Money Renters Pty Ltd v Good Onion Pty Ltd

[2016] VCC 1406

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISON
BANKING AND FINANCE LIST

Case No. CI-15-04280

MONEY RENTERS PTY LTD	Plaintiff
v.
GOOD ONION PTY LTD, ANTHONY TOUMPAKKE and JOHN TOUMPAKKE	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	23 September 2016
DATE OF JUDGMENT:	23 September 2016 (revised 23 September 2016)
CASE MAY BE CITED AS:	Money Renters Pty Ltd v. Good Onion Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2016] VCC 1406

REASONS FOR JUDGMENT

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Catchwords:             Practice and procedure – Application to set aside default judgment – Short-term loan for one month with interest of 4% per month and default interest of 10% per month – Whether National Credit Code applies – Code not applicable because loan not predominately for “personal, domestic or household purposes” – Whether loan agreement unconscionable because of failure by the lender to disclose that default rate of interest was equal to 120% per annum – No lack of disclosure impugning the transaction – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C. Salpigtidis of Counsel	Summer Lawyers
For the Second Defendant For the Third Defendant	Mr A. Toumpakke (in person) Mr J. Toumpakke (in person)

HIS HONOUR:

1Money Renters Pty Ltd (“Money Renters”) on 15 June 2016 obtained a default judgment for possession of the property at 23 Catherine Drive Hillside (“the property”). The owners of the property are Anthony Toumpakke and John Toumpakke.

2Anthony and John Toumpakke now apply to set aside the judgment. They have provided explanations as to why they failed to file court documents, which permitted the judgment to be entered. There is, however, a dispute as to whether they have a defence to the proceeding.

3Money Renters entered into a loan agreement with Anthony and John Toumpakke, and a third borrower Good Onion Pty Ltd, on about 10 October 2014. The loan was secured by a mortgage over the property. Money Renters alleged in the proceeding that the loan had not been repaid and that the default entitled it to possession of the property.  

4Anthony and John Toumpakke allege that Money Renters were not entitled to recover under the loan agreement for the following reasons:

a.Money Renters was not licenced to act as a “credit provider under a credit contract” pursuant to the National Consumer Credit Protection Act 2009 (Cth) (“the Act”);

b.Money Renters had engaged in misleading and deceptive conduct, or alternatively unconscionable conduct by –

i.failing to properly advise the borrowers of the terms of the loan, particularly the default interest rate which was equivalent to 120% per annum;

ii.advancing funds to the borrowers without making enquiries to satisfy itself that the borrowers were likely to have the capacity to repay the loan;

c.the loan agreement was not made subject to the borrowers being able to refinance the loan with the ANZ Bank.

Was Money Renters a “credit provider”?

5Under the Act, a “credit contract” and a “mortgage” has the same meaning as in the National Credit Code (“the Code”). Under the Code, the provisions do not have application unless “the credit [secured by the mortgage] is provided or intended to be provided wholly or predominately” for “personal, domestic or household [or related] purposes”.

6The loan provided by Money Renters was for business purposes. This fact was conceded both in the affidavits sworn by Anthony and John Toumpakke and in their submissions to the Court. The reference to business purposes was referred to in many places in the contemporaneous documents and in the recorded telephone conversation between each of Anthony and John Toumpakke with Ms Catriona Anderson, the National Credit Controller of Money Renters, on 8 October 2014.

7In the circumstances, the Code and the protections it offers some consumers, were not available to Anthony and John Toumpakke.

Did Money Renters engage in misleading or deceptive conduct or unconscionable conduct?

8The loan was for $58,500 repayable in one month, although it could be extended from month to month provided 4% interest per month ($2,340) was paid in advance for the following month, before the due date. If there were a default, the interest rate payable was 10% per month.

9Anthony and John Toumpakke said that it was not explained to them that the default rate of interest of 10% per month equated to 120% per annum. If they had been told, they would probably not have entered into the loan agreement.

10Further, they said that Money Renters did not make any enquiries of the financial position of the borrowers, save that the property was available as security and that there was equity in the property.

11Money Renters should have been alerted by the fact that the loan was taken out to assist the cash flow of the business and there was to be a refinancing, as indicating the likelihood the loan would not be repaid and the borrowers would default.

12These submissions ignore the following matters:

a.Mr Anthony Toumpakke had engaged a broker and an accountant to source the refinancing for the business. This was never the responsibility of Money Renters;

b.Money Renters both in the application form submitted through its agent, HomeSec, and in the pre-loan conversation between Ms Anderson and Anthony and John Toumpakke had enquired about the borrowers’ “exit strategy” and had been told that it was proposed to refinance the business loans;

c.in the pre-loan discussion, Ms Anderson had emphasized the monthly interest rate of 4%, the default rate of 10% and the fact that they were monthly rates not annual rates;

d.the documents were sent to the borrowers’ solicitor. He signed a certificate that he “gave advice in respect of the documents”, and explained to Anthony and John Toumpakke that if they defaulted under the loan, the lender could “sell up any security”. Anthony and John Toumpakke each signed that, “The matters recorded in the certificate are true and correct”, and also executed the loan agreement and mortgage documents.

Should Money Renters have made the loan conditional upon the refinancing by ANZ?

13Refinancing the loan was the responsibility of the borrowers. It is not clear why this was not achieved by the broker or the accountant and why the borrowers kept on rolling over the loan with Money Renters without ensuring that the refinancing was being arranged.

14It is unrealistic to suggest that the borrowers would be liable to repay the loan to Money Renters, only if the refinancing were arranged.

15In the circumstances, Anthony and John Toumpakke have not established a basis upon which they might have a defence to the claim. Accordingly, the application to set aside judgment must fail.

Orders

1.        The summons of the second and third defendant dated 19 August 2016 is dismissed.

2.The second and third defendants must pay the plaintiff’s costs of the summons, including reserved costs and the costs of the hearing today, to be assessed by the Costs Court on an indemnity basis, in default of agreement.

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Certificate

I certify that the preceding 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 23 September 2016 and revised that day.

Dated: 23 September 2016

Carla Cianfaglione

Associate to His Honour Judge Anderson