FEDERAL COURT OF AUSTRALIA Jessup v HSBC Bank Australia Ltd [2012] FCA 1400 Citation: Jessup v HSBC Bank Australia Limited [2012] FCA 1400 Appeal from: Jessup v HSBC Bank [2012] FMCA 390 Parties: STEPHEN JESSUP v HSBC BANK AUSTRALIA LIMITED File number: TAD 18 of 2012 Judge: GILMOUR J Date of judgment: 16 November 2012 Catchwords: CONSUMER LAW – whether regulation 36(3) of the National Consumer Credit Protection Regulations 2010 (Cth) operates retrospectively Legislation: National Consumer Credit Protection Act 2009 (Cth) ss 177, 178, 179, 330 National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) s 4 National Consumer Credit Protection Regulations 2010 (Cth) reg 36(3) Consumer Credit (Tasmania) Code ss 5 and 6 Consumer Credit (Tasmania) Act 1996 Consumer Credit (Tasmania) (Jurisdiction of Courts) Regulations 2006 Consumer Credit (Queensland) Code Date of hearing: 16 November 2012 Place: Hobart Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 20 Counsel for the Appellant: Mr P McCarthy (McKenzie friend) Counsel for the Respondent: Mr P Lunn Solicitor for the Respondent: Simmons Wolfhagen IN THE FEDERAL COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY GENERAL DIVISION TAD 18 of 2012 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: STEPHEN JESSUP Appellant AND: HSBC BANK AUSTRALIA LIMITED Respondent JUDGE: GILMOUR J DATE OF ORDER: 16 NOVEMBER 2012 WHERE MADE: HOBART THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY GENERAL DIVISION TAD 18 of 2012 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: STEPHEN JESSUP Appellant AND: HSBC BANK AUSTRALIA LIMITED Respondent JUDGE: GILMOUR J DATE: 16 NOVEMBER 2012 PLACE: HOBART REASONS FOR JUDGMENT 1 The following are the edited reasons given ex tempore in this matter on 16 November 2012. 2 The appellant, Stephen Jessup, appeals from the judgment of a Federal Magistrate delivered on 23 April 2012, which dismissed his application for injunctive relief under s 177 of the National Consumer Credit Protection Act 2009 (Cth) (the NCCP Act). Background 3 The appellant has, at all material times, been resident in the state of Tasmania. The respondent, HSBC Bank, provided the appellant with a visa credit card in or about March 2005. By 2009, the appellant was not meeting the minimum payments due under that credit card contract. A default notice was issued by the respondent, no payment was received and the credit card was cancelled. 4 The respondent commenced recovery proceedings in the New South Wales Local Court, and a default judgment was entered against the appellant on 1 February 2010 for $22,403.17. The respondent subsequently obtained garnishee orders in New South Wales against the appellant's employer. The appellant twice sought, unsuccessfully, to set aside the Local Court judgment and garnishee orders. He had contended, in relation to the latter, that the garnishee orders were causing him financial strain and hardship. The Proceedings Below 5 The appellant asserted below that the proceedings in New South Wales ought never have been brought there or if they had, then they should have been brought under the then Consumer Credit (Tasmania) Code (the Code). The Code was adopted from the Consumer Credit (Queensland) Code, which was then succeeded by the NCCP Act to which I have referred. This came into effect on 1 April 2010, some two months after the judgment against the appellant had been entered by the New South Wales Local Court. By virtue of the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth) (the Transitional and Consequential Provisions Act), the Federal Magistrate was prepared to proceed on the basis that the credit card contract between the parties was a "carried over instrument" within the meaning of s 4 of the Transitional and Consequential Provisions Act. I will proceed on the same basis, there being no challenge to this approach. 6 Pursuant to s 330 of the NCCP Act, regulations were promulgated prescribing, relevantly, where court proceedings in relation to credit contracts must be brought. The National Consumer Credit Protection Regulations 2010 (Cth) (the Regulations) commenced on 1 July 2010. Regulation 36(3) of the Regulations relevantly provides that a court proceeding must be brought in a court of the State where the debtor ordinarily resides if the court proceeding is in relation to a credit contract. As I mentioned, the appellant ordinarily resides in the state of Tasmania. However, the Federal Magistrate rejected the appellant's submission that reg 36(3) had retrospective operation. 7 While there are some internal inconsistencies in his Honour's reasons on this aspect, these can only be reconciled with his dismissal of the appellant's claims by concluding that he rejected the retrospectivity submission. Indeed, in express terms at [31], he found that reg 36(3) had no application, that it was not retrospective on its face and indeed, to construe it retrospectively was, in his view, unsustainable. The appeal 8 The grounds of appeal are as follows: 1. His Honour generally erred in law by giving equity priority over statute law in relation to the application, including the Consumer Credit Tasmania Act 1996 and its instruments, the Consumer Credit (Tasmania) Code, the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 and its instruments and the National Consumer Credit Protection Act 2009 and its instruments. 2. His Honour found the Applicant's argument substantively proved in Statute but erred in not granting the relief that was due to the Applicant ex debito justitiae in consequence of the jurisdictional error of the NSW Local Court. 3. In finding the NSW Local Court action was a contravention of the Tasmanian legislation and taken without jurisdiction, his Honour erred by "going behind the decision" in relation to the debt and taking into account the affidavit of Tim Mozsny, against the common law principal that the Applicant was entitled to relief ex debito justitiae. 4. His Honour made an error of fact in his decision at point 28 where he states that the contract pre-dated the Tasmanian Credit Code, when in fact the Code pre-dated the contract. 5. At point 29, His Honour made an error of fact by stating the defendant exercised its rights under the contract by commencing legal action in NSW. The clause of the contract that could enable such action (clause 33.23) is severed from the contract by clause 33.22, which omits any provision that is a contravention of the credit code as per the requirements of the contracting out provisions in both the Old and New Credit Codes. Although this was raised in the argument, His Honour did not address the effect of this clause in his decision. 6. His Honour erred in fact by stating the NSW Local Court had taken account of the same arguments that were raised before him, when none of those arguments were presented to the NSW Local Court. 7. His Honour did not address, therefore it is presumed he did not take account of, the arguments raised in relation to the "corresponding provisions" between the old credit legislation and the new credit legislation which gives affect to various sections in both statutes in relation to "carried over instruments", including Regulation 36(3) of the National Consumer Credit Protection Regulations. 9 It is to be remembered that the appellant's claim below proceeded on the basis of an asserted breach by the respondent of reg 36(3) in bringing the recovery proceedings in New South Wales, rather than in Tasmania. Moreover, the principle relief sought below was in the way of an injunction under s 177 of the NCCP Act, to restrain the appellant from relying on the New South Wales Local Court judgment, an order setting that judgment aside, the return of the monies then paid under that judgment as well as compensation under ss 178 and 179 of the NCCP Act. 10 Neither the court below nor this Court has jurisdiction to set aside a judgment of the New South Wales Local Court, nor to order repayment of monies paid under it. There is jurisdiction to award compensation under the NCCP Act. 11 Section 178 of the NCCP Act is in the following terms: 178 Compensation orders Court may order person to pay compensation (1) The court may order a person (the defendant) to compensate another person (the plaintiff) for loss or damage suffered by the plaintiff if: (a) the defendant has contravened a civil penalty provision or has committed an offence against this Act (other than the National Credit Code); and (b) the loss or damage resulted from the contravention or commission of the offence. The order must specify the amount of compensation. Note: An order may be made under this subsection whether or not a declaration of contravention has been made under section 166. When order may be made (2) The court may make the order only if: (a) the plaintiff or ASIC (on behalf of the plaintiff) applies for an order under this section; and (b) the application is made within 6 years of the day the cause of action that relates to the contravention or commission of the offence accrued. Applications for order (3) For the purposes of paragraph (2)(a), ASIC may make an application on behalf of the plaintiff, but only if the plaintiff has given consent in writing before the application is made. Recovery of compensation as a debt (4) If the court makes the order, the amount of compensation specified in the order that is to be paid to the plaintiff may be recovered as a debt due to the plaintiff. 12 Section 179 sets out further provisions concerning compensation orders. 13 However, the appellant did not attempt, either in this court or below, to specify what particular loss and damage he had suffered, assuming the right to be compensated was triggered. No relief can flow in that respect. No injunctive relief lies now, in any event. 14 Mr McCarthy, appearing on the appellant's behalf pursuant to order of another judge of this Court as a McKenzie friend, belatedly informed the Court in response to a question that all monies due to the respondent under the New South Wales Local Court judgment have been paid since delivery of the reasons of the Federal Magistrate in this case. Accordingly, no relief whatsoever is available to the appellant. It might be, were I to have come to a different conclusion as to the merits of the appeal, that some form of declaration of contravention might have been made. However, that was not sought in the appeal and declarations are not awarded or granted by this Court as a matter of course. There has to be a basis for it, and none was contended for. 15 For these reasons alone, in my opinion, the appeal, at least at the commencement of the hearing before me, had become incompetent, there being no substantive relief available to the appellant. Nonetheless, I will deal with the appeal on its merits as this may be done in short compass. 16 I am of the opinion that reg 36(3) does not operate retrospectively in the sense that it did not relate to or govern the proceedings which had already been instituted and which had proceeded to judgment in the New South Wales Local Court. 17 Regulation 36(3) does, in one sense, look backwards in that it would have applied to the credit contract between the parties, which is accepted to have been a "carried over instrument", were proceedings to have been brought in relation to that contract after 1 July 2010, but that is not to use the word retrospective in the sense in which it is implied by the appellant, and of course, that circumstance is not one which is this case. There being no breach of reg 36(3), the appellant was not and is not entitled to relief under s 177 of the NCCP Act, and the Federal Magistrate was correct to so find. 18 The reliance placed by the appellant on ss 5 and 6 of the Code is misconceived. Neither ss 5 or 6, or indeed, any other provision of the Code or of the Consumer Credit (Tasmania) Act 1996, prohibited the respondent from commencing court proceedings against the appellant to recover monies due and owing by the appellant to the respondent under the credit contract, in New South Wales. It is the case that the Consumer Credit (Tasmania) (Jurisdiction of Courts) Regulations 2006 did provide that for the purposes of the provisions of the Code, a reference to "a court" is taken to include a reference to the Supreme Court of Tasmania or the Magistrates Court also of Tasmania. 19 At no time had either of the parties commenced proceedings against the other for relief under or pursuant to the Code. Further, none of those provisions prohibited the respondent from commencing court proceedings in New South Wales against the appellant to recover monies due and owing by the appellant to the respondent under the credit contract. The respondent was entitled to bring its recovery proceedings against the appellant in the New South Wales Local Court at the time it did. 20 For all these reasons the appeal will be dismissed. The appellant should pay the respondent's costs, to be taxed if not agreed. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 19 December 2012