FRAHM and SECURE FUNDING PTY LTD

[2010] WASAT 173

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: CONSUMER CREDIT (WESTERN AUSTRALIA) ACT 1996

CITATION:   FRAHM and SECURE FUNDING PTY LTD [2010] WASAT 173

MEMBER:   MR C RAYMOND (SENIOR MEMBER)

HEARD:   19 NOVEMBER 2010

DELIVERED          :   Edited reasons delivered orally on

19 NOVEMBER 2010

FILE NO/S:   CC 464 of 2010

BETWEEN:   TREVOR FRAHM

RAQUEL SAMSON FRAHM
Applicants

AND

SECURE FUNDING PTY LTD
Respondent

Catchwords:

Consumer Credit - Whether application should be dismissed - Whether res judicata - Whether proceedings constitute review of Supreme Court decision - Whether proceedings an abuse of process

Legislation:

Consumer Credit (Western Australia) Act 1996 (WA), s 70(1)
Consumer Credit (Western Australia) Code 1996 (WA), s 71
State Administrative Tribunal Act 2004 (WA), s 47

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Applicants:     Mr T Frahm

Mr Goff (Representative)

Respondent:     Ms E Margow (Representative)

Solicitors:

Applicants:     N/A

Respondent:     N/A

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

McLean and Permanent Custodians Ltd [2010] WASAT 127

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The applicants had applied to reopen a credit transaction entered into with the respondent.  The respondent applied for the proceedings to be dismissed on the grounds that the Tribunal lacked jurisdiction or, alternatively, that the proceedings constituted an abuse of process.

2. The factual basis underlying the respondent's application was that the respondent had commenced proceedings against the applicants in the Supreme Court for payment of the full balance outstanding under the same transaction.

3. The Tribunal rejected submissions that it lacked jurisdiction on the grounds of res judicata, or because the enabling legislation did not permit a review of a Supreme Court decision.  The Tribunal held that the principles of res judicata did not apply and that the proceedings did not constitute an attempt to exercise a review of a decision of the Supreme Court.  The Tribunal accepted, however, that the proceedings constituted an abuse of process as no relief could be granted which could logically coexist with the Supreme Court judgment.

4. The proceedings were dismissed as an abuse of process.

The proceedings before the Tribunal

1. On 19 November 2010, the Tribunal issued an order dismissing these proceedings.  The Tribunal provided its oral reasons for decision immediately before doing so and they are reproduced below from the transcript, subject only to minor editing to correct transcription errors and otherwise to set out and express the reasons in form more appropriate for publication.

2. In this matter, the applicants have applied under s 70(1) of the Consumer Credit (Western Australia) Code (Code) for the reopening of a transaction entered into with the respondent.

3. The respondent, at an early stage, foreshadowed raising jurisdictional issues and that is reflected in the respondent's statement of issues facts and contentions.  The applicants have in turn filed a statement of issues, facts and contentions setting out the basis on which the applicants contend the Tribunal has jurisdiction and should reopen the transactions.  The respondent applied for the proceedings to be dismissed on the above basis.

4. Since the filing of those documents, the Tribunal has published the decision of McLean and Permanent Custodians Ltd [2010] WASAT 127 (McLean), a decision of the President of the Tribunal, Chaney J.  As a result of that decision, the respondent sought to raise an additional basis on which to challenge the proceedings, and that is, that, to permit the matter to proceed would constitute an abuse of the processes of the Tribunal.

The application to dismiss

1. Section 47 of the State Administrative Tribunal Act 2004 (WA) permits a legally qualified member of the Tribunal, which I am, to dismiss or strike out a proceeding which the Tribunal believes is misconceived or an abuse of process. The respondent submits, firstly, that the Tribunal lacks jurisdiction on the grounds of res judicata.  This is because proceedings were commenced based on the loan agreement in question, in the Supreme Court of Western Australia, which resulted in a default judgment being entered against the applicants.  Obviously, an essential element of that cause of action was the rights which the respondent had under the loan agreement.  Those rights are set out in a statement of claim annexed to a writ of summons which was issued in those proceedings on 25 June 2008.  The allegations made therein set out the essential terms of the agreement relating to the applicants' obligations to make monthly payments.  It is further alleged that notwithstanding due notice, the applicants failed to bring arrear payments up to date and consequently, the applicants sought payment of an amount of $400,398.45 together with interest and other relief.

2. The argument is that because the Supreme Court has determined that matter, the Tribunal does not have jurisdiction to do so.  I am unable to accept that basis of attack by the respondent.  It is implicit in the application of the principles of res judicata that the court or tribunal finding that it should not deal with the matter on the grounds of res judicata had jurisdiction to deal with the matter but declines to do so on those grounds.

3. I do not see it as a jurisdictional issue.  I do not consider that the principles of res judicata would apply in circumstances in which the remedies sought in the Supreme Court are different to those which could be provided for in this Tribunal.  Indeed, the Tribunal has exclusive jurisdiction to deal with the reopening of transactions on the grounds that the transaction is an unjust transaction within the meaning of the Code.

4. The next basis of attack raised by the respondent is that the applicants is endeavouring to review a decision of the Supreme Court and that, as the enabling Act does not make any provision for that to occur, the Tribunal lacks jurisdiction to do so.  I accept the principle underlying those submissions that the Tribunal is a creature of statute and that its powers and jurisdiction are to be found within its enabling legislation.

5. The enabling legislation in this case is the Consumer Credit (Western Australia) Act 1996 (WA) and the Code to which I have referred, and neither gives the Tribunal any such review power. However, I consider that the proceedings are wrongly characterised in that way by the respondent. The application is not an attempt to exercise the Tribunal's review jurisdiction.

6. The matter has been brought forward under the Tribunal's original jurisdiction.  That is plain from the sections which are relied on in the body of the application and therefore I reject that basis of attack as well.

7. The third ground raised is one, however, of greater merit, and that is, that, to allow the matter to proceed before this Tribunal would constitute an abuse of process.  The applicants relies squarely on the discussion of that concept in McLean, commencing at [55] through to [61].

8. It is simply inconceivable that the Tribunal could deal with a reopening of this transaction and provide any relief to the applicants which could be then said to be consistent with and capable of coexisting with the Supreme Court decision.

9. As Chaney J said, at [59] of McLean:

   Most, if not all, the remedies provided through s 71 of the Code would be directly inconsistent with the judgment already obtained by Permanent.  Any order of the Tribunal reducing or setting aside Ms McLean's liability under the loan agreement and mortgage could not logically coexist with the Supreme Court judgment.

10. And that, regretfully for the applicants, is my view of the situation in relation to this case.  Mr Goff endeavoured to submit on behalf of the applicants that relief could be framed by way of a compensatory order in order to avoid that consequence.

11. I am unable to accept that is possible.  Firstly, the provisions of s 71 of the Code are not framed in terms which I think envisage that relief, and in any event, to endeavour to frame the relief in that way would, I think, be a sham.  The relief in substance would be relief which inevitably cuts across the Supreme Court decision.

12. The Supreme Court decision has ordered a particular amount of money to be paid and the object sought to be achieved, however it is framed by the applicants, is to reduce that liability.  Unfortunately for the applicants, I have come to the conclusion that the point raised by the respondent based on an abuse of process is well founded, and I will have to issue an order dismissing the proceedings on that basis.

Order

1. The Tribunal makes the following order:

   1.The application is dismissed.

I certify that this and the preceding [21] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MR C RAYMOND, SENIOR MEMBER