SCALES and MACQUARIE GROUP LIMITED - [2010] WASAT 170

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: CONSUMER CREDIT (WESTERN AUSTRALIA) ACT 1996

CITATION: SCALES and MACQUARIE GROUP LIMITED [2010] WASAT 170

MEMBER: MR C RAYMOND (SENIOR MEMBER)

HEARD: 2 NOVEMBER 2010

DELIVERED : 24 NOVEMBER 2010

FILE NO/S: CC 153 of 2010

BETWEEN: MICHAEL DAVID SCALES
Applicant
AND
MACQUARIE GROUP LIMITED
Respondent

Catchwords:

Consumer credit - Application to extend time for compliance with springing order - Dismissing proceeding - Principles to be applied - Whether applicant has demonstrated a reasonably arguable case

Legislation:

Consumer Credit (Western Australia) Act 1996 (WA), s 5
Consumer Credit (Western Australia) Code, s 5(a), s 6(1)(b), s 6(4), s 6(5), s 11, s 11(3), s 70(1)
Credit (Commonwealth Powers) (Transitional and Consequential Provisions) Act 2010 (WA), s 5(2)
State Administrative Tribunal Act 2004 (WA), s 9(b), s 32(5), s 87(1), s 92(1), s 92(2)
State Administrative Tribunal Rules 2004 (WA), r 22

Result:

Application for extension of time dismissed
Proceedings stand dismissed

Category: B

Representation:

Counsel:

Applicant: Mr G Cridland
Respondent: Mr GD Cobby

Solicitors:

Applicant: Lyons & Lyons
Respondent: Gadens Lawyers

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

Ambrus v Churches of Christ Homes and Community Services Incorporated [2006] WASAT 141
FAI General Insurance Co Ltd v Southern Cross Exploration NL 165 CLR 268
McLean and Permanent Custodians Limited [2010] WASAT 127
MTQ Holdings Pty Ltd v Lynch & Ors [2007] WASC 49

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant applied for an order extending the time for compliance with a springing order under which the proceedings were dismissed.
The Tribunal applied the principles in MTQ Holdings Pty Ltd v Lynch & Ors [2007] WASC 49 together with other factors identified by the applicant. Although there were a number of factors in favour of the applicant, the Tribunal concluded that the prospects of the applicant succeeding with his claim were particularly weak and noted that there was no point in resuscitating a case devoid of merit. Accordingly, the Tribunal concluded that the application for an extension of time should be refused with the result that the proceedings stood dismissed.

The proceedings before the Tribunal

In this matter, the Mr Michael Scales (applicant) has applied to the Tribunal pursuant to s 70(1) of the Consumer Credit (Western Australia) Code (Code). The Code at all material times had effect under s 5 of the Consumer Credit (Western Australia) Act 1996 (WA) (CC(WA) Act). The CC(WA) Act was repealed by the Credit (Commonwealth Powers) (Transitional and Consequential Provisions) Act 2010 which came into operation on 1 July 2010 (Western Australia, Government Gazette, No 130 (30 June 2010)). Pursuant to s 5(2) of the last mentioned Act, these pending proceedings are to be dealt with under the CC(WA) Act despite the repeal of that Act.
At a directions hearing and call-over on 14 June 2010, this matter and a related matter between the applicant and ANZ Banking Group Limited, being Matter No CC 155 of 2010, were identified as being matters which raised issues common to a number of proceedings before the Tribunal. Those issues concerned bank lending practices and whether the transactions were unjust because it was alleged the banks were making loans to parties who the bank should have known were not capable of servicing the loans in circumstances which mounted to what was termed 'asset lending'. The intention was that this matter and Matter No CC 155 of 2010 (Scales matters) be set down before hearing before the President of the Tribunal, Justice Chaney. Other matters, which can be identified in the reported decision of McLean and Permanent Custodians Limited [2010] WASAT 127 (McLean), were also to be determined by the President of the Tribunal so that the principles established in the McLean and Scales matters could be applied to a number of other cases which were pending before the Tribunal.
The Scales matters did not progress satisfactorily, resulting in the Tribunal issuing springing orders on 31 August 2010 dismissing the proceedings unless there was a compliance with certain procedural directions. The applicant failed to comply with these directions but has applied for an extension of time to do so. These reasons for decision address that application.

History of the proceedings

Only after the identification of the Scales matters had been agreed in the above directions hearing did counsel for the applicant raise that third party discovery may be required. Consequently, directions were made affording the applicant an opportunity to make any such application. The Tribunal made it plain to counsel that: it was not persuaded that documents from the Western Australian Police Service were required, based on a submission from the applicant that the Police investigation would demonstrate exactly what a particular finance broker concerned had done with money which he had borrowed from his clients; the grounds for any such application would have to be properly detailed; and the Tribunal would need to be persuaded that the third party documents required were relevant to the matters in issue. Directions were made to that effect and the matter was adjourned to 26 July 2010 when any application for third party discovery would be heard and determined, and the matter would be programmed to a final hearing before the President of the Tribunal. The Tribunal further directed that on or before 19 July 2010, the applicant must file and serve a complying application for third party discovery setting out in detail the grounds supporting the application and that failing compliance with the order, the applicant would be taken to no longer require third party discovery.
Counsel for the applicant did not appear at the directions hearing on 26 July 2010 on the basis that the applicant consented to programming orders proposed by the respondent. Counsel for the respondent informed the Tribunal that although a third party discovery application had been lodged with the Tribunal, it had not been served on the respondent as required by the Tribunal's order and having regard to the terms of the order and the applicant's consent to the programming orders, it could be taken that such orders were no longer sought by the applicant.
Having regard to this history, and particularly as other matters were being held in abeyance, the Tribunal expressed its displeasure at the ineffective way in which the applicant's legal representatives had conducted the matter. There had been a failure to comply with the order on 5 July 2010 within the time limit imposed and although a subsequent application was lodged with the Tribunal, it was not served contrary to the Tribunal's order made on 26 July 2010. In the circumstances outlined explaining the nonappearance of the applicant's counsel, the Tribunal made orders on 26 July 2010 dismissing the application for third party discovery and otherwise programming the matter in a manner consistent with the respondent's proposed programming orders. Those orders required the applicant, as a first step in the program, to file and serve any witness statements by no later than 16 August 2010. The applicant failed to do so.
On 20 August 2010, the Executive Officer of the Tribunal wrote to the applicant's solicitors, with a copy to the respondent's solicitors, advising:
(a)that this matter is to be listed for hearing on 31 August 2010 at 10.00am to determine whether the proceedings should be dismissed under section 48(1)(a) of the State Administrative Tribunal Act 2004; and to enable the applicant to show cause why the proceedings should not be dismissed; and
(b)that the applicant is required to file and serve on or before 27 August 2010 written explanation for the failure to comply with order 3 made on 26 July 2010.
Order 3 made on 26 July 2010 is the order requiring the applicant to file and serve any witness statements by no later than 16 August 2010.
On 27 August 2010, the applicant's solicitors filed a written statement of Ms Maria Fitzsimons in which she stated that she was a paralegal under the supervision of Mr Kingsley Liu, solicitor of the People's Solicitors, solicitors on record for the applicant, and that she had the day to day conduct of the Scales matters. Ms Fitzsimons related that the finance broker involved in the relevant transactions had been charged with fraud and that had affected the ability of the applicant to file witness statements by 16 August 2010. Further, that counsel for the applicant had advised that it would be appropriate for an application to be made to the Tribunal to stay the matters, while findings on credit which might adversely affect the finance broker's defence, if any, in criminal proceedings remained to be determined. It was not stated when such advice had been given and there was no explanation as to why an application for stay had not been made on or before the date for compliance with the Tribunal's directions. Neither Ms Fitzsimons, nor Mr Liu, both of whom attended the hearing on 31 August 2010 by way of telephone conference, could advance the need for a stay beyond the advice which had been given. Ms Fitzsimons proffered for the first time during the hearing that the order of 26 July 2010 had not been received by the People's Solicitors and that after receipt of the letter of 20 August 2010, in circumstances which she could not explain, a copy of the first page of the two page order had been received.
The Tribunal was dissatisfied with the ineffective manner in which the proceedings were generally being conducted, although it was accepted that it would not be appropriate to dismiss the proceedings. The Tribunal consequently made orders on 31 August 2010 that the proceedings are dismissed, unless on or before 14 September 2010, the applicant either filed and served all witness statements on which he intended to rely, or alternatively filed and served a formal application for a stay of the proceedings supported by affidavit and written submissions.
On 10 September 2010, the applicant lodged an application for an interim order staying the proceedings pending the outcome of the criminal prosecution of the finance broker concerned. The grounds stated shortly, with reference to both proceedings, that the Tribunal would be required to make findings upon the balance of probabilities that the finance broker committed various acts involving fraud and deception, the subject of the criminal proceedings; and that a civil court cannot make findings which relate to charges in respect of an indictable criminal matter waiting determination by a criminal court. No supporting affidavit or written submissions were filed. By letter dated 16 September 2010, the respondent's solicitors further informed the Tribunal that no documents whatsoever had been served in compliance with the Tribunal's orders.
The matter was subsequently listed for a hearing to determine whether or not the application stood dismissed, because the respondent contended that the Tribunal did not have power to extend time for compliance with the springing order. It was later conceded by the respondent that power did exist and the matter was therefore programmed to a hearing to determine whether or not time should be extended. In the meantime, on 30 September 2010, the applicant filed the witness statement of the applicant, Mr Michael Scales, together with written submissions, the effect of which is, to assert that the applicant had complied with the springing order by filing an application to stay proceedings on 10 September 2010. It was asserted that the application was supported by the statement of Ms Maria Fitzsimons previously filed in these proceedings. In any event, the applicant stated that the application for a stay was abandoned and that the applicant wished the matter to progress to hearing, which explained why the witness statement had been filed.

The application for extension of time of the springing order made on 31 August 2010

The applicant has filed in support of the application an affidavit of his current solicitor, Mr James William Lyons, sworn on 20 October 2010; the affidavit of Ms Dominique Eva Grubisa, who describes herself as manager of Unit 2/35 Spring Street, Bondi Junction, which is the same address given by Mr Lyons, also sworn on 20 October 2010; an affidavit of the applicant, Mr Michael Scales, sworn on 20 October 2010; and an outline of written submissions of the same date in support of the application. The respondent opposes the application, relying on the affidavit of Ms Caroline Louise Di Russo, sworn on 4 October 2010 and a written outline of submissions filed on 4 October 2010. The respondent filed supplementary written submissions on 21 October 2010. The respondent also referred in its oral submissions, without objection, to the respondent's bundle of documents which had previously been filed. That recourse was necessary because in order to determine whether the Code applies (the respondent submits not and that therefore the Tribunal lacks jurisdiction), it is the objective purpose of the transaction which must be determined (McLean at [129]) and the applicant's evidence does not incorporate the essential loan application documents.
In its written submissions, the respondent concedes that by virtue of the provisions of s 92(1) and s 92(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), read with r 22 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules), and if need be, supported by the powers conferred by s 32(5) of the SAT Act, the Tribunal has power to extend the time limit for doing anything in a proceeding, even where the time for doing so has expired. In my view, the respondent's concession is correctly made, although I do not consider it is appropriate to have regard to the general power expressed in s 32(5) of the SAT Act. This conclusion is consistent with the principles expressed in FAI General Insurance Co Ltd v Southern Cross Exploration NL 165 CLR 268 (HC).
In the applicant's last mentioned written submissions, it is accepted that the applicant had failed to comply with the springing order, contrary to the earlier submissions filed. It is clearly the case that the applicant did fail to comply with the order. The written submissions reflect that the applicant has withdrawn the application for a stay and that witness statements were filed and served on or before 27 September 2010 [sic]. The single witness statement was filed on 30 September 2010.
It is submitted for the applicant, correctly, that there is no closed list of matters to be properly considered by the Tribunal in determining to exercise its discretion on the question of whether to extend time for compliance with a springing order. The submissions then proceed to address the particular factors identified by Master Newnes, as he then was, in MTQ Holdings Pty Ltd v Lynch & Ors [2007] WASC 49 (MTQ Holdings) at [55], including a consideration of the merits of the case, and in addition to other factors submitted to be relevant. Each of those matters will be addressed.

The circumstances in which the springing order came to be made

Those circumstances are set out fully above. Any breach of a springing order is a serious matter, but it is particularly so in this case given the history of the matter prior to the making of the order and in particular, because the Scales matters had, with the concurrence of the applicant's counsel, been identified as matters to be determined by the President of the Tribunal in order to provide principles which would guide the determination of other cases which have been held in abeyance.
It is submitted for the applicant that the respondent has not yet provided all documents sought by the applicant. Mr Lyons refers to this in a general way at para 30 of his affidavit, although counsel for the respondent said that there had been no request until shortly prior to the hearing. It is also submitted that the noncompliance was attributable to the former solicitors and not the actions personally of the applicant, and that a costs order had already been made against those former solicitors.
The costs order related only to the hearing on 31 August 2010 which was necessary as a result of the noncompliance with the Tribunal's earlier directions. The provision of documents has evidently had no impact on the ability of the applicant to provide his witness statement and has had no impact on the course which the applicant actually followed, which was to apply for a stay. As explained in MTQ Holdings at [54], generally a litigant must bear the consequences of a failure to comply with a springing order, whether the failure was due to the litigant or his solicitor.

The reason for noncompliance

The conduct of Mr Lyons is fully explained in his affidavit and it is evident that he is in no way responsible for the noncompliance. He explained that he acted on the advice of counsel in making the application for stay. He had received instructions to act only on 8 September 2010. He did not have a copy of the order made on 31 August 2010 and the files received from the People's Solicitors were in a state of disorder, making it a difficult task to determine which files were active and which were not.
Mr Lyons had to inquire of counsel on 14 September 2010 what orders had been made 'in these matters', which is understood to be reference to all of the matters handed over, and it is evident that counsel advised only that all matters were back before the Tribunal on 16 September 2010 and did not identify the order made on 31 August 2010. That is not surprising because as indicated, the applicant was represented by Mr Liu, assisted on that occasion by Ms Fitzsimons. Mr Lyons understood only that there was some urgency in applying for a stay of the proceedings. While this explanation exonerates Mr Lyons from any blame, it in no way excuses the conduct of the applicant's former solicitors. There is no evidence to explain their conduct and why a copy of the order of 31 August 2010 was not provided urgently and separately from any other matters to Mr Lyons. It was a matter which obviously required urgent attention and required a strategic decision to be made, whether to apply for a stay, and if not, to ensure that the witness statements relied on by the applicant could be filed in time. If a stay application was to be made, it needed to be supported by affidavit and submissions. There is therefore no adequate explanation for the noncompliance with the order.
As to events subsequent to the making of the springing order, it is submitted for the applicant that his current solicitors became aware of the springing order on 16 September 2010 and then immediately acted to comply with the orders. But that submission is not supported by the facts of what occurred. It was two weeks thereafter that the witness statement of the applicant was filed, together with written submissions that ingenuously attempted to assert that there had been compliance with the order, by filing a stay application on 10 September 2010 and that the application was supported by the statement of Ms Fitzsimons previously filed. The statement of Ms Fitzsimons did no more than explain why there had been noncompliance with the earlier order of the Tribunal made on 16 August 2010 because counsel had advised that a stay application should be made. It was in full knowledge of that statement that the Tribunal ordered that, if a stay application were to be made, it was to be properly supported by affidavit and written submissions. No written submissions were filed and the application was never served as required by the Tribunal's order.

The prejudice of the defaulting party if an extension of time is not granted

It is submitted for the applicant that he has limited financial means as a consequence of the fraud allegedly perpetrated on him by the finance broker and that dismissal of the matter will require the applicant to make fresh applications for the same relief involving significant further costs. It is submitted that obliging the applicant to incur those costs would be contrary to the objectives of the Tribunal and, in particular, that set out at s 9(b) of the SAT Act, which requires the Tribunal act as speedily and with as little formality and technicality as is practicable, and minimise the costs to the parties.
It is accepted that the defaulting party would suffer this prejudice which, if anything, is exacerbated because the proceedings could not be recommenced in the Tribunal and would have to be conducted under the relevant Commonwealth legislative scheme. This is a factor to be taken in favour of the applicant in weighing all relevant considerations. The respondent submits that there is, in fact, no prejudice to the applicant if proceedings were to remain dismissed, because it is submitted that the applicant has no reasonable prospects of success. If the Tribunal were to come to that conclusion, it is obvious that the applicant would have to give very serious consideration to whether it would be prudent to contemplate commencing fresh proceedings. The question of prejudice is therefore a matter to which the Tribunal will revert.

Prejudice to the respondent

There is no specific prejudice identified by the respondent other than that it will have to incur further legal costs which it is unlikely to be able to recover. As the starting position in the Tribunal pursuant to s 87(1) of the SAT Act is that each party should bear its own costs, that is a realistic possibility. It, again, is a factor to be taken into account in weighing all considerations.
I do not accept the submission made on behalf of the applicant that, if the matter has to proceed to a hearing in which the respondent is ultimately successful, there will be a benefit in the costs because the respondent will be able to settle more of the related proceedings currently held in abeyance. Experience has shown that those cases, in relation to which it appeared that the principles established by Chaney J in the McLean case might have this effect, have not resulted in any significant number of settlement agreements. It can be inferred that the applicants in most of those cases maintain there is some basis upon which a distinction can be drawn, so that their respective cases remain meritorious.

The merits of the case

It is necessary, firstly, to have regard to the way in which the applicant has framed his case in the applicant's statement of issues, facts and contentions.
As originally filed and served, the applicant stated that the applicant was advised by (name omitted) (the broker), in his capacity as a financial and investment advisor, that he could arrange a loan for the applicant whereby the applicant drew down against the equity in his home and invested some of the draw down with the broker to earn an income and then utilise the balance to complete his home as required.
Pursuant to an order of the Tribunal made on 17 March 2010, the applicant filed an amended statement of issues, facts and contentions. The allegation was there made that the applicant was advised by the broker that he could arrange a loan for him whereby he drew down against the equity in his home and was advanced funds which would be placed into a line of credit account to be used, as and when required, to finish the construction, pay living and other expenses and to live off. It is stated in a subsequent paragraph that the broker then advised the applicant that the applicant should invest his line of credit monies with him and earn interest on those monies to augment his income and to service the loan to the respondent.
The above amendment is important in its effect. The Code only applies to transactions in which credit is provided when tendered to be provided, wholly or predominantly, for personal, domestic or household purposes (s 6(1)(b) of the Code). Further, the predominant purpose for which credit is provided is, relevantly, the purpose for which more than half of the credit is intended to be used (s (5)(a) of the Code).
As pleaded in the applicant's statement of issues, facts and contentions, the monies advanced by the respondent were applied as to $195,000 to discharge an existing mortgage on the applicant's principal place of residence; $5,000 for miscellaneous costs, fees and charges; and $360,000 to a line of credit account.
The amended statement of issues, facts and contentions further reflects that, subsequent to the allocation and payment of the loan monies, the applicant and the broker entered into a loan agreement under which $300,000 was loaned to the broker, on which interest was to be paid at a rate of 20% per annum each calendar month. It is stated that 'this way the applicant's loan monies would be working for him whilst they were not required for the construction'.
Both the applicant's original and amended statement of issues, facts and contentions reflect that the applicant was introduced to the broker concerned because the applicant required monies to complete the construction of his principal place of residence. Monies required for that purpose would unarguably be for personal purposes.
In its submissions to the Tribunal, the applicant contends that the $300,000 loan was no different to the applicant having the funds available in a bank because the applicant could require repayment of any part of the $300,000 amount loaned to the broker as it was required for completion of the construction.
The difficulty for the applicant is that the allegations made in the applicant's amended statement of issues, facts and contentions are not supported by his own evidence and the documents.
The following emerges from the applicant's affidavit.
In early 2008, which was prior to an application being made for a loan from the respondent, the applicant had a mortgage of about $192,000 in favour of the ANZ Bank and he required about $150,000 to $175,000 to finish the construction. He was introduced by a friend to the broker. The purpose of the scheme proposed by the broker is set out at para 24 of the affidavit and it was that the broker provide the applicant with an income to live off, sufficient to pay the mortgage and all bills and expenses while building. The object was to borrow more money than was required to complete the home so as to cover the cost of construction, lifestyle and mortgage repayments and while it was not being used by the applicant, the broker would borrow it. The broker was to pay 20% interest per annum on the borrowed monies.
The broker was left to arrange the loan and the applicant signed the necessary documentation when it was only partially completed.
After the loan was processed, the applicant refers to a letter dated 28 February 2008 from the respondent's solicitor. The letter is attached to the applicant's witness statement and it shows that the monies were disbursed not as alleged, by way of a line of credit of $360,000, but that $60,000 was paid to the applicant and $300,000 was paid to the broker. There is no evidence of any arrangement after the loan had been granted in terms of which a loan agreement was entered into between the applicant and the broker.
Counsel for the respondent referred the Tribunal to a declaration signed by the applicant which acknowledges, amongst other things, that the amount of the loan applied for of $560,000 was to be repaid by way of monthly instalments of $3,980. It will be recalled that the applicant says that he signed various documents presented to him by the broker and the authenticity of his signatures is not in issue.
In his affidavit, the applicant states that once he received monies from the broker, he was no longer eligible for social security benefits to which he had previously been entitled to the value of $386 per fortnight. His sole income was the 20% interest received on the $300,000 loaned to the broker.
The arithmetical calculation is simple. The applicant's income was $60,000 per annum. An amount of $10,036 of that sum did no more than replace the social security benefits and the instalments payable to the bank amounted to $47,760 per annum. Apart from the $60,000, which was paid to the applicant, which could be used for building work, the applicant was only $2,204 per annum better off as a result of the transaction. It is unlikely that the applicant could afford to forgo any part of that income because, as stated in his affidavit at the time when he first consulted the broker, he was unable to cope financially and was receiving assistance from his parents to meet mortgage repayments and pay his bills.
It is therefore unrealistic to suggest that the $300,000 had been borrowed for the purposes of carrying out construction work and that the monies were available to be called upon as required. Evidence of what occurred after draw down of the loan supports this view. Notwithstanding that the applicant wished to complete the construction, he made no attempt to require the broker to repay any part of the loan.
The applicant describes in his affidavit the work which was carried out using the $60,000. He then proceeds to set out what additional work was carried out in 2009 and 2010 which was financed by borrowing monies from friends and relatives and by incurring debts which he could not pay. By December 2008, the applicant became aware that the broker could not continue making the interest payments. Apart from a payment of $2,700.50 received in December 2008, no further monies were received from the broker. It was at this point that the applicant took the initiative and commenced the process which led to the refinancing of the transaction with the ANZ Banking Group Limited, which transaction, is the subject of proceedings in Matter No CC 155 of 2010.
At this point, the applicant calls in aid the evidence of Ms Grubisa as set out in her affidavit. The evidence is hearsay, but the Tribunal is not bound by the rules of evidence and it is necessary to determine whether any weight should be given to the evidence. Its effect is to show that the broker, and one other broker, were involved in a scheme with unnamed banks (which presumably could include the respondent bank and all the banks with which they dealt) whereby a strategy was adopted of ensuring that prospective borrowers signed a business purposes declaration. That was done so that by virtue of the provisions of s 11 of the Code, credit is presumed conclusively for the purposes of the Code not to be provided wholly or predominantly for personal, domestic or household purposes.
The further effect of the evidence, which it is suggested that the brokers concerned could give, is that it would show that the banks 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 and that therefore, by virtue of s 11(3) of the Code, the declaration would be ineffective.
However, even if this evidence were to be available, it would not assist the applicant in this case.
The respondent does rely on the applicant having signed such a business purposes declaration. It is expressly raised in the respondent's statement of issues, facts and contentions, and the declaration appears in the respondent's bundle of documents. But, even if this particular respondent was aware of the alleged arrangement with the broker in this case, the effect of that knowledge would simply be to make the declaration ineffective. It would still be necessary to objectively determine the purpose of the loan as determined in McLean.
The respondent's counsel points to the loan documentation comprised in document 2 of the respondent's bundle of documents. A mortgage loan summary expressly states that the purpose of the loan is 'refinance and cash out to purchase shares'. The loan details show that $200,000 was the refinance value and the balance of the loan of $360,000 was for 'other (stamp duty/legal) cash out'. On the above information, assessed objectively, the purpose disclosed was a mixed one of firstly, refinancing the existing loan and secondly, to purchase shares. By virtue of the provisions of s 6(5) of the Code, the predominant purpose is the purpose for which more than half of the credit is intended to be used. More than half of the credit was intended to be used for the purchase of shares which I consider constitutes an investment.
That term is not defined in the Code and must therefore be given its ordinary meaning. The Macquarie Concise Dictionary (4th ed, 2005) defines:
Investment n 1. the investing of money or capital in order to secure profitable returns, especially interest or income. ...
The purchase of shares would ordinarily be understood to be for the purpose of the profit earned from a longterm or shortterm increase in value and an income earned from dividends. The Code does not apply because s 6(4) thereof provides that for the purposes of the section, investment by the debtor is not a personal, domestic or household purpose.
And in this case, even if one goes outside the documentation provided to the bank, the actual arrangement made between the applicant and the broker was one in which it had been arranged that the applicant would loan the broker sufficient monies to enable interest paid at the rate of 20% per annum to cover the full amount of the interest payable to the respondent and leave the applicant with some monies for living expenses. As demonstrated above, and as shown by the conduct of the applicant and the broker, after the draw down of the loan, the applicant needed an income based on payment of interest at a rate of 20% per annum on $300,000 to survive.
I accordingly conclude that the applicant has little or no prospects of success in respect of the merits of the claim.
The applicant raises the following further considerations.

Type and character of noncompliance

The applicant's submissions effectively blame the noncompliance on the applicant having to rely on solicitors prepared to operate on a pro bono or reduced fee basis. It is accepted that the noncompliance was not wilful, deliberate or contumelious but not that it was inadvertent as submitted by the applicant. These are factors to be weighed in the final balance of the exercise of the Tribunal's discretion.

Desirability of determination of serious matters on the merits

It is accepted that policy favours the determination of serious matters on their merits and this is a factor very much in favour of the applicant to be weighed in the final balance.

Consideration raised by the applicant as to whether new proceedings can be brought

This consideration has effectively been addressed above in discussing the prejudice to the parties and as there indicated, is affected by the view taken on the merits. For the reasons given above, the applicant's prospects on the merits are extremely poor, at least insofar as there is an attempt to bring the proceedings within the provisions of the Code.

The main objectives and jurisdiction of the Tribunal

It is accepted that the objectives of the Tribunal discourage a technical approach to litigation and encourage the determination of the substantial merits of the case. However, as submitted by the respondent's counsel, there are two sides to the proceedings and the Tribunal must work fairness to both sides: Ambrus v Churches of Christ Homes and Community Services Incorporated [2006] WASAT 141. As pointed out in MTQ Holdings at [56], there is no point in resuscitating a case that is devoid of merit.

The matter is designated as a 'test case'

The Scales matters were identified as having the potential to allow the President of the Tribunal to determine principles which could be applied in other pending proceedings. However, the evidence referred to above suggests that the cases are more likely to be determined on jurisdictional grounds. Given the lack of progress in the matters since that identification was made during the directions hearing held on 14 June 2010, it will be in the interests of the other parties to identify a more suitable case for that purpose.

Conclusion and order

The circumstances in which the springing order came to be made and the failure to provide any explanation therefor can be laid squarely at the feet of the applicant's previous solicitors and but for other factors, I would not regard those matters as a basis for refusing the application to extend the time for compliance with the springing order. The delay in correcting the situation by filing the applicant's witness statement is also relatively minor. In these circumstances, and taking into account all the other considerations which I have accepted to be relevant above, I would be inclined to grant an extension of time but for the view I have taken of the merits of the claim. On balance, I do not consider that the interests of justice require the grant of the extension of time which is sought.
For the above reasons an order will issue as follows:
1.The applicant's application for an extension of time to comply with Order 1 of the Tribunal made on 31 August 2010 is refused and the proceedings stand dismissed.

I certify that this and the preceding [63] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR C RAYMOND, SENIOR MEMBER