Shortly prior to its merger with Community CPS Australia Ltd, United Credit Union Ltd made a civil penalty application to the State Administrative Tribunal of Western Australia in relation to contraventions of 7 key requirements of the Consumer Credit Code. United asked that the Tribunal also take into account contraventions of 13 non-key requirements of the Code.

The contraventions were identified during due diligence in preparation for the merger. Overall they affected in excess of 17,000 credit contracts. Upon the merger taking effect Community CPS became the successor in law to United, and continued the application in that capacity.

United, and Community CPS as its successor, offered to make ex gratia payments of compensation to borrowers affected by three of the contraventions.

The Commissioner for Consumer Protection intervened in the application to represent the interests of affected borrowers.

The application was heard by the President of the State Administrative Tribunal, His Honour Justice John Chaney, on 4 March 2010. His Honour delivered an oral judgment at the conclusion of the hearing.

His Honour made declarations that United had contravened key requirements of the Consumer Credit Code. However, he found that in all the circumstances it was inappropriate to impose any civil penalty. His Honour found that:

• The contraventions by United were not deliberate. By and large they arose from system failures.
• Community CPS was not responsible for the conduct which constitutes the contraventions, although it accepted legal responsibility for the consequences of that conduct.
• The conduct of Community CPS was ‘commendable’. It had acted in a ‘very responsible way’ and had accepted its responsibilities for compliance with the Code in a way which one would hope to be able to expect from all financial institutions.
• The voluntary payment of compensation by Community CPS was an important factor to be taken into account in deciding whether a civil penalty should be imposed, as was the expense which Community CPS had incurred in dealing with the matter.

Langes+ acted for United and Community CPS in relation to the application, and partner Shannon Adams represented them before the Tribunal.