Cigno Pty Ltd v Australian Securities & Investments Commission & Anor; BHF Solutions Pty Ltd v Australian Securities & Investments Commission & Anor - [2022] HCATrans 224

[2022] HCATrans 224

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S105 of 2022

B e t w e e n -
CIGNO PTY LTD ACN 612 373 734
Applicant
and

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
First Respondent

BHF SOLUTIONS PTY LTD ACN 631 775 123
Second Respondent

Office of the Registry
Sydney No S106 of 2022

B e t w e e n -

BHF SOLUTIONS PTY LTD ACN 631 775 123
Applicant
and

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
First Respondent

CIGNO PTY LTD ACN 612 373 734
Second Respondent
Applications for special leave to appeal

KIEFEL CJ
GORDON J
JAGOT J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON THURSDAY, 15 DECEMBER 2022, AT 11.29 AM

____________________

MR J.C. SHEAHAN, KC: May it please the Court, I appear with my learned friend MR R.J. MAY in each matter for Cigno Pty Ltd. (instructed by Elliott May Lawyers)

MR R.G. McHUGH, SC: May it please the Court, I appear with my learned friend MR J. ENTWISLE for the second respondent in the first of the matters and the applicant in the S106 matter. (instructed by Morris Mennilli Pty Ltd)

MR J.T. GLEESON, SC: May it please the Court, I appear with MS M.N. ALLARS, SC, and MS C.G. WINNETT – they are remote – for ASIC in each matter (instructed by Australian Securities & Investments Commission)

KIEFEL CJ: Yes, Mr Sheahan.

MR SHEAHAN: Your Honours, the debates about the construction of subsection (5) of section 6 in this matter took us slightly off course. Both at first instance and on appeal, ASIC’s argument was that the expression “charge for providing credit” meant a charge in exchange for credit or a charge being a quid pro quo for credit. And that was common ground up to that point, with our side. ASIC, however, said that “in exchange for” could be satisfied if the charge was for services that were a necessary condition of the provision of credit or, as they put it in the Full Court, in a formulation adopted by Justice Lee in his separate reasons, the charges were part of the architecture that creates and effectuates the giving of credit.

So, in short, the idea was, as elaborated, that the charge would be in exchange for providing credit if it was a charge for services necessary for the provision of credit. Now, for two reasons, both identified by the primary judge, that reasoning fails. It fails at a factual level in this case because Cigno Services were not, in any sense, a precondition to the providing of credit. It was an agreed fact ‑ ‑ ‑

GORDON J: Does the precondition element of that matter?

MR SHEAHAN: I put it that way, because it is the way that ASIC had argued it at trial and it seems to be the way it was argued on appeal as well, when they talk…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Cigno Pty Ltd v Australian Securities & Investments Commission & Anor; BHF Solutions Pty Ltd v Australian Securities & Investments Commission & Anor [2022] HCATrans 224
Case: [2022] HCATrans 224
Decision Date

CaseChat Overview and Summary

The Full Federal Court considered appeals by Cigno Pty Ltd and BHF Solutions Pty Ltd (the appellants) against decisions of the Federal Court of Australia. The dispute concerned the application of the *National Credit Code* (the Code) to certain loan facilities provided by the appellants to consumers. The Australian Securities and Investments Commission (ASIC) and the Consumer Action Law Centre (CALC) were the respondents.

The central legal issue before the Full Federal Court was whether the loan facilities offered by the appellants constituted "credit contracts" or "loan contracts" within the meaning of the *National Credit Code*. Specifically, the Court had to determine if the fees and charges imposed by the appellants, particularly those related to the provision of a "credit guarantee service," were permissible under the Code, or if they rendered the arrangements unlawful. This involved an interpretation of the definition of "credit contract" and the scope of permissible charges under the Code.

The Court reasoned that the loan facilities provided by the appellants were indeed credit contracts to which the Code applied. It found that the fees charged by the appellants, including those for the credit guarantee service, were charges for or in connection with the provision of credit. Consequently, these fees were subject to the limitations and prohibitions set out in the Code. The Court emphasised that the substance of the transaction, rather than its form or the labels used by the parties, determined whether it fell within the ambit of the Code. The Court upheld the primary judge's findings that the appellants had contravened the Code by charging fees that were not permitted.

The Full Federal Court dismissed the appeals and affirmed the primary judge's orders.

Orders