Smithson & Baye Pty Ltd and Australian Securities and Investments Commission

Smithson & Baye Pty Ltd sought to set aside a decision by the Australian Securities and Investments Commission (ASIC) to cancel its Australian Credit Licence (ACL). The dispute concerned a portfolio of "top-up loans" that Smithson & Baye acquired, which were originally provided by Vegeta Pty Ltd to purchasers of real estate. ASIC contended that these loans, made after the commencement of the National Consumer Credit Protection Act 2009 (NCCP Act) and its associated Code, were regulated loans and that Smithson & Baye had contravened the NCCP Act and breached conditions of its ACL. Smithson & Baye disputed that all these loans were regulated.

The court was required to determine several issues, including the number of top-up loans assigned to Smithson & Baye, how many of these loans, despite being made after 1 July 2010, fell outside the scope of the National Credit Code, and whether Smithson & Baye had engaged in alleged refinancing of disputed loans. Ultimately, the court had to decide whether Smithson & Baye was a fit and proper person to hold an ACL and what the correct and preferable decision was regarding the potential suspension or cancellation of that licence.

The Deputy President Molloy concluded that ASIC's decision to cancel Smithson & Baye's ACL should be affirmed. The reasoning involved considering the nature of the top-up loans, their regulation under the NCCP Act, and Smithson & Baye's conduct in relation to them. The Deputy President found that Smithson & Baye had contravened the NCCP Act and breached its ACL conditions, leading to the determination that it was not a fit and proper person to hold a licence.