National Credit Code – s 88(5)(c) – enforcement proceedings
In Ozden v Commonwealth Bank of Australia  VSCA 127 (24 June 2014), the Court of Appeal examined several issues. They included principles guiding an appellate court in a review of an award of unliquidated damages and the requirements of equity for the purposes of a ‘true’ equitable set-off (impeachment of the plaintiff’s claim). Whilst not requiring specific attention by the Court of Appeal, the learned trial judge usefully and succinctly brought together current authority on the question of implied contractual duties of co-operation, good faith and acting reasonably in the performance and enforcement of a contract.
The short focus of this Note is the granting of leave under s 88(5)(c) of the National Credit Code to commence a proceeding nunc pro tunc (now for then).
In the proceeding below, the bank sought judgment for possession of a residential (non-investment) property and claimed the amount due under three loans.
Two of the loans were the subject of the Code. A Notice of Default and Notice of Demand was described in the Notice as having been made pursuant to s 88 of the Code and s 76 of the Transfer of Land Act 1958 (Vic). Relevantly, the Notice overstated the arrears amount in respect of one of the loans to which the Code applied by approximately $10,000. Unless leave were granted under s 88(5)(c), the Notice was “ineffective”, at least as to the loans to which the Code applied. The trial judge said at : “The authorities suggest that proceedings commenced where no Notice as required by the Code has been served are not a nullity, although they may be capable of summary dismissal at an early point in the proceeding.”
Drawing on authority for the proposition that a court can authorise a credit provider to bring a proceeding where no notice has been served at all, the learned trial judge exercised a discretion to authorise the commencement of the proceeding ‘now for then’. His Honour took into account the practical consideration that the bank could commence a fresh proceeding in relation to the first two loans and the enforcement of the security, and the unlikelihood of any advantage to the borrowers if they faced further proceedings in relation to those loans and that security. This reasoning was accepted by the Court of Appeal, which found no error in the exercise by his Honour of the discretion given by s 88(5)(c).