Wade v J Daniels and Associates Pty Ltd
[2020] FCA 1708
•27 November 2020
FEDERAL COURT OF AUSTRALIA
Wade v J Daniels and Associates Pty Ltd [2020] FCA 1708
File number(s): VID 153 of 2019 Judgment of: O'BRYAN J Date of judgment: 27 November 2020 Catchwords: CONSUMER LAW – services supplied to a consumer facing foreclosure on a home loan mortgage – alleged breach of contract and failure to comply with consumer guarantees – alleged misleading and deceptive conduct – alleged unconscionable conduct – nature and scope of services supplied – where the consumer disclosed to the supplier that the purpose of seeking services was to retain her home – whether supplier agreed or represented that its services would provide consumer with a long term solution that would enable the consumer to retain her home – whether supplier agreed or represented that supplier would procure a refinance of the consumer’s home loan – whether supplier knew that consumer would be unable to maintain loan repayments and that the supplier’s services would not prevent the bank from taking possession of the consumer’s home – whether the removal of a credit impairment from the consumer’s credit file provided any benefit to the consumer in retaining her home
PRACTICE AND PROCEDURE – application to re-open case after judgment reserved – applicable principles – application refused
STATUTORY INTERPRETATION – meaning of the phrase “financial services” in s 12BAB of the Australian Securities and Investments Commission Act 2001 (Cth) – whether a service involving negotiations with a bank to defer recovery action and to agree temporary reductions in repayments is a financial service
Legislation: Australian Securities and Investments Commission Act 2001 (Cth) ss 12AB, 12BAA, 12BAB, 12CB, 12DA, 12ED
Competition and Consumer Act 2010 (Cth) ss 84(2), 130A, 131A, 137B, 139B(2)
Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 2, 18, 21, 22, 60, 61, 236, 267(3), 268, 275
Evidence Act 1995 (Cth) s 128
Federal Court of Australia Act 1976 (Cth) ss 37M, 43, 51A(1)(a), 52
Wrongs Act 1958 (Vic)
Federal Court Rules 2011 (Cth) r 39.06
Cases cited: Ample Source International Ltd v Bonython Metals Group Pty Ltd (No 6) [2011] FCA 1484; 285 ALR 488
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; ATPR 42-447
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2020] FCAFC 130; 381 ALR 507
Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2019] FCA 1284; 139 ACSR 52
Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 93 ALJR 743
Australian Securities and Investments Commission v Narain (2008) 169 FCR 211
Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
CCP Australian Airships v Primus Telecommunications Pty Ltd [2004] VSCA 232; (2005) ATPR 42-042
David Jones Ltd v Willis (1934) 52 CLR 110
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Effem Foods Ltd v Nicholls [2004] NSWCA 332; ATPR 42-034
F.Y.D Investments Pty Ltd v Promptair Pty Ltd [2017] FCA 1097
Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52
Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49
International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company (1958) 100 CLR 644
Jenyns v Public Curator (Qld) (1953) 90 CLR 113
The “Juliana” (1822) 2 Dods 504
Kelly v The Queen (2004) 218 CLR 216
Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193
King (Trustee), in the matter of Zetta Jet Pte Ltd v Linkage Access Limited [2018] FCA 1979
Let’s Go Adventures Pty Ltd v Barrett [2017] NSWCA 243
Miller & Associates Insurance Broking Pty Ltd v BMW Australia (2010) 241 CLR 357
Moore v Scenic Tours Pty Ltd [2020] HCA 17; 94 ALJR 481
O’Grady v Northern Queensland Company Ltd (1990) 169 CLR 356
Olson v Keefe (No 3) [2018] FCA 2001
Oshlack v Richmond River Council (1998) 193 CLR 72
Paciocco v Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199
Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525
PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Services (1995) 184 CLR 301
Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370
Ruddock v Vadarlis (No 2) (2001) 115 FCR 229
Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; 339 FLR 244
Smith v New South Wales Bar Association (1992) 176 CLR 256
Spotlight Pty Ltd v NCON Australia Ltd (2012) 46 VR 1
Trade Practices Commission v Sun Alliance Australia Ltd (1994) ATPR 41-286
Walplan Pty Ltd v Wallace (1986) 8 FCR 27
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 413 Date of hearing: 14, 15, 16, 29 October 2019 and 17 December 2020 Counsel for the Applicant: C H Truong QC, L F Alampi, M W Guo Solicitor for the Applicant: Consumer Action Law Centre Counsel for the Respondent: S Clement Solicitor for the Respondent Macpherson Kelly
ORDERS
VID 153 of 2019 BETWEEN: BRENDA MAREE WADE
Applicant
AND: J DANIELS AND ASSOCIATES PTY LTD (ACN 159 769 534)
Respondent
ORDER MADE BY:
O'BRYAN J
DATE OF ORDER:
27 NOVEMBER 2020
THE COURT ORDERS THAT:
1.The applicant’s interlocutory application dated 10 December 2019 seeking leave to re-open the applicant’s case be dismissed.
2.The respondent pay to the applicant the sum of $2,000 plus interest from 10 November 2017 to the date of judgment at the rate specified in Section 2 of the Federal Court Interest on Judgments Practice Note (GPN-INT) (Judgment Sum).
3.Interest is payable on the Judgment Sum from the date of judgment to the date of payment at the rate specified in r 39.06 of the Federal Court Rules2011 (Cth).
4.The applicant’s amended originating application be otherwise dismissed.
5.The applicant pay 50% of the respondent’s costs of the proceeding.
6.The parties have leave to apply to the Court by written notice within 14 days to vary paragraph 5 of these orders or seek further orders consequent upon the judgment of the Court.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
O’BRYAN J:
A. INTRODUCTION
Until November 2017, the applicant, Ms Wade, was the owner of a house in the suburb of Craigieburn in the city of Melbourne in Victoria. In 2011, Ms Wade refinanced her home loan with the National Australia Bank (NAB), which took a mortgage over the property as security. In the first half of 2016, Ms Wade was in persistent default under her NAB home loan. In mid‑July 2016, NAB gave notice to Ms Wade that it intended to issue proceedings for possession of her home and recovery of the home loan.
At that time, Ms Wade engaged the respondent, J Daniels and Associates Pty Ltd (JDA), to assist her. Three contracts were entered into and certain services were provided in the period from July to December 2016. The scope of JDA’s contractual engagement, and the promises made, were in dispute between the parties. Nevertheless, it is uncontroversial that, on behalf of Ms Wade, JDA negotiated a deferral of NAB’s foreclosure proceedings and then a temporary adjustment to Ms Wade’s repayment obligations with NAB. Ultimately, Ms Wade fell back into arrears and her house was sold in September 2017 by arrangement with NAB to repay the home loan and settlement of the sale occurred on 10 November 2017.
The evidence showed that two other companies also provided services to Ms Wade in relation to her financial predicament: Australian Real Estate Group (AREG) and National Home Loan Group (NHLG). The relationship between JDA, AREG and NHLG and the services each offered and provided were matters of dispute. Ms Wade alleged that AREG was an agent of JDA.
JDA charged Ms Wade a total amount of $9,832 for services rendered and costs incurred. JDA also lodged a caveat over Ms Wade’s house to secure payment of the amounts charged. When the sale of Ms Wade’s home was completed on 10 November 2017, part of the sale proceeds was applied in payment of the amount charged by JDA (and the caveat was discharged).
By her amended statement of claim filed on 7 October 2019, Ms Wade alleges that JDA, in providing services to her under and in connection with the three contracts:
(a)breached the terms of the contracts, including the “due care and skill” and “fitness for purpose” warranties implied by s 12ED of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), alternatively failed to comply with the “due care and skill” and “fitness for purpose” consumer guarantees in ss 60 and 61 of the Australian Consumer Law (ACL) (being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA)) (breach of contract and consumer guarantee claim);
(b)engaged in misleading or deceptive conduct in contravention of s 18 of ACL and/or s 12DA of the ASIC Act (misleading conduct claim); and
(c)engaged in unconscionable conduct in contravention of s 21 of the ACL and/or s 12CB of the ASIC Act (unconscionable conduct claim).
By her amended originating application filed on 7 October 2019, Ms Wade sought declaratory relief and damages or compensation for the loss caused by that wrongful conduct. The amount of the loss claimed was the amount paid to JDA plus unspecified loss for distress, physical inconvenience and disappointment.
The dealings between Ms Wade and JDA were the subject of material dispute. Ms Wade gave vive voce evidence of her recollection of the relevant events and communications with representatives of JDA. The communications largely occurred by telephone or by email. The telephone communications were recorded and the recordings and transcripts of the recordings were adduced in evidence. In material respects, Ms Wade’s recollection of both telephone and email communications with JDA (and other entities) was shown by the evidence to be inaccurate, partial or incomplete.
For the reasons explained below, I have found that, in supplying services under the second contract (involving the removal of a credit impairment from Ms Wade’s credit file in October 2016), JDA:
(a)breached its contract with Ms Wade in failing to consult with her;
(b)failed to comply with the consumer guarantee in s 61 of the ACL in that the service was not reasonably fit for the disclosed purpose of assisting Ms Wade to retain her home; and
(c)engaged in unconscionable conduct in contravention of s 21 of the ACL.
I otherwise dismiss the claims made by Ms Wade.
The monetary amount claimed by Ms Wade in this proceeding is very modest. Ordinarily, such a claim would be brought in a Tribunal (such as the Victorian Civil and Appeals Tribunal) or a lower court where the legal costs for all parties would be far more modest than a proceeding in the Federal Court. Ms Wade was represented in this proceeding by the Consumer Action Law Centre (CALC). CALC brought the proceeding in the Federal Court because it believed that the issues raised in the proceeding have wider application and it was appropriate for the issues to be considered by this Court.
I accept that the issues raised in this proceeding potentially have wider application. In its contracts, JDA describes itself as a “specialised consultancy who assist individuals and companies in home loan distress” and “specialised consultants who provide assessment and consulting services in respect of credit reporting”. The evidence shows that JDA provides advocacy services to persons who are experiencing financial difficulty with their home loans. In the normal course, it can be expected that other companies provide similar services. It can also be expected that many clients of JDA and similar suppliers will be financially and emotionally vulnerable. Many clients may have limited financial knowledge and limited experience of, or confidence in, negotiating with banks and will be reliant on suppliers such as JDA for advice and assistance. The provisions of Australia’s consumer laws are framed to protect consumers in vulnerable circumstances. In particular, the consumer guarantees in ss 60 and 61 of the ACL are designed to ensure that services are supplied with due care and skill and are reasonably fit for the purpose disclosed to the supplier by the consumer. The prohibition of unconscionable conduct in s 21 of the ACL is intended to ensure that suppliers do not exploit, take advantage of or deliberately harm consumers. Those legislative obligations require that companies supplying services to consumers ensure that the services are suitable and appropriate for the consumer. The common law maxim “caveat emptor” and contractual limitations and exclusions must give way to the legislative obligations. The statutory consumer laws will be contravened if companies take advantage of vulnerable consumers and supply services that are unsuitable and inappropriate, thereby profiting from the consumer’s vulnerability (as opposed to profiting from the provision of needed services).
Further, in some circumstances, Australia’s consumer laws may require a supplier, dealing with a vulnerable consumer, to enquire about the consumer’s needs and investigate the consumer’s circumstances. Obligations of that kind may arise under both the “due care and skill” and “fit for purpose” consumer guarantees, and also under the prohibition of unconscionable conduct. However, issues of that kind do not arise in this case. Ms Wade did not allege that JDA failed to comply with the consumer guarantees, or acted unconscionably, by failing to enquire about or investigate Ms Wade’s circumstances.
In closing submissions, Ms Wade’s case was framed simply and directly: it was never realistically possible for Ms Wade to keep her home, refinancing or not, which was her disclosed purpose for engaging the services of JDA, and JDA as a purported expert assisting persons in home loan distress either actually knew, or at least ought to have known, that that was the case. The case so framed went beyond the pleaded case. Ms Wade did not allege that JDA ought to have known that it was never realistically possible for her to keep her home. She only alleged that JDA knew that. Regardless, I have rejected the central contention advanced by Ms Wade on a number of bases. First, the services offered and provided by JDA involved a temporary reprieve from foreclosure by NAB and JDA never offered or promised anything else. The temporary reprieve was to afford Ms Wade an opportunity to explore a refinancing and, when it became apparent that that could not be achieved at that time, to provide Ms Wade with time to consolidate her financial positon with the hope that she would be able to meet her home loan repayments and retain her home. Second, JDA did not know that there was no realistic prospect that Ms Wade could keep her home. Third, and in any event, I am not satisfied on the evidence that there was no realistic prospect that Ms Wade could keep her home. Save in respect of the removal of a credit impairment pursuant to the second contract, the evidence does not establish that JDA supplied services to Ms Wade in circumstances where JDA knew that the services had no benefit for Ms Wade.
B. OVERVIEW OF THE EVIDENCE
Most of the evidence adduced in the proceeding was documentary. As noted earlier, that included recordings of telephone communications between Ms Wade and JDA and transcripts of those recordings. All of the evidence was adduced by Ms Wade. JDA elected not to call any additional evidence.
Ms Wade’s financial circumstances
Testimonial and documentary evidence was adduced by Ms Wade as to her financial circumstances during 2014 to 2016, but the evidence was piecemeal. The documentary evidence principally comprised bank statements for her bank accounts for limited periods of time. The bank accounts were:
(a)the NAB home loan account ending 9898;
(b)an ING transaction account ending 4144; and
(c)an ANZ transaction account ending 7581 (which had an overdraft of $1,000).
Ms Wade confirmed in evidence that she had only two accounts (apart from the home loan) which were the ING and ANZ accounts. Ultimately, the statements that were produced provided only a limited picture of Ms Wade’s financial circumstances, particularly in relation to her expenditure. As discussed further below, the difficulty in making any findings with respect to Ms Wade’s necessary or discretionary spending is exacerbated by the fact that Ms Wade made many cash withdrawals from her accounts using ATM or EFTPOS cash withdrawal facilities. Ms Wade bore the onus of proof and it was within her power to obtain complete banking records and provide a more comprehensive picture of her financial circumstances at the relevant time, but she failed to do so.
Dealings between Ms Wade and JDA, AREG and NHLG
Documentary evidence was also adduced by Ms Wade comprising the telephone and email communications between her and each of JDA, AREG and NHLG, as well as internal business records of each of those companies. The business records of JDA were provided to Ms Wade in the course of discovery and the business records of AREG and NHLG were obtained by Ms Wade by the issue of subpoenas.
Ms Wade gave vive voce evidence in her case and was cross-examined. That evidence is considered below. I find that Ms Wade was not a reliable witness. It is inevitable that an individual’s recollection of events and conversations that occurred up to two years prior to giving evidence is unlikely to be completely accurate. However, Ms Wade’s testimony about events was frequently contradictory. More significantly, and as discussed below, Ms Wade persisted with evidence about conversations with JDA that were shown to be inaccurate by transcripts of recordings of conversations. Ms Wade also sought to adhere to the case formulated on the pleadings, that her first contact was with JDA and that AREG was an agent (or division) of JDA, when that case was shown to be inconsistent with the documentary evidence.
In examination in chief, Ms Wade gave evidence to the effect that:
(a)JDA were the people whom Ms Wade first had contact with;
(b)JDA said that they would obtain refinancing for her loan;
(c)she was not kept up to date about the course of dealings with NAB or about the seeking of alternative finance;
(d)she was never told that it may not be possible for her to refinance her loan;
(e)she did not know that JDA was negotiating with NAB on her behalf or that JDA had negotiated terms with NAB to give Ms Wade time to seek refinancing; and
(f)when the third contract expired, JDA made no further contact with her and refused to return her calls.
I reject all of that evidence. It is contradicted by the records of telephone and email communications between JDA and Ms Wade that were in evidence, as discussed below. The evidence shows that each of JDA, AREG and NHLG diligently sought to contact and inform Ms Wade on regular occasions, but frequently they were unable to get through to Ms Wade and Ms Wade did not return messages to call back. Ultimately, I have concluded that many of the statements made by Ms Wade when giving evidence were not merely inaccurate but were also dishonest.
Ms Wade was also cross-examined about her appointment as a director of certain insolvent companies in 2019 and the circumstances of her appointment. It appears that Ms Wade was paid for accepting the appointments, but the appointments have now resulted in legal proceedings being issued against her in respect of the appointments and regulatory investigations being undertaken in respect of the persons behind the appointments. Counsel for JDA submitted that the evidence was relevant to Ms Wade’s credit. In the course of questioning, I had reason to issue a certificate under s 128 of the Evidence Act 1995 (Cth) in respect of certain answers given by Ms Wade. In my view, the evidence was of very marginal relevance and I have not placed any reliance upon it. It is unnecessary to refer to it further.
Expert evidence
Ms Wade also called an expert witness, Jason Fallscheer, and tendered an expert report from Mr Fallscheer. Mr Fallscheer holds a Bachelor of Business Finance from Deakin University and a Diploma in Finance and Mortgage Broking Management. He worked in business and corporate banking in Australia and England from 1993 to 2018 at a number of different banks. At the time of giving evidence, Mr Fallscheer was employed by Pitcher Partners Finance as Client Director where he advised clients on banking, funding and debt related matters. Mr Fallscheer was asked to express his opinion on certain questions concerning the likelihood of Ms Wade being able to refinance her NAB home loan. The questions were:
a. Was it reasonably possible for Wade to obtain finance for the purpose of refinancing her Home Loan from another Credit Provider in July 2016 having regard to the market and her personal and financial circumstances as set out in the SoFP (with the assumption that child support payments would cease in March 2017) as set out above and in the statement of claim?
b. If a person required a loan for $195,061.09 and could afford repayments of $700.00 per month, was there a loan available to meet those requirements in July 2016?
c. If a person required a loan for $195,061.09 and could afford repayments of $900.00 per month, was there a loan available to meet those requirements in July 2016?
d. Whether or not there was a loan available on the market to meet the needs set out in paragraphs b. and c. above, what interest rates and loan term would be applicable for such a loan if the repayments were set at either:
i. $700.00 per calendar month
ii. $900.00 per calendar month
e. Would a diligent and prudent lender responsibly provide a loan to a 51 year old with a 20, 25 or 30 year term? If so, what would those repayments be?
Mr Fallscheer’s report and the evidence given in cross-examination is considered below.
Relationship between JDA, AREG and NHLG
An ASIC company extract for JDA showed that the company was incorporated on 3 August 2012. From 13 May 2014 its registered office and principal place of business had been located at Unit 1005, 343 Little Collins Street, Melbourne in Victoria. James Daniels was a director and secretary from the date of incorporation until 28 March 2019. Robert Mancy became an additional director and secretary on 1 July 2014 and, at the time of trial, was the sole director and secretary. The company was originally owned by James Daniels but, at the time of trial, was owned by Robert Mancy.
An ASIC company extract for AREG showed that the company was incorporated on 10 August 2010. From 17 May 2014 its registered office and principal place of business had been located at Unit 37, 777 Bell Street, Preston in Victoria. Since 2 March 2011, its sole director, secretary and shareholder was Maclaren Pow Law.
An ASIC company extract for NHLG showed that the company was incorporated on 7 April 2014. From 22 March 2018 its registered office and principal place of business had been located at 3 Hossack Avenue, Coburg North in Victoria. Kiara Halley has been a director and secretary and the sole shareholder since incorporation. For a brief period of two months in 2014, Pierre Haddad was also a director.
No evidence was adduced of any corporate relationship between JDA, AREG and NHLG. The factual findings sets out below establish that there was a commercial relationship between the companies in that:
(a)AREG referred Ms Wade to JDA to provide services involving negotiating with NAB to defer recovery activity in respect of the home loan; and
(b)AREG referred Ms Wade to NHLG to explore alternative finance options for her home loan.
It is not alleged that either AREG or NHLG charged Ms Wade any fees for work done. Only JDA charged fees and the proceeding has been issued solely against JDA. Ms Wade alleges, though, that AREG acted as agent of JDA at all times. The basis for that allegation rested solely on the apparent commercial relationship and dealings between AREG and JDA. However, the fact that AREG and JDA might have a commercial relationship involving the referral of clients and sharing of information does not establish an agency relationship between them. The evidence set out below does not establish any basis for inferring an agency relationship.
C. FACTUAL FINDINGS
Ms Wade’s personal and financial circumstances up to June 2016
As noted earlier, Ms Wade gave evidence vive voce rather than by affidavit. Her evidence in chief did not provide a comprehensive picture of her personal and financial circumstances in the period to June 2016. Ms Wade tendered a range of documents relevant to that question. However, the documents were far from complete and raised many questions about her income and expenses during that period.
Ms Wade lived at 4 Winsham Court, Craigieburn in Victoria from 1989 until the house was sold in 2017. She built the house with her former husband, with a joint mortgage loan from Citibank. Ms Wade’s two daughters were born and raised in the house.
From the time her eldest daughter was born (in 1994), Ms Wade was treated for depression and anxiety. Her treating doctor until the present day has been her general practitioner, Dr Psycharis. Ms Wade has taken anti-depressant medication over time.
Ms Wade and her former husband divorced in 2004. Ms Wade became the sole owner of the house in Craigieburn and refinanced the loan through Members Equity.
A letter dated 29 June 2011 from Homeside (a division of NAB) to Ms Wade recorded that a drawdown on Ms Wade’s credit facility took place on that day in the amount of $190,000 (which is the loan at the centre of this proceeding, being account ending 9898). The monies were applied in a number of ways, including payment of $166,579.11 to Perpetual Limited. It was common ground that that was a repayment of a loan to Perpetual. Ms Wade explained in evidence that the loan from NAB enabled her to consolidate her existing home loan and car loan. The letter recorded an initial interest rate on the loan of 7.1% pa, a minimum monthly repayment of $1,287 with fortnightly repayments of $644 and a loan term of 30 years.
At that time, Ms Wade was employed by Bill Kerry Machinery Transport Pty Ltd (Bill Kerry) as a clerical assistant and cleaner. Ms Wade commenced that employment in 2003. In cross‑examination, Ms Wade stated that she was earning about $530 a fortnight from Bill Kerry as at the time of the commencement of the NAB loan. It is significant to note that that was less than the Centrelink Newstart benefits that Ms Wade was receiving from 2014 when she fell into default under her home loan.
Ms Wade gave somewhat inconsistent evidence about her employment in early 2014. At first, Ms Wade said that she finished up at Bill Kerry around 2014. She said that, in early 2014, she fractured her knee in a workplace accident and went on to WorkCover payments. Ms Wade was also treated for anxiety and depression and she began to fall behind in her mortgage repayments. Subsequently, Ms Wade said that she was sacked by Bill Kerry because she did not get along with one of the owners and was suffering depression, and went onto Centrelink. Ms Wade did not state when that occurred, but I infer from her dealings with NAB, referred to below, that it occurred in 2013 or early 2014.
On 20 March 2014, NAB wrote to Ms Wade advising that a fortnightly loan repayment of $530.41 sought to be drawn from her ING transaction account ending 4144 by way of direct debit was dishonoured. I will refer to such letters as a dishonour letter. The second page of the dishonour letter explained options available to a borrower if they were experiencing financial difficulty. One of the options was to go to the Financial Services Ombudsman (FOS) and have enforcement action put on hold while any complaint was considered. In cross-examination, Ms Wade confirmed that she was aware of that option.
On 3 April 2014, Ms Wade received a further dishonour letter from NAB.
At about that time, Ms Wade made an application to NAB for financial assistance. A copy of the application, being an online form, was tendered in evidence. The document was undated but a handwritten date of May 2014 appeared at the top and Ms Wade confirmed that the application was made at that time. Ms Wade gave evidence that she gave instructions to NAB for the online form to be completed. The form stated that Ms Wade had had a substantial amount of time off work due to illness and she had run out of sick pay; this resulted in her having time off work without pay, thus not having enough funds to meet expenses; the situation was improving as a result of medication and counselling. In terms of her financial position, the form recorded that:
(a)Ms Wade was employed part time by Bill Kerry as a clerical assistant and had been employed for 3 years or more;
(b)Ms Wade had a Centrelink debt of $5,000;
(c)Ms Wade’s fortnightly income after tax was $530 and she also received a fortnightly Centrelink benefit of $690 and received child maintenance of $650; and
(d)Ms Wade’s monthly household expenses were around $2,300 per month.
As already noted, there is a degree of inconsistency between the oral testimony given by Ms Wade and the financial assistance application. The application refers to Ms Wade receiving fortnightly income of $530, which I infer is a reference to income from Bill Kerry, as well as Centrelink benefits. Ms Wade’s bank statements for the period from 1 April 2014, referred to below, show that Ms Wade was receiving the Newstart benefit, which is an unemployment (income support) benefit, and do not show the receipt of any income from Bill Kerry. There is no evidence that suggests that Ms Wade was receiving any form of WorkCover benefits. Despite that, and despite Ms Wade’s earlier testimony that she had been sacked by Bill Kerry, when asked about the NAB financial assistance application, Ms Wade said that she was employed by Bill Kerry until she began caring for her father in February 2015. I reject that evidence. The evidence supports the conclusion that, by 1 April 2014, Ms Wade was no longer employed by Bill Kerry and was not receiving income from employment (contrary to what was stated in the financial hardship application), but was receiving Newstart benefits, Family Tax benefits and Child Support payments from her former husband. The application did not provide any breakdown of the estimated monthly household expenses of $2,300. However, a subsequent financial hardship application submitted to NAB at the end of October 2014 provided the same estimate of household expenses, comprising loan repayments of $1,210 and other household expenses of $1,100.
On 15 May 2014, Ms Wade received a further dishonour letter from NAB.
On 20 May 2014, NAB wrote to Ms Wade and informed her that her application for relief in respect of her home loan had been approved, that she would not be required to make repayments for the next 3 months (expiring 29 August 2014) but interest would continue to accrue on her loan.
Ms Wade’s bank statement in respect of her ING account ending 4144 for the period 1 April 2014 to 30 June 2014 showed that Ms Wade was receiving a fortnightly Centrelink Newstart benefit (which varied in amounts between $530.78 and $480.78), a fortnightly Family Tax Benefit payments (totalling $160.72) and, in each of April and May, a Child Support payment from her former husband of $1,400. The statement also showed regular payments for various household goods and services such as Woolworths, Council rates, insurances, electricity and gas, home telephony (Optus), mobile phone (Vodafone) and Foxtel. The bank statement also records the dishonour of the attempted loan repayment on 2 April 2014 due to a lack of funds. No loan repayments were made from the account during the period of the statement.
The ING bank statement also showed regular cash withdrawals via ATMs and EFTPOS transactions (the cash withdrawal accompanying an EFTPOS purchase transaction). In April, the cash withdrawals totalled approximately $1,250; in May the cash withdrawals totalled $1,150; in June the cash withdrawals totalled approximately $650. The cash withdrawals showed a somewhat unusual pattern in that multiple withdrawals were often made on the same day. For example, on 10 April 2014, a cash withdrawal of $200 was made with an EFTPOS purchase at Big W Craigieburn, followed by two separate cash withdrawals of $100 and $80 from a Westpac ATM in Craigieburn. On 30 April 2014, a cash withdrawal of $200 was made with an EFTPOS purchase at Woolworths Craigieburn, followed by two separate cash withdrawals of $200 each from ATMs. On 29 May 2014, two separate cash ATM withdrawals of $200 each were made. On 31 May 2014, an EFTPOS cash withdrawal of $200 was made from the Craigieburn Sporting Centre followed by a cash withdrawal of $200 from a nearby ATM. On 19 June 2014, an ATM cash withdrawal of $100 was made followed by an EFTPOS cash withdrawal of $200.
Ms Wade’s cash expenditure, and particularly her expenditure on gambling activities such as poker machines (colloquially referred to as pokies) was the subject of cross-examination and is considered below.
The ING bank statement also showed that Ms Wade made a number of transfers to and from her ANZ account ending 7581, indicating that the ANZ account was in existence during that period. However, no bank statement for that account in that period was adduced in evidence.
On 30 July 2014, NAB wrote to Ms Wade reminding her that monthly repayments on her home loan would recommence on 29 August 2014 in an amount of $1,060.82. For reasons that were not explained, on 7 and 21 August 2014, Ms Wade received further dishonour letters from NAB (before repayments were due to recommence on 29 August 2014).
Ms Wade’s bank statement in respect of her ING account ending 4144 for the period 1 July 2014 to 30 September 2014 showed similar receipts and payments to the previous quarter. Ms Wade received a child support payment of $1,400 on 1 July 2014, which I infer related to the previous month as a further payment of $1,400 was received on 29 July 2014. In August, the child support payments reduced to $700. Ms Wade continued to receive the fortnightly Centrelink Newstart benefit and the fortnightly Family Tax Benefit payments (which by mid‑August had increased to around $197). She also received the Schoolkids Bonus of $410 and an Income Support Bonus of $686.10. The statement also showed similar payments for various household goods and services and also a similar pattern of cash withdrawals. In July, the cash withdrawals totalled $3,060; in August, the cash withdrawals totalled $1,640; in September, the cash withdrawals totalled $1,430. The cash withdrawals had a similar pattern to the previous quarter in that multiple withdrawals were often made on the same day. For example, on 1 July 2014, a withdrawal of $500 and a withdrawal of $200 were made from an ATM on the Corner of Craigieburn Road West. On 17 July 2014, an EFTPOS cash withdrawal of $150 at Woolworths Craigieburn was made, as well as an ATM withdrawal at BP Craigieburn of $100 and an ATM withdrawal of $100 at Craigieburn Safeway. On 18 July 2014, an ATM withdrawal of $800 was made as well as an EFTPOS cash withdrawal of $200. That pattern repeated itself many times. No loan repayments were made from the account during the period of the statement.
Again, no bank statements for Ms Wade’s ANZ account in that period were adduced in evidence.
Ms Wade gave evidence that she applied to NAB in September 2014 over the telephone for an extension of the relief from repayments in respect of her home loan, and NAB approved the extension. There was no documentary record of that extension. I accept Ms Wade’s evidence, but the extension appears to have been for September 2014 only because Ms Wade continued to receive dishonour letters in October 2014.
No bank statements (other than for the home loan) were adduced in evidence for the period from 1 October 2014 until 1 January 2016.
In October 2014, Ms Wade lodged a medical certificate with Centrelink signed by Dr Psycharis on 6 October 2014 stating that Ms Wade was suffering from anxiety with depression and would be unfit for work or study for a period of 3 months until 6 January 2015. An objection was taken to the truth of the contents of the document on the ground that the doctor had not been called. Ms Wade gave evidence that she saw Dr Psycharis and received the diagnosis and certificate so that she would not be required to attend work interviews in order to retain Centrelink Newstart benefits. I accept that evidence.
On 16 and 30 October 2014, Ms Wade received further dishonour letters from NAB.
On 31 October 2014, Ms Wade sent an email to “[email protected]” attaching a written application for variation of her home loan contract due to financial hardship. A copy of the application was tendered in evidence. It was signed by Ms Wade on 23 September 2014. The application contained two statements giving the reason for the application. The first, typewritten, stated (errors in original):
Was having a substantial amount of time of work due to diagnosed depression & anxiety. medication was helping depression but anxiety was becoming worst as the pressure from my boss about going back to work permanently was mounting, they could no longer accommodate to my absences, so eventually my employment was terminated. I have decided to study a short course in computerised book keeping. then I'm starting my own business. I am only now beginning to control my anxiety & depression with changing doses of medication, councilling & numerous self help journals.
The second, which was handwritten, stated (errors in original):
I would like to apply for extension on hardship till end of December, I have had a return of deppresive illness which set back my plans of studying & opening own book keeping business. I am beginning to now stabilise & am going to enquire on the short course needed to complete my studies & begin recruiting customers. I am very aware that I have already been granted time off from paying repayments & I'm also aware that the principal of the loan is rising, thus being the reason I wish to only apply for hardship till the end of December.
The application form also stated that:
(a)Ms Wade’s monthly income (after tax) comprised Centrelink benefits of $1,631.50 and child maintenance of $700;
(b)Ms Wades’ monthly expenditure comprised loan repayments of $1,210 and other expenditure of $1,100, totalling $2,331.50.
A further email was sent by Ms Wade to “[email protected]” on 2 November 2014 again attaching the hardship application.
Ms Wade gave evidence that the statements in the hardship application were true and correct. I generally accept that evidence. However, Ms Wade also gave evidence that her anxiety was becoming worse because of the pressure from her “boss”, which I understand is a reference to the owner at Bill Kerry with whom Ms Wade had had a falling out. She said that she was being pressured to return to work, but Ms Wade said that she could not face going to work to face her “boss”. I reject that evidence for the reasons already given. It is inconsistent with her earlier evidence that she was sacked and that caused her to fall behind in her repayments. It is also inconsistent with the fact that, by this time, Ms Wade had been on the Newstart benefit for at least 6 months. It is also inconsistent with the lodgement of the medical certificate with Centrelink the purpose of which was to exempt her from applying for jobs.
On 6 November 2014, NAB wrote to Ms Wade about the arrears on her home loan which then stood at $5,720.66. The letter stated that NAB had been trying to get in touch with Ms Wade but had not been able to reach her. The letter stated that NAB wished to see how they could assist Ms Wade, but required Ms Wade to contact the bank to avoid further collection activities. The letter did not refer to the hardship application. The evidence did not establish whether NAB actually received the hardship application (there was no evidence about the “nabcare” email address used by Ms Wade) or whether NAB responded to it. Nor did the evidence show any further steps taken by Ms Wade either in respect of the hardship application or in response to NAB’s letter.
On 13 and 27 November 2014, Ms Wade received further dishonour letters from NAB.
On 12 December 2014, NAB sent Ms Wade a formal default notice under her home loan contract. At that time, the arrears on the loan were $6,251.07. The letter demanded repayment of that amount within 31 days failing which the whole of the loan would become repayable and foreclosure might then follow. The letter contained standard information about applying to the bank to vary the contract if Ms Wade was experiencing financial hardship, and the ability to apply to the FOS to review the bank’s decision with respect to varying the contract. The letter also stated that Ms Wade could contact a financial counsellor (and provided a free call number) and had the right to ask the bank to postpone any enforcement action. The letter contained hand-written annotations. Ms Wade gave evidence that the annotations were made by her and recorded details from one or more telephone conversations she had at about that time with a representative of NAB and a financial counsellor recommended by NAB. Ms Wade’s recollection of the annotations and the telephone conversations was limited, but the annotations indicate that Ms Wade discussed a 6 month variation to her home loan contract to reduce the repayment obligations during that period.
On 29 December 2014 and 8 and 22 January 2014, Ms Wade received further dishonour letters from NAB.
Ms Wade gave evidence that, in February 2015, her father, John, was diagnosed with cancer and came to live with Ms Wade and her daughters. Ms Wade became a full time carer for her father. Ms Wade began to receive a Centrelink Carer’s benefit (instead of Newstart). Ms Wade’s father passed away in about February 2016. Ms Wade said that caring for her father at home put a strain on the whole family. As the cancer took hold, her father’s disposition changed and made circumstances very difficult for Ms Wade. At some point, which was not specified by Ms Wade, her father went into palliative care. During that period, Ms Wade said that she was trying to maintain her father’s business, which was a mobile mechanic business (using a van to deliver specialist hand tools to customers such as motor mechanics). However, Ms Wade conceded that she did not know anything about tools. It became apparent during the course of evidence that Ms Wade never took any real steps to conduct her father’s business.
On 4 February 2015, Vodafone sent a letter of demand to Ms Wade stating that an amount of $933.69 was overdue and demanding repayment of a total balance of $965.62. The letter stated that Ms Wade had failed to respond to all prior Vodafone communications which had caused Vodafone to demand repayment. The letter asked Ms Wade to make contact within 72 hours, after which recovery action might be taken. The letter contained handwritten annotations. Ms Wade gave evidence that the annotations recorded a telephone conversation with Vodafone in which she agreed to pay $150 per fortnight.
On 18 February 2015, Vodafone sent a further letter to Ms Wade stating that it had cancelled her service. The letter contained handwritten annotations. Ms Wade gave evidence that the annotations recorded amounts that Ms Wade had paid Vodafone (which were less than $150 per fortnight) and a reminder to herself that she needed to pay $150 per fortnight.
On 17 March 2015, Australian Debt Recoveries wrote to Ms Wade regarding her outstanding debt to Vodafone in an amount of $1,207.03 and demanding immediate repayment. The letter stated:
Our client may exercise their right to place a default listing on your credit file if they have not already done so (a default listing will stay on file for up to five years and may impact on your ability to obtain credit in the future) and/or additionally, our client may exercise their right to commence legal action to recover this debt.
As set out below, the evidence showed that a credit impairment in respect of the Vodafone debt was recorded on Ms Wade’s credit file and was subsequently removed in October 2016 through action taken by JDA on behalf of Ms Wade pursuant to the second contract entered into.
On 14 May 2015, Mercantile Legal wrote to Ms Wade on behalf of Australian Debt Recoveries regarding her outstanding debt to Vodafone advising that if the debt was not repaid within 10 days legal proceedings would be commenced.
In the first half of 2015, there was very little documentary evidence of communications between Ms Wade and NAB. On 27 April 2015, Ms Wade sent an email to a NAB representative called Adam suggesting that she may be able to apply her superannuation toward repayment of her home loan and asking Adam to confirm whether the bank required a copy of her father’s will. On 3 June 2015, Ms Wade again sent an email to Adam stating that she would be paying two instalments that weekend. The email also stated that “unfortunately after 11 years of my ex husband paying Child Support without any problems whatsoever, last month he just decided I was getting to (sic) much so he halved the payments he was sending me”. That statement was inaccurate in so far as the reduction had occurred earlier than suggested by Ms Wade. The ING bank statements referred to earlier show that the monthly Child Support payments had reduced from $1,400 to $700 in August 2014, some 10 months earlier. Nevertheless, the reduction in Child Support was formalised in a letter from the Child Support Agency to Ms Wade dated 27 July 2015 which stated that, going forward, the Child Support payments would be $701.33 per month.
In respect of the second half of 2015, there was no documentary evidence of communications between Ms Wade and NAB. A bank statement in respect of Ms Wade’s loan account ending 9898 for the period 1 July 2015 to 31 December 2015 showed that Ms Wade made irregular loan repayments during that period. At the beginning of the period, the loan stood at $192,046.56 and, at the end of that period, the loan was slightly higher at $194,311.02.
On or about 20 November 2015, Ms Wade entered into a loan contract with Cash Converters to borrow $720 which required fortnightly repayments over the course of the following 12 months commencing 4 December 2015. The loan had an establishment fee of $120 and monthly fees over the course of the loan of $408. Ms Wade gave evidence that she borrowed those monies for day to day expenses.
On 25 January 2016, Gadens Lawyers wrote to Ms Wade on behalf of NAB regarding the arrears on her loan which then stood at $15,238.81. The letter referred to a telephone call that had occurred on 13 January 2016 and stated that the NAB shared Ms Wade’s willingness to explore possible options to resolve the default. The letter proposed the following arrangements:
…the Bank is willing to defer its enforcement action and allow you time to remedy the default, subject to your compliance with the following conditions:
1. By Friday, 29 January 2016, the Bank is to receive in cleared funds into the Account the amount of $250.82 being the difference of the missed minimum monthly repayments for December 2015.
2.In addition to the payments provided for in paragraph 1, all future repayments are to be made on time and in the amount indicated in the loan agreements.
The next minimum monthly repayment in the amount of $1,060.82 falls due on 28 January 2016 and on the 29th day of each month thereafter. Based on the payments made to date, a further amount of $250.82 will be required to be paid by 29 January 2016.
3. There is to be no further and/or other defaults under the terms of the mortgage or loan agreement.
Kindly confirm your acceptance of the above proposal by Friday, 5 February 2016 by signing and returning a copy of the letter.
If you do not comply with all of the above conditions, the Bank will proceed with enforcement action, without further notice.
Ms Wade signed the letter on 26 January 2016 signifying her agreement to the conditions. On 5 February 2016, Ms Wade sent a copy of the signed letter to Gadens by email.
As stated above, Ms Wade’s father, John, died in about February 2016. Ms Wade said in evidence that she was very upset by his death and could not accept that he had died. Ms Wade also gave evidence that, by that time, her father’s business was not generating income that Ms Wade could use.
The bank statement in respect of Ms Wade’s loan account ending 9898 for the period 1 January 2016 to 30 June 2016 showed that, at the beginning of the period, Ms Wade’s loan stood at $194,311.02. Ms Wade made loan repayments until 15 April 2016, but no further payments after that. The repayments in January and February were approximately $270 per week, and in March and the first half of April were approximately $250 per week. At the end of the statement period, the balance of the loan stood slightly higher than at the beginning, being $195,061.09. In cross-examination, Ms Wade agreed that during the period of 1 January 2016 to mid-April 2016, she was able to make regular payments to NAB on her home loan. It was put to Ms Wade that she had sufficient monies available to continue to meet her loan repayments on an ongoing basis, and could have done so but for her cash expenditure, particularly from mid-April 2016. Ms Wade’s evidence about her cash expenditure is considered below. I found her evidence unsatisfactory. I am not persuaded that Ms Wade was unable to meet her loan repayments during 2016 from her available income. Whether due to a gambling addiction or choices she made about her expenditure, Ms Wade put herself into a position where she had insufficient funds available to make repayments.
Bank statements for Ms Wade’s ING account for the period from 1 January 2016 to mid-July 2016, and her ANZ account for the period from 15 January 2016 to mid-July 2016, were adduced in evidence.
Ms Wade’s bank statement in respect of her ING account ending 4144 for the period 1 January 2016 to 31 March 2016 showed that Ms Wade received a weekly Centrelink Carer’s benefit in alternating amounts each week of $401.25 and $465.75 and a monthly Child Support payment of $700. An additional Centrelink Carer’s benefit of $4,756.05 was paid on 26 February 2016 which I infer was a payment associated with her father’s death. Ms Wade also received two payments (on 4 January 2016 and 18 January 2016) of $500 each designated “CBA Loan Land Rates” which were not explained. The statement showed similar payments for various household goods and services as shown in the ING statements in 2014. The statement also showed significant cash withdrawals, although to some extent those withdrawals were offset by receipt of the additional Centrelink Carer’s benefit of $4,756.05. The cash withdrawals in January totalled approximately $1,270 but the withdrawals in January were generally smaller amounts and more evenly spaced over time. The withdrawals in February totalled approximately $3,750, however, most of them were made following the receipt of the additional Carer’s benefit on 26 February 2016. Two ATM withdrawals of $500 and $600 were made on 26 February 2016; two ATM withdrawals of $200 and $250, as well as an EFTPOS cash withdrawal of $30 were made on 27 February 2016; three ATM withdrawals of $300, $300 and $400 were made on 28 February 2016; and a further EFTPOS cash withdrawal of $200 was made on 29 February 2016. The withdrawals in March totalled approximately $990, although an additional amount of $550 was spent at the TAB.
Ms Wade’s bank statement in respect of her ANZ account ending 7581 for the period 15 January 2016 to 15 March 2016 showed that Ms Wade received a fortnightly Family Tax Benefit totalling approximately $196. Ms Wade also received a Centrelink Carer’s benefit of $123.50 on 29 January 2016 and 12 February 2016. Ms Wade also received another payment of $500 titled “CBA Loan Land Rates” on 29 January 2016 and a payment of $1,000 titled “CBA Probate Balance” on 14 March 2016. The statement also recorded expenditure on a range of household goods and services such as groceries (Woolworths and Coles), electricity and gas and mobile phone (Virgin). The format of the ANZ account statement did not state whether EFTPOS transactions included a cash withdrawal component (in contrast to the ING statements). Generally, though, the ANZ account showed fewer ATM and EFTPOS transactions in comparison to the ING account statement for the same period. Nevertheless, on 15 February 2016, there was an EFTPOS transaction at the Highlands Hotel for $40 (excluding the $2.50 withdrawal fee) and a further EFTPOS transaction at Woolworths that day.
Ms Wade’s bank statement in respect of her ANZ account ending 7581 for the period 15 March 2016 to 13 May 2016 showed that Ms Wade continued to receive a fortnightly Family Tax Benefit totalling approximately $196. The statement also recorded other amounts received by Ms Wade on an almost daily basis between 17 March and 18 April for “CBA Wages”, “John Wade Pay Outstanding”, “CBA Car Maintenance”, “Wade”, “John Wade”, “John Wade Petty Cash”, “John Wade Online Probate”, “John Wade to pay GST”, “John Wade Business Transition”. John Wade was Ms Wade’s father who passed away in February 2016. Ms Wade gave evidence that those amounts were received by her in connection with the management of his business following his death. The amounts paid totalled $7,325. Coincident with those receipts, the statement shows an increase in ATM and EFTPOS withdrawal transactions, with multiple transactions occurring on the one day and often at the same location (for example multiple EFTPOS transactions at Woolworths Craigieburn on the one day in combination with ATM withdrawals). Many transactions occurred at locations with pokie machines. For example, on 21 March there was an EFTPOS withdrawal of $80 at the First and Last Hotel Fawkner and an ATM withdrawal in Fawkner of $100. There were also three separate EFTPOS transactions at Woolworths Craigieburn that day, as well as Visa debit transactions at Foodworks and Coles. On 29 March, there were two ATM withdrawals of $250 and $80, as well as an EFTPOS transaction at Woolworths Craigieburn and Visa debit transactions at Safeway Craigieburn and Coles Craigieburn (the latter shown as 31 March but with an effective date of 29 March). On 30 March, there were three EFTPOS withdrawals of $50 each at the Highlands Hotel Craigieburn, as well as two EFTPOS transactions at Woolworths Craigieburn and Coles Craigieburn. On 31 March, there was a further EFTPOS transactions at Woolworths Craigieburn. On 1 April, there was an EFTPOS withdrawal of $200 at the Craigieburn Sporting Club, as well as an EFTPOS transaction at Woolworths Craigieburn and a further Visa debit transaction at Woolworths Craigieburn. On 2 April, there was an EFTPOS withdrawal of $100 at the Craigieburn Sporting Club (recorded on 4 April but with an effective date of 2 April). On 4 April, there was an EFTPOS transaction at Woolworths Craigieburn and a Visa debit transaction at ALDI (recorded on 6 April but with an effective date of 4 April). On 5 April there were two more EFTPOS withdrawals at the Craigieburn Sporting Club of $100 each as well as an EFTPOS withdrawal at Woolworths Craigieburn. On 6 April, there was an ATM withdrawal of $200 as well as an EFTPOS withdrawal at Woolworths Craigieburn. On 8 April, there was an ATM withdrawal of $500. On 18 April, there were three ATM withdrawals totalling $570 and an EFTPOS withdrawal at Woolworths.
Ms Wade’s bank statement in respect of her ING account ending 4144 for the period 1 April 2016 to 30 June 2016 showed that Ms Wade received a weekly Centrelink Carer’s benefit in alternating amounts each week of $404.45 and $469.45 until 16 May 2016. Ms Wade also received a monthly Child Support payment of $700. The statement showed similar payments for various household goods and services as shown in the previous ING statements. Cash withdrawals in April totalled approximately $1,000; in May they totalled approximately $1,200; and in June they totalled approximately $600. In this period, there were fewer instances where multiple cash withdrawal transactions occurred on a single day. However, on 9 May, there were three EFTPOS cash withdrawals of $100 each, the first two both being at Woolworths Craigieburn and the third at Coles Craigieburn. On 14 May, there were two EFTPOS cash withdrawals of $50 each at the First and Last Hotel Fawkner. On 16 May, there were two EFTPOS cash withdrawals of $100 each at the Craigieburn Sporting Club and a further EFTPOS cash withdrawal of $170 at Woolworths Craigieburn. An internet print out for Ms Wade’s ING account shows further cash withdrawals after 30 June including a withdrawal of $40 at the Highlands Hotel on 11 July.
Ms Wade’s bank statement in respect of her ANZ account ending 7581 for the period 13 May 2016 to 15 July 2016 showed that Ms Wade continued to receive a fortnightly Family Tax Benefit totalling approximately $196. On 27 May 2016, Ms Wade began to receive a weekly Centrelink Newstart benefit of approximately $290. On 14 July 2016, Ms Wade received the Schoolkids bonus of $428. Substantial cash withdrawals from the account are shown totalling at least $400 in May, $790 in June and $850 (as noted earlier, the ANZ statement did not specify whether EFTPOS transactions involved cash withdrawals, although in some instances it is possible to infer a cash withdrawal from the standard withdrawal fee of $2.50). The withdrawals included the following. On 3 June 2016, a withdrawal of $40 was made at the Highlands Hotel and $150 was withdrawn from an ATM at the nearby Bridgehaven Stockland. On 10 June 2016, a withdrawal of $50 was made at the Epping Plaza Hotel. On 16 June 2016, $150 was withdrawn at the Westmeadows Tavern and a further $100 was withdrawn from an ATM at the nearby Caltex Greenvale. On 27 June 2016, $100 was withdrawn at the Craigieburn Sporting Club and a further $100 at the nearby Woolworths Craigieburn. On 15 July 2016, $200 was withdrawn at an ATM in Fawkner and a further $300 at an ATM in Craigieburn. An internet print out for Ms Wade’s ANZ account shows further cash withdrawals of $500 at an ATM at the Highlands Hotel on 18 July 2016, $300 at an ATM on 19 July 2016 and $50 at the Craigieburn Sporting Club on 21 July 2016.
On or about 12 May 2016, Ms Wade entered into a further loan contract with Cash Converters to borrow $322.80 which required 3 fortnightly repayments commencing 27 May 2016. The loan had an establishment fee of $53.80 and monthly fees over the course of the loan of $21.52.
On or about 30 May 2016, Gadens Lawyers wrote to Ms Wade on behalf of NAB regarding the arrears on her loan which then stood at $16,258.57 and enforcement expenses of $1,920.61. The letter referred to a telephone call that had occurred on 27 May 2016 and again stated that the NAB shared Ms Wade’s willingness to explore possible options to resolve the default. The letter contained an offer in similar form to the offer contained in the Gadens’ letter of 25 January 2016 as follows:
As a further gesture of goodwill, the Bank is willing to defer its enforcement action, for the time being, subject to your strict compliance with the following conditions:
1. Commencing on 29 June 2016, the Bank is to receive payment of at least your minimum monthly loan repayments into the Account, and on or before the 29th day of each subsequent month.
Your next minimum monthly loan repayment in the amount of $1,124.47 is due on or before 29 June 2016. Please note that your minimum monthly loan repayments may increase.
2. There is to be no further and/or other defaults under the terms of the mortgage and loan agreement.
If you do not strictly comply with the above conditions (for example, if you fail to pay the full amount of your minimum monthly loan repayments as they fall due on time) the Bank will be unable to assist you any further, and we are instructed to proceed with enforcement action, without further notice.
If you strictly comply with the all (sic) of the above terms for a period of six months, expiring on 29 November 2016 and evidence your ability to service the Account going forward, the Bank will review the matter further after 29 November 2016 with a view to capitalising the Notional Arrears and Enforcement Expenses, that remain owing at that time, onto the Account.
The letter invited Ms Wade to accept the offer by signing a copy of the letter. A signed copy was not in evidence. Ms Wade did not recall what she had done with the letter.
On 7 June 2016, Cash Converters wrote to Ms Wade notifying that she had defaulted on one of her loan repayments.
On 9 June 2016, Dun & Bradstreet (Australia) Pty Ltd wrote to Ms Wade in respect of amounts owing to Lumo Energy totalling $2,494.40. The letter recorded that an agreement had previously been made for Ms Wade to make fortnightly instalments of $50 but that she had defaulted on that agreement. The letter sought payment of the whole of the arrears. On 29 June 2016, Dun & Bradstreet (Australia) Pty Ltd wrote a further letter to Ms Wade acknowledging receipt of an instalment payment, but again seeking payment of the whole of the arrears.
Ms Wade’s cash expenditure
Ms Wade was cross-examined in respect of the cash withdrawals from her ING and ANZ accounts, particularly in the period from May 2016 when she again fell behind in home loan repayments. Ms Wade agreed that her regular household bills (such as utilities, rates and insurance) were paid by direct debit or BPAY and purchases such as groceries from Woolworths and Coles were paid by EFTPOS transactions and not by cash. It was put to Ms Wade that a considerable portion of the cash withdrawals shown on her bank statements was spent on gaming activities such as pokies and the TAB. Ms Wade agreed that she spent some money at the pokies. She confirmed that the First and Last Hotel Fawkner, the Craigieburn Sporting Club, the Highlands Hotel in Craigieburn and the Epping Plaza Hotel had pokies, although she could not recall whether they also had a TAB, and she agreed that she spent money on the pokies at those venues. Ms Wade also confirmed that Woolworths Craigieburn is only a short distance from the Craigieburn Sporting Club, a fact confirmed by a Google map that was tendered in evidence.
Ms Wade agreed that some of the cash withdrawn from her ING and ANZ accounts was used to gamble at the above-named venues. However, Ms Wade denied that all of the cash withdrawals was spent in that way. When asked how the money was spent, Ms Wade said that some of the cash withdrawn was loaned to friends, stating that “we often loaned money to each other”. Ms Wade agreed that the cash withdrawn as part of an EFTPOS transaction at Woolworths or Coles was not spent on groceries, but she maintained that not all of it was spent on pokies and some of it was paid to people she had borrowed money from. Later in her cross‑examination, Ms Wade said that some was spent on her late father’s business.
I accept the possibility that some of the cash that was withdrawn was loaned to other people or used to repay amounts Ms Wade had borrowed, but that explanation begs similar questions. In so far as the cash was applied to repay an inter-personal borrowing, how and in what circumstances was the original sum borrowed and where was that sum spent? In so far as the cash was loaned to others, why did Ms Wade prioritise such inter-personal lending over repayment of her home loan? I reject Ms Wade’s evidence that the cash was spent on her late father’s business. The evidence establishes that that business never operated after her father died. I do not accept that Ms Wade was responsible for any expenses of her late father’s business. Ms Wade gave evidence that the van that was used in her late father’s business was never transferred into her name, and nor was the accompanying finance lease.
Ms Wade said that she was not an addicted gambler. However, she admitted that:
I just desperately tried to get money, and then go to the pokies, because people did win, and I thought, if I could win, I – I just didn’t know what to do.
On another occasion when challenged about her evidence that, although she could not recall the cash expenditure in 2016, there would have been a reason that she needed to spend large amounts of cash rather than pay her home loan repayments, Ms Wade responded:
So sometimes there were issues that I thought were more important; sometimes, yes, pokies, in the hope that I could win, because friends did win, and try and get out of the mess I was in.
When asked if she had a gambling problem in 2016, Ms Wade responded:
Not a gambling problem. I had hope. My – my – my best friend won, like, a lot of money in – in a casino. I’ve never been – I’ve been to a casino once. I was desperate.
…I wasn’t doing too well. But I didn’t have a gambling problem in such. I’m – I – I don’t stop at any – or hang to go to pokies or anything like that. I urge for a relief in any way I could. And, like, there was no other way. No – no bank was going to loan me any more money or anything like that ..... the loans. My friends had won at the pokies. I thought if I could win – you know, anything. Just anything. I felt like I had failed.
An examination of Ms Wade’s bank statements, both in 2014 and 2016, and Ms Wade’s testimony, leads me to conclude that Ms Wade spent a considerable amount of cash on pokies or at the TAB. It is not possible to make specific findings about the amount of money that was spent in that way. However, Ms Wade’s testimony confirms that the cash was not used for her regular household expenses, but large quantities of cash were withdrawn. In a case in which Ms Wade’s financial circumstances and ability to service a loan are key issues, Ms Wade carried an evidentiary onus to explain how the large cash withdrawals from her account were spent. The failure to provide an adequate explanation supports an inference that a considerable amount was spent on gambling activities. Further, and as discussed below, I am not satisfied that Ms Wade was unable to meet her minimum home loan repayments and regular household expenditure needs from the income she was receiving. Ms Wade’s bank statements show that, each month, cash withdrawals which exceeded her home loan repayments were made, but Ms Wade did not show that the cash was spent on her household necessities.
Bank statements for Ms Wade’s ING and ANZ accounts for August and September 2016 were not in evidence, but Ms Wade said that they would have shown a similar pattern of cash withdrawals. Ms Wade’s bank statement in respect of her ING account ending 4144 for the period 1 October 2016 to 31 December 2016 showed that Ms Wade received a monthly Child Support payment of about $650. The statement showed similar payments for various household goods and services as shown in the previous ING statements. The statement also showed large cash withdrawals of $840 in October, $350 in November and $500 in December. Those withdrawals included an ATM withdrawal of $500 and EFTPOS withdrawal of $40 on 4 October 2016; an ATM withdrawal of $200 and EFTPOS withdrawal of $100 on 12 October; two EFTPOS withdrawals at the Craigieburn Sporting Club totalling $60 and an EFTPOS withdrawal at Woolworths Craigieburn of $50 and an EFTPOS withdrawal at Coles Craigieburn of $40 on 8 November; an ATM withdrawal of $200 on 9 November; an ATM withdrawal of $450 and an EFTPOS withdrawal at Woolworths Craigieburn of $30 and an EFTPOS withdrawal at Coles Craigieburn of $20 on 2 December. Ms Wade’s bank statement for her ANZ account for the same period was not in evidence.
NAB threatens recovery action from July 2016
On 15 July 2016, Gadens Lawyers wrote to Ms Wade on behalf of NAB in relation to her home loan as follows:
We refer to our letter of 31 May 2016 setting out an arrangement between yourself and our client to enable to remedy (sic) the default under the Account.
As at the time of writing, you have not complied with the conditions set out in that letter including that you have not made the minimum monthly repayment due under the Account, on time, or for the amount required under the Loan Agreement.
In the circumstances, we are instructed to proceed with enforcement action, including commencing proceedings for possession of the Property and recovery of the mortgage debt, without further notice.
Should you wish to make a further proposal, please do so and we will seek the Bank's further instructions. However please be aware that until such time as an agreement is made in writing, enforcement action will continue.
The letter suggests that Ms Wade had agreed to the proposal set out in the letter of 31 May 2016 even though a signed copy was not in evidence.
Ms Wade gave evidence that, on receiving that letter, she believed that she had no options left, there was no further opportunity to negotiate with NAB and NAB would proceed with recovery action.
On 19 July 2016, NAB filed a Writ in the Supreme Court of Victoria seeking possession of the mortgaged property and payment of the home loan with interest.
Ms Wade’s dealings with AREG and JDA
Ms Wade gave evidence that, shortly after receipt of the letter from Gadens in July 2016, she received a number of promotional letters from businesses offering services such as selling her house or “saving” her house. Ms Wade said that she telephoned one of the businesses who had sent promotional material, but could not remember which one. The promotional material was not adduced in evidence. I infer from the evidence that follows that Ms Wade called AREG.
Thursday, 21 July 2016
Internal files notes produced by AREG concerning Ms Wade were tendered in evidence (AREG file notes). Two notes were made in relation to 21 July 2016. The first recorded that the note-taker had spoken to Ms Wade by phone; an assessment was completed; NAB had advised that it will be taking her home and Ms Wade had been through her father’s passing and was now trying to take over his business. The second recorded that the note-taker had introduced Ms Wade to JDA; received approval to conduct her credit check and that it was explained to Ms Wade the urgency of the “ET” documents. I infer that ET is shorthand for “extra time” and the ET documents is a reference to the first contract with JDA by which JDA agreed to seek a deferral of NAB’s recovery action (referred to below).
In evidence was an audio recording and transcript of a telephone call involving Ms Wade, a person called Jody from AREG (which other documents show to be Jody Bou-Karroum) and a person called Kelli from JDA (which other documents show to be Kelli Denton) which occurred on 21 July 2016 commencing about 2.39pm. It is apparent from the opening of the call that Ms Wade had been on a call with Jody and that Jody then called Kelli with Ms Wade still on the call. Jody described Ms Wade as her customer. Jody then recounted her earlier conversation with Ms Wade which was to the effect that:
(a)Ms Wade had received a letter from NAB who was looking at taking her home.
(b)Ms Wade had been mostly out of work for a couple of years due to ill-health.
(c)Ms Wade’s father had passed away.
(d)Ms Wade was currently on Centrelink benefits, but she was looking at taking over her father’s business.
(e)Ms Wade had just got herself up and running and was trying to get the business started again to get a bit of income but she was worried because she had not been making payments on her home loan for about 15 months and NAB were looking at taking action and taking her home away.
Kelli from JDA then asked a series of questions of Ms Wade and Ms Wade informed Kelli that: Ms Wade had not yet received court documents from NAB; the arrears on the loan were approximately $15,000; and Ms Wade had previously applied for hardship assistance on two occasions. Kelli then tells Ms Wade that she would get her manager Helen on the call.
In evidence was an audio recording and transcript of the continuation of the telephone call on 21 July 2016 when a person called Helen from JDA also joined the call (so that there were four participants on the call). The information from the previous call with Kelli was conveyed to Helen. Helen advised Ms Wade that it was likely that NAB would issue legal proceedings shortly and explained the legal process associated with foreclosure on the mortgage. Helen recommended that JDA act to put the legal proceedings on hold to avoid legal fees piling up. Helen then asked whether Ms Wade wished to keep her house or sell it, to which Ms Wade replied, reasonably emphatically, that she wanted to keep it. Helen then stated that JDA usually advised that, in such circumstances where a current lender had taken recovery steps, it was desirable to look at the option of seeking a refinance through another lender. Helen stated that JDA would get the NAB legal proceedings put on hold, and get to know Ms Wade’s file a little better, and then speak with her again. Helen stated that there were fees and charges involved, which Kelli would explain to Ms Wade and that documentation would be sent to Ms Wade. Helen then left the call. Kelli then stated:
So, Brenda, as Helen explained we do need to get these proceedings on hold. We’ll get the authority and the agreement out to you. Now, with the agreement there are the fees involved and there are payment options on the agreements. However, if you can't afford to make a payment option at the moment you can opt for a deferred payment to pay at a later date once you've sorted everything out. Okay? So if you do have any questions in relation to the documents do give us a call. All the contact details will be on the email we send across to you.
Ms Wade gave evidence about her recollection of the statements made during the call. She said that her recollection of the call was that it was positive and that she was told that JDA could refinance her loan and put the legal proceedings on hold. The evidence was high level and, in light of the recording that was in evidence, inaccurate. I do not accept that Ms Wade had any actual recollection of the phone call and her evidence was a reconstruction. The transcript shows that the service being offered by JDA was to seek to put the NAB legal proceedings on hold, which would then provide an opportunity for Ms Wade to seek a refinancing. JDA did not represent that it would seek or provide a refinancing. JDA only said that it was desirable to look at the option of seeking a refinance.
Ms Wade gave inconsistent evidence about whether JDA’s fees were discussed. First, she said that she did not recall any discussion about fees during the above call. The transcript shows that fees were discussed, albeit at a high level and without specific figures being mentioned. Subsequently, when taken to the first contract (discussed below), Ms Wade said that she told “them” right from the start (or when she signed the contract) that she could not pay the fees as stated in the contract. Ms Wade said that “they” told her not to worry about it. Ms Wade said that she brought fees up many times and each time JDA said not to worry about the fees and that JDA would put her on a payment plan and that she would not have to pay until she obtained a refinancing. I do not accept any of that evidence. It is not supported by the records of the telephone and email communications. It is contradicted by the events that unfolded and subsequent conversations about fees (at the time of the third contract, as set out below). In my view, Ms Wade has transposed the complaints she ultimately made about JDA following NAB’s foreclosure on her mortgage and reconstructed the conversations that occurred at the time of the contracts being entered into. I consider that, at the time of signing the first contract, Ms Wade disregarded the fees because, at that time, she considered that JDA’s services were the only way to prevent NAB foreclosing on her home.
The statements made by Kelli about JDA’s fees on the telephone conversation were somewhat vague. Kelli told Ms Wade that she could opt for a “deferred payment to pay at a later date once you've sorted everything out”. While the statement was vague, it did not convey that the fees were conditional on Ms Wade refinancing her loan. It only conveyed that the fees could be deferred to the resolution of Ms Wade’s home loan problem. The resolution of the problem could be achieved in one of three ways: Ms Wade refinancing her loan; Ms Wade regularising her loan defaults with NAB; or the home loan being discharged through the sale of Ms Wade’s home. In the end, Ms Wade’s home was sold. The evidence shows that JDA did not pursue its fees other than from the proceeds of the sale. Accordingly, despite the vagueness of Kelli’s statements about fees, I consider that JDA acted consistently with those statements and did not mislead Ms Wade.
Finally, Ms Wade gave evidence that, on the phone call, she communicated that she was only interested in a long term solution to keep her house and she was not interested in a short term solution. The transcript shows that Helen asked Ms Wade whether she wished to keep or sell her house and Ms Wade replied that she wished to keep her house. There is a difference in the tenor of the two statements which becomes material in this case. I accept that Ms Wade communicated to both AREG and JDA that her wish or desire was to retain ownership of her house. I also accept that, so far as it goes, that is a statement of the purpose for which Ms Wade was seeking assistance from AREG and JDA. However, and as discussed below, that purpose is advanced by seeking and obtaining a temporary deferral of legal proceedings to provide time for Ms Wade to explore refinancing options or other means to enable Ms Wade to regularise her home loan. Ms Wade was asked in examination in chief whether she would have retained JDA if she had been told that their services were of a short or temporary nature, to which Ms Wade replied that she would not. The question is simplistic, rendering the answer largely irrelevant. The relevant question is whether JDA’s service, which was to defer foreclosure for a period of 60 days or longer in order to provide an opportunity for Ms Wade to seek alternative finance, was a service of benefit to Ms Wade.
In evidence was a document, accepted as a file note within JDA’s records, titled “Referrer – Summary” where the referrer was identified as AREG. I infer from those facts and the contents of the document that the document contains a file note of information concerning Ms Wade communicated by AREG to JDA. I also infer that the information contained in the document was a record of Ms Wade’s initial conversation with Jody from AREG. The document records the following (errors in original):
One year ago Brenda became sick while working part time - She had depression. Spoke to with applied for hardship, that approved hardship for 6 months where you dont pay anything, they advised the amount will then be added to the loan term and she can pay it later, she still received default letters. She then lost her job a few months later. Nab did not hear from NAB untill she was $10,000 in arrears.
Brendas dad became sick she had to be his carer 2 years ago, then her father passed away in Feb 2016, Brenda is the executive on will and is trying to take over the business only now because she was suffering and mourning. Was on a carers pension.
Currently on new start $560 per fortnight. Brenda is paying for her fathers business expenses as well, its a retail mobile tools business, Brenda goes to service men and sells tools.
Brenda lost her job 2 years ago, has been on CL [Centrelink] ever since. Once the business is up and running and transferred to her name she will be able to able to make a killing.
Moving forward Brenda will be able to make payments if no arrears. Starting to even out now. Brenda advised the one month she could not pay the mortgage her x husband was not able to pay child support payment she fell behind.
Ms Wade gave evidence that she did not recall communicating those circumstances to AREG. She also said that not all of it was accurate. For example, her father had become sick one year ago rather than two. Further, Ms Wade agreed that she wanted to learn her father’s business, but she was not running it at that stage and had only visited one customer. Ms Wade denied saying to AREG that she would be able to make a “killing” in the business. I reject that part of Ms Wade’s evidence. It is highly unlikely that that statement would have been made up by AREG. The statement that “the one month she could not pay the mortgage her x husband was not able to pay child support payment she fell behind” is also incorrect, as the evidence shows that Ms Wade’s failure to pay her loan repayments was longstanding. I consider that that was a further false statement made by Ms Wade to AREG.
In conclusion, I dismiss Ms Wade’s claims that JDA breached the first and third contracts and failed to comply with the consumer guarantees in ss 60 and 61 in respect of the services supplied in connection with the first and third contracts. However, I accept Ms Wade’s claim that JDA breached the second contract and failed to comply with the consumer guarantees in ss 60 and 61 in respect of the services supplied in connection with the second contract.
H. MISLEADING AND DECEPTIVE CONDUCT
Alleged misleading conduct
Ms Wade alleges that JDA engaged in misleading and deceptive conduct contrary to s 18 of the ACL by representing to Ms Wade, on and from about 21 July 2016, that her home could realistically be saved from repossession by NAB through refinancing of her home loan with another lender. Ms Wade alleges that that representation was misleading or deceptive because:
(a)JDA's services were, at best, a temporary or short-term measure to prevent immediate foreclosure by NAB;
(b)it was not realistically possible that JDA's services would prevent NAB from taking possession of Wade's home in the longer term; and
(c)it was not realistically possible that JDA's services would result in Wade varying her NAB home loan on repayment terms that she could repay without substantial hardship or refinancing her NAB home loan on repayment terms that she could reasonably afford.
Ms Wade also alleges, in the alternative, that JDA engaged in misleading and deceptive conduct by failing to inform her of the matters referred to in the preceding paragraph, in circumstances where there was a reasonable expectation that Wade would be informed of those matters.
Applicable legal principles
Section 18(1) of the ACL provides as follows:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
The legal principles governing the application of s 18 are well known and were not in dispute between the parties. The principles were recently summarised by the Full Court of the Federal Court in Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2020] FCAFC 130; 381 ALR 507 at [22]. The following principles, referred to by the Full Court, are central to the application of the section:
(a)First, the primary question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error - that is, to form an erroneous assumption or conclusion about some fact or matter.
(b)Second, conduct is likely to mislead or deceive if there is a real or not remote chance or possibility of it doing so.
(c)Third, it is not necessary to prove an intention to mislead or deceive.
(d)Fourth, it is unnecessary to prove that the conduct in question actually deceived or misled anyone.
(e)Fifth, it is not sufficient if the conduct merely causes confusion.
It has long been established that conduct that contravenes s 18 may involve, but need not involve, the making of a false or misleading representation: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [102] per Gummow, Hayne, Heydon and Kiefel JJ, referring with approval to Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [103] per McHugh J. Thus, in certain circumstances, non-disclosure or “silence” may constitute misleading and deceptive conduct. Section 2(2) of the ACL defines “conduct” to include the doing or the refusing to do any act, and defines “refusing to do an act” as refraining, otherwise than inadvertently, from doing that act. However, there is appellate authority that non-disclosure may be a contravention of s 18 of the ACL even if it is not intentional: CCP Australian Airships v Primus Telecommunications Pty Ltd [2004] VSCA 232; [2005] ATPR 42-042 at [34] (Nettle JA, as a judge of the Victorian Court of Appeal, with whom Batt and Vincent JJA agreed).
It remains common to plead, in support of an allegation of misleading conduct by silence, that the plaintiff had a reasonable expectation of certain information being disclosed. The language of “reasonable expectation” derives from a statement of Gummow J in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31, quoting French J in Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 at 53,195, that “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist” (at 41). That statement, and the circumstances in which non-disclosure of information may constitute misleading or deceptive conduct within s 18, were considered by the High Court in Miller & Associates Insurance Broking Pty Ltd v BMW Australia (2010) 241 CLR 357 (Miller). French CJ and Kiefel J stated (at [20]) that characterisation of conduct as misleading or deceptive must be undertaken by reference to its circumstances and context where silence is one circumstance to be considered, together with other factors such as the knowledge of the person to whom the conduct is directed and common assumptions and practices in the relevant area of commerce. In relation to the concept of a reasonable expectation of disclosure, their Honours observed at [19] (citations omitted):
The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, of conduct consisting of, or including, non-disclosure of information. That approach may differ in its application according to whether the conduct is said to be misleading or deceptive to members of the public, or whether it arises between entities in commercial negotiations.
and at [21]:
To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute.
Similarly, Heydon, Crennan and Bell JJ stated that determination of whether non-disclosure amounts to misleading conduct requires “close analysis of all of the circumstances of the transaction” (at [91]).
As the judgments in Miller make clear, relevant circumstances to be taken into account in assessing whether non-disclosure constitutes misleading conduct within s 18 include the characteristics of the parties to the relevant dealings, particularly whether the parties are both commercial entities involved in a commercial negotiation (which was the case in Miller) or one of the parties is a consumer. As a general proposition, non-disclosure in a commercial setting, where each party keeps their own counsel and their “cards close to their chests”, is less likely to constitute misleading conduct (see at [21]-[22] per French CJ and Kiefel J and at [91] per Heydon, Crennan and Bell JJ).
Consideration
I reject the allegation that JDA represented to Ms Wade, on and from about 21 July 2016, that her home could realistically be saved from repossession by NAB through refinancing of her home loan with another lender. No such representation was conveyed by the telephone conversation held on 21 July 2016.
The transcript of the telephone conversation on 21 July 2016 shows that Ms Wade told JDA that she wished to keep her home. The effect of JDA’s statements on the telephone call were that JDA could assist her in that objective. But JDA did not represent that the objective would be achieved, and that she would definitely be able to retain her home. As set out earlier, on that call a representative of JDA, Helen, told Ms Wade that JDA usually advised that, in such circumstances where a current lender had taken recovery steps, it was desirable to look at the option of seeking a refinance through another lender. Helen stated that JDA would get the NAB legal proceedings put on hold, and get to know Ms Wade’s file a little better, and then speak with her again. JDA referred to seeking refinance. It did not represent that refinance could be obtained. There is nothing in the surrounding circumstances that would have led a reasonable person in the position of Ms Wade to believe that JDA represented that a long term solution would definitely be found to her home loan problem. While Ms Wade gave evidence that her recollection of the call was that she was told that JDA could refinance her loan, I have found that that evidence was a reconstruction. Even if Ms Wade formed that impression from the telephone call, it was not the impression that a reasonable person would form.
I also reject the allegation that JDA engaged in misleading and deceptive conduct by failing to inform Ms Wade that JDA's services were a short-term measure to prevent immediate foreclosure by NAB and that it was not realistically possible that JDA's services would enable Ms Wade to refinance her home loan, or achieve repayment terms, that would prevent NAB from taking possession of Ms Wade's home. It is necessary to consider this allegation at different times in the course of dealings between JDA and Ms Wade, but particularly at the inception of their dealings on 21 July 2016 and at the renewal of the contract in mid-September 2016.
On 21 July 2016, JDA did not know, and could not have known, whether or not Ms Wade would be able to retain her home by either refinancing the loan or otherwise consolidating her financial position so as to be able to meet her NAB home loan repayments. The services offered by JDA were to avert immediate foreclosure to provide Ms Wade with an opportunity to investigate the availability of alternative refinance. In my view, JDA adequately communicated the nature of its services to Ms Wade as at 21 July 2016 and in the weeks that followed. A reasonable person in the position of Ms Wade would have understood that JDA’s services were directed to assisting her, but were not a promise that foreclosure would never occur. It follows that JDA did not fail to disclose information to Ms Wade and did not engage in misleading conduct.
By mid to late August 2016, Ms Wade and JDA knew that there was no immediate prospect of Ms Wade refinancing her home loan. That was driven home when, on 30 August 2016, NHLG advised Ms Wade of her difficulty in being able to service a refinanced loan and suggested that her daughter might assist and on 31 August 2016 when Ms Wade told NHLG that her daughter refused to assist. It was further confirmed in discussions between Ms Wade and JDA on 12 and 15 September 2016. On 12 September 2016, Ms Wade confirmed that her refinancing was not looking good. On 15 September 2016, JDA and Ms Wade looked again at her sources of income, with the aim of persuading NAB to enter into an arrangement that would provide a period of 9 months in which to stabilise her financial position, with the possibility of then maintaining her NAB home loan or obtaining refinance. As set out earlier, Ms Wade gave JDA false information about her income at that time. The false information indicated that Ms Wade was able to meet her expenses including her home loan repayments. Given the circumstances, I am not satisfied that JDA knew, as at 15 September 2016, that Ms Wade’s position was hopeless and she would not be able to retain her home. It follows that JDA did not fail to disclose information to Ms Wade and did not engage in misleading conduct.
Conclusion
In conclusion, I dismiss Ms Wade’s claim that JDA engaged in misleading or deceptive conduct.
I. UNCONSCIONABLE CONDUCT
Alleged unconscionable conduct
Ms Wade alleged that JDA engaged in unconscionable conduct in contravention of s 21 of the ACL. Ms Wade’s allegation of unconscionable conduct was pleaded in the following manner:
By reason of the matters alleged in paragraphs 9 to 39, JDA engaged in conduct, in trade or commerce, that was in all the circumstances, unconscionable in contravention of section 21 of the ACL and/or section 12CB of the ASIC Act.
That form of pleading of unconscionable conduct is to be discouraged. As stated by Bromwich J in Olson v Keefe (No 3) [2018] FCA 2001 at [22]-[23], in a claim alleging unconscionable conduct, it is not enough to plead a set of facts and a bare conclusion that what has taken place is unconscionable; it is necessary to plead what particular conduct or part of the conduct is said to be unconscionable and why. As Allsop CJ explained in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2019] FCA 1284; 139 ACSR 52 (in the context of a concise statement) at [4]: “In a coherent way, anchored in the facts, the plaintiff should explain why the facts stated lead to the conclusion contended for. This may require a degree of reasoned or argued articulation.”
The effect of Ms Wade’s pleading is to allege that the totality of JDA’s conduct in supplying services to Ms Wade was unconscionable, without identifying which aspects of the conduct are alleged to be unconscionable and why. Nevertheless, no challenge was taken to the form of the pleading. To some extent the pleading is consistent with Ms Wade’s overriding contention that JDA should have declined to assist her on the basis that her financial position was hopeless, and it was unconscionable for JDA to provide services in those circumstances. In support of that overriding contention, Ms Wade alleged that JDA's services to Ms Wade under the contracts were provided in circumstances where:
(f)JDA had breached contractual and statutory obligations to Ms Wade and had misled and deceived Ms Wade (on the basis of the allegations considered above);
(g)Ms Wade was in a lesser bargaining position than JDA;
(h)JDA did not explain, or not adequately explain, that:
(i)the contracts were, at best, a temporary or short term measure;
(ii)that a long-term solution to Ms Wade's inability to maintain contractual payments under the NAB home loan was unlikely to be achieved;
(i)Ms Wade did not receive, and was not recommended by JDA to obtain, independent legal and/or financial advice;
(j)Ms Wade was not given the opportunity by JDA to obtain independent legal and/or financial advice;
(k)Ms Wade was in a precarious financial position;
(l)Ms Wade suffered from anxiety and depression;
(m)Ms Wade's father had passed away in February 2016;
(n)JDA imposed an onerous security over Ms Wade’s property; and
(o)JDA knew of the matters referred to in paragraphs (a) to (i) above.
Applicable legal principles
Section 21 of the ACL relevantly provides as follows:
(1) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of goods or services to a person; or
(b) the acquisition or possible acquisition of goods or services from a person;
engage in conduct that is, in all the circumstances, unconscionable.
…
(4) It is the intention of the Parliament that:
(a) this section is not limited by the unwritten law relating to unconscionable conduct; and
(b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and
(c) in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:
(i) the terms of the contract; and
(ii) the manner in which and the extent to which the contract is carried out;
and is not limited to consideration of the circumstances relating to formation of the contract.
Section 22 sets out a list of matters that a court may have regard to for the purposes of applying s 21. Subsection 22(1) is directed to circumstances where it is alleged that a supplier of services has engaged in unconscionable conduct. Subsection 22(1) provides as follows:
(1) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to:
(a) the relative strengths of the bargaining positions of the supplier and the customer; and
(b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and
(c) whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and
(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and
(e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and
(f) the extent to which the supplier’s conduct towards the customer was consistent with the supplier’s conduct in similar transactions between the supplier and other like customers; and
(g) the requirements of any applicable industry code; and
(h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and
(i) the extent to which the supplier unreasonably failed to disclose to the customer:
(i) any intended conduct of the supplier that might affect the interests of the customer; and
(ii) any risks to the customer arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and
(j) if there is a contract between the supplier and the customer for the supply of the goods or services:
(i) the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and
(ii) the terms and conditions of the contract; and
(iii) the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and
(iv) any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and
(k) without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and
(l) the extent to which the supplier and the customer acted in good faith.
Section 21 of the ACL and its statutory analogue, s 12CB of the ASIC Act, have been the subject of consideration in a number of appellate decisions including by the Full Court of the Federal Court in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; ATPR 42-447, Paciocco v Australia & New Zealand Banking Group Ltd (2015) 236 FCR 199 (Paciocco FCAFC) and by the High Court in Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 (Paciocco HCA) (affirming the decision of the Full Court) and most recently in Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 93 ALJR 743 (Kobelt). While Kobelt involved a 4:3 majority decision (the majority comprising Kiefel CJ, Bell, Gageler and Keane JJ, the minority comprising Nettle, Gordon and Edelman JJ), the difference in outcome is largely attributable to different characterisations of the underlying facts (based on the manner in which the case was presented at trial). The following principles governing the application of the statutory prohibition of unconscionable conduct, which have been established over time, were affirmed by the High Court:
(a)First, the prohibition of unconscionable conduct in s 12CB of the ASIC Act (and its analogue s 21 of the ACL) is not confined to conduct that is unconscionable within the meaning of the general law and remediable on that basis by a court exercising jurisdiction in equity (in contrast to s 12CA of the ASIC Act and its analogue s 20 of the ACL): at [83] (Gageler J), [119] (Keane J), [144] (Nettle and Gordon JJ) and [311] (Edelman J).
(b)Second, the term “unconscionable” is to be understood as bearing its ordinary meaning, being conduct that objectively answers the description of being against conscience: at [14] (Kiefel CJ and Bell J), [92] (Gageler J) and [119] (Keane J).
(c)Third, the values that inform the standard of conscience fixed by the statutory prohibition include those identified in Paciocco FCAFC at [296], being certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage: at [14] (Kiefel CJ and Bell J) and [234] (Nettle and Gordon J).
(d)Fourth, the conclusion that a supplier has engaged in conduct that contravenes the statutory norm of conscience is an evaluative judgment: at [47] (Kiefel CJ and Bell J), [120] (Keane J) and [153] (Nettle and Gordon JJ).
(e)Fifth, conduct may be unconscionable in the absence of dishonesty, but the absence of dishonesty or other moral taint is a relevant consideration: at [59] (Kiefel CJ and Bell J) and [257] (Nettle and Gordon JJ).
In applying s 21 of the ACL, all of the factors referred to in s 22 that are relevant must be taken into account and it is wrong to focus on only some of those factors: Paciocco HCA at [188]-[189] (Gageler J), [294] (Keane J). The approach to the application of the prohibition in s 21 which is required by s 22 is analogous to the approach of a court of equity which takes a “more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case”: The “Juliana” (1822) 2 Dods 504 at 521; 165 ER 1560 at 1567 and Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 118-119, referred to by Allsop CJ in Paciocco FCAFC at [271] and in Kobelt by Keane J at [120] and Nettle and Gordon JJ at [150].
Consideration
In applying s 21 to the facts of this case, it is necessary to consider the circumstances relied on by Ms Wade, and all other relevant factors referred to in s 22 of the ACL. It is convenient to consider the services supplied under the first and third contracts before considering the services supplied under the second contract.
Services supplied under the first and third contracts
Ms Wade’s allegation of unconscionability is heavily dependent on the alleged contraventions of contractual obligations, failures to comply with the consumer guarantees and misleading and deceptive conduct of JDA. I have found that JDA did not breach its contractual obligations, fail to comply with the consumer guarantees or engage in misleading or deceptive conduct in respect of the services supplied under and in connection with the first and third contracts.
In the absence of those circumstances, the allegation of unconscionable conduct in respect of the services supplied under and in connection with the first and third contracts has almost no foundation. It can be accepted that:
(a)Ms Wade was in a lesser bargaining position than JDA;
(b)Ms Wade did not receive, and was not recommended by JDA to obtain, independent legal and/or financial advice;
(c)Ms Wade was in a precarious financial position;
(d)Ms Wade suffered from anxiety and depression;
(e)Ms Wade's father had passed away in February 2016; and
(f)JDA knew of the matters referred to in paragraphs (a) to (e) above.
However, those circumstances do not identify any conduct of JDA that is unconscionable. They merely describe the reasons that Ms Wade needed assistance in dealing with her home loan problem, and establish that Ms Wade was in a vulnerable position when dealing with JDA. Ms Wade’s allegation of unconscionable conduct required her to demonstrate that the services supplied by JDA, in the circumstances that they were supplied and with the knowledge of JDA at the time, involved a sufficient degree of unfairness, unreasonableness, trickery or sharp practice that JDA’s conduct could be described as being against conscience. For the reasons explained above, I do not consider that the services supplied by JDA under the first and third contracts involved unfairness or unreasonableness. The services had the potential to assist Ms Wade. I reach that conclusion having regard to both the information held by JDA as well as Ms Wade’s actual circumstances. Ms Wade has not persuaded me that her position was financially hopeless, let alone persuaded me that that was known by JDA (or ought to have been known by JDA).
Ms Wade also alleged that JDA imposed an onerous security over Ms Wade’s property, being the caveat in support of the payment of JDA’s invoices. That allegation was not developed in argument. It is not clear what “onerous” means in the circumstances. The caveat did not cause Ms Wade to sell her home; nor did it impede the ultimate sale of her home. The effect of the caveat was, if and when Ms Wade sold her house, JDA would have a form of security for amounts owing to it. In circumstances where I have concluded that fees were lawfully payable to JDA for services rendered, I do not consider that the act of taking security for payment of the fees is unconscionable.
The above findings address the factors in paragraphs (a), (i) and (j) of s 22(1). Turning to the other statutory factors in s 22(1), I make the following findings:
(a)As to paragraph (b), the only condition that Ms Wade was required to comply with was the payment of JDA’s fees. I do not consider that the fee was such that it could be concluded that it was not reasonably necessary for the protection of the legitimate interests of JDA.
(b)As to paragraph (c), no evidence was led from Ms Wade that she was not able to understand the first and third contracts sent to her. While Ms Wade gave evidence that she believed that JDA represented or promised to procure a refinancing, I consider that that evidence involved a reconstruction. In any event, nothing that JDA said, nor anything written in the contracts, would have led a reasonable person to form that view.
(c)As to paragraph (d), the evidence shows that no undue influence or pressure was exerted on, or any unfair tactics were used against, Ms Wade. The evidence shows that JDA had difficulties in contacting Ms Wade and frequently had to send emails or text messages asking Ms Wade to contact them. The predicament facing Ms Wade required urgent attention and it was reasonable and appropriate for JDA to try to contact Ms Wade regularly in an effort to assist her.
(d)As to paragraph (e), no evidence was adduced as to the amount for which, and the circumstances under which, Ms Wade could have acquired identical or equivalent services from a person other than JDA.
(e)As to paragraph (f), no evidence was adduced as to the extent to which JDA’s conduct towards Ms Wade was consistent with JDA’s conduct in similar transactions between it and other like customers.
(f)As to paragraphs (g) and (h), no evidence was adduced as to the existence of any applicable industry code.
(g)As to paragraph (l), the evidence does not establish that JDA acted with a lack of good faith in respect of the first and third contracts. Conversely, the evidence shows that Ms Wade was frequently not frank or honest in her dealings with JDA. Specifically, she was dishonest as to the income she was earning. In my view, she was also not frank with JDA about her expenditure. As set out earlier, each month Ms Wade had significant cash expenditure that was unexplained, a significant part of which was likely spent on gambling, and which was likely to be a significant cause of her financial difficulties. In the circumstances in which Ms Wade sought assistance from JDA, I consider Ms Wade’s lack of candour and dishonesty showed a lack of good faith in her dealings with JDA.
Taking all relevant circumstances into account, I do not consider that JDA’s conduct in relation to the services supplied pursuant to the first and third contracts was unconscionable.
Services supplied under the second contract (credit impairment)
The services supplied under the second contract raise different considerations. I have found that, in removing the Vodafone credit impairment from Ms Wade’s credit file in about October 2016, JDA breached its contractual obligations by failing to consult with Ms Wade and seek her agreement. I have also found that the same conduct involved a failure to comply with the “due care and skill” consumer guarantee in s 60. I have also found that the removal of the Vodafone credit impairment was a service supplied by JDA that was not reasonably fit for the disclosed purpose at the time that the service was supplied because it afforded no benefit to Ms Wade in keeping her home, and therefore involved a failure to comply with the “fit for purpose” consumer guarantee in s 61 of the ACL.
Those findings, in combination with the other circumstances relied on by Ms Wade, also support a conclusion that, in supplying that service and charging a fee for the service in October 2016 with no practical benefit for Ms Wade, JDA engaged in unconscionable conduct. The relevant circumstances were that:
(a)Ms Wade was in a precarious financial position;
(b)Ms Wade suffered from anxiety and depression; and
(c)Ms Wade was relying on JDA's expertise,
each of which was known to JDA.
Section 21 of the ACL requires companies supplying services to consumers to act ethically and not exploit or take advantage of a consumer’s vulnerability. Ms Wade was in a vulnerable position because of her financial difficulties and her mental health problems. Regardless of contractual rights, it is unconscionable to charge a consumer such as Ms Wade a significant sum of money, $2,000, to remove a credit impairment for her credit file which had no immediate benefit for her and might never have any benefit for her. At the time that JDA removed the credit impairment, it was not feasible for Ms Wade to seek refinance in the short term. In the circumstances, JDA should have held off, explaining to Ms Wade that it would not act under the second contract at that time because it would afford no benefits to her. If circumstances changed, and an improvement to her credit file might have made a practical difference to her prospects of being refinanced, it would then have been appropriate for JDA to consult with Ms Wade and, with her agreement, undertake the services promised.
In the present case, Ms Wade’s dependence on JDA’s expertise was apparent. JDA sent the second contract to Ms Wade with little in the way of explanation of the potential benefits for her. Ms Wade signed and returned the second contract. Ms Wade was not in a position to exercise any judgment about the benefits afforded by the second contract, and that was apparent to JDA. While the expert evidence of Mr Fallscheer confirmed that the removal of credit impairments has the potential to assist a person in refinancing a loan, Mr Fallscheer made clear that that depends on the circumstances. It was unethical for JDA to procure Ms Wade’s agreement to the second contract without adequate explanation of the reasons and circumstances in which it may benefit her, and then proceed to provide the service under the second contract at a time that it would not have any immediate benefit for her and may never have any benefit for her. In all the circumstances, I consider that the conduct of JDA answers the statutory description of being unconscionable.
Conclusion
In conclusion, I dismiss Ms Wade’s claim that JDA engaged in unconscionable conduct in supplying services under the first and third contracts, but I uphold her claim that JDA engaged in unconscionable conduct in supplying services under the second contract.
J. RELIEF
In conclusion, I have found that, in supplying services under the second contract by removing the Vodafone credit impairment from Ms Wade’s credit file in October 2016, JDA:
(a)breached its contract with Ms Wade;
(b)failed to comply with the consumer guarantees in ss 60 and 61 of the ACL; and
(c)engaged in unconscionable conduct in contravention of s 21 of the ACL.
I otherwise dismiss the claims made by Ms Wade.
I find that the above breaches of the law resulted in there being a total failure of consideration under the second contract. The removal of the Vodafone credit impairment from Ms Wade’s credit file in October 2016 provided no benefit to Ms Wade and it follows that the consideration for the payment of $2,000 for the service failed. Ms Wade is entitled to recover the payment of $2,000 under each of the following bases:
(a)First, Ms Wade is entitled to recover the sum in restitution (on the basis of a total failure of consideration) as the payment was made for the removal of the Vodafone credit impairment which was a severable part of JDA’s contractual services: see Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1993) 176 CLR 344.
(b)Second, Ms Wade is entitled to recover the sum under s 236 of the ACL by reason of the contravention of s 21 of the ACL. In circumstances where the service afforded no benefit to Ms Wade, her loss is the full amount of the fee paid to JDA.
(c)Third, Ms Wade is entitled to recover the sum under s 267(3) of the ACL by reason of the failure to comply with the consumer guarantees in ss 60 and 61 of the ACL. It follows from my findings that the failure is a major failure as defined in s 268 because a reasonable consumer would not have acquired the service knowing that, at the time it was acquired, it afforded no practical benefit. Under s 267(3), Ms Wade is entitled to recover compensation for any reduction in the value of the services below the price paid. As there was no value of the service to Ms Wade, she is entitle to recover the whole of the fee paid.
Section 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) empowers the Court to order that there be included in the sum for which judgment is given interest at such rate as the Court thinks fit for the period between the date that the cause of action arose and the date of judgment. I consider that it is appropriate to order interest at the rate specified in section 2 of the Federal Court Interest on Judgments Practice Note (GPN-INT). Interest is to apply from the date that the fee was paid by Ms Wade, which was 10 November 2017 (the date of settlement of the sale of her house). Section 52 provides that interest is payable on the judgment sum from the date of judgment at the rate stipulated in r 39.06 of the Federal Court Rules2011 (Cth) or such lower rate as the Court determines. There is no reason to apply a different rate to that specified in r 39.06.
JDA submitted that the damages awarded to Ms Wade ought to be reduced by reason of Ms Wade’s share in the responsibility for the loss and damage suffered. JDA did not develop the statutory basis for the reduction, although presumably it sought to rely on Part V of the Wrongs Act 1958 (Vic) in respect of the allegations of breach of contract and failure to comply with the consumer guarantees (by virtue of s 275 of the ACL) and s 137B of the CCA in respect of the allegations of contravention of s 18. Regardless, I do not consider that Ms Wade has any responsibility for the loss sustained in connection with the service supplied by JDA under the second contract.
Ms Wade also sought unspecified damages or compensation for distress, physical inconvenience and disappointment. In support of that claim, Ms Wade gave evidence that she was “gutted” by the sale of her home, she felt that she had lost everything and that she let her children down. While I accept that evidence, in my view Ms Wade’s distress and disappointment were not caused by JDA’s breaches of the law. On the findings I have made, JDA’s breaches (in relation to the second contract) did not cause the loss of Ms Wade’s home and did not exacerbate her feelings of distress and disappointment that came from losing her home. Accordingly, I dismiss the claim for damages or compensation for distress, physical inconvenience and disappointment.
Ms Wade also sought declaratory relief. No submissions were addressed to that form of relief. I am not persuaded that declaratory relief will provide any tangible benefits to Ms Wade over and above the award of damages. Accordingly, I decline to make declarations of contravention.
In relation to costs, the Court’s discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is broad. Usually, the discretion is exercised in favour of a successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35] per Gaudron and Gummow JJ, [66]-[67] per McHugh J and [134] per Kirby J; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [25] per Gleeson CJ, Gummow, Hayne and Crennan JJ. Nevertheless, a successful party may be deprived of a proportion of its costs, or even required to pay costs to the other party, if the successful party succeeded only upon a portion of its claim, or failed on issues that were not reasonably pursued, or where the result of the litigation might be described as mixed: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [11]ff per Black CJ and French J; Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370 at [11] per Dowsett, Middleton and Gilmour JJ.
The result in the proceeding is mixed, with JDA enjoying far greater success than Ms Wade. Ms Wade has succeeded on one aspect of her claims, but failed on all other aspects. The aspect of the claim on which Ms Wade succeeded was the smaller part of the claim, both in monetary terms and in evidentiary terms. It required Ms Wade to establish that, at the time that services were supplied by JDA under the second contract, the removal of the Vodafone credit impairment afforded her no tangible benefit in achieving her goal of retaining her home. While such a case required evidence to be adduced to establish the relevant context in which the services were supplied and to establish that they were of no practical utility at the time they were supplied, in my view the evidence required for that claim was far less than the evidence adduced at the hearing. The claims on which Ms Wade failed were significantly larger in monetary and evidentiary terms. Ms Wade set out to prove that all aspects of JDA’s dealings with her involved breaches of the consumer law. Ms Wade also failed on her application to re-open her case and adduce further evidence.
In the circumstances, I consider that the appropriate order is for Ms Wade to pay 50% of JDA’s costs. However, I will give the parties leave to notify the Court within 14 days if they seek an opportunity to vary that costs order or seek further orders consequent upon these reasons and which have not been addressed by these reasons. If such a notification is made, the parties will be given an opportunity to file submissions and evidence in support of a different costs order or further orders.
I certify that the preceding four hundred and eleven (411) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan. Associate:
Dated: 27 November 2020
Key Legal Topics
Areas of Law
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Consumer Law
Legal Concepts
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Breach of Contract
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Unconscionable Conduct
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Misleading and Deceptive Conduct
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Statutory Interpretation
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Limitation Periods
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