In Make It Mine Finance Pty Ltd, in the matter of Make It Mine Finance Pty Ltd [2015] FCA 393 the Federal Court decided that admitted contraventions of the Credit Act and Credit Code by Make It Mine Finance Pty Ltd (“MIM”) in respect of more than 24,000 credit contracts were four separate contraventions of different key requirements rather than one contravention of a key requirement of a similar kind.

The application was made by the licensee itself for a declaration of the contraventions and to fix the penalty under section 116 of the Credit Code. ASIC intervened.

If the application is made by a credit provider the effect of section 116 is to impose a limit on the penalty to $500,000 for all contraventions of a key requirement provision, even though each contravention may have been committed multiple times throughout Australia. But if multiple key requirement provisions have been contravened, the $500,000 maximum penalty applies to each class of contracts which breaches each such separate key requirement.

The company sold computers and household goods to consumers under a contract of sale by instalments (although they were called a “lease”).

The breaches were:

• failing to disclose the cash price of goods;
• failing to disclose the annual percentage rate under the contract;
• failing to disclose the method of calculation of interest charged under the contract; and
• failing to disclose the total amount of interest charged under the contract.

MIM contended that the Court should treat all of its breaches as one, or at most, two, contraventions of the key requirement provisions, based upon its interpretation of s 113(5) of the Credit Code. ASIC disagreed.

Section 113(5) states: “The court must, for the purposes of determining an application for an order under this Division or the amount of a penalty, treat a contravention of a key requirement that occurs merely because of another contravention of a key requirement as being a contravention of the same kind. If a provision referred to in section 111 contains several requirements, the court must treat contraventions of more than one of those requirements as a single contravention of the one key requirement for the purposes of determining the amount of a penalty.”

ASIC contended that the purpose of the relevant provisions is to protect consumers and that they should be interpreted in that light.

Justice Beach preferred an interpretation of the text itself.

Justice Beach concluded:

“Because of MIM’s mischaracterisation and misconception of the nature of the contracts, it did not disclose any concepts referring to interest rates, annual percentage rates or total interest charged. This was not a case of one omission leading to another omission, but a complete absence of disclosure of all such matters. On the evidence, it is not possible for me to identify the general method and process of charging for the cost of credit so that I could then say that one omission was brought about merely because of another.”

He decided that there were four separate contraventions of key requirements to which the maximum prescribed penalty is to be applied to each.

The question of the penalty to be imposed will be determined in a penalty hearing later this year.

Background facts
It was not disputed that:

• MIM entered into 1,830 credit contracts in the period 1 July 2010 to 31 December 2010 without being registered.
• MIM entered into 1,784 credit contracts in the period 1 January 2011 to 20 April 2011 without being registered.
• From the time that it received an Australian Credit Licence (21 April 2011) until 1 March 2013, MIM entered into 20,763 individual credit contracts for which MIM did not comply with the responsible lending requirements. In respect of the responsible lending provisions Justice Beach rejected ASIC’s argument of multiple contraventions. He said “in my view ASIC’s approach is infected with duplicity. On the penalty phase I will treat there in substance to be:
  (a) one contravention of s 128(c) in relation to such credit contracts; and
  (b) one contravention of s 128(d) in relation to such credit contracts (as illuminated by the deficiencies referred to in s 130)….”
• in respect of 24,377 credit contracts entered into in the period 1 July 2010 to 1 March 2013 MIM:
  (a) contravened the key requirement (as defined in s 111(1)(a)) identified in terms of s 17(3);
  (b) contravened the key requirement (as defined in s 111(1)(b)) identified in terms of s 17(4);
  (c) contravened the key requirement (as defined in s 111(1)(c)) identified in terms of s 17(5); and
  (d) contravened the key requirement (as defined in s 111(1)(d)) identified in terms of s 17(6).

In respect of the key requirement contraventions Justice Beach decided MIM committed 4 strictly separate contraventions.