Australia Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Limited

1. [1]

   BELL CJ AND MEAGHER JA: The Australian Financial Complaints Authority Ltd (AFCA) is a company limited by guarantee and is the operator of the “AFCA scheme”, which is a financial services external dispute resolution scheme authorised under s 1050 of the Corporations Act 2001 (Cth) (the Act).

2. [2]

   Section 1051(4) of the Act specifies various operational requirements for the scheme which include that, pursuant to s 912A(1)(g)(i), a financial services licensee that provides financial services to persons as retail clients is required to have a dispute resolution system complying with s 912A(2) of the Act, which relevantly requires membership of the AFCA scheme.

3. [3]

   AFCA’s Constitution cl 3.2(g) provides that each member of AFCA agrees to be bound by the AFCA Complaint Resolution Scheme Rules (AFCA Rules). Once a complaint is made to AFCA, the AFCA Rules form a binding tripartite contract between the complainant, AFCA and the member the subject of the complaint (referred to in the Rules as the “Financial Firm”): see AFCA Constitution, cl 12.1(d); AFCA Rules, r A.1.2. This in turn has ramifications for the bases upon which any determination ultimately made by AFCA can be challenged in Court proceedings, as shall be explained below.

4. [4]

   Section B of the AFCA Rules, which are set out in further detail later in these reasons, provides the requirements that must be met in order for AFCA to be able to consider a complaint that is submitted to it by a person eligible to make a complaint. Section C and rr C.1.2 – C.1.6 specify categories of complaints that AFCA must exclude unless all parties to the complaint and AFCA agree to AFCA considering the complaint.

5. [5]

   Sections B and C of the AFCA Rules collectively may be described as going to AFCA’s “jurisdiction” to resolve complaints by eligible persons about AFCA members. Those Rules provide that a “complaint is within AFCA’s jurisdiction provided it meets the requirements (as set out in section B) unless it is outside jurisdiction (as set out in section C)”.

6. [6]

   AFCA made a determination in relation to a complaint (or, more correctly, two related but separate complaints) against Australia Capital Financial Management Pty Ltd (ACFM or the Appellant) which is an AFCA member (the Determination). The relevant outcome of the Determination for present purposes was as follows:

7. [7]

   Once a complaint is made to AFCA, its Rules form a contract between the complainant, AFCA and the Financial Firm. AFCA’s determination of the complaint is “final”, and binding on both parties if accepted by the complainant within 30 days of receipt (r A.15.3).

8. [8]

   Notwithstanding the complainant’s right to elect not to accept AFCA’s determination, upon the submission of a complaint the parties in dispute are bound in contract to observe the Rules and entitled to require that AFCA proceed in accordance with them: Mickovski v Financial Ombudsman Service Ltd (2012) 36 VR 456; [2012] VSCA 185 at [35] (Mickovski); and Cromwell Property Securities Ltd v Financial Ombudsman Service Ltd [2014] VSCA 179; (2014) 288 FLR 374 at [78], [87] (Cromwell). See also Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 at 335-336 (McHugh JA).

9. [9]

   As Ball J (the primary judge) held (Australian Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Limited [2021] NSWSC 1577 (the primary judgment or PJ)) at [4]:

10. [10]

    By their agreement that AFCA’s determination is to be final, the parties accept that the “determination will not be subject to review unless affected by fraud or dishonesty or lack of good faith or (by analogy with jurisdictional error) unless it is otherwise apparent that the determination has not been carried out in accordance with the agreement” (Mickovski at [38] and fn 26, [41]). That will be the case if the outcome is one that no reasonable decision-maker could have reached. See also Cromwell at [86]-[89], [93], [256].

11. [11]

    With one exception, the primary judge proceeded on this basis (PJ [6]), noting also at PJ [7]:

12. [12]

    That exception relates to the determination of two matters with respect to the scope of AFCA’s authority to determine Mr Bai’s and Ms Yang’s complaints. In Mickovski the decision-maker’s terms of reference excluded from its authority any complaint in which the complainant “knew or should reasonably have known of all the relevant facts” more than six years before it was first notified (cl 14.1(p)). The decision-maker ruled that the exclusion was engaged and did not determine Mr Mickovski’s complaint. The question was whether that ruling was in accordance with the parties’ agreement, which provided for the decision to be made by the “panel chair” (at [41]). The Court held that although there was an error in the panel chair’s reasons for concluding that the exclusion had been engaged, he did not “misconceive the task which he was required to undertake”, having made an error “in the execution of his decision-making responsibility” (at [50]-[51]). In other words, although there was an error in arriving at the relevant decision, the decision-maker had decided the question which he was authorised to decide so that the parties were bound by that decision. The significance of Mickovski in this context is that the Court did not apply an objective or correctness standard of review to this decision concerning the scope of the decision-maker’s authority to deal with Mr Mickovski’s complaint.

13. [13]

    ACFM made several challenges to the Determination in the proceedings before the primary judge. They included the challenges set out in [73] below. All were in substance unsuccessful and the proceedings were dismissed with costs. It is from that decision that this appeal is brought. The First Respondent to the appeal is AFCA which essentially adopted a role akin to that of an amicus curiae, making submissions in relation to aspects of the Rules but not trespassing into the legal merits or otherwise of the dispute between the Complainants and ACFM. It had adopted a similar role at first instance.

14. [14]

    Before the primary judge ACFM challenged the scope of AFCA’s authority (or jurisdiction) to resolve the Complainants’ complaint on two bases. One concerned a provision which excluded the consideration of certain complaints if their value exceeded $1 million (r C.1.2(e)), and the other a provision limiting the amount which might be awarded as compensation for particular complaints to $1 million (rr D.3.1 and D.4.1). The primary judge held that these challenges were to be resolved by a correctness standard which had regard to the proper construction of the Rules and the facts as they were before the reviewing Court (PJ [36]). In doing so his Honour rejected the Complainants’ submission that these matters as decided by AFCA could only be reviewed by the standard described in Mickovski at [38], which included Wednesbury unreasonableness.

15. [15]

    Before this Court ACFM challenges the correctness of the primary judge’s conclusions but not the standard of review applied; and the Complainants do not contend that his Honour’s conclusions with respect to these matters should be affirmed because, applying the standard of review in Mickovski, each was decided in accordance with AFCA’s Rules, and therefore the parties’ agreement.

16. [16]

    As decided by the primary judge each of these questions turned, at least in part, on the construction of the relevant rule or rules. As to r C.1.2(e), the primary judge held that its language directed attention to the value of the claim which was the subject of the complaint at the time that complaint was made (PJ [43]). As to r C.1.2(e)(iii), the primary judge held that the time for the complaint to answer the description in sub-par (iii) was when the complaint was made (PJ [39]). Finally, as to rr D.3.1 and D.4.1, and treating Mr Bai and Ms Yang as having made separate complaints, his Honour held that any estimate of interest on Mr Bai’s underlying liability as a guarantor should not be included when applying the $1 million cap because it could not readily be calculated (PJ [45]).

17. [17]

    The reasons which follow address ACFM’s challenges to these “jurisdictional” matters by reference to the standard of review adopted by the primary judge and whether, accepting that was the correct standard, his Honour erred in applying it. Approaching those questions on the assumption that the parties’ agreement required the application of that standard, we agree with his Honour’s conclusions that AFCA’s determinations did not depart from that agreement. If in respect of these matters that agreement required the application of the standard of review applied in Mickovski at [38], it nevertheless follows from his Honour’s conclusions as summarised above that AFCA’s decisions on the same questions were open to a reasonable decision-maker and made in good faith. This follows principally because the resolution of each of these matters turned on the construction of the Rules, about which there is no contest as between the primary judge and AFCA.

Background to the dispute

1. [18]

   The factual background to the dispute, which was largely (although not entirely) uncontroversial, was set out with clarity at PJ [8]–[18]. Efficiency warrants the reproduction of that statement of background with only minor additions.

2. [19]

   Prior to 2014, the Second and Third Respondents to this appeal, Mr Bai and Ms Yang (collectively the Complainants), carried on a business of importing sheepskins into China. In 2014, they agreed in conjunction with Mr David Lee to establish a sheepskin export business in Australia which was to be conducted through an Australian company, Australian Sheepskin & Hide Pty Ltd (ASSH) which is now in liquidation. Both Mr Lee and Ms Yang became directors of ASSH and each acquired 40 of the 120 issued shares in the company.

3. [20]

   Prior to that time, Mr Bai and Ms Yang had acquired two adjacent properties at Point Cook, Victoria (Property 21 and Property 23). Mr Bai and Ms Yang lived in Property 21 when they were in Australia. That property was acquired by Mr Bai alone.

4. [21]

   On 16 May 2014, ACFM as lender, ASSH as borrower and Mr Lee, Ms Yang and Mr Bai as guarantors entered into a loan agreement by which ACFM agreed to lend ASSH an amount of up to $2 million in connection with ASSH’s business and Mr Lee, Ms Yang and Mr Bai agreed to guarantee ASSH’s obligations under the agreement. At the same time, Mr Bai and Ms Yang granted mortgages over Property 21 and Property 23, respectively.

5. [22]

   Clause 15 of the loan agreement provided:

6. [23]

   Item 6 of the Schedule listed the following as “Collateral Security”:

7. [24]

   The loan agreement and associated documents (including the deed of guarantee and indemnity) were signed by Mr Bai and Mr Lee. Mr Lee signed on behalf of Ms Yang pursuant to an authority given to him by Ms Yang that was in effect between 16 May 2014 and 20 June 2014, while Ms Yang was in China. Ms Yang signed the documents herself in June 2014 on her return to Australia, by which time ASSH had drawn down $390,000 under the loan.

8. [25]

   Between 18 June 2014 and 29 August 2014, ASSH drew down a further $800,000 under the loan.

9. [26]

   It appears that by about July 2014 ASSH had run into financial difficulties. On 15 July 2014, ACFM placed a caveat on the title of Property 23. Contracts for the sale of that property for a price of $625,000 were exchanged on 26 August 2014. On settlement of the sale, ACFM received $254,646.10 from the sale proceeds.

10. [27]

    On 7 November 2014, ACFM sent the first demand to ASSH requiring it to rectify various breaches of the loan agreement by 14 November 2014, including the failure to repay a drawdown of $271,000 made on 28 July 2014.

11. [28]

    On 3 and 4 February 2015, ACFM commenced proceedings in the New South Wales District Court against Mr Bai and Ms Yang to recover the amount of $742,800 owing under the loan agreement together with interest and costs. On 7 July 2015, Mr Bai and Ms Yang filed cross-claims seeking to have the loan agreement and guarantees declared void under the Contracts Review Act 1980 (NSW) and the general law.

12. [29]

    On 14 March 2016, Mr Bai and Ms Yang departed Australia voluntarily following an unsuccessful appeal to the Administrative Appeals Tribunal against the Minister’s refusal to grant Ms Yang a Business Owner (Residence) visa.

13. [30]

    The District Court proceedings were due to be heard commencing on 6 June 2016. There was no appearance by Mr Bai and Ms Yang, as a result of which judgment in favour of ACFM was given against each of them in the amount of $738,876.39.

14. [31]

    On 31 October 2018, the District Court made orders by consent setting aside the judgment given on 6 June 2016 and ordered that Mr Bai and Ms Yang pay ACFM’s costs.

Background to AFCA proceedings

1. [32]

   As with the general background to the parties’ dispute, it is convenient and efficient to adopt with some additions the primary judge’s statement of the circumstances relating to the making and disposition of the complaint.

2. [33]

   Before proceeding to provide that description and at this point in the narrative, it is necessary to identify key provisions of the AFCA Rules so that some of the principal issues which are alive on the current appeal may be seen in their procedural context.

3. [34]

   As previously noted, the AFCA Rules operate as a tripartite contract of dispute resolution between AFCA, the Financial Firm (here ACFM) and the Complainants. The Rules are divided into five sections: A – E. As is noted in r A.4.4, Section C sets out certain types of complaints that AFCA must exclude and some situations in which AFCA can decide to exclude a complaint.

4. [35]

   Under r A.2.1(c), AFCA is required to consider complaints submitted to it in a way that is:

5. [36]

   Under r A.10.2, AFCA must provide the parties to the complaint with access to relevant information and an opportunity to make submissions.

6. [37]

   Under r A.12.1, AFCA may, after collecting relevant information and obtaining submissions from the parties, choose to provide the parties with a preliminary assessment of the complaint. If the financial services firm which is the object of the complaint fails to accept AFCA's preliminary assessment within the timeframe specified by AFCA, the complaint must proceed to a determination: r A.12.3.

7. [38]

   When determining a complaint at the request of a party, the AFCA decision maker must consider the parties’ reasons if any for disagreeing with the preliminary assessment, but it is not limited to those reasons: r A.12.5.

8. [39]

   Rule A.14.2 provides that:

9. [40]

   An AFCA decision maker is not bound by the rules of evidence or previous AFCA or Predecessor Schemes decisions: r A.14.3. A determination by AFCA is “final” but only binding on the complainant(s) if accepted within 30 days of receipt of the determination: r A.15.3.

10. [41]

    Rule C.1.1 provides that rules C.1.2 to C.1.6 specify categories of complaints that AFCA must exclude unless all parties to the complaint and AFCA agree to AFCA considering the complaint. In this context, r A.4.7 provides that “[d]espite other rules, AFCA may consider a complaint if all parties to the complaint consent in writing and AFCA agrees to this.”

11. [42]

    Under r C.1.2(e), AFCA must exclude "[a] complaint where the value of the Complainant's claim when the complaint is submitted to AFCA exceeds $1 million …". However, that jurisdictional limit does not apply relevantly to "a complaint to set aside a guarantee supported by security over the guarantor's primary place of residence": r C.1.2(e)(iii).

12. [43]

    Rule C.1.3(b) provides in relation to “credit complaints” that AFCA must exclude:

13. [44]

    Rule C.2.1 states that AFCA may in its discretion exclude a complaint “if AFCA considers this course of action is appropriate”. The rule goes on to note that “AFCA will not exercise its discretion to exclude a complaint lightly. The discretion will only be used in cases where there are compelling reasons for deciding that AFCA should not consider the complaint.”

14. [45]

    Rule C.2.2 provides examples of circumstances where AFCA may consider excluding a complaint which include:

15. [46]

    Section D of the AFCA Rules is headed “Remedies” and r A.14.4 provides that “any remedy must be within AFCA’s jurisdiction as set out in Section D.” Rule D.3.1 provides:

16. [47]

    Rule D.4 includes a table which sets out the maximum amounts that AFCA may award for complaints, not including costs and interest. The relevant limits stated in the table in relation to a credit facility complaint by a borrower are $1 million in the case of a small business loan, and an unlimited amount where the claim is "by a guarantor to set aside a guarantee supported by security over … the guarantor's principal place of residence …". Otherwise the limit for a guarantor of a small business loan is also $1 million.

17. [48]

    On 15 February 2019, Mr Bai and Ms Yang entered into a litigation funding agreement with Mr Jeffrey Lennon and borrowed $150,000 for costs relating to the District Court proceedings. Subsequently, Mr Lennon lodged a caveat over Property 21.

18. [49]

    On 3 March 2019, Mr Lennon purported to lodge a complaint with AFCA against ACFM. Originally, the complaint was lodged in Mr Lennon’s own name and named Mr Bai as the other complainant. The Complaint was set out electronically on a standard form prepared by AFCA for the making of complaints. It contained various dialogue boxes for the complainant to supply information about the complaint and to answer certain questions.

19. [50]

    In response to the question on the standardised AFCA Complaint Form “What outcome are you seeking”, it was stated:

20. [51]

    AFCA apparently responded that it had no jurisdiction to hear a complaint by Mr Lennon. Ultimately, however, he was permitted to pursue the complaint on behalf of Mr Bai relying on an “Agent Authority Form” dated 12 April 2019 signed by Mr Bai and Ms Yang as complainants. The Agent Authority Form was accompanied by a 17 page document entitled “A Story to Tell” which elaborated on the complaint (although it also contained much information agitating Mr Lennon’s separate grievances with the principal of ACFM, Mr Owen Chen, as opposed to complaints specific to the Complainants’ engagement with that company).

21. [52]

    On the final page of the “Story to Tell” Document, under a bold sub-heading “And the loss personally for Bai & Yang which continues to escalate”, was written the following:

22. [53]

    On 3 May 2019, Mr Taylor of AFCA wrote to ACFM expressing the view that the complaint against ACFM was “now within our jurisdiction”. This followed AFCA’s receipt of the Agent Authority Form. Mr Taylor wrote:

23. [54]

    On 29 May 2019, ACFM inquired of AFCA whether it was willing to exclude the complaint or consent to ACFM continuing with the District Court proceedings. In its email, ACFM noted that AFCA had the discretion to exclude complaints pursuant to r C.2 of the AFCA Rules and developed arguments to the effect that there was a more appropriate place to deal with the complaint, namely the District Court, pursuant to r C.2.2(a); that the complaint was frivolous, vexatious, misconceived or lacking substance pursuant to r C.2.2(d); and that the complainant was represented or assisted by an agent who may receive remuneration for his service and who was engaging in inappropriate conduct which was not in the best interests of the Complainants, pursuant to r C.2.2(g). Each of these discretionary grounds upon which AFCA may have chosen to exclude the complaint within its rules was further elaborated.

24. [55]

    On 3 June 2019, AFCA informed ACFM that it had decided to reject ACFM’s application for AFCA to exclude the complaint and that it did not consent to a continuation of the District Court proceedings. Mr Ben Grant, a case analyst at AFCA, wrote to ACFM purporting to explain why each of the AFCA Rules relied upon by ACFM was not applicable in the matter. Mr Grant noted that:

25. [56]

    By a further email of 4 June 2019 to Mr Lennon, Mr Grant of AFCA noted that AFCA was only considering whether ACFM acted inappropriately or unconscionably in taking a guarantee from Mr Bai and Ms Yang and, as a result, whether the guarantee provided by Mr Bai and Ms Yang was enforceable.

26. [57]

    On 5 July 2019, AFCA contacted officers of ACFM to discuss the complaint and to request ACFM’s credit policies. Significant documentation was supplied on 29 July 2019 including documentation in relation to the District Court proceedings. The covering email contained the submission that:

27. [58]

    During the second half of 2019, ACFM provided further documentation to AFCA, as did Mr Lennon on behalf of the Claimants. This material included the relevant agreements, affidavits sworn in the District Court proceedings (including by Mr Bai and Ms Yang) and the Court Book prepared for the purpose of those proceedings. In that period and through early 2020, AFCA continued its inquiries, directing detailed questions to the parties as its investigation proceeded, including in relation to the circumstances surrounding the execution of loan documentation and guarantees.

28. [59]

    On 9 April 2020, AFCA issued its preliminary assessment (titled “Recommendation”) and requested a response within 30 days. AFCA summarised its “key findings” in these terms:

29. [60]

    AFCA concluded that “[b]ased on the information provided, the lender did not act appropriately when it provided the loan”. It then set out the relief that it proposed to give, which substantially corresponds to the relief set out in its final determination.

30. [61]

    On 26 May 2020, ACFM’s then solicitors, Arnold Bloch Leibler, made extensive submissions in relation to AFCA’s preliminary finding. They also supplied AFCA with a statutory declaration made by Mr Lee setting out the circumstances in which he and Mr Bai executed the loan documents. Mr Lee’s account differed from that given by Mr Bai.

31. [62]

    Following further submissions on 15 and 24 July 2020 by its new solicitors, Mills Oakley, that the complaint should be excluded under mandatory and discretionary grounds (with a response by solicitors then acting for the Complainants), on 29 October 2020, AFCA rejected the jurisdictional objections. It is not necessary to go into the detail of AFCA’s rejection of these jurisdictional objections. In issuing its ruling, AFCA indicated that any further submission in relation to jurisdiction would be dealt with in its final determination. In the event, ACFM submitted a largely repetitive further objection on 6 November 2020. In that letter, Mills Oakley stated on behalf of ACFM that:

32. [63]

    AFCA made its Determination on 17 February 2021.

33. [64]

    The Determination again addressed the various jurisdictional objections which had been raised by ACFM.

34. [65]

    AFCA set out its “key findings” in these terms:

35. [66]

    AFCA’s reasons for reaching that conclusion were extensive. Relevantly, AFCA said:

36. [67]

    AFCA noted that the documents were in English and that Mr Bai and Ms Yang did not speak or read English. It considered that that conclusion was corroborated by the fact that ACFM provided Mr Bai and Ms Yang with a loan summary, a loan security summary and a loan draw down summary in Mandarin. In AFCA’s view, that would have been unnecessary if Mr Bai and Ms Yang understood written English.

37. [68]

    AFCA concluded that Ms Yang was not offered the opportunity to obtain legal advice and did not understand the purport and effect of the guarantee. In reaching the first of those conclusions, it rejected evidence given by Mr Chen, the sole director of ACFM, in the District Court proceedings that at the time Ms Yang executed the guarantee he and she had a conversation in words to the following effect:

38. [69]

    AFCA gave the following reasons for doing so:

39. [70]

    On the question whether Ms Yang understood the guarantee, AFCA reached the following conclusion:

40. [71]

    AFCA reached similar conclusions in relation to the guarantee given by Mr Bai. It observed that in giving the guarantee he was a volunteer with the result that the standard of conduct required of ACFM was particularly stringent. On the question whether Mr Bai was afforded time to obtain legal advice, it said:

41. [72]

    On the question whether the mortgages granted by Mr Bai were unenforceable, AFCA said:

42. [73]

    ACFM challenged AFCA’s Determination on a number of grounds including that:

    1. (1)

       AFCA lacked jurisdiction to hear the complaint because it exceeded the $1 million jurisdictional limit in the AFCA Rules and did not involve an application to set aside a guarantee supported by security over the guarantors’ primary place of residence (which would have extended the jurisdiction);

    2. (2)

       AFCA did not accord ACFM procedural fairness in concluding that Mr Bai and Ms Yang did not understand the purport and effect of the guarantees;

    3. (3)

       AFCA’s conclusion that the mortgages were unenforceable either amounted to a denial of procedural fairness or was so unreasonable that no reasonable decision-maker would have reached it. That is said to be so because the mortgages were independent securities;

    4. (4)

       AFCA’s conclusion that ACFM must repay the $254,646.16 was so unreasonable that no reasonable decision-maker could reach it because the payment was a voluntary one; and

    5. (5)

       AFCA’s conclusion that Mr Bai and Ms Yang were entitled to recover certain legal costs and non-financial compensation was so unreasonable that no reasonable decision-maker could reach it.

The primary judgment

1. [74]

   Not all of the issues dealt with at first instance carried through to the appeal. The matters which did, as dealt with at first instance, are summarised below. The first ground raised in the proceedings at first instance was that AFCA in fact had no jurisdiction to determine the complaint before it. The primary judge noted that the question of jurisdiction raised two issues: first, whether the complaint involved an application to set aside a guarantee supported by security over Mr Bai and Ms Yang’s principal or primary place of residence (which AFCA had held that it did, in which case, there was no jurisdictional limit); the second, if it did not, whether the claim was for more than the jurisdictional limit of $1 million imposed by r C.1.2(e).

2. [75]

   As we have already noted, the primary judge approached these “jurisdictional” questions on the basis that whether AFCA’s decisions were within the terms of the parties’ agreement was “a question for the Court, not a question for AFCA”, and one to be resolved “on the facts before the Court, not on what was before AFCA” (PJ [36]). As to the first of the issues raised by the question of jurisdiction, the primary judge disagreed with AFCA, holding that the question whether a property is the applicant’s principal or primary place of residence is to be determined at the time the claim is made and that, as the complaint was made on 3 March 2019, almost three years after Mr Bai and Ms Yang left Australia, neither of the Complainants had ‘resided’ in Australia, let alone at the relevant mortgaged property, since the time of their departure.

3. [76]

   As to the second of those issues, the primary judge held (at PJ [43]) that:

4. [77]

   His Honour went on to note that Section D of the AFCA Rules placed caps on the quantum of compensation that could ultimately be awarded by AFCA and noted ACFM’s submission that “the value of the remedies given in this case is at least $1.28 million, consisting of the value of the outstanding loan as at 31 January 2019 of $938,051 together with the order that ACFM repay the sum of $254,646.” His Honour rejected this submission, holding at PJ [45]–[46] that:

5. [78]

   On the question of procedural fairness, a number of matters were raised by ACFM before the primary judge. One was that it was denied procedural fairness because AFCA failed to adopt appropriate procedures to resolve the conflicts in evidence between Mr Bai and Ms Yang, on the one hand, and Mr Chen and Mr Lee, on the other hand. It was contended that AFCA did not adequately test Mr Bai and Ms Yang’s unconscionability claims and their claims that they did not understand the guarantees that they signed.

6. [79]

   The primary judge pointed out that AFCA was not required to conduct a hearing, although it was required to give the parties an opportunity to make submissions, which it did in a number of respects. Moreover, it provided a preliminary determination and entertained further submissions after this preliminary determination was provided. In holding that there was no denial of procedural fairness, the primary judge observed at PJ [51] that:

7. [80]

   His Honour went on to note that reliance upon objective material is an orthodox means of resolving conflicting accounts of oral conversations especially, it might be added, where the disputed conversations occurred many years beforehand. His Honour also emphasised the tension between what ACFM contended was required, with its inevitable attendant expense, and the informal procedure which the AFCA scheme was designed to enshrine.

8. [81]

   ACFM also complained, under the rubric of denial of procedural fairness and unreasonableness, about AFCA’s conclusion that the mortgages secured Mr Bai’s obligations under the guarantees rather than operating as independent securities in respect of the loan.

9. [82]

   The primary judge dealt with this argument in short order, noting that ACFM’s solicitors in their submissions of 26 May 2020 proceeded on the basis that the guarantees and mortgages stood or fell together. His Honour pointed out, moreover, that that approach was entirely consistent with the language of cl 2.1 of the mortgages of Mr Bai and Ms Yang.

10. [83]

    Further, his Honour observed at PJ [59] that:

Grounds of appeal

1. [84]

   Although the Amended Notice of Appeal contained a raft of grounds of appeal, Mr Cox SC who appeared for the Appellant gathered the various grounds of appeal under what he described as “three broad issues”: jurisdiction; procedural fairness; and what he described as the “mortgage issue”. There was no challenge to the objective or correctness standard of review which the primary judge applied in relation to jurisdiction. The “mortgage issue” involved a challenge to a finding by AFCA that the mortgages given by the Complainants were effectively to secure the guarantees, and the contention that this finding was unreasonable in the Wednesbury sense: see [81]–[83] above. The conclusion was also said to have entailed a denial of procedural fairness.

2. [85]

   Mr Bai and Ms Yang also filed a Notice of Contention. The various matters raised on the Notice of Contention are considered in the course of consideration of the grounds of appeal. The Complainants did not contend that his Honour’s decisions in relation to the jurisdiction issue should be upheld by reference to the standard of review applied in Mickovski.

Jurisdiction

1. [86]

   The first ground in the Amended Notice of Appeal was that:

2. [87]

   As noted in [42] above, under r C.1.2(e), AFCA must exclude "[a] complaint where the value of the complainant's claim when the complaint is submitted to AFCA exceeds $1 million …" but this limit does not apply to "a complaint to set aside a guarantee supported by security over the guarantor's primary place of residence": r C.1.2(e)(iii).

3. [88]

   As also already noted, AFCA treated the guarantees as being supported by security over Mr Bai and Ms Yang’s primary place of residence, but the primary judge held that AFCA was wrong to do so because the mortgaged properties had ceased to be the primary place of residence at the time of the making of the complaint to AFCA: see [75] above.

4. [89]

   By Notice of Contention, Mr Bai and Ms Yang seek to support the decision of the primary judge in relation to jurisdiction by contending that his Honour should have held, as AFCA had done, that the guarantees were supported by securities over their primary place of residence.

5. [90]

   The primary judge’s view on this matter has been noted at [75] above. The issue turns on the time at which the question falls to be assessed: at the time of entry into the guarantees and mortgages in 2014 or the time of the lodging of the complaint. The primary judge’s reasoning in respect of his conclusion was contained in PJ [39] as follows:

6. [91]

   The brief submission of Mr Bai and Ms Yang on appeal on this issue was that:

7. [92]

   This argument was not developed orally.

8. [93]

   The first aspect of the argument is largely assertion. True it is that the AFCA Scheme and the Rules are intended to be remedial and protective of the consumer, but that intention is given effect no less and arguably more so by the construction afforded by the primary judge. The Scheme gives effect to a free, quick and relatively informal optional dispute resolution process, with the optionality being in favour of the consumer who, unlike the “financial firm”, is not bound by the outcome: see r A.15.3 noted at [40] above.

9. [94]

   In cases (likely to be most cases) where there has been no change in the guarantor’s principal or primary place of residence between the time when the guarantee is given and the time of the claim, the answer to the particular question of construction thrown up for consideration will not matter. But where there has been a change, and the consumer seeks to extricate him or herself from a guarantee, the text of the Rules strongly supports the construction given by the primary judge. The relevant extension of jurisdiction operates by way of exception to an exclusion of jurisdiction. The exclusion expressly looks to the value of the claim “when the complaint is submitted to AFCA”. It would be incongruous if one looked to the value of the excluded claim at a particular point in time but had to consider whether there was an exception to that exclusion at a prior point in time. Further, as the primary judge held, there is a symmetry between r C.1.2(e)(iii) and r D.4.1 which supports his Honour’s preferred construction.

10. [95]

    The second aspect of Mr Bai and Ms Yang’s argument as noted at [91] above can be quickly dismissed. Rule A.14.2 was not designed to be and should not be construed as being a general rule dispensing power. It should be construed as a rule authorising AFCA to do what is fair in all the circumstances within the constraints of its carefully delineated jurisdiction.

11. [96]

    It follows that the argument based upon the Notice of Contention and summarised in [91] above must be dismissed. Because this conclusion is not dispositive of the appeal, it is not necessary for us to address the question raised by Basten AJA as to the standard of review applicable to a challenge to AFCA’s determination as to its own jurisdiction.

12. [97]

    The next issue relates to the challenge to the primary judge’s finding that the value of Mr Bai and Ms Yang’s claim did not exceed $1 million. Again, this aspect of the appeal is squarely met by the language of r C.1.2(e) which expressly and solely focuses upon “the value of the Complainant's claim when the complaint is submitted to AFCA” (emphasis added). The Rules do not address the amendment of a complaint but it is plain that the relatively informal procedure attaching to AFCA’s consideration of a complaint, including its information gathering powers, means that the outcome and breadth of a complaint could expand over time. So also AFCA’s obligation to do “what is fair in all the circumstances” in determining a complaint (r A.14.2) may mean that, subject to obligations of procedural fairness, the “value” of a complaint may grow from the time it is first filed. This is in fact what appears to have happened in the present case.

13. [98]

    The simple answer to ACFM’s argument is that whatever may have been the value of the relief ultimately awarded (a separate issue dealt with immediately below), the value of Mr Bai and Ms Yang’s claim at the time when it was submitted to AFCA did not exceed $1 million. There is no basis for interfering with the primary judge’s decision in this respect. His Honour’s reasoning, as reproduced at [76] above, was correct.

14. [99]

    Subparagraphs b and c of the first ground of appeal (see [86] above) assert that the primary judge erred by finding that the amount of interest could not be readily calculated at the date the complaint was submitted, and finding that interest as at the date the complaint was submitted was not included in calculating the value of the remedy at that date. The short answer to these two aspects of appeal ground 1 is that the primary judge made no such finding; his Honour’s observations in relation to the ability readily to calculate interest and whether to include interest in the assessment of the value of the complainant’s claim were made in the context of a consideration of whether or not the cap on the value of the remedy to be given, as provided for by r D.4.1 and the table which forms part of Section D of the Rules, applied. In his Honour’s words, his conclusions on this point were directed to AFCA’s “jurisdiction to make the orders it did” (emphasis added): PJ [47]; see also PJ [45]. The observations did not apply to the valuation of the claim at the time the complaint was submitted to AFCA, and the question of whether or not such a claim should be excluded.

15. [100]

    That leaves for consideration the argument raised in subparagraphs d and e of the first ground of appeal (see [86] above) to the effect that the primary judge erred by finding that interest should not have been included in calculating the value of the remedy of declaring the guarantees invalid and unenforceable; and finding that the value of the compensation ordered by the First Respondent did not exceed $1,000,000.

16. [101]

    The primary judge’s reasoning in respect of this aspect of the appeals has been reproduced at [77] above.

17. [102]

    Both the primary judge and the parties proceeded on the basis that the cap on compensation that could be awarded was not confined to an actual award of money (as the term “compensation” might ordinarily imply) but also included the value of any remedy where that value can “readily be calculated”. This interpretation is supported by the terms of r D.3.1 which is set out at [46] above and also by the fact that that rule is followed by the statement, “D.4 sets out the maximum amount that an AFCA decision-maker can award for direct financial loss”. This statement in turn points to the table in Section D of the Rules and ties the meaning of “compensation” in that table to what might be described as the extended sense of that term derived from r D.3.1.

18. [103]

    On the facts of the present case, the underlying indebtedness together with interest amounted to slightly less than $1 million, although there was also an order that ACFM had to pay compensation to Mr Bai in the sum of $254,646 together with interest.

19. [104]

    The point raised by sub-paragraphs d and e of appeal ground 1 is critical in Mr Bai’s case as it was common ground that, if interest were included in the calculation of the value of compensation, what was awarded by the AFCA decision maker exceeded the $1 million compensation cap established by r D.4 of the Rules. This was not, however, so in Ms Yang’s case, and one point raised on the Notice of Contention was that Ms Yang’s complaint was separate to that of Mr Bai or at least should have been treated as separate. In our view, that point was well made.

20. [105]

    It follows that the question whether interest on the underlying indebtedness should be included in calculating the value of the compensation available to Mr Bai remains alive in respect of him.

21. [106]

    Ordinarily we would be inclined to accept ACFM’s submission that interest on an underlying guaranteed indebtedness should be included and ordinarily would be readily calculable at the date of any determination by AFCA, particularly where, as in the current case, interest was capitalised under the loan. On the other hand and consistent with the conclusion of the primary judge, the value to Mr Bai of setting his guarantee aside overall was not readily calculable for the reason that the underlying indebtedness was also guaranteed by Ms Yang from whom Mr Bai could have sought contribution in the event that the guarantee had been called upon by ACFM.

22. [107]

    Put shortly, as Mr Bai would have had a right of contribution against his co-guarantor, the value to him of having been relieved of any liability under the guarantee was not automatically the value of the underlying indebtedness including interest due on that amount and was not readily calculable. The value of the setting aside of Mr Bai’s guarantee would have depended upon the value of his right to obtain contribution from Ms Yang. That would, in turn, have involved an assessment of Ms Yang’s ability to meet any notional contribution as a co-guarantor.

23. [108]

    As Mr Bai and Ms Yang submitted:

24. [109]

    For these reasons, we do not consider that the value of setting aside Mr Bai’s guarantee was readily calculable, with the consequence that the value of compensation awarded to him as direct financial loss cannot be said to have exceeded the $1 million limit and was not beyond the limit of compensation able to be awarded by AFCA.

25. [110]

    It follows that appeal ground 1 should be dismissed.

Procedural fairness

1. [111]

   The grounds of appeal asserting that the primary judge ought to have held that ACFM had been denied procedural fairness related to two matters. First it was contended that AFCA denied the Appellant procedural fairness by not declining to exercise jurisdiction and in effect referring the matter for determination by the District Court of New South Wales in which proceedings had in fact been commenced. This was said to have been especially critical because of differences in the accounts between the parties as to what was understood by the two Complainants at the time they executed the guarantees, questions of independent advice and the like, coupled with the fact that ACFM was not able to cross-examine the Complainants in the context of AFCA’s investigation.

2. [112]

   This was an ambitious argument. It was, in effect, a challenge to a discretionary judgment made by AFCA not to decline to exercise jurisdiction and exclude the complaint but which was dressed up as a denial of procedural fairness. It was open to AFCA to decline to exclude the complaint in favour of conventional litigation, as the primary judge held. To do so was not only open to AFCA but entirely understandable given the length of time that had passed since the guarantees had been entered into and the diminishing quality of individual witness recollections over time. It would also be anathema to the relatively informal procedure permitted by the AFCA Rules to insist that in every case involving a potential dispute between witnesses, AFCA should exclude a complaint and decline to hear it so as to allow cross-examination in a court. Indeed, ACFM disavowed the existence of any such obligation.

3. [113]

   Further, ACFM was given the opportunity to make submissions in support of its contention that AFCA was not the appropriate forum for the determination of the disputes, and took up that opportunity in particular in its detailed written submission of 15 July and 6 November 2020: see [62] above.

4. [114]

   AFCA considered the jurisdictional objection on more than one occasion including in its Determination of 17 February 2021. This leads in to the second aspect of the alleged denial of procedural fairness claim, namely that AFCA had failed to engage with a detailed submission that had been made on 26 May 2020 by Arnold Bloch Leibler, the then solicitors for the Appellant, which included as an attachment a statutory declaration by Mr Lee as to his various interactions with the Complainants at the time the underlying loan and associated security guarantee documents were executed.

5. [115]

   This aspect of the appeal was rightly abandoned when it became clear that AFCA in its Determination had in fact had regard to aspects of Mr Lee’s Statutory Declaration of 22 May 2020.

Mortgage Issue

1. [116]

   This issue is identified in [81] above. In essence, the Appellant re-agitates the argument, rejected by the primary judge, that AFCA’s determination that the mortgages were given to support the guarantees was unreasonable within the Wednesbury sense and was made in circumstances entailing a denial of procedural fairness.

2. [117]

   As to the asserted denial of procedural fairness, the Recommendation referred to at [59] above set out a proposed finding that the “guarantee and security taken to support it [i.e. the mortgages] are unenforceable”. In other words, that ultimate finding was clearly foreshadowed and ACFM afforded an opportunity to make further submissions in relation to it. In those submissions, ACFM described the guarantees and mortgages as related documents.

3. [118]

   This last point is also relevant to the challenge to the primary judge’s rejection of the unreasonableness claim. It stretches credulity for one party to complain that a finding is so unreasonable that no reasonable decision maker could have reached it when that self-same party made submissions consistent with the subsequently impugned finding. The primary judge was correct in holding that it would be “unrealistic to treat the mortgages and guarantees as entirely separate”. They were executed simultaneously, being third party mortgages given by guarantors.

4. [119]

   AFCA’s conclusion was open to it. The primary judge was correct to reject the suggestion that the high hurdle presented by a challenge on grounds of legal unreasonableness had been surmounted. To the extent that the primary judge’s decision was sustained by AFCA’s ability to reach a determination by reference to what was “fair in all the circumstances”, so much was consistent with r A.14.2, and the interpretation of an equivalent rule in Patersons Securities Ltd v Financial Ombudsman Service Pty Ltd [2015] WASC 321; (2015) 108 ACSR 483 at [90]–[95].

5. [120]

   The grounds of appeal in relation to what was described as the “mortgage issue” should be rejected.

Additional ground – Code of Banking Practice

1. [121]

   A further ground of appeal, not addressed orally before this Court (or the primary judge) was to the effect that the primary judge erred by failing to decide whether, or alternatively by not finding that:

   1. (1)

      the First Defendant applied the Code of Banking Practice in making its decision; and

   2. (2)

      its decision to do so was a decision that was so unreasonable that no reasonable decision-maker could have made it.

2. [122]

   It was perhaps not surprising that this particular contention was not sought to be developed orally. That is because the Code of Banking Practice was described by AFCA in its Determination as “reflective of good industry practice” and, under the AFCA Rules (r A.14.2), AFCA was required to take into account “good industry practice”. That approach was open to AFCA which did not proceed under any misconception that ACFM subscribed to the Code of Banking Practice.

3. [123]

   Further, the fact that the primary judge did not deal with the argument was of no material significance given the peripheral and passing role it played in the proceedings before him, not being the subject of any oral argument. That ground of appeal should therefore also be rejected.

Conclusion and orders

1. [124]

   The appeal against the Second and Third Respondents should be dismissed with costs.

2. [125]

   The appeal against the First Respondent (AFCA) should be dismissed but, consistent with its submissions and the approach AFCA adopted, there should no order as to costs in relation to its participation in the appeal.

3. [126]

   BASTEN AJA: I agree with the orders proposed by the Chief Justice and Meagher JA. Further, subject to two qualifications, I also agree with their reasons.

4. [127]

   The first qualification relates to the limits on the characteristics of complaints which can be considered by AFCA; that is, as to the scope of its functions. As the joint reasons explain, the rules under which AFCA operates constitute a tripartite contractual arrangement in relation to a complaint. (Given the inappropriate connotations of using a term which defines the authority of a court or tribunal, it is preferable not to describe the scope of AFCA’s functions and powers as its “jurisdiction”.) From the perspective of a court, the question is on what grounds the court may set aside a determination reached by AFCA that its power to determine the substance of a complaint was engaged. While the parties did not take issue with the approach of the primary judge to the scope of the Court’s powers, there may be difficulties in the Court deciding an issue as to the meaning of AFCA’s contractual rules which, arguably according to authority, is a matter for AFCA, acting reasonably. In this case the Court and AFCA agree on a sufficient ground to allow the rejection of the appeal.

5. [128]

   As Leeming JA has written, extrajudicially, the statement that parties cannot confer jurisdiction by consent is apt to mislead. [1] The Court undoubtedly has jurisdiction to determine the limits of the contractually-conferred powers of AFCA, but the operation of those limits is arguably for AFCA to determine, acting reasonably. This was not the subject of direct argument in this case.

6. [129]

   The second qualification relates to a specific limitation on AFCA’s functions. It arises from an issue raised on a notice of contention by the complainant respondents, to the effect that the monetary limit on their complaint did not apply because the loan was secured against a principal place of residence. As the complaints were otherwise held to fall within the monetary cap, that point did not need to be resolved. In the circumstances, and for the reasons which follow, I prefer not to resolve the issue. Nevertheless, if it is to be resolved, I am not attracted to the approach of the primary judge.

The courts’ power to set aside a determination

1. [130]

   The Complaint Resolution Scheme Rules (the “Rules”) involve a number of mandatory exclusions, the legal operation of which cannot be varied by AFCA in exercising the decision-making mandate under rule A.14.2 to do what is “fair in all the circumstances”: that rule assumes that the dispute resolution function was in fact engaged. The parties and AFCA may agree to the limitations being ignored (rule A.4.7), but that did not happen in this case.

2. [131]

   There is a question as to whether the factual basis upon which AFCA operates can be determined by it, in the exercise of its functions. It does appear to have been assumed that AFCA’s determination as to whether the complaint fell within the monetary cap was a matter which could be reviewed by a court according to a correctness standard. In the present case, both the primary judge and this Court are satisfied that the complaint fell within the cap. The question is whether that is an available finding, or whether the court is constrained to a determination that AFCA’s understanding of the complaint was open to it.

3. [132]

   The principles to be applied in determining the jurisdiction of the Supreme Court to review decisions of a body such as AFCA were addressed at length by the Victorian Court of Appeal in Cromwell Property Securities Ltd v Financial Ombudsman Service Ltd. [2] The Court [3] accepted that a decision of the respondent, operating under relevantly identical terms of reference to AFCA, could only be reviewed on the basis of principles applying to review of private domestic bodies resolving disputes between members. The majority concluded:

4. [133]

   Those principles reflect principles applicable to judicial review of administrative decisions, and those applicable to the review of decisions by trustees. [5] Nevertheless, they are applied in this area on the basis that the tripartite contractual arrangements require such constraints. The application of those principles cannot be derived from the express terms of the contract, nor are they implied terms which comply with the principles established in BP Refinery (Westernport) Pty Ltd v Shire of Hastings. [6] Those principles, sometimes described as “ad hoc implied terms”, [7] are distinguished from implied terms which constitute a legal incident of a particular class of contract. [8] Importantly in this context, AFCA operates a dispute resolution service as part of a scheme recognised by the Corporations Act 2001 (Cth) as a requirement of the statutory scheme regulating financial service providers. [9] AFCA itself is independent of the parties to the disputes it resolves.

5. [134]

   While there can be no doubt that the principles of restraint apply to judicial review of decisions of AFCA made in accordance with its rules, there is a separate question, relevant in the present context, as to whether the principles of restraint apply to decisions of AFCA as to the scope of its functions and as to whether a particular dispute falls within the scope of those functions. In other words, if AFCA determines, acting in good faith and with procedural fairness, that it has power to resolve a particular dispute, is that decision immune from review, in circumstances where it was not manifestly unreasonable?

6. [135]

   Cromwell Property Securities was a case involving the scope of the functions of the Financial Ombudsman Service. However, it was concerned with a criterion which did not preclude the exercise of the dispute resolution function, but which permitted the Service a discretionary power to refuse to entertain the complaint. Nevertheless, it was not suggested that any different principle applied to that discretionary exercise of power, involving, as it did, an evaluative criterion, than would have applied to the resolution of the dispute itself.

7. [136]

   More relevantly for present purposes, Mickovski v Financial Ombudsman Service Ltd [10] involved a mandatory exclusion identified in the following terms:

8. [137]

   On the facts, it was clear that the complainant, Mr Mickovski, did not know of a significant aspect of his total and permanent disability (TPD) policy under which he had made a claim, which was rejected, because the term of the policy had been changed by a judicial order made some time after his claim was dismissed. Nevertheless, the relevant decision-maker, a panel chair within the Service, rejected the complaint. The Court of Appeal held:

9. [138]

   The Court then set out the reasoning of the primary judge who had upheld the decision of the panel chair. The Court of Appeal continued:

10. [139]

    Clause 15.3 rendered decisions “final” and therefore not appealable. It is not clear that such a clause adds any additional protection. [11] It does not preclude review on the constrained grounds. [12] In any event, because a determination as to whether to accept a complaint or exclude it fell within the ambit of the powers conferred on the Service, the constraints on judicial intervention were applied to that decision.

11. [140]

    In principle, a similar approach should apply with respect to AFCA. Thus, rule C.1.2 commences, “AFCA must exclude:” followed by a list of designated complaints. An ordinary reading of this rule is that it imposes on AFCA an obligation to satisfy itself that none of the designated criteria is engaged and, if one or more is engaged, to exclude the complaint. It is clear that some of the criteria involve elements of evaluative judgment, whilst others may require a degree of investigation in order to determine whether the facts are within the particular criterion or not. On this view, the mandatory exclusions in Part C.1 of the Rules confer on AFCA an obligation to decide the admissibility of the complaint. According to the approach accepted in Mickovski, the constraints on judicial intervention will apply to any attempt to review the decision of AFCA with respect to the operation of the exclusions. It is not the function of a court to exercise a de novo jurisdiction to determine whether a complaint falls within a particular excluded category or not.

12. [141]

    Although, in principle, it might be suggested that those criteria which involve a mechanical determination of whether a fact exists or not could be distinguished from those requiring an evaluative judgment, such a distinction is unattractive. If the intention is that the former are open to be determined by the Court exercising original jurisdiction, whereas the latter are to be reviewed on the constrained basis, such a distinction would be hard to apply and therefore impractical. It should not be adopted. In any event, the present case involves the exclusion in par (e) which requires a determination of “the value of the Complainant’s claim when the complaint is submitted to AFCA”. The “value” of a claim is not necessarily simply the amount of money which the claimant seeks, although no doubt that is a factor to be considered. It will often (perhaps usually) involve an evaluative exercise.

13. [142]

    It follows that, in my view, the preferable result is that neither the primary judge nor this Court can engage in a de novo assessment of the value of the claim at the relevant time. The proper conclusion is not that the claim was not excluded under par (e), but rather that there was no reviewable error on the part of AFCA in determining that the claim was not excluded under par (e).

The principal place of residence exception

1. [143]

   As noted above, the operation of the exception to the exclusion required by par (e) only arises if AFCA erred in finding that the exclusionary criterion was engaged (which it did not). My tentative view is that the exception applied in the present case, for reasons given below. The better view may be that because it need not be determined, it should not be. Further, on the reasoning set out above as to the scope of the review available in a court, it is a matter which was determined by AFCA, favourably to the respondents, in a way which was not open to review by the primary judge, or this Court.

2. [144]

   The exclusion in rule C.1.2 (e) reads as follows:

3. [145]

   The question is whether the exceptions are each to be assessed at the same time as the value of the claim, namely when the claim was made. The primary judge thought it both “logical” and in conformity with the purpose of the exception to provide an affirmative answer. [13] For the reasons set out below, I would not accept that approach.

4. [146]

   First, the argument based on logic (or perhaps consistency) is weak if it does not apply to each exception. As to (i), there is no temporal element as the definition of “Superannuation Complaint” turns on whether the complaint relates to superannuation, as defined in s 1053 of the Corporations Act. That will direct attention to the underlying insurance policy.

5. [147]

   The exception in (ii) did not apply in this case because the complaint was by a guarantor and not “by a borrower”, although the borrower was in fact a small business. However, the reason for the exception is that there is a separate cap in relation to a small business credit facility described in the following terms:

6. [148]

   The harmonious operation of these provisions with respect to small business credit facilities is not without its difficulties. However, relevantly for present purposes, the question whether the claim is about a small business credit facility is to be determined, like the value of the claim, “when the complaint is submitted to AFCA”. The consistency argument suggests that the chapeau to par (e) also provides an answer to the date at which the operation of exception (ii) must be addressed.

7. [149]

   There is no reason to assume that the temporal element governing the timing of the value of the claim flows through to the exception; indeed, it clearly does not. The term “Small Business” is defined in rule E.1.1 to mean a business that had fewer than 100 employees “at the time of the act or omission by the Financial Firm that gave rise to the complaint.” Thus, if the complaint related to the conduct of the credit provider at the time the credit facility was provided, then the number of employees should properly be calculated as at that time, and not at the time the complaint is made. At least in relation to exception (ii), the logic that the temporal element in the exclusion should apply to the exception cannot be accepted. Should a different conclusion be reached with respect to exception (iii)? The element of consistency with the chapeau provides little support for such a conclusion.

8. [150]

   It is at least arguable, on the ordinary meaning of exception (iii), that because a complaint seeking to set aside a guarantee supported by security over the guarantor’s primary place of residence will be addressed by reference to the giving of the guarantee and the security, the exception should also be addressed at that time. That would be consistent with exception (ii).

9. [151]

   Secondly, it is said that a purposive reading of the exception requires that the protection be removed if the property ceases to be a principal place of residence. However, that identifies a single purpose and assumes it to be the only purpose of the exception, or at least the one which impliedly controls its operation. One can envisage circumstances in which the property ceased to be the principal place of residence because of the conduct complained of, but before the complaint was lodged. One can also envisage a purpose that seeks to place an additional cause for caution on a credit provider obtaining security over a principal place of residence. Such a purpose would necessarily operate at the time the impugned transaction was entered into, not the date of the complaint. If the complaint was about subsequent conduct, the same rationale might require attention to the character of the security at the time of the impugned conduct.

10. [152]

    Further, while it is no doubt consistent with the apparent purpose of the exclusion that a property which becomes a principal place of residence after the conduct complained of may be the subject of the exception, it is by no means clear that such a change in the status of the property would bring it within the terms of par (iii). For present purposes, it suffices to say that even if a property, not originally a principal place of residence of a guarantor, becomes one before the complaint was made and thus engages the exception, it does not follow that a property which was a principal place of residence when the guarantee was given, but thereafter ceased to be, thereby lost the relevant protection. Clearly that is not the case where a small business ceases to be a small business after the conduct complained of occurred, but before the complaint was made.

11. [153]

    Finally, applying the constraints on judicial intervention, the question is not whether this Court thinks that AFCA’s construction of the rule was wrong, unless determining the operation of its own Rules was not within the scope of its functions, as I consider it was. Rather the question is whether the decision was not reached in good faith or was manifestly unreasonable.

12. [154]

    In these circumstances, I would not determine the point raised by the notice of contention, it otherwise being unnecessary, and arguably inappropriate, to do so. But if it is to be determined, the preferable outcome is that for which the respondents contend.