FLOCKTON and ANZ BANKING GROUP LIMITED - [2011] WASAT 57

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: CONSUMER CREDIT (WESTERN AUSTRALIA) ACT 1996

CITATION: FLOCKTON and ANZ BANKING GROUP LIMITED [2011] WASAT 57

MEMBER: DR B DE VILLIERS (MEMBER)

HEARD: 15 FEBRUARY 2011, 25 FEBRUARY 2011 AND 15 MARCH 2011

DELIVERED : 11 APRIL 2011

FILE NO/S: CC 1942 of 2009

BETWEEN: JON KIERAN FLOCKTON
Applicant
AND
ANZ BANKING GROUP LIMITED
Respondent

Catchwords:

Consumer credit Harsh and unconscionable conduct Unjust transaction Does the Tribunal have jurisdiction if funds are received without a credit contract? Can the conduct of the credit provider be construed as unjust if the credit contract was not unjust? Reopening of a transaction on the basis that it was unjust at the time when it was entered into or when the credit was provided Can an error by the bank be construed as an unconscionable or unjust transaction? Can an error by the bank be construed as a change to a credit contract? Mitigation of losses by the debtor Can the losses incurred by the debtor due to a collapsed investment scheme be taken into account to determine if the transaction was unjust?

Legislation:

Consumer Credit (Western Australia) Act 1996 (WA), s 5
Consumer Credit (Western Australia) Code 1996 (WA)
Consumer Credit (Western Australia) Code Regulations 1996 (WA), s 6(1)(b), s 70, s 70(1), s 70(2), s 70(4)
State Administrative Tribunal Act 2004 (WA), s 47

Result:

The application is dismissed

Category: B

Representation:

Counsel:

Applicant: Mr K Staffa
Respondent: Mr G Cobby

Solicitors:

Applicant: Staffa Lawyers
Respondent: Gadens Lawyers

Case(s) referred to in decision(s):

Antonovic v Volker (1986) 7 NSWLR 151
Australian Society Group Financial Services (NSW) Ltd v Bogan (1989) ASC
Custom Credit Corporation Ltd v Gray [1992] 1 VR 540
Custom Credit Corporation Ltd v Lupi and Ors [1992] 1 VR 99
Mah v Esanda Limited (Commercial) [2004] NSWCTTT 448
Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, [2004] HCA 52
WF Lean Ltd v Dale (1936) 39 WALR 22

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The proceeding concerns an application by Mr Jon Flockton to set aside a transaction between himself and the ANZ Banking Group Limited (ANZ Bank), on grounds that the conduct of the ANZ Bank relating to the transaction, was unjust.
The cause of action, in a nutshell, is that the ANZ Bank transferred an amount of $167,695.12 to the account of Mr Flockton which, he says, he never sought or applied for. Mr Flockton did not take issue with the loan account he had with the ANZ Bank but, he says, the conduct of the ANZ Bank, by providing him with unwanted credit, was unjust. In order to mitigate his losses to pay the interest on the non-requested loan, Mr Flockton says he had to invest the money and, as a result of the collapse of the investment scheme, he now suffers serious hardship.
Mr Flockton did not take issue with any term or condition of the credit contract but he contended that the conduct of the ANZ Bank, by providing him with unwanted funds, constituted an unjust transaction. Mr Flockton contended that the conduct of the ANZ Bank caused him to be credited with an amount of $167,695.12 for which he never applied and for which he never qualified. Mr Flockton further said, that due to the failure of the ANZ Bank to speedily investigate and resolve its error, he had no choice but to invest the funds. Mr Flockton contended that the ANZ Bank failed in several respects in its obligations towards him.
The ANZ Bank said, firstly, that the application should be dismissed since there is no credit contract in dispute and the application therefore falls outside the jurisdiction of the State Administrative Tribunal; secondly, the ANZ Bank said that it acted on the instructions of Mr Flockton; thirdly, even if the ANZ Bank had made an error by paying the amount of $167,695.12 to Mr Flockton, he should have given the ANZ Bank time to investigate the matter rather than invest it in a speculative scheme. The ANZ Bank contended there was nothing unjust in the transaction.
The Tribunal found as follows.
Firstly, the matter does not fall within the jurisdiction of the Tribunal since Mr Flockton accepts that there is nothing in the credit contract that can be brought within the realm of an unjust transaction. The erroneous transfer of the unrequested funds into the account of Mr Flockton cannot be described as an 'unjust transaction' within the context of s 70(1) of the Consumer Credit (Western Australia) Code Regulations 1996 (WA).
Secondly, even if it was found that the transaction fell within the ambit of s 70(1) of the Consumer Credit (Western Australia) Code Regulations, the Tribunal is satisfied that the ANZ Bank gave effect to the instructions provided by Mr Flockton by transferring the $167,695.12 into an account nominated by Mr Flockton.
Thirdly, if it was found that the ANZ Bank had erred, then such an error cannot be classified as an 'unjust transaction' under s 70(1) of the Consumer Credit (Western Australia) Code Regulations. Mr Flockton withdrew, and used, $250,000 for purposes which resulted in a very risky endeavour by investing the sum with a mortgage broker, Mr Mark Booty, without the necessary security. Although Mr Flockton now suffers hardship due to the failure of the investment, the Tribunal is not satisfied that, in the circumstances relating to the credit contract at the time that it was entered into, the transaction can be found to have been unjust.
The application must therefore be dismissed.

Issues

The key issue arising in these proceedings is whether the transfer of an amount of $167,695.12 by the ANZ Bank into the Access Advantage account of Mr Flockton, should be reopened, on the ground that in the circumstances relating to the transaction, at the time it was entered into, the contract was unjust (including unconscionable, harsh or oppressive).
During closing submissions, Mr Kevin Staffa, acting for Mr Flockton, emphasised that Mr Flockton is not taking issue with any term or condition of the credit contract he has with the ANZ Bank, but that the actions of the ANZ Bank in providing Mr Flockton with credit for which he did not apply, fall within the provisions of s 70(1) of the Consumer Credit (Western Australia) Code Regulations 1996 (WA) (Credit Code). Mr Staffa emphasised that s 70(1) of the Credit Code also applied to circumstances where there was no term or condition of a credit contract in dispute but where credit was nevertheless provided to a person in circumstances that were unjust.

Background

The application is made pursuant to s 5 of the Consumer Credit (Western Australia) Act 1996 (WA) (CC (WA) Act) and s 70(1) of the Credit Code pertaining to the reopening of an unjust credit transaction.
The facts giving rise to these proceedings can be summarised as follows.
Mr Flockton had, at various times, held several accounts with the ANZ Bank. The details of these accounts are usefully set out in the affidavit of the ANZ Bank's Collections Manager, Mr Geoffrey Mark Lee, dated 22 February 2011 (note, for reasons of privacy, only the last five numbers of each account is referred to) as follows:
•Home Loan account … 21915 (Variable Interest Home Loan account)
•Home Loan account … 90017 (New Fixed Interest Loan account)
•Investment Loan account … 85464 (Investment Loan account)
•Access Advantage account … 19347 (Access Advantage account)
•V2 Plus account … 78444 (V2 Plus account)
•Premium Cash Management account … 53015 (Premium Cash Management account).
On 3 August 2004, Mr Flockton entered into the Variable Interest Home Loan agreement with the ANZ Bank in the amount of $196,373.52, secured by a mortgage over a residential property owned by Mr Flockton. The application for the Variable Interest Home Loan was prepared and submitted to the ANZ Bank by a mortgage broker, Mr Mark Booty.
On 27 November 2007, Mr Flockton submitted to the ANZ Bank an investment loan application (Investment Loan) for the amount of $320,000. The application was also prepared by Mr Mark Booty. The purpose of the loan was to pay out the existing Variable Interest Home Loan of $188,000 and to provide for the remaining $132,000 to be available for purposes of investment. The ANZ Bank approved a loan of $296,000 which was 80% of the value of the residential property.
On 15 December 2007, Mr Flockton applied to the Kingsway branch of the ANZ Bank for the Variable Interest Home Loan to be refinanced. Mr Flockton and the ANZ Bank entered into the New Fixed Interest Loan on 21 December 2007.
On 21 December 2007, the ANZ Bank credited the Variable Interest Home Loan in the amount of $167,695.12 and debited the New Fixed Interest Loan to the same amount. Mr Flockton now owed $19,978.44 on the Variable Interest Home Loan and $167,695.12 on the New Fixed Interest Loan.
On 5 February 2008, the ANZ Bank advanced $296,000 to Mr Flockton, via the Investment Loan account. Of the $296,000, an amount of $19,585.53 was credited to the Variable Interest Home Loan, thereby discharging that loan in full. The remainder of $276,105.12 was paid into the Access Advantage account.
Mr Flockton's total debt to the ANZ Bank now amounted to $464,160.
On 12 February 2008, Mr Flockton met with the ANZ Bank's Senior Personal Banker at the Kingsway branch, Ms Capel Lee Margetic, to discuss his concern that the product he received from the ANZ Bank was not consistent with the product he sought. On Ms Margetic's advice, he opened a Premium Cash Management account. On the same day, Mr Flockton transferred, via the Internet, $276,105.12 from the Access Advantage account to the Premium Cash Management account.
On 15 February 2008, Mr Flockton withdrew $250,010, in the form of a bank cheque, from the Premium Cash Management account. The entire amount was invested in a scheme proposed by Mr Booty.
On 15 February 2008, Mr Flockton transferred, via the Internet, the balance of the Premium Cash Management account to the V2 Plus account.
Mr Flockton received a monthly amount of $4,166.60 from Mr Booty, in return on the investment of $250,000. These payments continued until 15 January 2009.
The investment scheme of Mr Booty failed and stopped paying interest to Mr Flockton around January 2009. Mr Flockton's investment with Mr Booty was unsecured. Mr Booty's actions are now the subject of criminal proceedings.
On 15 December, Mr Flockton lodged an application with the Tribunal, pursuant to s 70(1) of the Credit Code. Mr Flockton contends that the transaction was unjust on the grounds that:
•the $167,695.12 was advanced to him without him applying for it;
•the ANZ Bank refused to reverse the advance and to implement the credit package Mr Flockton had originally sought;
•the ANZ Bank failed to ascertain the capacity of Mr Flockton to meet the large debt repayments; and
•the ANZ Bank failed to take measures, as set out in s 70(2)(k) of the Credit Code, to ensure that Mr Flockton understood the nature and implications of the transaction.

Orders sought

In closing submissions, Mr Staffa summarised the orders sought from the Tribunal as follows:
a)The entire transaction regarding the $167,695.12 be set aside.
b)All costs, fees and charges levied in regard to the $167,695.12 be set aside or reimbursed.
c)Mr Flockton be reimbursed the difference between the $250,000 capital loss and the $167,695.12.
d)Mr Flockton should have his debt reduced by an equal amount to the loss of $13,600 (or that he suffered when he sold his motorcycle).

Statutory framework

The statutory framework within which the review occurs is as follows (s 70 of the Credit Code):
(1)Power to reopen unjust transactions. The Court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change.
(2)Matters to be considered by Court. In determining whether a term of a particular credit contract, mortgage or guarantee is unjust in the circumstances relating to it at the time it was entered into or changed, the Court is to have regard to the public interest and to all the circumstances of the case and may have regard to the following
(a)the consequences of compliance, or noncompliance, with all or any of the provisions of the contract, mortgage or guarantee;
(b)the relative bargaining power of the parties;
(c)whether or not, at the time the contract, mortgage or guarantee was entered into or changed, its provisions were the subject of negotiation;
(d)whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the contract, mortgage or guarantee or the change;
(e)whether or not any of the provisions of the contract, mortgage or guarantee impose conditions that are unreasonably difficult to comply with, or not reasonably necessary for the protection of the legitimate interests of a party to the contract, mortgage or guarantee;
(f)whether or not the debtor, mortgagor or guarantor, or a person who represented the debtor, mortgagor or guarantor, was reasonably able to protect the interests of the debtor, mortgagor or guarantor because of his or her age or physical or mental condition;
(g)the form of the contract, mortgage or guarantee and the intelligibility of the language in which it is expressed;
(h)whether or not, and if so when, independent legal or other expert advice was obtained by the debtor, mortgagor or guarantor;
(i)the extent to which the provisions of the contract, mortgage or guarantee or change and their legal and practical effect were accurately explained to the debtor, mortgagor or guarantor and whether or not the debtor, mortgagor or guarantor understood those provisions and their effect;
(j)whether the credit provider or any other person exerted or used unfair pressure, undue influence or unfair tactics on the debtor, mortgagor or guarantor and, if so, the nature and extent of that unfair pressure, undue influence or unfair tactics;
(k)whether the credit provider took measures to ensure that the debtor, mortgagor or guarantor understood the nature and implications of the transaction and, if so, the adequacy of those measures;
(l)whether at the time the contract, mortgage or guarantee was entered into or changed, the credit provider knew, or could have ascertained by reasonable inquiry of the debtor at the time, that the debtor could not pay in accordance with its terms or not without substantial hardship;
(m)whether the terms of the transaction or the conduct of the credit provider is justified in the light of the risks undertaken by the credit provider;
(n)the terms of other comparable transactions involving other credit providers and, if the injustice is alleged to result from excessive interest charges, the annual percentage rate or rates payable in comparable cases;
(o)any other relevant factor.
(3)Representing debtor, mortgagor or guarantor. For the purposes of subsection (2)(f), a person is taken to have represented a debtor, mortgagor or guarantor if the person represented the debtor, mortgagor or guarantor, or assisted the debtor, mortgagor or guarantor to a significant degree, in the negotiations process prior to, or at, the time the credit contract, mortgage or guarantee was entered into or changed.
(4)Unforeseen circumstances. In determining whether a credit contract, mortgage or guarantee is unjust, the Court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable when the contract, mortgage or guarantee was entered into or changed.
(5)Conduct. In determining whether to grant relief in respect of a credit contract, mortgage or guarantee that it finds to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the contract, mortgage or guarantee since it was entered into or changed.
(6)Application. This section does not apply to a change in the annual percentage rate or rates payable under a contract, or to an establishment fee or charge or other fee or charge, in respect of which an application may be made under section 72 (Court may review unconscionable interest and other charges). This section does not apply to a change to a contract under this Division.
(7)Meaning of unjust. In this section, 'unjust' includes unconscionable, harsh or oppressive.

Contentions of Mr Flockton

The contentions of Mr Flockton can be summarised as follows:
•Mr Flockton contends that he sought an arrangement from the ANZ Bank in which he would have a line of credit for investment purposes. The existing credit arrangements with the ANZ Bank should have otherwise remained the same. He should have only paid interest as the line of credit was drawn. The product that was ultimately given to Mr Flockton did not reflect his instructions to the Bank.
•Mr Booty completed the loan application to give effect to the proposed arrangement sought by Mr Flockton. According to Mr Flockton, Mr Booty completed parts of the loan application in Mr Flockton's presence, and parts without Mr Flockton being present. On 22 November 2007, Mr Flockton signed parts of the application although, at the time, he did not sight the complete credit application.
•The ANZ Bank credited Mr Flockton's Access Advantage account with an amount of $167,695.12 which he had not applied for and which was, in effect, an unauthorised loan that was forced upon him. As a result, Mr Flockton's total debt to the Bank was $464,032.28, all on a fixed interest.
•Mr Flockton's total debt exceeded the value of the house which served as security and it also exceeded Mr Flockton's ability to service the loan repayments. The ANZ Bank did not, (or did not prudently), value the house, estimate Mr Flockton's net surplus ratio, his debt service ratio, or the loan, to determine his capacity to service the debt.
•If the ANZ Bank had undertaken a proper assessment, it would have realised that Mr Flockton was not able to service such a large debt.
•The ANZ Bank also failed to discharge its obligations to Mr Flockton, as per s 70(2) of the Credit Code, by not taking measures to ensure that he understood the nature and implications of the transaction.
•As soon as Mr Flockton became aware of the implications of the $464,032.28 debt, he asked Mr Booty for an explanation. Mr Booty assured Mr Flockton that the application he had completed was in order, and that the line of credit should not have been released until it was drawn down by Mr Flockton.
•Mr Flockton discussed his concerns about the unwanted $167,695.12 with the ANZ Bank's Ms Margetic and requested that the transaction be reversed. The ANZ Bank told Mr Flockton that to reverse the transaction would cost a substantial amount (as much as $25,000). The Bank undertook to investigate the matter. The Bank, however, took an extraordinary long time to investigate the matter and it only became serious about establishing the reasons for its actions when these proceedings were commenced in the Tribunal .
•Mr Booty, in an effort to assist Mr Flockton, advised Mr Flockton to invest the funds into the property management scheme of Mr Booty. Mr Booty offered an annual return of 20%, which would have enabled Mr Flockton to service the debt to the ANZ Bank. Mr Flockton consented to the proposal, since he had to mitigate his losses, and subsequently invested $250,000 (of which the $167,695.12 formed part) with Mr Booty. The investment was made on the basis that it could be withdrawn at any stage with 30 days' notice. Although Mr Booty paid the interest on the investment for about 10 months, the investment scheme collapsed and Mr Booty is now facing criminal charges. Mr Flockton is entitled to the relief s 70(1) of the Credit Code offers, and the fact that his investment with Mr Booty failed, is irrelevant.

In summary, Mr Staffa contends that the transaction to transfer the $167,695.12 to the Access Advantage account was unjust since the end result does not reflect the credit application of Mr Flockton; the transaction was not consensual; Mr Flockton was not given what he had asked for; and the ANZ Bank did not discharge its duties under s 70(2) of the Credit Code.

Contentions of the ANZ Bank

The contentions of the ANZ Bank can be summarised as follows:
•The application should be dismissed since it is not based on a credit contract, mortgage or guarantee, as is required by s 70(1) of the Credit Code. There is no provision, in s 70(1) of the Credit Code, for the general conduct of the ANZ Bank to be scrutinised unless there is a 'relevant credit contract, mortgage or guarantee' to consider. Even with the most favourable assessment of the facts, from the view of Mr Flockton, the Tribunal should conclude that Mr Flockton received credit from the ANZ Bank to which he was not entitled and he should have returned it to the Bank rather than risk it with a questionable investment through Mr Booty.
•The only credit contract between the ANZ Bank and Mr Flockton is the Investment Loan. The Investment Loan is the loan, if any, that must be considered for the purposes of these proceedings. Mr Booty assisted Mr Flockton to apply for the Investment Loan; Mr Flockton agreed to the conditions thereof and the ANZ Bank acted in accordance with the distribution instruction therein by transferring the $167,695.12 to the Access Advantage account.
•Even if the ANZ Bank had made an error by not discharging the Fixed Interest Home Loan to the amount of $167,695.12, but instead had credited the Advantage Access account to the amount of $167,695.12, there is nothing to suggest that an 'unjust' transaction occurred. In the worst case, the Bank may have made an error by not discharging the Fixed Interest Home Loan, but that does not amount to an unjust transaction under s 70(1) of the Credit Code. If an error was made, nothing prevented Mr Flockton from using the $167,695.12 to discharge the Fixed Interest Home Loan so as to reduce his total debt and bring his account to a serviceable level.
•Mr Flockton met with the ANZ Bank's Ms Margetic on 12 February 2008. Ms Margetic acted properly and undertook to investigate Mr Flockton's concerns. The evidence of Ms Margetic is that she requested Mr Flockton to ask Mr Booty to telephone her, so as to enable her to establish whether the credit transaction was in accordance with Mr Flockton's instructions; whether Mr Booty may have made an error when the application form was completed; or whether there had been an error on the part of the ANZ Bank.
•Ms Margetic recommended to Mr Flockton that the total amount of $276,105.12 be transferred to an ANZ Bank interest bearing account (Premium Cash Management account) so as to mitigate the losses while the complaint was being investigated, It was only when the source of the error, if any, was identified, that a decision could be made about remedial steps that could be taken.
•On 15 February 2008, Mr Flockton, at his own volition, entered into a deed with Mr Booty whereby he invested $250,000 into a venture recommended to him by Mr Booty. Neither Mr Booty nor Mr Flockton contacted the ANZ Bank thereafter to pursue the investigation regarding the $167,695.12. Mr Flockton had the benefit of a 20% return on his investment with Mr Booty for close to a year and used the return to fund a lifestyle that was beyond his means. Mr Flockton only commenced these proceedings when that investment scheme failed. The hardship being experienced by Mr Flockton arises from a decision attributable to him, namely, to invest a large sum of money with Mr Booty, without the necessary security.
•The Tribunal may investigate whether the credit contract was unjust by considering its terms, consequences or effects, or the methods used to enter into it. There was nothing in the terms of the Investment Loan that can reasonably be said to be unjust. The ANZ Bank acted on the basis of the instructions it received from Mr Flockton. Even if an error was made on the part of the Bank by it not discharging the Fixed Interest Home Loan, Mr Flockton withdrew $250,000 without giving the Bank an opportunity to investigate the complaint.
In conclusion, the ANZ Bank contends that the application should be dismissed for falling outside the jurisdiction of the Tribunal or, in the alternative, the application should be dismissed because there are no grounds upon which the transaction can be found to be unjust, pursuant to s 70(1) of the Credit Code.

Consideration

The parties accept that the application falls within the jurisdiction of the Tribunal, pursuant to s 6(1)(b) of the Credit Code, since the credit was obtained wholly or predominantly for personal, domestic or household purposes.
The Tribunal will reply to the respective submissions under the following headings:
•Meaning of 'unjust transaction'
•Jurisdiction of the Tribunal
•Terms of the Investment Loan
•Does an error constitute an unjust transaction?

Meaning of 'unjust transaction'

Section 70(1) of the Credit Code empowers the Tribunal to reopen a transaction if the Tribunal is satisfied that, in the circumstances relating to the credit contract at the time it was entered into, the contract was unjust. Section 70(7) of the Credit Code defines 'unjust' to include 'unconscionable, harsh or oppressive'.
'Unjust' has been referred to as a 'slippery word of uncertain content': see Antonovic v Volker (1986) 7 NSWLR 151 at 157. The word can easily be misconstrued to give such a wide meaning that any unfortunate or unintended outcome of a credit transaction can be interpreted as being 'unjust'.
In the matter of WF Lean Ltd v Dale (1936) 39 WALR 22, at 26 27, Dwyer J said the following about a finding of harsh and unconscionable conduct:
… This means something more than that it imposes hard terms on the borrower: it suggests in addition the existence of circumstances which enable the lender to impose such terms, something in the nature of the oppression and abuse of power referred to by Lord Loreburn [in Samuel v Newbold [1906] AC 461]. I see nothing unconscionable in a lender prescribing the conditions on which he is willing to lend his money, if the borrower is quite free to take it or leave it; but a transaction becomes unconscionable when a lender is in a position of undue advantage, and uses it to treat a borrower unfairly and extortionately. …
The meaning of 'unjust' is not assessed only in a strict sense with the letter of the credit contract. Section 70(1) of the Credit Code refers to the 'circumstances relating to the relevant credit contract'; s 70(2) of the Credit Code contains a wide range of matters to consider in determining whether, in the circumstances, the contract was 'unjust'; s 70(4) of the Credit Code deals with unforseen circumstances; and s 70(5) of the Credit Code enables the Tribunal to consider the conduct of the parties 'since it [contract, mortgage or guarantee] was entered into or changed'.
The Tribunal must be satisfied that there was a real injustice, other than a failure on the part of the ANZ Bank to comply with the Credit Code: see Custom Credit Corporation Ltd v Gray [1992] 1 VR 540, at 561.
The Tribunal must therefore consider the substance of the credit contract, as well as the conduct of the parties prior to and after the contract was entered into, in order for a finding to be made. It must, however, be emphasised that it is not merely the conduct of the lender that must be shown to be unjust, the mortgage itself must be unjust. For example, '… the fact that a party cannot afford a loan is in itself not sufficient to find the loan contract unjust'. There needs to be 'something more', see Australian Society Group Financial Services (NSW) Ltd v Bogan(1989) ASC 55 - 938.
Section 70(2) of the Credit Code provides useful guidance as to the matters that may be considered by the Tribunal when making its determination. For example, the Tribunal must have consideration of the public interest and to all the circumstances of the case, and it may have regard to a wide range of other factors, as set out in s 70(2)(a) - (o) of the Credit Code. The Tribunal will, in due course, address each of those indicia on the basis of the information available to it in these proceedings.
The scope of information the Tribunal can take into account is, however, not unlimited. It is the transaction which gives rise to the mortgage that is liable to be reopened, but what must appear to be 'unjust' is the particular mortgage, 'not the wider transaction, and thus not some other contract forming part of the transaction' (The Laws of Australia, at para 35.9.1720).
It must also be emphasised that all relevant criteria must be considered in light of the circumstances when the transaction was entered into (A Beatty and S Smith's Annotated Consumer Credit Code and Regulations (3rd ed, 2006), at para 70.14). The application of the indicia in s 70(2) of the Credit Code, therefore, takes place within the framework of s 70(1) of the Credit Code and not in isolation thereof.
The importance of taking account of the public interest is relevant, both from the perspective of certainty and finality of contracts on the one hand, and to prevent unjust dealings on the other hand. A 'balancing exercise' is therefore required 'between the importance of upholding contracts and countervailing factors. The question as to how and where the balance should be struck is at large', see A Duggan and E Lanyon Consumer Credit Law, Butterworth's 1999, at para 9.2.5).
Section 70(2) of the Credit Code assists the Tribunal to determine, if any or more of, the potential indicators of an unjust transaction are present in the facts surrounding the application. While s 70(2) of the Credit Code is not an exhaustive list of possible grounds that could be indicative of a transaction being unjust, it provides a valuable yardstick on which to assess the transaction and circumstances giving rise to it. It is, however, important that these factors are not read in isolation of the circumstances that prevailed at the time when the transaction was entered into. According to Duggan and Lanyon, Consumer Credit Law, at para 9.2.6:
… the courts have held that the listed factors are not determinative. They are relevant only in so far as they throw light on whether a contract is 'unjust', and a contract is not to be held unjust unless it is unjust in its terms or the product of unjust conduct on the part of the stronger party.
Section 70(4) of the Credit Code provides that the Tribunal is not to have regard to any injustices arising from circumstances that were not reasonably foreseeable when the mortgage was entered into. In some instances, it has been held that the credit provider had actual knowledge of the unjustness, or ought reasonably to have foreseen the unjustness: see Custom Credit Corporation Ltd v Lupi and Ors [1992] 1 VR 99; while in other instances, it has been held that relief may be granted, notwithstanding a lack of knowledge: see West v AGC (Advances) Ltd (1986) 5 NSWLR 610.

Jurisdiction of the Tribunal

The Tribunal finds that the provision of credit by the ANZ Bank to Mr Flockton, in the amount of $167,695.12, does not fall within the scope of an unjust transaction, pursuant to s 70(1) of the Credit Code. The Tribunal, therefore, does not have the jurisdiction to consider the dispute and the application must be dismissed as being misconceived, pursuant to s 47 of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
The reasons for this finding are as follows:
• In his closing submissions, Mr Staffa emphasised that Mr Flockton does not contend that any term or condition of a credit contract that he holds with the ANZ Bank is unjust, pursuant to s 70(1) of the Credit Code. Mr Staffa says that Mr Flockton received an amount which he never sought, never applied for, and never agreed to. Mr Staffa is satisfied that the credit contracts between Mr Flockton and the ANZ Bank were voluntary and that none of the terms or conditions are challenged. Mr Staffa says, however, that s 70(1) of the Credit Code does not limit the scope of an unjust transaction to the letter of a credit contract. He says that even if the credit contract is unobjectionable, the circumstances surrounding it may be found to be unjust. In these proceedings, Mr Staffa accepts that there is no term or condition in the Investment account, or any of the other accounts, that by itself constitutes an unjust transaction. Mr Staffa says, however, that the transfer of credit that was not applied for is unjust, within the meaning of s 70(1) of the Credit Code. The Tribunal does not accept this contention. The 'unjust transaction' referred to in s 70(1) of the Credit Code must be reflected in the credit contract, and the circumstances giving rise to the contract, and cannot be based solely on an error on the part of the credit provider to transfer an amount of money to a client. If any error is made, there is no contract. Section 70(1) of the Credit Code specifically refers to the reopening of a credit contract, mortgage or guarantee. By reopening the transaction, the Tribunal is empowered to make those orders set out in s 70(1) of the Credit Code, for example, reopen an account, set aside the agreement, or discharge the mortgage. On Mr Staffa's own contention, there is no term or condition of a credit contract, mortgage or guarantee between Mr Flockton and the ANZ Bank that is alleged to be unjust for purposes of these proceedings. If unrequested funds were paid to Mr Flockton by the Bank, as is contended by Mr Staffa, the error does not fall within the scope of an unjust transaction, pursuant to s 70(1) of the Credit Code.
• Mr Staffa contends that s 70(1) of the Credit Code covers the general conduct and behaviour of the ANZ Bank, even if there was no credit contract between the Bank and Mr Flockton at issue. Mr Staffa concluded that 'the terms of the loan are irrelevant', as to the question of whether s 70(1) of the Credit Code applies. Mr Staffa did not provide any authorities to support this contention in support of this interpretation. It seems as if Mr Staffa reads grounds for a general equitable relief within s 70(1) of the Credit Code . The Tribunal does not agree with such an interpretation. Section 70(1) of the Credit Code does not clothe the Tribunal with a wide investigative power to launch an inquiry into the general conduct or behaviour of a credit provider or the systems and procedures used by the credit provider. The Tribunal's powers are directed at, and limited to, the credit contract, the terms and conditions thereof, and the question as to whether it is an unjust transaction in the circumstances relating to the contract. Rectifying an erroneous transfer of credit does not fall with s 70(1) of the Credit Code.
• Mr Staffa contends that the ANZ Bank, by having provided Mr Flockton with credit he did not apply for, in effect, changed the terms of his Investment Loan account, and, therefore, the matter falls within s 70(1) of the Credit Code. While the Tribunal agrees that s 70(1) of the Credit Code includes changes to a credit contract, the Tribunal does not accept that the credit provided to Mr Flockton constitutes a change to a contract, mortgage or guarantee, as is required by s 70(1) of the Credit Code. Mr Staffa failed to demonstrate what aspect of Mr Flockton's credit contract had been changed so as to substantiate his contention. If the contentions of Mr Flockton are accepted, that he received unwanted credit, then it could, at best, be described as an error on the part of the ANZ Bank, but such an error cannot be equated to an 'unjust transaction', pursuant to s 70(1) of the Credit Code.
• Mr Staffa emphasised what he described as the 'crucial and pivotal' role of the ANZ Bank in failing to deal properly and effectively with the complaint of Mr Flockton, that an amount of $167,695.12 for which he did not apply, was credited to his account. According to Mr Staffa, the ANZ Bank could have resolved the complaint without delay; it should not have waited for information from Mr Booty; and the error was clearly on the part of the Bank. According to Mr Staffa, the Bank caused Mr Flockton to be 'engulfed in debt', by providing him with credit he did not seek and, when a complaint was lodged, it refused to rectify the error immediately. Mr Staffa accepts that although there is no term or condition of any credit contract between Mr Flockton and the Bank that Mr Flockton wishes to challenge, he says the conduct of the Bank led to an unjust transaction. The Tribunal does not accept on this version of events, as summarised by Mr Staffa, that s 70(1) of the Credit Code applies. It seems as if Mr Staffa equates potential 'unacceptable practices' on the part of the ANZ Bank with an 'unjust transaction', under s 70(1) of the Credit Code. If, indeed, the ANZ Bank had erroneously provided unwanted credit to Mr Flockton, the provision of such credit cannot be classified as an 'unjust transaction', pursuant to s 70(1) of the Credit Code. It is not uncommon for financial institutions to make errors from time to time, but Mr Staffa failed to provide any authority to support his contention, that the provision of credit that was not applied for, constitutes an unjust transaction, pursuant to s 70(1) of the Credit Code, or a change to an existing credit contract.
The Tribunal therefore concludes that the application does not fall within the scope of s 70(1) of the Credit Code since the Tribunal is not satisfied that in the circumstances relating to the Investment Loan, at the time it was entered into, the Investment Loan was unjust. The application should, therefore, be dismissed as misconceived, pursuant to s 47 of the SAT Act.
In the event that the Tribunal erred by finding that the application is misconceived, the Tribunal will next consider:
a) the terms of the Investment Loan; and
b)whether an error was made on the part of the ANZ Bank when funds were disbursed.

Terms of the Investment Loan

The Tribunal will now consider the terms and conditions of the Investment Loan account and, in particular, the instructions that were given by Mr Flockton for the disbursement of funds into the Access Advantage account.
The Tribunal is not satisfied, in light of the instruction given by Mr Flockton in the Loan Disbursement and Settlement Authority, for the amount of $167,695.12 to be paid into his Access Advantage account, that in the circumstances relating to the credit contract at the time it was entered into, the credit contract should be reopened on the grounds that it was unjust transaction.
The reasons for this finding are as follows.
The completion of an application for the Investment Loan was facilitated by Mr Booty, who assisted and gave advice to Mr Flockton at the time when the credit was applied for. In the application, although Mr Flockton sought an order for the Tribunal to find that Mr Booty was the agent of the ANZ Bank, Mr Staffa withdrew the contention during his closing submissions. It is not contested that Mr Booty gave investment advice to Mr Flockton, that Mr Booty actively assisted Mr Flockton to complete the loan application and to submit it to the Bank for consideration.
Mr Flockton initially sought a loan from the ANZ Bank of $320,000 but he ultimately accepted an offer for a loan of $296,000 since that was the amount for which he qualified.
The Loan Disbursement and Settlement Authority, completed by Mr Flockton, instructed the ANZ Bank to 'Credit to ANZ Bank, BSB [ … ], Account Number [ … ] 19347' (Mr Flockton's Access Advantage account). Although the actual amount to be credited to the Access Advantage account was left blank in the Loan Disbursement and Settlement Authority, there was nothing to suggest to the Bank that the amount of $276,105.12, that remained after the discharge of the Variable Interest Home Loan account of $19,585.53, should not be paid into the Access Advantage account.

The New Fixed Interest Loan account, on which an amount of $167,695.12 was owed, was not referred to by Mr Flockton in the Loan Distribution and Settlement Authority.
As a result of Mr Flockton's instruction on 5 February 2008, the ANZ Bank paid into the Access Advantage account the amount of $276,105.12; this included an amount of $167,695.12 that was owing on the New Fixed Interest Loan account.
The Tribunal notes Mr Flockton's contention earlier in the proceedings, namely, that he had not sighted all the pages of the loan application or agreement, but the Tribunal finds that it is not material to these proceedings. The duty is on Mr Flockton to refrain from signing a loan contract until he has sighted what is to be signed and that he understands the loan contract: see Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd(2004) 219 CLR 165, [2004] HCA 52 at [42] [46]. It is not contested by Mr Flockton that Mr Booty assisted him with the completion of the documentation.
The Tribunal does not accept the contention that Mr Flockton received money that he neither sought nor applied for. The Tribunal also does not accept the contention of Mr Staffa, in closing submissions, that Mr Flockton was 'given a chunk of money and the ANZ Bank would not reverse it.' Mr Flockton received what he had applied for, namely, a loan of $296,000. This loan was disbursed, as per Mr Flockton's instructions.
On a plain reading of the Loan Disbursement and Settlement Authority, which was initialled and signed by Mr Flockton, the Tribunal finds no grounds to support the contention, that the ANZ Bank's compliance with the instructions given to it by Mr Flockton, falls within the scope of 'unjust' under s 70(1) of the Credit Code. Mr Flockton initialled the amendments made to the account number and signed at the bottom of the page on which the Loan Distribution and Settlement Authority is given. The Bank acted in accordance with those instructions.
Even if the Tribunal were to agree with Mr Staffa, that the ANZ Bank should have contacted Mr Flockton to establish what the amount was that he wanted to transfer to the Access Advantage account, there is insufficient evidence to make a finding, that the actions by the Bank can be categorised as an 'unjust transaction', within the context of s 70(1) of the Credit Code.
The entire matter could have been resolved if Mr Flockton and Mr Booty had given their full cooperation to the ANZ Bank, for a proper investigation into the circumstances that gave rise to the transfer of the amount of $167,695.12 into Mr Flockton's Access Advantage account. If an error had been made on the part of the Bank, it could have agreed, or it could have been ordered by a competent court, to make good any losses suffered by Mr Flockton by way of an interest payment or other costs.
In summary, the Tribunal finds that the ANZ Bank offered Mr Flockton a loan of $296,000 which he accepted; Mr Flockton instructed the ANZ Bank on how to disburse the amount; Mr Flockton was assisted by Mr Booty in making these instructions; and the ANZ Bank complied with the instructions.
The Tribunal, therefore, finds that the decision by the ANZ Bank to transfer the amount of $167,695.12 to the Access Advantage account of Mr Flockton, on the basis of the Loan Distribution and Settlement Authority signed by Mr Flockton, is not an unjust transaction within the context of s 70(1) of the Credit Code.

Was the transfer of the $167,695.12 to the Access Advantage account an error on the part of the ANZ Bank and, if so, does the error fall within the scope of s 70(1) of the Credit Code?

The Tribunal finds that if the transfer of the $167 695.12 to the Access Advantage account was an error on the part of the ANZ Bank, such an error does not fall within the meaning of an unjust transaction, pursuant to s 70(1) of the Credit Code.
The reasons for this finding are as follows.
As far as a potential error on the part of the ANZ Bank is concerned, the situation was briefly as follows: on 5 February 2008, the ANZ Bank advanced $296,000 to Mr Flockton; the vehicle used for this transaction was the Investment Loan account; of this amount, $19,585.53 was credited to the Variable Interest Home Loan, thereby discharging the said account; the remainder was transferred into the Access Advantage account. The Tribunal found, above, that the Bank acted in accordance with the instructions in the Loan Distribution and Settlement Authority.
If the Tribunal erred above, by finding that the ANZ Bank acted in accordance with the Loan Distribution and Settlement Authority, signed by Mr Flockton, then the question is, did the Bank err by failing to discharge the New Fixed Interest Rate Home Loan of $167,695.12.
In its letter, dated 8 April 2010, the ANZ Bank admitted that it may have erred and that the New Fixed Interest Rate Home Loan should have been discharged. Mr Geoffrey Lee, ANZ Bank's Collections Manager, confirmed in his evidence that, on closer examination, it appears the New Fixed Interest Rate Home Loan should have been discharged.
As a result of the error, all of the balance of the $276,105.12 was paid to Mr Flockton's Access Advantage account. Mr Flockton, therefore, only had a part of his existing debt discharged and he had an amount available in his Access Advantage account that exceeded the line of credit he was hoping to obtain. His total debt to the ANZ Bank on 5 February 2008 was $464,160 (which included the outstanding $167,695.12 owed on the New Fixed Interest Rate Home Loan).
Mr Flockton met with Ms Margetic on 12 February 2008, to discuss his concerns that the product he received was not what he and Mr Booty had discussed. Acting upon her advice, he opened the Premium Cash Management account, of which the interest would have been used to offset the interest payable to the Access Advantage account while the matter was investigated.
Mr Flockton, however, prior to the conclusion of the investigation and only three days following his meeting with Ms Margetic, withdrew an amount of $250,010 from the Premium Cash Management account, by way of a bank cheque, on 15 February 2008 . The withdrawal was not discussed with the ANZ Bank. Mr Flockton handed the cheque to Mr Booty to invest in his property management enterprise. Mr Flockton did not consult with the ANZ Bank prior to undertaking this investment and, according to Mr Flockton's evidence, he did not seek legal advice.
Mr Flockton received the 20% return on Mr Booty's investment for about 10 months, after which the scheme failed, and Mr Booty lost the entirety of his investment. Mr Staffa says that this was not a particularly risky endeavour since the terms of the deed with Mr Booty provided that he would have had to refund Mr Flockton within 30 days of notice. If the ANZ Bank had acted speedily, so says Mr Staffa, Mr Flockton would have been able to recoup his investment from Mr Booty.
In making its determination, the Tribunal must have regard to the circumstances of the transaction at the time when the credit was obtained, the public interest, and it may also have regard to a wide range of other factors, as set out in s 70(2) of the Credit Code.
The Tribunal has had regard to all the factors surrounding the erroneous provision of the credit and cannot find any circumstance, action, event or term that would satisfy the Tribunal to make a finding that the contract was unjust, harsh, unconscionable or oppressive.
Even if the Tribunal accepts that an amount of $167,695.12 was paid by the ANZ Bank into Mr Flockton's Access Advantage account in error, Mr Flockton has failed to demonstrate why such an error should be categorised as an 'unjust transaction' under s 70(1) of the Credit Code.
If Mr Flockton was concerned about his level of debt, he could have used the funds in the Access Advantage account to discharge the New Fixed Interest Rate Home Loan account. If the $167,695.12 was used by Mr Flockton to discharge the New Fixed Interest Rate Home Loan account, he would have had the remainder available in the Access Advantage account for discretionary use. But Mr Flockton withdrew the $167,695.12 and invested it with Mr Booty, while at the same time retaining the debt of $167,695.12 in the New Fixed Interest Rate Home Loan account.
The ANZ Bank accepted, prior to and during the hearing, that if an error had been made, the Bank was, and remains, willing to refund to Mr Flockton all charges and interest arising from the error. But the ANZ Bank insisted consistently that the entire transaction, including the instructions given to Mr Booty, had to be investigated to establish if an error had been made and, if so, by whom. In his statement of evidence, Mr Lee explains the potential reason for an error as follows:
When the investment loan was drawn down on 5 February 2008 only the variable part of the home loan was paid out. It is likely that this was because the officer responsible for the draw down was not aware that the applicant had split the home loan into two accounts. The investment loan should have been applied to pay out the entirety of the existing home loans.
The Tribunal is not satisfied that the error made by the ANZ Bank (on the assumption that the ANZ Bank had indeed made an error) can be classified as 'unjust' within the meaning of s 70(1) Credit Code. Errors are made from time to time by financial institutions and, although these may cause stress and anxiety, there are appropriate remedies to correct them. But to construe an 'error' of this nature as per se the equivalent of 'unjust', as meant in s 70(1) of the Credit Code, is not correct.
The Tribunal does not agree with Mr Staffa that the proper characterisation of the events is that credit was 'forced upon Mr Flockton without his consent'. A more accurate description of the events is that the amount of $167,695.12 was transferred to the Access Advantage account for discretionary use, rather than to discharge the New Fixed Interest Rate Home Loan account. This error does not equate to an 'unjust transaction'.
The ANZ Bank undertook to investigate Mr Flockton's complaint as soon as they were made aware of it. At the stage when Mr Flockton raised the concern with Ms Margetic, on 12 February 2008, the Bank had not been in a position to conclude that an error on the part of the Bank had been made. Since then, the Bank has acknowledged that an error may have occurred, and it offered a refund of charges and interest.
Although Mr Flockton now contends that the ANZ Bank took too long to investigate his complaint, the Tribunal also notes the following: neither Mr Flockton nor Mr Booty actively pursued the complaint with the Bank after 12 February 2008; Mr Booty did not approach the ANZ Bank to explain what he believed, as broker, to have been the product that should have been given to Mr Flockton; Mr Flockton withdrew the $250,000 within three days after meeting Ms Margetic; Mr Flockton did not discuss with the ANZ Bank the decision to withdraw the $250,000; and Mr Flockton only commenced these proceedings after he had had close to 10 months of benefit of the investment with Mr Booty.
The large amount of disposable credit that became available to Mr Flockton, through the Access Advantage account. was inexplicable at the time when he went to discuss it with Ms Margetic, on 12 February 2008. Ms Margetic suggested to Mr Flockton, when he complained to her that he did not have the funds to repay the interest, that he invest the amount into an interest bearing account (Premium Cash Management account) while the matter was being investigated. Ms Margetic explained to the Tribunal that she had to establish whether an error had indeed been made and, if so, was it on the part of Mr Booty when he filled in the application, or was the error on the part of the ANZ Bank. The Tribunal accepts that on 12 February 2008, there is no reasonable way Ms Margetic could have foreseen that Mr Flockton would withdraw $250,000 from the Premium Cash Management account and invest it with Mr Booty.
As a result of the advice of Ms Margetic, Mr Flockton opened the Premium Cash Management account. However, within three days of meeting with Ms Margetic, and without contacting Ms Margetic to find out how her investigation was progressing or seeking the ANZ Bank's advice, Mr Flockton decided to withdraw $250,000 and invest it with Mr Booty. The ANZ Bank had no role in Mr Flockton's decision. On his own evidence, Mr Flockton acted on the advice of Mr Booty. Mr Flockton says he had to make the investment since he did not have the funds to service the interest on such a large debt. While the Tribunal understands that Mr Flockton may have panicked when he realised he had to service such a large interest repayment, the blame for his actions, to increase his exposure by engaging in a very risky investment scheme without the necessary security or legal arrangements, must be placed at his door.
The Tribunal finds Mr Flockton's explanation, that he was forced to reinvest the sum of $250,000 so as to make up for the interest he had to pay, as lacking in credibility. It is inexplicable why Mr Flockton, while facing a possible shortage of debt repayment, would engage in a highly questionable investment strategy without giving the ANZ Bank an opportunity to fully investigate the matter. It seems Mr Flockton may have seen the amount as a windfall and, acting on the advice of Mr Booty, decided to make the most of it.
After Mr Flockton had invested the $250,000 with Mr Booty, he received the benefits from that investment with Mr Booty for a period of about 10 months, without pursuing his complaint with the ANZ Bank, or without lodging an application with the Tribunal. It was only when the stream of income from Mr Booty terminated that Mr Flockton pursued the purported unjust actions of the ANZ Bank.
If the New Fixed Interest Rate Home Loan had been discharged (be it by the ANZ Bank or by Mr Flockton), he would, on the basis of the information provided, have been in a position to service the total debt without hardship. If, indeed, Mr Flockton had to take 'selfhelp remedies', as is contended by Mr Staffa, the most obvious choice would be to reduce his existing debt, rather than to engage in a questionable investment scheme.
It has been accepted by the courts that mere hardship or inability to service a loan cannot be classified as 'unjust'. However, in this matter, the assessment by Mr Lee in his evidence, is that Mr Flockton's Loan Valuation Ration and Uncommitted Monthly Income were to the satisfaction of the ANZ Bank to have awarded the credit. It must also be noted that the ANZ Bank did not loan $464,160 to Mr Flockton. The total loan was $296,000 and this was within Mr Flockton's ability to repay. The reason why the total debt amounted to $464,160 was that $167,695.12 was erroneously transferred to the Access Advantage account, instead of discharging the $167,695.12 owed on the Fixed Interest Rate Home Loan.
The Tribunal notes the criticism, expressed by Mr Staffa, at the ANZ Bank's actions in regard to this matter. The Tribunal rejects the contention that any of the actions of the Bank in general, or Ms Margetic in particular, fall within the scope of s 70(1) of the Credit Code. If any criticism is to be directed, it should be towards Mr Flockton, who failed to use the excess funds to discharge the New Fixed Interest Rate Home Loan; who withdrew $250,000 and invested it with Mr Booty without security; who failed to arrange for Mr Booty to contact the ANZ Bank; and who did not pursue the complaint with the Bank, after he had made what seemed to be, a beneficial investment with Mr Booty.
The Tribunal heard, during the evidence of the ANZ Bank's Mr Lee and Ms Margetic, that aspects of the Bank's mortgage application process may be open for critical assessment and improvement. For example, Mr Lee explained to the Tribunal that if a credit application was submitted to the Bank by a mortgage broker, and simultaneously a credit application was submitted at one of the ANZ Bank's branches, the two applications would be processed and approved without the one part of the Bank necessarily knowing that another section of the Bank was also considering an application for credit. Ms Margetic also explained to the Tribunal that Mr Flockton only had to declare his existing liabilities on the application form, without having to make any mention of applications for credit that may be within the process of assessment with the ANZ Bank or any other financial institution. She also said that when Mr Flockton discussed with her the possibility of opening variable and fixed interest accounts, he did not mention that he had also applied for an investment account through Mr Booty. It is, therefore, possible that the ANZ Bank may approve credit, on the basis of information provided to it, that is not entirely current or an exact reflection of the applicant's liabilities. While the Tribunal notes these potential deficiencies within the Bank's credit application and assessment process, these do not constitute unjust actions within the context of s 70(1) of the Credit Code, for the purpose of these proceedings.
The question for the Tribunal is not whether the credit application process of the ANZ Bank is watertight or without fault. The question is whether, at the time the credit contract was entered into or changed in the circumstances relating to the contract, the contract was unjust.
The Tribunal can understand Mr Flockton's surprise and shock when he realised the extent of his debt. He had discussions with the ANZ Bank's Ms Margetic and she undertook to investigate the matter after Mr Booty had contacted her. The Tribunal found Ms Margetic's evidence and explanation of events professional, credible and consistent. Although some period had lapsed between her meeting with Mr Flockton and the hearing, her recollection was clear, concise and to the point. In a nutshell, she undertook to investigate the matter, and suggested that he invests the surplus in an interest bearing account to offset the interest he had to pay. She agreed with him that, if the Bank had been in error, it would be unfair to expect him to pay for the rectification that was required. But before coming to any conclusions, she needed to do her own internal enquiries, and she also requested that Mr Flockton ask Mr Booty to telephone her, since he may have made the error, or he may have misunderstood Mr Flockton's instructions. The Tribunal found the actions of Ms Margetic entirely coherent and logical and prefers her evidence to that of Mr Flockton, who says that he was never asked to convey a message to Mr Booty to telephone Ms Margetic. There was nothing before the Tribunal to suggest her actions were less than professional.
The Tribunal cannot find any substance in the contention of Mr Flockton that the unjust nature of the transaction is illustrated by the failure of the ANZ Bank to investigate his complaint with more urgency. The facts before the Tribunal are that within three days of lodging the complaint, Mr Flockton withdrew an amount of $250,000 to invest with Mr Booty, and neither Mr Booty nor Mr Flockton pursued the complaint with the Bank or provided it with any further information as to why the incorrect product might have been given to Mr Flockton. The Bank acted reasonably by not pursuing the complaint since, in its assessment, the distribution took place in accordance with Mr Flockton's instructions.
Although Mr Flockton was requested by Ms Margetic to ask Mr Booty to telephone her in order for them to discuss whether a wrong product had been given to Mr Flockton and, if so, who was responsible for the error, there is no evidence that Mr Flockton conveyed the urgency of the request to Mr Booty. In fact, Mr Flockton did not follow up with Ms Margetic to establish if she had received a call from Mr Booty. Mr Flockton also did not call Mr Booty to give evidence in these proceedings. Mr Flockton's evidence is that he had many meetings with Mr Booty over the years. It is, therefore, inexplicable to the Tribunal why Mr Booty did not call Ms Margetic to discuss the origin of the misunderstanding, if any, since he was the mortgage broker and investment advisor of Mr Flockton. Although Mr Flockton says that he discussed his concern with Mr Booty, and Mr Booty insisted that the documents were in order and the funds should not have been drawn, there is no explanation as to why Mr Booty did not telephone the ANZ Bank to discuss the concern of his client, Mr Flockton.

During the 10 months Mr Flockton was receiving the 20% return on his investment from Mr Booty, neither he nor Mr Booty made any effort to pursue the complaint raised with the ANZ Bank. According to Mr Flockton's evidence, he incurred several expenses during the year, such as, a visit to New Zealand; the purchase of a Ducati motorcycle in 2008 for $33,000, spending another $4,600 on accessories and safety equipment for the motorcycle, and when he sold it a year later, he suffered a loss of approximately $13,600; he invested approximately $5,000 in shares and he invested approximately $7,000 into coffee making equipment. At that stage, he was on an income of approximately $50,000. It appears at that time, for the duration of the investment with Mr Booty, as if Mr Flockton was relying on the return of his investment with Mr Booty to finance not only the interest of the ANZ Bank but also to engage in a lifestyle that may have exceeded the income from his salary. It was only after the investment scheme with Mr Booty failed that Mr Flockton sought an order from the Tribunal to reopen the transaction. Although, during closing submissions, Mr Flockton suggested that he had funded these expenditures from his savings, there is no evidence before the Tribunal to suggest that Mr Flockton had savings of this magnitude to sustain these expenditures.
The Tribunal will now, for the sake of exhaustiveness, consider the indicia as set out in s 70(2) of the Credit Code:
a)The consequences of compliance with all the terms of the loan are far reaching for Mr Flockton, but the Tribunal is satisfied that he was made aware of such terms and conditions, that he signed the credit application voluntarily, and that the ANZ Bank did not do anything that could be categorised as unjust, unconscionable, harsh or oppressive. In fact, the Bank was willing to investigate the complaint, but Mr Flockton and Mr Booty failed to pursue the matter. It was only after Mr Flockton had lost his money, with an ill-fated investment with Mr Booty, that he lodged an application with the Tribunal.
b)The Tribunal is satisfied that the bargaining power of the parties was fair and voluntary. Mr Booty was acting for Mr Flockton in assisting him to complete the credit application.
c)There is no information before the Tribunal to make a finding that Mr Flockton had not had the opportunity to have received advice at the time the Investment Loan was entered into.
d)The Tribunal is satisfied that it was reasonably practical for Mr Flockton to have negotiated another arrangement, or to have the error fully investigated and, if indeed the ANZ Bank was at fault, for the transaction to be reversed. He chose, however, to risk investing a large sum with Mr Booty, with no security, and he derived a benefit from that arrangement for close to a year before it failed. The blame for this unsuccessful investment cannot be placed before the ANZ Bank.
e)The Tribunal is satisfied that no provision of the credit contract is unreasonably difficult to comply with, and that none of the provisions was not reasonably necessary for the protection of the legitimate interests of a party to the contract.
f)The Tribunal is satisfied that age, or the physical or mental condition of Mr Flockton, played any role in the transaction.
g)The Tribunal is satisfied that the form of the contract was in plain English and the provisions thereof simple to understand. Mr Flockton did not rely on any aspect of the contract that was difficult to understand, save to point out that he was only required to declare existing liabilities and not potential liabilities.
h)The Tribunal is satisfied that Mr Flockton had the opportunity to seek and obtain independent advice and that he relied, at least in part, on advice he received from Mr Booty. It must be noted that there is no legal requirement in the Credit Code for legal advice to be obtained, as long as the opportunity is there to seek and obtain advice: see Mah v Esanda Limited (Commercial)[2004] NSWCTTT 448 (25 August 2004), at para 4.
i)The Tribunal cannot make a finding in regard to whether Mr Booty explained to Mr Flockton the terms and conditions of the credit contract, but the Tribunal notes that Mr Flockton does not take issue with any term or condition of the contract.
j)The Tribunal is satisfied that the ANZ Bank did not use any unfair pressure, undue influence, or unfair tactics, to obtain the consent from Mr Flockton to enter into the agreement. The Tribunal is satisfied that Ms Margetic acted reasonably in the assistance she offered Mr Flockton.
k)There is no evidence before the Tribunal to suggest that Mr Flockton did not understand the nature and implications of the credit application. If an error had indeed been made, it did not relate to the credit contract, but to the giving effect thereof.
l)The Tribunal is satisfied that at the time of the contract Mr Flockton was financially able to service the debt. A loan of $296,000 was approved for Mr Flockton and he had the ability to service it. The funds that were provided to Mr Flockton in error could have been reserved if it has been shown that the ANZ Bank had erred. There was no justification for Mr Flockton to invest such a large sum with Mr Booty in, what turned out to be, a very risky endeavour. There was nothing in the transaction itself, or in the relationship between Mr Flockton and the ANZ Bank, that brought about the hardship that is now experienced by Mr Flockton. The hardship was brought about by Mr Flockton using the excess funds to invest in a questionable venture.
m)The Tribunal is satisfied that the terms of the transaction were justified.
n)The Tribunal is satisfied that the terms of this transaction are comparable to other similar transactions offered by the ANZ Bank.
In summary, the Tribunal finds that even if it is shown that the ANZ Bank had made an error, by the transfer of the $167,695.12 to the Access Advantage account of Mr Flockton and not to the New Fixed Interest Loan account, the error does not constitute an 'unjust transaction' within the meaning of s 70(1) of the Credit Code.
The application should therefore be dismissed for the reasons set out above.

Order

The application is dismissed.

I certify that this and the preceding [100] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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DR B DE VILLIERS, MEMBER