Robinson v Ackroyd
[2018] ACAT 114
•14 November 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
ROBINSON & ANOR v ACKROYD & ORS (Civil Dispute) [2018] ACAT 114
XD 123/2018
Catchwords: CIVIL DISPUTE – mortgage broker negligence – duty of care responsibility of holder of credit license and their representatives – misrepresentation that finance approved – authority to enter unconditional contract for sale – delay in obtaining finance – whether negligence caused loss
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 48
Civil Law (Wrongs) Act 2002 ss 40, 42, 45, 46
National Consumer Credit Protection Act 2009 (Cth) ss 35, 65, 75
Cases cited:Glasgow Corporation v Muir [1943] AC 448
Tribunal: Senior Member E Ferguson
Date of Orders: 14 November 2018
Date of Reasons for Decision: 14 November 2018
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 123/2018
BETWEEN:
JULIAN ROBINSON
First Applicant
KLYNTON STEPHENS
Second Applicant
AND:
KYLIE ACKROYD
First Respondent
LIBERTY NETWORK SERVICES PTY LTD
Second Respondent
CLARIS PROFESSIONAL SERVICE PTY LTD
Third Respondent
TRIBUNAL:Senior Member E Ferguson
DATE:14 November 2018
ORDER
The Tribunal orders that:
1.The application is dismissed.
………………………………..
Senior Member E Ferguson
REASONS FOR DECISION
Introduction
1.The applicants, Mr Robinson and Mr Stephens, engaged the first respondent, Ms Ackroyd, who was at all relevant times a mortgage broker, to arrange finance for them to purchase a yet to be selected house in the ACT.
2.She assisted them to make an application to the Commonwealth Bank of Australia (the CBA).
3.Before finance was approved the applicants found and purchased at auction a house at Charnwood (the Charnwood property) and entered an unconditional contract for sale. Under the contract they were required to complete the sale by 9 October 2017.
4.Finance was not approved by the completion date but the vendor agreed to extend the date three times subject to the payment of contractual penalties and agreed damages.
5.The sale finally settled approximately one month after the original completion date.
6.The applicants attribute their loss to the negligence of the first respondent who they say represented before the auction that conditional finance was approved; authorised them to bid at the auction; and failed to secure finance within a reasonable time.
The claim
7.The applicants claim $13,251.70:
(a)$10,293.70 default interest late settlement penalties and damages.
(b)$1,650.00 legal costs.
(c)$1,140 excess conveyancing charges.
Plus
(d)$159.00 ACAT filing fee.
(e)$84.00 ACAT subpoena fee.
(f)$9 ASIC search fee.
The hearing
8.In this decision a reference to the ‘tribunal’ or ‘ACAT’ refers to the ACT Civil and Administrative Tribunal generally and a reference to the ‘Tribunal’ or the first person refers to the member who heard the matter.
9.I heard this matter over two days on 27 June and 26 July 2018.
10.The applicants appeared on their own behalf. Mr Staples and Mr Reis appeared for both the 1st and 3rd respondents. Ms Murphy appeared for the 2nd respondent.
11.The parties adduced a large volume of correspondence and other documents relating to relevant loan applications.
12.Ms Ackroyd produced a witness statement dated 8 June 2018. The applicants made factual assertions in the materials they filed.
13.The applicants also relied on:
(a)subpoenaed documents produced by the CBA relating to their loan application with the bank; and
(b)transcript of SMS text correspondence between Mr Robinson and Ms Ackroyd.
14.Both applicants and the first respondent gave evidence and were cross-examined.
15.After hearing the parties’ submission I reserved my decision.
Background
16.Mr Robinson wanted a suitable property in the ACT to buy, renovate and eventually sell at a profit. He intended to borrow the entire purchase price plus extra funds to cover the cost of renovations.
17.The only security Mr Robinson could offer was the property he would purchase. As he knew this would be insufficient to satisfy a lender he enlisted the help of his friend, Mr Stephens, who agreed to offer his own property as additional security in return for a 20% interest in the property to be purchased.
18.On 30 July 2017 both applicants and Ms Ackroyd met at Mr Robinson’s house.
19.At the meeting:
(a)Ms Ackroyd gave the applicants a document entitled ‘Preliminary Assessment and Product Proposal’. Presumably based on previous discussions with Mr Robinson; and
(b)the applicants accepted the recommendation and signed a joint application for a CBA loan for $504,000 secured against property owned by Mr Stephens as well as the house to be purchased.
20.The applicants, both being self-employed, were unable to provide the documentation usually required by lenders to establish income.
21.The CBA policy was that self-employed applicants could establish their income by providing Business Activity Statements (BAS) for the last 12 months and evidence of registration for Goods and Services Tax (GST).
22.It is not disputed that the applicants informed Ms Ackroyd at the meeting that they had not completed their tax return for the most recent financial year; and were not registered for GST and therefore could not provide BAS statements.[1]
[1] Ms Ackroyd admits at first hearing that they told her they didn’t have the documents at first meeting
23.Instead the applicants made a “low doc” application that is without the usual documentation, on the strength of the pre-existing relationship both had with the CBA.
Relationship between the three respondents
24.In its response the third respondent provided the following description of the relationship between the three respondents, which I accept is correct.
(a)The second respondent, Liberty Network Services Pty LTD (LNS), is the holder of an Australian credit license.
(b)Pursuant to section 35(1) of the National Consumer Credit Protection Act 2009 (Cth) (the Act), an Australian credit licence is a licence that authorises the licensee, in this case LNS, to engage in particular credit activities.
(c)On or about 24 September 2013, Claris Professional Service Pty Ltd (Claris) was registered as a company.
(d)The directors of Claris are Kylie Ackroyd, Bretton Ackroyd and Joshua Ackroyd. Claris is a family run company.
(e)Pursuant to an agreement between LNS and Claris dated 24 October 2014 and amended on 20 February 2017 (the LNS agreement),[2] Claris is an authorised credit representative of LNS.
(f)Pursuant to section 65 of the Act and Schedule J of the LNS agreement, Claris so authorised the natural persons Kylie Ackroyd and Joshua Ackroyd as credit representatives of LNS. This authorisation was approved by LNS.
(g)A credit representative is authorised to engage in specified activities on behalf of the licensee, in this case LNS.
(h)Pursuant to section 75 of the Act, LNS is responsible to the client for the conduct of Kylie Ackroyd and Joshua Ackroyd.
Joshua Ackroyd’s role
[2] Third respondent’s response, attachment “A” tab 2
25.Joshua Ackroyd is Ms Ackroyd’s son and worked with her in the family mortgage broking business. It is necessary to explain his role because most of the correspondence regarding the loan application is apparently between him, rather than Ms Ackroyd, and the CBA.
26.The assessment and product proposal was issued in the name of Joshua Ackroyd and he is also identified as the broker in the loan application.
27.According to Ms Ackroyd she told the applicants at the meeting:
I will be lodging this application through my son Joshua as he has recently passes (sic) his CBA examination and is still in the process of establishing his CBA accreditation. I can still do the groundwork and can still liaise with the bank after that.
28.It is not disputed that applicants dealt with Ms Ackroyd and that she was responsible for the management of their application, rather than her son. Mr Stephens says he never met Joshua.[3]
[3] First hearing day
29.Due to the nature of the legal relationships between the three respondents and their respective statutory responsibilities liability can only be attributed to LNS or to Claris if the applicants establish that Ms Ackroyd is liable. Accordingly I will consider the applicants claim against Ms Ackroyd first.
30.In order to establish a claim of negligence against Ms Ackroyd the applicants must establish on the balance of probabilities[4] that:
(a)Ms Ackroyd owed a duty of care to the applicants;
(b)she breached that duty of care by failing to take reasonable steps;
(c)her breach of the duty of care has caused the injury or damage to the respondents; and
(d)the quantum of that damage.
[4] Section 46 Civil Law (Wrongs) Act 2002 regarding onus of proof
31.Even if the applicants can establish negligence and causation they are not entitled to be compensated for their loss or part of it, if the loss, or part of the loss, to be compensated could have been reasonably avoided.
32.In this case the respondent asserts that the applicants failed to take reasonable steps to mitigate their loss. The onus rests with the party alleging a failure to mitigate to prove the other party acted unreasonably in failing to take action and therefore contributed to their loss.
Duty of care
33.A duty of care is the legal responsibility of a person or organisation to avoid any behaviours or omissions that could reasonably be foreseen to cause harm to others.
34.The applicants engaged Ms Ackroyd’s professional services to assist them to select and apply for a loan and negotiate the process through to settlement.
35.Ms Ackroyd had a duty of care to perform those functions properly so as to avoid foreseeable risks to the applicants.
36.If Ms Ackroyd did represent that finance was approved when it was not it would be foreseeable that the applicants would enter an unconditional contract for purchase without finance and suffer loss as a result of failure to complete purchase on time or at all.
37.Once the applicants entered an unconditional contract to purchase without pre-approval, it was reasonably foreseeable that should Ms Ackroyd fail to take reasonable steps to secure finance as quickly as possible, the applicants risked loss as a result of failure to complete purchase on time or at all.
Breach of duty
38.The law of negligence is codified in the ACT in the Civil Law Wrongs Act 2002 (CLWA).
39.It covers negligence, which causes harm, including economic loss.[5]
[5] CLWA section 40
40.‘Negligence’ means failure to exercise reasonable care and skill.[6]
[6] Ibid
41.Section 42 of the CLWA addresses the required standard of care and states:
For deciding whether a person (the defendant) was negligent, the standard of care required of the defendant is that of a reasonable person in the defendant's position who was in possession of all the information that the defendant either had, or ought reasonably to have had, at the time of the incident out of which the harm arose.
42.At common law the hypothetical reasonable person is said to be free from over apprehension or over confidence.[7]
[7]Glasgow Corporation v Muir [1943] AC 448, 457 (Lord Macmillan)
43.The applicants allege Ms Ackroyd was negligent in two ways, which I will call ‘the representation’ and ‘the delay’.
44.The representation relates to Ms Ackroyd’s conduct in the time leading up to the auction on 9 September 2017 which the applicants say caused them to enter an unconditional contract of sale without having the necessary finance approved to complete.
45.The delay relates to the Ms Ackroyd’s conduct from the time she recommended the original loan product to the applicants until finance was finally secured the day before the ultimate settlement date. However the risk of loss from the delay was only brought to life by the applicants contracting to complete the purchase of the Charnwood property by the agreed date.
46.Ms Ackroyd contended:
(a)she did not tell the applicants prior to the auction that finance was pre-approved;
(b)she did not ‘authorise’ the applicants to bid at that or any other auction, in fact she explicitly warned them not to;
(c)the delay in securing finance for the purchase was not unreasonable in the circumstances;
(d)if there was a delay in securing finance it was not Ms Ackroyd’s fault and was caused by either:
(i) applicants not providing required information; or
(ii) that CBA required further information from them.
47.It is not disputed that at settlement the applicants paid the vendors an extra $10, 293.70 for delay being:
(a)$2,853.70 for default interest from 16 October 2017 to 9 November 2017;
(b)$7,000 damages as agreed; and
(c)$440 penalties under contract;
The representation
48.In their application the applicants make three factual assertions regarding the representation:
49.The following assertions were disputed:
(a)that Ms Ackroyd expressly represented prior to the auction that the CBA had pre-approved finance to buy at auction; and/or
(b)that Ms Ackroyd had authorised them to bid and purchase the Charnwood property at auction.
50.The third assertion, that Ms Ackroyd obtained a deposit bond prior to the auction is not disputed. It is disputed that she did so for the purpose of enabling the applicants to purchase at that, or any auction.
51.Prior to auction the applicants could only have obtain pre-approval, conditional upon the CBA’s subsequent acceptance of the property purchased as security.
52.At the hearing Mr Robinson conceded that there was no written evidence that Ms Ackroyd expressly told the applicants prior to the auction that finance was pre- approved but said that she had made verbal representations to that effect.
53.The applicants also say that Ms Ackroyd encouraged them to bid at the auction and assured them that the CBA would approve finance for the purchase.
54.The applicants gave evidence that before purchasing the Charnwood property the applicants attended two previous auctions with a view to bidding with Ms Ackroyd’s knowledge and encouragement.
55.Mr Robinson told the Tribunal on the first day of the hearing:
…But Kylie gave us all assurances that our loan approval would come through and everything would be fine and that there would be no problems with the loan at all. Also when I asked Kylie I saw a couple of house auctions coming up, and I asked Kylie, “Would I be all right to bid at these auctions?” And she said, “Yeah, go ahead. That's fine, yep. Your loan approval, your loan finance will be fine.”
56.The first auction was at Fraser in the ACT (the first auction) where the applicants placed an unsuccessful bid.
57.The second auction was another property located in Charnwood (which I will call Warby Place to distinguish it from the property they ultimately purchased).
58.Mr Robinson described the bidding process for Warby Place as a “blind auction”. The applicants placed an equal winning bid and were in competition with the other equal bidder to sign the contract for sale first.
59.On 23 August 2017 Mr Robinson says he rang Ms Ackroyd from his solicitors’ office and she assured him that “finance was fine” to sign the contract. In any event they lost the property at Warby Place to the competing bidder.
60.Mr Robinson told the Tribunal that Ms Ackroyd obtained the first deposit bond for the express purpose of them bidding at the first auction.
61.However Mr Robinson also gave contradictory evidence at various stages of the hearing that the deposit bond was issued for the specific purpose of bidding at both the second auction and the third (and final auction) at which they purchased the Charnwood property.
62.Mr Robinson produced a transcript of SMS exchanges between himself and Ms Ackroyd.
63.At the hearing Ms Ackroyd generally accepted that the transcript was accurate except she said it was not a complete record and that the date attributed to at least one message was incorrect (Mr Robinson conceded the error in the date).
64.The following events are either not disputed or I am satisfied are established on the balance of evidence.
65.On 25 August 2017 Mr Robinson sent an SMS to Ms Ackroyd: “Kylie have you got the deposit bond for me?”
66.On 26 August 2017 Ms Ackroyd arranged for a deposit bond to be issued to the applicants for $25,000 (the first deposit bond).[8] No property or purchase price are specified and date of expiry is 26 February 2018.
[8] Annexure C (1/2) original application.
67.On 26 August 2017 Ms Ackroyd sent an SMS to Mr Robinson: “How’s the auction?”
68.It is not clear to me which auction Ms Ackroyd is referring to. On 26 August 2017 the Warby Place auction had passed and the Charnwood property auction was yet to be held.
69.On 9 September 2017 the applicants purchase the Charnwood property at auction for $434,000 and signed an unconditional contract for sale as tenants in common, in specified shares of Mr Robinson 80% Mr Stephens 20%. Settlement date is 9 October 2017.
70.On the same day upon being informed of purchase Ms Ackroyd sends SMS to Mr Robinson: “Congratulations.”
71.The first deposit bond was insufficient to guarantee the 10% deposit required under the contract for sale.
72.On 11 September 2017 Ms Ackroyd, at Mr Robinson’s request, obtained a second deposit bond for $18,400.00 to meet the shortfall. The terms of the bond specifically relate to the purchase of the Charnwood property at a price of 434,000.[9]
[9] Annexure C (2/2) original application.
73.Ms Ackroyd said she was generally aware that the applicants were looking at properties for sale and attending auctions to get a feel for market.
74.Ms Ackroyd said that in about mid-August 2017 she provided the applicants with property data in relation to a number of properties, including the Charnwood property.[10]
[10] First respondent’s witness statement at [19]
75.She was not aware that they were bidding and she expressly warned then against doing so. She said in her witness statement:
… on 30 July 2017 Ms Ackroyd informed the applicants of the risks of purchasing a property at auction as opposed to an offer.
76.Ms Ackroyd pointed out that she could not have obtained the first deposit bond for the purpose of the applicants bidding at either the first or second auction because it was issued on 26 August 2017, that is at least three days after Mr Robinson said he bid at the second auction.
Conclusion - representation
77.It is not established on the evidence that Ms Ackroyd at any time prior to the Charnwood auction represented to the applicants either expressly or by implication that the CBA has pre-approved finance to purchase a property at auction.
78.The applicants also failed to establish that Ms Ackroyd by words or deeds ‘authorised’ or encouraged them to enter an unconditional contract to purchase the Charnwood property without pre-approved finance.
79.Based on the applicants own evidence they had placed bids to purchase two properties at auction before Ms Ackroyd organised the first deposit bond. I therefore reject their argument on the basis of logic that by organising the deposit bond Ms Ackroyd gave a guarantee, upon which they relied, that finance would be available to complete a purchase.
80.I am also not satisfied that the first deposit bond was related to the auction of the Charnwood property as it occurred two weeks prior to the auction and its terms were not specific to that property. Further, it did not expire until 26 February 2018 and could have been used before or after finance was approved in the purchase of a property by auction, private treaty or other means. If it was not used it would lapse.
81.I prefer the respondents’ argument that the deposit bond was unrelated to the applicants’ prospects of obtaining loan approval.
82.Although Ms Ackroyd knew the applicants were attending auctions there is insufficient evidence to establish that she encouraged them to place bids.
83.It seems likely that Ms Ackroyd was confident that finance would ultimately be approved by the CBA and conveyed that confidence to the applicants. Her confidence could not be reasonably be construed as a guarantee that finance would be approved because that was a decision for the bank. Mr Stephens as a former mortgage broker in particular should have understood that.
84.By the time Ms Ackroyd sent the SMS “Congratulations” the applicants had committed themselves to provide the purchase funds by the completion date or risk loss. Her opportunity to urge caution had passed. I am not satisfied that her comment is anything more than conventional politeness.
85.Accordingly, I find that Ms Ackroyd did not breach her duty of care to the applicants by negligently representing that finance was approved prior to the auction; or by authorising or encouraging them to enter an unconditional contract for sale without finance.
The delay
86.The evidence does not disclose why the loan application, lodged on 31 July had still not been determined, at least conditionally, by 9 September 2017.
87.The slowness of the assessment process while no doubt frustrating did not expose the applicants to foreseeable loss until they entered an unconditional contract for sale on 9 September 2017.
88.On 11 September Mr Robinson told Ms Ackroyd that the date for completion of the sale was 30 days and that the vendor refused to extend time to complete.
89.At this point a reasonable person in Ms Ackroyd’s position would have foreseen that if finance to complete the purchase was not available by 9 October 2017 the applicants risked either the loss of the sale and liability for the deposit; or penalties under the contract for delay. As Ms Ackroyd continued to act for the applicants she had a duty to take reasonable steps to avoid those foreseeable risks materialising.
90.The applicants argued that Ms Ackroyd was negligent as follows:
(a)By recommending the CBA loan when they did not meet the bank’s lending criteria due to inability to provide evidence of registration for GST and 12 months BAS statements.
(b)By persisting with CBA when it should have been apparent that the applicants could not meet its criteria.
(c)By failing to seek alternative finance in a timely way.
(d)By making errors in their loan application to the CBA.[11]
The facts
[11] Points 2-5 “Home loan application with Kylie Ackroyd”
91.The applicants placed the winning bid for the Charnwood property at the auction on Saturday 9 September 2017.
92.On the next working day, Monday 11 September 2017 Ms Ackroyd caused the second deposit bond to be issued. The full deposit under the contract of sale was now guaranteed.
93.On 12 September 2017 Ms Ackroyd delivered the second deposit bond to the applicants’ solicitors.
94.Ms Ackroyd says that on 13 September 2017 she sent a copy of the contract for sale, which she received from the applicants the previous day, to CBA through its online portal for brokers.[12] The page contained the description of the property and the bank could begin to assess it as security.
[12] First respondent’s witness statement [26]
95.Ms Ackroyd says that on or about the same day she accessed CBA brokers’ portal to check the banks current estimated processing times for loan applications. She says the information indicated that it would be a further nine business days that is, 26 September 2017 before CBA would even review the applicants’ loan application.
96.I note that on the basis of Ms Ackroyd’s own evidence that left nine days for the CBA to assess and approve unconditional finance before the scheduled settlement.
97.On 21 September 2017 Ms Ackroyd provided the CBA with a rental appraisal for the Charnwood property.
98.On 26 September 2017, according to Ms Ackroyd, CBA sent her a missing information request because the applicants failed to tick a mandatory box on the application.
99.Documents produced by the CBA show that a week later on 3 October 2017 Joshua emailed CBA the corrected application and asked the bank to escalate the loan application given that settlement was five days away (it’s actually 6 days).[13]
[13] Produced by CBA under subpoena
100.On 5 October 2017 CBA notified Joshua that the applicants’ loan application was refused for following reasons:
(a)Applicants not registered for GST
(b)Current BAS statement for last 12 months not provided
Would re-assess on full doc basis- i.e. if applicants provide evidence of GST registration and BAS statement.[14]
[14] Exhibit A1 ‘F’
101.On 5 October 2017 Ms Ackroyd asked the CBA to reconsider its requirement for GST and BAS.[15]
[15] Exhibit A1 at [31]
102.The applicants asked Ms Ackroyd to apply for a Liberty low doc loan for Mr Robinson only.
103.On 6 October 2017 Ms Ackroyd comes to Mr Robinson’s home to complete and collect application for a Liberty low doc loan. To meet Liberty’s lending criteria only 80% of the purchase price is sought.
104.On 7 October 2017 Ms Ackroyd lodges Mr Robinson’s loan application with Liberty.
105.On 9 October 2017 the applicants are unable to complete the sale on the original settlement date due to lack of finance.
106.On 13 October 2017 Mr Robinson emails Ms Ackroyd PAYG statements for himself and Mr Stephens and asks that she submit them to the CBA,[16] which she does. He writes:
….Klynton told me if CBA grant the loan he only wants to lend me the $100,000 to get settlement done and has asked if you can lend me the final $50,000 for house renovations.
I’m hoping if you can send these statements into CBA they will accept them and unconditionally approve the home loan for $450,000.
Just another question, if CBA approve my loan for 80% would they be happy for Martin to go as mortgagee for 20% of the property?
[16] First respondent’s witness statement, attachment HI
107.On 16 October 2017 CBA reject the PAYG statement and insist on full documentation. They ask that each applicant provide a Notice of Assessment for the 2016/2017 Financial Year.
108.Because the applicants have not submitted their tax returns for last financial year they are unable to comply. Ms Robinson suggests they ask their accountant to prepare draft tax returns to give to the CBA instead.
109.On 17 October 2017 the vendors’ solicitors give notice to the applicants under the contract to complete by 31 October.
110.On 17 October 2017 at 2.51pm Ms Ackroyd sends Mr Robinson an SMS: “servicing really strong now- I have no reason to expect anything other than you’ll be fine.”
111.18 October 2017 at 11.56 am Ms Ackroyd sends Mr Robinson an SMS: CBA are being very cooperative again now just dotting I’s/crossing t’s. I’m very comfortable that you will be able to proceed to conclusion this time.
112.On 17 and 19 October 2017 the applicants provided draft tax returns to Ms Ackroyd which she forwards to CBA.
113.Ms Ackroyd negotiates with the CBA to accept draft tax returns as sufficient evidence of income.
114.On 19 October 2017 Mr Robinson complains to Daniel Marsi, Network Sales Manager, LNS about delay in their property settlement.
115.22 October 2017- at 7.05pm Ms Ackroyd sends Mr Robinson an SMS: “I’m expecting CBA to come back with a positive response tomorrow, I’ve already informed you that BDM is supporting your application.”
116.On 22 October 2017 at 7.06pm Ms Ackroyd sends Mr Robinson an SMS: “I really hope for our sake the cba approve tomorrow.”
117.On 22 October 2017 at 7.07 pm Ms Ackroyd sends Mr Robinson an SMS:
That wasn’t my fault- that was Krishna who had control of that decision. I’m not prepared to enter into an argument with you. I simply want to get this resolved as quickly as possible for you and would appreciate if you allow me to do that.
118.On 23 October 2017 Mr Robinson:
(a)emails financial details to another Liberty advisor/broker (N) requesting that she obtain loan approval for him;
(b)sends N a further email asking that the ANZ loan application be escalated for settlement deadline of 30 October;
(c)sends a third email requesting unconditional approval with Liberty be provided in writing.
119.On 23 October 2017 N contacts Mr Robinson to say that that Ms Ackroyd will contact him with details of the unconditional Liberty approval.
120.On 23 October 2017 Mr Robinson emails N to say he omitted to disclose that he had two ANZ credit cards, he says he did not disclose them in previous loan application because they were not in debit. He has since used them to purchase a vehicle-and request his application with ANZ be escalated.
121.On 24 October 2017- Joshua Ackroyd emails the State Sales Manager NSW/ACT of CBA, asking him to intervene to have the applicants’ loan application approved. Daniel Marsi is copied into the email.
122.On 26 October CBA declines loan application for the following reasons:
(a)Capacity to pay.
(b)Applicant’s credit card limits totalling $120,300.00.
(c)No beneficial interest for Klynton as Mr Robinson has not provided any value by way of security to the purchase.
123.On 26 October 2017 Liberty unconditionally approves a loan to Mr Robinson for $347,200. That is, 80% of the purchase price on the basis that he can supply the $130,000 shortfall. The loan approval describes the source of the additional funds as savings. On the loan application the funds are described as “Klynton investment into purchase”.
124.On or around 26 October 2017 after some discussion between Mr Robinson and Ms Ackroyd about securing the balance of the purchase price, Ms Ackroyd applies to CBA on Mr Stephens behalf for the necessary funds.
125.On 30 October 2017 CBA gives unconditional approval to Mr Stephens for $150,000 secured against two of his properties in Gunghalin provided he reduces existing credit card limit from $50,000 to $15,000. The applicants now have sufficient funds secured to complete the purchase.
126.On 31 October 2017 Mr Robinson objects to the Liberty loan approval conditions on the grounds that the interest rate and fees are unacceptable and not as advertised by Liberty.
127.On 2 November 2017 Ms Ackroyd lodges a loan application on behalf of both applicants to ANZ for $347,200.
128.On 2 November the vendor agrees to extend settlement to 8 November if the applicants agree to pay $5,000 in addition to penalties payable under the contract and says it would only consider further extensions at $2,000 a day.
129.On 3 November the applicants accept the vendor’s terms for extension.
130.On 6 November 2017 ANZ loan application unconditionally approved for $346,200. Again there are sufficient funds to complete purchase. Ms Ackroyd sends Mr Robinson an SMS: “I’ve just emailed the Unconditional Approval. I managed to get you 3.99%.”
131.On 8 November 2017 ANZ suspends settlement to consider request to waive application fee.
132.On 9 November 2017 the sale of the Charnwood the applicants pay penalties and agreed damages of $10,293.70 to vendor, plus loss of rent $2,000.
133.The above is a summary of most relevant interactions between the parties. The SMS transcript between Mr Robinson and Ms Ackroyd shows they were communicating constantly often several times a day including on the weekend as they tried to find way to resolve the problem of finance.
Analysis and conclusion
134.It was not unreasonable for Ms Ackroyd to apply for and continue to negotiate with the CBA for approval of the original loan despite the applicants not meeting the banks lending criteria because:
(a)the applicants expressed a strong preference for CBA when they first approached Ms Ackroyd; and
(b)based on her experience she reasonably believed CBA might relax its criteria because of the applicants’ longstanding relationship with the bank.
135.Ms Ackroyd told the Tribunal:
So they [CBA] will sometimes be flexible with the standard policy. You can put a request in to waive that specific thing obviously because of you two both being long-term customers of CBA and on my understanding at the time the application was lodged all of your finances, both liabilities and income and your business incomes were all being generated through CBA. CBA had full, I understood, disclosure to your full financial position and I used that and the fact that you had been existing customers for 15 years to request that they waive that condition. In the end the requirement for GST was ultimately waived. So they did require back statements from you but the GST requirement was overturned.
136.On the balance of evidence I am satisfied that the applicants expressed a strong preference for a loan for CBA because they thought prospects for approval would be improved as longstanding customers of the bank; and CBA already held security for other property owned by Mr Stephens.
137.When the CBA first refused the application on 5 October 2017 because the required documentation had not been provided Ms Ackroyd worked with the applicants and the bank to find acceptable alternative documentation.
138.She also works with the applicants on a Plan B to restructure the loan and apply to another lender.
139.At the hearing Ms Ackroyd did not dispute Mr Robinson’s contention that Liberty offered him a loan on substantially worse conditions than the product he applied for.
140.I am satisfied that in the circumstances it was reasonable for Mr Robinson to reject Liberty’s offer even though in doing so he exposed the applicants to the risk of further penalties.
141.Ms Ackroyd told the Tribunal that Liberty was not obliged to offer approval in same terms as the application and it was something outside her control.
142.On the balance of the evidence I am satisfied that Ms Ackroyd could not have reasonably foreseen that Liberty’s approval would be rejected by the applicants and she would have to apply to a third lender.
143.Ultimately Ms Ackroyd was able to obtain finance from ANZ in time available for the rescheduled settlement on 8 November 2017 and at a better interest rate than that offered by either Liberty or CBA.
144.The applicants say the ANZ called off settlement on 8 November because Ms Ackroyd, without their instructions, asked ANZ to waive the application fee.
145.Ms Ackroyd responded at the hearing:
Okay. I did not actually seek to do that. In fact I protested it. The assessor who assessed it, and organised it through ANZ pro-actively did that on your behalf, and when - I wasn't aware it was going to affect settlement in any way. When I became aware it was going to affect settlement, I actually protested it, and I said, “They don't care. They're happy to accept the fee. We just want to settle today.” So again, that was 100 per cent outside of my control. It was initiated by the lender, not by myself.[17]
[17] 2nd hearing day
146.I prefer the evidence of Ms Ackroyd as the applicants have neither direct knowledge nor objective evidence if what transpired between the ANZ and Ms Ackroyd.
147.I am not satisfied that Ms Ackroyd caused settlement to be delayed a further day to 9 November 2017.
148.Although Ms Ackroyd’s management of the CBA application might not have been perfect, for example she should have checked the loan application to ensure it was complete before submitting it – as should the applicants before signing it – the applicants also contributed to the delay.
149.Overall I am satisfied that Ms Ackroyd did take reasonable steps to progress the CBA application – even as the prospects of success became increasingly dim and the bank raised new objections.
150.However she failed to take other reasonable steps to avoid delay:
(a)She knew on 9 September she only had 30 days to secure finance.
(b)She knew on or about 13 September that on current timeframes the CBA was unlikely to even review let alone assess the application until 26 September 2017, leaving only nine business days for determination and alternative finance if approval was refused.
(c)No attempt was made to escalate application until 3 October when Joshua wrote to CBA.
(d)Only after CBA refused application on 5 October did she take steps to arrange alternative finance through Liberty while continuing to negotiate with the CBA.
151.The applicants concede that once the loan application was lodged with ANZ Ms Ackroyd took reasonable steps to secure approval.
152.The critical period where Ms Ackroyd failed to take reasonable precautions against foreseeable loss was between 13 September and 5 October 2017.
Causation
153.For Ms Ackroyd to be liable the applicants must establish that her negligence caused their loss.
154.Section 45(1) of the CLWA provides:
A decision that negligence caused particular harm comprises the following elements:
(a) that the negligence was a necessary condition of the happening of the harm (‘factual causation');
(b) it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (the scope of liability)
155.The element at section 45(1)(b) reflects the common law which limits a plaintiff’s liability to only those losses which were a reasonably foreseeable consequence of their negligence – that is that the damage is not too remote.
Factual causation
156.Imagine that on 13 September 2017 Ms Ackroyd said to the applicants:
Given the current circumstances I think it would be prudent to have a Plan B in case CBA do not approve finance in time for settlement or at all. Let’s apply to another lender and ask them to escalate the application process; in the meantime I’ll keep your options open and persist with your application to the CBA.
157.The applicants’ purpose was to obtain finance on acceptable terms to purchase a suitable house - it was not to get a loan from the CBA. They preferred the CBA only because they thought it was the lender most likely to help them achieve their purpose.
158.It is therefore likely they would have readily agreed with such a recommendation, and if Ms Ackroyd had followed through she would have fulfilled her duty of care to the applicants.
159.Instead, negligently, she did not take steps to apply for alternative finance until 6 October 2017.
160.Was that delay a necessary condition of the harm suffered by the applicants, or might they have the same or worse harm anyway?
161.The applicants told the Tribunal that if Ms Ackroyd had only applied for a loan with the ANZ earlier their loss would have been avoided.
162.At the hearing on 26 July 2018 Mr Stephens said:
…can I just say that Kylie did an excellent job at the end with getting us an ANZ loan in one week start to finish. It's just that that process was started about six or seven weeks later than it should have been.
163.Mr Robinson added: “That's right. So we got the loan that really we should have had in the first place in the end.”
164.The applicants originally applied to the CBA for a joint loan of $504,000. The ANZ only approved finance for $346,200. It only did so after the CBA approved a separate loan to Mr Stephens to cover the balance of the purchase price and issues with the applicants’ other liabilities were resolved.
165.The loan structure and amount which finally succeeded was significantly different from that originally intended by the applicants. The timing and nature of the final outcome was the result a series of intervening variable events. It was just one of many possible outcomes.
166.It took time to negotiate with lenders and arrive at an acceptable loan structure.
167.There is insufficient evidence to establish that the applicants would have secured the funds necessary to settle any sooner if an application was made to the ANZ on 13 September 2017, when the urgency became apparent, in the same terms as the original application to the CBA finance.
168.For the reasons set out above I am not satisfied that Ms Ackroyd’s negligence was a necessary condition of the delay and consequent loss suffered by the applicants. Accordingly she is not liable for the applicants’ loss.
169.As the second and third respondent’s liability is dependent upon liability of the first applicant being established, they are also not liable. Accordingly, the application against all three respondents is dismissed.
Costs
170.Section 48 of the ACAT Act deals with costs of proceedings in the tribunal and relevantly provides at subsection (1):
The parties to an application must bear their own costs unless this Act or another territory law otherwise provides or the tribunal otherwise orders.
171.Section 48(2) sets out the circumstances in which the Tribunal may orders costs against an unsuccessful party to proceedings.
172.The respondents have failed to establish the existence of any of those circumstances in this case therefore I have not ordered the applicants to pay the respondents’ costs.
………………………………..
Senior Member E Ferguson
HEARING DETAILS
FILE NUMBER:
XD 13/2018
PARTIES, APPLICANT:
Julia Robinson and Klynton Stephens
PARTIES, RESPONDENT:
John Reis and Charlotte Murphy
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
N/A
TRIBUNAL MEMBERS:
Senior Member E Ferguson
DATES OF HEARING:
26 July 2018
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