New Capital Finance Pty Ltd v Miller
[2002] QDC 291
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- Unreported Judgment
- New Capital Finance Pty Ltd v Miller[2002] QDC 291
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New Capital Finance Pty Ltd v Miller[2002] QDC 291
New Capital Finance Pty Ltd v Miller[2002] QDC 291
DISTRICT COURT OF QUEENSLAND
CITATION: | New Capital Finance P/L v Miller [2002] QDC 291 |
PARTIES: | NEW CAPITAL FINANCE PTY LTD Plaintiff v ANDREW CLARK MILLER Defendant |
FILE NO/S: | D1418 OF 2002 |
DIVISION: | Civil Jurisdiction |
PROCEEDING: | Application |
ORIGINATING COURT: | Brisbane |
DELIVERED ON: | 25 September 2002 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 20 September 2002 |
JUDGE: | Forde DCJ |
ORDER: | 1.Judgment obtained by the plaintiff against the defendant on 9 August 2002 is set aside.
|
CATCHWORDS: | Consumer Credit (Qld) Code ss. 6, 11, 66, 80 KD Morris & Sons Pty Ltd v Bank of Queensland (1980) 146 CLR 165 at 173 |
COUNSEL: | Mr I Erskine for the Applicant/Defendant Mr P Hackett for the Respondent/Plaintiff |
SOLICITORS: | Graham Isles, Solicitor for the Defendant Crouch & Lyndon for the Plaintiff |
Introduction
- [1]This is an application by the Plaintiff (the “Applicant”) that the judgment of 9 August 2002 be set aside. The judgment was obtained by New Capital Finance Pty. Ltd. (the Respondent”) in default of appearance. The amount of the judgment was $84,840.00 including interest to that date in the amount of $12,870.96 plus costs in the amount of $794.40. Reasons have been given in the course of this hearing that the judgment was entered regularly. The Applicant is now required to satisfy the requirements of rule 290 UCPR. The court has to be satisfied that:
- The Applicant has a defence on the merits
- An explanation is necessary as to why no defence was filed within the prescribed time
- Explain any delay in making the application.
See Yankee Doodles Pty. Ltd. V. Blemvale Pty. Ltd. [1999] QSC 134 (unreported 23 June 1999).
Grounds for setting aside the judgment
- [2]The Respondent contends that by letters of 2 May 2002 and 20 May 2002, the solicitors for the Applicant admitted that the debt was owing. It further contends that there is a failure to explain why no defence was filed within the required period under the rules. There was some three (3) months between the service of the proceedings on 29 April 2002 and default judgment on 9 August 2002. In fact there was some correspondence between the parties in that period which in my opinion explains the delay adequately. The parties were attempting to negotiate and the Applicant was to auction his house. The application to set aside the judgment was filed on 12 September 2002. Therefore, the defence on the merits is the main point which the Applicant must establish for the purposes of this application.
Defence on the merits
- [3]The Applicant contends that the Loan Agreement between the parties is regulated by the Consumer Credit (Qld) Code (the “Credit Code”) . There are references in the Loan Agreement to the said Credit Code as being applicable (pp. 1 and 5 for example). In the letter 8 August 2002 the Respondent’s solicitors seem to accept that the Code applies. For the purposes of this application, I intend to proceed on that basis. Section 6 of the Credit Code provides as follows:
“6 Provision of credit to which this Code applies
- (1)This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of pre-contractual obligations) is proposed to be entered into –
(a)...
- (b)the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes: and
...
- (4)For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose.
- (5)For the purposes of this section, the predominant purpose for which credit is provided is –
- (a)the purpose for which more than half of the credit is intended to be used; or
- (b)if the credit is intended to be used to obtain goods or services for use for different purposes, the purpose for which the goods or services are intended to be most used.”
- [4]The evidence in this respect is somewhat equivocal. Clause 11 of the Loan Agreement provides :
“Purpose of Loan The purpose of the loan is for Business use”
One has to contrast that clause with clause 12 which provides:
“You state and promise to New Capital Finance Pty Ltd that:-
….
- The Loan is to be used wholly or predominantly for personal domestic or household purposes.”
Mr. Miller deposes that “all loan monies were borrowed for and expended upon personal domestic and household expenses including but not limited to loan repayments mortgage repayments general household and living expenses school fees and like expenses. No monies were expended either directly or indirectly for or upon business expenses”. (para 3 affidavit sworn 20 September 2000). Mr. John Pyke-Nott, the manager of the respondent company deposes that some $20,000.00 which was lent to a company Corporate Contract Services Pty. Ltd. was incorporated into the subject loan at the request of Mr. Miller. Mr. Miller was the principal of that company. Even if one accepts that to be correct, the transaction could still be“….predominantly for personal, domestic or household purposes”.
- [5]Once the Credit Code applies, there are other requirements before the respondent is entitled to proceed. S. 80 of the Credit Code provides:
“80.(1) Enforcement of credit contract. A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless the debtor is in default under the credit contract and –
- (a)the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and
- (b)the default has not been remedied within that period.
Maximum penalty – 50 penalty units.
.............................
(3)Default notice requirements. A default notice must specify the default and the action necessary to remedy it and that a subsequent default of the same kind that occurs during the period specified in the default notice for remedying the original default may be the subject of enforcement proceedings without further notice if it is not remedied within the period.
..............................
(4)When default notice not required. A credit provider is not required to give a default notice or to wait until the period specified in the default notice has elapsed, before beginning enforcement proceedings, if –
- (a)the credit provider believes on reasonable grounds that it was induced by fraud on the part of the debtor or mortgagor to enter into the credit contract or mortgage; or
- (b)the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or
- (c)the Court authorises the credit provider to begin the enforcement proceedings; or
- (d)the credit provider believes on reasonable grounds that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or under the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider’s permission or that urgent action is necessary to protect the mortgaged property.
(5)Non-remedial default. If the credit provider believes on reasonable grounds that a default is not capable of being remedied -
- (a)the default notice need only specify the default; and
- (b)the credit provider may begin the enforcement proceedings after the period of 30 days from the date of the notice.”
It is contended that there is no evidence that such default notice was given. Reference is made to Exhibits “E” and “F” to the affidavit of Mr. Pyke-Nott. It was argued that those notices do not comply with s. 80(3). It is clear in my view that they do not comply. The letters do not include the specific requirements of the section and in particular reference to the default period of thirty (30) days. It has not been argued that the provisions of s. 80(4) or (5) apply to relieve the respondent of compliance with s. 80(1) and (3).
- [6]Counsel for the respondent referred to the fact that s. 11 of the Credit Code contains a presumption that the Credit Code applies unless the contrary is proved. Section 11 provides:
“Presumptions relating to application of Code
11.(1) In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established.
(2)Credit is presumed conclusively for the purposes of this Code not to be provided wholly or predominantly for personal, domestic or household purposes if the debtor declares, before entering into the credit contract, that the credit is to be applied wholly or predominantly for business or investment purposes (or for both purposes).
(3)However, such a declaration is ineffective for the purposes of this section if the credit provider (or any other relevant person who obtained the declaration from the debtor) knew, or had reason to believe, at the time the declaration was made that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes. For the purposes of this subsection, a relevant person is a person associated with the credit provider or a finance broker (or a person acting for a finance broker) through whom the credit was obtained.
(4)A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not.”
The Consumer Credit Regulation 1995 s. 10 provides a form which would give effect to s. 11(2). No such form was produced on this application. Therefore, the presumption does not apply in the present case. There was an attempt by the Respondent to rely upon the forms relating to the loan to Corporate Contract Services Pty. Ltd. (Exhibit “A” to the affidavit of Mr. Pyke-Nott). However, that loan seemed to merge with the subject loan and no evidence has been adduced by the Respondent which would contradict the finding that the subject loan was predominantly non-business. In any event, given the reference in Clause 12 (ibid para. 4) any such declaration is arguably ineffective.
- [7]The present Loan Agreement is a fresh agreement. There was no continuity of obligation as the borrower in each instance was different. The subject Loan Agreement is to be read independently from the earlier loan agreement: contrast K.D. Morris & Sons Pty. Ltd. v Bank of Queensland (1980) 146 CLR 165 at 173. This is particularly relevant where there is a Code which purports to cover the field of consumer finance. The loan to the company appears to be business orientated. The subject Loan Agreement is internally inconsistent but one has to have regard to the provisions of s. 11(1) of the Credit Code.
- [8]Given the presumption that the Credit Code does apply s. 11(1) and the conflicting clauses in the Loan Agreement, for the purposes of this application the Applicant has satisfied me that there is a defence on the merits. The defence put forward is “not so slim as to be fanciful”: National Australia Bank v. Hart [2002] QSC 051.
- [9]Application under s. 66(1) and (2) of the Credit Code
These provisions state as follows:
“66.(1)General principle. A debtor who is unable reasonably, because of illness, unemployment or other reasonable cause, to meet the debtor’s obligations under a credit contract and who reasonably expects to be able to discharge the debtor’s obligations if the terms of the contract where changed in a manner set out in subsection (2) may apply to the credit provider for such a change.
(2)Changes. An application by a debtor must seek to change the terms of the contract in one of the following ways -
- (a)extending the period of the contract and reducing the amount of each payment due under the contract accordingly (without a change being made to the annual percentage rate or rates);
- (b)postponing during a specified period the dates on which payments are due under the contract (without a change being made to the annual percentage rate or rates);
- (c)extending the period of the contract and postponing during a specified period the dates on which payments are due under the contract (without a change being made to the annual percentage rate or rates).”
The Applicant’s solicitors wrote to the Respondent on 2 August 2002, indicating that its client wanted to review the provisions of the Loan Agreement (Exhibit “GDI 4” to the affidavit of Mr. Isles sworn 12 September 2002). The reply received was on 13 August 2002 whereby the solicitors for the Respondent informed the Applicant’s solicitors that judgment had been obtained. No form is provided for such an application. However, I am not satisfied that the letter “GDI 4” complies with the requirements of s. 66(2). The Respondent contends that it replied to that letter on 8 August. In effect, the Respondent referred the Applicant to the requirements of the Credit Code. The Applicant denies that the letter was received. Therefore, it cannot be said that the Applicant relied upon that letter to his detriment by allowing judgment by default to be entered without entering an appearance. It is not necessary to rule as to the significance of that correspondence. It is mentioned in deference to the arguments put by either side in event that the matter is argued elsewhere. The application pursuant to ss. 70 and 71 of the Credit Code in separate proceedings has been adjourned.
Discretionary Factors
- [10]The question argued with respect to s. 66, it is contended by the Applicant, is relevant to the exercise of the discretion. Certainly, the Applicant requested that the parties do undertake a revision of the Loan Agreement, but the Applicant did not spell out the basis of such a review. After purporting to reply, the Respondent went ahead and entered judgment. It was implicit in the response of 8 August 2002, that the Respondent would grant the Applicant a reasonable opportunity to comply with the requirements of s. 66. It did not do so. The fact that the Applicant did not receive the letter is not to the point. The Applicant requested that opportunity. Given the nature of the Credit Code and the facts of this case, the discretion of the court in this case is exercised in favour of the Applicant.
Orders
- That the judgment obtained by the plaintiff against the defendant on 9 August 2002 is set aside.
- The costs of and incidental to this application are costs in the cause.