Perpetual v Treloar [2009] NSWSC 386

In this matter possession proceedings were defended on the basis on the s57(2)(b) notice had not been served. However the mortgage manager, Royal Guardian, kept computerised telephone records that proved the borrower had called and acknowledged receiving the notice.  Although a s57(2)(b) notice is not normally necessary to obtain possession it’s value as an acceleration notice was in question due to an allegation that the Consumer Credit Code applied to the transaction.

It was then argued that the Consumer Credit Code applied. However there was a declaration signed pursuant to s11(2) of the Code that the loans was for business or investment purposes. There were minor differences between the prescribed form of the notice and the actual notices used but the court held these were irrelevant.

The Court next considered whether s11(3) of the Code applied to make the signed declaration ineffectual ‘if the credit provider (or any other relevant 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 predominantly for personal, domestic or household purposes’.  For this purpose the court held the test was to:

Consider all that was known to the credit provider at the time the declaration was made, before the loan contract was entered, being an objective consideration of what a reasonable person in the shoes of the credit provider would have understood as the predominant purpose of the loan, given all that was actually or impliedly known by the credit provider at the time the declaration was made.

On the basis of this test Schmidt AJ found the Code did not apply. The Court then awarded possession and indemnity costs (in accordance with the mortgage provisions) to the lender.

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