Consumer Credit Legislation Amendment (Enhancements) Act 2012 (130 of 2012)

Schedule 5   Consumer leases

National Consumer Credit Protection Act 2009

18   After section 175 of the National Credit Code

Insert:

Division 4 - Fees and charges

175A Prohibited consumer lease fees or charges

The regulations may specify:

(a) consumer lease fees or charges; or

(b) classes of consumer lease fees or charges;

that are prohibited for the purposes of this Code.

175B Fees or charges in relation to third parties

When this section applies

(1) This section applies if a fee or charge is payable by a lessee to the lessor for an amount (the third party amount ) payable or paid by the lessor to another person, body or agency.

Third party amount ascertainable at time of lessee payment

(2) If, when the fee or charge is paid by the lessee to the lessor, the third party amount is ascertainable, then the amount of the fee or charge must not exceed the third party amount.

Third party amount not ascertainable at time of lessee payment

(3) If:

(a) when the fee or charge is paid by the lessee to the lessor, the third party amount is not ascertainable; and

(b) after the fee or charge is paid, the lessor ascertains the third party amount; and

(c) the third party amount is less than the amount of the fee or charge paid;

then the lessor must refund or credit the difference to the lessee.

Determining third party amount

(4) The third party amount is to be determined by:

(a) taking into account any discount, rebate or other allowance that is received or receivable by the lessor or a related body corporate (within the meaning of the Corporations Act 2001); and

(b) disregarding any rebate on tax payable by the lessor or a related body corporate (within the meaning of that Act).

Division 5 - Lessor's obligation to account

Subdivision A - Ongoing statements of account

175C Statements of account

(1) A lessor must give to the lessee, or arrange for the lessee to be given, periodic statements of account in accordance with this Subdivision.

Criminal penalty: 100 penalty units.

(2) The maximum period for a statement of account is 12 months.

(3) A statement of account need not be given if:

(a) the lessee was in default under the consumer lease during the statement period and the lessor has commenced enforcement proceedings; or

(b) the lessee has died or is insolvent and the lessee's personal representative or trustee in bankruptcy has not requested a statement of account.

(4) Subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

175D Information to be contained in statements of account

A statement of account must contain the information prescribed by the regulations.

175E Statement of amount owing and other matters

(1) A lessor must, at the request of a lessee and within the time specified by this section, provide a statement of all or any of the following:

(a) any amounts credited to the lessee's account during a period specified in the request;

(b) any amounts currently overdue and the date they became due;

(c) any amount currently payable and the date it becomes due;

(d) any other information prescribed by the regulations.

Criminal penalty: 100 penalty units.

(2) The statement must be given:

(a) within 14 days, if all information requested relates to a period 1 year or less before the request is given; or

(b) within 30 days, if any information requested relates to a period more than 1 year before the request is given.

(3) A statement under this section may be given orally but if the request for the statement is made in writing the statement must be given in writing.

(4) In the case of joint lessees, the statement under this section need only be given to a lessee who requests the statement and not, despite section 194, to each joint lessee.

(5) A lessor is not required to provide a further written statement under this section if it has, within the 3 months before the request is given, given such a statement to the person requesting it.

(6) Subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

175F Court may order statement of account to be provided

If a statement of account is not provided within the time required by this Subdivision, the court may, on the application of the lessee, order the lessor to provide the statement or itself determine the amounts in relation to which the statement was sought.

175G Disputed accounts

(1) If:

(a) a liability is entered against a lessee under a consumer lease; and

(b) the lessee, by written notice to the lessor, disputes the liability;

then the lessor must give the lessee a written notice explaining in reasonable detail how the liability arises.

(2) A written notice need not be given if the lessor agrees with the lessee as to the disputed amount and gives the lessee a written notice advising of the agreed liability.

(3) In the case of a consumer lease for which a statement of account is given, the notice of dispute must be given to the lessor within 30 days after the day the lessee receives the statement of account in which the amount, or part of that amount, is first shown.

(4) In the case of a consumer lease in respect of which a statement of account need not be and is not given for the period to which the disputed liability relates, the notice of dispute must be given to the lessor not later than 3 months after the day the lease ends.

(5) The lessor must not begin enforcement proceedings on the basis of a default arising from the disputed liability until the period of 30 days, starting on the day the lessor gives the written explanation or advice as to agreement, has expired.

Criminal penalty: 50 penalty units.

(6) A lessee or lessor may apply to the court to have the court determine a disputed liability and, if satisfied that a liability is genuinely disputed, the court may determine the matters in dispute and make such consequential orders as it thinks just.

(7) If an application is made to the court under this section within 30 days after the day the written explanation is given, the lessor must not, without leave of the court, begin enforcement proceedings on the basis of a default arising from the disputed liability.

Criminal penalty: 50 penalty units.

(8) Subsections (5) and (7) are offences of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(9) This section does not affect a dispute not dealt with, or not arising, under this section.

Subdivision B - End of lease statements

175H End of lease statement

(1) A lessor must arrange for the lessee to be given, not later than 90 days before the end of the fixed term of a consumer lease, a statement containing the information prescribed by the regulations.

Criminal penalty: 100 penalty units.

(2) Subsection (1) does not apply in the circumstances (if any) prescribed by the regulations.

(3) Subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

Division 6 - Certain transactions not to be treated as new consumer leases

175J Changes etc. under consumer leases

If:

(a) there is:

(i) a change to an existing consumer lease that results in further goods being provided; or

(ii) a deferral or waiver of an amount under an existing consumer lease; or

(iii) a postponement relating to an existing consumer lease; and

(b) the change, deferral, waiver or postponement is made in accordance with this Code or the existing consumer lease;

then the change, deferral, waiver or postponement is not to be treated as creating a new consumer lease or a credit contract for the purposes of this Code.

Division 7 - Changes to obligations under consumer leases

Subdivision A - Changes by agreement of parties

177A Changes by agreement

(1) If the parties under an existing consumer lease agree to change its terms, the lessor must, not later than 30 days after the date of the agreement, give to the lessee a written notice setting out:

(a) particulars of the change in the terms of the consumer lease; and

(b) any information required by the regulations.

Criminal penalty: 100 penalty units.

(2) Subsection (1) does not apply to a change which defers or otherwise reduces the obligations of the lessee for a period not exceeding 90 days.

(3) This section does not apply to a change made under Subdivision B.

(4) The lessor may, under subsection (1), give a lessee particulars only of a matter as changed instead of particulars of the change, but only if the lessor:

(a) makes it clear to the lessee that the matter has changed; or

(b) issues to the lessee a new set of terms and conditions relating to the consumer lease.

(5) Subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

Subdivision B - Changes on grounds of hardship and unjust transactions

177B Changes on grounds of hardship

Hardship notice

(1) If a lessee considers that he or she is or will be unable to meet his or her obligations under a consumer lease, the lessee may give the lessor notice (a hardship notice ), orally or in writing, of the lessee's inability to meet the obligations.

Note: If the lessee has given the lessor a hardship notice, there may be extra requirements (beyond those in section 179D) that the lessor must comply with before beginning enforcement proceedings - see section 179F.

Further information

(2) Within 21 days after the day of receiving the lessee's hardship notice, the lessor may give the lessee notice, orally or in writing, requiring the lessee to give the lessor specified information within 21 days of the date of the notice stated in the notice. The information specified must be relevant to deciding:

(a) whether the lessee is or will be unable to meet the lessee's obligations under the lease; or

(b) how to change the lease if the lessee is or will be unable to meet those obligations.

(3) The lessee must comply with the requirement.

Note: The lessor need not agree to change the consumer lease, especially if the lessor:

(a) does not believe there is a reasonable cause (such as illness or unemployment) for the lessee's inability to meet his or her obligations; or

(b) reasonably believes the lessee would not be able to meet his or her obligations under the lease even if it were changed.

Notice of decision on changing consumer lease

(4) The lessor must, before the end of the period identified under subsection (5), give the lessee a notice:

(a) that is in the form (if any) prescribed by the regulations and records the fact that the lessor and the lessee have agreed to change the consumer lease; or

(b) that is in the form (if any) prescribed by the regulations and states:

(i) the lessor and the lessee have not agreed to change the consumer lease; and

(ii) the reasons why they have not agreed; and

(iii) the name and contact details of the approved external dispute resolution scheme of which the lessor is a member; and

(iv) the lessee's rights under that scheme.

Civil penalty: 2,000 penalty units.

(5) The lessor must give the notice before the end of the period identified using the table.

Regulations may prescribe shorter periods for consumer leases

(6) The regulations may provide for subsections (2), (3), (4) and (5) to have effect in relation to consumer leases prescribed by the regulations as if a particular reference in subsection (2) or (5) to a number of days were a reference to a lesser number of days prescribed by the regulations.

177C Notice of change

(1) A lessor that enters into an agreement with a lessee to change the consumer lease as a result of a hardship notice by the lessee must, not later than 30 days after the date of the agreement, give to the lessee a written notice setting out:

(a) particulars of the change in the terms of the lease; and

(b) any information required by the regulations.

Criminal penalty: 50 penalty units.

(2) The lessor may, under subsection (1), give the lessee particulars only of a matter as changed instead of particulars of the change, but only if the lessor:

(a) makes it clear to the lessee that the matter has changed; or

(b) gives to the lessee a new set of terms and conditions relating to the lease.

(3) Subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

177D Changes by court

(1) If a lessor does not change a consumer lease as a result of a hardship notice by a lessee, the lessee may apply to the court to change the terms of the lease.

(2) The court may, after allowing the applicant and the lessor a reasonable opportunity to be heard:

(a) by order change the lease (but not so as to reduce the amount ultimately payable by the lessee to the lessor under the lease), and make such other orders as it thinks fit; or

(b) refuse to change the lease.

(3) The court may, if it thinks it appropriate in the circumstances, stay any enforcement proceedings under the lease, and make such other orders as it thinks fit, until the application has been determined.

177E Lessor may apply for variation of change

(1) A lessor under a consumer lease that has been changed by an order under subsection 177D(2) may apply to the court for an order varying or revoking the order.

(2) A lessor subject to a stay of enforcement proceedings or other order under subsection 177D(3) may apply to the court for an order varying or revoking the stay or order.

(3) On an application under this section, the court may vary or revoke the order or stay to which the application relates as it thinks fit, or may refuse the application.

177F Court may reopen unjust transactions

Power to reopen unjust transactions

(1) The court may, if satisfied on the application of a lessee that, in the circumstances relating to the relevant consumer lease at the time it was entered into or changed (whether or not by agreement), the lease or change was unjust, reopen the transaction that gave rise to the lease or change.

Matters to be considered by court

(2) In determining whether a term of a particular consumer lease is unjust in the circumstances relating to it at the time it was entered into or changed, the court is to have regard to the public interest and to all the circumstances of the case and may have regard to the following:

(a) the consequences of compliance, or noncompliance, with all or any of the provisions of the lease;

(b) the relative bargaining power of the parties;

(c) whether or not, at the time the lease was entered into or changed, its provisions were the subject of negotiation;

(d) whether or not it was reasonably practicable for the applicant to negotiate for the alteration of, or to reject, any of the provisions of the lease or the change;

(e) whether or not any of the provisions of the lease impose conditions that are unreasonably difficult to comply with, or not reasonably necessary for the protection of the legitimate interests of a party to the lease;

(f) whether or not the lessee, or a person who represented the lessee, was reasonably able to protect the interests of the lessee because of his or her age or physical or mental condition;

(g) the form of the lease and the intelligibility of the language in which it is expressed;

(h) whether or not, and if so when, independent legal or other expert advice was obtained by the lessee;

(i) the extent to which the provisions of the lease or change and their legal and practical effect were accurately explained to the lessee and whether or not the lessee understood those provisions and their effect;

(j) whether the lessor or any other person exerted or used unfair pressure, undue influence or unfair tactics on the lessee and, if so, the nature and extent of that unfair pressure, undue influence or unfair tactics;

(k) whether the lessor took measures to ensure that the lessee understood the nature and implications of the transaction and, if so, the adequacy of those measures;

(l) whether at the time the lease was entered into or changed, the lessor knew, or could have ascertained by reasonable inquiry at the time, that the lessee could not pay in accordance with its terms or not without substantial hardship;

(m) whether the terms of the transaction or the conduct of the lessor is justified in the light of the risks undertaken by the lessor;

(n) the terms of other comparable transactions involving other lessors and, if the injustice is alleged to result from excessive costs, the costs payable in comparable cases;

(o) any other relevant factor.

Representing lessee

(3) For the purposes of paragraph (2)(f), a person is taken to have represented a lessee if the person represented the lessee, or assisted the lessee to a significant degree, in the negotiations process prior to, or at, the time the consumer lease was entered into or changed.

Unforeseen circumstances

(4) In determining whether a consumer lease is unjust, the court is not to have regard to any injustice arising from circumstances that were not reasonably foreseeable when the lease was entered into or changed.

Conduct

(5) In determining whether to grant relief in respect of a consumer lease that it finds to be unjust, the court may have regard to the conduct of the parties to the proceedings in relation to the lease since it was entered into or changed.

Application

(6) This section does not apply to a change to a consumer lease under this Subdivision.

177G Orders on reopening of transactions

The court may, if it reopens a transaction under this Subdivision, do any one or more of the following, despite any settlement of accounts or any agreement purporting to close previous dealings and create a new obligation:

(a) reopen an account already taken between the parties to the transaction;

(b) relieve the lessee from payment of any amount in excess of such amount as the court, having regard to the risk involved and all other circumstances, considers to be reasonably payable;

(c) set aside either wholly or in part or revise or alter an agreement made in connection with the transaction;

(d) give judgement for or make an order in favour of a party to the transaction of such amount as, having regard to the relief (if any) which the court thinks fit to grant, is justly due to that party under the consumer lease;

(e) give judgement or make an order against a person for delivery of goods to which the lease relates and which are in the possession of that person;

(f) make ancillary or consequential orders.

177H Applications by ASIC

(1) This section applies if ASIC considers that it is in the public interest to make an application under this Subdivision.

(2) ASIC may make an application under this Subdivision and has standing to represent the public interest.

(3) The application:

(a) may apply to any one or more consumer leases; and

(b) may apply to all or any class of consumer leases entered into by a lessor during a specified period (for example, all leases entered into during a specified period that are affected by a specified matter for which relief is sought).

177J Time limit

An application may not be brought under this Subdivision more than 2 years after the relevant consumer lease is terminated, discharged or otherwise comes to an end.

177K Joinder of parties

(1) If it appears to the court that a person other than a lessor (a third party ) has shared in the profits of, or has a beneficial interest prospectively or otherwise in, a consumer lease that the court holds to be unjust, the court may make an order about the third party that the court considers appropriate.

(2) However, before making an order about the third party, the court must:

(a) join the third party as a party to the proceedings; and

(b) give the third party an opportunity to appear and be heard in the proceedings.