[1988] VR 904
ENCYCLOPAEDIA BRITANNICA (AUSTRALIA) INC v DIRECTOR OF CONSUMER AFFAIRS
SUPREME COURT OF VICTORIA FULL COURT
MURRAY, FULLAGAR and HAMPEL JJ
8-9 September, 14 December 1987
[1988] VR 904
Contract — Credit — Regulated loan contract — Credit provider — Failure to
obtain licence — Application by credit provider for order that debtor's
liability should be increased — Finding that failure ought reasonably to be
excused as to part of period during which provider unlicensed — Powers of
Small Claims Tribunal — Credit Act 1984 (No. 10097), s85(2)(a).
.
S64 of the Credit (Administration) Act 1984 provides that, subject to s85 of
the Credit Act 1984, if a credit provider carries on business of providing
credit whilst he is neither the holder of a licence nor an exempt person, a
debtor is not liable to pay the credit provider either the amount financed
(the principal sum) or the credit charge (the interest). S85 of the Credit Act
provides that where a debtor is thus relieved of the obligation to pay the
credit provider, the credit provider may apply to the Small Claims Tribunal
for an order increasing the liability of the debtor to the credit provider.
S85(2)(a) provides that: -
"(2) Where an application is made to a Tribunal under this section in relation
to a regulated contract, the Tribunal, after consideration of the relevant
circumstances, including the conduct of the credit provider and the debtor and
the loss or damage (if any) suffered by the debtor -
(a) in the case of a credit sale contract or a loan contract and a
contravention of or failure to comply with the Credit (Administration) Act
1984 -
(i) may, where it is satisfied that the contravention or failure has occurred
and ought reasonably to be excused - determine that the debtor is liable to
pay the amount financed under the contract and the whole or such part of the
credit charge as it determines; or
(ii) may, where it is satisfied that the contravention or failure has occurred
but ought not to be excused - determine not to increase the liability of the
debtor or determine that the debtor is liable to pay the whole or such part as
it determines of the amount financed under the contract and the whole or such
part of the credit charge as it determines;...".
S86(b) of the Credit Act allows the Tribunal to "make a determination under
s85 in relation to all regulated contracts entered into by the credit provider
during a specified period".
The appellant sold encyclopaedias on credit in Victoria while not the holder
of a credit provider's licence. There were 1058 sales contracts, most of which
involved amounts of less than $3000 but which collectively involved an amount
of the order of $650,000. It applied to the Tribunal for orders under s85 in
respect of the contracts. In its decision the Tribunal divided the contracts
into three categories: those entered into between 1 June 1985 and 21 March
1986; those entered into between 22 March 1986 and 6 May 1986; and those
entered into between 7 May 1986 and 16 May 1986. It ordered that the credit
charge should remain forfeited for all three periods. In respect of the first
period the Tribunal was satisfied that the failure of the appellant to apply
for a licence ought reasonably to be excused and ordered that the liability of
the debtors should be increased to 95 per cent of the amount financed. In
respect of the second and third periods it was satisfied that the failure
ought not to be excused. In respect of the third period the Tribunal ordered
that the zero liability of the debtors should not be increased at all. In
respect of the second period the Tribunal fixed a sliding scale of the
proportions of the capital amounts which the debtors were liable to pay
ranging from 92 per cent of the amount financed for contracts made on 22 March
1986 to 2 per cent of the amount financed for contracts made on 6 May 1986.
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[1988] VR 904
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