Fast Access Finance (Beaudesert) Pty Ltd v Charter
[2012] QCATA 51
•21 March 2012
| CITATION: | Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor [2012] QCATA 51 |
| PARTIES: | Fast Access Finance (Beaudesert) Pty Ltd Diamond Clearing House Pty Ltd (Applicants/Appellants) |
| v | |
| Rachel Charter Michael Sinclair (Respondents) |
| APPEAL NUMBER: | APL450-11 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr J R Forbes, Member |
| DELIVERED ON: | 21 March 2012 |
| DELIVERED AT: | Brisbane |
ORDER MADE: | 1 Leave to Appeal refused. 2 Liberty to either party to make a written application for costs within 14 days of delivery of this decision. If any such application is made, the other party may file a written response thereto within 28 days of delivery of this decision. |
| CATCHWORDS: | Application for leave to appeal – minor civil claim – whether series of contracts and arrangements a consumer credit loan Queensland Civil and Administrative Tribunal Act 2009, ss 32, 142(3)(a)(i) |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
In November 2009 the Respondents Rachel Charter and Michael Sinclair made arrangements with the Applicants Fast Access (Beaudesert) Pty Ltd and Diamond Clearing House Pty Ltd which they say was a consumer credit loan. Charter and Sinclair asked the Tribunal to reopen the transaction, claiming that it was a device to charge an exorbitant rate on interest, far in excess of the 48% limit then allowed by the Consumer Credit (Queensland) Act 1994 and Consumer Credit Code (Queensland) (now repealed).[1] But Fast Access and Diamond Clearing House contend that the dealings in question are a lawful transaction to which the Code does not apply.
[1]The potential applicability of these enactments to the present dispute is common ground: see pre-hearing submissions of Fast Access and Diamond Clearing House Item 3.2.
In a decision delivered on 25 October 2011 Adjudicator LeMass upheld Charter’s and Sinclair’s claim, and awarded them $1,500. From that decision Fast Access and Diamond now seek leave[2] to appeal. There is no appeal as of right. It is a principal object of the Queensland Civil and Administrative Tribunal Act 2009 to resolve disputes quickly and economically.[3] Subject to justice and reason, finality of the primary decision is consonant with the policy of that Act.
[2]As required by the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”), s 142(3)(a)(i).
[3]QCAT Act, s 3(b).
The Respondents Approach Fast Access
In November 2009 the Respondents were living in rental premises at Eagleby. Charter was 20 years of age; she left school without completing Grade 10, although at the time of the trial she was enrolled in a TAFE course, to enable her to complete that grade. Sinclair, then 21, was in and out of work as a boilermaker or a sanitary technician. Their rent and electricity accounts were in arrears. They decided to apply for a loan. So they went to the Beaudesert office of Fast Access, where they were interviewed by a Ms Tracey Reed. She prepared several documents for their signatures, including one headed “Fast Access – Finance Application”. They did not seek any independent advice, or ask for time to examine and consider the documents placed before them.
The Respondents’ position vis a vis Fast Access was markedly different from this scenario in a case before Dutney J in 2009:
“I do not accept [the defendant’s] evidence that he was unaware of the content of the letter he signed .... The fact that the document is so short and separate from the other papers makes it unlikely that he would not have been aware of the nature of the document he was signing. Having regard to the fact that [he] was at all times represented by and usually dealing through his accountant and had the documents explained to him by a solicitor, I have difficulty in accepting that he was unaware of what he was doing.”[4]
[4] Australian Capital Providers Pty Ltd v Wakelin & Anor [2009] QSC 167 at [43].
According to Charters, Reed made no attempt to explain the nature of the transaction or contents of the documents.[5] And as Sinclair puts it: “We just signed where she told us to”.[6]
[5] Affidavit of Charters paragraph 31. See also Sinclair, cross-examined, transcript page 31.
[6] Affidavit of Sinclair paragraph 23.
They signed the following series of documents:[7]
(a) Fast Access Finance – Loan Application;
(b) Privacy Act Consent Form;
(c) Fast Access Finance Sales Agreement (8 diamonds);
(d) Collateral Security Agreement (Holden sedan);
(e) Bill Buddy Direct Debit Request;
(f) Purchase Agreement (Diamond Clearing House Pty Ltd from Respondents);
(g) Tax Invoice (Fast Access to Respondents).
[7] Copies exhibited to affidavit of Tracey Kim Reed 6 September 2011.
Item (b) – the Privacy Act Consent Form – includes this statement by Charters and Sinclair: “We have made application to Fast Access ... to borrow a certain amount of money”. So far there was no mention of diamonds.[8]
[8] Transcript page 44 (Reed).
Ms Charter and Mr Sinclair say – and the Adjudicator accepted – that at all material times they believed that Fast Access was a money lender, and that they were simply seeking a loan to pay their rent and electricity account, with not the remotest thought of diamonds. Sinclair had secured a loan from Fast Access some two years before, and still saw that company as a “normal loan shop”.[9] It was Charters’ first experience with Fast Access.[10] There is support for Sinclair’s evidence in the cross-examination of Ms Reed:
MR CLEARY: In November 2009 you advertised your services as being a lender?
MS REED: More than likely, yes.
[9] Affidavit of Michael Sinclair, sworn 2 September 2011, paragraph 25.
[10] Affidavit of Rachel Charter, sworn 2 September 2011, paragraph 9.
MR CLEARY: And so ... it would be reasonable for Michael and Rachel ... to think you were a lender?
MS REED: Yes, it’s reasonable for them to have thought that, yes.[11]
[11] Transcript page 44.
According to Sinclair there was a sign in Fast Access’ office, at the time of their application, reading: “Instant loans up to $2000”.[12] As recently as 14 December 2010, the office displayed a pamphlet reading in part: “Fast Access Finance – Ezi Bonds, Rent and Loan Monies ... Loans also available for other purposes”,[13] and a billboard proclaiming: “Fast Access Finance, funds available right now”. A photograph of the billboard is in evidence and its authenticity is undisputed.[14]
[12] Sinclair cross-examined, transcript page 27.
[13]Exhibit JJU-1 to Affidavit of Joshua James Underwood, sworn 1 September 2011, and paragraph thereof.
[14] Transcript page 48 (Reed).
The Customers Express Surprise
Charter and Sinclair say that when they left the Fast Access office to drive home they realised, for the first time, that they were expected repay $2,000 for the $1,000 advanced to them, which eventually they did.[15]
MR CLEARY: ... Mr Sinclair and Ms Charter came into your office for a loan of $1000. They left your office with a liability of $2000?
MS REED: Yes they did.
[15] Transcript page 44 (Reed).
MR CLEARY: The cost to them of receiving a loan from you for $1000 was $1000 ... ?
MS REED: Yes.[16]
[16] Transcript page 50 (Reed).
That result was produced by purported dealings in unseen[17] diamonds, by arrangement between Fast Access and Diamond Clearing House.
[17] Transcript page 48 (Reed).
A little later, at home, they were even more surprised to find a document referring to diamonds – a topic which they swear was not mentioned in their twenty-minute interview with Tracey Reed.[18]
[18] Affidavit of Charter, paragraphs 33, 35-37. Affidavit of Sinclair 26, 29, 31.
Ms Reed (for Fast Access) Cross-Examined
Cross-examined about that interview, Reed agreed that one of the subject documents contains the phrases “Loan request” and “Loan agreement”.[19]
[19] Transcript page 38.
MR CLEARY: So that’s the loan application. The third page at the top ... it’s described as a loan request, isn’t it?
MS REED: It is.
MR CLEARY: ... [T]he following page ... it uses the phrase `Loan agreement’?
MS REED: Yes. ...
MR CLEARY: So you used this application?
MS REED: Yes.
MR CLEARY: On this particular occasion ...?
MS REED: Yes ... .
MR CLEARY: The form that you used when you took down the details of the applicants’ request for finance from you was your own form which described what they were doing as applying for a loan?
MS REED: I suppose you could say that. ... [20]
[20] Transcript pages 38-39 (Reed).
Free for a moment from documentary constraints Ms Reed was less forthcoming:
MR CLEARY: So it’s possible the applicants did say to you that they were seeking a loan?
MS REED: It’s possible but I don’t recall those words.[21]
[21] Transcript page 39 (Reed).
The terminology of a loan was not confined to the “Loan Request”. Ms Reed was referred to a Privacy Act Consent form signed by Charters and Sinclair:
MR CLEARY: And [on] the second page of that document ...there’s amount of $1000 written as the loan amount ... ?
MS REED: Yes.
MR CLEARY: So you filled out that figure of $1000?
MS REED: Yes.[22]
[22] Transcript page 42 (Reed) emphasis added.
As for the “diamond purchase”:
MR CLEARY: You mentioned nothing about diamonds when you told [Sinclair] that you were doing things differently ...?
MS REED: I didn’t mention anything about diamonds, no. I just told him that there was a facility where we could obtain funds. ... I can’t be 100% sure that I didn’t mention the diamonds totally at that stage. ...
MR CLEARY: In November 2009 you advertised your services as being a lender?
MS REED: More than likely, yes.
MR CLEARY: And so ... it would be reasonable for [the Respondents], having seen your advertisements, to think you were a lender?
MS REED: Yes.
MR CLEARY: And that when they entered you shop on 5 November 2009 that you would provide them with a loan?
MS REED: Yes. It’s reasonable for them to have thought that, yes.
The Adjudicator Finds a Credit Contract
How was the subject series of documents and arrangements to be characterised? The Adjudicator held that they amount to a credit contract, within the meaning of the former Consumer Credit (Queensland) Act 1994 and Consumer Credit Code (“the Code”).[23]If his decision is correct, the highest interest rate that Fast Access could lawfully charge was 48%[24], whereas the amount of $1,000, if correctly deemed to be interest on a loan of the same amount, is grossly in excess of that limit.
[23]In operation as at 5 November 2009 and applicable to the subject dealings; repealed by Credit (Commonwealth Powers) Act 2010. From now on the Act and the attached Code are simply called “the Code”.
[24]Consumer Credit (Queensland Special Provisions) Regulation 2008, s 3.
In essence the Respondents’ case, as accepted by the Adjudicator, is that the collection of documents generated by the first Appellant and perfunctorily signed by them is a colourable device for evading the 48% limit. In the Adjudicator’s view, the Applicants’ alternative version of the arrangements in question is “so highly unlikely, improbable and implausible as to be a complete fiction”.[25]
[25]Reasons for Decision at [27].
Pursuant to sections 70 and 71 of the Code, the Adjudicator held that the subject dealings were an unjust transaction, and proceeded to set it aside by ordering the Applicants to repay the interest paid ($1,000) and a further $500 for late payment fees. The only available evidence of the latter amount is the oral evidence of the borrowers, which the Adjudicator accepted, considering that Fast Access had repeatedly refused or failed to produce records of relevant receipts and payments.[26] There is no sufficient reason for disturbing that finding of fact.
[26]Reasons for decision at [33].
Another of the numerous complaints of Fast Access and Diamond Clearing House is that the Adjudicator erred in accepting evidence of solicitor Bridget Ann Burton[27] that the effective interest rate paid by Charters and Sinclair is approximately 224.77%[28] or 318.7% respectively.[29] Ms Burton fairly conceded that she used a computer-based programme that may not produce precisely the same results as the algorithm prescribed under the Act, but the Adjudicator reasonably concluded that the rates imposed on these borrowers were so far in excess of the permitted rate that possible minor variations could be safely disregarded.
[27]Affidavit of Bridget Ann Burton sworn 5 September 2011, paragraph 12.
[28]Repayment over 31 weeks.
[29]Repayment over 21 weeks.
In a submission verging on hyperbole Fast Access submits that acceptance of Ms Burton’s calculations denied it natural justice, in that she was permitted to act as an expert without qualifications to do so. I need not recite what Lord Denning, Megarry J and others have said about natural justice as a forensic haven of last resort.[30] Suffice it to say that the erroneous reception of inadmissible material, even in a court bound by the rules of evidence[31] seldom amounts to a denial of natural justice. But be that as it may, the witness was not acting as an expert; she was reporting the result of a process that anyone of moderate computer competence could readily conduct. The same might have been done, albeit more tediously, by arithmetic and pencil and paper.
[30]R v Secretary of State for the Home Department; Ex parte Mughal [1974] QB 313 at 325 per Denning MR; London Borough of Hounslow v Twickenham Garden Developments Ltd [1973] 3 All ER 326 at 347-348 per Megarry J.
[31]As this tribunal is not: QCAT Act, s 28(3)(b).
“Contract” According to the Code: Technicality or Reality?
I do not intend to traverse all the submissions, ingenious or otherwise that are urged in defence of the process followed by Fast Access and Diamond Clearing House. The real issue is whether the Adjudicator correctly characterised that process as a credit contract, and to that question I now turn.
It is necessary to consider the evidence in relation to two terms, namely “contract” and “credit contract” as they are defined for the purposes of Code. “Contract”, in particular, is not confined to its meaning at common law.
A “contract” governed by the Code need not be in a single document, or series of documents. Indeed, it may be, in part, a non-contractual “arrangement” or series of arrangements.[32] It is not necessary that all the contracts or arrangements be with the same person,[33] or that they be wholly in writing, although, absent writing, the lender would be in peril of section 20, and a maximum fine of 100 penalty units.
[32]Code Schedule 1.
[33]Bahadori v Permanent Mortgages Pty Ltd [2008] NSWCA 150.
Fast Access argues that the decision “is inconsistent with established law in respect of contract interpretation”. But that ignores the significantly extended definition of contract in the Code. The same applies to a submission that the Adjudicator failed to observe the “parole” [sic] evidence rule.
A “credit contract” is a contract under which credit is or may be provided, and to which the Code applies.[34] It applies when four conditions in sub-section 6(1) are met, and the Adjudicator, in reasonable findings of fact, held that they were.[35] Furthermore, Charter and Sinclair have the benefit of a legal presumption that what they allege was a credit contract is indeed a transaction of that kind.[36]
[34]Code, s 5.
[35]Adjudicator’s decision paragraph 6.
[36]Code, s 11(1).
The Minister’s Second Reading speech deplored the excessive technicality of previous legislation and commended the “plainer English” of the Code.[37] In my view the Code’s definition of “contract” has been deliberately written in plain English. It should be interpreted sensibly and reasonably, respecting Parliament’s intention to frame it as widely and realistically as possible, and with the remedial objects of the legislation in mind.
[37]QPD 4 August 1994 pp 8828, 8832.
The meaning of “arrangement” is left to the common law. The formula “contract, agreement or arrangement” (to which “understanding” is sometimes added) is now a legislative warning sign[38] that technicalities and artificialities calculated to defeat or evade consumer protection laws are no longer tolerable. The formula is a well-known and much-litigated solvent of tax avoidance schemes. In Bell v Federal Commissioner of Taxation[39] the High Court observed:
“[T]he word `arrangement’ is the third in a series which as regards comprehensiveness is an ascending series ... extend[ing] beyond contracts and agreements so as to embrace all kinds of concerted action by which persons may arrange their affairs ... to produce a particular effect.”[40]
[38]See for example Competition and Consumer Act 2010 (Cth) ss 45, 45E, Australian Consumer Law (Queensland) s 2 (“linked credit provider”); ss 14, 19, 38.
[39](1953) 87 CLR 548.
[40](1953) 87 CLR 548 at 573 per curiam, emphasis added.
In Newton v Federal Commissioner of Taxation the Privy Council visited the same definition. An “understanding”, their Lordships stated, is a word
“... apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons – a plan arranged between them which may not be enforceable at law ... not only the initial plan, but also all the transactions by which it is carried into effect ...”.[41]
[41](1958) 98 CLR 2 at 7-8 (PC).
Presented with the “series or combination of contracts, or contracts and arrangements” evidenced in this case, the Adjudicator reasonably found that it was a consumer credit contract. The Code, as a protective,[42] remedial measure is “to be construed so as to give the fullest relief which the fair meaning of its language will allow”.[43] Legislation such as the Code intends commercial reality, rather than legal technicality to be the guiding principle when there is any question of evading the enactment:
"The ultimate theory behind the philosophy of truth in lending in our credit legislation is that disclosure of critical elements in the consumer contract will help to ensure honesty and integrity in the relationship (where one party is normally disadvantaged or even vulnerable); promote informed choices by consumers; and allow the market for financial services to operate effectively."[44]
[42]Bahadori v Permanent Mortgages Pty Ltd [2008] NSWCA 150 at [57]; Fast Funds Pty Ltd v Coppola; Coppola v Hall [2010] NSWSC 470 at [163]; Rafiqi v Wacal Investments Pty Limited [1998] ASC 155-024.
[43]Mooloolaba Slipways Pty Ltd & Anor v Cashlaw Pty Ltd & Ors [2011] QSC 236 at [215], citing Bull v Attorney-General for New South Wales (1913) 17 CLR 370 at 384.
[44]Canham & Ors v Australian Guarantee Corporation Ltd & Anor (1993) 31 NSWLR 246 at 254 per Kirby P, in relation to similar legislation.
If the Adjudicator required any further encouragement to be robust, it may be found in the Code’s own directive:
“Interpretation best achieving Code’s purpose
(1) In the interpretation of a provision of this Code, the interpretation that will best achieve the purpose or object of this Code is to be preferred to any other interpretation.
(2) Subclause (1) applies whether or not the purpose is expressly stated in this Code.” [45]
[45]Schedule 2 Clause 7.
In The State of Queensland v Ward & Anor[46] an egregiously oppressive financier gained no benefit, but considerable liability, by cloaking consumer credit loans as loans for business purposes. While that decision turned on another provision of the Code, it embodies the principle that substance and reality should prevail.
[46][2003] QCA 366 .
The Adjudicator was satisfied that, while the words of the loan application and the diamond dealings point in quite different directions,[47] Charter’s and Sinclair’s experience with Fast Access and Diamond Clearing House should be treated as a whole, and, in substance,[48] amounts to a consumer credit contract. The Loan Application, as the “first arrangement in the series”[49], followed by an advance of $1,000, gave the series of documents and arrangements the quality of a consumer credit contract, although it was not compliant with sections 12 and 15 of the Code,[50] the substantial penalties[51] of which apply to complicit officers as well as offending corporations.[52]
[47]An expression used in McEntire v Crossley Bros [1895] AC 457 at 462-463.
[48]Australian Guarantee Corporation v Balding (1930) 43 CLR 140 at 150-151; Stradbroke Waters Co-owners Co-operative Society Ltd v Taylor [1988] 1 Qd R 595; Jonsson v Arkway Pty Ltd (2003) 58 NSWLR 451 at 456; Linkenholt Pty Ltd v Quirk [2000] ASC 155-040 at 200, 341 (“consider the substance of the transaction in the context of its performance”); Shakespeare Haney Securities Ltd v Crawford [2009] QCA 85 at [30].
[49]Bahadori v Permanent Mortgages Pty Ltd [2008] NSWCA 150 at [3] per Giles JA.
[50]State of Queensland v Ward & Anor [2003] QCA 366 at [7].
[51]Code, s 20, and see State of Queensland v Ward & Anor [2003] QCA 366 at [8]-[9], [14].
[52]Code, s 183.
Diamond Clearing House as a Party
Diamond Clearing House contends that the decision cannot apply to it, because it is not a party to the proceedings. That is not so. The original application on the Tribunal’s file shows that in the space for “Respondent Details” the Respondents inserted the words “see attached”. The corresponding attachment names both Applicants, with addresses for service. Other documents filed in the Tribunal, including an application for extension of time, filed by Fast Access on 18 November 2010, nominate both Applicants. Diamond Clearing House, by its agent[53] Ms Reed, participated in the credit contract in question.
[53]As admitted by her: transcript page 50.
Leave to Appeal?
This is not a case for leave. The Adjudicator was entitled to make the findings of fact on the evidence before him, including the assessment of moneys payable. Findings of fact will not usually be disturbed on appeal if the findings of fact by the original decision maker have rational, albeit debateable support in the evidence.[54] Leave is not to be given where a party simply desires to re-argue the case, on existing or additional evidence. One clear purpose of a “leave” requirement is to preclude any attempt to conduct a retrial on the merits.[55] It is necessary to demonstrate an appellable error, and one that results in substantial injustice.[56] This is not a case raising a question of general importance[57], but merely an application of the Code to a particular set of arrangements and circumstances. There is no evidence that these or similar arrangements are commonly used, or employed by Fast Access or kindred financiers on other occasions.
[54]Fox v Percy (2003) 214 CLR 118 at 125-126.
[55]Contrast QCAT Act, s 20 (review jurisdiction).
[56]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41; Drew v Bundaberg Regional Council [2011] QCA 359 at [19].
[57]Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 at 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 at 578, 580.
I can find no error of law in the decision under appeal. On the contrary, as appears above, it is well supported by legislative and judicial authority. Leave to appeal is refused.
No application has been made for costs. However, I propose to allow either party to make a written application in that regard within 14 days of delivery of this decision. If any such application is made, the other party may file a written response within 28 days of delivery of this decision.
ORDERS
The application for leave to appeal dismissed.
Liberty to either party to make a written application for costs within 14 days of delivery of this decision. If any such application is made, the other party may file a written response thereto within 28 days of delivery of this decision.
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