Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Monas v Perpetual Trustees Victoria Limited [2011] NSWCA 417
• Hearing dates: 29 November 2011
• Decision date: 21 December 2011
• Before: Beazley JA at [1]; McColl JA at [2]; Young JA at [3]

Decision

Appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: CONSUMER CREDIT - Consumer Credit (New South Wales) Code s 80 - whether a s 80 default notice must be in the exact terms of s 80(3) - notice must reasonably convey the message the section intends and not be misleading to the borrower; CONSUMER CREDIT - consequences of an inadequate s 80 notice - whether the notice is invalid - whether the court can grant leave nunc pro tunc - statute allows for restitution and criminal sanctions as consequences of inadequate notice - these consequences strongly tend against further consequences - breach of s 80, at most an irregularity - authorisation to proceed may be given nunc pro tunc
• Legislation Cited: Consumer Credit (New South Wales) Code 1996 ss 66, 70, 71, 80, 86, 88, 170, Sch 2 cl 11; Contracts Review Act 1980; Conveyancing Act 1919 ss 111, 129; Credit (Home Finance Contracts) Act 1984 s 7; National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) s 4, Sch 1 cl 3; National Credit Code 2009 (Cth) ss 72, 74, 94, 96; Real Property Act 1900 s 57
• Cases Cited: Bank of Queensland Ltd v Dutta [2010] NSWSC 574; Benjamin v Ashikian [2007] NSWSC 735; Berowra Holding Pty Ltd v Gordon [2006] NSWSC 32; 225 CLR 364; Campbell v The Commercial Banking Co of Sydney (1879) LR 2 NSW (L) (PC) 375; CBFC Finance v Dickinson (unreported, 18 August 1992, Master Greenwood); Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404; Fox v Jolly [1916] 1 AC 1; Graham v Aluma Life Pty Ltd (1996) 39 NSWLR 58; Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361; Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907; Shakespeare Haney Securities Ltd v Crawford [2009] QCA 85; [2009] 2 Qd R 156; Silberman v Citigroup Pty Ltd [2011] VSC 514
• Category: Principal judgment
• Parties: Bianka Monas (Appellant); Perpetual Trustees Victoria Limited (Respondent)
• Representation: Legal Aid NSW (Appellant); Kemp Strang (Respondent)
• File Number(s): CA 2009/293578

Decision under appeal

• Citation: Perpetual Trustees Victoria Ltd v Monas [2010] NSWSC 1156 (Davies J); Perpetual Trustees Victoria Limited v Bianka Monas [2011] NSWSC 57 (Hoeben J)
• Before: Davies J; Hoeben J
• File Number(s): SC 2009/293578

Judgment

1 BEAZLEY JA: I agree with Young JA.

2 McCOLL JA: I agree with the orders Young JA proposes for the reasons his Honour gives.

3 YOUNG JA: These reasons cover two appeals: (a) an appeal from Davies J ( Perpetual Trustees Victoria Ltd v Monas [2010] NSWSC 1156); and (b) one from Hoeben J between the same parties delivered on 21 February 2011 ([2011] NSWSC 57).

4 The basal facts were not in dispute. The appellant, at all material times, has been the registered proprietor of a house and land at Liverpool. She mortgaged that property to the respondent and the mortgage was duly registered. The mortgage secured the monies due under a loan agreement of 12 May 2004. Pursuant to that agreement, the respondent had advanced $330,000 to the appellant in two facilities: (a) $278,000 on a variable rate premium interest only account for five years; and (b) $52,000 on a line of credit. The appellant duly paid what was due on each facility up until November 2008.

5 On 29 January 2009, the respondent issued a default notice to the appellant. Under the legislation, this would be deemed to have been given to her on 4 February 2009.

6 The form of the notice is important, and I will set it out in full:

This is a Default Notice issued by Perpetual Trustees Victoria Limited ( Lender ) pursuant to section 57(2)(b) of the Real Property Act (NSW) 1900, by its solicitor, Kemp Strang, so authorised by the Lender to do so. If the Uniform Consumer Credit Code applies to your credit contracts and/or mortgage, this Default Notice is also a default notice within the meaning of section 80 of the Uniform Consumer Credit Code.

Credit Contract status as at 27 JANUARY 2009

Credit Contract(s) Mortgage(s) Property Arrears Total Amount

Outstanding

MN330566001181012551 AA705462 27 Charles Street $4,534.90 $284,332.04 increasing

LIVERPOOL NSW at a rate of 8.41%

2170

MN330566001181019401 AA705462 27 Charles Street $ 892.85 $53,035.47 increasing

LIVERPOOL NSW at a rate of 8.61%pa

2170

1. As set out in the above table:

1.1 Pursuant to the Credit Contract(s), the Lender provided financial accommodation to you. To secure the amounts owing to the Lender under the Credit Contract(s), you gave the Mortgage(s) over the Property in favour of the Lender.

1.2 Default(s) occurred under the Credit Contract(s) and the Mortgage(s) as the Arrears were not paid when due ( Default(s) ).

2. To remedy the Default(s), you are required to pay the Arrears due under the Credit Contract(s) to the Lender within 31 days of receipt of this notice* ( Grace Period ).

3. If you do not remedy all the Default(s) within the Grace Period, or if a default of the same type as specified in this notice occurs during the Grace Period, then, in respect of the Credit Contract(s) for which Arrears remain unpaid:

3.1 The Total Amount Outstanding plus Lender's costs and charges will automatically be due and payable and the Lender may commence proceedings for the Total Amount Outstanding; and

3.2 In respect of the Property securing that Credit Contract, the Lender proposes to:

commence proceedings for or otherwise take possession of the Property

exercise power of sale in respect to the Property

3.3 The Lender may take such other action under the Credit Contract(s) and the Mortgage(s) as it sees fit.

4. The Lender also requires you to pay the sum of $411.13 within the Grace Period being the costs of issuing this notice ( Enforcement Expenses ).

How to Pay

You can pay the Arrears and the Enforcement Expenses by sending payment to the Lender at Level 10, 101 Collins Street, Melbourne, VIC 3000 to the attention of Ray Grech, who can be contacted on 03 8616 1295, alternatively payment can be made by Bpay, Biller Code 31336, customer ref no. 1994938 (for account no. MN330566001181012551) and customer ref no. 1994946 (for account no. MN330566001181019401).

Dated 29 January 2009

[Sgd]

per James David McKenzie Graham

Kemp Strang

*If sent by post, this Notice will be deemed to have been received by you on the date it would have been delivered in the ordinary course of post or the date it bears whichever is the latter.

7 The appellant failed to remedy the defaults identified in the notice and the respondent claims that as of 8 March 2009, it became entitled to possession of the land. On 1 April 2009, it commenced these proceedings for possession.

8 In her further amended defence of 4 June 2010, the appellant raised two substantive defences. The first was that the notice served by the respondent on 4 February 2009 did not comply with the requirements of s 80 of the Consumer Credit (NSW) Code 1996 ("the NSW Code") and secondly, that she was entitled to relief under s 70 of the NSW Code and under the Contracts Review Act 1980.

9 By notice of motion filed on 9 September 2010, the appellant sought to file an amended cross claim and a second further amended defence relying on the hardship provisions of the National Credit Code 2009 (Cth). She also asked to have determined as a separate question the issue raised by the hardship application as well as the issue of compliance by the respondent with the requirements of s 80 of the NSW Code. More or less as a defensive measure, the respondent filed a notice of motion for authorisation to begin the current proceedings nunc pro tunc in case the Court should find that there was a defect in its notice. That application was made by notice of motion filed 7 September 2010.

10 The notices of motion came on before Davies J on 22 September 2010.

11 Davies J decided that it was inappropriate to order that issues be decided as separate questions.

12 Davies J recorded that on the day the application was due to be heard by him, the appellant abandoned her hardship application. Consent orders were then made giving her leave to file a cross claim which asserted that the loan agreement was unjust and should be reopened under ss 70 and 71 of the NSW Code.

13 Davies J dismissed the appellant's notices of motion. The only aspect of his Honour's judgment that is the subject of the appeal is his determination that the appellant was not entitled to make an application under ss 72 and 74 of the National Credit Code. Section 72 of the National Credit Code provides that a debtor who is unable reasonably for certain reasons to meet her obligations under a credit contract but who reasonably expects to be able to do so if the obligations were changed may apply for relief on hardship grounds. Section 74 gives a court similar powers to vary the contract. However, s 72(5) is as follows:

This section and sections 73 to 75 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than:

(a) $500,000; or

(b) if the regulations prescribe a higher amount - that amount.

14 The National Credit Code came into force on 1 July 2010. Transitional provisions were dealt with by the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (the "Transition Act" ). Section 4 gave a dictionary and in that dictionary the term "carried over instrument" was defined as "a contract or other instrument that: (a) was made before commencement; and (b) was in force immediately before commencement; and (c) the old Credit Code of a referring State or a Territory applied to immediately before commencement." The present loan agreement, if the NSW Code applied to it, is thus a carried over instrument.

15 Clause 3 of Division 2 of Schedule 1 to the Transition Act substitutes for s 72(5) of the New Credit Code the following:

5. This section and sections 73 to 75 do not apply to a credit contract under which the maximum amount of credit that is or may be provided is more than an amount equal to 110% of the amount of the average loan size for the purchase of new dwellings in New South Wales as set out in the Table of Housing Finance Commitments in the most recent publication entitled Housing Finance, Australia , as published from time to time by the Australian Bureau of Statistics.

16 Davies J held that that section in the same way as s 66(3) of the NSW Code must be read as providing that the Consumer Credit Code did not apply to a credit contract under which the maximum amount of credit determined as at the date of the loan was more than the maximum provided by the legislation at that date. It is clear that the amount lent to the appellant was greater than that maximum, hence those provisions of the Code did not apply. The appellant appeals against this decision.

17 The proceedings then went for trial before Hoeben J. Hoeben J found that the notice was valid. However, he also said that failure to comply exactly with the requirements of s 80 of the NSW Code did not make the notice void and the Court could exercise its discretion to allow the proceedings to continue despite procedural irregularity and that, if he were wrong on the main point, he would exercise that discretion in favour of the respondent. Again he held that it would be appropriate in the proper case to give leave to proceed nunc pro tunc.

18 Accordingly, Hoeben J made an order for possession.

19 The appeal was heard on 29 November 2011. Mr J Sheahan SC and Ms R Francois appearing for the appellant and Mr M Ashhurst SC and Mr S Docker appearing for the respondent.

20 Mr Sheahan opened the appeal by saying there were three issues. First, whether the notice that was served was adequate and complied with the Credit Code. Secondly, if it were not adequate what are the consequences of non compliance, and thirdly, whether there is power under the Code to grant leave nunc pro tunc if there was non compliance. I will deal with those matters in order and then state the result of the appeal.

First Issue

21 I have already set out the notice that was deemed to be served on 4 February 2009. It is now necessary to set out the provisions of s 80 of the NSW Credit Code:

80 Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor

(1) Enforcement of credit contract. A credit provider must not begin enforcement proceedings against a debtor in relation to a credit contract unless the debtor is in default under the credit contract and -

(a) the credit provider has given the debtor, and any guarantor, a default notice, complying with this section, allowing the debtor a period of at least 30 days from the date of the notice to remedy the default; and

(b) the default has not been remedied within that period.

Maximum penalty - 50 penalty units.

(2) Enforcement of mortgage. A credit provider must not begin enforcement proceedings against a mortgagor to recover payment of money due or take possession of, sell, appoint a receiver for or foreclose in relation to property subject to a mortgage, unless the mortgagor is in default under the mortgage and -

(a) the credit provider has given the mortgagor a default notice, complying with this section, allowing the mortgagor a period of at least 30 days from the date of the notice to remedy the default; and

(b) the default has not been remedied within that period.

Maximum penalty - 50 penalty units.

(3) Default notice requirements. A default notice must specify the default and the action necessary to remedy it and that a subsequent default of the same kind that occurs during the period specified in the default notice for remedying the original default may be the subject of enforcement proceedings without further notice if it is not remedied with the period.

( 3A) Combined notices. Default notices that may be given under subsections (1) and (2) may be combined in one document if given to a person who is both a debtor and a mortgagor.

(4) When default notice not required. A credit provider is not required to give a default notice or to wait until the period specified in the default notice has elapsed before beginning enforcement proceedings, if -

(a) the credit provider believes on reasonable grounds that it was induced by fraud on the part of the debtor or mortgagor to enter into the credit contract or mortgage; or

(b) the credit provider has made reasonable attempts to locate the debtor or mortgagor but without success; or

(c) the Court authorises the credit provider to begin the enforcement proceedings; or

(d) the credit provider believes on reasonable grounds that the debtor or mortgagor has removed or disposed of mortgaged goods under a mortgage related to the credit contract or under the mortgage concerned, or intends to remove or dispose of mortgaged goods, without the credit provider's permission or that urgent action is necessary to protect the mortgaged property.

(5) Non-remedial default. If the credit provider believes on reasonable grounds that a default is not capable of being remedied -

(a) the default notice need only specify the default; and

(b) the credit provider may begin the enforcement proceedings after the period of 30 days from the date of the notice.

(6) Other law about mortgages not affected. This section is in addition to any provision of any other law relating to the enforcement of real property or other mortgages and does not prevent the issue of notices to defaulting mortgagors under other legislation. Nothing in this section prevents a notice to a defaulting mortgagor under other legislation being issued at the same time, or in the same document, as the default notice under this section.

Note: By virtue of section 161(2), a notice may contain information required to be given under other legislation or be included in a notice given under other legislation.

22 In his analysis of s 80, Mr Sheahan put that the notice must: (1) specify the default; and (2) specify the action necessary to remedy it. There is no complaint about those matters. However, subsection (3) also provides that the default notice must specify "that a subsequent default of the same kind that occurs during the period specified in the default notice for remedying the original default may be the subject of enforcement proceedings without further notice if it is not remedied within the period."

23 Mr Sheahan says that the notice does not comply with that part of s 80(3). It does not clearly tell the recipient that a default of the same kind occurring during the grace period must be remedied before the original notice expires. He puts that the borrower might quite reasonably assume that if there is a subsequent default, then there would need to be a new notice and he or she would be given a further 31 days to remedy the subsequent default. It is put that the confusion is exacerbated by the fact that the word "arrears" appears in clause 3 of the notice with a capital "A" which might make the debtor think that it refers to the arrears as noted in the earlier part of the document rather than arrears with a small "a" being any arrears.

24 Hoeben J rejected that argument. He said at [22] and following that the proposition that the Code required strict compliance with its terms was unnecessarily rigid and illegitimately required additional words of expansion being read into the provision. His Honour ruled at [23] that:

In order to comply with the requirements of s 80, a default notice needs to provide the information set out in s 80(3) but does not have to use the exact words of the section.

25 He said at [24]:

Apart from the wording of s 80, there is support elsewhere in the Code for such an approach. Section 161 of the Code provided that regulations might prescribe the form of any notices required or authorised to given under the Code and might require such notices to contain specified information. No such regulations were made in respect of s 80. Section 11 of Part 2 of Schedule 2 of the Code referred to "compliance with forms". It provided:

11(1) If a form is prescribed or approved by or for the purpose of this Code, strict compliance with the form is not necessary and substantial compliance is sufficient.

[25] The very fact that no form has been prescribed in respect of a s 80 notice, suggests that a substantive rather than a restrictive approach should be adopted to its contents. Where the legislature has not seen fit to draft a form of words for use in a s80(3) notice, the Court should not perform that function unless the section clearly requires it.

26 Mr Sheahan challenges that statement on the basis that clause 11 of Schedule 2 does not apply because no form had been prescribed and the primary judge applied the fact that clause 11 existed in an inappropriate manner. With respect, I disagree.

27 Hoeben J then looked at the purpose of s 80. He said that the words of Smart AJ in Benjamin v Ashikian [2007] NSWSC 735 [88] that the purpose was "to give the debtor or mortgagor an extra period of at least 30 days within which to remedy the default" were a fine statement of the purpose.

28 Mr Sheahan puts that that is inadequate. He puts that ss 86 and 88 of the NSW Code (which have counterparts in ss 94 and 96 of the National Credit Code), only arise when the debtor has been given a notice of default. Further, although the hardship provisions are not made conditional upon the service of a notice, it is consistent with the objects of the legislation that a default notice might be expected to be something that would prompt a hardship application in many circumstances. There is, of course, something in that point but in my view the fact remains that the basal purpose of the notice is to give the debtor a grace period to remedy the default.

29 Mr Sheahan says that the opening words of s 80(1) that a credit provider must not begin enforcement proceedings, show that the legislature intended that the requirements of s 80(3) were mandatory. She also points to the decision of this Court in Graham v Aluma Lite Pty Ltd (1996) 39 NSWLR 58 as reinforcing that view.

30 Graham's case involved s 7 of the Credit (Home Finance Contracts) Act 1984 which provided that a credit provider "shall not institute proceedings ... until after the expiration of one month after service ... of a notice in the prescribed form that specifies the proceedings". The Court consisted of Priestley, Clarke and Cole JJA. Priestly JA agreed with both the other judges and the Court held unanimously that service of a notice under s 7 was a condition precedent to any action being instituted in the Court. However, Clarke and Cole JJA gave separate reasons for coming to that conclusion.

31 Clarke JA at [65]-[66] said that the matter was one of statutory construction and that a conclusion that a credit provider could maintain proceedings despite a failure to give the notice was inimicable to the scheme of the Act. He also found other provisions of the Act reinforced that view.

32 Cole JA said at [69] that the question for consideration was the effect to be given to the doing of an act permitted by the general law but prohibited by s 7, namely the institution of proceedings. His Honour noted that the legislature had provided a penalty and liability and damages and that ordinarily, this fact and the absence of a declaration that the prohibited acts were to be rendered ineffective, meant one did not presume that that was so. His Honour, however, thought when considering the whole group of statutes dealing with credit provision for consumer contracts that there was sufficient to show that he should not follow this view.

33 In Bank of Queensland Ltd v Dutta [2010] NSWSC 574, Davies J had to consider the argument that a s 80 notice which did not mention subsequent defaults was or was not valid. His Honour was presented with argument that the case was covered by Graham v Aluma Lite but ruled at [153] that the differences between the Code and the 1984 Act had the result that the decision in Graham does not dictate the outcome of a failure to serve a notice under s 80 of the Code.

34 His Honour said that proceedings in disregard of s 80 could not be regarded as a nullity, he referred to Berowra Holdings Pty Ltd v Gordon [2006] NSWSC 32; 225 CLR 364 to support that proposition. Next he said that s 80(4)(c) could authorise the credit provider to begin enforcement proceedings. Thirdly, s 170 of the Code provided that "a credit contract, mortgage or guarantee or any other contract is not illegal, void or unenforceable because of a contravention of this Code unless this Code contains an express provision to that effect." His Honour ruled at [146]:

All that s 80 does is to provide a penalty for commencing the proceedings without serving a notice. It contains no express provision that the credit contract or mortgage is unenforceable.

35 He ruled that the present proceedings before him were not a nullity, nor does s 80 require that they be dismissed [160].

36 In Silberman v Citigroup Pty Ltd [2011] VSC 514, Whelan J considered a similar argument on corresponding legislation in Victoria. At [40]-[45] Whelan J decided that he should follow the decision of Davies J in Dutta. There is some criticism as to this decision because at [38] Whelan J seems to have thought that the Queensland Court of Appeal in Shakespeare Haney Securities Ltd v Crawford [2009] QCA 85; [2009] 2 Qd R 156 had come to a similar conclusion. However, a closer reading of the Queensland decision shows that the paragraph relied on was merely a statement of counsel's contention in that case rather than a decision of the Court of Appeal.

37 In the present case Hoeben J followed Dutta . Despite Mr Sheahan's strong submissions, I have reached the view that the result in Dutta is correct for the reasons given by Davies J. Thus non compliance with s 80 does not mean that there is a failure of a condition precedent to the present litigation and that therefore the present litigation must be dismissed.

38 Provisions in legislation to protect borrowers requiring a lender or lessor first to give a notice before taking enforcement action are not new.

39 What is now s 129 of the Conveyancing Act 1919, prevents a lessor from enforcing a forfeiture unless it has first given a notice. The decisions under the section as to the form of the notice are to the effect that the notice must specify to the lessee the breach complained of, with such particularity, as fairly to tell him what is required to remedy it, if it is capable of remedy, and what it is for which he is required to make compensation in money: Fox v Jolly [1916] 1 AC 1 at 22. There is authority, see eg Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907 at 925, that the same test applies to notices under s 111 of the Conveyancing Act or s 57 of the Real Property Act. Indeed there is a whole series of authorities under those sections, or their predecessors, to the effect that one should not look at such notices strictly, that they are valid so long as they reasonably convey to the recipient the message that the section intends the borrower to receive and the borrower is not misled; see Campbell v The Commercial Banking Co of Sydney (1879) LR 2 NSW (L) (PC) 375; Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404; Mancon v Parabolic Pty Ltd (1985) 2 NSWLR 361, 377.

40 When I put this proposition to Mr Sheahan in argument, he submitted that the "not misleading" test was not appropriate with s 80, but even if it was appropriate, the notice in the present case was misleading. It potentially misled the recipient to believe that even if there was another default of a similar kind, there would be another notice with another grace period forthcoming.

41 Mr Sheahan's proposition that the misleading test does not apply was based on the fact that the present section was part of a package of consumer protection legislation designed to provide strong consumer protection with specific categories of customers who needed special protection. He put that, in that context, one would not expect an assumption that the test that had been developed by the courts in relation to other mechanisms designed to protect mortgagors generally would necessarily be applied here. That was reinforced by the fact that non compliance with s 80 was made an offence. I do not accept that submission. Section 80 makes it clear that a notice under that section can be given in connection with notices under other legislation dealing with defaulting mortgagors (s 80(6)). It would be very strange to my mind if the test that has been laid down for over a century with respect to one sort of notice was not to apply to a notice that could be issued at the same time under other legislation.

42 Further, I do not consider that the current notice was misleading.

43 It follows that I am of the view that the appeal on this part of the case should be dismissed and that Hoeben J was correct in his decision.

Second Issue

44 It is accordingly unnecessary to consider whether a notice that does not comply with s 80 is invalid. Section 80 provides a criminal sanction. Section 114 allows the court to order the credit provider to make restitution. Hoeben J said that these consequences strongly tend against an interpretation which would impose further consequences for breach for which no specific provision has been expressly made. I agree with this view. In Dutta , Davies J came to the same conclusion. In my view, were it necessary to consider the matter fully, I would uphold the decision in [82] of Hoeben J's judgment that proceedings commenced in breach of s 80 involve at worst an irregularity.

Third Issue

45 Section 80(4)(c) provides that the section does not apply where:

The Court authorises the credit provider to begin the enforcement proceedings.

The question is whether the Court must give that authorisation before the action begins or whether it can give it nunc pro tunc. It is argued that the word "begins" is significant. Hoeben J held at [72] that it was not decisive. Mr Sheahan does not dispute that but says it is certainly indicative. At [74] Hoeben J said that the fact that the authorisation of a credit provider to bring proceedings nunc pro tunc might cut across the penal provisions of s 80 and the compensation provisions in s 114 is not decisive. Again Mr Sheahan says that that is so, but it is a powerful consideration. The basal reason for Hoeben J agreeing with Davies J in Dutta that authority can be given nunc pro tunc is that it is difficult to see what work s 80(4)(c) would have to do if this were not the case. I respectfully agree.

Generally

46 As I indicated earlier, part of the appeal was from Davies J who had held that the provisions of s 66(3) of the NSW Code and its transitional equivalent in the National Code had to be applied to the amount of the maximum credit as at the date of the contract and not at the date of the hearing.

47 Nothing was said in oral submissions on this point, but the written submissions deal with it as I have detailed below.

48 The NSW Code and the National Code are each silent as to the date at which the threshold above which the Code does not apply must be considered. The appellant's written submissions put that it is logical that it be the date of the application for a hardship variation or similar. The submission notes that it is not at all uncommon for the amount advanced under credit facilities to be increased from time to time.

49 Again, the time when the hardship provisions are needed to carry out the purpose of the legislation is the time of application, not the time of the initial loan.

50 These are valid arguments, but the counter proposition stated by Davies J, basically that there must be certainty from the commencement of the transaction outweigh them.

51 In my view, Davies J's interpretation was clearly correct. Indeed, my own research confirms this result. In an unreported decision of Master Greenwood of 18 August 1992, CFBC Finance v Dickinson (11385/92), the Master gave full reasons for reaching the same view as Davies J in Dutta .

52 It follows that the appeal must be dismissed with costs.

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Decision last updated: 21 December 2011