Brownbill, A.V. v Esanda Fiancne Corporation Ltd
[1991] FCA 374
•13 MAY 1991
Re: ALLAN VICTOR BROWNBILL; FREDERICA KATHLEEN BROWNBILL and PALMAT PTY LTD
And: ESANDA FINANCE CORPORATION LIMITED
No. Q G56 of 1991
FED No. 374
Consumer Credit
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.(1)
CATCHWORDS
Consumer Credit - Credit Act 1987 (Qld) - whether contract is a "regulated loan contract".
Credit Act 1987 (Qld)
Federal Court Rules
HEARING
BRISBANE
#DATE 13:5:1991
Counsel for the applicants: Ms C.E. Holmes
Solicitors for the applicants: Boe and Company
Counsel for the respondent: Mr. D.J. Jackson QC
with Mr. McQuade
Solicitors for the respondent: Corrs Chambers Westgarth
ORDER
Paragraphs 14, 15, 16, 17 and 18(d), (e) and (f) of the Statement of Claim be struck out.
Paragraphs 4, 5 and 6 of the Application be struck out.
The applicants pay the respondent's costs of and incidental to the motion, to be taxed if not agreed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This is a notice of motion seeking to have certain paragraphs of the statement of claim and certain paragraphs in the originating application struck out.
The proceedings concern the provision of funds by Esanda Finance Corporation Limited (Esanda) to Palmat Pty Ltd (Palmat), a company of which Mr. and Mrs. Brownbill, the other applicants, are directors, to be applied primarily in financing the purchase of a Ford Louisville prime mover.
Pursuant to O. 11 r. 16(a) of the Federal Court Rules, the application seeks to strike out paragraphs 14 to 17 inclusive of the statement of claim and paragraphs 18 (d), (e) and (f) of the prayer for relief of the statement of claim on the basis that no reasonable cause of action is disclosed.
The application also seeks to stay or dismiss paragraphs 4, 5 and 6 of the application, pursuant to O.20 r.2(1), again on the basis that no reasonable cause of action is disclosed. The reliance on O.20 r.2 as to the originating application is because the definition of "pleading" in O.1. r.4 does not extend to an originating application.
The notice of motion brought pursuant to O.19 is short served. Both O.10 r.4 and O.19 r.3 require three days' notice to the respondent. An application seeking the abridgment of the time fixed for service was not opposed by the applicants in the principal proceedings, thus sparing the parties the additional expense of a further hearing and recognising that the point which is sought to be ventilated by the Motion is a short point of law concerning the application of the Credit Act 1987 (Qld.) to the facts pleaded in the statement of claim.
The short point of the notice of motion is whether as a matter of law the provisions of the Credit Act which are relied on in the application and the statement of claim have any application to the contract in the present case. That in turn comes down to whether the contract is a "regulated loan contract" under the Credit Act. The respondents to the motion in paragraph 14(b) of the statement of claim assert that it is; the respondent in the principal proceedings (the applicant on the motion) contends that it is not.
The context in which the Notice of Motion falls to be determined appears from the facts asserted in paragraph 5 of the statement of claim as follows:
" 5. On or about the fifteenth day of August 1989:-
(a) the Applicant, PALMAT PTY LIMITED, by the Applicants, ALLAN VICTOR BROWNBILL and FREDERICA KATHLEEN BROWNBILL, entered into a contract in writing (hereinafter referred to "the loan contract") with the Respondent to borrow the amount of ONE HUNDRED AND NINETY-TWO THOUSAND EIGHT HUNDRED AND TWENTY-NINE DOLLARS AND FORTY-SEVEN CENTS ($192,829.47) together with interest at the rate of twenty-one point five percent (21.5%) per annum to be repaid by sixty (60) calendar monthly instalments in the sum of FOUR THOUSAND EIGHT HUNDRED AND THIRTEEN DOLLARS
($4,813.00) each together with a final instalment in the amount of FIFTY-FOUR THOUSAND EIGHT HUNDRED DOLLARS AND THIRTEEN CENTS ($54,800.13), the said sum of ONE HUNDRED AND NINETY-TWO THOUSAND EIGHT HUNDRED AND TWENTY-NINE DOLLARS AND FORTY-SEVEN CENTS
($192,829.47) to be applied, inter alia,
(i) as to the sum of ONE HUNDRED AND SEVENTY-NINE THOUSAND ONE HUNDRED AND FIFTY-FOUR DOLLARS AND TWENTY-SEVEN CENTS ($179,154.27) to the financing of the purchase of a Ford Louisville Prime Mover Registered Number QXO-IBI (hereinafter referred to as "the prime mover"),
(ii) as to the sum of TWO THOUSAND ONE HUNDRED AND SIXTY-NINE DOLLARS AND TWENTY-FOUR CENTS
($2,169.24) to the reduction of a debt owed by the Applicants, ALLAN VICTOR BROWNBILL and FREDERICA KATHLEEN BROWNBILL, to the Respondent;
(b) as security for the said loan contract, the Applicant, PALMAT PTY LIMITED, granted to the Respondent a registered Bill of Sale and equitable mortgage (hereinafter referred to as "the equitable mortgage") over a Ford Louisville Prime Mover Registered Number QXO-IBI owned by PALMAT PTY LIMITED;
(c) further as security for the said loan contract, the Applicants, ALLAN VICTOR BROWNBILL and FREDERICA KATHLEEN BROWNBILL, entered into a contract of guarantee and indemnity (hereinafter referred to as "the guarantee") of and for payment of the moneys advanced by the Respondent pursuant to the said loan contract;
(d) the Applicants, ALLAN VICTOR BROWNBILL and FREDERICA KATHLEEN BROWNBILL, granted to the Respondent as further security for the said loan contract a second mortgage over property owned by them and described as all that land contained in Lot 44 on registered plan number 138278, County of Ward, Parish of Tamborine being that land described in Volume 5537 Folio 113 (hereinafter referred to as the "property mortgage"). The impugned paragraphs of the statement of claim allege:
" 14. At all material times:-
(a) the Respondent was a "credit provider" within the meaning of the Credit Act 1987;
(b) the loan contract was a regulated loan contract within the meaning of the Credit Act 1987;
(c) the guarantee was a contract of guarantee within the meaning of the Credit Act 1987;
(d) the property mortgage was a regulated mortgage within the meaning of the Credit Act 1987.
15. In connection with the entering by the Applicants of the loan contract, the equitable mortgage, the property mortgage and the guarantee, the Respondent contravened the Credit Act 1987 in the following respects:-
(a) contrary to section 34(1) of the said Act, by giving to the Applicants for signature a loan contract which did not include a notice in the form prescribed;
(b) contrary to section 34(3) of the said Act, by giving to the Applicants for signature a loan contract without also giving to them a true copy of the document for their own use certified as required by the said section before the Applicants signed the said document;
(c) contrary to section 38(1) of the said Act, by failing to include in the loan contract each and every one of the matters referred to in the said section;
(d) contrary to section 36 of the said Act, by failing to provide within twenty-one days after the contract was made a statement as prescribed by the said section;
(f) contrary to section 138 of the said Act, by failing to provide to the Applicants, ALLAN VICTOR BROWNBILL and FREDERICA KATHLEEN BROWNBILL, within twenty-one days after the signature by them of the guarantee, a statement as prescribed by the said section.
16. Insofar as the Applicants seek relief pursuant to the provisions of the Credit Act 1987, they rely on section 4 of the Jurisdiction of Courts (Cross-vesting) Act 1987 as amended on the grounds that the said relief is closely allied to the other grounds of relief sought herein and is in respect of identical transactions so as to make the exercise by this Honourable Court of its jurisdiction in respect of all matters herein appropriate. " Sub-paragraphs 18(d), (e) and (f) seek the following relief: "(d) a declaration that the conduct of the Respondent was unjust within the meaning of section 148 of the Credit Act 1987;
(e) a declaration that the Applicant, PALMAT PTY. LIMITED, is not liable, by virtue of section 44 of the Credit Act 1987, to pay the Respondent the credit charge provided under the loan contract;
(f) further, or in the alternative, that the transaction giving rise to the loan contract and property mortgage be re-opened pursuant to section 148 of the Credit Act 1987, and that:-
(i) the loan contract be set aside,
(ii) the property mortgage be set aside; "
That relief mirrors the prayer for relief in paragraphs 4, 5, and 6 of the application.
The Credit Act defines a "regulated loan contract" in section 7, as "a loan contract to which Part III applies". Part III is headed "REGULATED CONTRACTS". Section 32(2) in Part III has the effect of restricting the application of other sections of Part III to a loan contract which does not exceed $40,000.00 for the amount financed or, where the sum is under $40,000.00, where the interest rate exceeds a certain percentage, unless a mortgage is made relating to a commercial vehicle to secure the payment of the debt under the contract. The effect is that, if the contract in the present case was a loan contract as defined in section 7, it would be a regulated loan contract for the purposes of Part III.
The Credit Act imposes a number of requirements relating to regulated loan contracts. The contract has to be in a prescribed form (s.34(1); a copy of the offer of a loan contract has to be supplied (s. 34(3)); a number of matters have to be disclosed, including the total of the credit charge, and the amount financed, and the annual percentage rate of interest (s.38(1)). In addition, a debtor is required to be given within 21 days after the making of a loan contract, a statement of his rights under the Act (s.36(1)).
Part IV is headed "Regulated Mortgages" and s.93 relates to mortgages given to secure the payment of a debt under a regulated contract which, pursuant to s.7, includes a regulated loan contract. Its operation is therefore confined relevantly to regulated loan contracts. By s.93 a copy of the mortgage has to be provided to the debtor. Section 138 provides that where there is a contract of guarantee made between a credit provider and a guarantor with respect to the obligations of a debtor under a regulated contract, the credit provider shall give to the guarantor a statement in or to the effect of the form prescribed. Section 149(1) gives power to the Court on the application of the debtor under a regulated contract, the mortgagor under a regulated mortgage, or the guarantor of a performance of a regulated contract, to re-open the transaction that gave rise to the contract or mortgage.
These consequences flow if the relevant contract is a "loan contract" within the meaning of s. 7 of the Credit Act. In that section a "loan contract" is defined to mean, subject to a provision not presently relevant -
" a contract under which a person in the course of a business
carried by him provides or agrees to provide, whether on one or more occasions, credit to another person, not being a body corporate, in one or more of the following ways:-
(a) by paying an amount to or in accordance with the instructions of that other person;
(b) by applying an amount in satisfaction or reduction of an amount owed to him by that other person; ... "
"Credit" is defined to include any form of financial accommodation other than specified types of credit, and the definition provides further:-
" ...Credit includes any form of financial accommodation provided to
a debtor in respect of a contract relating to a commercial vehicle or farm machinery. "
"Debtor" is defined to mean, inter alia, "in relation to a credit contract, the person to whom credit is provided under the contract". In turn "credit contract" means, inter alia, "a loan contract". The relevant provisions of the Act identify the person to whom credit is provided for the purposes of the Act as the "debtor". The Act separately defines "guarantor" to mean "a person who enters into a contract of guarantee in respect of the performance by a debtor...of his obligations under a credit contract or...who enters into a contract of indemnity in relation to a credit contract..." Under the Act the concepts of "debtor", to whom the credit is provided, and "guarantor" of the debtor's obligations are quite separate.
In my opinion, in paragraph 5 of the statement of claim the contract relied on by the applicant is a contract made between Palmat Pty Ltd and Esanda Finance Corporation Limited. The sum of $192,829.47 borrowed by Palmat from Esanda was to be applied as to $179,154.27 to the financing of the purchase of a Ford Louisville prime mover and as to $2,169.24 to the reduction of a debt owed by Mr. and Mrs. Brownbill to Esanda. Paragraph 5(c) of the statement of claim alleges Mr. and Mrs. Brownbill entered into a contract of guarantee and indemnity of and for the payment of the monies (namely, $192,829.47) advanced by Esanda pursuant to the loan contract.
It was submitted on behalf of counsel for the respondent to the motion that the contract was "a contract under which Esanda provided or agreed to provide credit to the Brownbills personally by reducing the amount of their debt". This submission is contrary to the plain words pleaded in paragraph 5.
In my opinion the loan contract specified in paragraph 5 of the statement of claim is not a loan contract within the meaning of s. 7 of the Credit Act because the person to whom the financial accommodation was provided by Esanda was and is a body corporate. In my opinion none of the relief which relies on the Credit Act 1987 is sustainable on the present pleadings. I will hear the parties as to the form of orders I should make and as to costs.
0
0
0