Dennis v Commonwealth Bank of Australia - [2018] FCCA 1159

FEDERAL CIRCUIT COURT OF AUSTRALIA

DENNIS v COMMONWEALTH BANK OF AUSTRALIA

[2018] FCCA 1159

Catchwords:
CONSUMER LAW – Application for summary dismissal – no prospects of success – application dismissed – costs.

Legislation:

National Consumer Credit Protection Act 2009 (Cth), ss.128, 129, 130, 131, 160D, and 178
Federal Circuit Court Rules 2001 (Cth) r.13.10

Applicant:

SUSAN DENNIS

Respondent:

COMMONWEALTH BANK OF AUSTRALIA

File Number:

BRG 134 of 2018

Judgment of:

Judge Vasta

Hearing date:

27 April 2018

Date of Last Submission:

27 April 2018

Delivered at:

Brisbane

Delivered on:

27 April 2018

REPRESENTATION

The Applicant appearing on her own behalf

Counsel for the Respondent:

Mr M.D. Alexander

Solicitors for the Respondent:

Gadens Lawyers

ORDERS

That pursuant to r.13.10 of the Federal Circuit Court Rules 2001 the Application filed 19 January 2018 be dismissed.
That the ~~Respondent~~ Applicant pay the Respondent’s ~~Applicant’s~~ costs of and incidental of these proceedings fixed pursuant to Schedule 1 of the Federal Circuit Court Rules 2001 and as assessed.

Notation: Orders have been amended pursuant to Rule 16.05(2)(e) of the Federal Circuit Court Rules 2001.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

No. BRG 134 of 2018

SUSAN DENNIS

Applicant

And

COMMONWEALTH BANK OF AUSTRALIA

Respondent

REASONS FOR JUDGMENT

(Ex tempore)

On 19 January 2018, the Applicant, Susan Dennis, filed an application for consumer protection before this Court. In that originating application, Ms Dennis asked the Court, on these following grounds, to grant her the relief that she sought. And I will read these fully into the record.
“1. In November 2015, the Commonwealth Bank of Australia breached its responsible lending obligations under the National Consumer Credit Protection Act 2009 and the Code of Banking Practice 2013 by declining a temporary loan I had the capacity to repay in full approximately four months later, solely on the basis that my income is stopping temporarily while I am taking leave. The CBA disregarded all the relevant information I provided about my circumstances at that time, except that my income is stopping temporarily. The CBA disregarded my financial situation at that time, which demonstrated my capacity to repay the temporary loan. The CBA disregarded my requirements and objectives at that time, even though the CBA knew that it was vital for every aspect of my life that I remain employed and my permanent government employment was not in jeopardy. The CBA failed to recognise the significant financial hardship I was suffering at that time, ie, my companion animals and I were facing starvation, and placing all my loan replacements on hold would not have provided me with funds to purchase food and petrol to travel to purchase food, etcetera, to enable me to continue to live at that time. When I applied for a temporary loan, the CBA knew I was planning to return to work as soon as possible. If the CBA had approved this temporary loan, I would have returned to my government employment, working my standard hours, on 4 January 2016. The CBA knew that their decision in November 2015 to decline this temporary loan would force me to resign from my permanent government employment to access my superannuation and I would suffer significant financial hardship for the remainder of my life.
2. In November 2015, the Commonwealth Bank of Australia deceived me about its responsible lending obligations in accordance with what was described to me at that time as the Lending Code of Practice implemented by the Australian government.
3. In addition to breaching its responsible lending obligations, the Commonwealth Bank of Australia breached its obligations under the Code of Banking Practice 2013 and the recommendations of the Code Compliance Monitoring Committee by failing to give genuine consideration to my significant financial hardship at that time and not engaging actively and cooperatively with me to ensure an effective outcome. The CBA failed to assist me to stop my circumstances from deteriorating. The CBA failed to deal with my urgent complaint dated 5 November 2015 about the decision of the CBA on 4 November 2015 in a genuine, fair and prompt manner. The CBA did not contact me about my complaint, dated 5 November 2015, until 16 November 2015, after the CBA knew I had been forced to resign from my permanent government employment to access my superannuation so that my companion animals and I could continue to live at that time.”
The background to this matter has been helpfully set out by His Honour Judge Jarrett in a previous decision.
It would seem that the Applicant had four separate loan facilities at various levels with the Commonwealth Bank as at October 2015. Because of the very sad and unfortunate illnesses that occurred to the animals with whom she cared and lived with, the Applicant was, as far as she was concerned, forced to stay away from her employment so that she could care for the animals and, hopefully, nurse the animals at least back to health, or be there for them.
The Applicant took leave without pay to do this because she had exhausted all other ways in which she could take paid leave. Because the illnesses were not responding in any way and, certainly, because the Applicant felt it would have been quite cruel to euthanize the animal before it was that every effort could have been made to save their lives, the Applicant sought a loan from the Commonwealth Bank to, in effect, tide her over until there was some definite prognosis with the animals and that she could fix up her life and then return to work.
The Commonwealth Bank declined that loan.
The Applicant then, because she had been given advice that she could access her superannuation, attempted to access her superannuation and was, for some reason that I still cannot fully understand, unable to access that superannuation.
She was given the advice again that she should then resign because once she had finished working, she could access her superannuation.
Again, for some reason, that did not seem to happen straight away because she was told that she needed to be on Centrelink benefits for some time before that could happen. A decision was made that that, in effect, stopped her from accessing payments until the completion of that period.
She reviewed that decision and the Centrelink payments did start. She then asked for, in effect, an act of mercy payment by the Commonwealth under the Centrelink provisions, which is a Ministerial discretionary decision. The Minister declined to give her such a payment and the Applicant asked for a judicial review of that decision. In reviewing that decision, His Honour Judge Jarrett refused the application and dismissed it with costs.
It was after this time that the Applicant said that she realised that the Commonwealth Bank had been derelict in its duty and had actually breached its obligations. She then brought the action in this Court on those grounds that I have previously read out.
The remedy that she sought is for an amount of $750,000 to compensate her for the loss she has incurred as a consequence of the decision to decline that loan. She has also wanted all of the interest that had been charged to her four accounts by the Commonwealth Bank to be refunded and for the Bank to refund the repayments that she has made on her home loan, personal loan and credit card accounts since 11 November 2015.
Her rationale for that is that this decision and what has happened afterwards has crippled her financially.
Whilst she has the sympathy of the Court for the circumstances that she finds herself in, nevertheless, the Court has a duty to ensure that the law is upheld, notwithstanding any personal cost it may cause to any particular person.
The matter came before me as a first Court date on 12 March 2013 where the Respondent, the Commonwealth Bank, asked for a further date for an application for summary dismissal.
As 12 March was a first Court date duty date, I did set the matter down for another date, mainly because the Applicant needed to have some time to prepare herself for such a matter and, also, because I certainly did not have enough time in that day to entertain such an application. So the matter was adjourned to today.
As can be seen from the grounds that I read into the record, the Applicant has not demonstrated a cause of action that would enliven the jurisdiction of this Court.
Through a series of questions that I gave to the Applicant at the beginning of the process today, I can infer that this application is an application pursuant to s.178 of the National Consumer Credit Protection Act 2009 (Cth) (“the Act”). Under s.178 of that Act, the Court may order a person, in this case the Commonwealth Bank, to compensate another person (the plaintiff) and in this case, Ms Dennis, for loss or damage suffered by the plaintiff, if the Commonwealth Bank had contravened a civil penalty provision or committed an offence against the Act and the loss or damage resulted from the contravention or commission of the offence.
Being that this now is an application pursuant to s.178, Ms Dennis was able to particularise that the civil remedy provisions that were breached were s.130, s.131 and s.160D. There was also a breach of the general provision under section s.47 of the general conduct obligations of licensees.
Section 130 reads as follows:
“Requirement to make inquiries and take steps to verify
(1) For the purposes of paragraph 128(d), the licensee must, before making the assessment:
(a) make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract; and
(b) make reasonable inquiries about the consumer’s financial situation; and
(c) take reasonable steps to verify the consumer’s financial situation; and
(d) make any inquiries prescribed by the regulations about any matter prescribed by the regulations; and
(e) take any steps prescribed by the regulations to verify any matter prescribed by the regulations.
Civil penalty: 2,000 penalty units.
(1A) If:
(a) the credit contract is a small amount credit contract; and
(b) the consumer holds (whether alone or jointly with another person) an account with an ADI into which income payable to the consumer is credited;
the licensee must, in verifying the consumer’s financial situation for the purposes of paragraph 128(d), obtain and consider account statements that cover at least the immediately preceding period of 90 days.
(1B) Subsection (1A) does not limit paragraph (1)(c) of this section.
(2) The regulations may prescribe particular inquiries or steps that must be made or taken, or do not need to be made or taken, for the purposes of paragraph (1)(a), (b) or (c).”
It is not alleged that subsection (1A) applies, but even if it did, I must look at it. The provisions of s.128 that were referred to in s.130 are these. Section 128 says that:
“A licensee must not:
(a) enter a credit contract with a consumer who will be the debtor under the contract; or
(aa) make an unconditional representation to a consumer that the licensee considers that the consumer is eligible to enter a credit contract with the licensee; or
(b) increase the credit limit of a credit contract with a consumer who is the debtor under the contract; or
(ba) make an unconditional representation to a consumer that the licensee considers that the credit limit of credit contract between the consumer and the licensee will be able to be increased;
on a day (the credit day) unless the licensee has, within 90 days (or other period prescribed by the regulations) before the credit day:
(c) made an assessment that:
(i) is in accordance with section 129; and
(ii) covers the period in which the credit day occurs; and
(d) made the inquiries and verification in accordance with section 130.
Civil penalty: 2,000 penalty units.”
Section 129 of the Act says:
“For the purposes of paragraph 128(c), the licensee must make an assessment that:
(a) specifies the period the assessment covers; and
(b) assesses whether the credit contract will be unsuitable for the consumer if the contract is entered or the credit limit is increased in that period.
Note: The licensee is not required to make the assessment under this section if the contract is not entered or the credit limit is not increased.”
It then goes to show, then, section 130 is really only a matter that applies when it is that the bank was looking at increasing the credit limit, and it is only when the credit limit is going to be increased that s.128, s.129, and s.130 need to be complied with.
The requirement s.131 relevantly says that:
“Requirement to assess the contract as unsuitable
(1) The licensee must assess that the credit contract will be unsuitable for the consumer if the contract will be unsuitable for the consumer under subsection (2).
Civil penalty: 2,000 penalty units.
Note: Even if the contract will not be unsuitable for the consumer under subsection (2), the licensee may still assess that the contract will be unsuitable for other reasons.
Particular circumstances when the contract will be unsuitable
(2) The contract will be unsuitable for the consumer if, at the time of the assessment, it is likely that:
(a) the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship, if the contract is entered or the credit limit is increased in the period covered by the assessment; or
(b) the contract will not meet the consumer’s requirements or objectives if the contract is entered or the credit limit is increased in the period covered by the assessment; or
(c) if the regulations prescribe circumstances in which a credit contract is unsuitable—those circumstances will apply to the contract if the contract is entered or the credit limit is increased in the period covered by the assessment.
(3) For the purposes of paragraph (2)(a), it is presumed that, if the consumer could only comply with the consumer’s financial obligations under the contract by selling the consumer’s principal place of residence, the consumer could only comply with those obligations with substantial hardship, unless the contrary is proved.
(3A) If the contract is a small amount credit contract (the relevant contract) and either of the following apply:
(a) at the time of the assessment:
(i) the consumer is a debtor under another small amount credit contract; and
(ii) the consumer is in default in payment of an amount under that other contract;
(b) in the 90‑day period before the time of the assessment, the consumer has been a debtor under 2 or more other small amount credit contracts;
then, for the purposes of paragraph (2)(a), it is presumed that the consumer could only comply with the consumer’s financial obligations under the relevant contract with substantial hardship, unless the contrary is proved.
Information to be used to determine if contract will be unsuitable
(4) For the purposes of determining under subsection (2) whether the contract will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account:
(a) the information is about the consumer’s financial situation, requirements or objectives, or any other matter prescribed by the regulations under paragraph 130(1)(d) or (e);
(b) at the time of the assessment:
(i) the licensee had reason to believe that the information was true; or
(ii) the licensee would have had reason to believe that the information was true if the licensee had made the inquiries or verification under section 130. The applicant contends that the Act is there to protect the consumer.”
When one looks at all of those provisions as well as section 160D, which is a prohibition on giving misleading information, that contention, that these sections apply to an increase in credit, is absolutely correct.
The problem for the Applicant here is that when one looks at those provisions, they are to ensure that there is no irresponsible lending of money that would cause a person to get in over their head; and that a licensee or a lender must make absolutely sure that what occurs in the process of either lending money or extending further credit is a rigorous process that ensures that the consumer is protected from getting into a financial position from which they would be unable to extract themselves.
In this matter, what has occurred is that the Commonwealth Bank has looked at the situation and come to a decision that it should not increase the credit liability of the Applicant. The Applicant in this case says that such a decision was in breach of the obligations that the Commonwealth Bank of Australia had to its consumers, and was a contravention of the protections in the Act.
However, the Applicant has not been able to show me any evidence that the Commonwealth Bank had actually failed in the obligations that it has pursuant to s.130 and s.131. Those sections, as I say, have to be read with s.128 and s.129.
That being the case, it is quite obvious that what has occurred here is that the Commonwealth Bank has looked at all of the information that the Applicant has given it. The Commonwealth Bank has come to a decision in accordance with all of those sections.
However, it is a decision with which the Applicant vehemently disagrees. The Applicant is firmly of the view that if the Commonwealth Bank had looked at all of the circumstances, it would have given her the loan. That is, of course, extremely circular reasoning. It is solely based on a presumption that, because the decision was not one with which the Applicant agrees, there must have been an incorrect process by which the Commonwealth Bank came to that decision; and if there was an incorrect process, therefore that must be a breach of this particular Act. As I say, such reasoning does not translate into logic.
It is quite distressing to see what has happened to the Applicant in her life since this time, but that is not a consideration that the Court can take notice of in looking at whether there is actually a case that the Commonwealth Bank has to answer. Neither is the fact that there are quite a number of terrible details coming out about banks and financial institutions in the present Hayne Royal Commission into Banks and Financial Institutions. All of that material is quite extraneous to the Court’s thinking. The Court must look at what is before the Court.
Pursuant to s.13.10 of the Federal Circuit Court Rules 2001 (Cth), the Court can dismiss an application if, in the view of the Court, the Applicant does not have a reasonable prospect of success in prosecuting the application.
In this case, there is no reasonable prospect of success. The Applicant cannot point to any evidence other than subjective feelings that would show that there has been any breach of s.130 and s.131. In those circumstances, the duty of the Court is to put an end to the litigation before it gets too far and clogs up the system.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Vasta

Date:14 May 2018