Ennis v Credit Union Australia
[2016] FCCA 1705
•22 June 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ENNIS v CREDIT UNION AUSTRALIA | [2016] FCCA 1705 |
| Catchwords: CONSUMER LAW – Misleading and deceptive conduct – unfair terms – where applicant’s case described as “Organised Pseudolegal Commercial Argument” – application summarily dismissed. |
| Legislation: Competition and Consumer Act2010 (Cth) Federal Circuit Court Act 1999 (Cth) s.17A |
| Cases cited: Meads v Meads (2012) ABQB 571 First National Bank of Montgomery v. Jerome Daly, Dec. 9, 1968 (Justice Court, Credit River Township, Scott County, Minnesota) Zurn v Northwestern National Bank 284 Minn. 573, 170 N.W.2d 600 (1969) Daly v Savage State Bank 285 Minn. 503, 171 N.W.2d 218 (1969) In re Jerome Daly 291 Minn. 488, 189 N.W.2d 176 (1971) Tuttle v. Chase Home Finance, LLC et al., U.S. District Court for the District of Utah, Oct. 26, 2008, case no. 2:08-CV-574-DB |
| Applicant: | ALANA-KARENE ENNIS |
| Respondent: | CREDIT UNION AUSTRALIA |
| File Number: | BRG 7 of 2016 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 29 February 2016 |
| Date of Last Submission: | 29 February 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 22 June 2016 |
REPRESENTATION
| The Applicant appeared in person |
| Counsel for the Respondent: | Mr M. Jones |
| Solicitors for the Respondent: | Thomsons Lawyers |
ORDERS
BY CONSENT THE COURT ORDERS THAT:
The application filed on 14 June, 2016 by the applicant be dismissed.
The application filed on 15 June, 2016 by the respondent be dismissed.
THE COURT ORDERS UNTIL FURTHER ORDER THAT:
Of the application filed on 6 January, 2016, Grounds 1 – 4 are dismissed pursuant to rule 13.10(1) of the Federal Circuit Court Rules 2001.
By no later than 4:00pm on 29 June, 2016 the Applicant file and serve a written statement identifying:
(a)the responsible lending criteria that she alleges should have been observed; and
(b)how they have been breached by the respondent when it made a loan to her on 28 August 2012.
By no later than 4:00pm on 13 July, 2016 the Respondent file and serve a response.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 7 of 2016
| ALANA-KARENE ENNIS |
Applicant
And
| CREDIT UNION AUSTRALIA |
Respondent
REASONS FOR JUDGMENT
Revised from the transcript
This application was commenced on 6 January, 2016 by Ms Ennis. In the application she seeks a number of orders that are expressed to be orders pursuant to the Competition and Consumer Act 2010.
The first order that she seeks in her application is that an amount claimed of approximately $60,000 be returned to her. They are payments made by her on a mortgage that the respondent holds and which is registered over the title to property that is currently owned and occupied by Ms Ennis and her partner.
She seeks an order discharging the mortgage or the “alleged mortgage/loan debt”. She seeks an order “to void the alleged mortgage contract ab initio between the respondent and the applicant”, again pursuant to the Competition and Consumer Act.
She seeks an order for damages, although the application does not specify the amount claimed. She seeks an order “for the respondent to transfer the title deed to the applicant”, again pursuant to the Competition and Consumer Act. And she seeks an order “that the respondent provide the original (not a certified copy) unaltered, wet ink, with signature duly signed mortgage note”.
The grounds of her application are set out in her Initiating Application. There are six of them.
The first is that she alleges that the respondent has engaged in conduct that is misleading, deceptive, unconscionable and fraudulent in contravention of the Competition and Consumer Act.
The second is that the respondent has imposed unfair contract terms on her in contravention of the Competition and Consumer Act.
The third is that the respondent has breached the alleged contract pursuant to the Competition and Consumer Act.
The fourth is that the respondent has engaged in conduct that is misleading, deceptive and fraudulent in contravention of the National Consumer Credit Protection Act 2009.
Fifth, she says that the respondent should not have entered into any loan agreement, alleged or otherwise, with she and her partner that the respondent therefore, breached “their responsible lending obligations” under the National Consumer Credit Protection Act.
The sixth ground is really not a ground at all and I will not reiterate it in these reasons.
The respondent has applied for summary dismissal of the Initiating Application. The respondent says that there are no reasonable prospects of the applicant successfully prosecuting the application. Alternatively, it is said to be frivolous or vexatious or, perhaps, an abuse of process.
The applicant’s submissions in response to the application for summary dismissal suggest that the Court has no lawful authority to dismiss or stay her proceeding. But I am against her on that proposition. The Court does have lawful authority to do that. It is to be found in section 17A of the Federal Circuit Court Act 1999 and in the rules that have been made pursuant to that Act. And it is pursuant to the Act and Federal Circuit Court Rules 2001 that the respondent pursues this application.
In support of the application for summary dismissal, the respondent has filed an affidavit of Jason Alexander McCubbin filed on 11 February, 2016. Mr McCubbin is a solicitor who is acting for the respondent and annexed to his affidavit is a bundle of annexures – a bundle of documents which in all respects bar one complies with the Rules. Despite the Rules requiring that the annexures be identified by an annexure marking that is signed by the witness who witnessed Mr McCubbin’s signature, the witness did not place their signature on the annexure marking.
Ms Ennis argues that the annexure and the documents contained with it are inadmissible and should be struck out for that reason. I decline to strike them out. To the extent that it is necessary to do so, pursuant to the rules of the Federal Circuit Court, I dispense with the requirement for that signature to appear on the annexure marking. It seems plain that it is an oversight and there would be no purpose in striking out that annexure because it could easily be cured by refiling the affidavit.
The respondent suggests that the applicant has pursued these proceedings by seeking to engage an argument which has found some favour with persons who are seeking to avoid payment of their debts, around the world really, but principally in the United States, Canada and Australia. The argument is described in the material as an “Organised Pseudolegal Commercial Argument” and there are, as the respondents submissions point out, a number of hallmarks to that type of approach which are present in the current case.
The relevant approach has been described in other cases – and I do not intend in these reasons to go through chapter and verse what that argument entails other than to say that it has been the subject of scholarly explanation in a decision from Canada called Meads v Meads (2012) ABQB 571. The argument and the approach is flawed and cannot succeed for the reasons explained in Mead v Mead.
In this application, although Ms Ennis disavows any knowledge of the “Organised Pseudolegal Commercial Argument” she does, nonetheless, seek to rely on a case which tends to suggest that she is, in fact, relying on the “Organised Pseudolegal Commercial Argument”.
The case concerned is a decision from a United States court in Minnesota. That decision, First National Bank of Montgomery v. Jerome Daly, Dec. 9, 1968 (Justice Court, Credit River Township, Scott County, Minnesota), also known as the Credit River Case was a case where a Justice of the Peace in a court in Minnesota determined that the U.S. Federal Reserve Act was unconstitutional and void; determined that the U.S. National Banking Act was unconstitutional and void and declared a mortgage acquired by the First National Bank of Montgomery, Minnesota in the regular course of its business, along with the foreclosure and a sheriff's sale to be void. The respondent, who was being pursued by his bank for recovery of land that was used as security for a loan, was successful in avoiding having to repay the debt and by the decision was able to keep his land.
In her materials Ms Ennis suggests that that case is somehow important here; she suggests that the decision has survived an appeal because an appeal was made out of time and dismissed and that the decision should bind me. But none of that is correct. The decision has no importance here for a number of reasons. First, it is a decision of a very minor court in the United States given in 1968. It has no precedent value here. It is not even part of the same court system. Secondly, the decision in that court was “voided” in 1969 by a subsequent decision of the Minnesota Supreme Court: see Zurn v Northwestern National Bank 284 Minn. 573, 170 N.W.2d 600 (1969).
The same thing happened in another case also involving Mr Daley, as it turns out, Daly v Savage State Bank 285 Minn. 503, 171 N.W.2d 218 (1969). Sadly for Mr Daly, who was a lawyer, following those decisions he was disbarred as a direct result of the arguments in those cases: In re Jerome Daly 291 Minn. 488, 189 N.W.2d 176 (1971).
There has also been an erudite discussion of these types of matters in a case called Tuttle v. Chase Home Finance, LLC et al., U.S. District Court for the District of Utah, Oct. 26, 2008, case no. 2:08-CV-574-DB.
So enough said about the “Organised Pseudolegal Commercial Argument” and the cases upon which it might be founded. Here there are some facts which are not in dispute. The first is that Ms Ennis and her partner or husband are the registered proprietors of some land upon which a house is constructed at Redbank Plains. They live there. They purchased that property in 2012. It is clear from the evidence that they did not have enough money themselves to buy the house. They needed to borrow some.
The respondent in this case provided the money that they borrowed. The documents make it clear that the respondent provided part of the purchase price, the amount of the loan and some other costs to Ms Ennis and her partner and that was used to purchase the property. There is a disbursement authority signed by Ms Ennis and her partner and there is a mortgage document registered with the Titles Office signed by each of them as well. There have been mortgage repayments of some $60,000 made since the loan was advanced.
What then might be the problem, one might ask? Well, according to the argument before me there are two problems as far as Ms Ennis is concerned. The first is that there is no “loan contract” which has been signed. The evidence reveals that there was an offer of a loan made to Mr and Ms Ennis. The copy in the evidence, which is to be found attached to a number of affidavits, but in particular the affidavit of Mr McCubbin to which I have earlier referred, is unsigned.
The National Consumer Code which appears as schedule 1 to the National Consumer Credit Protection Act requires by s.14(1)(b), that any offer of a loan be signed by the credit provider. Ms Ennis says there is no offer of a loan that has been signed by the credit provider. She does not articulate her argument in that way. She says there is no loan contract. But the Act and the Code suggest that it is sufficient if there is a written contract document signed by the credit provider which constitutes an offer of a loan. In any event, she says there is not one of those in this case.
The evidence from the respondent is that the respondent holds its documents electronically and that no copy of the signed offer of loan is retained, although it is signed when it is sent out by mail to the proposed borrower.
Ms Ennis and her partner Mr Ennis both swear that they never received a signed offer for a loan. I might be over-egging the pudding a little there because, on a closer scrutiny, their evidence might not amount to that, but I will take it that that is what they mean in their affidavits.
And so there is an issue of fact about whether a signed offer of the loan was given to Mr and Ms Ennis. Ms Ennis says that there is evidence from her solicitors who acted for them on the conveyance that there was no signed loan contract. But proper analysis of that evidence shows that that is not what the evidence says. What she requested from her former solicitors was information about whether there was any loan contract or mortgage contract in their possession relating to the loan from the respondent in this case. The solicitors responded that there was no “mortgage contract”. The evidence from her solicitors does not suggest that there was no offer of loan – something completely different to a “loan contract”. The solicitors’ evidence does not support Ms Ennis’ case.
By its terms, the offer of the loan relied upon by the respondent provided for how the offer was to be accepted. There was no loan contract, as such, signed or executed by each of the parties but, rather, the loan contract came into being upon acceptance of the respondent’s offer by Mr Ennis and Ms Ennis in the way stipulated by the respondent. That happened when they signed and returned to the respondent a “disbursement authority”. That is what the offer of loan required to be done for the offer to be accepted. And there seems to be no dispute that that is what Mr and Mrs Ennis did. As I have already indicated, there is the signed disbursement authority by each of them.
Ms Ennis seems to argue in one of her written submissions that the bank fraudulently secured her signature on that document but it is difficult to see how and there are no particulars of the fraud given.
So, to the extent that Ms Ennis’ case hinges on the notion that there is no “loan contract”, there is. There is the offer of the loan accepted in the way provided for by the offeree and which, upon acceptance, created a binding agreement. It must be the case that Mr and Ms Ennis received the offer of loan, signed or not, because they signed and returned to the respondent the disbursement authority necessary to accept the offer of the loan.
That does not, however, deal with the issue of whether the offer of loan was signed or not as required by the National Credit Code. Section 14(1) requires it to be signed. Section 124 of the National Credit Code gives a person who suffers loss because s.14(1) has not be complied with a right to obtain an order from the court for restitution or compensation as a result of the non‑compliance. Assuming that the offer of loan was not signed as required by s.14(1) of the Code, it is difficult to see how Ms Ennis and Mr Ennis have suffered any loss by reason of that default. They accepted the offer, took the money, used it to buy the house and have lived there ever since.
Even if it was the case that there was some consequence for Ms Ennis by reason of the offer of loan not being signed, the entitlement to which s.124 of the National Credit Code speaks is an entitlement to restitution or compensation. Insofar as restitution is concerned, that would probably mean that she gets back what she may have paid away, I suppose, by reason of the default. But in making restitution, Ms Ennis would, no doubt, have to give back the money that the respondent gave to her. She disavows any liability to do that. That is to say, she is not prepared, according to her own arguments to me, to return the respondent to the position it was in, in return for restitution under s.124 of the Code.
As I have said, it is difficult to see what loss she might have suffered by reason of the absence of a signature on the offer of the loan (if indeed that was the case) and, therefore, to what compensation it might be that she is entitled.
The second issue raised by Ms Ennis is whether the respondent has properly applied its lending criteria to determine whether it ought to lend her money. There are some factual disputes about that. The respondent’s material makes it reasonably clear that the respondent has, at the very least, attempted to discharge its obligations in that respect. There are working sheets and the like in evidence.
The real argument is whether the respondent has used the correct figures. The evidence is, quite plainly, I think, that it has used the figures that Ms and Ms Ennis gave to the respondent to use. But the matter is not free from doubt. There is some evidence from Ms Ennis that the figures may have been misinterpreted and the wrong figures used.
They are really the two points that emerge from all of the written submissions and the material and the arguments that I have heard. There is really nothing else in the case.
There are, on the evidence before me filed by either party, no irregularities in any of the practices of the respondent that might engage the Court’s attention. That is so even having careful regard to the material relied upon by Ms Ennis and, in particular, the material from the Federal Reserve Bank of the United State of America.
The evidence permits of only two queries, the first in respect of the signature on the offer to loan and the second in respect of the application of the lending criteria. To succeed on the application the respondent needs to demonstrate that Ms Ennis has no reasonable prospect of successfully prosecuting her claim.
As to the first issue I have identified, namely that there was no signed loan contract that can be produced by the respondent, Ms Ennis’s case must fail. There is a loan contract between the parties in the way in which I have explained and, apart from anything else, the mortgage document itself signed by the parties and registered over the title also represents such an agreement.
To the extent that her case really is that there was no signed offer of loan and s.14 of the National Credit Code was not complied with, she has no prospect, in my view, of successfully prosecuting a claim for either restitution or compensation. Her evidence establishes no loss on her part by reason of the default. For those reasons, that aspect of the claim based on that argument will be dismissed.
I am not so satisfied, however, in respect of the argument concerning the application of the lending criteria. There are some factual matters that need determination and it might be, if those factual matters are determined in Ms Ennis’s favour, that there may be some relief available to her. But those matters must await an examination of the evidence in due course.
So to the extent that her application seeks relief in respect of breaches of the Competition and Consumer Act for misleading, deceptive, unconscionable and fraudulent conduct, her claim is summarily dismissed.
Insofar as her claim seeks relief from unfair contract terms pursuant to the Competition and Consumer Act, it is summarily dismissed.
To the extent that her claim is based upon an allegation that the respondent has breached the alleged contract pursuant to the Competition and Consumer Act, her claim is dismissed.
To the extent that she seeks relief by reason of the respondent failing to apply its responsible lending obligations, to use her words from her application, I refuse to summary dismiss the claim.
In those circumstances, the only remaining matter for determination is whether the respondent has breached those obligations on the facts which will be found at trial.
So that is abundantly clear, the only issue for further determination by the Court is whether the respondent has breached its own responsible lending criteria or any responsible lending criteria that emerges from the National Credit Code or the National Consumer Credit Protection Act 2009.
RECORDED : NOT TRANSCRIBED
The applications that were filed on 14 and 15 June by each of the parties will be, with the consent of each of the parties, dismissed.
RECORDED: NOT TRANSCRIBED
As with the summary dismissal application, the costs of those of those applications are reserved.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 22 June, 2016.
Date: 25 January 2017
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