Victorian Producers Co-operative Co Ltd v Edwards

[1993] SASC 4145

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), DUGGAN(2) AND DEBELLE(3) JJ

CWDS
Consumer credit - Claim for balance on running account with stock agent for supply of goods and services on credit - balance consisting of interest - defences that no implied promise to pay interest and that no credit charge, including interest, recoverable because plaintiff not holder of Credit Provider's Licence under Consumer Credit Act - promise to pay interest properly implied - Act not applying to credit contract where amount of principal exceeds prescribed amounts (s.6(3)) - applicability of Act while aggregate of advances less repayments did not exceed prescribed amount - non-applicability of Act thereafter.

HRNG ADELAIDE, 13 July 1993 #DATE 1:9:1993
Counsel for appellant Nessie Edwards:     Mr A J Besanko
Solicitors for appellant Nessie Edwards: Piper Alderman
Counsel for respondent:                 Mr D J Bleby QC
  with Mr P A McNamara
Solicitors for respondent:                Wallmans

ORDER
Appeal allowed

JUDGE1 KING CJ The respondent sued the appellants in the Supreme Court for an amount alleged to be due as the balance of a current or running account in the name of the appellant Mrs Edwards and her late husband. The appellants other than Mrs Edwards are the executors of the will of the late Mr Edwards. A partial summary judgment was obtained. The balance of the claim in dispute was the interest component of the claim and the appellants were given leave to defend as to that balance. The learned trial judge found against the appellants and judgment has been entered against them in the sum of $187,424.94. They appeal against that judgment. 2. Two issues were debated on the hearing of the appeal. The first is whether there was an implied agreement to pay interest, or alternatively to pay interest on the basis claimed. The second is whether the provisions of the Consumer Credit Act 1972 operate to preclude recovery of interest. 3. The appellant Mrs Edwards and her late husband were farmers near Bordertown. From about 1973 they operated a running account with a stock and station agent company known as DSM Estates Limited. DSM supplied on credit goods and services used in carrying on the farm and was sole agent for the sale of livestock, crops and wool. The debit balance of the account from time to time bore interest at a rate determined by DSM. Due to a takeover of DSM in 1984 Mrs Edwards' brother, who had been the Bordertown manager of DSM, approached the respondent, which was also a stock and station agent, to open an office in Bordertown. The brother thereupon became the respondent's manager in Bordertown. 4. Mr and Mrs Edwards agreed with the brother to transfer their account to the respondent if the respondent would advance the money needed to pay out DSM. That amount was $111,700.18. The brother prepared an application for finance for that sum for the purpose of paying out DSM on the basis of information supplied by the Edwards. The brother had obtained the Edwards' instructions shortly after he commenced with the respondent on 6th July 1984. He forwarded the application on 20th July. It was approved by the Finance Department on 27th July. The respondent thereupon opened for Mr and Mrs Edwards what is known as a financed account. This is the same type of account as they had operated with DSM. The account is described by the learned trial judge in his reasons for judgment as follows:
    "I accept Mr Sapiatzer's evidence that the essential terms
    of operation of the DSM account were the same as those which
    applied to the financed account offered by the plaintiff.
    Financed accounts were offered to farmers who wanted ongoing
    credit. When such an account was established, the stock and
    station agent would obtain details of a program within the
    framework of which the account holder indicated what sales of
    crops and livestock were likely to be made and when the revenue
    was expected to come in from such sales, during a given year. The
    farmer would then be permitted to charge up goods and services
    within that year, on credit, in the expectation that if sales were
    effected according to the program set at the start of the year,
    the account would be cleared within twelve months trading.    It
    was not common for an express limit to be set on a financed
    account, but the local manager of the stock and station agent
    would keep an eye on the account to see that it was running
    generally within the expected limits, having regard to the
    program. Given the unpredictable nature of farming operations, I
    infer from the evidence that a fair degree of flexibility was
    inherent in the operation of such an account.    In the case of a
    financed account, interest was charged daily and debited at the
    end of each month. A monthly statement would issue, which set out
    the debits for the various goods and services supplied, the amount
    of any payments received during the month and the amount debited
    for interest.    The rate of interest was fixed at the discretion
    of the stock and station agent. In the case of both DSM and the
    plaintiff, the rate was set by the company's head office. The
    local branch managers had no participation in the setting of the
    interest rate. It was always slightly higher than the equivalent
    bank interest rate. No advance notice was given to customers as
    to any change in the interest rate. The monthly statements of
    account simply indicated the amount of interested calculated
    according to the rate prevailing during that month. The only
    pressures which operated to contain the interest rate were those
    which resulted from competition between the various stock and
    station agents, and recognition of the generally prevailing levels
    of interest.    When Mr Sapiatzer discussed the position with Mrs
    Edwards and the deceased early in July 1984, they were keen to
    change their account to the plaintiff. Mr Sapiatzer told them
    that he would work out a program 'to give them the possibility of
    clearing the account within twelve months'. The Edwards made it
    clear that they wished to have a financed account. Mr Sapiatzer
    said that the plaintiff would debit interest in the same way that
    DSM had. Nothing else was said about the terms of the proposed
    account as their years of experience in operating such an account
    with DSM had made Mrs Edwards and the deceased familiar with the
    essential characteristics of its operation. They correctly
    assumed that any such account, if the plaintiff was willing to
    allow them to open one with it, would be on essentially the same
    terms as those on which they had operated with DSM." 5. The respondent also provided to clients another type of account known as a sundry debtors account. His Honour described that type of account as follows:
    "One kind of account was known as a sundry debtors account.
    Under that account, goods and services were supplied by the stock
    and station agent on 30 day terms. Payment was to be made on a
    statement furnished at the end of the month during which the goods
    and services were supplied. No interest was charged provided that
    payment was made on the due date. Furthermore, such an account
    was not an account which was allowed to accumulate from month to
    month, as the basis of its operation was that it be cleared each
month." 6. It was necessary to make an arrangement to cover the period until the financed account was approved. It was arranged that the respondent would open a sundry debtors account on the basis that it would be transferred to the financed account when approved. If the financed account was not approved, the Edwards would pay the amount owing on the sundry debtors account and continue their financed account with DSM. The balance of the sundry debtors account at 31st July 1984 was $2,037.09, including $14.69 interest. 7. On 1st August 1984, the financed account was opened. The balance of the sundry debtors account was debited to the financed account. The account was also debited with the sum of $111,700.18 and a cheque for that amount was paid to DSM. 8. The learned judge held, on those facts, that there was an implied agreement that the respondent was entitled to charge interest on the outstanding balance at the end of each month at a rate which it was free to set each month. His Honour said: "The evidence which compels me to that finding is the evidence of the terms upon which the financed account with DSM operated for many years, the fact that Mrs Edwards and the deceased sought a similar account with the plaintiff, the evidence of Mr Sapiatzer to the effect that he explained that interest would be charged monthly, and the course of dealing between the parties after the account was opened." 9. Mr Besanko, who appeared for the appellants, challenged the finding of an implied promise to pay interest. I think, however, on the above facts, the finding was plainly correct. 10. Mr Besanko, in the alternative, argued that a term that the rate of interest could be fixed by the credit provider was so vague and uncertain as to be unenforceable. I should preface consideration of this point by saying that in my opinion the term to be implied from the above facts must include the concept of reasonableness. The term would be that Mr and Mrs Edwards were liable to pay interest at such reasonable rates, having regard to the rates charged by stock and station agents in like circumstances, as might be fixed by the respondent from time to time. Thus expressed the term is not uncertain and the terms of the bargain have been agreed upon; Sweet and Maxwell Ltd v Universal News Services Ltd 1964 2 QB 699. It is true that "there can be no concluded bargain if a vital matter ... has been left to the determination of one of the parties"; Godecke v Kirwan (1973) 129 CLR 629 per Gibbs J at p.647; Meehan v Jones and Ors (1982) 149 CLR 571 per Mason J at p.587, but as Gibbs J acknowledge in Godecke v Kirwan that is not the situation where the scope of the party's power of determination is limited by the familiar and objective standard of reasonableness. 11. Section 28(1) of the Consumer Credit Act 1972 provides that a person shall not carry on business as a credit provider unless he is duly licensed. Subsection (3) provides that a person who is required to be licensed shall not be entitled to recover a credit charge in respect of credit provided by him at any time at which he is unlicensed. A credit charge, by definition, includes interest (s.5). The contract between the parties was a credit contract within the meaning of the definition in s.5 which is as follows: "... a contract or agreement (whatever its terms or form may be) under which credit is provided by a credit provider to, or for the use or benefit of, a person (other than a body corporate) and includes a sale by instalment." 12. The respondent was not at the material time a licensed credit provider. Moreover the contract did not comply with s.40 of the Act. Furthermore it made a charge of interest upon interest as prohibited by s.42. There is no doubt that if the Act applies, the respondent is not entitled to recover the amount claimed in this action. 13. The learned trial judge held that the Act did not apply to this transaction by virtue of s.6(3). That subsection is as follows:
    "(a) where-
    (i) the principal exceeds $15,000; and
    (ii) the credit is not provided on the security of land;
    (b) where-
    (i) the principal exceeds $15,000;
    (ii) the credit is provided on the security of land; and
    (iii) the consumer has made a statutory declaration that the
    land is not to be used as a place of residence for the
    consumer's own personal occupation; or
    (c) where the amount of the principal exceeds $30,000." 14. His Honour considered that the principal exceeded $15,000. The argument for the appellant was that the principal did not exceed the prescribed sum of $15,000 because the principal for the purpose of s.6(3) was the amount first advanced and the subsequent advance of the sum to pay out DSM did not constitute part of the principal. The learned judge approached the matter differently. 15. His Honour relied upon the definition of "principal" in s.5 which is as follows:
    "'principal'-
    (a) in relation to a credit contract (other than a sale by
    instalment), means the amount actually lent by the credit
    provider, or of which he forebears to require payment, under
    the credit contract; and
    (b) in relation to a sale by instalment, has the meaning
    assigned by section 41 of this Act" 16. His Honour said:
    "In my opinion, the words 'the amount actually lent' make
    it plain that in identifying the principal in relation to a
    credit contract, one looks at the amounts actually lent. The
    amount agreed to be advanced or lent is irrelevant. Furthermore,
    for the purposes of s.6(3)(a)(i), where there are successive
    amounts of principal lent, it is necessary to aggregate the
    amounts 'actually lent' for the purposes of determining the
    application of the Act, and furthermore, the total is irreducible.
    By that I mean that no credits, such as payments on a running
    account which result in a reduction in the total shown in the
    account from time to time should be taken into account in
    determining the amount of the principal, just as no other debits,
    such as interest, should be taken into account either. The amount
    actually lent is a fixed and invariable amount at the moment it is
    advanced, and as successive amounts lent accrete, once the total
    exceeds $15,000, where the credit is not provided on the security
    of land, the Act is not of application, although it may have
    otherwise been of application before that stage was reached.    It
    follows from the observations which I have made that by the time
    the second account was rendered to the defendant, that is, by the
    end of August 1984, the amount actually lent, which by then
    included the advance of $111,700.18 paid to DSM, exceeded $15,000
    and was not lent on the security of land. In the result, the Act
    did not apply to the credit contract in question. It follows that
    the fact that the plaintiff was not licensed as a credit provider
    pursuant to the Act does not operate to preclude the recovery of
the interest charges the subject of the claim." 17. His Honour's construction could produce strange results. In a running account constituted by a credit contract and consisting of frequent small credit transactions and regular repayments, the prescribed amount might be exceeded by reason of the number of small transactions over a long period of time. The Act would then not apply although the principal outstanding had never attained the prescribed amount and although the account had never been authorised pursuant to s.6(4) as a revolving charge account. The regulation of that type of account is plainly within the purpose and intendment of this consumer protection legislation and a construction which would remove it, even after a lapse of time and a multitude of transactions, from its protective provisions, is to be avoided if the language of the Act so permits. 18. The governing provision is that contained in s.6(3), namely that the Act does not apply where the amount of the principal exceeds the prescribed amount. The intention is plainly that the Act is not to apply to large transactions but is to apply to smaller, and therefore presumably consumer-type, transactions. The definition of "principal" in s.5 as meaning "the amount actually lent" must be designed to ensure that the Act is not excluded because of an agreed principal in excess of the prescribed amount when the real transaction as determined by actual amount involved is within the financial limit of a consumer transaction. 19. I agree with the learned trial judge that the amount agreed to be lent is irrelevant in determining the amount of the principal for the purpose of s.6(3). This must result from the definition. I agree too that where there are successive amounts of credit, it is necessary to aggregate the amounts for the purpose of determining the applicability of the Act. The Act applies up to the point at which the aggregate exceeds the prescribed amount but it then ceases to apply. When that stage is reached the amount of the principal under the credit contract is determined as being in excess of the prescribed amount. The Act therefore has no further application to the transaction notwithstanding that the principal outstanding may later be reduced to or under the prescribed amount. 20. I have difficulty, however, with the learned judge's view that in determining whether the aggregate has exceeded the prescribed amount, prior payments or repayments by the debtor are to be disregarded. I think that that is to apply the words "actually lent" in the definition in a sense and for a purpose which could not have been intended. If the amount of the indebtedness never exceeds the prescribed amount by reason of repayments, the transaction, in substance, always remains in the consumer category. It would be artificial to treat it as removed from that category simply because the aggregate of all amounts of credit has come to exceed the prescribed amount notwithstanding that the amount outstanding has never exceeded that amount. 21. I think that the principal for the purpose of s.6(3) can quite reasonably be regarded as the aggregate of all amounts of credit advanced under the credit contract less payments or repayments by the debtor prior to the stage at which the prescribed amount is exceeded. 22. Mr Besanko based an argument upon s.40(3). Section 40, however, is concerned only with the form and content of the credit contract, not with the applicability of the Act to a transaction. Subsection (3) deals with the method of determining what amount is to be stated as the principal where there are to be a number of advances and the total to be advanced is unascertainable. I note that the word "principal" appears to be used in this section in a sense which is inconsistent with the definition of s.5, but the defined meaning must prevail in interpreting s.6(3). Section 40 throws no light upon the meaning of the word "principal" as used in s.6(3). 23. The credit advanced to and including 31st July 1984 was less than the prescribed amount and during that period the Consumer Credit Act applied to the transaction. The advance of $111,700.18 on 1st August 1984 took the amount of the principal over the prescribed amount of $15,000 and thereafter the Act had no application to the transaction. The respondent was not entitled to credit charges prior to 1st August by virtue of s.28(3) and s.40(8). Thereafter, as the Act did not apply, the contract applied according to its terms and the respondent was entitled to interest determined in accordance with the implied term. 24. The claim in the action is for the balance of the account and therefore, it would seem, includes a small amount of credit charge applicable to the period during which the Act applied. I would hear counsel as to how that should be dealt with before entering judgment.

JUDGE2 DUGGAN J I agree that there was an implied undertaking to pay interest at such reasonable rates as might be fixed by the respondent from time to time after taking into account generally prevailing levels of interest. 2. I also agree with the views expressed by the Chief Justice as to the limited application of the Consumer Credit Act, 1972 to the dealings between the parties. Counsel should be heard on the adjustment which would be required in the light of this construction of the Act.

JUDGE3 DEBELLE J This is an appeal from a judgment in which the appellant was held to be liable to pay the respondent the sum of $173,293.21. The debt arose out of the operation of a running account which the appellant and her husband had with the respondent. There was little dispute as to the relevant facts. There were two main issues at the trial and on this appeal. First, whether it was a term of an agreement to lend $111,700.18 that the respondent should be entitled to charge interest and, secondly, whether the respondent was prevented from pursuing its claim for interest by reason of its failure to comply with the provisions of the Consumer Credit Act, 1972 ("the Act"). 2. The appellant and her husband were farmers near Millicent. From about 1973 they had operated a running account with a stock and station agent, DSM Estates Limited ("DSM") and its predecessors. The account was of a kind commonly operated by farmers with stock and station agents by which goods and services are supplied on credit to the customer and the stock and station agent is the sole agent for the sale of the customer's livestock, crops and wool. 3. The respondent is a co-operative of farmers and carries on business inter alia as a stock and station agent. Its principal place of business is in Victoria but in the 1980's it expanded its business into South Australia. 4. The appellant's brother, Mr Brian Sapiatzer, was manager of the Millicent branch of DSM. He looked after the account operated by the appellant and her husband. In the early part of 1984 Mr Sapiatzer left DSM and established a new branch of the respondent at Millicent. The respondent opened the branch on 6 July 1984 and Mr Sapiatzer was manager. 5. The trial judge found that, at this time, stock and station agents commonly offered two kinds of accounts to farmers: a sundry debtors account and a financed account. The terms upon which these accounts were offered were, broadly speaking, the same as between the various companies. A sundry debtors account was a means by which goods and services would be supplied by the stock and station agent on 30 day terms. Payment was to be made on the statement furnished at the end of the month. Interest would be charged only if payment was not made on the due date. The object was that an account of this kind should not accumulate from month to month as the basis of its operation was that it was to be cleared in each month. 6. Financed accounts were offered to farmers who were seeking credit. When such an account was established, the stock and station agent would obtain details of a programme within the framework of which the holder of the account indicated what sales of crop and livestock were likely to be made and when the revenue was expected to be derived. The farmer would then be permitted to obtain goods and services within that year on credit in the expectation that, if sales were effected according to the programme set out at the beginning of the year, the account would be cleared within twelve months' trading. Interest was charged daily and debited at the end of each month. A monthly statement would be issued which would set out the debits for the various goods and services supplied, the amount of any payments received during the month and the amount debited for interest. The rate of interest was fixed at the discretion of the stock and station agent set by the head office of the company. No advance notice was given to customers as to any change in the interest rate. 7. The appellant and her husband operated a financed account with DSM. The essential terms of the financed account with DSM were the same as those on which the respondent conducted such accounts. 8. On 6 July 1984 the appellant and her husband owed DSM some $110,000 in respect of their running account. At about that time, Mr Sapiatzer approached the appellant and her husband and asked if they wished to establish an account with the respondent in lieu of their account with DSM. They agreed. It was proposed to borrow a sum sufficient to pay DSM what was owing on that account. Mr Sapiatzer did not have authority to grant the loan. He prepared an application for finance from the respondent. It included a list of assets and liabilities and contained a request for an advance of $111,700.18 to pay the amount due on the account with DSM. The application was an internal document. Although the application is dated 20 July 1984, Mr Sapiatzer had obtained the instructions and other details required for the application from the appellant and her husband shortly after he commenced as the plaintiff's manager on 6 July 1984. The application was not signed by the appellant or her husband. At no time did the appellant or her husband sign any applications or other documents in relation to this application for finance. 9. Although Mr Sapiatzer did not have authority to approve the opening of a financed account, he did, however, have authority to approve the opening of a sundry debtors account. At the request of the appellant and her husband, he approved the opening of a sundry debtors account to enable the purchase of farm goods and equipment pending the consideration by the respondent of the application for finance. That account was opened soon after 6 July 1984 and on 10 July 1984 the first item was debited to the account for the purchase of farm chemicals in the sum of $237.80. By 27 July 1984 six further purchases of farm goods to a total sum of $2,022.40 had been made. No application or other document was agreed by the appellant or her husband in relation to this account. 10. The application for finance was approved by the respondent on 30 July 1984 to be effective from 27 July 1984. Upon approval of the application for finance, the sundry debtors account was merged with the financed account. From that date there was only one account and that became the running account for the appellant and her husband. The appellant and her husband continued to purchase goods against that account. 11. On 1 August 1984, after he had been advised that approval had been given to the opening of a financed account, Mr Sapiatzer arranged for a cheque to be drawn and paid to DSM, effectively closing the account of the appellant and her husband with DSM. The cheque was in the sum of $111,700.18. That sum was debited to the merged account and appears in the statement for August 1984. 12. For a time, the appellant and her husband reduced their indebtedness to the respondent. However, at no time did they repay the whole of the amount due. By 31 October 1984 they had reduced the debt to $47,760.45. That was the lowest balance of the account. In 1984-5 after a bad season, the appellant and her husband fell into arrears in making re-payments to the respondent. There were discussions between officers of the respondent and the appellant and her husband. The appellant's husband died on 25 August 1986. The account was continued after his death but in May 1987 a separate account was opened in the name of the appellant only. There is no occasion to refer further to the appellant's separate account. 13. The respondent's claim of $173,293.21 is made up of the loan to discharge the DSM account, purchases and interest on the amount outstanding from time to time less payments which had been made. 14. It is common ground

     - that the respondent was at all material times a credit
     provider within the meaning of the Act;
     - that the respondent did not hold at the relevant time a
    licence under the Act to carry on business as a credit provider;
     - that the agreement by which the respondent advanced the
    appellant and her husband the sum of $111,700.18 was a credit
    contract; . that the advances of money and goods on the credit
    contract were made by the respondent in the course of carrying on
    business as a credit provider;
     - that the levying of interest on the account amounted to the
    imposition of a credit charge within the meaning of the Act;
     - that the respondent did not obtain a credit contract in a form
    complying with s.40 of the Act; and . that the compound interest
    was charged so as to attract the operation of s.42(1) if it was
    otherwise applicable. 15. The trial judge found that it was an implied term of the agreement in respect of the sundry debtors account that the respondent would be entitled to interest at a rate which it was free to set each month and that the interest was chargeable on the outstanding balance of the account at each month. His reasons for this conclusion were that terms on which the appellant and her husband operated the finance account with DSM for many years, the fact that the appellant and her husband sought a similar account with the respondent, the evidence of Mr Sapiatzer to the effect that he explained that interest would be charged monthly, and the course of dealing between the parties after the account had been opened. He expressly rejected a plea in paragraph 3.2.4 of the respondent's statement of claim as to the manner in which the rate of interest was to be found. That plea was in these terms: "The rate of such interest was to be fixed and determined by the plaintiff at the end of each month having regard to each of:
     (a) the interest rate charged to the Plaintiff by its own
     banker on the plaintiff's overdrawn trading account in such month
    by its banker;
     (b) interest rates charged by competitors of the plaintiff in
    such month;
     (c) interest rates prevailing in the Australian financial
    markets generally; and
     (d) the yield of the defendants' account that is to say the
    commission generated by transactions upon it by the defendants." 16. Instead, the trial judge found:
    "Mrs Edwards and her husband must be taken simply to have
    agreed that the plaintiff was entitled to interest to be debited
    monthly at such rate as the plaintiff might unilaterally
    determine. Nothing occurred which the effect of fixing Mrs
    Edwards or the deceased with knowledge of the process to be
    followed in determining or varying the rate, or which gave rise to
    an implied term that any particular process would be followed in
that respect." 17. I pause simply to emphasise the finding that there was no implied term as to the process to be followed in determining or varying the rate. It is to be noted also that the trial judge made no finding as to whether there is any implied term as to the method by which interest was to be calculated. 18. I cannot agree that there was an implied term as to interest, certainly not on the terms found by the trial judge. The effect of the finding is that the appellant and her husband virtually wrote a blank cheque to the respondent in respect of interest. According to the finding, the respondent could fix whatever rate it chose with the appellant and her husband having no knowledge either as to any variation in the rate or as to the manner in which interest was to be calculated or as to any variation in the manner in which interest was to be calculated. Thus, the respondent would be free not only to determine whatever rate it chose from time to time but was also at liberty to choose the method of calculation, be it daily rests, monthly rests, six-monthly rests or annual rests, or entirely vary the method of calculation. The finding that interest was chargeable at the end of the month says nothing as to the method of calculation. 19. The fact that the appellant and her husband operated an account with DSM for many years and DSM purported to charge interest on that account cannot be used for the purpose of implying a term as to interest with another company. Neither does the course of dealing between the appellant and her husband, after the account with the respondent had been opened, establish any basis for an implied term. True it is that from time to time they made payments in reduction of the account but, given that they were always substantially indebted to the respondent, there is no basis on which one can find the existence of implied term. The position might have been otherwise had there been occasions when the appellant and her husband cleared the account. The payments which were made, therefore, did not constitute an admission of liability to pay interest: W. Thomas and Co Ltd v Wella (1935) SASR 165 per Murray CJ at 169. 20. When Mr Sapiatzer discussed with the appellant and her husband the opening of the account with the respondent, he mentioned that interest would be charged monthly. However, there was no discussion as to the rate of interest. He was asked in examination-in-chief:
     "Q. Was there any express discussion on this particular
     occasion on the topic of interest rates.
     A. No, not to my knowledge.
     Q. Was there any express discussion on this occasion on the
     topic of the means by which VPC was charging interest to its
     clients.
     A. None, other than I said, the finance application of VPC was
     exactly the same as DSM Estates finance application where interest
was charged monthly." 21. In cross-examination, he admitted that he did not check with the respondent to ascertain what interest rate was being charged by it. All he knew was that interest was being calculated at the respondent's head office. It is clear, therefore, that Mr Sapiatzer was simply not in a position to inform the appellant and her husband as to the rate of interest or the method of calculation. 22. It is to be noted also that there was no written application to the respondent in respect of either the loan nor the sundry debtors account. It is quite remarkable that, when agreeing to make such a substantial loan to the appellant and her husband, the respondent did not have a written contract which included some term as to interest. 23. Finally, the fact that there was no implied term as to interest was dramatically demonstrated by the course of events at the trial. On the second day of the trial and while Mr Sapiatzer was being cross-examined, the respondent announced that it abandoned one method of calculating interest for another. Later it produced an amended calculation for a sum less than had been originally claimed by way of interest. There could hardly be any more telling pointer to the absence of an implied term as to interest. The only inference is that the respondent itself did not know the terms as to interest. How can the respondent allege there was an implied term as to interest when it knew not the rate or method of calculation? 24. The failure by the respondent to make any express provision for interest in its agreement with the appellant and her husband cannot be remedied by its various attempts to spell out an implied term. Nor can it be remedied by resort of an implied term as to reasonableness of the rate of interest. The respondent charged a rate of interest in excess of that charged on bank overdraft. There is a real question as to whether interest at such a rate was a reasonable rate in respect of the advance of $111,700.18. In addition, I do not think there is any basis for holding, as the trial judge did, that there was an implied term that the respondent was entitled to interest at a rate it was free to set each month and that such a term could be regarded as reasonable. 25. In the light of this conclusion, it is unnecessary to deal with the issues arising under the Consumer Credit Act. However, given that I differ from the trial judge, I set out my reasons for concluding that the respondent was in breach of the provisions of the Act and for that reason also is not entitled to recover interest. 26. Section 28 of the Act prohibits a person from carrying on business as a credit provider unless he is duly licensed. A credit provider who is required to be licensed under the Act is not entitled to recover to obtain any credit charge in respect of credit provided by him while unlicensed: s.28(3). A credit charge includes interest: s.5. During the period in which the appellant and her husband ran an account with the respondent, the Act did not apply to a credit contract where the principal exceeded $15,000 and the credit was not provided on security of land: s.6(3). The Act defines "principal" to mean, inter alia, the amount actually lent by the credit provider of which he forbears to require payment under the credit contract. 27. A credit contract is defined by s.5 to mean a contract or agreement (whatever its terms or form may be) under which credit is provided by a credit provider to, or for the use or benefit of, a person (other than a body corporate). "Credit" is defined in s.6 to mean, inter alia, any advance or money's worth made in expectation of repayment or any forbearance to require payment of any money owing made in expectation of subsequent payment. 28. Thus, by reason of the operation of the Act, when the respondent, a credit provider, agreed in early July 1984 to sell goods to the appellant and her husband on credit, it entered into a credit contract. Pursuant to that credit contract, the respondent first provided credit to the appellant and her husband when on 10 July 1984 it made the first sale of goods to them on credit. Thereafter, pursuant to that credit contract, the respondent then sold further goods on credit. This contract attracted the application of the Act because the principal did not then exceed $15,000. The agreement to provide the advance of $111,700.18 was also a credit contract. Thus, when the respondent debited the amount of the advance to the sundry debtors account, it was debiting that sum to an existing credit contract. 29. The debiting of the amount of the advance to the sundry debtors account increased the amount due under an existing credit contract to a sum which substantially exceeded $15,000. That does not have, however, the consequence that the Act no longer applied. If that were so, a credit provider could avoid the consequences of the Act by debiting to one account the obligations arising out of two or more credit contracts. For example, a person could in each of two separate contracts borrow less than $15,000 but the total sum could exceed $15,000. I do not think that is the intention of the Act. 30. The conclusion that the Act applies to this contract is reinforced by an examination of the manner in which the respondent purported to charge interest. Section 5 of the Act defines a revolving charge account. It is an account:
    (a) to which an amount or amounts due under a contract or
    contracts are debited; and
    (b) upon which a credit charge is made from time to time on the
    outstanding balance of the account" 31. The sundry debtors account was a revolving charge account. The Act applies in respect of revolving charge accounts unless the Commercial Tribunal has approved the operation of the account and the account is operated in accordance with the conditions prescribed by the Tribunal: see s.6(5) and (6). When the respondent calculated interest, the principal sum would have comprised that part of the advance which remained unpaid and that part of the total cost of goods purchased which remained unpaid. Thus, the interest would have been charged in contravention of the Act at least in respect of that portion of the account which represented the cost of goods purchased. The consequence of the merging of the accounts is that it is now not possible to determine what was payable for interest in respect of goods purchased on credit (which was not recoverable under the Act) and what was payable by way of interest of the advance. That portion which represented interest on the unpaid cost of purchases would have been charged contrary to the provisions of the Act and would, therefore, not be recoverable. Further, the sundry debtors account was a credit contract and it did not comply with s.40 of the Act either when it was opened or at any later time. 32. Here again, the remedy was in the hands of the respondent. Had the respondent obtained a licence under the Act and had it obtained approval to operate a revolving charge account, its present difficulties would not in all likelihood have arisen. Alternatively, the respondent could have avoided this result by the simple expedient of not debiting the credit contract with the amount of the advance made to the appellant and her husband. 33. For these reasons I would allow the appeal.