FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Channic Pty Ltd (No 4) [2016] FCA 1174

ORDERS

THE COURT ORDERS THAT:

1.    The applicant is directed to submit to the Court within 14 days proposed declarations and orders to be made in conformity with the findings in the reasons for judgment published today.

2.    The costs of and incidental to the proceeding are reserved for later determination.

3.    The parties are directed to file submissions in relation to the costs of the proceedings within 21 days.

4.    The question of the determination of a pecuniary penalty in respect of the various contraventions is to be determined in a separate proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GREENWOOD J:

PART 1: The Statutory Background

1    In 2009, the Commonwealth Parliament enacted the National Consumer Credit Protection Act 2009 (Cth) (the “NCCP Act”). Schedule 1 to the NCCP Act is the National Credit Code.

2    Sections 3 to 337 of the NCCP Act (essentially the entirety of the NCCP Act) and the National Credit Code (having effect as a law of the Commonwealth; s 3, NCCP Act) commenced on 1 April 2010 (by Proclamation), subject to transitional arrangements contained in the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) (the “Transitional Provisions Act”).

3    Prior to the enactment of the NCCP Act and the Transitional Provisions Act, the States and Territories had made provision for, put simply, a statutory regime for the regulation of transactions and arrangements concerning the provision of credit or advice about credit, to consumers, described in s 4(1) of the Transitional Provisions Act, as the “old Credit Code”. The object of Schedule 1 of the Transitional Provisions Act is to provide a “smooth transition” from the old Credit Code “of a referring State or Territory” to the new National Credit Code under the NCCP Act whilst accommodating the principles set out at Item 2(1)(a) and (b) of Schedule 1 of the Transitional Provisions Act.

4    That transition was effected by Schedule 1 to the Transitional Provisions Act. Relevantly for present purposes, Items 1 to 21 of Schedule 1 commenced on 1 April 2010. Item 19 of Schedule 1 provides that Chapter 3 of the NCCP Act, which addresses the topic of “responsible lending conduct” applies on and after 1 January 2011 being a date described as the “Chapter 3 start date” (rather than 1 April 2010). Notwithstanding the Chapter 3 start date of 1 January 2011, Item 19(2) of Schedule 1 provides that 31 sections of Chapter 3 of the NCCP Act apply in relation to particular conduct in the period commencing on 1 July 2010 and ending on 1 January 2011 (when Chapter 3 generally starts).

5    Thus, the relevant interim transitional period is 1 July 2010 to 1 January 2011.

6    Relevantly for present purposes, ss 128, 129, 130, 131 and 133 of Chapter 3 applied from 1 July 2010 in relation to particular conduct and so too ss 115, 116, 117, 118 and 123 of Chapter 3 from 1 July 2010.

7    Sections 113, 114 and 121 apply from 1 January 2011.

8    Chapter 2 of the NCCP Act casts an obligation on all persons who engage in “credit activities” to be licensed under the NCCP Act and in general a person cannot engage in a credit activity if the person does not hold an “Australian credit licence” within the meaning of s 35 of the NCCP Act.

9    Schedule 2 to the Transitional Provisions Act addresses the topics of “transitional authorisation” of persons to engage in credit activities and “prohibitions” upon engaging in credit activities in the period 1 July 2010 to 31 December 2010 and also from 1 January 2011 to 30 June 2011. Part 3 of Schedule 2 addresses the topic of “registration” of persons who engage in credit activities and the application process for registration in the period 1 April 2010 to 30 June 2010 (among other matters).

10    Item 36(2) of Schedule 2 provides that ss 128, 129, 130, 131 and 133 of the NCCP Act apply to a “registered person” during the period 1 July 2010 to 1 January 2011 as if all references to a licensee in those provisions were references to a registered person or a licensee and, on the same footing, ss 115, 116, 117, 118 and 123 apply in the same period to a registered person.

11    Sections 113, 114 and 121 apply from 1 January 2011.

12    It is now necessary to say something about these provisions, in context, as they applied at the time of the conduct in issue.

13    The NCCP Act was introduced to prescribe conduct of relevant participants where: “credit products in the market has made it much less straightforward for consumers to determine whether a product is suitable for their needs and [has] increased their dependence on intermediaries” and “[a]s a result there are considerable information asymmetries that justify regulatory intervention”: Revised Explanatory Memorandum for the National Consumer Credit Protection Bill 2009 (the “REM”), p 28.

14    As to the obligations cast upon credit providers by the NCCP Act, the REM for the Bill at [3.25] says this:

The primary obligations in relation to the provision of credit (for example, lending); or the provision of credit assistance (for example, suggesting a particular credit contract or assisting with a particular credit contract) are: to make an assessment that the loan is not unsuitable for the consumer; and to assess that the consumer has the capacity to meet the financial obligations under the contract without substantial hardship.

15    As already mentioned, Chapter 3 of the NCCP Act is concerned with the topic of “responsible lending conduct” and Part 3-2 applies to licensees who are credit providers. Section 128 provides that a licensee must not enter into a credit contract with consumer, who will be the debtor under that contract, on a day (called the “credit day”) unless the licensee has, within 90 days before the credit day: made an assessment that accords with s 129 and covers the period in which the credit day occurs; and made the inquiries and verification required by s 130. The words in italics represent the essential elements of the section.

16    A credit contract is a contract under which credit is or may be provided to which the National Credit Code applies: s 5, NCCP Act; ss 4 and 5, National Credit Code. It is uncontroversial in these proceedings that each loan contract as recited at [73] of these reasons is a credit contract. It is also uncontroversial that the borrower described at [73] of these reasons is a consumer: s 5, NCCP Act.

17    The assessment required by s 128 of the NCCP Act is an assessment that specifies the period the assessment covers and one that assesses whether the credit contract, if entered in that period, will be unsuitable for the consumer: s 129(a) and (b), NCCP Act.

18    As to the inquiries required by s 128, the licensee must do five things before making the assessment in accordance with s 129. Those five things, by s 130(1)(a) to (e) are:

(a)    make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract; and

(b)    make reasonable inquiries about the consumer’s financial situation; and,

(c)    take reasonable steps to verify the consumer’s financial situation; and

(d)    make inquiries prescribed by the regulations about any matter prescribed by the regulations; and

(e)    take any steps prescribed by the regulations to verify any matter prescribed by the regulations.

19    The assessment of whether the credit contract is unsuitable for the consumer is in some respects taken out of the hands of the licensee (or is, at least, the subject of additional statutory considerations) as s 131 provides that the licensee “must assess” the credit contract as unsuitable for the consumer if, at the time of assessment, it is likely, that, relevantly, the consumer will be unable to comply with the consumer’s financial obligations under the contract or could only comply with those obligations with substantial hardship (if the contract is entered in the period covered by the assessment); or the contract will not meet the consumer’s requirements or objectives if entered in the period covered by the assessment: s 131(2).

20    Section 131(4) sets out the only information to be taken into account for the purposes of s 131(2).

21    If the consumer requests a copy of the assessment before entering into the credit contract, the licensee must give a copy of it to the consumer before entering into the contract: s 132.

22    A credit contract with a consumer “is unsuitable” for the consumer if, at the time it is entered, relevantly: it is likely that the consumer will be unable to comply with his or her financial obligations under it or could only comply with those obligations with substantial hardship; or, the contract does not meet the consumer’s requirements or obligations: s 133(2). If, having regard to s 133(2), a credit contract is unsuitable for a consumer (who will be a debtor under it), the licensee must not enter into the contract: s 133(1).

23    In determining whether the credit contract is unsuitable under s 133(2), the only information to be taken into account is information that satisfies both of the following integers: (a) the information about the consumer’s financial situation, requirements or obligations; (b) the information the licensee had reason to believe was true or would have had reason to believe was true if the licensee had made the inquiries or verification under s 130: s 133(4).

24    Apart from obligations cast upon credit providers, Division 4 of Chapter 3 (Part 3-1) casts obligations upon credit assistance providers.

25    A person provides credit assistance to a consumer if, by dealing directly with the consumer (or his or her agent) “in the course of, as part of, or incidentally to”, a business carried on by the person (or another person), the person, relevantly: suggests that the consumer apply for a particular credit contract with a particular credit provider (s 8(a), NCCP Act); or assists the consumer to apply for a particular credit contract with a particular credit provider (s 8(d), NCCP Act)).

26    The obligations cast upon such a person are very similar to the obligations cast upon a credit provider.

27    By s 115(1) a licensee must not provide credit assistance to a consumer on a day (called the “assistance day”) by, relevantly, suggesting that the consumer apply, or assisting the consumer to apply, for a particular credit contract with a particular credit provider (s 115(1)(a)) unless the licensee has within 90 days before the assistance day: made a preliminary assessment which accords with s 116(1) and which covers the period proposed for the entering of the contract (s 115(1)(c)); and made the inquiries and undertaken the verification in accordance with s 117 (s 115(1)(d)).

28    The preliminary assessment must specify the period the assessment covers (s 116(1)(a)) and assess whether the credit contract, if entered into, will be unsuitable for the consumer (s 116(1)(b)).

29    As to the inquiries and verification required by s 115(1)(d), the licensee must, before making the preliminary assessment do five things required by s 117(1) and they are:

(a)    make reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract; and

(b)    make reasonable inquiries about the consumer’s financial situation; and

(c)    take reasonable steps to verify the consumer’s financial situation; and

(d)    make inquiries prescribed by the regulations about any matter prescribed by the regulations; and

(e)    take any steps prescribed by the regulations to verify any matter prescribed by the regulations.

30    The credit contract will be unsuitable for the consumer if, at the time of the preliminary assessment, it is likely that, relevantly: the consumer will be unable to comply with the consumer’s financial obligations under the contract or could only comply with them with substantial hardship (s 118(2)(a)); or the credit contract will not meet the consumer’s requirements or objectives (s 118(2)(b)), if, in either case, the contract is “entered in the period proposed for it to be entered”.

31    If the credit contract will be unsuitable for the consumer, by reason of the s 118(2) factors, the licensee “must”, for the purposes of the preliminary assessment under s 116(1), “assess that the contract will be unsuitable for the consumer”: s 118(1).

32    The credit contract also will be unsuitable for the consumer if at the time the licensee provides the credit assistance it is likely that, relevantly, first, the consumer will be unable to comply with the consumer’s financial obligations under the contract or could only comply with those obligations with substantial hardship, or, second, the contract will not meet the consumer’s requirements or obligations, if in either case, the contract is entered into in the period proposed for it to be entered: s 123(2)

33    Section 123(1) provides that a licensee must not provide credit assistance to a consumer by suggesting that the consumer apply, or by assisting the consumer to apply, for a particular credit contract with a particular credit provider if the credit contract will be unsuitable for the consumer under s 123(2): s 123(1).

34    Sections 113, 114 and 121 of Chapter 3 of the NCCP Act commenced on 1 January 2011. Section 113(1) provides that a licensee must, as soon as practicable after it becomes apparent to the licensee that it is likely to provide credit assistance to a consumer in relation to a credit contract, give the consumer the licensee’s credit guide in accordance with s 113(2). Section 113(2) sets out approximately 16 matters the licensee’s credit guide must address.

35    Section 114 provides that a licensee must not provide credit assistance of the kind described, relevantly, at s 114(1)(a), unless the consumer has been given a quote in accordance with s 114(2), the consumer has signed and dated the quote or otherwise accepted it and has been given a copy of the “accepted quote”.

36    Section 121 provides that the licensee must at the same time as providing credit assistance to a consumer (by, relevantly, suggesting that the consumer apply, or by assisting the consumer to apply, for a particular credit contract with a particular credit provider), give the consumer a credit proposal disclosure document that satisfies the mandatory requirements of s 121(2).

37    Section 76(1) of the National Credit Code provides, relevantly, that the Court may, if satisfied on the application of a debtor or mortgagor, that, in the circumstances relating to the relevant credit contract or mortgage at the time it was entered into, the contract or mortgage was unjust, re-open the transaction that gave rise to the contract or mortgage. Section 76(2) provides, relevantly, that in determining whether a term of a particular credit contract or mortgage 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 16 matters set out at (a) to (p) of s 76(2), including “any … relevant factor”. 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: s 76(4).

38    The position in relation to the application of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (the “ASIC Act”) requires a little elaboration. In the period, relevantly, 2010 and up to and including 31 December 2011, s 12CB of the ASIC Act provided that a person must not, in trade or commerce, in connection with the supply (or possible supply) of financial services to a person, engage in conduct that is, in all the circumstances, unconscionable: s 12CB(1). “Financial services” in this section is a reference to financial services of a kind ordinarily acquired for personal, domestic or household use: s 12CB(6). The statutory “requirement” of s 12CB(1) requires the Court to consider the conduct of the supplier of the financial service in “all the circumstances”: Paciocco v Australia and New Zealand Banking Group Limited (2016) 90 ALJR 835; [2016] HCA 28, Keane J at [294]. See, however, the circumstances falling within s 12CB(4)(a), below.

39    Without limiting the matters to which the Court may have regard for the purpose of determining whether a supplier of a financial service to a consumer has contravened s 12CB(1), s 12CB(2) sets out five matters to which the Court may have regard. They are these:

(a)    the relative strengths of the bargaining positions of the supplier and the consumer; and

(b)    whether, as a result of conduct engaged in by the supplier, the consumer 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 consumer was able to understand any documents relating to the supply or possible supply of the services; and

(d)    whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the services; and

(e)    the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent services from a person other than the supplier.

40    For the purpose of determining whether a person has contravened s 12CB(1), the Court must not have regard to “any circumstances” that were not reasonably foreseeable at the time of the alleged contravention: s 12CB(4)(a).

41    So far as the supply of financial services is concerned, s 12CC(1) prohibits (as the section stood up to and including 31 December 2011) a person from engaging in conduct that is, in all the circumstances, unconscionable, in connection with the supply (or possible supply) of those services to another person (other than a listed public company), where the acquisition of the service is or would be for the purpose of trade or commerce (that is, a business transaction rather than a consumer transaction): s 12CC(1)(a) and s 12CC(6).

42    Without “in any way” (a phrase not present in s 12CB(1)) limiting the matters to which the Court may have regard in determining whether a person has contravened s 12CC(1), the Court may have regard to 12 matters set out at s 12CC(2)(a) to (k). Apart from the particular matter of the business capacity of the recipient of the service for the purposes of s 12CC(1), the factors at s 12CC(2)(a) to (e) are in the same terms as the factors recited at s 12CB(2)(a) to (e) in relation to consumer transactions.

43    However, ss 12CB and 12CC were amended effective from 1 January 2012 giving rise to the “new s 12CB” and the “new s 12CC” of the ASIC Act, with the result that the earlier provisions were, in effect, unified in a single statutory prohibition upon unconscionable conduct.

44    The new s 12CB prohibits a person from engaging in conduct, in trade or commerce, that is, in connection with the supply of financial services (relevantly for these proceedings), unconscionable, in all the circumstances.

45    The new s 12CB and the prohibition within it no longer retains the prior distinction between the supply of financial services “of a kind ordinarily acquired for personal, domestic or household use” (a consumer transaction: the old ss 12CB(1) and 12CB(5)) on the one hand, and the supply of financial services in business transactions (the old ss 12CC(1) and 12CC(6)) on the other hand.

46    Although the language of the new s 12CB(1), as to the supply of financial services, is in similar terms to the earlier s 12CB(1), it is nevertheless an entirely new provision not limited to what might loosely be called consumer transactions yet applying to them according to the integers of the new section and also other supply circumstances.

47    The new s 12CC(1) sets out 12 matters to which the Court may have regard in determining whether a person has contravened the new unified s 12CB(1) in the supply of financial services, without limiting the matters to which the Court may have regard. In other words, the 12 matters recited at s 12CC(1) are non-exhaustive. The 12 matters set out in the new s 12CC(1)(a) to (l) are essentially in the same terms as those set out in the earlier s 12CC(2)(a) to (k) although those earlier factors were expressly considerations relevant to possible contraventions of the bifurcated version of the prohibition as it applied to financial supply transactions to business recipients.

48    As mentioned, that distinction is now gone.

49    The new s 12CB(4) sets out the intention of the Parliament with respect to the new s 12CB.

50    The new s 12CB(3) provides (like the earlier s 12CB(4)(a)), that in determining whether a person has contravened s 12CB(1), the Court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention. The new s 12CB(3)(b) provides that in determining whether a person has contravened the new s 12CB(1), the Court “may have regard to conduct engaged in, or circumstances existing, before the commencement of this section” [emphasis added]: that is, prior to 1 January 2012. The earlier s 12CB contains s 12CB(4)(b) which is in the same terms as s 12CB(3)(b) except, of course, that subsection operates by reference to the commencement date of the earlier s 12CB.

51    Orthodoxy requires that the relevant prohibition (as a matter of substantive law) against which the conduct of Channic is to be considered is s 12CB as it stood (in relation to conduct up to 31 December 2011) at the time of the contended contraventions informed by the matters at s 12CB(2) as it stood, among any other considerations the Court regards as relevant to the conduct, “in all the circumstances”. The new ss 12CB(1) and 12CC(1) apply to the conduct of the first respondent occurring on and from 1 January 2012. Section 7(2)(b) and (c) of the Acts Interpretation Act 1901 (Cth) provide that if an Act amends an Act or part of an Act, the amendment does not affect the previous operation of the affected Act (or part) or affect any liability accrued or incurred under the amended Act. The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect liabilities which the law had defined by reference to past events (leaving aside the application of the difficult distinction between substantive rights and liabilities on the one hand and procedural and remedial matters on the other hand): Maxwell v Murphy (1957) 96 CLR 261 at 267, Dixon CJ.

52    Having regard to new s 12CB(3)(b), a question arises of whether the new ss 12CB and 12CC evince a parliamentary intention to apply retrospectively to conduct prior to 1 January 2012. Obviously enough, the new s 12CB in some respects looks back to earlier facts or events in the sense that s 12CB(3)(b) enables the Court to have regard to conduct engaged in, or circumstances existing before 1 January 2012. This provision does not mean, however, that the content of the prohibition in the new s 12CB(1) applies to conduct prior to 1 January 2012. It simply means that in determining whether a person has contravened the new s 12CB(1) by engaging in unconscionable conduct, in all the circumstances, on and from 1 January 2012, the Court may have regard to conduct occurring before that date or circumstances existing before that date.

53    There is no express or inferential intention to apply the new s 12CB or s 12CC to facts or events prior to 1 January 2012.

54    That being so, a further question arises, in relation to the application of the pre-amendment provisions, of whether the seven further factors set out in s 12CC(2) as applying to “business transactions” nevertheless relevantly inform the question of whether a person has contravened s 12CB(1), as the five factors set out at s 12CB(2) (see [39] of these reasons) are non-exhaustive considerations which do not operate to limit the matters to which the Court may have regard for the purpose of determining whether a person has engaged in unconscionable conduct in the supply of financial services.

55    It seems to me that those additional seven factors at s 12CC(2) may well be matters to which the Court may have regard in determining whether a contravention of s 12CB(1) has occurred in all the circumstances of the case. Those matters may give “guidance” as to the content of the notion of unconscionability. They may assist in setting a framework for the values that lie behind the notion of the relevant conscience of the supplier of the financial service to a consumer. In that regard, see the observations of Allsop CJ in Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199; [2015] FCAFC 50 at 285. Allsop CJ also took the view that the factors contained in the new s 12CC(1) also inform the content of the notion of the relevant conscience of the parties. As already mentioned, the 12 factors in the new s 12CC(1) are in substantially the same terms as the 12 factors in the earlier provision, s 12CC(2)(a) to (k). The statute, by s 12CB(2) gives particular attention to the five factors identified at [39] of these reasons although those matters, do not limit, expressly, the matters to which the Court may have regard for the purpose of determining whether a person, in trade or commerce, has engaged in unconscionable conduct in the supply of financial services. Those other matters that might be taken into account include the additional matters mentioned at s 12CC(2)(f) to (k) where relevant and material having regard to the circumstances of engagement between the supplier of the financial service and the individual consumer. These reasons are arranged in the following way according to the following topics:

PART 2: The Originating Application and some related matters

56    By its originating application, the applicant, the Australian Securities and Investments Commission (“ASIC”) seeks the following declarations, injunctions and orders against the respective respondents.

57    The first respondent is Channic Pty Ltd (“Channic”).

58    As against Channic, ASIC seeks three declarations.

59    First, a declaration pursuant to s 166 of the NCCP Act that Channic has contravened ss 128, 130, 131 and 133 of the NCCP Act.

60    Second, a declaration that credit contracts entered into by Channic with consumers as described in the statement of claim were unjust within the meaning of s 76 of Schedule 1 to the NCCP Act otherwise described as the National Credit Code: as to the credit contracts see [73] of these reasons.

61    Third, a declaration that Channic, by engaging in the conduct recited in the statement of claim, engaged in unconscionable conduct in contravention of s 12CB of the ASIC Act.

62    The first two declarations form the basis upon which ASIC seeks the imposition of civil pecuniary penalties pursuant to s 167 of the NCCP Act on Channic for contraventions of ss 128, 130, 131 and 133 of the NCCP Act.

63    ASIC seeks an injunction pursuant to s 177 of the NCCP Act to restrain Channic from further contraventions of those sections of the NCCP Act and an injunction pursuant to s 12GD of the ASIC Act to restrain Channic from further engaging in unconscionable conduct within the meaning of s 12CB of the ASIC Act in relation to Channic’s credit contracts with the consumers described in the table at [73] of these reasons or in relation to Channic’s entry into any future credit contracts.

64    ASIC also seeks orders pursuant to s 76 of the National Credit Code that each of the credit contracts made between Channic and the borrowers described at [73] of these reasons be reopened and the borrowers be further relieved of any liability to Channic in relation to the credit contracts, the credit contracts be set aside ab initio and/or Channic repay to each of the borrowers the amounts paid by each of them under the respective credit contracts.

65    The second respondent is Cash Brokers Pty Ltd (“CBPL”).

66    As against CBPL, ASIC seeks a declaration that CBPL has contravened ss 113, 114, 115, 117, 118, 121 and 123 of the NCCP Act.

67    ASIC also seeks the imposition of civil pecuniary penalties pursuant to s 167 of the NCCP Act on CBPL for contraventions of ss 113, 114, 115, 117, 118, 121 and 123 of the NCCP Act. ASIC seeks an injunction under s 117 of the NCCP Act to restrain CBPL from further contravening these provisions in relation to the entry by CBPL into any future credit contracts.

68    The third respondent is Mr Colin William Hulbert.

69    At the time of the pleaded conduct, Mr Hulbert was the sole shareholder, sole director and controlling mind of Channic. He was also the duly authorised agent of that entity. He was the sole director of and a shareholder in CBPL. He was the controlling mind of that company and its duly authorised agent. As against Mr Hulbert, ASIC seeks a declaration that Mr Hulbert has contravened ss 113, 114, 115, 117,118, 121, 123, 128, 130, 131 and 133 of the NCCP Act. ASIC also seeks the imposition of civil pecuniary penalties on Mr Hulbert for contraventions of those sections of the NCCP Act. ASIC seeks an injunction restraining Mr Hulbert from further contravening those sections of the Act.

70    The originating application is supported by an extensive statement of claim (220 pages) setting out all of the material facts concerning the contended conduct contraventions. The allegations made by ASIC fall into three categories. ASIC describes, as the “principal category”, those contended contraventions consisting of breaches of the responsible lending obligations under Chapter 3 of the NCCP Act by Channic and CBPL and the involvement of Mr Hulbert in those contraventions.

71    The second category consists of allegations of unconscionable conduct under s 12CB of the ASIC Act by Channic.

72    The third category consists of allegations that the loan contracts were “unjust transactions” under s 76 of the National Credit Code.

73    By its statement of claim, ASIC contends that contravening conduct occurred on the part of Channic in connection with steps taken (or not taken) by it in relation to transactions concerning the following consumers (in the order of the pleading) who entered into loan contracts (credit contracts) with Channic on the following dates in relation to the purchase of the following motor vehicles and that contravening conduct occurred on the part of CBPL in the provision of credit assistance to those consumers (except for Leandrea Rose Raymond) concerning those credit contracts:

74    All the vehicles were purchased by the consumers from an entity called ANG Hulbert & Associates Pty Ltd (“ANG”) trading as either “SuperCheap Auto” or “SuperCheap Car Sales” which conducted the business of selling used motor vehicles initially from premises at 484 Mulgrave Road, Earlville (a suburb of Cairns) in Queensland and then from 132 Spence Street, Parramatta Park (Cairns) in Queensland. Mr Hulbert was the sole director, sole shareholder and controlling mind of ANG.

The early history of the matter

75    The history of the matter is a little unusual in the following sense.

76    The respondents are represented (and were represented in the conduct of the trial) by Dr Robert Spence who conducts practice as a solicitor under the description “Integrity Criminal Legal” of Elizabeth Street, Sydney. On 3 October 2013, Dr Spence wrote an open letter to ASIC in which he said this in relation to these proceedings framed by the originating application and the statement of claim:

I confirm that I am the solicitor acting for the Respondents in this matter. Mr Anthony Collins, barrister-at-law has a received a brief to appear in this matter.

Mr Hulbert has confirmed on behalf of the Respondents that they do not wish to contest any of the orders set out in the application filed in the Queensland Federal Court by the Applicant.

I am obliged for your co-operation in agreeing to communicating directly with Mr Collins in relation to these proceedings.

77    On 8 October 2013 the matter came before the Court for the first time for directions. All of the respondents were represented by Mr A.P.J. Collins of counsel. ASIC was represented by Mr Derrington QC. An affidavit was read by ASIC’s counsel exhibiting Dr Spence’s letter of 3 October 2013: affidavit Scott Edward Seefeld sworn 8 October 2013. ASIC also relied on an affidavit of Jamie William Black sworn 3 October 2013.

78    Mr Derrington observed that the statement of claim had been served (on 20 August 2013) but no defence had been filed and that it appeared that the respondents did not intend to file a defence as they had chosen not to contest the matters of fact set out in the statement of claim: T, p 3, lns 5-10; T, p 2, lns 22-23, 8 October 2013. Thus the matter would proceed to a hearing in which the questions of fact were to be uncontested. Mr Derrington correctly described the statement of claim as “both long and complicated” (T, p 3, ln 30). That is so because it asserts a lengthy factual matrix against the respondents involving all claims in respect of all consumers coupled with an accessorial liability claim against Mr Hulbert in respect of the Channic contraventions. It was contemplated that a less complicated statement of agreed facts would be formulated upon which the Court could and would rely. The statement of agreed facts was to be supported by written submissions. A discussion took place about possible dates for hearing the matter, preferably over a single day. Mr Collins seemed to embrace those propositions and suggested that the matter would conclude inside one day, on the footing as suggested.

79    Thereafter, the parties attempted to agree upon a statement of facts to be put to the Court. It seems that a document of approximately 123 pages had been formulated on behalf of ASIC setting out all the relevant factual matters. Mr Collins described the document as containing approximately 800 facts based on a pleading containing over 400 paragraphs. Emphasis was placed by ASIC upon the earlier unqualified unequivocal acceptance of the statement of claim with no defence having been filed.

80    Mr Collins explained at the further directions hearing on 4 February 2014 that there were “aspects” of the statement of claim and “aspects” of the proposed agreed statement of facts that were perceived by the respondents to be not “strictly accurate”. Mr Collins observed that since agreement had not been reached about the proposed statement of facts, ASIC had proposed, prior to the directions hearing, that the respondents put on a defence: T, p 6, lns 30-33, 4 February 2014. As to the statement of claim, Mr Collins observed that “the vast majority are accepted, some are accepted but with slight nuances or qualifications”. Mr Collins also observed that he did not “want it to be said that there’s some sort of about-face” because “the vast majority will be accepted”: T, p 8, lns 8-9; 17-18. Proposed directions were then discussed for the filing of a defence. The scope of the matters which would then be in issue would be revealed.

81    As things transpired, Mr Collins ceased to act for the respondents.

82    Dr Spence thereafter acted for them.

83    A defence was put on by Dr Spence. It was struck out as being embarrassing in the technical sense with leave given to re-plead in conformity with the Federal Court Rules 2011. An amended defence was then filed. By the defence, Dr Spence pleaded to not only the material facts but each of the individual particulars in the lengthy and complicated statement of claim. Accordingly, the amended defence is also a lengthy and complicated document.

84    By the amended defence a range of matters are admitted by the respondents. Many other matters are denied or the subject of a contention that the matters are not within the knowledge of the respondents. Statements were put on. All of ASIC’s witnesses were required for cross-examination by Dr Spence. The proceeding proceeded to trial.

85    It is now necessary to address aspects of the factual matters which are admitted on the pleadings and identify the range of questions now in controversy. In doing so, I will simply recite the relevant matters without attributing each of them to paragraphs of the respective pleadings.

PART 3: The position reached by the parties on the face of the pleadings

86    Unless otherwise mentioned, the following matters (relevant to all material times in the proceeding) are admitted and thus not in issue.

87    ASIC has standing to bring the proceeding for the relief it seeks.

88    ANG engaged in the business of selling used motor vehicles. It advertised under the prominent name “SUPER CHEAP” followed by the words “Car Sales” (“Supercheap”). Mr Hulbert was its sole director, sole shareholder and controlling mind. Supercheap operated its used car sales business from at least 16 June 2010 to 20 September 2011 at and from premises at 484 Mulgrave Road, Earlville Cairns (the “first premises”) and from 21 September 2011 at and from premises at 132 Spence Street, Parramatta Park, Cairns (the “second premises”).

89    Channic engaged in the business of providing credit for profit. It did so as trustee for the “AHA New Start Finance Trust”. Mr Hulbert was the sole director, controlling mind and authorised agent of Channic. The company search shows that Mr Hulbert was Channic’s sole shareholder.

90    CBPL was engaged in the business of brokering credit for profit. Mr Hulbert was the sole director, controlling mind and authorised agent of CBPL. The company search shows that he was CBPL’s sole shareholder.

91    Channic and CBPL conducted their respective business undertakings at and from the first premises until 20 September 2011 and then at and from the second premises.

92    The usual operation of those three businesses involved used cars being offered for sale or sold to members of the public by Supercheap. The sale of the cars would usually be financed by loans. Supercheap would be the seller and would convey title to the vehicle to the consumer. Channic would provide loans to customers to buy the vehicles. ASIC contends that CBPL would “purport” to broker a loan from Channic to assist a customer to purchase the vehicle. The respondents contend that CBPL “actually” brokered such loans from Channic. ASIC says that CBPL only arranged loans from Channic. The respondents say that CBPL arranged loans with other credit providers and that Supercheap sold cars financed by other lenders.

93    Mr Kevin Humphreys was either an employee of, or contractor to, Supercheap. He was Supercheap’s agent. He was also either an employee of, or a contractor to, CBPL. He was CBPL’s agent. The respondents deny he was an employee or an agent of, or a contractor to, Channic.

94    Supercheap took out written advertisements by which it said that finance was offered to buyers: with a 20 minute on-site approval; to persons in receipt of Centrelink income; to persons with bad credit histories; and to ex-bankrupts. Supercheap advertised its business by means of a large sign outside its business premises visible to passers-by as set out below (Applicant’s Tender Bundle, Vol 1, Tab 4):

95    The respondents deny that the business activities of Supercheap, Channic and CBPL were likely to attract persons who were: unable to obtain or unlikely to seek loans from major banking institutions due to a poor credit history or because they perceived themselves or perceived as having a poor credit history; in need of an inexpensive vehicle and an inexpensive loan; lacking in commercial experience; unlikely to understand or appreciate legal documentation not drafted in simple English; unlikely to be able to evaluate whether the terms of any loan were fair or commercial.

96    On or about 16 June 2010, Channic made an application for registration and was registered as a credit provider under the Transitional Provisions Act. On 13 December 2010, Channic applied for an Australian Credit Licence under the NCCP Act and on 31 January 2011 that licence was granted. Chapter 3 of the NCCP Act applied to Channic, in the period relevant to these proceedings, either as if it was a licensee or because it was a licensee Each loan contract entered into by Channic with each borrower described in the statement of claim (and described at [73] of these reasons) constituted the provision of credit for the purposes of s 5 of the NCCP Act. See also s 3(1) of the National Credit Code.

97    On or about 18 June 2010, CBPL made an application for registration and was registered as a credit assistance provider under the Transitional Provisions Act. On 22 December 2010, CBPL applied for an Australian Credit Licence under the NCCP Act and on 24 February 2011 that licence was granted. Chapter 3 of the NCCP Act applied to CBPL, in the period relevant to these proceedings, either as if it was a licensee or because it was a licensee.

98    As to the “credit broking activities” of CBPL, each buyer of a car with whom CBPL dealt, was a consumer within the meaning of the NCCP Act. CBPL dealt directly with each buyer in the course of or as part of its business. Each “loan contract” in respect of which CBPL provided credit assistance to the borrower was a credit contract within the meaning of s 4 of the National Credit Code. As to the credit providing activities of Channic, each buyer of a car with whom Channic dealt was a consumer within the meaning of the NCCP Act. Channic provided credit by the provision of a loan to the buyer of the car.

99    I propose to now illustrate the position in relation to the first of the consumer buyers of a car, Ms Kingsburra, who engaged with Channic and CBPL, by identifying the pleaded position (admissions and matters in contention) concerning her circumstances and then examine the evidence of Ms Kingsburra and the particular documents immediately relevant to Ms Kingsburra (which, in the main, characterise the method adopted by CBPL and Channic in the conduct of their respective undertakings). I will then examine the evidence of the respondents.

Ms Adele Dorothea Kingsburra

100    As to the pleaded position, the following facts are admitted except where otherwise indicated.

101    Ms Kingsburra attended the first business premises (484 Mulgrave Road) on 6 July 2010 for the purpose of purchasing a car for one of her sons, paying a deposit as part of the purchase price and paying the remaining part of the purchase price by instalments. At the first business premises on 6 July 2010, Mr Humphreys for Supercheap, showed Ms Kingsburra a 1997 Hyundai Elantra Sedan. ASIC contends that Mr Humphreys told her that he had used the car, sometimes, for his own personal purposes; it had no problems; and the existing paint damage to it could be fixed cheaply. The respondents say that they have no knowledge of what was said by Mr Humphreys to Ms Kingsburra.

102    ASIC says that Mr Humphreys told Ms Kingsburra that the purchase price was $8,990.00, a deposit of $1,500.00 would be required and if Ms Kingsburra wanted “mag wheels” an extra $200.00 deposit would be required. These matters, however, are admitted by the respondents even though these matters also fall within the knowledge of Mr Humphreys.

103    Ms Kingsburra agreed, with Mr Humphreys, to buy the car for $8,990.00 by paying a deposit of $1,500.00 (plus $200.00 for the mag wheels) with the balance to be paid by instalments. The respondents say the deposit was $1,700.00 for the car and it included mag wheels.

104    On 10 July 2010, Ms Kingsburra returned to the first business premises. ASIC says she paid a deposit of $1,500.00 plus $200.00. The respondents say she paid a deposit of $1,700.00. ASIC says Mr Humphreys told Ms Kingsburra she would have to return to the premises on another day to collect the vehicle.

Ms Adele Dorothea Kingsburra and Cash Brokers Pty Ltd

105    ASIC says that on 6 July 2010, Mr Humphreys inquired of Ms Kingsburra as to various aspects of her financial situation. On 6 July 2010, Mr Humphreys substantially completed or filled out a “Credit Application Form” in the name of Ms Kingsburra. ASIC says this was done, by CBPL, by Mr Humphreys. ASIC says that Mr Humphreys “caused” Ms Kingsburra to sign the Credit Application Form. The point of distinction pleaded by the respondents is that they say that the Credit Application Form was “offered” to Ms Kingsburra (by CBPL) “for her signature” and “she signed it”.

106    ASIC says that Mr Humphreys advised Ms Kingsburra to obtain a statement from Centrelink showing the amount of her regular Centrelink social security payments so as to support the application for credit for the purchase of the car and advised her to obtain also a letter from her partner stating that he paid her board of $150.00 per fortnight, to further support the credit application. The respondents plead that they have no knowledge of these matters although Mr Hulbert pleads that he believes that the person paying board to Ms Kingsburra was not her partner.

107    ASIC contends that Mr Humphreys told Ms Kingsburra that her weekly repayment instalment would be $120.00; did not advise Ms Kingsburra of any brokerage payable to CBPL or that she was entering into a brokerage agreement with CBPL; did not tell Ms Kingsburra that brokerage payable to CBPL would be added to the amount of the credit which she would be obtaining; and, did not tell Ms Kingsburra that there was a legal entity, CBPL, acting as a broker, separate from the lender, Channic, and the seller of the car, Supercheap. As to each of these matters, the respondents do not admit the facts and say that the matters are not within their knowledge.

108    ASIC says that on 6 July 2010, Mr Humphreys for CBPL prepared a document called a “Preliminary Test” which purported to be a preliminary assessment in accordance with s 115 of the NCCP Act of whether a loan to Ms Kingsburra of $7,290.00 would be unsuitable for her and which purported to analyse the capacity of Ms Kingsburra to repay a loan of $7,290.00. The respondents admit these matters except that they say that the Preliminary Test document is dated 7 July 2010.

109    The respondents also admit that Mr Humphreys for CBPL: did not include any brokerage fee in the amount of the credit assumed by the Preliminary Test; wrote a letter to Channic, on behalf of Ms Kingsburra, applying for a loan of $7,290.00 with weekly repayments of $119.45 (accepted, for the purposes of the admission, as the “Cash Brokers/Kingsburra Proposed Loan”; also referred to later in these reasons as “CB/KPL”); and delivered the Preliminary Test, Credit Application Form and the letter to Channic, to Channic, thereby applying for that loan on behalf of Ms Kingsburra.

110    ASIC says that by doing the things described at [108] and [109] of these reasons, CBPL “suggested” to Ms Kingsburra that she “apply” for a “particular” credit contract with a “particular” credit provider. The respondents say that this matter is not within their knowledge.

111    The respondents, however, admit that: CBPL “assisted” Ms Kingsburra to apply for a particular credit contract (the Cash Brokers/Kingsburra Proposed Loan) with a particular credit provider (Channic) and on 6 July 2010 CBPL provided “credit assistance” to Ms Kingsburra within the meaning of s 8 and s 115 of the NCCP Act.

112    On 13 July 2010, subsequent to providing credit assistance to Ms Kingsburra on 6 July 2010, CBPL, by Mr Humphreys, received from Ms Kingsburra a copy of a Centrelink Statement dated 12 July 2010 and a signed statement from Mr Garry Gilmartin that he paid board each week to Ms Kingsburra of $150.00.

113    ASIC asserts that at no time prior to purporting to make a preliminary assessment, if any, in relation to Ms Kingsburra on 6 July 2010 did CBPL make any or any reasonable inquiries as to Ms Kingsburra’s requirements and objectives in relation to the Cash Brokers/Kingsburra Proposed Loan. CBPL, it is said, failed to inquire as to the amount of the loan which Ms Kingsburra required; the interest rate which she required; the length of time over which Ms Kingsburra intended that any credit provided would be repaid; and whether or not Ms Kingsburra required the loan for a purpose of paying brokerage of any kind which would be chargeable on the loan transaction. The respondents do not admit these matters and say that each matter is a fact not within the knowledge of the respondents.

114    ASIC also asserts that at no time prior to purporting to make a preliminary assessment, if any, in relation to Ms Kingsburra on 6 July 2010 did CBPL make any reasonable inquiries as to Ms Kingsburra’s financial situation. CBPL, it is said, failed to inquire as to the usual weekly, fortnightly or monthly expenses of Ms Kingsburra; the amount of money which Ms Kingsburra usually had available each week, fortnight or month which might be available for repaying a loan. The respondents do not admit these matters and say that each matter is a fact not within the knowledge of the respondents. CBPL, it is said, also failed to inquire as to Ms Kingsburra’s “actual living expenses” but instead applied an amount of $2,925.00 as her monthly expenses in the Preliminary Test document using a “standardised formula”, as set out in the Preliminary Test document, of $1,300.00 per month for a de facto or married couple and $325.00 for each of Ms Kingsburra’s five dependents. The respondents do not admit these factual matters and say that each of them is not within their knowledge.

115    However, the respondents admit that CBPL “used a standardised formula as particularised”.

116    It is also said that at no time prior to 6 July 2010 when purporting to make a preliminary assessment did CBPL take any reasonable steps to verify Ms Kingsburra’s financial situation. This matter is denied by the respondents.

117    However, the respondents admit that CBPL could not have undertaken any or any reasonable steps to verify Ms Kingsburra’s financial situation as the preparation of the Preliminary Test and the provision of credit assistance to Ms Kingsburra occurred on 6 July 2010 but the Centrelink statement and the statement from Mr Gilmartin were not obtained by CBPL until, at the earliest, 13 July 2010: para 25.3 and para 25.3(a) of the statement of claim and the amended defence. I mention, on this occasion, the paragraph references because it seems to me that Dr Spence was probably seeking to deny a failure by the respondents to take any reasonable steps to verify Ms Kingsburra’s financial situation but admit, simply, the facts about CBPL having received the Centrelink Statement and Mr Gilmartin’s statement no earlier than 13 July 2010.

118    The respondents deny that CBPL did not otherwise obtain information which would evidence or support (that is to say, verify) the information provided by Ms Kingsburra as to her financial situation.

119    ASIC says that CBPL did not verify Ms Kingsburra’s actual living expenses but instead applied an amount of $2,925.00 as her monthly living expenses for the purposes of the Preliminary Test using the standardised formula of $1,300.00 per month for de facto or married couple and $325.00 for each of Ms Kingsburra’s five dependents. The respondents deny that CBPL failed to verify Ms Kingsburra’s actual living expenses. The respondents admit that CBPL used a standardised formula as alleged by ASIC but say that that use “did not supplant the verification that [CBPL] made in respect of Yeatmans’ actual living expenses”. I proceed on the basis that the respondents were intending to refer to Ms Kingsburra at this point in their pleading.

120    The respondents deny that CBPL contravened s 117 of the NCCP Act.

121    However, the respondents admit that at the time of the provision by CBPL of credit assistance to Ms Kingsburra, CBPL had not, within 90 days before the day on which the credit assistance was provided, or at all, made any preliminary assessment that was in accordance with s 116(1) of the NCCP Act and that the Preliminary Test did not specify the period it covered. Although there is a misdescription at para 27.1b of the amended defence (which refers to para 27.1a of the statement of claim rather than para 27.1b), it seems clear enough that the respondents also admit that the preliminary test did not contain an assessment of whether the Cash Brokers/Kingsburra Proposed Loan would be unsuitable: para 27.1b, amended defence.

122    There is no misdescription as to para 27.2a and the respondents admit that CBPL had not, within 90 days before the day on which credit assistance was provided, or at all, made any preliminary assessment that “covered the period that was proposed for the entering into the credit contract”. They admit that the “period which should have been covered by any preliminary assessment was the period during which it was proposed the credit contract would be entered into”. The respondents seem to admit (although there may be another misdescription of para of the statement of claim in the amended defence), that CBPL had not within 90 days before the day on which the credit assistance was provided, or at all, undertaken the inquiries and verification required by s 117 of the NCCP Act.

123    The respondents also admit that CBPL, by providing credit assistance to Ms Kingsburra, contravened s 115(1) of the NCCP Act.

124    ASIC says that the Cash Brokers/Kingsburra Proposed Loan was unsuitable for Ms Kingsburra because at the time CBPL provided credit assistance it was likely that Ms Kingsburra would be unable to comply with her financial obligations under the loan or would only be able to comply with those obligations with substantial hardship; Ms Kingsburra’s accounts were regularly overdrawn; the accounts were rarely in credit; and in the ordinary course, any social security payments paid into Ms Kingsburra’s account were withdrawn on or about the day on which the money was deposited. All of these matters are denied by the respondents. The respondents also deny that Ms Kingsburra had a number of recurring expenses such as repayments of cash advances made to her by “Cash Converters”. The respondents deny that Ms Kingsburra had a number of recurring expenses but admit that Ms Kingsburra was making payments on a loan previously provided by Cash Converters.

125    The respondents admit that in purporting to assess the unsuitability of the Cash Brokers/Kingsburra Proposed Loan, CBPL failed to take into account the cost per month of the motor vehicle insurance that Ms Kingsburra would be required to obtain pursuant to any loan agreement she entered into with Channic and also failed to take into account an estimate of the additional costs Ms Kingsburra would incur due to owning and maintaining a motor vehicle.

126    The respondents deny that the CB/KPL did not meet Ms Kingsburra’s requirements and objectives. They deny that CBPL failed to make reasonable inquiries about Ms Kingsburra’s requirements and objectives in relation to any finance she would obtain to assist in the completion of the purchase of the car and they deny that they “could not have been aware of” Ms Kingsburra’s requirements and objectives for that purpose. They deny that the CB/KPL ought to have been assessed as “unsuitable” for Ms Kingsburra and deny that in failing to do so they contravened s 118(1) of the NCCP Act. They deny that CBPL contravened s 123(1) of the NCCP Act by suggesting that Ms Kingsburra apply for the CB/KPL and by assisting Ms Kingsburra to apply for that loan.

Ms Adele Dorothea Kingsburra and Channic

127    The respondents admit that on 6 July 2010, Channic prepared a document called a “Credit Suitability Assessment” (“CSA”) which: stated that it was made on 6 July 2010; was purportedly made in accordance with ss 128 and 129 of the NCCP Act; purported to assess the suitability of a loan to Ms Kingsburra from Channic in an amount of $8,301.50 for a period of 110 weeks at an interest rate of 48% (called the “Kingsburra Proposed Loan”); purported to assess that a loan in such terms was not unsuitable for Ms Kingsburra and that it met her needs and objectives during the period of the loan; and which stated that the period covered by the assessment was from 6 July 2010 to 6 August 2010.

128    The respondents admit that Ms Kingsburra returned to the first premises on 13 July 2010 where she completed a contract to purchase the car with the assistance of credit from Channic.

129    The respondents admit that on 13 July 2010, Ms Kingsburra entered into a loan agreement (the “Kingsburra Loan”) with Channic in writing comprising a document entitled Consumer Loan Contract and Mortgage No: 5030 (also called in these reasons the “Credit Contract”).

130    The respondents admit that pursuant to the Kingsburra Loan, Channic agreed to lend and Ms Kingsburra agreed to borrow an amount of $8,301.50 at an annual interest rate of 48% over a loan period of 110 weeks with amounts payable each week of $119.45 and a final payment of $114.30 with the first repayment to be made on 19 July 2010 and that on settlement of the loan, a sum of $990.00 would be paid to CBPL as brokerage and the sum of $7,290.00 would be paid to Supercheap for the purchase of the 1997 Hyundai Elantra motor vehicle.

131    ASIC says that at no time prior to preparing the Kingsburra CSA on 6 July 2010 (or at all) did Channic make any or any reasonable inquiries as to Ms Kingsburra’s requirements and objectives in and for the proposed Kingsburra Loan. Channic failed, it is said, to inquire as to the amount of the loan Ms Kingsburra required; the interest rate she required; the length of time over which she intended that any credit provided would be repaid; and whether or not Ms Kingsburra required the loan for a purpose of paying brokerage of any kind which would be a charge on the loan transaction. As to all of these matters, the respondents do not admit the facts and say that each fact is not within the knowledge of the respondents and they further say, as to each fact, that “Kevin Humphreys prepared the Credit Suitability Assessment in respect of Ms Kingsburra”.

132    As to the question of inquiries, ASIC also says that at no time prior to preparing the Kingsburra CSA on 6 July 2010 or otherwise did Channic make any reasonable inquiries as to Ms Kingsburra’s financial situation. Channic, it is said, failed to inquire as to: Ms Kingsburra’s weekly, fortnightly or monthly expenses; the amount of money which Ms Kingsburra usually had available at the end of each week, fortnight or month which might be available for repaying a loan; Ms Kingsburra’s actual living expenses and instead relied upon the Preliminary Test prepared by CBPL which applied an amount of monthly expenses of $2,925.00 based on the standardised formula contained in the Preliminary Test as earlier mentioned. As to each of these matters the respondents again say that these matters of fact are not within their knowledge and that Mr Humphreys prepared the Kingsburra CSA. As to the matter of applying the monthly amount of $2,925.00 based on the formula rather than conducting an inquiry into Ms Kingsburra’s actual living expenses, the respondents say that Mr Humphreys prepared the Kingsburra CSA and thus any failure to inquire into actual living expenses is not within the knowledge of the respondents but, nevertheless, the respondents admit that Channic “used a standardised formula [as alleged]”.

133    As to the question of verification, ASIC says that at no time prior to preparing the Kingsburra CSA on 6 July 2010 or at all did Channic take any reasonable steps to verify Ms Kingsburra’s financial situation. Channic, it is said, first, could not have undertaken any or any reasonable steps to verify Ms Kingsburra’s financial situation as the CSA was completed on 6 July 2010 but the Centrelink Statement and the statement from Mr Gilmartin were not obtained by Channic until 13 July 2010. Second, Channic did not otherwise obtain information or material which would evidence or support the information provided by Ms Kingsburra as to her financial situation. Third, Channic did not verify Ms Kingsburra’s actual living expenses but instead relied on the Preliminary Test prepared by CBPL which applied a standardised formula as earlier described.

134    As to the matters at [133], the respondents deny that Channic failed to take any reasonable steps to verify Ms Kingsburra’s financial situation. They deny that the CSA was completed on 6 July 2010 and say that it was completed on 7 July 2010. They do not admit that the Centrelink Statement and Mr Gilmartin’s statement were not obtained by Channic until 13 July 2010 and add “that that is not a matter of fact within the knowledge of the respondents”. They deny that Channic did not otherwise obtain information in verification of Ms Kingsburra’s financial situation. They do not admit that Channic failed to verify Ms Kingsburra’s actual living expenses although that is said to be a matter not within their knowledge because Mr Humphreys prepared the Kingsburra CSA. The respondents admit, however, that Channic “had reference to a standardised formula”, as particularised, but say that reference to the formula “was not such that it supplanted the verification undertaken by [Channic].

135    The respondents deny that Channic contravened s 130(1) of the NCCP Act.

136    The respondents admit that at the time of provision by Channic of credit to Ms Kingsburra, Channic had not, within 90 days before the day on which the credit was provided, or at all, undertaken the inquiries and verification required by s 130 of the NCCP Act. The respondents also admit that Channic, by providing credit to Ms Kingsburra, contravened s 128 of the NCCP Act.

137    ASIC says that Ms Kingsburra was a person who would be unable to comply with her financial obligations under the Kingsburra Proposed Loan or would only be able to comply with those obligations with substantial hardship for the reasons described in para 40.1 of the statement of claim (which repeats the matters at para 29 of the statement of claim) which are those matters described at [124] of these reasons.

138    The respondents deny that the Kingsburra Proposed Loan did not meet Ms Kingsburra’s requirements and objectives. They deny that Channic had not made reasonable inquiries about Ms Kingsburra’s requirements and objectives in relation to any finance obtained by her from Channic to assist in the completion of the purchase of the car. They deny that they could not have been aware of Ms Kingsburra’s requirements and objectives for the finance. They deny that the requirements and objectives of Ms Kingsburra for the loan were that the loan be for an amount of $7,290.00 representing the difference between the cost of the car at $8,990.00 and the amount of $1,700.00 which was paid as a deposit. They deny that the requirements and objectives of Ms Kingsburra for the loan did not include any amount to be used to pay brokerage in obtaining the loan from Channic. They deny that the Kingsburra loan was for $8,301.50 in circumstances where Ms Kingsburra only required a loan of $7,290.00. They deny that Ms Kingsburra did not require or seek an amount of $990.00 to be included in the loan for brokerage. They deny that Ms Kingsburra was unaware that the loan amount included brokerage of $990.00. Although there is a misdescription at para 40.2(e) of the amended defence (which refers to 40.2(d) of the statement of claim rather than 40.2(e)) it seems clear that the respondents also deny para 40.2(e) of the statement of claim.

139    As to the notion that Channic, in making its assessment, relied upon the Preliminary Test prepared by CBPL and in doing so took into account a formula or standardised amount “as representing” Ms Kingsburra’s actual living costs and expenses resulting in an applied amount of $2,925.00 comprising $1,300.00 per month for a de facto or married couple and an additional $325.00 per month for each of Ms Kingsburra’s five dependents, the respondents say this. They deny that matter. However they then admit that CBPL made reference to a standardised formula as asserted but say that the use of that formula did not result in the Preliminary Test “being not referrable to the actual living costs and expenses of Ms Kingsburra”. As to the numbers, the respondents deny the formulation of the numbers pleaded against them and say that the formula used was based on Ms Kingsburra being a single person and not in a de facto relationship and they say that the relevant numbers derived from the formula were $2,575.00 being $950.00 per month for a single person and $325.00 for each dependent.

140    The respondents deny that they failed to take into account only the information which satisfied integers (a) and (b) of s 131(4) of the NCCP Act.

141    The respondents deny that Channic should have assessed the Kingsburra Proposed Loan as being unsuitable for Ms Kingsburra as a loan which would not have met Ms Kingsburra’s requirements and objectives. They deny that, in failing to assess the loan as unsuitable, they contravened s 131(1) of the NCCP Act. They deny that the loan was unsuitable. They deny that Channic contravened s 133(1) of the NCCP Act by entering into the Kingsburra Loan.

The unconscionable conduct aspects of the matter

142    The respondents deny that the provision of the loan to Ms Kingsburra by Channic was the provision of a “financial service” as that expression is used in s 12BAB of the ASIC Act.

143    The respondents admit that the Kingsburra Loan was entered into by Channic in the course of trade and commerce and they admit that Ms Kingsburra was desirous of acquiring a car and had, as her only source of income, the receipt of social security payments.

144    The respondents do not admit and have no knowledge of whether Ms Kingsburra had the care of eight children or was a person of limited education, as alleged.

145    They admit that Ms Kingsburra was a resident of the Yarrabah Aboriginal Community.

146    They have no knowledge of whether, as alleged, Ms Kingsburra had very limited ability to negotiate and to protect her own interests when dealing with people outside of her community.

147    As to the contention that Ms Kingsburra had limited knowledge of, or experience in relation to, financial transactions, the respondents deny that matter and say that Ms Kingsburra had some experience in financial transactions as she had previously obtained personal loans from a credit provider, Cash Converters.

148    As to whether Ms Kingsburra was not aware of the market values of used motor vehicles, as alleged, the respondents say that that is not a matter of fact within their knowledge. As to whether Ms Kingsburra was unable to ascertain for herself whether or not a motor vehicle was or was not in a reasonable condition, the respondents say that that is not a matter of fact within their knowledge. Two other matters are asserted by ASIC to which the respondents have pleaded the same response. The first is that Ms Kingsburra was not used to reading and understanding transactional documents relating to loans and purchases and second, she would require advice and explanations to be given in relation to the effect of commercial documents.

149    The respondents deny that Channic, by Mr Humphreys and/or Mr Hulbert, was aware of or believed that persons in the position of Ms Kingsburra were unlikely to be able to acquire a loan from any mainstream bank, building society or other similar financial institutions. The respondents admit that Channic, by Mr Humphreys or Mr Hulbert, held expertise in the selling of motor vehicles. The respondents deny that that they were aware that the vehicle being sold to Ms Kingsburra was worth substantially less than the amount which Ms Kingsburra had agreed to pay for it.

150    The respondents admit that the vehicle was sold by Supercheap to Ms Kingsburra for an amount of $8,990.00 in circumstances where Supercheap had acquired the vehicle for $500.00 and had expended $1,091.00 on reconditioning it, representing total expenditure by Supercheap of $1,591.00. Although the respondents admit those matters, they say that the overheads per vehicle sold by Supercheap were between $3,000.00 and $4,000.00.

151    The respondents deny that Channic was in a substantially superior bargaining position to Ms Kingsburra in the negotiation of the sale and purchase of motor vehicles and the financing of the purchase of a motor vehicle.

152    The respondents admit that on 13 July 2010, at the time when the Kingsburra loan was entered into, Mr Hulbert placed a 22 page document (as earlier described), the Kingsburra Loan Contract, in front of Ms Kingsburra. As to the notion that Mr Hulbert turned the pages of the document without giving Ms Kingsburra any proper opportunity to read any of the pages, Mr Hulbert admits that he turned the pages of the loan contract but denies that Ms Kingsburra was not given any proper opportunity to read any of the pages. Mr Hulbert further says that prior to turning the pages, he told Ms Kingsburra that she should read the loan contract and that she could read the loan contract at the premises (the first premises) or take the loan contract away from the premises to read. Mr Hulbert says that Ms Kingsburra declined, in the exercise of her free will, to read the document at the premises or elsewhere.

153    As to the notion that Mr Hulbert instructed Ms Kingsburra to initial the foot of each page of the contract (which she did), the respondents deny that any such instruction was given but say that the loan contract was offered to Ms Kingsburra (although at this point of the pleading there is a mistaken reference to Ms Harris) for her to initial each page and they admit that she did initial each page.

154    As to the notion that Mr Hulbert instructed Ms Kingsburra as to where to place her signature on pages 8, 9 and 22 (which she did), the respondents deny any such instruction and say that the loan contract was offered to Ms Kingsburra for her signature at those pages and she signed on those pages.

155    As to the notion that Mr Hulbert did not explain the document to Ms Kingsburra or did not fully explain it to her, the respondents deny that matter and say that Mr Hulbert referred Ms Kingsburra to the following matters contained within the loan contract: the amount of credit; the annual percentage rate; the amount of interest payable; the number of repayments; the amounts of repayments; the date of the first and last repayments; the frequency of the payments; the total amount of repayments; the comparison interest rate; the term of the loan; the amount of the brokerage fee; the amount of the “REVS” encumbrance fee; the amount of direct debit fees; the missed payment fee; the default notice fee; the debt recovery fee; the details as to the vehicle the subject of the loan; the “Important Note” to borrowers and the two “boxed” warnings to the borrower, immediately above the location for the borrowers and witness signature. Mr Hulbert pleads that he provided Ms Kingsburra with a summary of the key provisions of the loan contract and told her that if there was anything in the contract which she did not understand, it would be explained to her.

156    As to the notion that Mr Hulbert did not advise Ms Kingsburra to read the document or to seek legal advice in relation to it, the respondents deny that matter and Mr Hulbert pleads, again, that he advised Ms Kingsburra to read the loan contract and that he said she could read it at the premises or take it away to read but that Ms Kingsburra elected not to read the document at the premises or elsewhere. Mr Hulbert says that he told Ms Kingsburra that she should seek legal advice about the contents of the loan contract but that she declined to obtain such legal advice, in the exercise of her free will.

157    As to the notion that Mr Hulbert did not explain the interest rate of 48% per annum, did not identify the amount being borrowed, did not identify the total amount that would be repaid and did not identify an amount representing brokerage forming part of the loan, all such matters are denied.

158    ASIC contends that the terms of the loan were harsh and unconscionable having regard to these considerations: the contended circumstances in which it was entered; the amount borrowed was more than the amount which Ms Kingsburra sought or required in order to purchase the Hyundai Elantra; all Ms Kingsburra wanted to borrow to complete the purchase of the car was $7,290.00; the interest rate was 48% per annum “despite the fact that Ms Kingsburra was paying above the market value for the [car]”; the total amount of the repayments under the agreement was $13,134.35; Ms Kingsburra agreed or undertook that should she default in making the loan repayments she would consent to the car being repossessed and would remain liable for any shortfall in the loan repayments; Channic knew that the loan related to the purchase of a car by Ms Kingsburra which was worth substantially less than the amount she had agreed to pay for it (and that was so because: the sale price of the car was substantially more than the price of a similar car of that kind generally available on the market; the car had a number of defects including cracked wheels which were required to be replaced at a cost of $180.00 each; the front passenger door did not open and, once repaired, the window winder was broken; the car had paint damage for which Ms Kingsburra received a repair quote of $800.00; and the spare tyre of the car was flat).

159    As to these various matters, the respondents admit that the interest rate was 48% per annum and that total repayments under the agreement amounted to $13,134.35. They admit that Ms Kingsburra undertook to consent to repossession of the vehicle should she default and that she would remain liable for any shortfall in loan repayments. They say that the vehicle was security for the loan and that such a term is a standard term in many loan contracts relating to the purchase of second-hand motor vehicles.

160    They say that the car was sold at market value for such a vehicle having regard to the second-hand vehicle market in the Cairns area. They deny that the price was substantially higher than a comparative similar vehicle. As to the first two defects described earlier, the respondents say that these are matters of fact not within the knowledge of the respondents but in any event the defect could have been repaired under the warranty if the defect occurred during the warranty period. As to the paint damage, the respondents admit that the car had “some paintwork which was faded” but say that otherwise the factual matter is not within the knowledge of the respondents. The respondents assert the same response to the matter of the spare tyre being flat but say that the defect would have been repaired under the warranty at no cost to Ms Kingsburra.

161    ASIC says that Channic, by entering into the loan contract with Ms Kingsburra, took advantage of her vulnerability in relation to the transaction.

162    The respondents deny that by entering into the Kingsburra loan, Channic engaged in unconscionable conduct within the meaning of s 12CB of the ASIC Act.

The matter of whether the Channic Loan Contract is an unjust contract under s 76 of the National Credit Code

163    ASIC says that the Channic loan to Ms Kingsburra was an unjust contract within the meaning of s 76 of the National Credit Code for a number of reasons. Having regard to the way I have broken up these paragraphs, I will attribute a principal paragraph number to each set of contentions.

164    First, Ms Kingsburra had substantially less bargaining power than Channic as she had very little experience with car finance and much less experience than Mr Hulbert on behalf of Channic: 53.1.

165    Second, her income was derived from Centrelink social security payments and she had few other options for obtaining finance to purchase a vehicle: 53.1.

166    Third, she suffered from vulnerabilities (in terms of the factual matters described at [143] to [148] of these reasons in addressing the amended defence of the respondents) whereas Channic had the benefit of the advantage of being familiar with transactions in relation to the purchase of cars and related financial lending transactions: 53.1.

167    Fourth, the terms of the loan to Ms Kingsburra and the conduct of Channic were “not justified in light of the risks undertaken by Channic”. That is said to follow because the risks undertaken by Channic were “minimal” having regard to four factors and they are: Supercheap bought the car for $500.00 and expended $1,091.00 reconditioning it; Ms Kingsburra had paid Supercheap a deposit of $1,700.00; of the loan to Ms Kingsburra of $8,301.50, $8,280.00 was disbursed to Supercheap and CBPL; and, Supercheap and CBPL were owned and controlled by Mr Hulbert, as was Channic: 53.2.

168    As to these four matters, the respondents deny that the Channic loan was an unjust contract. They deny that Ms Kingsburra had substantially less bargaining power than Channic and say that Ms Kingsburra voluntarily and freely entered into the loan contract and that she had an opportunity to buy a vehicle elsewhere, to take out a loan elsewhere and to seek legal advice about the terms of the contract. They admit that Ms Kingsburra had “much less experience with car finance” than Mr Hulbert but do not admit that Ms Kingsburra had “very little experience with car finance”. The respondents admit that Ms Kingsburra’s only source of income was her Centrelink social security payments but say that Ms Kingsburra had other options for obtaining finance including four other “non-mainstream” credit providers in the Cairns area.

169    As to the allegation that the Channic loan was not justified having regard to the risks undertaken by Channic, the respondents deny that matter and repeat that although they admit the financial statistics, they say that Supercheap’s overheads were between $3,000.00 and $4,000.00 per vehicle. As to the amount of the loan, the respondents admit that out of a loan of $8,301.50, $8,280.00 was disbursed to Supercheap and CBPL but deny that those matters demonstrate that Channic’s risks were minimal. As to the control by Mr Hulbert, the respondents admit that Supercheap, CBPL and Channic were owned and controlled by Mr Hulbert but say that those facts are not probative of Channic’s risk being minimal.

170    Fifth, ASIC also says that the Channic loan to Ms Kingsburra was an unjust contract because the interest rate of 48% per annum was not reasonably necessary for the protection of Channic’s legitimate interests and that an interest rate of 48% was unreasonably high: 53.3. The respondents deny those matters.

171    Sixth, ASIC also says that the Channic loan contract to Ms Kingsburra was an unjust contract because the combined effect of the price of the car (above market value) and the interest rate of 48% per annum were not justified in light of the risk taken by Channic and were not necessary to protect Channic’s legitimate interests. Moreover, Channic knew that the value of the car sold to Ms Kingsburra was above market value as the sale price was substantially more than a similar car of that kind generally available on the market and the car had a number of defects which rendered its value less than the market value of a car of that type and age: 53.4. All of these matters are denied by the respondents.

172    Seventh, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because Ms Kingsburra’s undertaking that upon default she would consent to repossession of the car while remaining liable for any shortfall in loan repayments was not reasonably necessary for the protection of Channic’s interests in circumstances where Channic knew that the loan related to the purchase of a car by Ms Kingsburra which was worth substantially less than the amount of the loan: 53.5. The respondents say, again, that the overheads per Supercheap vehicle were between $3,000.00 and $4,000.00 per vehicle and that the vehicle in question was not repossessed by Channic and the loan was written off by Channic on 27 June 2013.

173    Eighth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because at the time Channic entered into the Kingsburra Loan, its provisions were not the subject of negotiation between Ms Kingsburra and Channic: 53.6. The respondents admit the factual matter (but not the conclusion) and say that Ms Kingsburra was able to exercise “her free choice as to whether to negotiate the terms of the loan, and to enter the loan or not”.

174    Ninth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because it was not reasonably practicable for Ms Kingsburra to negotiate for the alteration of the terms or rejection of any of the provisions of the loan contract: 53.7. The respondents deny this matter.

175    Tenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because the loan contract was in a form that was not readily understandable by Ms Kingsburra because it was 22 pages in length and written in complex legal style: 53.8. The respondents deny this matter although they admit that the contract was 22 pages in length.

176    Eleventh, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because Channic failed to explain accurately or at all the provisions of the loan document to Ms Kingsburra. ASIC says that Channic failed to explain that: Ms Kingsburra was borrowing an amount of $990.00 to be paid to CBPL; the existence of CBPL; that CBPL was providing a brokerage service or that CBPL and Channic were owned by Mr Hulbert; the interest rate was 48% per annum which was, or was close to, the maximum rate allowable under legislation: 53.9. The respondents deny these matters except to say that Mr Hulbert admits he did not explain that the interest rate of 48% was close to the maximum rate allowable under legislation.

177    Twelfth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because Ms Kingsburra did not understand the provisions of the loan contract or their effect. ASIC says that that follows because of the earlier matters taken together with the contention that Ms Kingsburra was not aware that there was a brokerage fee of $990.00 to be paid to CBPL included in the amount of credit advanced to her or that the interest rate was 48% per annum and, she was not aware, that the total repayments would be $13,134.35 or aware that those repayments would be in addition to the deposit she had already paid of $1,700.00: 53.10. The respondents deny these matters.

178    Thirteenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because the loan to Ms Kingsburra included an amount of $990.00 payable to CBPL upon disbursement of the funds in circumstances where Ms Kingsburra was not informed of the service performed by or the fee charged by CBPL: 53.11.

179    Fourteenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because Ms Kingsburra did not obtain independent legal advice prior to entering into the loan and Channic did not give her an opportunity to do so. ASIC says this result follows having regard to the earlier matters and the circumstance that Ms Kingsburra, at page 9 of the document, signed a statement to the effect that she had had the opportunity to obtain legal advice but had chosen not to do so, in circumstances where Ms Kingsburra was not aware of, and therefore did not understand, the implications of the statement at page 9 of the document: 53.12. The respondents admit that Ms Kingsburra did not obtain independent legal advice prior to entering into the loan contract but do not admit that she was not given a real opportunity to do so. Mr Hulbert says that he told Ms Kingsburra that she could take the loan contract away and seek legal advice about it but she chose not to seek legal advice and acknowledged that she did not wish to seek legal advice. They admit that Ms Kingsburra signed the statement at page 9 of the document.

180    Fifteenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because Channic engaged in unfair tactics in relation to Ms Kingsburra in that the brokerage fee was not orally disclosed to Ms Kingsburra and nor was it disclosed to her in writing until it was included in a loan disbursement at page 2 of the 22 page document Ms Kingsburra signed in the factual circumstances contended for by ASIC outlined earlier (and in the context of the amended defence put on by the respondents): 53.13. As to these matters the respondents admit that the brokerage fee was not disclosed to Ms Kingsburra in writing until it was included as a loan disbursement at page 2 of the 22 page document put before Ms Kingsburra to be signed. The respondents say that Ms Kingsburra was orally told by Mr Hulbert of the existence of the brokerage fee in the course of Mr Hulbert explaining the loan contract to Ms Kingsburra.

181    Sixteenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because at the time the loan was entered into with Ms Kingsburra, Channic knew or could have ascertained by reasonable inquiry that Ms Kingsburra could not pay in accordance with its terms, or could not pay without substantial hardship: 53.14. The respondents deny that matter but admit that Ms Kingsburra’s accounts were regularly overdrawn; that Ms Kingsburra’s accounts were rarely in credit; that in the ordinary course, any social security payments which were paid into Ms Kingsburra’s account were withdrawn on or about the day on which the money was deposited; and Ms Kingsburra had a number of recurring expenses such as cash advances from Cash Converters.

182    The respondents deny that it was unlikely that Ms Kingsburra would be able to make the repayments under the Channic loan to her and, as to that, they say that Ms Kingsburra in fact made a total of $13,427.00 in payments in respect of the loan contract.

183    Seventeenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because the bargain between Channic and Ms Kingsburra was unjust because to Channic’s knowledge the value of the car was substantially less than the amount of the loan (with the same particulars repeated); the interest rate was unreasonably high; and the brokerage fee of $990.00 was unreasonably high: 53.15. The respondents deny these matters.

184    Nineteenth, ASIC says that the Channic loan to Ms Kingsburra was an unjust contract because the loan has not been discharged or otherwise come to an end: 53.16. As to this matter the respondents deny the contention and say that Mr Hulbert did not seek to repossess the vehicle and “wrote the loan off as a bad debt”.

185    ASIC says that the loan to Ms Kingsburra should be reopened by the Court under s 76 of the National Credit Code as an unjust contract. The respondents oppose reopening the contract and say that the vehicle was not repossessed and was retained by Ms Kingsburra.

PART 4: the questions to be addressed so far as the nccp act is concerned

186    The questions are these, so far as CBPL is concerned:

1.    Did CBPL provide credit assistance to the relevant borrower, on a day, by suggesting that the borrower apply, or assisting the borrower to apply, to Channic for a particular credit contract?

2.    If so, did CBPL within 90 days of that day make a preliminary assessment that purports to comply with s 115(1)?

3.    If so, does it specify, as required by s 116(1)(a) the period the assessment covers?

4.    Does the preliminary assessment, if made, assess, as required by s 116(1)(b) whether the credit contract with Channic will be unsuitable for the consumer if he or she enters into the credit contract in the period of the assessment?

5.    If no to either 3 or 4, CBPL fails to comply with s 115(1)(c)(i).

6.    If a preliminary assessment is made, is it likely, at the time of the preliminary assessment, that the consumer will be unable to comply with his or her financial obligations under the contract if the credit contract is entered into with Channic in the period proposed for it to be entered?

7.    If the consumer will be able to comply with those obligations, is it likely that such compliance could only be achieved by the consumer with substantial hardship?

8.    Is it likely, at the time of the preliminary assessment, that the contract with Channic will not meet the consumer’s requirements or objectives if the contract is entered into with Channic in the period proposed for it to be entered?

9.    If yes to any of 6, 7 or 8, the credit contract will be unsuitable by reason of s 118(2). If unsuitable by reason of s 118(2), CBPL must assess, by reason of s 118(1), the Channic credit contract as unsuitable for the consumer, in making the assessment required by s 115(1)(c)(i) and s 116(1)(b).

10.    Also, does the preliminary assessment cover, as required by s 115(1)(c)(ii), the period proposed for the entering of the contract?

11.    Did CBPL make reasonable inquiries as required by s 115(1)(d) and s 117(1)(a) about the consumer’s requirements and objectives concerning a contract with Channic?

12.    Did CBPL make reasonable inquiries as required by s 115(1)(d) and s 117(1)(b) about the consumer’s financial situation?

13.    Did CBPL take reasonable steps to verify the consumer’s financial situation as required by s 115(1)(d) and s 117(1)(c)?

14.    If no to any of 2, 3, 4, 10, 11 12 or 13 (or yes to any of 6, 7 or 8), CBPL fails to satisfy s 115(1)(c) or (d) and must not provide credit assistance to the consumer by suggesting or assisting him or her to apply to Channic for the particular credit contract: s 115(1).

15.    Apart from the questions arising out of the operation of s 115 going to the preliminary assessment, is it likely, at the time CBPL provides credit assistance to the consumer, that he or she will be unable to comply with his or her financial obligations under the Channic contract if the contract is entered into in the period proposed for it to be entered?

16.    As to 15, if it is not likely that the consumer will be unable to comply with those obligations, is it likely that the consumer could only comply with such obligations with substantial hardship?

17.    In any event, is it likely, at the time CBPL provides credit assistance to the consumer, that the credit contract will not meet the consumer’s requirements or objectives, if the contract is entered into in the period proposed for it to be entered?

18.    If yes to 15, 16 or 17, the credit contract will be unsuitable for the consumer by reason of s 123(2).

19.    If unsuitable by reason of s 123(2), CBPL must not provide credit assistance to the consumer by suggesting that the consumer apply, or by assisting the consumer to apply for the particular credit contract with Channic: s 123(1).

20.    Did CBPL, at the same time as providing credit assistance to the consumer, give the consumer a credit proposal disclosure document in accordance with s 121(2)?

187    The questions so far as Channic is concerned are these.

1.    It is uncontroversial that Channic entered into a credit contract with the consumers described at [73] of these reasons.

2.    Did Channic, within 90 days of the day of entry into the credit contract (the credit day) make an assessment that purports to comply with s 128(c)?

3.    If so, does the assessment specify the period the assessment covers, as required by s 129(a)?

4.    If Channic has made an assessment, does it assess whether the contract will be unsuitable for the consumer if the contract is entered into in the period the assessment covers, as required by s 129(b)?

5.    Is it likely, at the time of the assessment required by s 128(c)(i) and s 129(b), that the consumer will be unable to comply with the consumer’s financial obligations under the contract if the credit contract is entered into in the period covered by the assessment?

6.    As to 5, if it is not likely that the consumer will be unable to comply with those obligations, is it likely that the consumer could only comply with those obligations with substantial hardship?

7.    Is it likely, at the time of the assessment required by s 128(c)(i) and s 129(b), that the credit contract will not meet the consumer’s requirements or objectives if the credit contract is entered into in the period covered by the assessment?

8.    If the answer to 5, 6 or 7 is yes, Channic must assess that the credit contract will be unsuitable for the consumer by reason of s 131(1).

9.    Also, does the assessment cover the period in which the credit day occurs, which for present purposes is the date of entry into the Channic contract: s 128(c)(ii)?

10.    Has Channic, before making its assessment, made reasonable inquiries about the consumer’s requirements and objectives in relation to the credit contract: s 128(d) and s 130(1)(a)?

11.    Has Channic, before making its assessment, made reasonable inquiries about the consumer’s financial situation: s 128(d) and s 130(1)(b)?

12.    Has Channic, before making its assessment, taken reasonable steps to verify the consumer’s financial situation: s 128(d) and s 130(1)(c)?

13.    If the assessment does not cover the period in which the credit day occurs, or if Channic has failed to do the things contemplated by 9, 10 and 11, Channic has failed to comply with s 128(d).

14.    In the event that Channic fails to comply with s 128(c) or (d), it must not enter into a credit contract with a consumer who will be the debtor under the contract: s 128(a).

15.    Apart from any question concerning the making of an assessment as required by s 128, is it likely, at the time the credit contract is entered into, that the consumer will be unable to comply with his or her financial obligations under the contract: s 133(2)(a)?

16.    As to 15, if it is not likely that the consumer will be unable to comply with those obligations, is it likely that the consumer could only comply with those obligations with substantial hardship: s 133(2)(a)?

17.    Is it likely, at the time the credit contract is entered into, that the credit contract does not meet the consumer’s requirements or objectives: s 133(2)(b).

18.    If the contract is unsuitable by reason of s 133(2), Channic must not enter into the credit contract with a consumer who will be the debtor under the contract: s 133(1).

PART 5: THE ADMISSIONS

188    In relation to the case made against them concerning each of the consumers, the respondents have made a number of admissions. Many other factual matters are contested. The admissions in relation to Ms Kingsburra have already been noted. I propose, however, to now note the admissions made by the respondents (drawn from the amended defence) in respect of the claims made against them concerning each consumer. I will also note the relevant paragraphs of the pleading.

As to Ms Kingsburra

189    The respondents admit that CBPL provided credit assistance to her for the purposes of ss 8 and 115 of the NCCP Act: para 23.

190    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 27.1.

191    They admit that no inquiries and verification as required by s 117 of the NCCP Act was undertaken by CBPL: para 27.3. Although there is a misdescription at para 27.3 of the amended defence (which refers to 27.2(a) of the statement of claim rather than 27.3) it seems clear that the respondents also admit para 27.3 of the statement of claim.

192    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 28.

193    They admit that Channic failed to undertake reasonable inquiries and verification as required by s 130 of the NCCP Act: para 38.

194    They admit that Channic failed to discharge its obligation to assess unsuitability for the purpose of s 128 of the NCCP Act: para 39.

195    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions contravened by Channic: para 414.4.

196    All other matters are in issue.

As to Ms Prunella Kathleen Harris

197    The respondents admit that CBPL provided credit assistance to her for the purposes of ss 8 and 115 of the NCCP Act: para 59.

198    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 63.

199    All other matters are in issue.

As to Mr Vance Henry Gordon and Ms May Estell Stanley

200    The respondents admit that CBPL provided credit assistance to them for the purposes of ss 8 and 115 of the NCCP Act: para 95.

201    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 98.1.

202    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 99.

203    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions contravened by Channic: para 414.4.

204    All other matters are in issue.

As to Ms Rhonda Lorraine Brim

205    The respondents admit that CBPL provided credit assistance to her for the purposes of ss 8 and 115 of the NCCP Act: para 133. Although there is a misdescription at para 133 of the amended defence (which refers to 132.2(b) of the statement of claim rather than 133) it seems clear that the respondents also admit para 133 of the statement of claim.

206    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 136.1.

207    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 137.

208    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions of the NCCP Act contravened by Channic: para 414.4.

209    All other matters are in issue.

As to Ms Kerryn Gerthel Smith

210    The respondents admit that CBPL provided credit assistance to her for the purposes of ss 8 and 115 of the NCCP Act: para 170.

211    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 179.1.

212    Because the respondents failed to plead to para 179.3 of the statement of claim, they are taken to have admitted that no inquiries or verification as required by s 117 of the NCCP Act was undertaken by CBPL: para 179.3.

213    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 180.

214    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions of the NCCP Act contravened by Channic: para 414.4.

215    All other matters are in issue.

As to Ms Joan Cecily Noble and Mr William Damien Noble

216    The respondents admit that CBPL provided credit assistance to them for the purposes of ss 8 and 115 of the NCCP Act: para 214.

217    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 223.1. They admit that no inquiries and verification as required by s 117 of the NCCP Act was undertaken by CBPL: para 223.3.

218    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 224.

219    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions of the NCCP Act contravened by Channic: para 414.4.

220    All other matters are in issue.

As to Ms Muriel Grace Dabah and Ms Estelle Harris

221    The respondents admit that CBPL provided credit assistance to them for the purposes of ss 8 and 115 of the NCCP Act: para 259.

222    They admit that no inquiries and verification as required by s 117 of the NCCP Act was undertaken by CBPL: para 261. They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 262.1(a).

223    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 263.

224    They admit that Channic failed to undertake reasonable inquiries and verification as required by s 130 of the NCCP Act: para 273.1.

225    They admit that Channic failed to discharge its obligation to assess unsuitability for the purpose of s 128 of the NCCP Act: para 274.

226    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions contravened by Channic: para 414.4.

227    All other matters are in issue.

As to Ms Charlotte Mudu and Mr Aaron Elliott

228    The respondents admit that CBPL provided credit assistance to them for the purposes of ss 8 and 115 of the NCCP Act: para 298.

229    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 301.1(a)-(b).

230    They admit that no inquiries and verification as required by s 117 of the NCCP Act was undertaken by CBPL (para 301.3) although the respondents also deny a contravention of s 117 of the NCCP Act: para 300.

231    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 302.

232    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions contravened by Channic: para 414.4.

233    All other matters are in issue.

As to Ms Donna Gayle Yeatman and Mr Farren Yeatman

234    The respondents admit that CBPL provided credit assistance to them for the purposes of ss 8 and 115 of the NCCP Act: para 338.

235    They admit that no preliminary assessment as required by s 116(1) of the NCCP Act was made by CBPL due to the relevant period not being specified: para 341.1.

236    They admit that CBPL contravened the prohibition upon providing credit assistance in applying for a credit contract to Channic without a preliminary assessment having been done, and inquiries and verification having been undertaken, in contravention of s 115(1) of the NCCP Act: para 342.

237    Mr Hulbert admits that, by operation of s 169 of the NCCP Act, he is taken to have contravened the provisions contravened by Channic: para 414.4.

238    All other matters are in issue.

As to Ms Leandrea Rose Raymond

239    The respondents admit that the original loan to Ms Raymond as varied by the “Raymond First Variation” and/or the “Raymond Second Variation” is a “Credit Contract” for the purposes of ss 4 and 204 of the NCCP Act: para 388.

240    The respondents failed to plead to para 392 of the statement of claim and thus they are taken to have admitted that Channic failed to make reasonable inquiries about Ms Raymond’s requirements and objectives for the purposes of s 130(1) of the NCCP Act: para 392.

241    The respondents admit that Channic failed to make reasonable inquiries and verification required by s 130 of the NCCP Act: para 393.3.

242    The respondents admit that Channic failed to discharge its obligation to assess unsuitability for the purposes of s 128 of the NCCP Act: para 394.

243    Although, of course, the facts concerning the circumstances relevant to each of the consumers recited in the Table at [73] of these reasons must be considered individually, the case made against the respondents concerning Ms Kingsburra illustrates, fundamentally, the nature of the case made against the respondents in respect of each of the other consumers and the business method adopted by Supercheap, CBPL and Channic.

244    It is now necessary to consider, the evidence of Ms Kingsburra.

part 6: The evidence of Ms ADELE DOROTHEA Kingsburra

245    Ms Kingsburra was born on 10 October 1972. She was almost 38 years of age when she engaged with the respondents between 6 July and 13 July 2010.

246    Ms Kingsburra lives within the Aboriginal Community at Yarrabah as part of what is called “Yarrabah Aboriginal Community Housing”. Ms Kingsburra has lived in the community for approximately 30 years. Ms Kingsburra lives in a de facto relationship with Mr Garry Gilmartin. Ms Kingsburra has eight children aged, at the date of her affidavit, 8, 10, 11, 13, 16, 22, 24 and 25. She lives with Mr Gilmartin and her five youngest children. On 6 July 2010 when she went to Supercheap she was then living with Mr Gilmartin and her eight children: T, p 594, lns 34-38; T, p 619, lns 42-43. Mr Gilmartin suffers from depression and anxiety. Ms Kingsburra is his carer. Ms Kingsburra’s 11 year old son, Lemac, has special needs as he suffers from a condition described as “absency seizure”.

247    Ms Kingsburra attended the Slade School in Warwick as a boarder. She left that school in 1988 after Year 11. She was at the school for two years in 1987 and 1988.

248    After leaving school, Ms Kingsburra returned to the Yarrabah community. For brief periods of approximately six months or so, she lived outside the community in places such as Blackwater or Toowoomba. She undertook a general computer course at the Yarrabah Training Centre about two or three years ago although she has not undertaken any further study. She thinks that her English is “pretty good” and she says that she can read and write “pretty well”. She says that sometimes she does not understand the meaning of some words. In giving her evidence Ms Kingsburra was well-spoken. She does not speak any other languages. Ms Kingsburra says that she has “done some casual work before”. In about 2011, Ms Kingsburra was employed doing casual work as part of the Commonwealth Government Census but that work endured for only six weeks. In doing that work, she was required to “knock on people’s doors and fill out census forms for people in Yarrabah”. Ms Kingsburra says that she has not done any other paid work since she left school.

249    Ms Kingsburra elaborated upon these matters in the course of cross-examination. She agreed with counsel for the respondents that she had worked as a Postmistress at Yarrabah for “maybe two years” and in undertaking that work she was doing “CDEP two days a week”, that is, a “work for the dole thing”. Ms Kingsburra says that she was handling the mail in the sense of “just giving mail – handing mail out”. Ms Kingsburra says that she was not responsible for “filling out any paperwork or finance or anything, just handling the mail”: T, p 626, lns 36-47; T, p 627, lns 4-5. Ms Kingsburra accepted that this work approached something like 200 days of work assuming the period was about two years.

250    Ms Kingsburra also agreed that she lived for about two years in Blackwater. She was unemployed and lived there with her in-laws: T, p 627, lns 21-31. She also lived for a year prior to 2010 in Toowoomba. She was again unemployed and living with her in-laws: T, p 627, lns 33-35.

251    Ms Kingsburra says that in July of each year she usually receives a bonus from Centrelink as a “family tax benefit”. Ms Kingsburra says she knew she was going to receive a benefit of about $2,000.00 or $3,000.00 in July 2010. Ms Kingsburra says that one of her sons had an 18th birthday coming around in October and she wanted to buy a car for him with some of the Centrelink benefit. She did not want to use “the whole lot”. She had promised him a car if he graduated from school “for her” and since his birthday was in about three months’ time, she thought she would try and “get him a car”: T, p 595, lns 1-2. Ms Kingsburra said that she did not know where she was going to get the car from at the time but she spoke to a “couple of ladies” whose names she could not recall and they referred her to Supercheap: T, p 595, lns 10-16.

252    In her affidavit, Ms Kingsburra says that the people recommending Supercheap told her that she could “go down to see a guy named Colin at Super Cheap Auto in Cairns” [and as] long as you can come up with a deposit for them you can sign for the car and drive off”. They also said that a “deposit for a small car would be $1,500.00 and a bigger car would be $2,000.00”.

253    Ms Kingsburra thought she could afford a deposit of $1,500.00 because she knew she was going to be receiving some money in July from Centrelink. She did not want to spend too much on the car because she knew she could not “afford too much”: T, p 595, lns 18-24. She knew that she would have to make some payments on the car other than the deposit but, by this stage, she had not thought about how much the other payments might be. Ms Kingsburra said that “roughly, like, anything under 10,000 really, you know” was something she may have had in mind: T, p 595, lns 28-29.

254    Ms Kingsburra says that in July 2010 she went to the Supercheap car yard on Mulgrave Road on a Tuesday (6 July) and spoke to a “tall bloke there” whose name was Kevin. This was Mr Humphreys although in the context of Ms Kingsburra’s evidence I will continue to refer to him as Kevin. He worked in the car yard. In response to Kevin’s question of whether he could help her, Ms Kingsburra said that she just wanted to see if she would be able to get a car for one of her sons as his 18th birthday was coming up. Ms Kingsburra said that since he would be 18, he would want something “sporty-looking”. Kevin pointed out some cars. Ms Kingsburra thought that a teenager would not like those cars. Kevin pointed out a car parked outside the car yard and asked “what about that one there”? Ms Kingsburra thought that car looked “okay” and looked “sporty”. Ms Kingsburra says that Kevin said: “well, that car runs well, because I know because I drive it to and from work, and also I took it for a drive up on the Atherton Tablelands and it drives pretty well up there on – on the Tablelands”: T, p 595, lns 46-47; T, p 596, lns 1-2.

255    In her affidavit, Ms Kingsburra, in the context of the reference to the Atherton Tableland, thought that Kevin also said this: “it is pretty good out on the range and has no problems”. That observation is consistent with the remark that: “I took it for a drive up on the Atherton Tablelands and it drives pretty well up there on – on the Tablelands”.

256    In her affidavit Ms Kingsburra thinks that she noticed and pointed out to Kevin some paint damage on the back bumper bar of the car. It was peeling and Kevin said that Ms Kingsburra “could get that fixed for pretty cheap” and “it won’t cost you much for a paint job” and “you could just get some spray paint and paint it yourself”.

257    Ms Kingsburra had a conversation with Kevin about the price. She asked how much the car would cost and he said $8,990.00. Ms Kingsburra thought: “Wow, I can afford this. I can afford this car. It’s a nice sporty car for my boy’s 18th”: T, p 596, lns 1-5. In cross-examination, Ms Kingsburra rather thought that she did not have a conversation with Kevin about how much the car would cost. Her recollection was that there was a sign on the front windscreen marked $8,990: T, p 614, lns 44-47; T, p 615, lns 1-4. Kevin then said that Ms Kingsburra would need to “come up with $1,500.00 deposit”. Ms Kingsburra said that she did not have the deposit with her but would have it on Saturday. Kevin said he would hold the car until Saturday. Ms Kingsburra says that Kevin “also asked me to pay another 200 – [an] extra $200 for a new set of mags to go on the car”. Ms Kingsburra says Kevin told her that “it’s going to cost him 400 but he just want[ed] me to pay … $200 for the cost of the mags”: T, p 596, lns 44-45; T, p 597, lns 1-4.

258    Ms Kingsburra says she then went to “[something] just like an office with a door” and Kevin introduced her to “a bloke named Colin”. This was Mr Hulbert although in the context of Ms Kingsburra’s evidence I will continue to refer to him as Colin. Kevin said to Colin “she’s looking for a car for her son’s 18th birthday”: T, p 596, ln 11. Kevin then told her to come back on Saturday with the deposit and a Centrelink statement and an identification photo as well. Ms Kingsburra says that she did not have a discussion with anyone on that day about her income or her expenses. That was going to be discussed on the following Saturday, when she was to return to the car yard with the deposit, the Centrelink statement and identification although she was also asked to bring with her a letter from her partner Garry Gilmartin stating that he paid her board of $150.00 each fortnight towards food.

259    Ms Kingsburra says that she had the discussion as to these requirements with Kevin.

260    In her oral evidence, Ms Kingsburra rather thought that she did not have any discussion about expenses on the Tuesday and that this discussion was to occur on the following Saturday. There must have been some discussion about some aspects of her financial circumstances because Ms Kingsburra was asked by Kevin to bring the Centrelink statement and Mr Gilmartin’s statement to the car yard the following Saturday. That explains the circumstance referred to in Ms Kingsburra’s affidavit that she was asked by Kevin on the Tuesday about her Centrelink payments and her rental income. Kevin asked her whether she was on Centrelink payments. She said yes. She was asked whether she had to pay rent and she said yes, in an amount of $250.00 per fortnight deducted out of Centrelink payments. She was asked whether she had any other income and she said that she received $150.00 per fortnight board from Mr Gilmartin as a contribution towards the cost of groceries.

261    Kevin then asked Ms Kingsburra to produce a Centrelink statement and evidence of the payments by Mr Gilmartin.

262    At some point there was a discussion of loans with other people.

263    Ms Kingsburra says she was asked, by Kevin, whether she had other loans and she said that she had a loan with “Safrock”, that is, “Cash Converters” and also with “GE Finance”. Ms Kingsburra said that the loan from Cash Converters was still outstanding at this time and the GE Finance loan had been “put towards the debt collector” because “I … wasn’t able to afford to pay them these instalments”: T, p 597, lns 18-26. Kevin said that he would obtain a “credit check” concerning Ms Kingsburra.

264    In her affidavit, Ms Kingsburra says that she told Kevin that her monthly repayments to GE Finance were $200.00 although she was not making any repayments at that time and she said: “The loan with Cash Converters has three more fortnightly payments to go and I owe them about $800.00”.

265    Ms Kingsburra was taken to a three page document at Tab 2 to her affidavit. On page 1, it bears the heading “Credit Application Form”. Under that, it has “loan purpose”. That space is blank. The next line is “Credit Terms”. The word “vary” is inserted there. The next section is headed “Deal Basics (Office Use)”. It has no entries. The next section, in a box, is headed “Personal Details”. It has handwritten details. The last section, in a box, is headed “Notes”. It has no entries. As to the handwritten information in the “Personal Details” box, Ms Kingsburra says that those handwritten inserted details are not her handwriting. In the “Personal Details” box someone has noted in handwriting that Ms Kingsburra has five dependants and apart from details of Ms Kingsburra’s name, date of birth, current address, time at that address and whether Ms Kingsburra rents the premises, someone has noted that Ms Kingsburra’s current employer is “Centrelink” and as to “income”, three figures are noted: $462, $106 and $528 amounting to $1,096. Those amounts reconcile to amounts recited in a Centrelink statement dated 12 July 2010. The amount of $528 is the combination of a carer payment and a pension supplement ($485.60 and $42.90). The amount of $106 is a carer allowance. The amount $462 represents the total of the remaining benefits, namely $887.18 less Centrelink deductions of $425.62, which amounts to $461.56.

266    Page 2 contains two boxes. The first box is headed “Financial Information” and the second is headed “References”. The handwriting in the “References” box is that of Ms Kingsburra. She remembers filling out that part of the form on page 2 and says that she filled it out on the day that she went to pick up the car. She thinks that when she was filling out that part of the form she may have spoken to Colin: T, p 598, lns 1-8.

267    Ms Kingsburra says that the handwriting in the “Financial Information” box is not her handwriting. On the last page there is a space for the signature of the applicant, the printing of the applicant’s name and a date. Ms Kingsburra says that she signed the document on page 3, wrote in her name and wrote in the date, “06-07-10”. Ms Kingsburra says that she did this on the day of her first visit to the car yard, namely the Tuesday.

268    In her affidavit Ms Kingsburra says that at the time of going to buy the car she was “doing okay moneywise” and although she had some loans to pay off, she thought she could afford to put a deposit on the car having regard to the Centrelink bonus payment. Apart from the bonus payment, Ms Kingsburra says that her regular fortnightly Centrelink payments were about $1,500.00. Deductions had to come out of that sum. She was also receiving $150.00 per fortnight from Mr Gilmartin.

269    At the time of buying the car, her expenses were these (as set out at para 58 of her affidavit):

(a)    my rent, which was $250 a fortnight to Yarrabah Community Housing, that was deducted through Centrepay;

(b)    my electricity bill, which I pay through Centrepay, I was paying about $150 a fortnight;

(c)    my gas bill, which was about $170 a quarter, which I pay in cash;

(d)    my food and groceries, [on] which I spent about $120 a week on food for me and the family, it’s a bit more now;

(e)    my pre-paid mobile phone, which I got in July 2010, [on which] I spend about $30 a week on recharges;

(f)    school fees for the kids of about $400 per year, which I pay in January, and then whatever they need for books, uniforms, stationery and shoes through the year;

(g)    repayments on my loan with Cash Converters … of about $200 per fortnight; and

(h)    instalments on an advance I have from Centrelink (“Centrelink Advance”) of about $25 per fortnight.

270    Ms Kingsburra says that at the time of buying the car her debt to GE Finance was $1,700.00 and she had stopped making the payments. The debt to Cash Converters was about $800.00 and the collection of that debt was also in the hands of a debt collector.

271    Returning to page 2 of the Credit Application Form, Ms Kingsburra thinks that at the time she wrote the information in the “References” box, it was probably Colin who was asking her about her expenses. Ms Kingsburra cannot recall whether anything was written in the “Financial Information” box when she was filling the “References” box. In the “Financial Information” box, the first line asks the question: “do you have any know[n] Credit Defaults?” Ms Kingsburra says that she was not asked to fill in anything in answer to that question and added the observation (about the Financial Information box) that: “they’re not my handwriting”: T, p 598, lns 15-24. Ms Kingsburra says that none of the handwriting in this box is her handwriting. The next information line is “Rent/Mortgage” with a space at the end of the line, of “$             per week”. Each information line ends in that way to enable the insertion of an amount.

272    In the Rent/Mortgage line the words “already taken” are inserted which Ms Kingsburra understands to be a reference to Centrelink deductions for the payment of rent and electricity: see para 58(a) and (b) recited at [269] of these reasons. The next line is “Credit Card(s)” and there is no entry of an amount for that item. The next line is “Food” and an amount of $480 is inserted with the word “week” crossed out and “Mt” added. The next two lines are “Phone (H)/Mobile” and “Vehicle Expenses”. No amount is entered on either line. The next line is “Personal Loan(s)” and an entry appears there of “Cash Converters (3 = Finalised) $807” (followed by the standard words “per week”). The next line is “Utilities” and the words inserted there are “already taken”. The next line is “Child Support” and no entry appears. The next line is “Other” and on that line there is an entry “GE”. An amount is entered on that line of $200 (and the pro forma words “per week”) and then the amount is crossed out. The total expenses (“Exp”) are shown as $1,487.00. Plainly they are not weekly expenses. Total income (“Inc”) is shown as $2,374.66. Under that, two figures appear on two separate lines in this way:

DSR    54%

DSR    28%

273    The difference between total income and total expenses (as recited in the box) is $887.66. The weekly repayments under the Channic Loan Contract with Ms Kingsburra are $119.45. That represents approximately $477.80 per month. That monthly repayment as a proportion of Ms Kingsburra’s residual income (as calculated in the box, amounting to $887.66) is 53.82% or approximately 54%.

274    As already mentioned, Ms Kingsburra says that she signed page 3 of the document with Kevin on the Tuesday and that she later went to the premises and she filled out the names of family members in the “References” box. She signed and dated page 3. She says that Kevin filled out the first page and the information in the “Financial Information” box.

275    In her affidavit, Ms Kingsburra says that after she signed the document, she had a conversation with Kevin about obtaining the documents earlier mentioned and bringing them to the car yard on the following Saturday. Kevin had already said that the car would cost $8,990.00 and that the deposit would be $1,500.00. There had also been the discussion about $200.00 for the mag wheels. Ms Kingsburra says she asked Kevin how much the instalments would be after the payment of the deposit. Ms Kingsburra says that Kevin said: “roughly $120 a week for about 2 years”. Ms Kingsburra says that at the time she thought that she could afford such a payment and was surprised that it was “so easy to get a car”. She says that “[w]ith all my problems with finance in the past and the debt collectors I thought it would be a lot harder”. In her oral evidence, Ms Kingsburra thought that she discussed the weekly payment with Colin.

276    Ms Kingsburra then left the car yard premises.

277    She returned the following Saturday, 10 July 2010.

278    The mag wheels had been put on the car. Kevin was at the car yard. Ms Kingsburra says that she told Kevin she had the deposit. She was asked whether she had a Centrelink statement and a copy of her identification card. She had neither of those things. Kevin told her that she could not take the car “because you don’t have your Centrelink statement or your ID and the contract isn’t ready yet either”. Ms Kingsburra was also told that she would need to bring the letter from Garry saying that he pays $150 a fortnight board to Ms Kingsburra towards food.

279    Ms Kingsburra says she was told to come back on Monday with those things.

280    The Centrelink statement provided to Kevin is dated 12 July 2010. Ms Kingsburra says that on Monday morning, (which was 12 July), Ms Kingsburra went to the Centrelink Office in Yarrabah and obtained the Centrelink statement and a Rent Deduction Statement. Ms Kingsburra’s daughter-in-law and niece borrowed a car and drove Ms Kingsburra into Cairns to the car yard to pick up the car and sign a contract. She had with her a copy of her ID, the letter from Garry and the Centrelink statement dated 12 July 2010. At para 29 of her affidavit (and following), Ms Kingsburra says that her third visit to the car yard occurred on the Monday following the second visit on the Saturday which, in turn, followed the first visit on the Tuesday. Those dates are 12 July, 10 July and 6 July 2010, respectively. The Credit Contract was signed on the third visit. It, however, is dated 13 July 2010 and the respondents admit that it was signed on 13 July 2010. The third visit must have been on Tuesday not Monday. Presumably, Ms Kingsburra obtained the Centrelink statement on Monday, 12 July 2010. She must have then gone to the car yard for the third visit the next day.

281    In her oral evidence, Ms Kingsburra says that she was also asked to provide a bank statement and on that third visit she did provide a bank statement.

282    Page 2 of the Centrelink statement contains information under the heading “Future regular entitlements and payments”. Ms Kingsburra says that these were the entitlements and payments she was receiving. They are:

283    These fortnightly payments amount to $1,522.38. On a monthly basis the payments amount to approximately $3,044.76. The statement shows that “Centrepay deductions” were made from Ms Kingsburra’s entitlements. The first deduction is an amount of $400.00 which represents the rent payment of $250.00 and the electricity payment of $150.00: see para 58(a) and (b) at [269] of these reasons. The second deduction is a fortnightly amount of $25.82. Monthly payments, after those deductions, amount to $2,593.52. Ms Kingsburra also received $150.00 a fortnight from Mr Gilmartin.

284    The letter from Mr Gilmartin is Tab 5 to Ms Kingsburra’s affidavit. Apart from the documents already mentioned, Ms Kingsburra was not asked for any other documents nor any documents in relation to the GE loan or the Cash Converters loan.

285    On the front page of the Centrelink statement there is a handwritten amount of $3276.65. Ms Kingsburra says that this is not her handwriting and she does not recognise it.

286    Ms Kingsburra says that when she and her daughter-in-law and her niece arrived at the car yard they went up to Kevin. He took them into the office. Ms Kingsburra gave the document she had brought with her to Kevin. Kevin gave the documents to Colin. Colin and Ms Kingsburra then sat at a desk and Colin “pulled out the contracts for me to start signing”: T, p 603, ln 7.

287    In her affidavit, Ms Kingsburra says that Colin showed her the contract and said words to the effect: “please sign this”. Ms Kingsburra was shown a document by ASIC’s counsel described as “Consumer Loan Contract and Mortgage No: 5030” (the “Credit Contract”). She said that she did not know what the “mortgage part was about”: T, p 603, ln 17. Ms Kingsburra identified her initials on page 1 next to the place marked “Borrower(s) To Initial Here”. She also identified her initials on page 2 and also next to some figures in the Schedule on page 2. She also identified her initials on page 3 and so on throughout the document in the place provided for the borrower to initial the document. Ms Kingsburra acknowledged her signature on pages 8 and 9 of the document and also at the end on page 22 of the document.

288    In her affidavit, Ms Kingsburra says that she did not get a chance to read the Credit Contract before signing it. She says that Colin “did not explain anything about the Credit Contract to me” and “Colin just turned the pages and pointed to where I had to sign”: para 41. At para 42, Ms Kingsburra says that when she signed the Credit Contract she understood that the car was “going to be $8,990” which is what “I agreed with Kevin on the Tuesday and that was everything I was going to pay for the car”. Ms Kingsburra says, at para 42, that she had paid a deposit of $1,700.00, “so I thought I was borrowing the rest for the car and would pay that back in instalments”. She also thought that the instalments would be $120.00 a week over two years as Kevin had told her. Weekly payments, on that footing, over two years, would amount to $12,480.00.

289    In cross-examination Ms Kingsburra gave evidence that the formulation of $120.00 per week over two years did not alert her to the fact that she was going to be paying “a lot more money back” than the price that was displayed on the vehicle: T, p 621, lns 42-44. Ms Kingsburra says that she was not concerned to try and work out some idea of the total amount she was going to have to pay: T, p 622, lns 5-6. Ms Kingsburra says that it never dawned on her in the week between the first time she went to Supercheap and was told by Kevin that the instalments would be $120.00 per week over two years and the signing of the contract that she was going to be paying more than the advertised price of the car, “because I was so excited of getting this car for my son’s 18th birthday”: T, p 626, lns 15-21.

290    In her oral evidence, Ms Kingsburra explained the circumstances in which she signed the Credit Contract in this way at T, p 604, lns 10-24:

… at the time I was very anxious for a car, as you can tell by my story in the statement, and I didn’t quite understand the contract and as we were going through, … because Colin didn’t go [into] details – you know, it was just quickly – briefly of what’s on the page, and for me to sign and initial where needed. And, yes, I thought it was – it wasn’t right, because it was too quick that the contract was signed off with so many pages. [I] think we must have done it in, like, 15-20 minutes, or something. And I didn’t know about – is it broker – broker or something [like] that … that I had to pay Kevin the salesman $900 as well as my contract, and I didn’t know what 48 per cent was at the time. Well, no, I still don’t – don’t know the amount for 48 per cent. And I didn’t know I was going to be paying [$13,000] for this car, because I knew it was second-hand and used, and if I had known that at the time, I wouldn’t have went ahead with the contract and signed any papers. And knowing that I’ve got to pay someone else $900 too, well, I wouldn’t have done it.

291    Page 1 of the Credit Contract contains a financial table in these terms:

292    At the end of the Financial Table, there is a reference to a “Comparison Rate” in these terms:

Comparison Rate                    47.4631% per annum

This rate is calculated on the $8,301.50 credit amount over a 110 week term with the ascertainable credit fees and charges (if any) and repayment amount(s) and date(s) as stated in the Schedule.

293    In oral evidence, Ms Kingsburra was taken to the Financial Table and the amount of the loan of $8,301.50. She said that she thought that this was the amount that was “supposed to be left”, “without the deposit”. She said: “that’s all I thought I was going to be paying”: T, p 604, lns 42-43; T, p 605, ln 1. Ms Kingsburra was then taken by ASIC’s counsel to the elements of the transaction and agreed that the purchase price of the car was $8,990.00 and that she had paid a deposit of $1,500.00 plus $200.00 for the mag wheels. Thus, the purchase transaction balance was $7,290.00. Ms Kingsburra acknowledged that the recited amount of the loan of $8,301.50 was more than the purchase transaction balance. Ms Kingsburra said that she did not realise that the amount of the loan was more than the purchase transaction balance until it was pointed out to her by ASIC although Ms Kingsburra seemed to attribute the difference to the interest rate of 48%.

294    Ms Kingsburra said that nobody told her, at the time, that the interest rate was 48%: T p, 605, ln 16.

295    Ms Kingsburra was also taken to the “total amount of repayments” entry in the Financial Table of $13,134.35 and gave evidence that nobody had pointed out to her, at the time, that the repayments were going to be that amount: T, p 605, lns 19-20. Ms Kingsburra gave evidence, in response to a question from counsel, for ASIC that she did not appreciate that the amount of $13,134.35 did not include the deposit she had paid of $1,500.00. She said that she did not appreciate that, in fact, she would be paying $14,600.00 (the accurate amount being, on that footing, $14,634.35) and, in answer to the question “if you had been told that at the time, what would you have [done]?, Ms Kingsburra also said, “I wouldn’t have bought the car”: T, p 605, lns 18-26.

296    Apart from Ms Kingsburra’s oral evidence just described, Ms Kingsburra addressed these matters in her affidavit. At para 46, she says that ASIC pointed out to her that under the Credit Contract she was borrowing $8,301.50; that she would be paying interest of $4,832.85 and making total repayments of $13,134.35. As to the amount of $8,301.50, she says that she did not know she was borrowing this amount and thought that she was borrowing the price of the car less the deposit. As to the interest of $4,832.85 she says that she did not know that she was “going to be paying that much in interest”. As to the total repayments of $13,134.35 she says that she “did not know that”. At para 47, she repeats that at the time she signed the Credit Contract, her “understanding was that the total amount of repayments would be $8,990.00 less the deposit and she adds that “if they wanted to charge me $13,134.35, I do not understand why they didn’t put that price on the car”.

297    The first page of the Credit Contract recites this:

We, Channic Pty Ltd, ATF trading as AHA New Start Finance Trust, ABN No: 60 141 145 753, (we, us, the Lender) of [the Earlville address]

offer to enter into a loan contract with:

Adele Dorothea Kingsburra (you, Borrower/Mortgagor No. 1) [Address]

On the terms set out in the Schedule below [pages 2 to 9 inclusive of the contract] and the General Conditions [pages 10 to 22] contained in this document. This offer replaces any previous offer made following your credit application. Any such previous offer is cancelled. The lender is treating this offer as being regulated by the National Credit Code.

298    Ms Kingsburra was taken to the above opening part of the contract and gave evidence that she was not told at the time who Channic was: T p 605, ln 32.

299    The Schedule on page 2 sets out further information in a schedule. The top four boxes of the schedule are set out in the following way:

Schedule

300    In this part of the Schedule, a line is crossed through Channic Pty Ltd and Supercheap Car Sales is handwritten in. Ms Kingsburra’s initials appear next to that change to Item 3 in the Schedule.

301    As to CBPL, Ms Kingsburra was asked whether anyone told her “who Cash Brokers were” and she answered: “No”. She was asked whether anyone had told her “about brokerage being paid” and she answered: “No”. She was asked whether anyone had told her “about any other fees or expenses associated with the transaction” and she answered: “No”: T, p 605, lns 28-44.

302    In her affidavit Ms Kingsburra says that she does not remember any business called Cash Brokers and says: “I never wanted to borrow any money to pay an extra $990.00 to anyone”. She adds that she could not afford to do that and says that she does not know what brokerage is. She adds that no-one told her about “about this before I purchased the car”: para 52. Ms Kingsburra also refers to a document at Tab 7 of her affidavit which is an invoice from CBPL to Channic concerning Ms Kingsburra. The invoice is for brokerage of $990.00 representing a brokerage fee of $900.00 and GST of $90.00. Ms Kingsburra says that she had not seen this document before being shown it by an ASIC officer and adds that until she was informed of the brokerage component she was unaware that she had been charged a brokerage fee of $990.00: para 53. She adds: “if I had seen this document at the time of buying the car, I would have asked what I was paying $990.00 for.

303    She was also asked, “did you know who was giving you the finance on the car or who was giving you the credit to pay off the car” and answered that she thought she was “just buying it [the car] off Colin – the car yard people who were selling the car”: T, p 606, lns 1-3.

304    Ms Kingsburra’s second visit to the car yard was on Saturday, 10 July 2010. She knew she would be returning to the car yard to sign a written contract on Monday. She thought that she would be going to the car yard just to “sign the contract” and “take the car home”: T,   622, lns 34-35. She says that she was not “interested to know about the writing on the paperwork, the contract”: T, p 622, lns 40-41. That was so because she thought “it was too easy to get this car”: T, p 622, lns 43-44. Ms Kingsburra says that no-one had told her, leading up to her first visit to the car yard, that if she wanted to borrow money to buy a car from Supercheap, she would have to pay interest: T, p 623, lns 8-10. Ms Kingsburra accepted that the bank statement shows an ATM fee of $2.00 for making a withdrawal and that it shows an entry on 1 March of “debit INT to 25 February of $1.84”. Ms Kingsburra did not know that the entry represented a debit of interest: T, p 623, lns 38-46.

305    Ms Kingsburra accepted that the bank statement shows a range of fees such as account fees, overdraft fees and ATM fees. Ms Kingsburra said that she looked at the bank statements simply to check the balance and did not actually look at any of the entries. She said that she was not aware of the charges the banks might render as shown in the bank statement: T, p 624, lns 38-46.

306    As to GE Finance and Cash Converters, Ms Kingsburra said that those companies did not send her statements about her loans. She said that GE Finance did not send any statements to her even when default had occurred and it did not send her a letter about the default: T, p 625, lns 5-15. Sometime in 2013, Ms Kingsburra received a letter from a debt collector for GE Finance stating that she was in debt in an amount of $1,700: T, p 625, lns 21-23.

307    Ms Kingsburra gave evidence that when speaking with Kevin on the first day she went to Supercheap she told him that the GE Finance loan had been referred to a debt collector and that she was not making any repayments on the loan at that time. She says she has never heard from them, subsequently: T, p 620, ln 31. She told Kevin that she owed Cash Converters approximately $800.00 and thus there were three more fortnightly payments to go, at least at that time. She did not make the payments because she could not afford to pay it back. That matter was put in the hands of debt collectors as well and Ms Kingsburra has not heard from them since, either: T, p 620, lns 33-47.

308    Ms Kingsburra also gave evidence that nobody spoke to her about getting legal advice about the contract and nor did anybody suggest that she should read the document: T, p 606, lns 18-21.

309    It is necessary to say some further things about the Credit Contract.

310    Schedule 1 (page 5 of the Credit Contract) sets out a list of the dates of payment for each weekly instalment.

311    Page 8 contains a box under the heading “IMPORTANT” in these terms:

A Kingsburra

Signature of Borrower

Hulbert

Signature of Witness

Date    13.7.2010

312    Ms Kingsburra signed page 8 immediately under the box in the space provided. That page also says this:

You should retain the additional copies of this document for your records.

(a)    PLEASE ALSO ENSURE THAT YOU COMPLETE BOX A OR BOX B. YOU SHOULD COMPLETE BOX A IF YOU CHOOSE TO OBTAIN LEGAL ADVICE OR ALTERNATIVELY, COMPLETE BOX B IF YOU CHOOSE NOT TO OBTAIN LEGAL ADVICE.

(b)    WE STRONGLY RECOMMEND THAT YOU OBTAIN INDEPENDENT LEGAL AND FINANCIAL ADVICE REGARDING YOUR LOAN CONTRACT BEFORE YOU SIGN YOUR LOAN CONTRACT.

313    Page 9 contains Box A and Box B. Box A is crossed out. Box B is signed by Ms Kingsburra and, in plainly different handwriting, contains the date 13th July 2010. Box B is in these terms:

BOX B

314    Page 22 of the Credit Contract is also signed by Ms Kingsburra as the signatory of an account recited in a document described as a “Direct Debit Request”. By that document Ms Kingsburra authorised and requested debit payments to be made to her account with the CBA Bank through the “PayGate Direct Debit Billing System”, by reference to a particular user ID number, by “AHA New Start Finance Trust”. The Credit Contract, of course, is entered into by Channic as trustee of that trust.

315    Ms Kingsburra was taken by ASIC’s counsel to a document called “PAMD Form 37a” under the Property Agents and Motor Dealers Act 2000 (Qld) (the “PAMD Act”). Form 37a is concerned with important pre-purchase information relating to a cooling off period. Ms Kingsburra signed an acknowledgement on page 2 that she had received the form and Appendix A to it.