GOFF and CITIBANK PTY LTD - [2011] WASAT 10

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: CONSUMER CREDIT (WESTERN AUSTRALIA) ACT 1996

CITATION: GOFF and CITIBANK PTY LTD [2011] WASAT 10

MEMBER: DR B DE VILLIERS (MEMBER)

HEARD: 19 MAY 2010 AND 18 NOVEMBER 2010

DELIVERED : 21 JANUARY 2011

FILE NO/S: CC 107 of 2010

BETWEEN: VERNON GEORGE GOFF
EMMA LUISA GOFF
Applicants
AND
CITIBANK PTY LTD
Respondent

Catchwords:

Consumer credit - Preliminary issues - Declaration as to the purpose of a loan - Best available evidence - Unavailability of original documents or certified copies of the original documents - Whether credit intended to be used wholly or predominantly for personal, domestic or household purposes - Test to be applied to ascertain intended purpose - Allegation of false and corrupt dealings by mortgage broker - Whether mortgage broker is an agent of the credit provider - Whether the declaration made is ineffective

Legislation:

Consumer Credit (Western Australia) Act 1996 (WA), s 5
Consumer Credit (Western Australia) Code (WA), s 6, s 6(1)(b), s 11, s 11(1), s 11(2), s 11(3), s 70(1)

Result:

The application is dismissed

Category: B

Representation:

Counsel:

Applicants: Selfrepresented
Respondent: Mr P Sheiner

Solicitors:

Applicants: Self-represented
Respondent: Gadens Lawyers

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

Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177
Masquarade Music Ltd v Springsteen (2001) 51 IPR 650
McLean and Permanent Custodians Ltd [2010] WASAT 127

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The proceedings concern three preliminary issues, firstly whether the Tribunal can accept copies of credit applications as 'best evidence' if the originals of the documents are not available; secondly, whether the respondent, based on the information that was given to a mortgage broker, Ms Siranovic, knew or had reason to believe that the credit was wholly or predominantly for private, household or domestic use; and thirdly, what, objectively, the intended purpose of the credit was.
The applicants contended that the credit applications had been tampered with; that the Tribunal cannot rely on the facsimile copies of credit applications as best evidence; that Ms Siranovic was an agent for the respondent and the information the applicants gave to her is presumed to be known by the respondent since she was the respondent's agent; and, objectively, the credit was wholly or predominantly for purposes of private, household or domestic use and not for business or investment purposes as per the declaration. The applicants concluded that the dispute falls within the ambit of the Consumer Credit (Western Australia) Code (WA).
The respondent contended that it was its policy to accept credit applications by facsimile and that, in the absence of the original applications or certified copies of the original applications, the facsimile copies should be accepted as best evidence; the declaration thereon that the purpose of the credit was wholly or predominantly for business or investment must be accepted; and that Ms Siranovic was not an agent of the respondent. The respondent concluded that the dispute does not fall within the ambit of the Consumer Credit (Western Australia) Code.
The Tribunal accepted the facsimile copies as the best evidence available. The Tribunal was satisfied that searches by the respondent could not obtain any other documentation or correspondence and the applicants were also not able to tender better documents. The parties were also not able to locate Ms Siranovic for her to give evidence in the proceedings. The Tribunal further found that Ms Siranovic was not the agent of the respondent. The mere fact that she assisted the respondents to complete credit applications and that she received a commission from the respondent does not imply an agency relationship. Finally, the Tribunal held that, objectively, the respondent did not know of, or have reason to believe, that the credit applied for was not to be used wholly or predominantly for business or investment purposes.
The Tribunal therefore does not have jurisdiction to deal with the dispute under the Consumer Credit (Western Australia) Code and the application must be dismissed.

Issues

Three preliminary issues arise in these proceedings.
Firstly, can the Tribunal rely on copies of credit applications as 'best evidence' in the absence of the original applications or certified copies of the original documents?
Secondly, did the respondent know or have reason to believe, on the basis of information provided by the applicants to the mortgage broker, Ms Suzanne Siranovic, that the credit the respondent made available to the applicants was to be applied wholly or predominantly for personal, domestic or household purposes regardless of the declaration that the credit was for business and investment purposes (s 11(3) Consumer Credit (Western Australia) Code (Credit Code))?
Thirdly, is the Tribunal satisfied that the credit applied for was provided or intended to be provided wholly or predominantly for personal, domestic or household use (s 6(1)(b) of the Credit Code)?

Background

Mr and Mrs Goff (applicants) seek an order for the re-opening of what they contend is an unjust transaction pursuant to s 70(1) of the Credit Code as given effect by s 5 of the Consumer Credit (Western Australia) Act 1996 (WA). The applicants contend that two loan contracts, the subject of this proceeding, should be reopened on grounds that Citibank Pty Ltd (respondent) did not make reasonable enquiries into the ability of the applicants to service the loans.
A preliminary question, which is the subject of this decision, is whether the State Administrative Tribunal (Tribunal) has jurisdiction to determine the dispute. The Tribunal only has jurisdiction if the credit was provided or intended to be provided wholly or predominantly for personal, domestic or household purposes (s 6(1)(b) of the Credit Code).
The Tribunal was therefore requested by the parties to determine the preliminary question prior to considering the merit of the concern of the applicants.
The application was lodged on 25 January 2010. The first directions hearing took place on 11 February 2010. The proceedings were subject to several delays. The hearing of the preliminary issue took place on 19 May 2010 and the decision was reserved. Shortly after reserving its decision, the Tribunal became aware that another matter that may have relevance to these proceedings was then under consideration by the President of the Tribunal, his Honour Justice Chaney. The decision in the matter of McLean and Permanent Custodians Ltd [2010] WASAT 127 (McLean) was delivered on 14 September 2010. The Tribunal, by way of orders dated 23 September 2010, gave the parties in these proceedings an opportunity to make submissions in regard to the potential relevance of the McLean decision to the outcome of these proceedings. Both parties made submissions and the decision was reserved on 18 November 2010.
The applicants made an offer to acquire the property the subject of these proceedings situated at No 1 Breakwater Parade, Mandurah (Mandurah property) on 6 September 2006.
The applicants approached Ms Siranovic, who was, at the time, the Managing Director of Planet Finance Pty Ltd, to arrange financing of the acquisition. Ms Siranovic was at the time a finance broker but her current whereabouts are unknown.
The applicants signed a Citibank Mortgage Application Form (First Application) on 12 September 2006.
The First Application was for a loan amount of $604,000. The loan amount had to be used for the purchase of the Mandurah property. The First Application indicated that the loan would be for 'investment' purposes, that the applicants confirmed all the information provided in the First Application are, to the best of their knowledge, true and correct, and that they consented to the terms and conditions of the First Application. The signatures of the applicants appear on the declaration of 12 September 2006, which states that signatories acknowledge that the loan is to be applied wholly or predominantly for purposes of business or investment.
The applicants sought, on 19 June 2007, an increase in the loan. They again approached Ms Siranovic to assist with securing financing for an amount of $68,000 (Second Application). According to the copy of the Second Application, the additional amount was to be used for 'investmentshares' purposes. The Second Application indicated that the applicants had confirmed by their signature that all the information provided was, to the best of their knowledge, true and correct, and that they agreed to the terms and conditions of the Second Application. The signatures of the applicants appear in the declaration in which signatories acknowledge that the credit provided for purposes of the Second Application is to be applied wholly or predominantly for purposes of investment of business.
The Tribunal was not provided with the original or certified copies of the originals of the First Application or the Second Application. The applicants do not accept that the copies of the First Application and the Second Application are consistent with the instructions they had given to Ms Siranovic and they contend that they did not sign the business declarations. They also contend that some of the other the information on the First Application and the Second Application are not consistent with the instructions they gave to Ms Siranovic.
The applicants did not move into the Mandurah property immediately after settlement. The Mandurah property was rented out from 6 December 2006 to February 2010, and was thereafter occupied by the applicants.

Statutory framework

The Credit Code regulates credit contracts, and the kinds of credit contracts are defined as follows:
6.Provision of credit to which this Code applies
(1)This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of pre-contractual obligations) is proposed to be entered into
(a)the debtor is a natural person ordinarily resident in this jurisdiction or a strata corporation formed in this jurisdiction; and
(b)the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and
(c)a charge is or may be made for providing the credit; and
(d)the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider.
(2)If not all the debtors under a credit contract ordinarily reside, or are strata corporations formed, in this jurisdiction, this Code applies only if credit is first provided under the contract in this jurisdiction.
(3)If this Code applies to the provision of credit (and to the credit contract and related matters)
(a)this Code applies in relation to all transactions or acts under the contract whether or not they take place in this jurisdiction; and
(b)this Code continues to apply even though the debtor ceases to be ordinarily resident in this jurisdiction.
(4)For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.
(5)For the purposes of this section, the predominant purpose for which credit is provided is
(a)the purpose for which more than half of the credit is intended to be used; or
(b)if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.
11.Presumptions relating to application of Code
(1)In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established.
(2)Credit is presumed conclusively for the purposes of this Code not to be provided wholly or predominantly for personal, domestic or household purposes if the debtor declares, before entering into the credit contract, that the credit is to be applied wholly or predominantly for business or investment purposes (or for both purposes).
(3)However, such a declaration is ineffective for the purposes of this section if the credit provider (or any other relevant person who obtained the declaration from the debtor) knew, or had reason to believe, at the time the declaration was made that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes. For the purposes of this subsection, a relevant person is a person associated with the credit provider or a finance broker (or a person acting for a finance broker) through whom the credit was obtained.
(4)A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not.

Contentions of the parties in regard to the first issue: 'best evidence'

The applicants contend that the Tribunal should not accept into evidence the copies of the First Application and the Second Application (credit applications) filed by the respondent since they are not the best available evidence. The respondent contends that the copies of the credit applications should be accepted as the best available evidence since the original applications could not be located by either party.
The contentions of the applicants as to whether the Tribunal can rely on copies of the credit applications as 'best evidence' in the absence of the original credit applications or certified copies of the original credit applications can be summarised as follows:
•The 'best evidence' in these proceedings is the original credit applications, or in the alternative, certified copies of the original credit applications. The applicants' rights are severely prejudiced by the inability or unwillingness of the respondent to make available the original or certified copies of the original credit applications.
•The applicants had only seen and signed the execution pages of the original credit applications. The applicants 'did not sign a business declaration' but 'they do not deny signing a page of an incomplete application that was sent to them by facsimile' by Ms Siranovic. All the other information contained in the credit applications was inserted by Ms Siranovic. The applicants had never received or sighted copies of the completed credit applications.
•Ms Siranovic was told at various occasions by the applicants that the credit the subject of the credit applications was for personal use for purposes of acquiring the Mandurah property and not for investment or business purposes. The original credit applications (if the originals can be produced by the respondent) will show that the applications were completed and possibly altered by Ms Siranovic and not by the applicants, and that the signature on the business declaration may have been falsified or copied and pasted.
•The original credit applications 'have been tampered with'. It is only if the originals of those applications were provided that the existence and extent of any tampering can be demonstrated, if necessary, by an expert. Mr Adrian Lacroix, an expert forensic document examiner who has been retained by the applicants, confirmed in his statement to the Tribunal that any tampering or cutandpaste interference with a document 'will not be evident on facsimile copies'. It is therefore essential that the originals of the credit applications must be provided to the Tribunal.
•The applicants reject the evidence of the respondent's Mortgage Collector, Mr Kovicz, that the originals of the credit applications are not held by the respondent. The applicants are of the belief that the originals of the credit applications must be in the possession of the respondent and if that is not the case, serious questions can be raised about the file management policies and practices of the respondent. If the original credit applications are not in the possession of the respondent, it is nevertheless the duty of the respondent to obtain the originals from their agent, Ms Siranovic.
•In summary, the applicants contend that the copies of the credit applications before the Tribunal are potentially flawed and not the best evidence available for purposes of these proceedings. The document management system of the respondent does not comply with best practice and is essentially 'without integrity'. The respondent acted 'without legal due diligence' by accepting facsimile copies of a credit application. The applicants conclude as follows in their statement of 14 May 2010:
(10)Accepting facsimile copies of loan application in preference to maintaining the original document on file destroys the integrity of their filing system and archival modus operandi. On the one hand, the Respondent gains profit, speed and convenience but conversely potentially loses reliability, truthfulness and legal accountability.
The contentions of the respondent as to whether the Tribunal can reply on copies of the credit applications as 'best evidence' in the absence of the original credit documents or certified copies of the original credit applications can be summarised as follows:
•The respondent has, for several years, had a policy to accept facsimile copies of credit applications and not to insist on the original of credit applications. This is confirmed by the statement dated 4 May 2010 of Mr John Ramage, Director of Mortgages of the respondent, in which he says that the respondent 'has not required the original credit application form from the credit applicant or their finance broker'.
•The respondent has no documents or correspondence in regard to this matter in its possession other than those already submitted to the Tribunal. This is confirmed by Mr Kovicz who explained in his affidavit dated 31 March 2010 that, other than the copies of documents already provided to the Tribunal, there are no other documents or correspondence in the possession of the respondent 'which refer to the purpose of the loan, or the subsequent increase to the loan. Further, to the best of my knowledge and belief, there are no documents which observe any verbal communication between the applicants or Ms Siranovic, and the respondent[,] with regard to the purpose of the loan'.
•The remark by Mr Kovicz in his affidavit dated 31 March 2010 that the copy of each of the credit applications provided to the Tribunal was a 'true copy' thereby suggesting the original documentation is in the possession of the respondent is incorrect and based on a misunderstanding. Mr Kovicz therefore explained in his affidavit of 4 May 2010 that he did not intend to mislead the Tribunal or to create the impression that the copies of credit applications provided to the Tribunal were copies of the original applications. The copies provided to the Tribunal were copies of the copies received by the respondent via facsimile from Ms Siranovic. Mr Kovicz explained as follows in his affidavit:
(18)I have searched for an[d] have been unable to locate the 'original' mortgage applications (being documents containing the original handwriting of the Applicants or broker) being annexure 'JK1' and 'JK5' to my previous affidavit, on files maintained by the Respondent with respect to the Applicants' applications. I have also made internal inquiries, within the Respondent, to ascertain whether or not it is possible that the original mortgage applications were received by the Respondent and not place on the relevant files.
(19)Based on the matters stated above and in addition to my previous affidavit, to the best of my knowledge and belief, the original mortgage applications referred to as 'JK1' and 'JK5' annexed my previous affidavit are not in possession of the Respondent.
•Ms Siranovic was not an agent of the respondent, but the respondent has nevertheless attempted to contact Ms Siranovic but to no avail.
•In summary, the respondent contends that, unless the applicants or Ms Siranovic can provide original credit applications to the Tribunal, the copies filed by the respondent is the best evidence available upon which the issues can be determined.

Consideration of the first issue

The question to be determined is whether the copies of the credit applications should be accepted into evidence for the purposes of these proceedings as the best evidence available. The Tribunal is not called upon in these proceedings to make a general assessment of the appropriateness of the recordkeeping and file management system of the respondent.
The respondent clarified its policy for accepting credit applications, namely that, for some years (since 2003), it had not required the original of credit applications to be lodged. It accepted facsimile copies and, on the basis thereof, made its assessment and decision. The respondent had no policy whether the original of credit applications had to be kept by the mortgage broker or by the applicant of the credit.
Mr Ramage explained in his affidavit that the respondent has since 2003 'routinely' accepted facsimile copies of credit applications. This policy is evidenced in the copies of the Mortgage Application Forms submitted in these proceedings which state 'Please note: Original application not required'.
Some confusion was caused by the first affidavit of Mr Kovicz, dated 31 March 2010, in which he attested that the copies of credit applications submitted to the Tribunal were 'true copies'. The Tribunal and the applicants assumed that by 'true copies' Mr Kovicz implied that the original applications were indeed in the respondent's possession. After the Tribunal questioned Mr Sheiner about the location of the original documents, Mr Kovicz submitted a clarifying affidavit dated 4 May 2010 in which he explained that he had been in error when he used the words 'true copy', in the sense that he did not intend to convey the impression or to mislead the Tribunal that it was a 'true copy' of the 'original application'. He went on to explain that after having investigated the records of the respondent and made internal inquiries, the respondent did not, to the best of his knowledge and belief, possess the original credit applications or any other documents or correspondence of relevance to these proceedings. He further confirmed that all documentations held by the respondent of relevance to these proceedings had been filed.
The respondent did not offer any suggestion as to who might be in possession of, or what might have happened to, the original credit applications. The best evidence it can provide are therefore those copies of the credit applications filed in these proceedings.
The applicants do not accept the explanation of the respondent and take issue with the appropriateness of the respondent's document management system. The applicants contend that the respondent failed to comply with its 'due diligence' duties by accepting facsimile copies of credit applications. The applicants further contend that, by accepting facsimile copies, the respondent creates an opportunity for abuse, fraud and misunderstanding.
Ms Siranovic, who was responsible to submit the credit applications to the respondent on behalf of the applicants, could not be located to give evidence about the whereabouts of the original credit applications or about any other matter of relevance to these proceedings.
The 'best evidence' rule requires the Tribunal, as a matter of prudence, to ensure that the 'original of a private document must be produced in order to prove its contents unless its absence can be explained' (Tribunal emphasis) JD Heydon Cross on Evidence (8th Edition) 2010: 105 (Heydon, 2010).
Although the original of a document is the 'par excellence of the contents of the document' (Heydon, 2010 at page 1,418), it is accepted that there are circumstances in which the original document may not be able to be produced. One such instance where the contents of a document may be proved by way of secondary evidence is 'when the original cannot be found after due search': (Heydon, 2010 at page 1,421).
It must be emphasised that the applicants' construction of the 'best evidence' rule, namely, that the proceedings cannot, for all practical purposes, continue until and unless the original of the credit applications were produced, is not accepted by the Tribunal. There are circumstances where original documentation cannot be located, and in such circumstances, a court or tribunal may rely on secondary information such as copies of documentation as 'best evidence' to make a determination.
This is consistent with the matter of Masquarade Music Ltd v Springsteen (2001) 51 IPR 650 at [77] when it was observed that the best evidence rule was dead and that it was, in essence:
... no more than the rule of practice to the effect that the court would attach no weight to secondary evidence of the contents of a document unless the party seeking to adduce such evidence had first accounted to the satisfaction of the court for the non-production of the document itself. ...
In these proceedings, the Tribunal is guided by the following assessment regarding the availability of the original credit applications and the reliance on copies of the credit applications:
•The respondent has had a policy since 2003 to accept credit applications via facsimile and not in the original. Although one might question the appropriateness of the respondent's document management policies, there is nothing of substance before the Tribunal to suggest that the respondent was withholding information or documents from the Tribunal or that the respondent had treated the credit applications of the applicants in any other way than in accordance with its stated policy to accept facsimile copies of credit applications.
•The mortgage applications signed by the applicants contain the following notation: 'Fax applications to: … Please note: Original application not required'. The policy of the respondent was therefore highlighted in its credit application forms.
•The evidence of Mr Kovicz, for the respondent, is that he has searched the record system of the respondent, that he has made internal inquiries within the respondent and that the original of the credit applications are, to the best of his knowledge, not in the possession of the respondent.
•The applicants did not themselves produce the original or a certified copy of any of the documentation they signed. The applicants acknowledge that they received in the mail the credit approval documentation from the respondent but they apparently signed it at the direction of Ms Siranovic without considering the content and without keeping a copy of the originals.
•Ms Siranovic could not be located to give evidence about the location of the original applications or to give evidence about any other matter arising in these proceedings.
•It is not known whether the originals of the credit applications remain in existence. There is no evidence before the Tribunal to support a contention that the originals of the credit applications exist and, even if the original are in existence, who is in possession of them.
The Tribunal is satisfied that, on the basis of the information before it and for the reasoning above, the best available evidence upon which to proceed are the copies of the facsimile credit applications as filed by the respondent. It is on the basis of those copies of the credit applications that the remaining questions arising from the dispute must be answered.

Contentions in regard to the second issue: is the declaration made ineffective pursuant to s 11(3) of the Credit Code?

The provisions of s 11 of the Credit Code deal with presumptions arising from the application of the Credit Code. Firstly, it is presumed that if a party claims that a credit contract or mortgage is one to which the Credit Code applies, then it is presumed to be such unless the contrary is established (s 11(1) of the Credit Code). Secondly, it is presumed that credit is to be applied wholly or predominantly for business and investment purposes if it is so declared by the debtor prior to entering into the credit contract (s 11(2) of the Credit Code). Thirdly, the declaration that credit is to be used wholly or predominantly for purposes of business or investment is ineffective if the credit provider or any relevant person who obtained the declaration from the debtor knew, or had reason to believe, that the credit was, in fact, to be applied wholly or predominantly for personal, domestic or household purposes.
The Tribunal will therefore now deal with the applicants' claim that the credit contracts must be presumed to fall within the Credit Code and that, based on the information they provided to Ms Siranovic, the respondent knew or had reason to believe that the credit was to be applied wholly or predominantly for personal, domestic or household purposes.
The applicants contend that s 11(1) and s 11(3) of the Credit Code apply to these proceedings. The applicants contend that Ms Siranovic was the agent of the respondent and that she (and therefore the respondent) knew or had reason to believe that the credit was, in fact, to be applied wholly or predominantly for personal, domestic or household purposes.
The respondent contends that Ms Siranovic was not the agent of the respondent; she was acting on behalf of the applicants to secure credit from a financial institution and the respondent did not know nor did it have any reason to believe at the time when the declaration was made, that the credit applied for was for any other purposes but for predominately business or investment, as stated in the declaration.
The contentions of the applicants can be summarised as follows:
•It was their intention, at the time when the declaration was made, to acquire the Mandurah property for purposes of private use as their principal residential premises. Their intention was conveyed to Ms Siranovic on several occasions.
•At the time when the credit application was made, the principal residential premises of the applicants was in Wannanup. They decided, however, to sell the Wannanup property and to move to Mandurah to be closer to friends, school and places of employment. They expected their Wannanup property to sell without any trouble.
•Unfortunately, due to the onset of the global financial crisis, the offer they received for the Wannanup property fell through and they had to remain at the Wannanup property for longer than originally planned while they rented out the Mandurah property.
•The Mandurah property remained on the rental market until early 2010 since the advice they received was that it would be easier to find a tenant for the Mandurah property than the Wannanup property. Ms Scancano filed a statement in these proceedings to confirm that she had recommended that the applicants make their Mandurah property available for rent since the market for rent was better in Mandurah than in Wannanup.
•The intention of the applicants to move to the Mandurah property as their primary place of residence was made known to Ms Siranovic and to several other persons, such as Mr Don Pember (a business acquaintance of the applicants and exDeputy Mayor for the City of Mandurah) and Mr Trevor Frahm (a delivery person for Australia Post). Mr Pember and Mr Frahm filed statements of evidence to confirm that Mr Goff had informed them of their intention to sell the Wannanup property to resettle in Mandurah. Mr Shortland also filed a statement to confirm that he had made an offer for the Wannanup property but that it had fallen through.
•The applicants made an offer on 6 September 2006 for the Mandurah property and the offer was accepted on 7 September 2006. They approached Ms Siranovic on 8 September 2006 to assist in arranging finance.
•The applicants had met Ms Siranovic through the Peel Mandurah Chamber of Commerce. She had told them that she was an accredited agent of Citibank; that she knows what Citibank expects in credit applications, and that there would be no problem to obtain finance.
•On 11 September 2006, Ms Siranovic informed Mr Goff that she had completed the credit application and that she would fax to him the two pages that required their signature. The applicants received only the two pages, signed it and faxed it back to Ms Siranovic. They did not seek a copy of the completed application, nor did they sight the completed application, and they did not receive a copy thereof.
•On 23 September 2006, the applicants received a 'small bundle of mortgagerelated documents' (loan approval contract) from the respondent. They took the documents to Ms Siranovic and without her explaining it to them, they signed it. According to Mr Goff, they were 'instructed' by Ms Siranovic to sign the documents.
•The fact that it took them longer than originally anticipated to move into the Mandurah property as their primary residence does not diminish their intent, when they applied for the credit, met with Ms Siranovic and explained to her, that the mortgage was to be used wholly or predominantly for personal, domestic or household purposes.
•Ms Siranovic was the agent of the respondent. Her status is evidenced by Ms Siranovic purporting to the applicants that she was an agent of the respondent; she acted in a manner consistent with a person being an agent; Ms Siranovic and Planet Finance acted in accordance with written instructions and authority from the respondent; Ms Siranovic acted in good faith towards the respondent, and she acted with 'fidelity and fiduciary interest for the benefit of the respondent'. Ms Leonie Hill, another client of Ms Siranovic, filed a statement in these proceedings in which she says that Ms Siranovic had also made representations to her that she was an agent of the respondent.
•The respondent at the time marketed a 'lo doc' product that 'encouraged and deceived consumers to extend their financial resources'. As a result of the lack of due diligence on the part of the respondent, the credit applications were approved. Had the respondent made even the most basic of inquiries, such as a telephone call to the applicants, the respondent would have realised that the information provided in the credit applications was not accurate.
•The applicants accept that there are 'pointsoflaw similarities' between this proceeding and the McLean matter, but at the same time there are important factual differences which limits the applicability of the Mclean decision; for example, in the McLean matter, the original or certified copies of the original loan application was made available. The evidence in this proceeding of an agency relationship between Ms Siranovic and the respondent is also stronger in these proceedings than was the case in McLean.
•In summary, s 11(1) of the Credit Code applies since it must be presumed, on the basis of the claim of the applicants, that the credit was wholly or predominantly for personal, domestic or household use. In addition, s 11(3) of the Credit Code applies since the declaration purportedly made in the credit application was ineffective as Ms Siranovic was agent of the respondent and the respondent is imputed to know, or had reason to believe, that the credit was sought wholly or predominantly for personal, domestic or household purposes. Further, the respondent advised in its letter of 7 July 2009 to the applicants that they were 'entitled to apply for financial assistance under the Consumer Credit Code'. By giving this advice, the respondent acknowledged that the Credit Code applied and that the credit was to be used for household, domestic or personal purposes.
The contentions of the respondent can be summarised as follows:
•Ms Siranovic was not an agent of the respondent when the credit applications were completed and the declarations were made.
•Ms Siranovic was approached by the applicants to assist them to obtain credit. The respondent had no agency or other agreement with Ms Siranovic.
•The Citibank Introducer Agreement that was tendered in these proceedings was entered into between the respondent and Professional Lenders Association Network of Australia Pty Ltd as Trustee for Plan Unit Trust, and not with Ms Siranovic in person or with Planet Finance. The Citibank Introducer Agreement nevertheless makes it clear that an Introducer 'carries on an independent business referring applications for mortgage loans and other financial products to various lenders' (paragraph B 'Introduction').
•The role of the Introducer was principally to fill out the 100 point check and not to give any advice or make representations of any kind on behalf of the respondent.
•Ms Siranovic approached the respondent to obtain financing for the applicants and when the applications were approved, she received a commission from the respondent. The payment of commission does not, in itself, signify an agency relationship between the respondent and Ms Siranovic.
•If the applicants allowed Ms Siranovic to fill out the credit applications without them checking the detail or the accuracy of the information, the respondent cannot be held responsible for relying on the information provided to it. The same applies to the applicants' contention that they were 'instructed' by Ms Siranovic to sign the loan contracts without having read them. If they, indeed, signed the contracts without reading them, the responsibility could not be placed before the respondent.
•If the applicants had read the credit applications and the 'small bundle of mortgage related documents' (loan contracts) that were sent to the applicants before signing them, they would have noted any inaccuracies and could have corrected them.
•The applicants knew the credit product which they applied for was based on a self-assessment whereby a client's application is considered by the credit provider solely on the basis of the information provided by the client on the credit application. Even if the applicants had in their mind that the loans were to be used for residential purposes and, even if they had conveyed privately to their friends that they intended to resettle, there is nothing in the credit applications, or in other evidence to support the contention that the respondent knew, or had reason to believe, that the information provided in the credit applications was not accurate.
•There is no evidence that any intention other than for the credit to be used wholly or predominantly for business or investment purposes was ever communicated to Ms Siranovic or to the respondent. Although the applicants assert that they had told various things to Ms Siranovic, there is no evidence before the Tribunal to support it. The respondent only had the credit applications upon which to assess the creditworthiness of the applicants and, according to that information, the credit was not wholly or predominantly for personal, household or domestic purposes. The fact that the Mandurah property was rented out for such an extended period of time and that it was referred to in the Second Application as a 'rental property' affirmed the understanding of the respondent that it was, indeed, an 'investment' and the income derived from it was used to support another 'businessinvestment' application.
•The commission paid to Ms Siranovic does not impute an agency relationship between the respondent and her. The mere fact that Ms Siranovic submitted a credit application to the respondent and that she received a commission when the credit had been approved does not justify a conclusion that she was an agent of the respondent.
•The question for the Tribunal to consider is not what the applicants had intended subjectively in the privacy of their own deliberations, but what was known to the respondent at the time when the declaration was made, or what a reasonable person standing in the position of the respondent would have concluded, on the basis of the information available to it.
•In conclusion, s 11(3) of the Credit Code does not invalidate the declaration made by the applicants in the First Application or Second Application since the respondent did not know, or have reason to believe, that the credit was to be applied wholly or predominantly for other purposes as set out in the applications and that Ms Siranovic was not an agent of the respondent.

Consideration of the second issue

Section 11(3) of the Credit Code overrides any declaration the applicants may have made in their credit application, provided that the respondent, or 'any other relevant person' who obtained the declaration from the applicants, knew, or had reason to believe at the time the declaration was made, that the credit was, in fact, to be applied wholly or predominantly for personal, domestic or household purposes. 'Any other relevant person' is defined as a 'person associated with the credit provider or a finance broker (or a person acting for a finance broker) through whom the credit was obtained' (s 11(3) of the Credit Code).
The applicants contend that, even if it is decided by the Tribunal that:
a)the copies of the applications for credit were the best available evidence; and
b)the declarations in those applications were in accordance with s 11(2) of the Credit Code;
then the information they provided to Ms Siranovic should cause the declaration to be ineffective pursuant to s 11(3) of the Credit Code.
The applicants contend that they had always seen Ms Siranovic as the agent of the respondent; that they disclosed their intentions to her; that she was responsible for completing the applications; that she instructed them where to sign the credit applications and the loan contracts; and that she had acted as if she was an agent of the respondent. The applicants further contend that their intention to acquire the credit for personal, domestic and household purposes was consistent with their conduct. For example, they informed various persons that they intended to relocate to the Mandurah property; they placed their premises in Wannanup on the market; and they ultimately moved into the Mandurah property. The only reason there was a delay in moving to the Mandurah property was because the global financial crisis had caused the real estate market to suffer, and the advice they received was to remain in the Wannanup property while renting out the Mandurah property.
As the Tribunal observed above, the proceedings would have benefitted greatly if Ms Siranovic was available to give evidence about her role in the entire process.
The final submissions made by the parties had the benefit of being informed by the decision of Chaney J, in the McLean matter. The parties were given an opportunity to make written submissions in regard to aspects, if any, of the McLean decision that may be of relevance to these proceedings.
The Tribunal will utilise the key principles set out in the McLean decision to determine whether s 11(3) of the Credit Code applies to these proceedings. Those principles are:
a)Even if a declaration was given to Ms Siranovic but she knew that it was not true, the respondent cannot rely on the declaration (McLean at [127]).
b)If Ms Siranovic was aware that the declaration was untrue, the effect of such knowledge was merely to deprive the respondent of the capacity to rely on the statutory presumption in s 11(2) of the Credit Code. The knowledge of a broker of the true purpose of the credit does not mean the respondent cannot displace the presumption created by s 11(1) of the Credit Code. In other words, the respondent 'could nevertheless demonstrate on the evidence that the credit was provided or intended to be provided wholly or predominantly for business or investment purposes or both' (McLean at [128]).
c)The presumption in s 11(1) of the Credit Code can be displaced by relying on a declaration and by taking into account 'evidence of the transaction itself and the circumstances surrounding it … ' (McLean at [129]). If a debtor fails to execute the declaration as per s 11(2) of the Credit Code, it may be difficult, but not impossible, for the lender to displace the presumption in s 11(1) of the Credit Code presumption. However, if a s 11(2) of the Credit Code declaration is made, 'it is a relevant fact to be considered with all the other relevant facts in determining the purpose for which the credit is provided or is intended to be provided' (McLean at [29]).
d)In order to determine if Ms Siranovic was an agent of the respondent, Chaney J adopts the following conclusion of Newnes M (as he then was) in Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177:
While, therefore, whether in any case a finance broker is the agent of the financier is a question which must be determined on the facts of the particular case, there is a strong body of authority which support the view that such an agency will not readily be inferred and it is not sufficient simply to show that the broker possessed and completed the finance application form, provided to the financier information required by the financier and received a fee or commission from the financier.
The Tribunal does not accept the contention of the applicants that s 11(3) of the Credit Code applies.
The reasons for this finding on the application of the above principles are as follows:
a)There is insufficient evidence to conclude that the applicants had informed Ms Siranovic that the credit was wholly or predominantly for personal, domestic or household purposes. Ms Siranovic did not give evidence to support the contentions of the applicants. Mrs Goff says that Mr Goff told Ms Siranovic about the purpose of the credit, but Mrs Goff does not explain when her husband imparted such information, where it happened, whether she (Mrs Goff) was in attendance at the meeting, what exactly was said or why they did not check the credit application forms to ensure that the information therein was consistent with what Mr Goff had told Ms Siranovic. Mr Goff says he told Ms Siranovic 'on numerous occasions' but, other than him saying so, there is no evidence of any information to support this; he does not explain when and where such meetings occurred; who was present; if any written information was given, and he failed to explain satisfactorily why he would have signed a credit application without checking that the information provided to Ms Siranovic was accurately recorded in the application.
b)There is insufficient evidence to make a finding that Ms Siranovic had known that the declaration made in the credit applications was untrue. The applicants signed not one but two declarations and, in both, the purposes of the credit were referred to as 'investment' or 'business'. In the Second Application, the applicants relied on the investment income from the Mandurah property to sustain an application for further credit. The Tribunal finds, on the balance of probabilities, that it is unlikely that the applicants, who, at the time had extensive involvement in the real estate industry, would have signed two credit applications without bothering to consider the content thereof. In fact, the applicants not only signed the two credit applications, but they say they also signed the loan contracts, allegedly without considering the content. The Tribunal finds this implausible. There was nothing in the surrounding circumstances of the applications that could have indicated to the respondent that the purpose of the credit was other than indicated in the declaration.
c)Even if the Tribunal found that the declaration is not accepted due to the unavailability of the original documentation, it does not automatically mean that the s 11(1) Credit Code presumption is final. The Tribunal must be guided by the circumstances surrounding the credit applications. The Tribunal accepts that the applicants had told various people of their intention to relocate at some point in time to Mandurah. The Tribunal also accepts that the timing of the relocation may have been impacted upon by global economic events and that this may explain why the applicants did not relocate to the Mandurah property immediately after settlement. The question is whether the respondent, or Ms Siranovic, knew, or had reason to believe, that the credit for this particular transaction was to be used wholly or predominantly for personal, domestic or household purposes. There is no evidence before the Tribunal to suggest that the respondent or Ms Siranovic knew, or had reason to believe at the time of the credit application, that such information had been given to third parties. The 'lo doc' product was a specific option marketed by the respondent and chosen by the applicants where selfassessment by a credit applicant is the key to the respondent's assessment of the credit application. This was stated not only in the credit applications but also in the loan contracts. In addition, the applicants signed the following acknowledgement in the Mortgage Loan Final Approval Advice Settlement Conditions:
'I/We acknowledge that Citibank has advised me/us to obtain independent legal and financial advice in connection with the proposed facility.' (Settlement Condition 944)
The Tribunal therefore finds that, even if the copies of credit applications and the loan documentation were not accepted into evidence, the respondent is successful, on the basis of the circumstances surrounding the credit applications, to displace the presumption in s 11(1) of the Credit Code.
d)The Tribunal does not accept that Ms Siranovic was an agent of the respondent. This conclusion is reached for the following reasons:
•There is no evidence of an agency agreement between the respondent and Ms Siranovic. The respondent had an Introducer Agreement but that was not with Ms Siranovic or Planet Finance.
•The Introducer Agreement with Professional Lenders Association as Trustee for Plan Unit Trust made it clear that the Introducer was an 'independent business' that referred applications to 'various lenders' and that a commission was payable if credit was approved. The status of the Introducer was as 'independent contractor'. Although there is no evidence of an Introducer Agreement with Ms Siranovic or Planet Finance, the Tribunal finds that, even if there was an agreement similar to the agreement with Professional Lenders, it would not have constituted an agency agreement for the purposes of s 11(3) of the Credit Code.
•There is no verifiable evidence before the Tribunal that Ms Siranovic introduced herself to the applicants as an 'agent' of the respondent or even if she did, that the respondent had acted in any way to sustain such an impression that Ms Siranovic was its agent.
•The fact that the respondent paid commission to Ms Siranovic is not sufficient to denote an agency relationship. The loan contracts signed by the applicants explain the basis upon which a commission is paid, and there is nothing to suggest such payment constitutes confirmation of an agency relationship. The Mortgage Loan Final Approval Advice Settlement Conditions explain that 'authorised third parties may provide prospective customers with information regarding Citibank products. They may not give any advice on behalf of Citibank or enter into any dealings with Citibank' (Settlement Condition 82). Under the heading 'Commission', it is explained that a commission is paid to Professional Lenders Association Network of Australia. No mention is made of Ms Siranovic or Planet Finance.
In conclusion, the Tribunal finds that s 11(3) of the Credit Code does not apply to these proceedings since:
a)Ms Siranovic was not an agent for the respondent; and
b)the respondent did not know, and had no reason to believe, that the credit was to be used wholly or predominantly for personal, domestic or household purposes.
The presumption of s 11(1) of the Credit Code, namely, that the credit falls within the ambit of the Credit Code, is therefore displaced by s 11(2) of the Credit Code.

Contentions of parties in regard to the third issue: was the credit provided or intended to be provided wholly or predominantly for personal, domestic or household purposes (s 6(1)(b) of the Credit Code)?

The applicants contend that the credit applied for was provided or intended to be provided wholly or predominantly for personal, domestic or household use and that, as a consequence, s 6 of the Credit Code applies. The respondent contends that the applicants declared that the credit was to be used for business and investment purposes and that the Credit Code therefore does not apply.
In essence, the applicants contend as follows:
•The applicants accept that an objective test must be applied to determine what a reasonable person standing in the position of the respondent would have considered the predominant purpose for which the credit was provided. They contend that a reasonable person would indeed have concluded that the credit was predominantly for residential, personal or domestic use based on the information that was provided to Ms Siranovic.
•The applicants did not sight the completed credit application forms since Ms Siranovic told them she would fill in the necessary detail. They only signed the execution pages that were faxed to them, and relied on her to complete the application accurately and in accordance with their instructions.
•The applicants also signed the loan approval documentation but did not consider the content thereof since Ms Siranovic allegedly pointed to them where they had to affix their signatures without explaining any of the content to them.
•The information contained in the credit applications, namely, that the credit applications were to be used for investment purposes and acquiring shares, were false and fraudulent. The applicants also did not sign the declaration.
•In the absence of the original credit applications, the Tribunal ought to disregard the copies provided to it and it should treat the application as if it falls within the scope of the Credit Code on the basis of the presumption in s 11(1) of the Credit Code, which provides as follows:
In any proceedings (whether brought under this Code or not) in which a party claim that a credit application, mortgage or guarantee is one to which this Code applies, is presumed to be such unless the contrary is established.
The respondent, in essence, contends as follows:
•The intent of the credit contract is determined objectively at the time when the declaration is made. The implication of s 11(3) of the Credit Code is not conclusive or final, but merely to deprive the respondent from relying on the statutory presumption in s 11(2) of the Credit Code. If the respondent cannot rely on the presumption of s 11(2) of the Credit Code, it can nevertheless demonstrate on the available evidence that the credit was provided, or intended to be provided, wholly or predominantly for business or investment purposes. This is consistent with the decision of Chaney J, in the McLean matter at [128].
•The secondary evidence, namely, the copies of the credit applications, is the best and most reliable evidence available to the Tribunal since the original applications could not be located.
•The credit applications were duly signed by the applicants and, if any responsibility is to be apportioned, it should not rest with the respondent for making an assessment of the credit applications on the basis of the documents provided to the respondent by facsimile.
•If the applicants had signed the credit applications without apparently checking the accuracy of information that Ms Siranovic had provided, the responsibility does not rest with the respondent. It has, however, not been shown that the information on the applications were not authorised or seen by the applicants.
•The actions of the applicants after settlement of the Mandurah property were consistent with their original intent to use it as a business venture. This is why, when the applicants sought additional financing, they referred to the Mandurah property as an investment.
•The credit applications clearly provide that the credit was to be used for purposes other than personal, household or domestic and, as a result, the Credit Code does not apply. The applicants were aware of the nonapplication of the Credit Code and signed the declaration attesting to their knowledge.

Consideration of the third issue

Both parties accept that the 'objective understanding' of the respondent for providing the credit must be ascertained for purposes of s 6(1)(b) of the Credit Code and not the intention of the applicants for obtaining the credit (McLean at [145]).
Section 11 of the Credit Code is, in essence, an 'evidential provision'. This means that if there is a declaration, it is presumed that the credit was for the purpose specified therein. However, if there is no declaration, the respondent must, by way of evidence, rebut the presumption in s 11(1) of the Credit Code. 'Whether or not a declaration is made makes no difference to the test that must be applied under s 6(1)(b)': (A Beatty and S Smith's Annotated Consumer Credit Code and Regulations (3rd ed, 2006) at page 6.40). The rationale for the objective test applied under s 6(1)(b) of the Credit Code was explained as follows in the McLean matter at [145]:
The debtor's stated intention will usually determine what a reasonable person standing in the shoes of a credit provider would understand the purpose of the provision of the credit to be. There may, however, be circumstances apparent to the credit provider that lead to a conclusion that, despite what the debtor may have stipulated as his or her intention, a reasonable person standing in the shoes of the credit provider would understand that the funds are to be used for some different purpose.
The Tribunal has already decided in the first issue that, with the information available to it, the copies of the credit applications filed in these proceedings are accepted as the best available evidence on which a determination of the preliminary issues can be made. The Tribunal has also found in response to the second issue that Ms Siranovic was not an agent of the applicants and that s 11(3) of the Credit Code does not apply.
Both credit applications were signed by the applicants. The Tribunal notes the contention of the applicants that they did not sign the business declaration. They do admit, however, to having signed both the credit applications and the loan approval contracts. On the basis of the available evidence, the Tribunal finds that, on the balance of probabilities, the applicants had signed the business declaration together with the credit applications.
The First Application was signed by the applicants on 12 September 2006 and specifies under the heading Loan Details that the purpose of the loan is for 'Investment'. The applicants signed a 'SelfCertification Declaration' in which they declare that:
1I/We request Citibank to rely on the information contained in this declaration and the accompanying mortgage application form, without independently verifying the details of my/our income, expenses, assets and liabilities.
The Second Application was signed by the applicants on 19 June 2007 and specifies that the purpose of the loan is 'InvestmentShares'.
The applicants also acknowledge that they signed the loan approval contracts albeit, according to their evidence, without considering the content of the contracts. The Tribunal finds it unlikely that, as the applicants contend, they received the loan approval contracts and took them to Ms Siranovic who 'instructed' them to sign without them reading or considering the content of the contracts. It would be most unusual, even extraordinary, for two persons who are actively involved in the real estate industry to not even consider the content of a loan contract and to sign it at the 'instruction' of a broker.
The loan contracts, which the applicants acknowledge they have signed, contain, under the heading 'Acknowledgement of acceptance', a confirmation that the applicants confirm that before signing the contract they have received and read a copy of the Citibank Home Loan Facility Agreement Terms and Conditions.

The applicants do not dispute that the signatures on the credit applications are their signatures. They contend, however, that they signed the applications without sighting the full application forms and that the information ultimately provided by Ms Siranovic is false and fraudulent and that some of the information may have been varied. They also contend that their signatures on the declaration may have been added by way of a cutandpaste exercise.
The Tribunal finds that the respondent had, when the objective test is applied, no reason to know that the First Application and the Second Application were provided or intended to be provided other than wholly or predominantly for business or investment purposes.
In summary, the applicants signed the credit applications and the loan approvals, and although they contend that they had not read the completed documentation, the Tribunal makes its findings on the basis of the following:
a)The applicants did not provide any documentation, in original or copied form, to the Tribunal of the credit applications they had completed.
b)The applicants did not provide to the Tribunal copies of any written instructions that they may have given to Ms Siranovic about the information she had to insert into the credit application forms.
c)Although the applicants contend that Ms Siranovic was given information about the true intent of the credit applications, there is no evidence before the Tribunal of when such information was given to her, who was present when it was given or any other facts that can verify the contention. Mrs Goff, says that Mr Goff 'advised' Ms Siranovic of their decision to move to the Mandurah property, but she does not provide any confirmation that she was present when the advice was given, what exactly was said, whether anyone kept notes, etc.
d)The applicants did not provide the original or copies of the original loan approval documentation that they received from the respondent after their credit applications had been approved. The Tribunal finds it most unlikely that the applicants, who have extensive involvement in the real estate industry, would execute two credit applications and two loan contracts without considering the content of those documents, without making copies of any of the documents and without keeping record of any instructions that were given to Ms Siranovic.
e)Ms Siranovic was not called to give evidence about the allegation that the applications had been falsified and/or altered fraudulently.
f)Ms Siranovic was not called to give evidence about what she had done with the original credit applications.
g)The applicants signed the credit applications knowing that the information contained therein was to be relied upon by the respondent for purposes of making a risk assessment for providing credit. Both applicants had experience in the real estate industry at the time. Mr Goff was employed by Realty Executives Mandurah as an advertising and commercial property manager, and Mrs Goff was employed by Realty Executives Mandurah as a sales consultant.
The Tribunal concludes that the credit provided was not wholly or predominantly for personal, domestic or household purposes and, as a result, the matter does not fall within the ambit of the Credit Code. The Tribunal therefore does not have jurisdiction to determine the main application.

Conclusion

In summary, the Tribunal's findings in regard to the three preliminary issues are as follows.
Firstly, the Tribunal can rely on copies of the credit applications as 'best evidence' in the absence of the original documents or certified copies of the original documents.
Secondly, the respondent did not know, or had no reason to believe, that the credit the respondent made available to the applicants was to be applied wholly or predominantly for personal, domestic or household purposes. Furthermore, Ms Siranovic was not an agent for the respondent.
Thirdly, the Tribunal is not satisfied that the credit applied for was provided, or intended to be provided, wholly or predominantly for personal, domestic or household use.
The application must therefore be dismissed on the grounds that it does not fall within the jurisdiction of the Tribunal.

Order

The application is dismissed.

I certify that this and the preceding [73] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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DR B DE VILLIERS, MEMBER