Volkswagen Financial Services Australia Pty Limited v Hepburn
[2024] FedCFamC2G 899
•13 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Volkswagen Financial Services Australia Pty Limited v Hepburn [2024] FedCFamC2G 899
File number(s): SYG 534 of 2024 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 13 September 2024 Catchwords: CONSUMER LAW – Practice and procedure – where applicant applies for orders under s 100 and s 101 of the National Credit Code in relation to default by borrower of terms of a credit facility – where application has not been personally served – whether term of loan agreement engages r 10.28(1) of the Federal Court Rules – terms of loan agreement do not because r 10.28(1) of the Federal Court Rules applies to agreement for service of an originating application in a proceeding or of other documents in a proceeding – application therefore was not served – matter listed for further directions. Legislation: National Consumer Credit Protection Act 2009 (Cth) Sch 1, ss 88(1), 100, 101
Personal Property Securities Act 2009 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 6.06, 6.14, 6.15, 17.05
Federal Court Rules 2011 (Cth) r 10.28(1)
Cases cited: Volkswagen Financial Services Australia Pty Ltd v Adra [2024] FedCFamC2G 653
Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712
Division: General Number of paragraphs: 20 Date of hearing: 14 May 2024 Place: Sydney Solicitor for the Applicant: Ms E Flack of Celtic Legal, by telephone The Respondent: No appearance by, or on behalf of, the respondent ORDERS
SYG 534 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: VOLKSWAGEN FINANCIAL SERVICES PTY LIMITED (ABN 20 097 071 460)
Applicant
AND: WILLIAM HEPBURN
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
13 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.The matter be listed for a directions hearing at 9.30 am on 11 October 2024.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
The applicant (VFSA) seeks an order pursuant to s 101 of Schedule 1 (Code) to the National Consumer Credit Protection Act 2009 (Cth) that the respondent, Mr Hepburn, deliver to VFSA’s agents a 2018 Ducati Monster 659 ABS (Vehicle) and, if he fails to do so, an order pursuant to s 100 of the Code that VFSA have access to residential premises for the purpose of enabling it to repossess the Vehicle.
FACTS
On 9 February 2019 Mr Hepburn signed a document headed “Consumer Loan Contract – Secured Loan Schedule” (Loan Schedule), under which the following appears:
This is an offer by you, the Borrower/s named below, to us, Volkswagen Financial Services (“we”, “us”). You have asked us to lend you money under the terms and conditions of the Consumer Loan Contract, which is made up of this Loan Schedule (“Loan Schedule”) and the Terms and Conditions (“Terms and Conditions”). If we accept your offer it will automatically form a binding contract between us (“Contract”). As security for your obligations under this Contract this Contract creates a mortgage over the Goods described below.
The Loan Schedule then sets out details which include identifying Mr Hepburn as the borrower, Mr Hepburn’s address (Warrawong Address), and the amount of credit ($14,850), $12,850 of which was to be applied towards the purchase price of the Vehicle, and $770 for payment of a “Dealer Administration Fee”.
In a section headed “Repayments” the Loan Schedule provides that the loan is to be repaid over a period of 36 months by Mr Hepburn making 36 monthly loan instalments, the first 35 of which would each be in the amount of $438.24, and the final payment would be $438.21. The Loan Schedule further provides that
All monthly repayments are due on the same date each month, commencing one month after the date you sign this offer. If a month does not have the same date (e.g. 31st of the month), the payment is due on the last business day of that month. If the due date falls on a day which is not a business day, the payment must be made on the next business day.
Section 8 of the Loan Schedule provides that a “mortgage is given to secure your obligations under this Contract over the Goods described below”, the “Goods” being the Vehicle.
The Loan Schedule in evidence does not record a signature by any person on behalf of VFSA. The Loan Schedule provides, however, that it “may accept this offer by an authorised and identified person acting on our behalf causing notations to be made in our electronic systems that this offer is accepted on the date specified there”. There is no evidence that any such notation has been made; but it is reasonable to infer, and I find, that such a notation was made.
There is in evidence a document titled “Terms and Conditions Consumer” which contains two sets of terms, one of which is titled “Consumer Loan Contract – Secured Terms & Conditions” (Loan Terms). Clause 1.1 provides that VFSA will lend Mr Hepburn the “total amount of credit as set out in the Loan Schedule”, noting that “[t]his is the loan which you must repay”. Clause 3.1 provides that Mr Hepburn must pay the loan in full by the end of the repayment period, and cl 3.2 provides that Mr Hepburn must make the repayments as specified in the Loan Schedule. Clause 6 provides that Mr Hepburn “gives us a legal mortgage over the Goods specified in the Loan Schedule”, the “Goods” being the Vehicle.
Clause 11 of the Loan Terms deals with default. Clause 11:
(a)defines when default occurs, and this includes Mr Hepburn’s failing to pay VFSA on time any money due (cl 11.1(a));
(b)if default occurs, obliges VFSA to give a written default notice requiring Mr Hepburn to correct the default, at least where the law would require VFSA to give such notice (cl 11.2);
(c)requires Mr Hepburn to pay the full amount owing under the loan agreement if he does not comply with the default notice (cl 11.3); and
Further, cl 11.6 provides that if Mr Hepburn does not or cannot fix the default VFSA will be entitled to take possession of the Vehicle.
On 11 February 2019 VFSA registered a security interest against the Vehicle with the Personal Property Securities Register established under the Personal Property Securities Act 2009 (Cth) (PPS Act).
VFSA issued a document titled “Default Notice” dated 28 March 2020 addressed to Mr Hepburn at the Warrawong Address. The Default Notice stated that Mr Hepburn was “currently in default of the Credit Contract” because VFSA had not received $543.24; demanded that Mr Hepburn remedy the default by paying this amount by 4 May 2020; and stated that if the default is not remedied by 4 May 2020, the total amount outstanding “under the Credit Contract and Mortgage” would become outstanding, and VFSA may begin enforcement proceedings, and VFSA may begin repossession of the “Mortgaged Goods” (these being identified as the Vehicle).
VFSA, in its written submissions, correctly proceeds on the premise that s 88(1) of the Code applies to the Loan Schedule and the Loan Terms. Subsection 88(1) of the Code provides:
A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless:
(a) the debtor is in default under the credit contract; and
(b)the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and
(c) the default has not been remedied within that period; and
(d)if the credit contract is for a reverse mortgage, the credit provider has spoken to one of the following persons by telephone or in person in that period and has thus both confirmed that the debtor received the default notice and informed the person of the consequences of failure to remedy the default, or has made reasonable efforts to do so:
(i) the debtor;
(ii) a practising lawyer representing the debtor;
(iii) a person with a power of attorney relating to the debtor’s financial affairs.
PROCEEDING IN THIS COURT
The matter came before me on a first court date on 30 April 2024. Mr Hepburn did not appear. I adjourned the matter to 14 May 2024, on which day Mr Hepburn again did not appear. On that day Ms Flack, who appeared for VFSA, read the following affidavits:
(a)An affidavit made on 5 March 2024 by Mr Brendan Long, VFSA’s lawyer, annexing the Loan Schedule, Loan Terms, extract from the PPS Act Register, and the Default Notice (Long affidavit).
(b)An affidavit made by Mr Dane Ruddock on 15 April 2024 in which he deposes to serving Mr Hepburn with the application and Long affidavit on 15 April 2024 by leaving these documents at the Warrawong Address.
(c)An affidavit made by Mr Angus Tunney on 10 May 2024 in which Mr Tunney deposes that on 16 April 2024 he sent the application and the Long affidavit to an Mr Hepburn by email at the address “hepburnmasonry @ . . . .” Mr Tunney is a paralegal engaged by VFSA’s lawyers.
(d)An affidavit made by Mr Long on 10 May 2024 deposing to Ms Mia Johnson, an administration officer within Mr Long’s legal practice, having posted, on 12 April 2024, the application and the Long affidavit to the Warrawong Address.
DETERMINATION
It is apparent from the affidavits of service that Mr Hepburn has not been personally served with the application.
Service of documents starting a proceeding in this Court is governed, in the first instance, by r 6.06 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules), which provides:
(1)Service by hand is required for an application starting a proceeding or a subpoena requiring attendance of a person.
(2)However, service by hand is not required if:
(a)there are current proceedings for which there is a notice of address for service for the person to be served; or
(b)the Court directs that an application may be served in another way; or
(c)a lawyer accepts service for a party and subsequently files an address of service; or
(d)a lawyer accepts service for a person other than a party.
Rule 6.06 is subject to r 6.14 and r 6.15 of the GFL Rules:
6.14 Substituted service
(1)If, for any reason, it is impracticable to serve a document in a way required under this Part, the Court may make an order dispensing with service or substituting another way of serving the document.
(2)The Court may specify the steps to be taken for bringing the document to the attention of the person to be served.
(3)The Court may specify that the document is to be taken to have been served on the happening of a specified event or at the end of a specified time.
6.15 Matters to be taken into account
In making an order for dispensing with service or for substituted service, the Court may have regard to:
(a)whether reasonable steps have been taken to attempt to serve the document; and
(b)whether it is likely that the steps that have been taken have brought the existence and nature of the document to the attention of the person to be served; and
(c)whether the person to be served could become aware of the existence and nature of the document by means of advertising or another means of communication that is reasonably available; and
(d)the likely cost to the party serving the document, the means of that party and the nature of the proceedings; and
(e)any other relevant matter.
It is the case that cl 13.4 of the Loan Terms specifies the means by which VFSA may give a document. These include by posting the document to Mr Hepburn’s residential or postal address, and by sending the document “to the email address you have authorised and only if you have agreed to receive documents this way”.
In Volkswagen Financial Services Australia Pty Ltd v Adra,[1] I held that a differently worded clause engaged r 10.28(1) of the Federal Court Rules 2011 (Cth) (Federal Court Rules), which provides:
If a respondent in a proceeding has agreed that an originating application or other document in the proceeding may be served on the respondent, or on another person for the respondent, in a way or at a place mentioned in the agreement, the document may be served in accordance with the agreement.
and, on that basis, I found that personal service was not required. In Volkswagen Financial Services Australia Pty Limited v Feili [2] however, Judge Cameron held that the clause did not have the effect I held it did. His Honour said:[3]
Although the contractual relationship between the parties provides that the lender may give notice to the borrower in accordance with the finance agreement, the agreement does not purport to affect the operation of the Court's rules concerning personal service in a proceeding’s initial stages, as was the case with the agreement considered in Kosmos Capital Pty Ltd v Turiya Ventures LLC [2019] FCA 528.
[1] Volkswagen Financial Services Australia Pty Ltd v Adra [2024] FedCFamC2G 653
[2] Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712
[3] Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712, at [6]
In his Honour’s view, r 10.28(1) of the Federal Court Rules does not apply to an agreement concerning the service of documents unless the agreement expressly or by implication applies to an originating document. On reflection, I am satisfied his Honour is plainly correct. That means that Mr Hepburn has not been served with the application, and for that reason, it is not open to me to make any order other than to list the matter for a further directions hearing.
The only order I propose to make is to list the matter for a directions hearing at 9.30 am on 11 October 2024.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 13 September 2024
0
3
4