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…

Grounds of appeal

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

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

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

Consideration

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

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

Keep reading for free

Create a free CaseChat account to read FLOCKTON and ANZ BANKING GROUP LIMITED and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2011] WASAT 57
Decision Date: 11 APRIL 2011

CaseChat Overview and Summary

The case of Flockton and ANZ Banking Group Limited involved a dispute between the debtor, Flockton, and the credit provider, ANZ Banking Group Limited. The primary issue was whether the Tribunal had jurisdiction to declare a transaction unjust when the funds were received without a credit contract. Further, the court needed to determine if the conduct of the credit provider could be construed as unjust if the credit contract itself was not considered unjust. Additionally, the case examined whether the transaction could be reopened on the basis that it was unjust at the time it was entered into or when the credit was provided. The court also had to consider if an error by the bank could be construed as an unconscionable or unjust transaction, or as a change to a credit contract. Finally, the court had to assess whether the losses incurred by the debtor due to a collapsed investment scheme could be taken into account to determine if the transaction was unjust.

The court examined the jurisdiction to declare a transaction unjust when funds were received without a credit contract. It concluded that the Tribunal must be satisfied that there was a real injustice, beyond a mere failure to comply with the Credit Code. The Tribunal must consider the substance of the credit contract, as well as the conduct of the parties before and after the contract was entered into, to make a finding. The court also determined that it was not merely the conduct of the lender that must be shown to be unjust, but the mortgage itself must be unjust. The court emphasised that the mere fact that a party could not afford a loan was not sufficient to find the loan contract unjust, and there needed to be'something more'. The court further considered the indicators of an unjust transaction under s 70(2) of the Credit Code, noting that while these factors were not exhaustive, they provided a valuable yardstick to assess the transaction and circumstances giving rise to it. The court also highlighted the importance of considering the public interest, both from the perspective of certainty and finality of contracts, and to prevent unjust dealings.

The court held that the Tribunal had jurisdiction to declare a transaction unjust even if funds were received without a credit contract. The court found that the conduct of the credit provider could be construed as unjust if it led to an unjust transaction, even if the credit contract itself was not considered unjust. The court also determined that the transaction could be reopened if it was unjust at the time it was entered into or when the credit was provided. Regarding the bank's error, the court found that it could be construed as an unconscionable or unjust transaction if it led to an unjust outcome for the debtor. The court also held that the losses incurred by the debtor due to a collapsed investment scheme could be taken into account to determine if the transaction was unjust. However, the court emphasised that the mere fact that a party could not afford a loan was not sufficient to find the loan contract unjust, and there needed to be 'something more'. The court also highlighted the importance of considering the public interest, both from the perspective of certainty and finality of contracts, and to prevent unjust dealings.

The court ordered that the transaction be reopened and declared unjust due to the bank's error and the resulting losses incurred by the debtor. The court also directed the bank to compensate the debtor for the losses suffered as a result of the unjust transaction. The court emphasised that the losses incurred by the debtor due to a collapsed investment scheme could be taken into account to determine if the transaction was unjust. However, the court also noted that the mere fact that a party could not afford a loan was not sufficient to find the loan contract unjust, and there needed to be 'something more'. The court further highlighted the importance of considering the public interest, both from the perspective of certainty and finality of contracts, and to prevent unjust dealings.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

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.