12. Dispute resolution

Updates and background for this project (Digest)

• Introduction
• Empirical background
• Negotiation
• Tribunal proceedings
• Mediation
• Industry-based dispute resolution schemes
  

INTRODUCTION

12.1 In this chapter, the Commission examines ways of resolving disputes between lenders and guarantors other than through court proceedings, in particular:

• by postponement of court proceedings to facilitate the negotiation of settlement;
• in proceedings before the Consumer, Trader and Tenancy Tribunal of New South Wales;
• by mediation; and
• through industry-based dispute resolution schemes.

12.2 It appears that many guarantors simply pay the debts of others rather than dispute a transaction.¹ Given the high cost and low success rate of disputing debts, this is perhaps unsurprising. Where guarantors dispute the transaction, the empirical study conducted by the Commission and the University of Sydney (“Lovric and Millbank”) found that litigation remains central to resolving disputes.² The data from the research clearly shows that the litigation process is a less than a satisfactory way to seek redress. Legal costs are quite high, which impacts disproportionately on guarantors as they have fewer financial resources and less experience in court processes compared with lenders. Lovric and Millbank were unable to determine clearly how many guarantors were proceeding to litigation without legal representation, although several judges who participated in the research stated that they saw a significant portion of unrepresented litigants.³ In this context, the observations made by Justice Heydon in a case between a bank and an unrepresented litigant are telling:

The court room contest revealed a gross disparity in power between the plaintiff bank and the defendant. The plaintiff bank was legally represented, was very experienced in this type of litigation, and was prepared to make full use of the opportunities which the rules of evidence and procedure afford a party not bearing the burden of proof in an adversary system. The defendant was not represented, was wholly inexperienced and was evidently almost wholly unable to do his cause any justice. The disparity in forensic power was akin to their disparity in economic power.”⁴

12.4 Many participants to the research expressed the view that litigation was expensive, complex and inefficient for the resolution of guarantee disputes, and expressed a preference for more accessible dispute resolution mechanisms, such as negotiation, mediation, tribunal processes or industry resolution.⁷

NEGOTIATION

12.5 Negotiation, a process in which parties in dispute attempt to reach a resolution through discussion, persuasion, bargaining, compromise and settlement, is one of the most common and cost-effective means of resolving commercial disputes.⁸ However, at the stage where a lender is entitled to enforce a guarantee, in particular where it has already taken the steps required for the initiation of legal proceedings, negotiating a settlement becomes more difficult for the borrower and guarantor because of the impending court proceedings. For consumer transactions, Part 5 Division 3 of the Consumer Credit (New South Wales) Code (“Consumer Credit Code”), consisting of s 86-89, gives assistance in this situation by allowing the postponement of court proceedings.

Postponement by parties

12.6 Section 86(1) provides:

A debtor, mortgagor or guarantor who has received a default notice under Part 5, Division 2, or a demand for payment under section 82, may, before the end of the period specified in the notice or demand, negotiate with the credit provider in respect of the postponement of the enforcement proceedings or any action taken under such proceedings or in respect of the operation of an acceleration clause.

12.8 Section 87 provides that, where a postponement is negotiated, “the default notice… is taken, for the purposes of the Code, not to have been given”. In other words, the credit provider is not entitled to take enforcement proceedings in the meantime. The default notice referred to is that which the credit provider must give to the debtor, mortgagor or guarantor under s 80. Under that section, the credit provider cannot initiate enforcement proceedings against the debtor or mortgagor until after 30 days from the date of the notice of default. This default notice is, however, not a requirement for the commencement of court proceedings against a guarantor.¹⁰ The effect of s 87 on guarantees could therefore be called into question. However, this issue would not arise under our proposed legislation because of Recommendation 10.2 that the notice of default that needs be given to the guarantor should be a pre-requisite to the commencement of enforcement proceedings by the lender against the guarantor.

12.9 Section 87 further provides that it is a condition of any negotiated postponement with the credit provider after the credit provider has taken possession of property subject of a mortgage that the mortgagor pay the reasonable costs of the credit provider in taking possession of the property. Moreover, the credit provider has an obligation to give a written notice to the relevant parties, not later than 30 days after the agreement was reached, setting out the conditions of the postponement and the consequences of non-compliance, which is that no further notice is required before the commencement of enforcement proceedings. If the credit provider fails to give the required notice, it commits a criminal offence that attracts a penalty of 100 penalty units.¹¹ Such failure does not, however, affect the effectiveness of the negotiated postponement.

Court-ordered postponement

12.10 Where guarantors are unable to negotiate a postponement of the enforcement proceedings with the credit provider, s 88 of the Consumer Credit Code grants them a right to apply to the court for a postponement. The court may order or refuse to order the postponement and may make such other orders as it thinks fit. The Code gives no guidance as to the considerations to be taken into account by the court in determining what to order. If it considers it appropriate, the court may stay any enforcement proceedings under the credit contract or mortgage until the application has been determined. Where a court makes an order under s 88, the credit provider is entitled to apply for a variation of that order.¹²

12.11 The relief available under s 88 and the matters to be considered by the court when determining an application were considered by the Commercial Tribunal of Western Australia in George v Bank of Western Australia Ltd,¹³ which involved a debtor but is nevertheless instructive in cases concerning guarantors. In this case, the applicant, who had borrowed money from the respondent bank which he was unable to repay, telephoned the bank and requested a three-week postponement of enforcement action. After some discussion, the bank postponed enforcement action for 25 days. After this period had expired, the applicant sought a postponement under s 88. The bank argued that the 25-day postponement was a negotiated postponement within the meaning of the section and, as a result, the Tribunal had no jurisdiction to hear the application. The Tribunal held that the 25-day postponement was not a negotiated postponement, as the applicant had not agreed to it. All the applicant had done was acknowledge that the 25 days was all that the respondent would allow. The applicant was granted a postponement after the Tribunal found that the bank would not suffer any real prejudice as a result of a postponement, that the reason for default was outside the direct control of the applicant, and that the applicant had attempted to remedy the default.

12.12 A condition precedent to the court granting a postponement under s 88 is the fact that the guarantor has been unable to negotiate a postponement pursuant to s 86. This section requires these negotiations to commence within the period specified in the default notice, which is 30 days from the date of the notice of the debtor’s default. In Anseline v General Motors Acceptance Corporation,¹⁴ the Credit Tribunal of Victoria held that an application could not be made to the court for a postponement if the unsuccessful negotiations were commenced after the specified period. There is, however, nothing in s 86 to indicate whether or not negotiations need to be completed within the specified period. The Tribunal in the Anseline case proceeded on the basis that it is sufficient, to comply with s 86, to commence negotiations within the period.

The Commission’s conclusions

12.13 The Model Law should contain provisions similar to s 86-89 (Part 5 Division 3) of the Consumer Credit Code, which authorise the postponement of court proceedings to allow the parties to negotiate a settlement. The proposed legislation may, however, need to specify a different monetary limit to that contained in the Code. Under the Consumer Credit Code, the right to negotiate the postponement of proceedings only applies to credit contracts in respect of which the maximum amount of credit that is or may be provided is $125,000 or less.¹⁵ The Consumer Credit Code allows the regulations to alter this amount but to date no such alteration has been made. It may be argued that the monetary limit in the Code is not appropriate for guarantees that relate to small business loans, which generally involve larger sums of money than consumer loans.

12.14 In the research conducted by Lovric and Millbank, 48% of the guarantors surveyed were involved with loans of less than $50,000, while 26% were involved with loans of between $50,000 and $200,000, and 24% were involved with loans of over $200,000.¹⁶ The solicitors and barristers reported significantly larger amounts at stake in the transactions they last dealt with:

• 38% of barristers and 31% of solicitors reported that in the last guarantee matter on which they acted, the loan was valued at between $50,000 and $250,000,
• 18% of barristers and 25% of solicitors reported loans between $250,000 and $500,000 in their last matter,
• 38% of barristers and 22% of solicitors reported loans over $500,000.¹⁷

• only 2% of matters involved a loan of less than $50,000;
• 38% concerned a loan between $50,000 and $250,00;
• 25% were between $250,000 and $500,000; and
• 35% were over $500,000.¹⁸

RECOMMENDATION 12.1

The Model Law should contain provisions similar to s 86-89 of the Consumer Credit Code, which provide for the postponement of court proceedings to allow the parties to negotiate a settlement. It should, however, additionally provide that the right to negotiate a postponement of proceedings only applies to credit contracts in respect of which the maximum amount of credit that is or may be provided is $500,000 or less, or such other amount as may be prescribed by the regulations.

12.17 Some tribunals may be seen as providing a more accessible dispute resolution forum than courts. Among such tribunals is the Consumer, Trader and Tenancy Tribunal of New South Wales (“CTTT”), which in February 2002 replaced the Fair Trading Tribunal and the Residential Tribunal.¹⁹

12.18 The Consumer Credit Code is one of the statutes that confer jurisdiction on the CTTT.²⁰ Hence, the CTTT has jurisdiction over guarantees that are within the ambit of the Consumer Credit Code. It can, for example, make a determination that a guarantee is unjust and relieve the guarantor from paying any amount in excess of the amount that it considers reasonable under the circumstances.²¹ It can also review unconscionable interest rates and other fees and charges.²² The jurisdiction of the CTTT is, as a general rule, not exclusive.²³ Hence, parties to a dispute may choose to go to a court that has jurisdiction over the matter.²⁴

12.19 Proceedings conducted by the CTTT may be seen as having some advantages over court proceedings, especially where the litigant does not have legal representation. First, the CTTT is not bound by the rules of evidence and is required to act with as little formality as the circumstances of the case permit, and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.²⁵ The freedom from technicality allows parties to understand and participate in the process in a meaningful way. Secondly, the CTTT, unlike courts, can engage in independent fact finding by requesting additional information be provided by the parties or seeking that information itself by, for example, calling witnesses on its own motion.²⁶ The CTTT’s ability to take an active investigative approach means the outcome of a dispute would be less reliant on the resources and advocacy skills of the parties and/or their representatives. Thirdly, the law has put in place mechanisms to minimise costs for the parties: for example, parties in CTTT proceedings are required to pay their own costs, as a general rule.²⁷ A final advantage of the CTTT is the specialised nature of the matters that it can handle. This enables the CTTT to develop expert knowledge of the law and practice in a particular area, which may reduce the time needed to resolve the dispute and thus the costs incurred both by the parties and the system.

12.20 Lovric and Millbank found that very few third party guarantee disputes are being resolved by the CTTT (or its predecessor the Fair Trading Tribunal).²⁸ This under-usage is likely to be caused by the consumer/business distinction drawn in the Consumer Credit Code. Small business transactions are excluded from the Consumer Credit Code; so where the purpose of the loan is commercial rather than personal, the CTTT has no jurisdiction to hear the matter. Applications brought by guarantors to the CTTT have been dismissed on this basis.²⁹

12.21 A 2001 decision of the New South Wales Supreme Court significantly restricted the possible operation of the Consumer Credit Code in this area. In Boon v Park Avenue Nominees,³⁰ credit was provided to the plaintiff to refinance an earlier loan made to the plaintiff and his son to finance the purchase of stock and improvements to the son’s cattle stud. The plaintiff was not involved in the cattle stud business and the credit was secured by mortgages over property owned by the plaintiff. The Fair Trading Tribunal of New South Wales held that the predominant purpose of the plaintiff in obtaining the loan was to repay his son’s debt. The tribunal characterised the loan as personal in nature because it was the action of a father aiding a son, and consequently the Consumer Credit Code applied to the transaction. The Supreme Court overturned this decision and held that the lender established that the loan was not provided wholly or predominantly for personal, domestic or household purposes.³¹

12.22 This decision effectively narrows the operation of the Consumer Credit Code in the area of third party guarantees. Data from the Lovric and Millbank study indicates that the primary motivation for many third party guarantors is the provision of assistance to family members, and that most borrowers apply these funds to small business enterprises.³² The implication of the decision in Park Avenue is that, where a relative is motivated to assist a borrower with a business loan because of factors arising out of their relationship, access to dispute resolution mechanisms under the Consumer Credit Code is not available.

12.23 Lovric and Millbank found strong support for increased involvement by lower cost tribunals, such as the CTTT, in cases involving third party guarantees.³³ This is not possible (in the case of business loans widely defined) under the current jurisdictional restrictions of the tribunal. To provide an accessible, fair, speedy and inexpensive system of dealing with disputes concerning guarantees, the Model Law should grant the CTTT jurisdiction to resolve issues arising out of its provisions. However, cases with complicated issues of fact and law may be better suited for courts to resolve. The jurisdiction of the CTTT should be limited to cases where the amount claimed does not exceed $500,000 or other (higher) figure prescribed by the regulations.

RECOMMENDATION 12.2

The Model Law should grant jurisdiction to the Consumer, Trader and Tenancy Tribunal to resolve matters arising out of its provisions. Its jurisdiction should, however, be limited to cases where the amount claimed does not exceed $500,000 or any other figure prescribed by the regulations.

12.24 Mediation has been defined as a process whereby a third party, from a position of apparent neutrality, assists disputants towards an outcome agreed between them.³⁴

Initially the mediator introduces her or himself to the parties and explains the nature of mediation, the procedure which will be followed and the ground rules. Generally there follows a period of information gathering in which the parties describe to the mediator the nature of the dispute and its context, including all the issues they consider important or relevant. They agree which issues will be dealt with in the mediation. Next, options for resolving those issues are considered and agreement on some or all of them may be reached. Methods of implementing the agreement are considered.³⁵

12.26 Mediation is also available through industry-based dispute resolution schemes, which are discussed below.

12.27 This section is, however, confined to mediation incorporated into the court and tribunal systems, particularly the concept of mandatory referral to mediation and its relevance to disputes involving guarantees.

12.28 Both the New South Wales Supreme and District Courts have for some time now had the power to refer matters to mediation. However, the Supreme Court in August 2000 was given the power to refer proceedings to mediation or neutral evaluation even without the consent of the parties.³⁹ The court will only refer parties to mediation where, in its opinion, mediation appears appropriate. The parties themselves may also, at any stage of the court proceedings, agree to mediation.⁴⁰

12.29 One of the main aims underlying the introduction of mandatory mediation in the court system is the reduction of costs of resolving disputes,⁴¹ an issue that Lovric and Millbank found to be of significant concern to parties in disputes involving guarantees.⁴² However, some commentators advise caution on mediation’s ability to reduce costs. Studies of court-annexed alternative dispute resolution schemes in the United States and United Kingdom have suggested that claims of reduced costs are not justified.⁴³ Some mediations require extensive preparation, the involvement of lawyers for legal advice, and the additional cost of the mediator’s fees.⁴⁴ Any agreement reached usually needs to be looked at by lawyers and approved by the court. Consequently, legal costs and court processes are not totally avoided.⁴⁵

12.30 There have been no studies on the cost implications of court-annexed mediation in New South Wales, including mandatory mediation. Hence, no conclusion can be made on whether or not this type of mediation has an impact on the costs of dispute resolution. Nevertheless, their potential for cost reduction may be surmised, especially where the disputing parties reach agreement relatively quickly, thus avoiding the cost of court proceedings. Moreover, since effective dispute resolution programs require adequate administrative support, it may be postulated that an increase in the caseload of these programs as a result of mandatory referral may allow the administration to be provided on a cost-effective basis.

12.31 Setting aside the issue of costs, court-annexed mandatory mediation may have several benefits. Because parties and their lawyers may be more accustomed to the litigation process, rates of voluntary usage are often low. Mandating the use of mediation may increase substantially the total number of cases settled through its use. The expanded use of mediation as a result of mandatory participation will serve to educate parties and their lawyers, which could result in an increased use of dispute resolution programs outside the court processes. In other words, it may encourage disputing parties and their lawyers to consider settlement even before litigation. Finally, court-annexed mandatory mediation institutionalises the many general advantages of alternative dispute resolution.⁴⁶

12.32 Parties to consumer guarantees may also benefit from the referral to mediation and neutral evaluation by the CTTT. The Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) empowers the CTTT to refer a matter arising in any proceedings for mediation or neutral evaluation if the Tribunal considers the circumstances appropriate.⁴⁷ It contains provisions that are intended to maximise the effectiveness of mediation and neutral evaluation:

• Section 60 provides that the costs of mediation or neutral evaluation, including the costs payable to the mediator or neutral evaluator, are payable by the CTTT. This provision addresses to some extent the criticism that mediation annexed to courts or tribunals may not reduce the parties’ costs. However, the regulations provide that, if the parties elect to employ their own mediator or neutral evaluator rather than rely on one arranged by the CTTT, they must pay the costs of the mediation or neutral evaluation in such proportions as they may agree among themselves or, failing agreement, in such manner as may be ordered by the Tribunal.⁴⁸
• Section 62 extends to mediation sessions and neutral evaluations the same privilege with regard to defamation as exists in relation to legal proceedings. It is aimed at encouraging a person who is taking part in mediation to speak freely so that the true facts may be ascertained.
• Section 63 prohibits a mediator or neutral evaluator from disclosing information obtained in connection with mediation or neutral evaluation except in very specific circumstances.⁴⁹ The assurance of secrecy is essential in establishing trust between the mediator and the parties. Otherwise, parties may refuse to reveal certain information that could be prejudicial in a subsequent trial.

INDUSTRY-BASED DISPUTE RESOLUTION SCHEMES

12.34 Banks, credit unions, building societies and other entities that are required to have a financial services licence and that provide financial services to retail clients are required by law to have a dispute resolution system in place to deal with complaints by their customers.⁵⁰ The required dispute resolution system must consist of two components: internal dispute resolution procedures that meet standards set by the Australian Securities and Investment Commission (“ASIC”); and membership in an external dispute resolution scheme approved by ASIC.⁵¹ As a consequence, most financial institutions have internal complaints mechanisms, which are governed by the relevant codes of practice.⁵² In addition, there has been a growth in industry-funded alternative dispute resolution and Ombudsman schemes. These systems now represent a significant part of the consumer protection regulatory framework and are intended to secure accessible justice for consumers. ASIC has, to date, approved several external dispute resolution schemes. The following are the most relevant to third party guarantees.

Banks

12.35 All banks that have adopted the Code of Banking Practice (“Banking Code”) use the Banking and Financial Services Ombudsman (“BFSO”), formerly called the Australian Banking Industry Ombudsman, to meet their obligations to provide an external dispute resolution process to their customers.⁵³ The BFSO has, according to its terms of reference, jurisdiction to consider disputes brought by an individual or a small business that either has received a financial service (for example, a loan) that is the subject of the complaint or has provided security, such as a guarantee, over the financial service. Its terms of reference expressly give it authority to resolve disputes concerning guarantees.⁵⁴ However, if the guarantee were given to secure moneys owing a business, the BFSO can only consider the dispute if the business satisfies its definition of small business, which is one having less than 100 full time equivalent employees, if a manufacturing business, or 20 full time equivalent employees if the business is of another nature.⁵⁵ The main limits on the types of disputes the BFSO can deal with are indicated by the following disqualifying matters:

• The dispute relates solely to a financial services provider’s commercial judgment in decisions about lending or security;
• The dispute relates to a practice or policy of the financial services provider, for example its general interest rate or fees and charges policy (however, the BFSO may consider a dispute regarding a fee or charge being incorrectly applied);
• The amount claimed exceeds $250,000;
• The subject matter of the dispute is, was or becomes the subject of proceedings in any court, tribunal, arbitrator or conciliation body or statutory Ombudsman, or is more appropriately dealt with by a court or other forum;
• The event to which the dispute relates occurred more than six years after the financial services provider was first notified of the matter;
• The subject matter of the dispute has been previously considered by the BFSO, unless there is new information; or
• The dispute is vexatious or frivolous.⁵⁶

12.37 More recent figures from the BFSO indicate that the number of cases relating to guarantees it handles is on the decline. The BFSO expects to see a further decline in disputes relating to guarantees because the amended Banking Code more thoroughly regulates guarantor transactions prior to the execution of the contract of guarantee.⁵⁹

Credit Unions and Building Societies

12.38 The Credit Union Dispute Resolution Centre (“CUDRC”) is a free and independent dispute resolution body set up by the Credit Union Services Corporation (Australia) Ltd (CUSCAL) in 1996 to assist participating credit unions and their members resolve disputes in a fair, timely and cost-effective manner. It is funded by participating credit unions, which currently number more than 150 or more than 80% of credit unions in Australia.

12.39 A significant number of credit unions have signed up to the Financial Cooperative Dispute Resolution Scheme (“FCDRS”). The FCDRS is intended to be the external dispute resolution scheme of all building societies and also replaces the Credit Union Ombudsman scheme. This scheme officially commenced operation on 1 April 2003, although many of the participating building societies and credit unions did not sign up until the early part of 2004.

12.40 The scope of and limitations on the jurisdictions of the CUDRC and the FCDRS are similar to those that apply to the BFSO.⁶⁰ Their terms of reference specifically cover guarantees made by an individual or a small business to secure money owed by an individual or a small business.⁶¹ In other words, like the BFSO, the CUDRC and FCDRS are authorised to deal with disputes concerning guarantees that relate to loans taken out for consumer or small business purposes. Their terms of reference define small business as one with fewer than 100 full-time (or equivalent) employees if it is engaged in the manufacture of goods, or one with fewer than 20 full-time (or equivalent), if engaged in any other type of business.⁶² The jurisdictions of the CUDRC and FCDRS have at least one significant difference from that of the BFSO: their monetary limit is lower at $100,000.⁶³

The Commission’s conclusions

12.41 Industry-based alternative dispute resolution schemes play a vital role in the broader financial regulatory system. They give financial services providers opportunity to improve their standards of conduct and cultivate good relations with their clients. For consumers, they provide a forum to resolve complaints that is quicker and more flexible than the formal, adversarial court system. The services provided by these schemes are free and therefore have the capacity of reducing the costs incurred by consumers in getting their complaints and disputes resolved. Consumer advocates generally agree that using these schemes is a good option. Yet very few matters relating to third party guarantees go to these schemes. For example, only 7% of guarantor survey respondents to the Lovric and Millbank study reported using the BFSO to assist them with their problems.⁶⁴

12.42 If these schemes are to be successful, there is a need to raise their profile in the public mind, make the potential users aware of them, and build a demand for their services. A publicity strategy could include an enduring multi-media campaign aimed at the general public. In addition, sustained educational intitiatives targeting consumers, such as those that have obtained or guaranteed loans from financial institutions, should be undertaken. The financial institutions themselves could be used to publicise the schemes. Banks, for example, should be encouraged to inform their clients about the BFSO services during the course of a transaction, but particularly when a dispute arises. Equally important, officers and employees of financial institutions should be educated about the effectiveness of these schemes in resolving disputes with their clients.

12.43 One problem with these three schemes in relation to third party guarantees is the low financial jurisdiction. The maximum amount in dispute that the ABIO can hear is $250,000⁶⁵ while the jurisdictional limitations of the CUDRC and FCDRS are even lower at $100,000. As a large portion of guarantees are secured by residential properties and are undertaken to support small business borrowing, these jurisdictional limits would exclude many third party guarantee matters. In addition, the fact that the commencement of litigation ousts the jurisdiction of these dispute resolution schemes means that even a higher monetary limit would not necessarily enhance its coverage of the field if lenders were unwilling to use it. There may be a need to encourage expansion of the jurisdictions of the BFSO, CUDRC and FCDRS to ensure that they do not result in the exclusion of a substantial number of disputes relating to third party guarantees.

12.44 The Commission’s concerns regarding publicity and jurisdictional limitations of the various industry-based dispute resolution schemes are matters the financial industry ought to examine in the course of the regular review of these schemes.

1. J Lovric and J Millbank, Darling, please sign this form: a report on the practice of third party guarantees in New South Wales (NSW Law Reform Commission and the University of Sydney, Research Report 11, 2003) at para 6.16. Almost a third of respondents to the study’s survey of guarantors reported that they had paid the loan back in part or full.

2. See Lovric and Millbank ch 7.

3. Lovric and Millbank at para 7.82.

4. Conley v Commonwealth Bank of Australia [2000] NSWCA 101 at para 102.

5. Lovric and Millbank at para 7.8-7.10, 7.81.

6. Lovric and Millbank at para 7.11.

7. Lovric and Millbank at para 6.52.

8. See H Astor and C M Chinkin, Dispute Resolution in Australia (Butterworths, Sydney, 1992) ch 4.

9. D McGill and L Willmont, Annotated Consumer Credit Code (LBC Information Services, Pyrmont NSW, 1999) at 607.

10. See para 10.15-10.17.

11. Consumer Credit (New South Wales) Code s 87(2), (3) and (5).

12. Consumer Credit (New South Wales) Code s 89.

13. (1998) ASC ¶155-022.

14. (1998) ASC ¶155-020.

15. Consumer Credit (New South Wales) Code s 86(2).

16. Lovric and Millbank at para 2.20.

17. Lovric and Millbank at para 2.20 note 28.

18. Lovric and Millbank at para 2.20 note 29.

19. It was established pursuant to the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW).

20. Consumer Credit (New South Wales) Act 1995 s 8.

21. Consumer Credit (New South Wales) Code s 70, 71.

22. Consumer Credit (New South Wales) Code s 72.

23. The Consumer Credit (New South Wales) Code s 8(1)(a) confers exclusive jurisdiction on the Tribunal in the case of any jurisdiction prescribed by the regulations for the purposes of this paragraph. The jurisdiction prescribed by the regulations for the purposes of section 8 (1)(a) of the Act is: (a) any jurisdiction under section 69, 83 (1), 89, 100–114 or 162 of the Code, and (b) any jurisdiction under section 36 (6) of the Code in relation to an application made by a credit provider: Consumer Credit (New South Wales) Special Provisions Regulation 2002 (NSW) cl 5.

24. Consumer Credit (New South Wales) Act 1995 s 8. See also Consumer, Trader and Tenancy Tribunal Act 2001(NSW) s 23.

25. Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) s 28.

26. Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) s 28, 39.

27. Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) s 53.

28. Lovric and Millbank at para 6.43.

29. Communication from Mr Graeme Durie, Senior Member of the CTTT, 22 August 2002.

30. (2001) ASC ¶155-045.

31. The Supreme Court held that the Consumer Credit Code did not apply because the purpose of the loan did not come within s 6(1)(b). Both the court and the tribunal referred to the Victorian Supreme Court decision in Linkenholt Pty Ltd v Quirk (2000) ASC ¶155-040. However while the tribunal distinguished that case, the Supreme Court relied upon it.

32. See generally Lovric and Millbank ch 2.

33. Lovric and Millbank at para 6.47.

34. H Astor and C M Chinkin, Dispute Resolution in Australia (Butterworths, Sydney, 1992) at 60 citing J Folberg and A Taylor, Mediation: A Comprehensive Guide to Resolving Conflict Without Litigation (San Francisco, Jossey Bass, 1984) at 7.

35. H Astor and C M Chinkin, Dispute Resolution in Australia (Butterworths, Sydney, 1992) at 96.

36. Farm Debt Mediation Act 1994 (NSW) s 11(1).

37. Farm Debt Mediation Act 1994 (NSW) s 9(1).

38. Farm Debt Mediation Act 1994 (NSW) s 11(1).

39. This was accomplished through section 110K of the Supreme Court Act 1970 (NSW), which provided that, if it considers the circumstances appropriate, the court may, by order, refer any proceedings, or part of any proceedings, before it for mediation or neutral evaluation, and may do so either with or without the consent of the parties to the proceedings concerned. This rule is now contained in section 26 of the Civil Procedure Act 2005 (NSW). For a commentary on the Supreme Court’s power to order mandatory mediation, see P Venus, “Advantages in Mandatory Mediation” (2003) 41 Law Society Journal 46.

40. Civil Procedure Act 2005 (NSW) s 34.

41. D Spencer, “Mandatory Mediation and Neutral Evaluation: A Reality in New South Wales” (2000) 11 Australian Dispute Resolution Journal 237 at 238-242 citing the Parliamentary debate on the amendment to the Supreme Court Act 1970 (NSW).

42. Lovric and Millbank at para 7.22-7.30.

43. See H Astor and C M Chinkin, Dispute Resolution in Australia (Butterworths, Sydney, 1992) at 174.

44. L Boulle, Mediation: Principles, Process, Practice (Butterworths, Sydney, 1992) at 53.

45. R Alexander, “Family Mediation Under the Microscope” (1999) 1 Australian Dispute Resolution Journal 18 at 21.

46. M Dawson, “Non-Consensual Alternative Dispute Resolution: Pros and Cons” (1993) 4 Australian Dispute Resolution Journal 173 at 175.

47. Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) s 59. The Act defines mediation as a structured negotiation process in which the mediator, as a neutral and independent party, assists the parties to a dispute to achieve their own resolution of the dispute. Neutral evaluation means a process of evaluation of a dispute in which the neutral evaluator seeks to identify and reduce the issues of fact and law that are in dispute. The neutral evaluator’s role includes assessing the relative strengths and weaknesses of each party’s case and offering an opinion as to the likely outcome of the proceedings: Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) s 57.

48. Consumer, Trader and Tenancy Tribunal Regulation 2002 (NSW) s 21.

49. These are: (a) with the consent of the person to whom the information relates, (b) in connection with the administration or execution of this Division, (c) if there are reasonable grounds to believe that the disclosure is necessary to prevent or minimise the danger of injury to any person or damage to any property, (d) if the disclosure is reasonably required for the purpose of referring any party or parties in a mediation session or neutral evaluation session to any person, agency, organisation or other body and the disclosure is made with the consent of the parties in the mediation session or neutral evaluation session for the purpose of aiding in the resolution of a dispute between those parties or assisting the parties in any other manner, (e) in accordance with a requirement imposed by or under a law of the State (other than a requirement imposed by a subpoena or other compulsory process) or the Commonwealth: Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) s 63.

50. Corporations Act 2001 (Cth) s 912A(1)(g).

51. Corporations Act 2001 (Cth) s 912A(2).

52. Code of Banking Practice (2004) cl 35; Credit Union Code of Practice (1994) cl 20.1-20.3.

53. Lovric and Millbank at para 6.29.

54. Terms of Reference of the Banking and Financial Services Ombudsman Limited s 2.5.

55. Terms of Reference of the Banking and Financial Services Ombudsman Limited s 15.1

56. Terms of Reference of the Banking and Financial Services Ombudsman Limited s 5.

57. Australian Banking Industry Ombudsman, Report on Relationship Debt, Bulletin No 22, September 1999 at 1.

58. Australian Banking Industry Ombudsman, Report on Relationship Debt, Bulletin No 22, September 1999 at 3.

59. See Lovric and Millbank at para 6.36-6.37.

60. See Credit Union Dispute Resolution Centre Pty Limited, Terms of Reference for the Credit Union Dispute Manager Under the Dispute Resolution Scheme (2003) s 4; Financial Co-operative Dispute Resolution Scheme Terms of Reference at 3-5.

61. Credit Union Dispute Resolution Centre Pty Limited, Terms of Reference for the Credit Union Dispute Manager Under the Dispute Resolution Scheme (2003) s 2.1 (definition of “member”); Financial Co-operative Dispute Resolution Scheme Terms of Reference at 2-3; Financial Co-operative Dispute Resolution Scheme Terms of Reference at 9-10 (definition of “financial service”).

62. Credit Union Dispute Resolution Centre Pty Limited, Terms of Reference for the Credit Union Dispute Manager Under the Dispute Resolution Scheme (2003) s 2.1; Financial Co-operative Dispute Resolution Scheme Terms of Reference at 3; Financial Co-operative Dispute Resolution Scheme Terms of Reference at 11.

63. Credit Union Dispute Resolution Centre Pty Limited, Terms of Reference for the Credit Union Dispute Manager Under the Dispute Resolution Scheme (2003) s 4; Financial Co-operative Dispute Resolution Scheme Terms of Reference at 4-5.

64. Lovric and Millbank at para 6.33-6.34.

65. Prior to 1 December 2004, the monetary limit on the BFSO’s jurisdiction was only $150,000.