Hoskin v Ask Funding Ltd[2016] QDC 104

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 28 January 2015 a magistrate at Brisbane gave judgment for the respondent against the appellant in the sum of $165,877.50, including $16,044.45 by way of interest by statute. The following day the appellant was ordered to pay the respondent’s costs of the proceeding to be assessed on an indemnity basis. On 24 February 2015 the appellant filed a Notice of Appeal to this Court seeking to set aside the whole of the decision; an order for a new trial was not expressly sought from the District Court, though the Notice of Appeal did indicate that the appellant sought a hearing de novo of the proceeding the subject of the appeal, presumably by this Court, and foreshadowed that on the hearing the appellant would seek to adduce fresh evidence in six categories.

2. [2]
   An outline of argument was filed on behalf of the appellant on 26 March 2015, but it was difficult to follow, very wide ranging, to some extent repetitive, identified seven legal issues, what were said to be a number of erroneous findings, and in conclusion submitted that the judgment should be set aside and the Court should substitute a decision that the loan contract relied on by the respondent was void and had no effect.^[1]In the alternative, a rehearing by the Magistrates Court was sought.

3. [3]
   On 7 October 2015 a registrar referred the appeal to the Court because the parties had failed to file a Certificate of Readiness. On that day another Judge ordered that any application by the appellant to adduce fresh evidence be filed by 22 October 2015, to be heard on 5 November 2015, with the appeal listed for hearing on 16 December 2015, which involved dismissing an application by the appellant for an adjournment of the appeal. An application to adduce fresh evidence was in fact filed on 23 October 2015, and came before me on 5 November 2015. On that occasion the representative of the appellant sought an adjournment of that application, which was refused, and for reasons I then gave the application to adduce fresh evidence was dismissed. The application to adjourn the hearing of the appeal was renewed before me, and I adjourned it to 18 January 2015, when I heard the appeal.

4. [4]
   At the beginning of the hearing, an application was made to put in as evidence three categories of documents. For reasons I gave at the time that application was refused; in summary, this was because there had already been an application for leave to adduce fresh evidence on the appeal which had been dismissed, the documents sought to be put in evidence did not satisfy the fresh evidence rule, and the documents had not been disclosed by the appellant so that prima facie the documents were inadmissible at the trial anyway: UCPR r 225. There was no application for an adjournment of the appeal, and I was told that a foreshadowed application to amend the Notice of Appeal was not pursued, though the appellant was not now pursuing one ground of the Notice of Appeal,^[2]and that the relief the appellant was seeking was a new trial.

Argument for the appellant

5. [5]
   The appeal was argued on the basis that there had been three errors of law on the part of the magistrate. The first two were related, in that there had been a failure on the part of the magistrate to take into account matters which he was required by the relevant Act to take into account when considering a particular matter raised by way of defence by the appellant, and in relation to the third matter, in taking into account the question of what knowledge the respondent had of an alleged medical condition on the part of the appellant when what mattered for the purposes of the relevant provision of the relevant Act was simply whether the appellant had that medical condition.

6. [6]
   None of these points was raised below, but it was submitted that they were all matters of law and therefore they were matters which could be raised for the first time on appeal. Further, one of the grounds of appeal was that the decision of the magistrate erred in law, and it was not necessary for points of law to be pleaded. That is correct, but if it is to be argued on an appeal that a court of first instance erred in law in a particular fashion that ought to be disclosed in the grounds of appeal in the Notice of Appeal, and in the outline of argument filed in the court pursuant to the practice direction. In the circumstances the respondent would have been taken by surprise by the matters in fact argued on behalf of the appellant, and had I considered that there was some substance to them I would have given the respondent further opportunity to provide a considered response to them. In the event, that course was not necessary, though counsel for the respondent did helpfully draw attention to a relevant decision of the Court of Appeal which was of assistance in relation to the points argued.

Background

7. [7]
   Before discussing the points, in order to understand them, it is necessary to set out the background to the matter in some detail.^[3]The appellant was at one time married to a Mr Haliburton but by 2006 the marriage had broken down and there were proceedings in the Family Court in relation to the property of the parties. She had solicitors acting for her in these proceedings: in 2006 Galbally and O'Bryan were acting, but in February 2007 she changed to Michael Maplestone, in July 2007 to Kennedy Wisewoulds, and she later moved to Forte Family Lawyers who were her lawyers at the time of when the property dispute with her ex-husband was settled. She had five children but these were not children of this marriage; as at August 2007 they ranged in age from 23 down to 14.

8. [8]
   Galbally and O'Bryan were owed money for fees, and on 13 April 2007 lodged a caveat on the appellant’s home in support of a charge^[4]securing those fees. Ultimately they were paid $16,850 using money borrowed by the appellant from a friend.^[5]The appellant was quite active in giving instructions to her solicitors as to how the Family Court matter was to be progressed. For example, she pressed the solicitors to pursue very extensive disclosure from the husband,^[6]alleging that he had various aliases and money hidden with other people and overseas.^[7]

9. [9]
   Apart from owning her own home, the appellant as at 2006 owned 11 investment properties in Bendigo.^[8]According to her statement of financial circumstances in the Family Court proceedings, sworn by her on 8 May 2006 (Exhibit 36), these had a total value of $1.63 million, though she owed in respect of them $1,176,717, on loans to the National Australia Bank. She claimed in that document to pay about $2,700 per week in respect of the loans,^[9]and also to pay $519 per week for rates and landlord’s insurance, producing a weekly loss on these properties of $1,414. On these figures, they were quite heavily negatively geared, but since the financial statement also involved an assertion that the only other significant income she received was $110 per week paid by each of four boarders, whose living expenses came to that amount, and she had $500 living expenses for three children,^[10]and disclosed no savings or other assets of any significant value, on the face of this document she was quite unable to survive.^[11]The document identified 11 investment properties, and said that another had been sold in the period commencing 12 months before separation for $158,000, all of which went towards the costs of sale and paying down the mortgage.

10. [10]
    On 20 August 2007 she signed two applications for loans from the respondent, one seeking $20,000 and one seeking $8,721.77, said to be in respect of legal fees: Exhibit 2.^[12]These also set out some information about her assets, referring to her home, said to have no debt owing on it, and “other properties” which were not particularised, the market value of which had shrunk to $1,350,000, though the debt owing was said to be $1.2 million, about the same as in Exhibit 36. There was said to be unspecified other property worth $200,000 on which there was no debt owing, giving her on the face of it net assets of $700,000. All of the property was said to have been purchased before the marriage.

11. [11]
    She stated on the form: “My estranged husband has placed caveats over all of my assets and has placed me in a situation of extreme hardship. I am unemployed and currently unwell. Because of my asset base I cannot even obtain government assistance. My children have left and are being cared for by others. I cannot care for them.” On the second form she added the information “Michael Maplestone has also placed a caveat over my rental property as has Elizabeth Gray of Galbally & O'Bryan. I believe my husband has offshore investments and that he is hiding large amounts of funds overseas. I am contesting the account for Michael Maplestone^[13]but I have to have the funds up [unclear].” 

12. [12]
    There was in evidence a search of the title to her residence undertaken on 10 September 2007: Exhibit 44. This reveals the caveat by Galbally and O'Bryan, one by Mr Haliburton lodged 16 February 2006, and a mortgage to the Bendigo Bank Limited lodged 30 December 1997; on the basis of Exhibit 2 counsel for the appellant submitted that no money was owing on this mortgage. The background to this application appears to be that, having left two other firms of solicitors owing them for fees, she had sought to engage a new firm which said it was not prepared to act unless she put them in funds.^[14]She had no funds immediately available, despite the extent of her assets, and it was difficult for her to raise funds on the basis of those assets, partly because of the caveats and partly because, at least according to Exhibit 36, she plainly had no capacity to service any loan.

13. [13]
    The respondent was described by its managing director, who gave evidence, as a pre-settlement lender, that is it made advances to parties who were awaiting settlements in various forms of litigation: p 1-29. This included making loans to parties in matrimonial proceedings who required funds for legal expenses, or for living expenses, until those proceedings had been resolved. They had become aware of a potential for lending to people who had assets but no cash, and who were not able to obtain loans from major banks and finance companies, because of an inability to make a monthly payment to service the loans, and because of the difficulty in assessing their underlying prospects in the litigation. The prospects of applicants for loans to the respondent were assessed by people with expertise in family law: p 1-30. These were intended to be short-term loans, to enable the party to progress their claim and complete it, and then repay the loan and move on with their life. The company however was a victim of the global financial crisis, in that the bank which was providing its funding facility refused to continue that facility, and from November 2011 it ceased making further loans: p 1-32.

14. [14]
    The applications were approved by the respondent after securing from the appellant an acknowledgment that she would have no option after the matter was resolved but to sell properties to cover the debts that she was incurring: Exhibit 37B. The appellant signed a contract on 21 September 2007 which was subsequently accepted by the respondent: Exhibit 13B.^[15]It provided for a maximum amount to be advanced of $47,286, in respect of three separate payments: to provide $20,000 to the appellant’s current solicitors, Kennedy Wisewoulds on account of their costs in respect of the Family Court matter;^[16]$10,436 in order to satisfy a judgment which had been given against the appellant in unrelated litigation;^[17]and $16,850 to be paid to Galbally and O'Bryan in respect of their costs. The first two payments were to be made on 26 September 2007.^[18]

15. [15]
    The annual percentage rate was 16.95%, and there was an assessment fee which on the full advance would be $2,837.16. The contract also provided for annual fees which on the full advance would be $2,756.77 per annum. Repayment was to occur 14 days after any settlement of the appellant’s dispute, or upon earlier demand. The loan was to be secured by an irrevocable instruction to the appellant’s solicitors to pay the amount owing to the respondent from any settlement monies received, an equitable mortgagee’s caveat and a first ranking registered mortgage over the plaintiff’s residence, though the actual grant of the registered mortgage would at the time of course have been impossible because of the caveats, and it does not appear that any steps were ever taken to register a mortgage, or to obtain the execution of a mortgage, over the appellant’s land.

16. [16]
    The third payment was ultimately not made to Galbally and O'Bryan. As mentioned earlier, the appellant borrowed funds from a friend in order to make this payment. The balance of the initial approved loan was not then drawn down, but on or before 16 October 2007 the appellant approached the respondent to obtain more money in order to fund the cost of the impending Family Court trial: Exhibit 17A. The then solicitor for the appellant wrote to the respondent on 2 November 2007 advising that the trial had been listed on 17 December, that an application for discovery had been listed on 19 November, and that they had advised the appellant that they required $55,000 to be deposited into their trust account if they were to continue acting for her: Exhibit 17B.^[19]

17. [17]
    The respondent approved an advance of $55,000 on 5 November 2007 (Exhibit 17C), but on 15 November 2007 the appellant advised the respondent that Kennedy Wisewoulds had “revoked instructions”: Exhibit 18. On 20 November 2007 the respondent, apparently in response to a request from the appellant, wrote setting out the amounts already advanced, and confirming that interest on those amounts was running: Exhibit 19. The evidence does not make clear what happened to the application for discovery, but the trial came on in the Family Court on 17 December 2007, with the appellant representing herself. An application for adjournment on that day was refused, but on 19 December 2007 the trial was adjourned part heard to 19 May 2008 because the appellant was unwell.^[20]On about 9 May 2008 the appellant approached Forte Family Lawyers to act in the matter, and that firm contacted the respondent by phone (Exhibit 21A) and wrote on 12 May 2008 summarising the position, and estimating their legal costs of an application to adjourn the trial and to investigate the matter further: Exhibit 21D.

18. [18]
    On 14 May 2008 the amount of $16,850 was paid by the respondent to Forte Family Lawyers: Exhibit 21H. This occurred after the solicitor, Mr Salce, confirmed in writing that he had instructions from the appellant for that money to be drawn down into their trust account: Exhibit 21G.^[21]On 15 May 2008 Mr Salce wrote to the respondent setting out what had emerged from the documents and some further instructions from the appellant. There was some dispute about the value of the properties between the appellant and the former husband. At that stage the appellant owned 12 properties, 2 of which were unencumbered, with the other 10 mortgaged to the National Australian Bank, securing a debt of over $1,100,000. There were substantial arrears on that mortgage, and the bank was threating to enforce it. There was approximately $70,000 in a trust account on behalf of the parties as a result of the sale of another property in Bendigo during the marriage. The appellant then had liabilities on credit cards, land tax debts and rate debts which were approximately $57,165. The solicitor was not confident of obtaining a further adjournment of the trial, and noted that the husband was still under cross-examination, and the trial was expected to run for a further 4-5 days. Accordingly he sought a further payment of $30,000 into their trust account.

19. [19]
    A further update sent to the respondent by Mr Salce on 23 May 2008 (Exhibit 23) advised that the family law dispute was settled on 19 May 2008 on terms including that the appellant pay the husband $150,000 but receive an amount just short of $33,000 from the money held in the trust account in relation to the earlier sale of the property. The letter advised that that money had already been paid to the appellant, to stave off her bank. Notwithstanding the existence of an “irrevocable instruction” to the solicitors signed by the appellant,^[22]none of this money was in fact paid to the respondent. The appellant had been ordered to sell four properties before 16 September 2008 in order to pay out the husband.

20. [20]
    Ultimately after they settled the property dispute the fees of Forte Family Lawyers came to a little over $16,850, and the balance of $332.79 was paid on 30 May 2008 by the appellant: Exhibit 29B. One of the issues at the trial, raised by the appellant in her defence, was whether this advance was drawn down and paid to her new solicitors with her approval. In her evidence she claimed that she knew nothing about this (p 2-104), but it is clear from contemporaneous documents that she knew of and approved this draw down,^[23]and the magistrate rejected her evidence to the contrary, and found that this further advance had been made to her, applied on her instructions by payment to her new solicitors for her benefit: reasons p 7.

21. [21]
    What happened subsequently was set out in a further letter from Forte Family Lawyers to the respondent on 10 November 2008, by which time Mr Salce had left that firm and it was no longer acting for the appellant: Exhibit 24. That letter advised that one of the four properties listed for sale had been sold and the husband was paid out from the proceeds, with the balance being applied to reduce liabilities. Three other properties were listed for sale, and the appellant was stated to have advised those solicitors that the respondent could be paid from the sale of the next property after payment of secured creditors and the cost of sale. At that stage the property settlement agreed to had been carried out except for the sale of further properties to satisfy the requirements of the bank in order to obtain from it a release of a guarantee given by the former husband, evidently to be released as part of the settlement agreement. The respondent was invited to communicate directly with the appellant. However, no amount has ever been paid by the appellant, with the result that the amount of interest on the loan has grown substantially.^[24]

Pleadings

22. [22]
    The plaintiff’s statement of claim was conceptually simple: it had lent money to the defendant, the time for repayment had passed, and it had not been repaid. It also claimed an assessment fee of $2,037.16 and interest in accordance with the agreement.^[25]The defence largely put the plaintiff to proof of the relevant allegations, and raised the issues of the payment to Galbally and O'Bryan, and whether the advance on 14 May 2008 was approved by the appellant, to which I have already referred. Most of the non-admissions did not comply with r 166(4), so that the appellant was taken to have admitted the allegation: r 166(5). The defence raised issues about the interest charge being excessive and onerous, and other matters I need not mention. It was alleged that any agreement was unjust within the meaning of the National Credit Code s 76(1), of which 12 particulars were given: para 10. It was finally alleged that the defendant at the time she entered into the loan agreement was to the knowledge of the plaintiff suffering a mental illness, so that she did not have the capacity to understand its terms and conditions: para 11. Particulars of the particulars in paragraphs 10 and 11 were sought and provided. The allegations in paragraphs 10 and 11 were responded to in detail in the reply, paragraphs 6, 7.

The appellant’s submission

23. [23]
    The appellant submitted that the magistrate erred in failing to take into account two matters which were mandatory under s 76(2) of the National Credit Code.^[26]That section provides in part:

“(1) The court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement) the contract mortgage or guarantee was unjust, re open the transaction that gave rise to the contract, mortgage or guarantee or change.

2. (2)
   In determining whether a term of a particular credit contract, mortgage or guarantee is unjust in the circumstances relating to it at the time it was entered into or changed, the court is to have regard to the public interest and to all the circumstances of the case and may have regard to the following:

[there is then a list of 15 specific matters, the last of which is] any other relevant factor.”

24. [24]
    It is also relevant to note that subsection (4) provides that in determining whether a credit contract is unjust the court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable when the contract was entered into or changed. Subsection (8) provides that “unjust” includes “unconscionable, harsh or oppressive.”

25. [25]
    The structure of subsection (2) is that, in deciding whether a contract was unfair, the court has to take into account the public interest and all the circumstances of the case, and can take into account any of the matters listed in the specific paragraphs. The appellant’s point was that the reasons of the magistrate did not expressly state that he was taking into account the public interest and all the circumstances of the case. That was true, in that the reasons referred only to those matters which were contentious during the trial. On the other hand, there was no specific reference to public interest in the pleadings, or in the submissions for the appellant at the end of the trial.

26. [26]
    There were written submissions lodged by both sides following the taking of evidence in the trial, and oral submissions made to the magistrate on 28 January 2015, at the end of which he gave judgment. The written submissions for the appellant, which were provided to the court on 28 January 2015, made no mention of the public interest, but the written submissions for the respondent in para 10 said:

“In determining whether the contract is unjust, the court must have regard to the public interest and the circumstances which exist at the time that the contract was entered into (or which were reasonably foreseeable at that time) (s 76(1) NCC and Barker v GE Mortgage Solutions Ltd [2013] QCA 137 at [71]).”

27. [27]
    That paragraph from that decision of the Court of Appeal stated as follows:

“The definition of unjust in s 76 is not an exclusive one. In considering whether a term of a credit contract or mortgage is unjust in the circumstances relating to it at the time it was entered into the court may consider the matters listed in s 76(2)(a)-(p) and is to have regard to the public interest and all the circumstances of the case. Circumstances not reasonably foreseeable when the contract was entered into are not to be taken into account.”

28. [28]
    Accordingly if the magistrate had read the respondent’s written submissions, and had looked at the decision of the Court of Appeal which was referenced in them, both of which might be expected in the circumstances, his attention would have been specifically drawn to the test laid down in the statue in subsection (2). In his reasons the magistrate essentially endorsed the submissions in writing on behalf of the respondent: p 4 line 15. Those submissions referred expressly to the relevant tests in the passage that I have quoted, and there was no argument before him as to the content of the relevant test. In these circumstances it is understandable that the magistrate saw no need to refer expressly to the content of the test in his ex tempore reasons.

29. [29]
    The structure of the pleading was that the conclusion that the contract was unjust was alleged by the defendant to be based on a list of factual matters particularised in the defence, and the reply contested that conclusion and responded specifically to the factual allegations relied on. Hence on the pleading there was a dispute about each of the particulars relied on, and about the conclusion that the contract was unjust. This defined the parameters of the matters in contention at the trial.

30. [30]
    In my opinion the absence of specific reference on the part of the magistrate to the concept of public interest was consistent with the absence of any particular reference to that issue in the pleadings or in the submissions for the appellant. It is understandable that in giving an ex tempore judgment, the magistrate did not refer expressly to a matter which had not been in contention at the trial. The obligation to give reasons has been spoken of by reference to addressing the matters in contention at the trial.^[27]In those circumstances, the mere fact that the issue of public interest was not mentioned in the reasons does not mean that the magistrate did not have regard to it.

The Public Interest

31. [31]
    The content of the public interest referred to in s 76(2) has not been expounded much in court decisions. Section 76 is similar to, and apparently based on, s 9 of the Contracts Review Act 1980 (NSW), which also speaks of the “public interest”. In Baltic Shipping Company v Dillon (1991) 22 NSWLR 1, Kirby P said at p 20 in relation to s 9(2):

“The duty of a court remains to have regard to ‘all the circumstances of the case’. It must consider the public interest, including in the observance of agreements duly entered. But in the end, the focus of attention must be upon the contract. The court must decide whether ‘in the circumstances’ the contract is unjust.”

32. [32]
    In the same case Gleeson CJ said at p 9:

“The general policy of the law is that people should honour their contracts. The policy forms part of our idea of what is just. Moreover, there is a particular policy of the law to encourage resolution of litigation by settlement, and that particular policy is not advanced by encouraging plaintiffs who settle litigation and later repent of their bargains to seek to avoid their contracts on the basis that they were made in circumstances of emotional vulnerability. Litigation is stressful for most people who have the misfortune to become involved in it.”

33. [33]
    That suggests that the focus in relation to public interest is on the enforcement of contracts, holding people to their bargains, and that the requirement to consider this factor is a requirement which would function as a constraint upon a conclusion by the court that a particular contract was unjust. In those circumstances, the decision arrived at by the magistrate does not suggest there was a failure to take this consideration into account.

34. [34]
    There was an earlier comment to similar effect about the significance of the public interest consideration under s 9 in the judgment of McHugh JA in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 626.^[28]His Honour, with whom Hope JA agreed, said:

“The direction in s 9(1) to have regard to the public interest also points to the necessity in determining whether the contract is unjust to consider the position and rights of the party against whom relief is claimed. Section 9(2)(d) also emphasises that a party to a contract is entitled to insist on such contractual provisions as are necessary to protect his legitimate interests.”

35. [35]
    In Custom Credit Corporation Ltd v Lupi [1992] 1 VR 99 Murphy J commented at 105 that the public interest was a difficult concept but may direct attention to a consideration of whether the credit provider’s conduct in connection with the regulated contract offended against community standards of business morality. This was said without reference to authority, although the decision in West (supra) was referred to by the other members of the Court, who did not discuss the concept of the public interest. The point in that case was that a tribunal had erred in reopening a contract under the Credit Act 1984 on the basis that the underlying transaction was unjust, when there was no finding that the relevant contract was unjust. With respect, I do not regard this as a considered conclusion on the point by the Court, and in the circumstances I prefer to be guided by the decisions of the New South Wales Court of Appeal.^[29]

36. [36]
    The Explanatory Memorandum to the National Consumer Credit Protection Bill 2009 contained the following passage relating to the clause which became s 76(2) of the Act:

1385. In determining whether or not a contract, mortgage or guarantee is unjust, the Court must have regard to the public interest. The 'public interest' is a term that can bear different interpretations and is not fixed in meaning. In the lending context it can involve          competing interests such as:

   . the need for certainty in the determination of when a contract will be unjust (Dale v Nichols Constructions Pty Ltd [2003] QDC 453); or

   . the desirability of protecting consumers where their sole residence is at risk  (Perpetual Trustee Company Ltd v Albert and Rose Khoshaba [2006] NSWCA 41).

37. [37]
    Dale (supra) was a decision of mine, in which among other things I rejected an application to reopen a loan contract under the Consumer Credit Code s 70, the precursor of s 76 of the Code. What I said about the concept of “public interest” in that decision was at [105] as follows:

Consideration of the public interest involves the proposition that those engaged in the business of providing credit, or where that is part of or incidental to their business, should not be engaged in unconscionable, harsh or oppressive conduct.^[30]On the other hand, it can also be seen to be part of public policy that people should honour their contracts; this forms part of our idea of what is just: Baltic Shipping Company v Dillon (1991) 22 NSWLR 1 at 9 per Gleeson CJ.

38. [38]
    Khoshaba (supra) was a decision under the Contracts Review Act 1980 (NSW) s 9, where the Court of Appeal granted leave to appeal but dismissed an appeal against a decision by a trial judge to reopen a contract under that provision, that court holding that the trial judge had made an error of law, but itself arriving at the same decision. There was some consideration of the concept of when a contract was “unjust” under that Act, but little discussion in the reasons specifically of the concept of “public interest” in this context. The only reference is in a passage in the judgment of Basten JA where he rejected the proposition that “asset lending” was necessarily or prima facie unjust for the purposes of that Act, at [128]:

To engage in pure asset lending, namely to lend money without regard to the ability of the borrower to repay by instalments under the contract, in the knowledge that adequate security is available in the event of default, is to engage in a potentially fruitless enterprise, simply because there is no risk of loss. At least where the security is the sole residence of the borrower, there is a public interest in treating such contracts as unjust, at least in circumstances where the borrowers can be said to have demonstrated an inability reasonably to protect their own interests, for the purposes of, for example, s 9(2)(e) or (f). That does not mean that the Act will permit intervention merely where the borrower has been foolish, gullible or greedy. Something more is required: see Esanda Finance Corp Ltd v Tong (1997) 41 NSWLR 482 at 491 (Handley JA) cited with approval in Elkofairi (supra)^[31] at [77] by Beazley JA.

39. [39]
    That suggests that his Honour considered that it was contrary to the public interest for persons who had a demonstrated inability to protect their own interests to enter into a transaction which would lead to their losing their sole place of residence. It seems to me, with respect, that that decision does not support the much broader statement for which it was cited in the Explanatory Memorandum passage quoted earlier, although I accept that it may be that in interpreting the Act what matters is the content of the Memorandum rather than what was actually said by his Honour.

40. [40]
    I note that the Explanatory Memorandum also referred, in a different context, to what was seen as the obligation of a credit provider in relation to a proposed credit contract:

316. The key obligation for licensees is to ensure they do not provide, suggest, or assist with a credit contract that is unsuitable for the consumer. This obligation requires licensees to reasonably inquire and verify a customer's financial circumstances to make an assessment that the credit contract will meet the consumer's requirements and that the consumer has the capacity to repay the contract.

41. [41]
    In the present case, the purpose of the loan was essentially to pay for past and future legal costs in relation to the family law dispute, and one of the things the respondent did was to assess the appellant’s position and prospects in relating to that dispute, and whether it promised to produce a sufficient return to enable the loan to be repaid. That was directly relevant to the obligation to assess her capacity to repay the contract, and whether the contract would meet her needs. To the extent that subsequent events can throw light on the question of unfairness when the contract was made, which is limited, the later events here justified that assessment, and the loan would have been speedily repaid if the appellant had not chosen to direct that the funds that came in be applied elsewhere.

42. [42]
    In Flockton and ANZ Banking Group Ltd [2011] WASAT 57 the tribunal member said at [44]: “The importance of taking account of the public interest is relevant, both from the perspective of certainty and finality of contracts on the one hand, and to prevent unjust dealings on the other hand. A 'balancing exercise' is therefore required 'between the importance of upholding contracts and countervailing factors.”  I have not located any other cases dealing with this issue, nor was I referred to any. It was submitted for the appellant that the function of the Act was to strike a balance between the respective rights of borrowers and lenders, which is undoubtedly true, and that the public interest lay in not imposing unfair contracts on borrowers. There may be something in that, but it is unhelpful to say that it is necessary to have regard to the public interest in not having unjust contracts in deciding whether a contract is unjust, as that public interest is engaged only if the contract is unjust.

43. [43]
    There is nothing in the reasons specifically to suggest that the magistrate did not have regard to the public interest, but I am being asked to infer, from the absence of any reference in the reasons, that the magistrate did not have regard to it. Obviously that is possible,^[32]but one would expect the magistrate would have regard to the terms of the section when asked to resolve a dispute about whether the contract was unfair for the purposes of that section, particularly when he had been referred to the terms of the section and to a case which confirmed that it meant what it said. In the circumstances, I am not prepared to draw that inference, in circumstances where the decision arrived at does not itself suggest he did not have regard to it.

44. [44]
    As to the adequacy of the reasons, I note that in Barker v GE Mortgage Solutions Ltd (supra) the Court of Appeal was considering an appeal from a judgment given summarily in favour of the respondent, in circumstances where there had been reference at the hearing to an argument that the contract was unfair under the Consumer Credit Code s 70, which was in similar terms to s 76. It was held that this was something the primary judge was required to consider, and in circumstances where there had been no mention of this issue at all in ex tempore reasons for judgment, the judge’s discretion had miscarried so that the Court was required to exercise the discretion afresh: [70]. Reference was made to the terms of the statute as noted earlier, and the appellant’s arguments were then dealt with in paragraphs [72]-[80].

45. [45]
    The matter was dealt with in that judgment in broadly the same way as the matter was dealt with by the magistrate here, by dealing with specific matters raised by the appellant, and showing that there was no, or an insufficient, basis to think that any of those matters raised a good ground for thinking that there was any real prospect of successfully defending the respondent’s claim on the basis of an unjust transaction. In that case, the matter was being decided in that context, rather than as a final decision on the merits, but the approach of the Court of Appeal suggests that their Honours did not regard a conclusion that a contract had been unjust as one which would be readily arrived at. The Court said nothing in particular about what the public interest in question was, and how it had regard to it, nor did it say expressly that it had considered “all the circumstances of the case,” although the passage cited earlier did note the need to consider them.

46. [46]
    As to the other argument, the question of whether the magistrate failed to have regard to all the circumstances of the case, again there is nothing in the reasons specifically to indicate that there was any particular circumstance of the case to which the magistrate failed to have regard. Obviously the magistrate would have been aware of all of the circumstances of the case exposed by the evidence, and could not have been expected to take into account any circumstances not exposed in that way. If there was a conflict of evidence in relation to a particular matter, the magistrate resolved it. The magistrate did not say that there was some particular circumstances to which he was not having regard, and in that situation the appellant’s argument really comes down to the proposition that I should infer that the magistrate did not have regard to all the circumstances of the case, only because the magistrate failed expressly to state that he had regard to all the circumstances of the case.

47. [47]
    Again I am not prepared to draw that inference. If I were to conclude that there had been a failure to have regard to all the circumstances of the case, merely because the magistrate failed to say so expressly, that would be insisting upon a superficial approach to the process of giving reasons for judgment, which in my opinion is not appropriate, particular as something to be required of reasons delivered ex tempore. In these circumstances, I am not pursued that the magistrate has failed to have regard to the matters to which he was required to have regard under s 76(2). That argument on behalf of the appellant fails.

Knowledge of defendant’s mental health issues

48. [48]
    It was also argued on behalf of the appellant that the magistrate erred in rejecting reliance on the defendant’s mental health issues in relation to the application for reopening under s 76 of the National Credit Code, in circumstances where on the authorities the mental health issues were a relevant factor even if the respondent was not aware of them.^[33]This ground of appeal can be shortly dealt with. The magistrate did find that the respondent had not been aware of any mental health issues on the part of the appellant,^[34]a finding which was relevant to the matter raised in paragraph 11 of the defence. This was pleaded as an independent ground of defence, specifically on the basis that the respondent and its agents were aware of, or ought to have been aware of, the situation. In paragraph 7(d) of the reply the respondent denied that it was aware or ought to have been aware of circumstances possibly affecting the appellant’s capacity to enter into the loan agreement, and indeed went on to deny that the defendant did not have capacity to understand the terms and conditions of the loan agreement.

49. [49]
    The state of the respondent’s knowledge of this matter was therefore an issue on the pleadings, so it was appropriate for the magistrate to resolve that issue, as he did, adversely to the appellant. What mattered however for the purposes of s 76 was the existence or otherwise of a relevant mental health issue, and as I have pointed out the magistrate dealt with that issue by finding that any medical condition the appellant had, as to which he made no finding, did not adversely affect her capacity to protect her interest. In those circumstances, the appellant had failed to prove that she had a relevant medical condition, so there was no obligation on the magistrate, or for that matter on me, to take into account as a relevant circumstance the existence of a relevant medical condition. Accordingly, no error has been shown in relation to this issue either.

Precautionary findings

50. [50]
    Counsel for the appellant argued that, if there was an error of law on the part of the magistrate in failing to take into account either or both of the matters referred to in s 76(2), what should follow is that there should be a new trial. I am not persuaded there was any such error of law, but if a different view should be taken elsewhere on that question, I should on a precautionary basis deal with the question of what follows. I do not agree that the appropriate course is for the matter to be sent back for a new trial in those circumstances. The proceeding before this court is a proceeding by way of appeal pursuant to the Magistrates Courts Act 1921 s 45. An application for a new trial is made under s 44 of that Act, to a magistrate within seven days of the decision in the first trial. Pursuant to s 47 of the Act, on the hearing of the appeal the District Court may order a new trial on such terms as it thinks just – paragraph (b) – but it is also given power under paragraph (d) to:

“make any other order, on such terms as it thinks proper, to ensure the determination on the merits of the real questions in controversy between the parties.”

51. [51]
    In the ordinary case, if it emerges that there has been an error of law on that part of the magistrate, a Court on appeal will decide the matter for itself on the basis of the evidence before the magistrate, by way of rehearing,^[35]unless the circumstances are such that the matter cannot be resolved in this way. That might occur for example in circumstances where the magistrate made a finding of primary fact by resolving a conflict of evidence on the basis of an assessment of credibility of the witnesses concerned, if the error of law was associated with the resolution of that conflict of evidence.

52. [52]
    In the present case, although the Notice of Appeal was wider, there was no challenge in submissions to any of the findings of primary fact made by the magistrate, or to the resolution of any conflict of evidence before the court. The appeal as argued was limited to the proposition that the magistrate, in deciding whether for the purposes of s 76 the contract of loan was unfair, had failed to take into account matters which ought to have been taken into account. That deficiency can easily be rectified by an appeal court arriving at its own conclusion on that point on the basis of the evidence before the magistrate, taking into account any findings of primary fact arrived at by the magistrate, and applying the correct statutory test.

When is a contract “unjust”?

53. [53]
    Apart from noting that the definition of “unjust” in subsection 76(8) was inclusive, the Court of Appeal in Barker (supra) said nothing about what was meant by the term “unjust” for the purposes of s 76. There was some discussion in cases of the meaning of the term “unjust” when it was used in similar provisions in earlier legislation. In West (supra) McHugh JA noted at p 621 that contracts which fall into any of the categories of unconscionable, harsh or oppressive will be unjust, but a contract may be unjust which does not fall into any of those. His Honour said: “It is important to bear in mind that it is the contract or its provisions which must be unjust,” and later added:

“If a defendant has not been engaged in conduct depriving the claimant of a real or informed choice to enter into a contract and the terms of the contract are reasonable as between the parties, I do not see how the contract can be considered unjust simply because it was not in the interest of the claimant to make the contract or because she had no independent advice.”

54. [54]
    His Honour then cited a passage from Professor Peden, who was said to have been responsible for drafting the Act, and said at p 622 of it:

“This passage brings out the important point that, under this Act, a contract will not be unjust as against a party unless the contract or one of its provisions is the product of unfair conduct on his part either in the terms which he has imposed or in the means which he has employed to make the contract.”

In that case it was held that the contract in question, a guarantee supported by a mortgage over the applicant’s home, was not unjust. His Honour gave a number of reasons, but at p 626 noted:  “Nor is it suggested that AGC in any way sought to induce Mrs West to enter into the deed or mortgage or applied any pressure to her.”

55. [55]
    McHugh JA also said at p 620:

“A contract may be unjust under the Act because its terms, consequences or effects are unjust. This is substantive injustice. Or a contract may be unjust because of the unfairness of the methods used to make it. This is procedural injustice. Most unjust contracts will be the product of both procedural and substantive injustice.”

56. [56]
    The passage on p 621 in West was cited for approval by Sheller JA, with whom the other members of the Court of Appeal agreed, in Citicorp Australia Ltd v O'Brien (1996) 40 NSWLR 398, where the court overturned a finding by a trial judge that a contract was unjust under the Contract Review Act 1980. His Honour said at p 420:

“A contract is not unjust within the meaning of the Act because one party has made a good bargain and believes the other party has made a bad one. To say that, in such a situation, the first party must not enter into the contract as to stifle commerce. Moreover, with respect, there seems to be a good deal of hindsight built into his Honour’s conclusions. Citicorp were prepared to lend money to the O'Brien’s where apparently, on the evidence, others, such as permanent building societies, were not, but on a higher ratio of loan to security and at a higher rate of interest. As it happened, even though the borrowers were unable ultimately to meet their commitments, Citicorp suffered no loss. But that is not to say there was no risk that it would not suffer loss.^[36]Other money lenders were not prepared to take that risk. Provided the terms of the contract are reasonable and the parties have a real or informed choice to enter into the contract, I do not think the Act should be used by the court as a means to prevent them from doing so. In my opinion there is no basis at all upon which it could be said that either the finance agreement or the mortgage was unjust within the meaning of the Contracts Review Act 1980 and accordingly no orders under that Act could be made.”

57. [57]
    The passage at p 620 in Westwas cited with approval by the Court of Appeal in Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 at [64]. In addition reference was made at [69] to the proposition in the judgment of Gleeson CJ in Baltic Shipping (supra) cited earlier, and a similar statement by Sheller JA in Nguyen v Taylor (1992) 27 NSWLR 48 at 70, that “the general policy of the law is that people should honour their contracts”. In Elkofairi the appellant could not read or write English or understand other than the most basic spoken English, and had difficult domestic circumstances such that she was in a position of special disadvantage: [53]. Further, there was a substantial loan made, secured on the appellant’s only asset, with a high ratio of 75% when the respondent knew the appellant had no income or other assets, so that the respondent was lending on the faith of the security only: [79].

58. [58]
    There was some further discussion of the concept of a contract being “unjust” by the Court of Appeal in New South Wales in Khoshaba (supra). Spigelman CJ, with whom the other members of the court agreed generally, noted at [64] that a standard of “justness” had to be applied accordingly to community standards from time to time, and rejected a submission that the purpose for which the loan was obtained was not part of the circumstances relating to the contract which could be taken into account: [68]. His Honour did note that the general statements by McHugh JA were not to be understood as rules about the application of the statute, but as identifying relevant considerations entitled to significant weight: [73]. The same applied to the comments of Gleeson CJ in Baltic Shipping (supra): [74]. His Honour also said that the fact that the financer had no involvement of any kind in the investment for which the loan was made was entitled to significant weight in its favour: [77].

59. [59]
    In that case the lender had failed to follow its own lending guidelines, knew nothing about the purpose for which the loan was to be made, which happened to be an improvident investment, and did not verify information provided in the loan application, suggesting that it was an example of “asset lending”. There was a finding that if the guidelines had been followed the loan would not have been made. His Honour rejected the proposition that a failure to recommend independent advice in relation to the transaction was a matter deserving significant weight, and doubted that any recommendation would in any event have had any effect on the respondent: [90, 91]. His Honour noted that it was open under that act to take into account, as a factor relevant to the question of unjustness, circumstances relating to the contract at the time it was made, even if the other party was ignorant of them, though this was relevant in determining whether it was appropriate to exercise the discretion to make an order under the Act: [94, 95].[37]His Honour thought that the question was finely balanced, but ultimately concluded that the contract was unjust, and relief under the Act ought to be granted.

60. [60]
    I note that in Khoshaba (supra) two members of the court, Handley JA at [99] and Basten JA [106], said that considering an application for relief under the Contracts Review Act involved a three stage process: the making of findings of primary fact where these are disputed, the formation of an evaluative judgment as to whether or not the contract is unjust, and why, and then if necessary, the exercise of the courts discretionary power to grant relief and determine its extent. Handley JA said that the second stage finding is, within broad legal limits, impressionistic and evaluative: [101]. That would in my opinion apply to an application under s 76. It is also clear that a contract is not unjust just because some other provision of the Code has not been complied with: Custom Credit Corporation Ltd v Gray [1992] 1 VR 540, concerning the equivalent provision in the Credit Act 1984 (Vic); Flockton and ANZ Banking Group Ltd [2011] WASAT 57 at [39] concerning the equivalent provision in the Consumer Credit (WA) Code Regulation 1996.

Analysis

61. [61]
    The magistrate found that the three payments had been lent by the respondent to the appellant, including the payment of $16,850 which was paid to the last solicitor. He noted that the appellant in her evidence claimed that that solicitor should never have been paid, that no one told her about anything, and she was not sent any bills, but went on to say:

“Yet here she is, according to this, on the second of June she paid the outstanding account of $332.79. It just doesn’t make any sense.”^[38]

62. [62]
    I interpret that as a finding that the appellant’s evidence on these matters was rejected, on the basis that it was inconsistent with contemporaneous documents which shown that she had authorised the payment of the $16,850 to the solicitor, and after a bill was sent to her for the balance of just over $300, that amount was paid by her to the solicitor, propositions which were plainly inconsistent with the appellant’s evidence. Such a finding would have supported a further finding that the appellant was not a reliable witness generally, though no such specific finding was made expressly.^[39]There was however another area where it seems to me that the magistrate rejected the evidence of the appellant, and that was as to the appellant’s capacity to manage her affairs, in the light of her claims that she was suffering from various illnesses.

63. [63]
    The magistrate noted that there was no medical evidence in support of those claims, or a claim that she was taking various medication at different times, but dealt with this on the basis that any such difficulties which existed, about which he arrived at no definite conclusion, did not interfere with her ability properly to manage her affairs. This was based on findings that she had been able to give quite detailed instructions to the solicitors in relation to the Family Court litigation, including quite detailed instructions about the question of whether the husband had made any and what contributions to the maintenance of any of her houses, and was able to negotiate with the plaintiff in relation to the interest rate to be charged for one of the loans, and concluded that any illness she might have had “don’t seem to have affected her capacity to negotiate things like that.”^[40]

64. [64]
    That was in substance of finding that any illness she in fact had did not significantly interfere with her capacity to manage her affairs, which finding necessarily involved rejecting any evidence on her part to the contrary. Having looked at the exhibits, and bearing in mind the evidence of Ms Khung^[41]I consider that at the time the appellant showed no sign of mental incapacity. She was able to give the solicitor detailed instructions as to what she said were deficiencies in a report from a valuer (Exhibit 34: 29 August 2007) and as to what discovery she wanted from the husband (Exhibit 35, 29 August 2007, which seems very wide, although I do not know what sort of discovery is commonly ordered in the Family Court), and generally as to what matters she thought were relevant about her dispute: Exhibit 51. Exhibit 42 showed that she understood what interest she was paying, and was able to protect her interests, and Exhibit 47 shows her trying (without success) to negotiate with Galbally and O'Brien in November 2007 to protect her interests. Other sensible communications were Exhibits 10, 39 and 50A. What she was seeking may have been unrealistic or unreasonable, but she appears to have been capable of applying herself assiduously to seeking it. I agree with the Magistrate’s findings.

65. [65]
    The magistrate also rejected the allegation in paragraph 10(i) of the defence: reasons p 4. That conclusion was plainly justified by the evidence: there is nothing in the documentation in evidence to demonstrate, or even suggest, the existence of an agency relationship between the respondent and those solicitors, and the solicitor denied such a relationship in oral evidence.^[42]As to the question of inequality in bargaining power, the magistrate found that the appellant had successfully negotiated a reduction in the interest rate initially sought by the respondent in relation to part of the loan, as was clearly shown by the documentary exhibits, which demonstrated that she had some reasonably bargaining power, and a capacity to use it. Having read the transcript, I agree with these findings.

66. [66]
    No doubt she was in a situation where she needed money, in the sense that she was involved in Family Court litigation which she wished to pursue actively and wanted to retain solicitors to act for her in that litigation, and had no funds immediately available to her with which to pay such solicitors,^[43]but even in that context, it was more accurate to describe her situation as one in which she wanted money rather than one in which she needed money: she wanted to contest the Family Court proceedings, and wanted to contest them in a particular way, and wanted to retain solicitors, who were necessarily going to cost money, to assist her in doing so, but she did not have money available to her, and had no capacity to service a loan, so that the potential sources of finance available to her were necessarily going to be quite limited.

67. [67]
    No doubt the respondent was carrying on a business and would prefer to have customers rather than no customers, but equally it would no doubt prefer not to lend money to people who are not going to repay it. Its business involved dealing with a particular category of borrower, those who were involved in such litigation, had no immediate cash resources to carry it on, but had good prospects of success if they could obtain the necessary funds for a lawyer: p 1-29. This was a specialised lending area, because of the need for the lender to be able to assess the prospects of success in the Family Court litigation being funded, and hence the prospects of there being a fund available from which the loan was to be repaid. That was shown by the fact that the contact contemplated that the Family Court proceedings would be settled, and provided for the loan to be repayable when that occurred.

68. [68]
    There was even provision for an irrevocable authority to be signed by the appellant, as occurred, so that when monies were paid pursuant to the settlement they could be applied immediately to repay the loan, thus limiting the amount of interest which would accrue under it. As it happens, when funds did become available the appellant had this money paid to her bank,^[44]presumably so that it would not start selling up her properties secured by the mortgage. It was as a result of this choice by the appellant that the loans were not largely repaid promptly, and that interest has continued to accrue at the relatively high rate thereafter. As to the question of whether the appellant had the opportunity to obtain independent legal advice, even if the solicitors she was then seeking to retain would not be characterised as independent, she had already changed solicitors more than once, and was perfectly capable of going to other solicitors if she chose to do so. There was nothing complicated about the transaction and no evidence that the appellant was under any misapprehension about its essential features,^[45]or that the position would have been different in any way if she had obtained independent legal advice before signing the loan contracts.

69. [69]
    As to the allegation pleaded that the “agents” were aware of the financial situation of the defendant and her inability to repay the loan amount, as I have explained the appellant had the capacity to repay part of the loan amount from settlement funds, but chose to apply that money in a different way. Apart from that, she certainly had the capacity ultimately to repay the loan money, by selling some of her investment properties, the mode of repayment always in contemplation. The position seems to be however that she was reluctant to take that step.^[46]This, however, was certainly not a situation where money was lent to someone who was known not to have a capacity to repay it; on the contrary, this was a case where money was lent to someone who had a capacity to repay it.

70. [70]
    Finally, there was no evidence in support of the proposition that the interest charges were relatively high in comparison to comparable transactions. Indeed, there was no evidence at all of interest charges for comparable transactions. There was no legal security interest over land put in place, which could not have happened anyway because of the caveats, and which increased the risk for the respondent. I do not accept the submission that the existence of an equitable mortgage over the appellant’s home meant that the respondent was in essence in the same position; enforcement of an equitable mortgage against land is a much more difficult and expensive process than enforcing a legal mortgage, and that is a matter of some significance given the size of the initial loan here. To speak of the transaction being in effect secured by a first mortgage on land, as counsel for the appellant did, was quite unrealistic in the circumstances.

71. [71]
    In this matter there was certainly nothing unfair about the way in which the respondent behaved in the process of entering into the contract of loan. The respondent was offering a service which the appellant wanted, but it was entirely the appellant’s choice to take it from the respondent or not to do so. The interest rate was high, but it would have been manageable if the loan had been repaid promptly. The family law dispute was settled, which was what the loan was provided to achieve. Further, the respondent had put in place an arrangement, in the form of an “irrevocable authorities” to the solicitors, designed to ensure that the loan was promptly repaid.

72. [72]
    There was no evidence that funds were available from an alternative source at a lower rate, and the effect of the evidence was that loans of money for this purpose are not readily available. In those circumstances it is unsurprising that the interest rate charged would be relatively high. The National Credit Code does not impose a cap on interest rates, either generally or in relation to a particular situation, and I do not consider that s 76 provides a statutory basis on which a Court can, intuitively and without an evidentiary basis, simply decide that in the circumstances a particular interest rate which was agreed to between the parties was so high that the contract was unfair. This is particularly the case when the interest rate arrived at was to some extent the product of negotiation between the parties, as here.

73. [73]
    With regard to the matters raised in the defence, I have already noted that the allegation that the solicitor was the respondent’s agent was rejected by the magistrate, in my opinion correctly. I do not accept that the appellant had no bargaining power at all; in fact the appellant did bargain over the interest rate, in respect of part of the loan, and succeeded in securing a lower interest rate for that part. The solicitors she sought to retain were entitled to refuse to act unless put in funds,^[47]and accordingly she was in the position where, if she wanted to obtain their services, she had to obtain money from somewhere to put them in funds. There was nothing unfair or unreasonable about the solicitors acting in that way, particularly in a situation where there had previously been other solicitors acting who had not yet been paid in full.

74. [74]
    The fact that the solicitors suggested this source of funds to the appellant^[48]does not mean that they were putting any pressure on her to obtain the necessary funds from this source, nor was there any evidence of any improper pressure from any other source. The fact that the appellant wanted money and did not know of any other way to obtain it does not mean that there was any improper pressure applied to her. The proposition that the appellant was not reasonably able to protect her interests due to her mental condition at the time of entering into the loan contract was not made out on the evidence, as already discussed. The mere fact that the defendant did not obtain independent advice in relation to the loan agreement does not make it unjust, and there was in my opinion nothing in the circumstances surrounding this transaction which imposed any obligation on the respondent or the solicitors to advise the appellant to obtain independent advice in relation to this agreement. I am not persuaded that there was any relevant feature of the loan agreement not understood adequately by the appellant.

75. [75]
    Far from being aware that the appellant was unable to repay the loan, the true position is that the appellant was well able to repay the loan, and the respondent had taken some trouble to ensure that there was such a capacity to repay the loan on the part of the appellant before the agreement was entered into. That did not involve any hardship on the part of the appellant, merely the fact that she would have to sell some of the properties that she owned, something which she had said to the respondent she accepted she would have to do.

76. [76]
    There was no evidence that the interest charges were excessive and onerous in comparison to comparable transactions.^[49]Nor was there any evidentiary basis for a conclusion that the interest rate, though high, was excessive to the point of being unjust given the nature of the risks associated with this transaction, where there was the potential for the defendant to become insolvent if the Family Court proceedings went badly wrong for her, bearing in mind that any favourable order obtained from the Family Court by her former husband would take priority over this debt. Overall, in the light of the evidence and considering the findings of primary fact made by the magistrate, my conclusion is that none of the particulars of injustice alleged in paragraph 10 of the defence was made out.

77. [77]
    I am also of the opinion that none of the specific matters referred to in s 76(2) suggest that the contract in the present case was unjust. There were no particular consequences of compliance or noncompliance with any of the provisions of the contract which suggested that it was unjust, and it was not subject to any conditions not reasonably necessary for the protection of the legitimate interests of the respondent, or unreasonably difficult for the appellant to comply with. There was nothing in the form of the contract and the language in which it was expressed which rendered it unjust. The other matters referred in the list in subsection (2) have already been dealt with in what I said earlier.

78. [78]
    There is nothing inherently contrary to the public interest in funding litigation; indeed it could be said to be in the public interest for litigation funding of the kind provided by the respondent to be available to individuals involved in litigation in the Family Court who have good prospects in proceedings in relation to the distribution of matrimonial property, but would benefit from the availability of legal advice in order to bring those prospects to fruition. The public interest referred to in Baltic Shipping Co (supra) and elsewhere supports the enforceability of contracts in accordance with their terms, and I do not consider that there is any other aspect of the public interest which suggests that the contract in the present case was unjust. I am not persuaded there was any procedural injustice from the conduct of the respondent in relation to the making of the contract, or that there was any substantive injustice in the terms of the contract and the foreseeable consequences of entering into the contract at the time it was made. Taking into account all of the circumstances of the case, I would find that the loan contract in the present case was not unjust in the circumstances relating to it at the time it was entered into. Accordingly there is no occasion to reopen the transaction under the National Credit Code s 76(1).

Interest by contract and the jurisdiction of the Magistrates Court

79. [79]
    There was however one matter where I consider that the magistrate did fall into error. The magistrate held that he could not award interest under the contract if the amount awarded took the total judgment over the monetary limit of the Magistrates Court, of $150,000. This was said to follow from the decision of the Court of Appeal in Van Riet v ACP Publishing Pty Ltd [2004] 1 Qd R 194, but in my opinion that decision is authority for precisely the opposite. In that case the question before the Court was whether the appellant had a right to appeal from a final judgment of the District Court where the damages were awarded in an amount which was under the Magistrates Court jurisdictional limit, but with interest and costs added was for more than the Magistrates Court jurisdictional limit.

80. [80]
    The joint judgment of McMurdo P and Jerrard JA referred to the earlier decision of the Full Court in Johns v Johns [1988] 1 Qd R 138 at 140-1, and said at [19]:

“Consistent with the approach in Johns v Johns, the civil monetary jurisdiction of Magistrates Courts is $50,000^[50] exclusive of interest and costs. The judgment given in favour of the first respondent of $48,000 plus interest and costs was therefore within the jurisdictional limit of the Magistrates Court.”

81. [81]
    The third member of the Court, Davies JA, said at p 204:

“The phrase ‘Magistrates Court jurisdictional limit’ is defined in s118(10) of the District Court of Queensland Act 1967 to mean the amount of the jurisdictional limit in the Magistrates Courts for personal actions stated in the Magistrates Courts Act 1921 s 4(a). That is, personal actions in which the amount claimed is not more than $50,000. That seems to imply that claim can be made in the Magistrates Court for $50,000 damages and judgment given for that sum together with interest and costs. Consequently it would follow that the judgment for $48,000 together with interest and costs was not a judgment given for an amount equal to or more than the Magistrates Court jurisdictional limit.”

82. [82]
    The important consideration is that the jurisdiction of the Magistrates Court is by s 4(a) of the 1921 Act fixed by reference to “the amount claimed”, rather than the judgment given. So long as the claim is for an amount not above $150,000, the Court can give judgment for that sum together with interest and costs, without exceeding its jurisdiction. That position was confirmed by the analysis of Wilson J in Campbell v Turner (No.2) [2007] QSC 362 at [11]. In that case, as in Van Riet, the interest was allowed under the statutory provisions now in the Civil Proceedings Act 2011 s 58, but the reasoning applies equally to interest accruing as a debt under a contract of loan. The reasoning of Wilson J was approved by the Court of Appeal in Campbell v Turner (No.2) [2008] QCA 189, although the costs order was varied became of changes made in the judgment for damages by the Court of Appeal in [2008] QCA 126, where the court allowed equitable damages by way of compound interest rather than interest by statute, and the court doubted that the analysis of Wilson J applied to such damages. But there is no reason why it would not apply to interest under a contract.

83. [83]
    It follows that the magistrate erred in failing to award interest under the contract to the date of judgment. That error however was in the appellant’s favour, and there was no cross appeal. Accordingly as the matters argued on behalf of the appellant have not been made out, the appeal is dismissed with costs.