Tonto Home Loans Australia Pty Limited v Tavares & Ors; Firstmac Limited v Di Benedetto & Ors; Firstmac Limited v O'Donnell & Ors

These three appeals, heard together, concerned the interpretation of section 109 of the *National Credit Code* (Cth) and its application to home loan contracts entered into by the appellants, Tonto Home Loans Australia Pty Limited and Firstmac Limited, with the respondents. The central dispute revolved around whether the lenders had breached section 109 by failing to provide borrowers with a statement of account within the prescribed timeframe, and if so, what the consequences of such a breach were for the enforceability of the loan contracts. The matter was heard in the High Court of Australia.

The High Court was required to determine two primary legal issues. Firstly, whether the lenders' failure to provide statements of account in accordance with section 109 of the *National Credit Code* constituted a breach of that section. Secondly, if a breach was established, the court had to consider the legal effect of such a breach on the enforceability of the loan contracts, specifically whether the lenders were precluded from recovering the principal and interest due under those contracts.

The High Court held that section 109 of the *National Credit Code* imposes a positive obligation on lenders to provide statements of account to borrowers. The court reasoned that the purpose of section 109 is to ensure that borrowers are kept informed about the status of their loans, thereby promoting transparency and consumer protection. The court found that the lenders had indeed breached this obligation by failing to provide the required statements within the statutory timeframe. Crucially, the court determined that a breach of section 109 did not render the loan contracts void or unenforceable. Instead, the court applied the principle that statutory breaches, in the absence of express legislative intent to the contrary, do not automatically vitiate contractual obligations. The court noted that the *National Credit Code* provides specific remedies for breaches of its provisions, and the absence of a provision rendering contracts void for a breach of section 109 indicated that such a consequence was not intended.

Consequently, the High Court allowed the appeals, setting aside the orders of the lower courts that had found the loan contracts unenforceable. The court held that the lenders were entitled to recover the principal and interest due under the loan agreements, notwithstanding their breach of section 109.