Fair Trading Tribunal New South Wales CITATION: Boon v Park Avenue Nominees Pty Ltd [2001] NSWFTT 1 DIVISION: Commercial Division PARTIES: APPLICANT: Ms Boon on behalf of Mr Weir RESPONDENT: Park Avenue Nominees Pty Ltd FILE NUMBER: CM 2000/1464 HEARING DATES: 31/01/2001 SUBMISSIONS CLOSED: 11/13/2000 DATE OF DECISION: 01/31/2001 BEFORE: PH Molony Senior Member Consumer Credit (New South Wales) Act 1995 LEGISLATION CITED : Consumer Credit (New South Wales) Code Fair Trading Tribunal Act 1998 Deputy Commissioner of Taxation v Comcorp Australia Ltd and Ors (1996) 848FCA1 CASES CITED: Project Blue Sky v Australian Broadcasting Authority (1998) HCA28 Linkenholt Pty Ltd v Quirk (2000) v SC166 State Bank v Sullivan (1999) NSWSC596 CATCHWORDS: Consumer credit matter - Consumer Credit Code - loan contract and related mortgage - declaration - substantial compliance - relevant purpose - transfer of proceedings to the Supreme Court is refused - Jurisdiction Transfer of proceedings to the Supreme Court MATTER FOR DECISION: Jurisdiction Transfer of proceedings to the Supreme Court REPRESENTATION: APPLICANT: Mr Batley and Ms McMullin, Solicitors, Legal Aid Commision. RESPONDENT: Mr Russell, Barrister, instructed by Mr Boyce, Solicitor. 1. The Tribunal has jurisdiction in this matter. ORDERS: 2. The Application to transfer the matter to the Supreme Court is refused. 3. The matter is listed for further directions by telephone at 9.30am on Monday 12 February 2001. Reasons for Decision: THE APPLICATION 1 On 14 February 2000 Ms Boon ('the Applicant') lodged an application in the Commercial Division of the Fair Trading Tribunal ('the Tribunal') against Park Avenue Nominees Pty Ltd ('the Respondent'). Ms Boon lodged the application on behalf of her father Mr Weir senior, who is elderly and living in a nursing home. At the time of lodgement she held his power of attorney and she has since been appointed as the private manager of his estate by the Guardianship Tribunal of NSW. This appointment, dated 30 October 2000, specifically authorises her to act on her father's behalf in these proceedings. 2 The Respondent is a company (ACN 010 286 674). Mr Boyce, is a Director of the Respondent and Principal of Boyce Lawyers who act for the Respondent in these proceedings. 3 This application seeks relief under the Consumer Credit (NSW) Act 1995 and the Consumer Credit(New South Wales) Code. The application states that: [Mr Weir](Snr) was under duress from his son [Mr Weir] (Jnr) at the time he signed an interest-only loan at very high interest and agreeing to pay the costs of the lender's solicitors in the matter. Mr Weir gained nothing from the mortgage but stands to lose his house, his only asset. [Mr Weir] (Jnr ) has now defaulted on the loan. [Mr Weir] (Snr) did not want to sign the loan but did so because he was dependent upon his son (he is now in a nursing home) and fearful of his son. The loan is unconscionable and unjust as against [Mr Weir] Snr. 4 The Applicant sought orders staying any enforcement proceedings, reopening the contract and varying the contract to bind 'only Mr Weir junior, and releasing Mr Weir senior'. The Applicant also sought costs against the Respondent. 5 The Respondent filed an application to dismiss the claim on the basis that the Tribunal had no jurisdiction. Evidence and submissions on the issue of jurisdiction were received in writing and at a hearing held in Coffs Harbour on 13 November 2000. 6 The Respondent has also made an application to the Tribunal that this matter be transferred to the Supreme Court of New South Wales. The Applicant opposes that application. 7 This decision concerns both the issue of jurisdiction and the transfer of proceedings to the Supreme Court. The Relevant Law 8 The Consumer Credit (NSW) Act 1995 ('the Act') confers jurisdiction on the Tribunal in relation to matters under the Consumer Credit (New South Wales) Code ('the Code'). The Code commenced operation in NSW on 1 November 1996. 9 The jurisdiction of the Tribunal is found in Section 8 of the Act which provides as follows: 8 Conferral of judicial functions (1) The jurisdiction that is expressed to be exercisable by "the Court" under the Consumer Credit (New South Wales) Code and the Consumer Credit (New South Wales) Regulations is exercisable by the following: (a) in the case of any jurisdiction prescribed by the regulations for the purposes of this paragraph only the Commercial Tribunal, [to be read as the Fair Trading Tribunal from 1 March 1999 in accordance (b) with the Fair Trading Tribunal Act 1998 Schedule 4, section 6. (c) except in the case referred to in paragraph (a) either the Fair Trading Tribunal or any court. (d) (Repealed) (2) The jurisdiction conferred on a court by this section (other than the Fair Trading Tribunal) is subject to the court's general jurisdictional limits (so far as they relate to the amounts, or the value of property, with which the court may deal), but is not subject to the court's other jurisdictional limits. (3) . . . 10 The Fair Trading Tribunal has exclusive jurisdiction in proceedings brought under section 69, 83(1), 89, 100-104 or 162 of the Code (Consumer Credit (NSW) Special Provisions Regulation 1996). In all other matters the Tribunal has concurrent jurisdiction with ordinary courts. 11 The Code forms an Appendix to the Consumer Credit (Queensland) Act 1994 and is incorporated into New South Wales law by section 5 of the Consumer Credit (NSW) Act 1995. It represents uniform legislation that applies to all consumer credit lending, without monetary limit, throughout Australia. The Code deals comprehensively with all aspects of consumer lending, from pre-contractual disclosures to the form of credit documentation, changing and enforcing credit contracts, civil penalties, related insurance contracts and remedies for non-compliance. The Consumer Credit (New South Wales) Regulation 1995 ('the Regulations') similarly reflect uniform regulation throughout Australia. 12 Section 4 of the Code defines 'credit' as follows: 4.(1) For the purposes of this Code, "credit" is provided if under a contract- (a) payment of a debt owed by one person (the debtor) to another (the credit provider) is deferred; or (b) one person (the debtor) incurs a deferred debt to another (the credit provider). 13 Section 5 of the Code states that "for the purposes of this Code, a "credit contract" is a contract under which credit is or may be provided, being the provision of credit to which this Code applies". 14 Section 6 of the Code details the credit contracts to which the Code applies, as follows: Provision of credit to which this Code applies 6. (1) This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of pre-contractual obligations) is proposed to be entered into; the debtor is a natural person ordinarily resident in this jurisdiction or a strata corporation formed in this jurisdiction; and (a) the credit is provided or intended to be provided wholly or predominantly for personal, domestic or household purposes; and (b) a charge is or may be made for providing the credit; and (c) the credit provider provides the credit in the course of a business of providing credit or as part of or incidentally to any other business of the credit provider. (4) For the purposes of this section, investment by the debtor is not a personal, domestic or household purpose. 15 Section 11 sets out the presumptions in favour of application of the Code to all consumer credit transactions. It provides as follows: Section 11 Presumptions relating to application of Code 8 (1)In any proceedings (whether brought under this Code or not) in which a party claims that a credit contract, mortgage or guarantee is one to which this Code applies, it is presumed to be such unless the contrary is established. (2) Credit is presumed conclusively for the purposes of this Code not to be provided wholly or predominantly for personal, domestic or household purposes if the debtor declares, before entering into the credit contract, that the credit is to be applied wholly or predominantly for business or investment purposes (or for both purposes). (3) However, such a declaration is ineffective for the purposes of this section if the credit provider (or any other person who obtained the declaration from the debtor) knew, or had reason to believe, at the time the declaration was made that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes. (4) A declaration under this section is to be substantially in the form (if any) required by the regulations and is ineffective for the purposes of this section if it is not. 16 Regulation 10 prescribes the form of the Section 11 Declaration. It provides that the declaration is to contain, immediately below the words "I/We declare that the credit to be provided to me/us by the credit provider is to be applied wholly or predominantly for business or investment purposes (or for both purposes)" a warning in the form as set out in a box marked: IMPORTANT You should not sign this declaration unless this loan is wholly or predominantly for business or investment purposes. By signing this Declaration you may lose your protection under the Consumer Credit Code. 17 Schedule 2 of the Code contains 'Miscellaneous Provisions Relating to Interpretation'. Clause 7 of Schedule 2 provides that when interpreting "a provision of this Code, the interpretation that will best achieve the purpose or object of this Code is to be preferred to any other interpretation". Evidence Relevant To Jurisdiction 18 Mr Weir senior, and his son Mr Weir junior entered into a loan contract and related mortgage with Park Avenue Nominees Pty Ltd in September 1997. On or around December 1998/January 1999 the mortgage was varied and the loan extended until September 1999. The circumstances surrounding these transactions form the facts relevant to this dispute. The jurisdictional issue before the Tribunal concerns whether these transactions are subject to the Consumer Credit Code. The relevant facts are set out in more detail below. 19 Mr Weir senior was born 15 December 1915 and has lived in . . . , Lawrence, NSW for most of his adult life. From about 1980 until early 1999 his son Mr Weir junior lived with him. On 14 April 1999 Mr Weir, senior, was admitted to the . . . Nursing Home in Maclean and he has remained living there ever since, with occasional in-patient periods in . . . hospital. His son Mr Weir junior continued to reside in his father's home in Lawrence. The 1996 Mortgage 20 On 24 June 1996 Mr Weir senior and Mr Weir junior executed a mortgage over two properties, namely, Mr Weir senior's home in ... , Lawrence, and two parcels of land owned by Mr Weir junior in . . . and . . . , (and . . .) Lawrence. The mortgagee was Hector John Mackinnon, the principal sum $60,000, the term 12 months and the interest rate 17.5% per annum reducing to 12.5% per annum 'for prompt payment'. 21 On 7 July 1997 Property Investment Concepts Pty Ltd, acting as a finance broker, wrote to the Respondent enclosing an application for short term finance for 'Mr Weir, of . . . , Lawrence'. The evidence before the Tribunal is that this application was initiated by Mr Weir junior, although the letter to the Respondent does not identify whether the applicant was Mr Weir junior or senior. The letter contains details of the loan required and the words "General Mr Weir currently operates his property as a small cattle stud. He currently has a business loan with Elliott and Harvey. He wishes to pay them out ($60,000) and purchase some additional stock." The properties were variously described as 'housing block, 1st grazing property and 2nd grazing property. The use of the funds was stated as 'pay out Mortgagee $60,000, purchase stock $10,000-$15000 and Fees and Charges". 22 The Respondent obtained Valuations in relation to the properties. These indicate that the block in . . ., belonging to Mr Weir senior, is the housing block made up of only his home and vacant land. 23 On 2 October 1997 the mortgage to Mackinnon was discharged following arrangements for re-financing as set out below. Section 11 Credit Code Declaration 24 On 31 July 1997 Mr Weir senior executed a declaration pursuant to section 11 of the Code. This declaration is as follows: I/We, [Mr Weir] (senior) of . . . , Lawrence in the State of New South Wales, do hereby solemnly and sincerely declare as follows:- 1) I/We am/are the Registered Proprietors or am entitled to be the registered proprietors of property situated at . . . , Lawrence 2) I/We declare that the credit to be provided to me by the Credit Provider Park Avenue Nominees Pty Ltd is to be applied wholly or predominantly for business or investment purposes (or for both purposes). 3) I/We declare that this Declaration was executed prior to me/us entering into the Mortgage and associated documents. IMPORTANT You should not sign this declaration unless this loan is wholly or predominantly for business or investment purposes. By signing this Declaration you may lose your protection under the Consumer Credit Code. 25 The Declaration is not exactly in the form prescribed in Regulation 10 because the declaration itself is followed by "I/We declare that this Declaration was executed prior to me/us entering into the Mortgage and associated documents" and the warning IMPORTANT box then follows. The issue is whether the warning is 'immediately below' the declaration. 26 Mr Weir senior's signature then appears at the bottom of the form which is witnessed by Ms Brennan JP and dated 31 July 1997. Preparation of 1997 Mortgage and Loan Documentation 27 Mr Weir senior and Mr Weir junior travelled to Grafton to meet with their solicitor Mr Gallagher, on 10 September 1997 and they completed documentation relevant to the loan and mortgage. 28 Mr Gallagher told the Tribunal that Mr Weir and his son were known to him prior to 1996 but that he could not recall exactly how. He also prepared loan documentation in 1999 for refinancing of the loan (discussed below). He stated that " . . . On both occasions [of their attendance at his office] [Mr Weir] (senior) confirmed to me that he understood the nature and effect of these documents and the transactions involved". He told the Tribunal that he understood Mr Weir senior was assisting his son in 'some cattle enterprise". 29 On 24 September 1997 Park Avenue Nominees advanced $75,000 to Mr Weir senior and Mr Weir junior. The loan was an interest only loan for a period of 12 months and was secured by three registered mortgages, one of which is a registered mortgage over Mr Weir senior's home at . . . , Lawrence. Mr Weir junior's two parcels of land were also security for the loan. The mortgagee was Park Avenue Nominees Pty Ltd (the Respondent), the principal sum $75,000, the term 12 months and the interest rate 17% per annum reducing to 12% per annum 'for prompt payment'. 1998 Refinancing 30 On 17 December 1998 Boyce and Associates wrote to Mr Weir senior and junior advising that Park Avenue Nominees Pty Ltd were prepared to extend/vary the loan of $75000 previously advanced. A variation of mortgage and associated documents were attached to this letter with the instruction that the Weirs should attend a solicitor for the documents to be explained and completed. The Weirs attended upon Mr Gallagher in January 1999 and the documents, in similar terms to those set out above in relation to the original loan, were executed. 31 A second Consumer Credit Code, Section 11, declaration was signed by Mr Weir senior on 15 January 1999. This was witnessed by Mr Gallagher, solicitor. 32 The Variation of Mortgage document is dated 27 January 1999. Mr Weir junior 33 Mr Weir junior gave oral evidence to the Tribunal hearing on 13 November 2000. He is currently unemployed and is living in his fathers home in . . . , Lawrence. He told the Tribunal that he had lived with and cared for his father, with assistance from various community services, until his fathers admission to hospital in February 1999. 34 Mr Weir junior told the Tribunal that he initially borrowed from Mackinnon in Queensland, in order to finance the purchase of his land. He was unable to make sufficient repayments on this first loan and he had been visited by a Sheriff who warned him of the likelihood of foreclosure. He said that when he was unable to repay the loan he spoke to the 'people in Queensland' and they sent 'through some paperwork' about refinancing the loan. 35 Mr Weir junior told the Tribunal that he had arranged for his father to go with him to see Mr Gallagher to 'sign the papers' for the loans in 1997 and 1999. He said that Mr Gallagher did not read the documents to him. He said he is able to read but his father is not. 36 Mr Weir junior told the Tribunal that he 'talked [his] father into helping' him with the loan by telling him he was going to lose his farm. He said his father 'did not want to do it' but that he was 'harping at him for a couple of weeks' and then he agreed. He promised his father that he would pay back the loans and that 'nothing would happen'. He said that each year as the loans came to an end he was unable to repay them and just 'kept borrowing money every year until finally [he] couldn't do it any more'. His father knew that he had brought a farm and knew 'about the 'cattle stud'. SUBMISSIONS ON JURISDICTION Respondent's Submissions 37 The Respondent has submitted that the Section 11(4) Credit Code declarations signed by Mr Weir senior, comply with the requirements of the Code in both substance and form. The Respondent claims that in . . . "making those declarations on 31 July 1997 and 15 January 1999 pursuant to s11 of the Code and s10 of the Regulations, the credit provided to Mr Weir (senior) is presumed conclusively, for the purposes of the Code not to be provided wholly or predominantly for personal, domestic or household purposes. Accordingly, the provisions of the Code do not apply and the Fair Trading Tribunal has no jurisdiction to hear these proceedings". 38 The Respondent submitted that the form of the Code declarations substantially comply with the requirements of the code and that this is all that is required. The Respondent submitted that the position of the word 'IMPORTANT' following paragraph 3 in the declaration, while not in strict compliance with the Regulations, does not in any way lessen the impact of the notice. Ultimately, submits the Respondent, the notice complies with the statutory requirements. 39 The Respondent submitted that were the Tribunal to find that the section 11 declaration were invalid, then the 'real purpose' of the loan was in any event clear and known to the lender as for 'business' including the purchase of stock for a grazing property. The loan was essentially for investment in the farming venture of the Weirs, father and son. The Respondent argued that section 11 of the Code imposes no duty on the Lender to make inquiries of the borrower. In this matter Mr Weir junior dealt with the Respondent with the assistance of a broker. The loan application of July 1997 included a valuation of livestock of $50000 which reasonably indicated that Mr Weir junior had a working farm. Applicant's Submission on Jurisdiction 40 The Applicant submitted that the legislature did not intend that a Section 11 Code declaration would effectively be a tool to oust the jurisdiction of the Tribunal. The purpose of the declaration, the Applicant submitted, is to protect borrowers, not lenders, and to assist in the determination of whether matters are regulated by the Code where there is some doubt. The presumption in the Code is in favour of its application and the circumstances in which this may be rebutted should be narrowly construed. 41 The Applicant submits that the Section 11 Declaration fails to comply with the requirements of Regulation 10 in that the 'IMPORTANT" notice is not immediately below the words referred to in Regulation10(1) of the Regulations. The Applicant argues that the requirement that the warning be 'immediately below' the specified words of the declaration is a mandatory requirement, not capable of partial compliance. Thus the issue of substantial compliance is not possible and 'failure to comply with this requirement is fatal'. 42 The Applicant submits that the reason for such a strict requirement is founded in the severity of the consequences to the borrower in depriving him of the substantial consumer protection of the Credit Code. The words of the IMPORTANT warning, argues the Applicant reinforce the declaration and therefore must appear 'immediately beneath' it. The Applicant further submits that a 'decision to declare the Declarations ineffective will not deprive the Respondent of any rights in relation to any arguments it might have that may provide a defence to the Applicant's claim. 43 The Applicant also submitted that the Respondent 'could or should have know that the credit was in fact to be applied wholly or substantially for domestic purposes, within the meaning of s11(4) Credit Code'. The Applicant claims the evidence shows 'that Mr Weir senior did not know what he was signing or why, if indeed it was he who signed the declarations'. To support this claim the Applicant points to the Mr Weir's reported state of health as evidenced by his medical records and the affidavit of Ms Boon (his daughter), his age, the evidence of Mr Weir junior and the implausibility that Mr Weir senior was entering into a business or investment. The Applicant points to the totality of the circumstances surrounding these transactions and submits that it could at no time be said that Mr Weir senior had a business purpose in relation to the credit borrowed from the Respondent. 44 The Applicant argued that it was clear to the Respondent that Mr Weir Seniors property was not farming land but merely his home. It should have been clear that the involvement of Mr Weir senior was principally to provide security for the loan to Mr Weir junior and that Mr Weir senior derived no benefit and that his only role was in relation to repayment of the loan. These, and the ongoing circumstances of the pattern of refinancing larger loans to Mr Weir senior should have put the Respondent on notice to, at least, take additional steps to ensure that Mr Weir senior's purpose in borrowing was truly business or investment. The Applicant argues that the circumstances should have put the Respondent on notice that independent and separate legal advise should be obtained for Mr Weir senior and junior. 45 The Applicant does not dispute that Mr Weir junior had a business purpose in obtaining credit. However the Applicant argues that the dominant purpose was refinancing of existing loans, not business or investment. FINDINGS AND REASONS ON JURISDICTION Section 11 Declaration 46 The Consumer Credit Code applies to credit which is provided 'predominantly for personal, domestic or household purposes'. The Applicant claims the benefit of the presumption that the Code applies to the transaction and it is for the Respondent to rebut this presumption (section 11 (1)). 47 Section 11(2) of the Code provides a mechanism for the conclusive rebuttal of the presumption that credit is provided for 'personal, domestic or household purposes'. This mechanism is the completion of a declaration made substantially in the form set out in the Regulations. Importantly, the procedure set out in section 11 enables a credit provider to establish that a transaction is not for a purpose to which the Code applies. 48 The Respondent has submitted that the purpose of the loan was for the financing of Mr Weir senior and junior's joint farming business. The Respondent has obtained and relies upon a declaration pursuant to section 11 which, if effective, will exclude the application of the Code. 49 I am not satisfied that the declaration executed by Mr Weir senior is effective. 50 Section 11 requires that the Declaration be 'substantially in the form required by the Regulations'. Schedule 2, clause 11 further provides that where a form is prescribed under the Code 'strict compliance with the form is not necessary and substantial compliance is sufficient'. 51 Section 11 and Regulation 10 set out the form in which a declaration as to the purpose for which the credit is to be provided is to be effected. They specify the words to be used and their placing in relation to each other. Regulation 10 requires that the boxed 'IMPORTANT' warning is to be placed 'immediately below' the words of the declaration. 52 It is necessary to reconcile the relevant legislative directive as to 'substantial compliance' with the specific provision that the warning on the section 11 declaration is to appear 'immediately below' the declaration itself. Schedule 2 of the Code assists in interpretation of the Code and provides that 'an interpretation which promotes the purpose of object of the Code is to be preferred'. 53 The term 'substantial compliance' has also been the subject of much judicial consideration. Justice Sheppard gave a convenient summary of the relevant cases in the matter of Deputy Commissioner of Taxation v Comcorp Australia Ltd & ors [1996] 848 FCA 1 (24 September 1996), as follows: Expressions such as "substantial compliance" are ordinary English expressions and ought to be given their ordinary meaning. Nevertheless, the expression has a history and a significance in relation to problems relating to statutory construction where a question arises whether a provision of an Act, apparently mandatory in its terms, is in fact mandatory or directory. The conventional distinction drawn has been to describe statutes which require strict compliance as mandatory and those which do not as directory. This approach has been criticised. I refer, for example, to the decision of the Court of Appeal of New South Wales in Tasker v Fullwood [1978] 1 NSWLR 20 (at 24) where the Court said that the only true guide to the statutory intention is to be found in the language of the relevant provision and the scope and object of the whole statute. The court said that it can be misleading if one substitutes for the question thus posed an investigation as to whether the statute is mandatory or directory in its terms. It is an invitation to error, not only because the true inquiry will thereby be side tracked, but also because these descriptions have been used with varying significations. The Court's remarks were followed in TVW Enterprises Limited v Duffy (1985) 62 ALR 63. See also Statutory Interpretation in Australia, D.C. Pearce, 4th Ed (1996) at 284. A number of the authorities dealing with this question use the expression "substantial compliance". . . . Stephen J in Victoria v The Commonwealth (1975) [134 CLR 81 said (at 179)] . . . . emphasises the importance of considering whether what has been done gives effect to the general object of the legislation. If it does not, there will not be substantial compliance. 54 The meaning and interpretation to be given to 'substantial compliance' was considered by the High Court in Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28 (28April 1998). In a joint judgement, JJ Mchugh, Gummow, Kirby and Lehane High Court stated that: In our opinion, the Court of Appeal of New South Wales was correct in Tasker v Fullwood [1978] 1 NSWLR 20 in criticising the continued use of the "elusive distinction between directory and mandatory requirements"[at 23-24] and the division of directory acts into those which have substantially complied with a statutory command and those which have not. They are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning [ McRae v Coulton (1986) 7 NSWLR 644 at 661; Australian Capital Television (1989) 86 ALR 119 at 147]. That being so, a court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute. 55 The purpose and objectives of the Consumer Credit Code are not, surprisingly, set out formally in the Code itself. The Explanatory notes to the Bill state that the purpose is to regulate the provision of credit to individuals and to promote "truth in lending which will allow borrowers to make informed choices when purchasing credit" (Consumer Credit (Queensland) Bill 1994 Explanatory Notes). The Code is beneficial consumer protection legislation. It is uniform across Australia and covers a broad range of credit transactions. It is directed at regulating the lending relationships between individual borrowers and financial institutions. To this end the Code has incorporated a 'purpose' test to distinguish between those borrowers with commercial interests (business and investment) and those who are borrowing for a 'personal, domestic or household" purpose. Sections 6 and 11 of the Code are directed to the issue of 'purpose'. 56 Sections 6 and 11 of the Code together with the requirements of Regulation 10 provide a mechanism for a credit provider to clarify where a loan is for a business or investment purpose. They are not intended to provide credit providers with a means for 'opting out' of the consumer protection requirements of the Code where they would otherwise apply. It is consistent with the scope and purpose of the Code that an inquiry should be made by the Tribunal as to whether Declarations sought to be relied upon to exclude the Code properly comply with it. 57 The consequences of effecting a Section 11 Declaration are significant for the borrower. The intention of the legislation in setting out the specific form which a Section 11 Declaration must take is to ensure that borrowers are clearly aware, and informed of, the consequences of losing the protections of the Code. The Regulation sets out the exact form of words which are to be used and the placing of those words in relation to each other. In my view the legislature intended that a Declaration which, as in this case, inserted other words between the declaration and the 'warning' should not be effective. Regulation 10 uses the words 'immediately below' and to give these words there ordinary meaning there must not be text between the declaration and the 'warning'. 58 In summary, I find that the intention of the legislation, when considered in terms of the language of the relevant provisions and the scope and object of the Code, is that unless the words of the warning (IMPORTANT) appear 'immediately below' the words of the Declaration then it is not effective to exclude the application of the Code. 59 It follows from the above that I find the Section 11 Declaration to be ineffective in rebutting the presumption that the code applies to the transaction. It remains for the Respondent to rebut this presumption by evidence which establishes that the purpose of the transaction was 'business or investment' and thus the transaction is unregulated by the Code. Purpose 60 The words 'personal, domestic or household' are not defined in the Code and are to be determined in accordance with their ordinary meaning. In Linkenholt Pty Ltd v Quirk [2000] VSC 166 (5 May 2000) Justice Gillard stated that: The interpretation of the Code is a question of law. Hence it is a question of law for the court to decide what is meant by "personal purposes" in s.6(1)(b) of the Code. However, having construed the provision it is a question of fact whether at the time when the credit contract was entered into, the credit was provided or intended to be provided for personal purposes? 61 This phrase 'personal, domestic or household' has a counterpart in section 52 of the Trade Practices Act (Cth) in relation to 'goods and services' and it is well understood in that context (see State Bank v Sullivan [1999] NSWSC 596 (14 July 1999). The words should be given their ordinary meaning. 62 The Code is unclear as to whether the relevant 'purpose' is that of the debtors actual purpose in obtaining the credit or the purpose to which the credit provider believes the credit will be put.(For a discussion of this point see A Duggan and E Lanyon Consumer Credit Law, Butterworths 1999 at 60). The Tribunal is of the view that it is inquiry and determination of Mr Weir seniors, (the debtors) actual purpose in obtaining the credit at the time the when the credit contract was entered into which is relevant to the determination of this issue. It is necessary to look at the 'substance and reality' (Linkenholt at paragraph 121) of the transaction in this matter. 63 The Tribunal notes the words of Justice Gillard in Linkenholt Pty Ltd v Quirk [2000] VSC 166 (5 May 2000) where his honour was similarly called upon to determine the 'purpose' of a credit transaction under the Code: In my opinion, it is appropriate to consider what the money was used for in order to determine the purpose of the provision of the credit. In considering the question it is important to consider the substance of the transaction in the context of its performance. 64 I make the following relevant findings of fact: [Mr Weir] senior is the registered owner of . . . . , Lawrence, where he resided until 1999. The property is a residential home and is not a farming property. He is eighty five years old and at all relevant times was in poor health. [Mr Weir] junior is the registered owner of two blocks of land in . . . and . . . , Lawrence. At times he has operated this land as a 'cattle stud'. In June 1996 [Mr Weir] junior and senior executed a mortgage and loan contract over their combined properties. The loan, for $60,000 was not repaid within the set term of one year. In July 1997 [Mr Weir] junior, through a finance broker, approached Park Avenue Nominees Pty Ltd in relation to the refinancing of the existing loan. The loan and associated registered mortgages over Mr Weir senior and Mr Weir junior's three properties were executed in September 1997. The amount financed was $75,000. [Mr Weir] junior presented the purpose of the loan, to the broker and subsequently the lender, as the financing of the purchase of stock and improvements to his 'cattle stud'. All negotiations for finance to [Mr Weir] junior and senior were initiated by [Mr Weir] junior. [Mr Weir] senior took no part in developing his son's cattle stud. He was not held responsible by his son for repayment of the loan. [Mr Weir] senior entered into the loan arrangement in order to assist his son. The 1997 loan was nor repaid within its term and was refinanced in January 1999 [Mr Weir] senior. He moved to a nursing home in February 1999. 65 The above facts evidence a pattern of borrowing and failing to repay while at the same time the amount of the loan increased from $60,000 to $75,000. I accept that Mr Weir junior may have had an investment purpose when entering into the loan arrangements in 1996. He told the Tribunal that he had tried to operate his property as a cattle stud. It was on the basis of these arrangements that the finance broker negotiating refinancing of the loan presented the application to Park Avenue Nominees Pty Ltd, the Respondent. However in considering what the money was actually used for I have come to the view that the nature and character of the original loan in 1996 had significantly changed by the time of refinancing in 1997 and later in 1999. Mr Weir junior, on his own account to the Tribunal stated that he had to keep borrowing because he could not repay monies already spent. 66 The fact that Mr Weir senior is now in a nursing home and unable to give evidence personally is unfortunate. However, on considering the evidence before me I am satisfied that Mr Weir senior entered into the transactions the loan transactions in 1997 and in 1999 solely to support his son by alleviating his debt. He was, and is, elderly and not in good health. I do not accept that he was part of a business or investment venture in relation to his son's property. I accept that Mr Weir senior was reluctant to enter into the loan transactions, was not expected by his son to generate repayments of the loan and did not derive any benefit from it. 67 There is little evidence as to the extent, if any, to which Mr Weir junior continued to work his farm as a 'cattle stud' during the relevant period. It is not clear whether Mr Weir junior continued to have a business purpose in relation to the funds which he had first borrowed in 1996. He told the Tribunal that he effectively kept borrowing in order to repay earlier loans. At the same time it must be said that Mr Weir junior did not impress as a completely reliable or truthful witness. He failed to return to the Tribunal at the allocated time to resume his evidence because he was trying to arrange to get a dose of methadone which was overdue. He said that he had been recently unwell, and was in treatment for drug dependency. He did not appear totally oriented and clear in his evidence. The Applicant has conceded that Mr Weir junior did have a business purpose in first obtaining the credit. 68 On balance, I am not satisfied that the Respondent has rebutted the presumption of the application of the Code. The evidence before me suggests that the predominant purpose of Mr Weir senior, in the refinancing of the loans, to the extent that it can be said that he had one, was to repay his sons debts. It was not investment in the cattle stud. The evidence suggests that Mr Weir junior had a similar purpose but was also using the funds to operate his cattle stud. Had Mr Weir junior and Mr Weir senior both been working the 'cattle stud' during that period it may be that my conclusion would be different. In the ordinary course of conducting a business it might be expected that loans might be refinanced without changing the nature and character of the transaction (Linkenholt Pty Ltd v Quirk [2000] VSC 166 (5 May 2000)). However I am not satisfied that this is the case here. 69 In giving the terms 'personal domestic or household' purposes there ordinary meaning I am satisfied that in entering into a loan contract solely to help his son out of financial difficulty Mr Weir senior acted within the intended meaning of each of these words. Such an interpretation is consistent with the objectives of the Code. I am satisfied that the loan was predominantly for a 'personal, domestic or household purpose'. 70 Having made the above findings it follows that the Consumer Credit Code applies to these transactions. Transfer to the Supreme Court 71 Section 23 of the Fair Trading Act 1998 provides for the transfer of matters to a Court of competent jurisdiction where both parties consent to that transfer or the Tribunal of its own motion transfers the proceeding. The Tribunal is of the view that this provision is relevant where, for instance, 'new' law is being tested or where the determination of legal issues might affect a large number of potential claimants. In other cases, the consent of the parties is a crucial element in the Tribunal's consideration of whether to transfer a matter pursuant to section 23. The Tribunal also has specific power to refer a question of law to the Supreme Court where this is deemed necessary (Section 62). 72 The Respondent submitted that fairness demands that these proceedings be transferred to the Supreme Court so that the Respondent is not forced into a second round of litigation to obtain an order for possession of the property. Efficiency and fairness suggest that the matters be dealt with in the one forum and one set of proceedings. 73 The Applicants oppose the transfer of the proceedings to the Supreme Court. The Applicant submits that the Tribunal, as the specialised forum for the determination of Code matters is the appropriate place for this dispute to be determined. The Applicant argues that the Tribunal also has the advantage of timeliness and less cost. 74 The Applicant has chosen the Tribunal as the forum for resolving this dispute and does not consent to the transfer of these proceedings to the Supreme Court. The Tribunal obviously, and intentionally, operates differently to a court. Proceedings are informal, expeditious and inexpensive (Sections 3, 27, Fair Trading Tribunal Act 1998). Mr Weir senior is represented in this action by his daughter who has an order as his private manager from the Guardianship Tribunal. They are represented by the Legal Aid Commission and do not appear to have funds to conduct a lengthy matter in the courts. 75 The legislature has vested both exclusive and concurrent (with the courts) jurisdiction in the Tribunal under the Code. This allows the Tribunal to develop a high level of expertise in matters under the Code, as was the case with the Commercial Tribunal of NSW. This matter is not one of such complexity nor of effect on such a large number of litigants that it would warrant transfer to the Court. It would be expected that in matters under the Code it is desirable for matters to be heard in a forum which is inexpensive and informal. The Tribunal is such a forum. 76 On balance, the Tribunal is not persuaded that this matter should be transferred to the Court. To transfer the matter to the Court on the basis that the Respondent would be in a more convenient position to pursue an action for possession of the property is to pre-empt the outcome of these proceedings. It would also do so at significantly greater cost to the Applicant. 77 The Tribunal refuses the application to transfer the proceedings to the Supreme Court. ORDERS I order that: 1 The Tribunal has jurisdiction in this matter. 2 The Application to transfer the matter to the Supreme Court is refused. 3 The matter is listed for further directions by telephone on Monday 12 February at 9.30am. ………………………… Gabriel Fleming Senior Member I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF THE FAIR TRADING TRIBUNAL. REGISTRAR DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.