently or unconscionably induced by her mother to enter into those agreements. Further, Ms Boscolo contends she should not be bound by the 1997 loan agreement because she was not a party to that agreement, her mother having forged her signature on the loan document.

Does the AAT have jurisdiction?

As stated above, the Secretary contends that for the AAT (and the SSAT- see s 309(b)) to have jurisdiction there must be a decision of an officer under the SA Act. Centrelink states that the SFS Scheme debt due to the Commonwealth does not arise as a result of a decision of an officer but as a result of the operation of law. Section 12ZB(a) of the SA Act states that at the end of the loan contract period:
if the corporation's rights in respect of the student under the contract have not previously been assigned to the Commonwealth, those rights are assigned to the Commonwealth by force of this paragraph.
The Secretary was required by s 12ZC(1):
as soon as practicable after the termination date in relation to the contract, arrange for written notice to be given to the student:
(a)stating that at the end of the contract period the student ceased to be indebted to the participating corporation … ; and
(b)stating that on a date specified in the notice, being 1 June immediately following the termination date, the student incurred an FS debt or FS debts to the Commonwealth and setting out the amount of that debt or the amounts of those debts; …
Section 12ZH requires the Secretary to notify the Commissioner of Taxation of the debt and s 12ZK sets out the formula for calculating the amount of any compulsory repayments the student must make through the taxation system.
The Secretary referred the Tribunal to two previous decisions of the AAT where the Tribunal found it did not have jurisdiction because no reviewable decision had been made: Re Sukkarieh and Secretary, Department of Education, Science and Training [2006] AATA 446, and Re Collins and Department of Family and Community Services [2006] AATA 820. Having reviewed those cases, I agree with Mr Poynder that the cases can be distinguished on the basis that, unlike in Ms Boscolo’s case, the validity of the loans giving rise to the debt was not in issue. Mr Poynder referred to the decision in Re Carrington and Secretary, Department of Education, Training and Youth Affairs [1996] AATA 329, where the loan contract period had not expired and the debt had therefore not yet been assigned to the Commonwealth. The Tribunal held, at [32], that the waiver provisions in the SA Act did not apply “at the time of this application before the Tribunal”.
In my view, none of those decisions is of assistance in this matter. However, I agree with Mr Poynder that what distinguishes this matter from the others is that Ms Boscolo challenged the validity of the loans, and this was addressed by the authorised review officer in his decision of 16 March 2005, approximately two and a half years after Ms Boscolo first raised the issue with Centrelink in October 2002. In my view, this was clearly a decision of an officer relating to the SFS Scheme. The officer found that Ms Boscolo had signed the 1994, 1995 and 1996 loan applications, and he was not satisfied that there was any significant difference in the signature on the 1997 application. The officer therefore found that she was required to repay the SFS Scheme debts raised in her name for 1994, 1995, 1996 and 1997.
I note that Ms Donaghy contended that the Secretary (and therefore an officer exercising delegated power) had no power under the SA Act to give Ms Boscolo the relief she was seeking. I disagree. While I agree that pursuant to s 12ZB(a) of the SA Act, the CBA’s rights in respect of the student are assigned to the Commonwealth by operation of law, equally, it seems to me, if those rights are in issue after the assignment because of a question raised as to the validity of the loan contract, it then becomes an issue for the Commonwealth to deal with. Moreover, in Ms Boscolo’s case, the review officer clearly did so.
I therefore conclude that the AAT does have jurisdiction in this matter.

Should Ms Boscolo be required to repay the loans?

The second issue is whether Ms Boscolo should be required to repay the loans given the questions raised by her as to the validity of the loans.
Ms Boscolo provided five affidavits to the AAT setting out the background to this matter, including her family situation. The Tribunal has made a confidentiality order under s 35 (2)(c) of the AAT Act in respect of an affidavit dated 18 June 2009 because of the extremely personal nature of the matters dealt with therein. Ms Boscolo also gave oral evidence at the hearing.
Ms Boscolo is one of six children, who was born in Western Australia and came to Sydney with her parents at the age of five. Despite being moved from one private school to another and being dis-enrolled after her mother failed to pay the fees, resulting in her not attending school for a period of about 16 months, Ms Boscolo still managed to finish her HSC in 1993 shortly after her 16^th birthday. She then enrolled in a Bachelor of Science degree at the University of Sydney in 1994 which she completed in 1998. In 2000, she enrolled in a law degree, attending classes in the evening while working during the day to support herself. She completed the law degree and is now admitted and working as a solicitor.
Ms Boscolo’s evidence is that when, at the age of 16, she was asked by her mother to sign the first of what proved to be Austudy loan applications, she believed what her mother told her – that this was an application for a study grant. Her mother had completed the application and merely asked Ms Boscolo to sign it without giving her the opportunity to read the application. Ms Boscolo, who trusted her mother, did so. The same thing happened in 1995 and 1996, with Ms Boscolo continuing to believe that this was an application for a study grant from the Government. Ms Boscolo also said that because of her very difficult family situation, she was vulnerable to persuasion by her mother.
It was only in 1997 that Ms Boscolo appears to have become less compliant to family demands and sought to assert her own interests where appropriate. Thus, when, in May 1997, her mother asked her to sign a fourth loan application, Ms Boscolo refused to do so. She states that when, on 9 July 1997, she found a CBA statement among her mother’s papers, she realised that her mother had forged her signature on the loan application form. Ms Boscolo contacted the CBA the next day and asked the bank to cease making payments. By that date, $3,547.93 of the $7,000 loan had been paid.
In her affidavit dated 18 June 2009, Ms Boscolo stated that the signature on the 1997 loan application is markedly different from the signatures on the other three applications. She noted that in 2000, the police brought criminal charges of making false instruments against her mother, alleging that she had forged Ms Boscolo’s father’s signature on two caveat withdrawal forms in respect of properties in Western Australia: Boscolo v R [2000] NSWCCA 356. (I note the convictions were quashed on appeal but for reasons other than in relation to the evidence as to the actual signatures, which it appears the jury found to be forged.)
Ms Boscolo stated that she did not summons her mother to give evidence in these proceedings because it would be very difficult for her personally to face her mother and she did not want to put her brothers through this and cause them any further distress. In her confidential affidavit dated 18 June 2009, Ms Boscolo described the physical, emotional and psychological effect the events of her upbringing and relationship with her parents have had on her. Ms Boscolo said she had tried to discuss the SFS Scheme loans with her mother on the phone in early 2000 but her mother got very angry, said she was forced to do as she did by Ms Boscolo’s father, and refused to discuss the matter further. In February 2008, Ms Boscolo again phoned her mother in the hope that she would apologise for her conduct. Instead, her mother again got very angry and hung up. Ms Boscolo has not spoken to her mother since and did not invite either her or her father to her wedding in April 2008.
It appears that when a person applied for a SFS Scheme loan, the CBA would create a loan account in the student’s name. In Ms Boscolo’s case, loan payments were made from the CBA loan account in her name into a St George account in her mother’s name. Ms Boscolo sets out her evidence in relation to this in her affidavit dated 18 June 2009. She said she never had access to this St George account or to any payments made in respect of the four loans, and her mother never used of any of loan monies to support her.
Indeed, Ms Boscolo’s evidence is that her mother had poor financial judgment and became involved in various business ventures which failed with dire consequences for the support of the family. Her mother’s problems included being bankrupted in 1996 by Botany Council. Ms Boscolo’s evidence is that she supported herself without any assistance from either of her parents (her father separated from her mother in January 1990): “I got my first job in December 1993 and so after that time they did not pay for any of my clothes, food, text books, travel or even my compulsory union fees for university” (affidavit dated 18 June 2009, at [24]). Moreover, she said, at [28], that “up until I left home in 1998, I was also paying extra money to my mother for board”.
I accept Ms Boscolo’s evidence that she did not fully understand the character of the documents when she signed the loan applications in 1994, 1995 and 1996 when asked to do so by her mother. At this time, her mother was clearly a dominant figure in Ms Boscolo’s life and I am satisfied, given the family background, which Ms Boscolo described in her confidential affidavit dated 18 June 2009, that it is likely that Ms Boscolo was vulnerable to persuasion by her mother. However, I note that Ms Boscolo told the SSAT that in May 1994 her mother told her the application form was for “a government grant to assist students having difficulties financing their studies” (paragraph 8), and in 1995, Ms Boscolo again “understood this to be a government grant” (paragraph 9). In 1996, “she still believed that this was a government grant despite the fact that about 1/3 of the way down the form there is a reference to loan payments” (paragraph 10).
With regard to the 1997 loan application, I am satisfied from Ms Boscolo’s evidence that her mother forged her signature on the loan application after Ms Boscolo refused to sign it. I note that as soon as she discovered that her mother had submitted the loan application with the forged signature, Ms Boscolo took steps to stop any further loan payments from the CBA.

Section 12K(7)

The question is how do these findings affect the validity of the loans? The Secretary contends that if the Tribunal has jurisdiction to hear substantive arguments, those arguments cannot succeed, first, because of s 12K(7) of the SA Act. This states:
A financial supplement contract is not invalid, and is not voidable, under any other law (whether written or unwritten) in force in a State or Territory.

Thus, the Secretary contends, the common law, equitable principles and statutory protection relied upon by Ms Boscolo are excluded to the extent that they could otherwise make the loan agreements void or voidable. Ms Donaghy submitted that the wording of s 12K(7) is perfectly clear and, there being no ambiguity about the meaning of the provision, it is unnecessary to consult any extrinsic material as to its meaning. However, even if relevant extrinsic material is considered, there can be no doubt that s 12K(7) prevents a student avoiding liability based on any argument that the person lacked capacity for reasons related to their age or mental capacity. In Ms Boscolo’s case, the arguments made all relate to her mental capacity to independently understand the nature of the loan agreements in the face of the relationship with her mother
Mr Poynder submitted that there is some ambiguity in the meaning of s 12K(7) because, as is apparent from the debate on this provision in the Senate in Committee (discussed below), it is capable of different meanings. As the Full Federal Court recognised in Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203; (2007) 163 FCR 414 (see especially, at [105] – [106]), reference may be made to extrinsic material, including Explanatory Memoranda and a Hansard record of Committee proceedings, in order to ascertain the statutory purpose. Here references to the debate in the Senate in Committee shows that the Senate did turn its mind to the application of s 12K(7), and it is clear that s 12K(7) was only ever intended to prevent students from avoiding liability by reason of their minority or, perhaps, their mental incapacity. It was never intended to prevent students from avoiding liability where a SFS Scheme loan agreement had been imposed by fraudulent or unconscionable conduct.
Mr Poynder noted that the SFS Scheme was inserted into the SA Act by the Student Assistance Amendment Act 1992 (Cth). The Supplementary Explanatory Memorandum for the Student Assistance Amendment Bill 1992, reinforcing a statement in the original Explanatory Memorandum for the Bill, stated that the subsection, originally numbered s 12K(4), was:
primarily concerned to ensure the validity of contracts made with a person who is under 18. As some jurisdictions would regard such a contract as valid but voidable at the young person’s option, the revised s 12K(4) protects the contract against being rendered void, as well as against being held invalid outright.
Mr Poynder referred to debate over the Bill in the Senate in Committee, between Senator Teague and the Minister with the conduct of the Bill in the Senate, Senator Robert Ray. There was the following exchange on the proposed amendment as follows (Senate Hansard, 5 November 1992, pp 2425-2426):
Senator Teague - … I just want to ask whether the Government is confident that there is not an unintended consequence in this amendment; that is, there may well be quite proper State and Commonwealth laws that would give safeguards to students or the banks which will be made invalid by this amendment. I am really asking the Minister whether the Government has addressed the full repercussions of this waiver of all other laws that might bear upon this matter ...
Senator Ray - … Essentially it is to deal with students under the age of 18. That is what the amendment is targeted at. I do not think it is targeted at an exemption from all State laws per se, but at those related to under 18-year-olds. I think there will be provisions in State Acts that suggest that minors cannot be bound by certain contracts … That is what it is targeted at – making sure that provisions that protect under 18-year-olds are not in some way used to undermine this section.
Senator Teague – … It would seem that there is no limitation on the words that are to be substituted in the Bill …
Whilst I note that the explanatory notes refer to a primary concern for persons under [under] 18, and I can see that that is the intent of the Government, the words before us do not have that restriction. I just express one last note of scepticism, and I would be happy for some clarification in my mind.
Senator Robert Ray - … As I said earlier, the matter has come before us targeted at those under 18. I am informed that it is rather difficult to be quite that specific in that requirement. Therefore, I suggest to Senator Teague that if the matter is in any doubt in a legal institution anywhere, people will look to the explanatory memorandum for the explanation and, further, they will look to our exchange of views – as they do – and see that this provision is extended to cover minors. I am informed that it also might cover an area where someone has entered into a contract and is not mentally capable, in terms of mental stability. They are the two areas it covers.
Mr Poynder referred to discussion of the common law principle of non est factum (meaning “it is not my deed”) in the House of Lords decision in Gallie v Lee [1971] AC 1004, where, at 1015-1016, Lord Reid said:
The plea of non est factum obviously applies when the person sought to be held liable did not in fact sign the document. But at least since the sixteenth century it has also been held to apply in certain cases so as to enable a person who in fact signed a document to say that it is not his deed. Obviously such an extension must be kept within narrow limits if it is not to shake the confidence of those who habitually and rightly rely on signatures when there is no obvious reason to doubt their validity.
This decision was subsequently approved by the High Court in Petelin v Cullen (1975) 132 CLR 355, where, at 359-360, the Court said:
The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence. All this is made clear by the recent decision of the House of Lords in Saunders v Anglia Building Society (Gallie v Lee).
Ms Donaghy noted that a distinction should be drawn between the two classes of non est factum: the first class is where a person can prove fraud and establish that he or she did not sign the document. The second class is where a person has in fact signed the document but has done so under some sort of mistake. In the latter case, the person seeking to rely on the principle bears a heavy onus of proof in satisfying the court that they should be relieved from their having signed the document by reason of the document being radically or fundamentally different from that which they thought they were signing, in circumstances where they took all reasonable precautions in signing: see also Saunders v Anglia Building Society [1970] 3 ALL ER 961.
Mr Poynder contended that Ms Boscolo should not be bound by the 1997 loan agreement by reason of the common law principle of non est factum because she was not a party to that agreement, her mother having forged her signature on the loan application. Further, he contended that she should not be bound by the 1994, 1995 and 1996 loan agreements because she was fraudulently or unconscionably induced by her mother to enter into these agreements. Ms Boscolo should be released from any liability by reason of the common law principle of non est factum, in so far as she relied on her mother, whom she trusted, for her advice as to what she was signing and her failure to read and understand the agreements was not due to carelessness on her part. Moreover, she should not be bound because of the equitable principles of undue influence and unconscionable conduct, and the statutory protection afforded by the Contracts Review Act 1980 (NSW).
Mr Poynder referred to the discussion of unconscionability and undue influence in the High Court decision in Commercial Bank of Australia v Amadio (1983) 151 CLR 447. In that decision, at 474-475, Deane J said that undue influence “looks to the quality of the consent or assent of the weaker party”, whereas unconscionable dealing “looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity and good conscience that he should do so”. The adverse circumstances which may constitute a special disability may take a wide variety of forms but the common characteristic is that one party is placed at a serious disadvantage relative to the other: see also Da Yun Xu v Fang Lin [2005] NSWSC 569, at [25] – [29] (Barrett J); Johnson v Johnson [2009] NSWSC 503 (Forster J).
Mr Poynder said Ms Boscolo also contends that she is entitled to relief under the loan contracts in respect of her mother’s conduct by reason of the Contracts Review Act 1980 (NSW): see especially ss 7(1) and 9(2), (4) and (5).
Ms Donaghy said that even if s 12K(7) is found not to apply in relation to a plea of non est factum, the Secretary contends that Ms Boscolo has not satisfied the high onus of proof required to establish a successful plea of either class of non est factum in respect of any of the loans. She noted that the fraud alleged is that of Ms Boscolo’s mother who is not represented in this matter and has not been called to give evidence by Ms Boscolo. Moreover, the Secretary was not a party to any of the loan agreements and must be treated as an innocent third party.
Ms Donaghy submitted that Ms Boscolo cannot rely on arguments related to her age or mental capacity to have the loan agreements set aside. Reliance on a difficult child/parent relationship is not a sufficiently good reason not to be bound by her signature. Moreover, the Secretary does not accept that Ms Boscolo’s stated belief that the documents she signed were in respect of loan agreements is reasonable. Moreover, knowing of her mother’s poor financial judgement and lack of interest in her welfare, Ms Boscolo failed to take reasonable precautions when signing the documents.
Furthermore, Ms Donaghy submitted that undue influence and unconscionable conduct can only be relied upon where it was the other party to the contract – in this case the CBA – who knew or ought to have known of the weaker party’s special disadvantage. There is no evidence that the CBA knew or ought to have known of any special disadvantage affecting Ms Boscolo, or that the CBA acted improperly at any time. The funds were deposited into an account in her mother’s name nominated by Ms Boscolo and she knew that her mother was using the funds to support the family. Similarly, the relevant provisions of the Contracts Review Act 1980 (NSW) do not apply because there is no evidence that the CBA knew or should have known of the actions of Ms Boscolo’s mother, and Ms Boscolo does not argue that the terms of the SFS Scheme loan agreements are themselves unfair.

Consideration

Section 15AA of the Acts Interpretation Act 1901 (Cth) states:
(1)In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.
Section 15AB states:
(1)Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b)to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
Section 15AB(2) lists extrinsic material which may be considered for this purpose including Explanatory Memoranda and Hansard. In my view, the seemingly broad compass of s 12K(7) of the SA Act permits reference to be made to extrinsic material for the purpose of assisting in ascertaining the meaning of this provision – whether the meaning is the ordinary meaning conveyed by the text or whether it is something different. In my view, it is clear from the Supplementary Explanatory Memorandum and the Hansard record of the debates in Committee in the Senate, referred to above, that the purpose or object of s 12K(7) is to ensure the validity of SFS Scheme loan contracts made with persons who are under 18 or who might otherwise be found to lack mental capacity to enter into such a contract by reason of their minority or lack of capacity. The exchange between Senator Teague and Senator Ray makes this clear. I am not therefore satisfied that the purpose of the legislation was to negate other protections afforded by the law which have no particular relationship to a person’s minority or lack of mental capacity. Thus, in my view, the purpose or object does not extend to the common law principle of non est factum unless, in the particular case, the facts relied on in seeking to establish the defence involve the minority or a lack of mental capacity on the part of the person.
In Ms Boscolo’s case, I am satisfied by her evidence that she did not sign the 1997 loan agreement and that the signature on the document was forged by her mother. Given Ms Boscolo’s family background and the totally dysfunctional relationship with her mother, I accept that for Ms Boscolo to have summonsed her mother to give evidence would have proved very distressing, and that, in the circumstances, it was reasonable for her not to do so. Thus, I am satisfied that Ms Boscolo has established the defence of non est factum in respect of the 1997 loan agreement which is not, therefore, binding on her.
I am not, however, satisfied that Ms Boscolo has established a defence to the 1994, 1995 and 1996 loan agreements. Firstly, in relation to the defence of non est factum, I note that in relation to these earlier loan agreements the defence falls into the second class of non est factum. In Petelin v Cullen (1975) 132 CLR 355, at [11] to [12], the High Court said of this second class:
[11]The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation. The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind; and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity. The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one "which must necessarily be kept within narrow limits" (Muskham Finance Ltd v Howard (1963) 1 QB 904, at p 912 ) and in the qualifications attaching to the defence which are designed to achieve this objective. (at p 359)
[12]The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence. All this is made clear by the recent decision of the House of Lords in Saunders v Anglia Building Society (Gallie v Lee) [1970] UKHL 5; (1971) AC 1004, esp at p 1019 .
In my view, Ms Boscolo had some understanding of the nature of the document she was signing, believing it to be associated with the provision of Austudy. I do not accept that what she signed was radically different from what the document in fact was – an alternative form of providing support for students. I also note that in 1996 Ms Boscolo was 18 when she signed the loan document. She is clearly an intelligent and capable woman who could have questioned her mother about the document, where there were references to loan payments. I am therefore not satisfied that Ms Boscolo has made out the defence of non est factum in respect of the 1996 loan agreement.
With regard to the 1994 and 1995 agreements, quite apart from the fact that what Ms Boscolo signed was not radically different from what the document in fact was, on those occasions she was still a minor and, on her evidence, what occurred was due to the nature of the relationship with her mother. Because of her minority, and because what occurred was, essentially, related to that minority, in my view, s 12K(7) is operative to prevent the invalidation of the contract, this being the purpose of the amendment by which s 12K(7) was inserted into the SA Act.
Ms Boscolo also contends that she was fraudulently or unconscionably induced by her mother to enter into the 1994, 1995 and 1996 loan agreements and that she should not be bound because of the equitable principles of undue influence and unconscionable conduct and the statutory protection afforded by the Contracts Review Act 1980 (NSW). In relation to the 1994 and 1995 loan agreements, again I am satisfied that s 12K(7) is operative to prevent invalidation of the loan agreements because what occurred was, essentially, related to her minority.
Notwithstanding this, and also in relation to the 1996 loan agreement, I am not satisfied that Ms Boscolo is able to rely on undue influence and unconscionable conduct and the statutory protection afforded by the Contracts Review Act 1980 (NSW) because there is no evidence implicating the CBA as having exerted undue influence or having acted unconscionably in its dealings with Ms Boscolo. The undue influence/unconscionable conduct alleged by Ms Boscolo is that of her mother.
Thus, while I applaud Ms Boscolo’s drive and obvious determination to succeed in her education and in achieving admission as a solicitor while battling very difficult family circumstances, I am not satisfied that she has established a defence in respect of the 1994, 1995 and 1996 loan agreements.
In conclusion, the decision of the SSAT dated 21 September 2006 is:
(1)affirmed in relation to the 1994, 1995 and 1996 loan agreements, and
(2)set aside in relation to the 1997 loan agreement, there being substituted a decision that the 1997 loan agreement is unenforceable against Ms Boscolo by reason of the common law principle of non est factum.

I certify that the 55 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R P Handley, Deputy President

Signed: .............[sgd]...............................................................

A Veness, Associate

Date of Hearing:  21 September 2009
Date of Decision:  15 October 2009
Applicant counsel:  Mr N Poynder by direct access
Respondent representative:              Ms V E Donaghy, Minter Ellison