In the recent decision of Sandra McGuiness v ACM Group Limited [2015] VSC 216, Riordan J of the Supreme Court of Victoria, ordered that the final order of the Magistrates' Court in matter number D11054960 ('Magistrates' Court Proceedings') made on 7 March 2014 be set aside and the claim be dismissed1. The Magistrates' Court Proceedings were brought by the respondent against the appellant for nonpayment of a credit card debt.

On appeal, Riordan J was required to deal with issues relating to matters such as:
1. whether the finding of the appellant applying for a credit card was open on the evidence;
2. the admissibility of secondary evidence of the contents of a credit card contract;
3. the adequacy of proof of applicable terms of a credit card, including proof of interest and other charges; and
4. whether the Magistrate ensured a fair trial for a self-represented litigant.

On a broader level, the decision can be seen as the courts reluctance to simply accept secondary evidence, and/or infer evidence, on one or more aspects of a plaintiff's claim, particularly when the evidence is not overly strong at first instance.


In November 1993, the National Australia Bank ('NAB') issued a NAB Gold Rewards Visa Card ('Credit Card'), account number 4557 0168 3700 5714 ('Account'), in the name of the appellant. The appellant used the Credit Card from time to time between 1993 and December 2007. In or about late December 2007, NAB issued a statement addressed to the appellant for a Credit Card for the period 24 November 2007 to 24 December 2007. The statement identified the unpaid balance at $28,408.25.

On or about 19 March 2008, the NAB assigned the debt due under the Credit Card to Accounts Control Management Services Pty Ltd, which in April 2013 then assigned the debt to the respondent.

By a complaint filed in the Magistrates' Court Proceedings on 15 April 2013, the respondent claimed from the appellant the amount of $28,408.25 plus interest and late fees of $42,419.88, being a total of $70,828.13. On 7 March 2014 the Magistrate entered judgment in favor of the respondent for the sum of $70,828.13 plus costs of $12,107.00 ('Judgment').

Grounds for appeal

By an Amended Notice of Appeal dated 15 May 2015, the appellant sought to have the Judgment set aside and the respondent's claim dismissed. In summary the appellant's grounds for appeal were inter alia:

1. that in making her decision [the Magistrate] failed to take into account that the respondent had the burden of proving that:
a. by application in March 1993, the appellant personally requested to enter into an agreement with the NAB for the Credit Card (also hereinafter referred to as the 'Credit Card contract' otherwise described as the 'Loan Facility' in the decision);
b. the respondent had actually given notice to the appellant of the 'Conditions of use for credit cards' in operation in March 1993;
c. the NAB could unilaterally assign any of its rights under the Credit Card contract to any third person such as the respondent; and
d. the respondent could charge penalties and/or interest on $28,408.25 in accordance with the terms of the Loan Facility terms as at the date of the initial assignment on 19 March 2008;

2. in making the said decision, the Magistrate took into account the following irrelevant considerations:
a. that an application for an increased limit (identified as the 2001 Variation Application) was evidence of an application for an increased limit of the Credit Card; and
b. an aide-mémoire prepared by the respondent that purported to calculate the sum of $70,828.13 of which $42,419.88 was said to be for interest and/ or penalties, as evidence of the actual damages recoverable from the appellant;

3. there was no direct evidence substantiating several aspects of the respondent's claims including inter alia:
a. NAB's right to assign the Credit Card contract to any third party;
b. that the first assignee [Accounts Control Management Services Pty Ltd]:
i. had itself any rights under the Credit Card 'contract' to recover interest and/or penalties from the appellant; and
ii. could assign any rights to recover interest and/or penalties from the appellant to any third person such as the Respondent;
c. that the appellant had personally requested the Credit Card contract; and
d. that the Appellant had notice, constructive or otherwise, of the 'Conditions of use for credit cards' or any subsequent variation of such terms and conditions.


By judgment dated 10 June 2015, Riordan J found in favor of the appellant and made an order setting aside Judgment and dismissing the respondent's claim. Riordan J handed down a 37 page decision in which he cited the following reasons for his decision:

1. the Magistrate erred in finding that the 2001 Variation Application was 'applicable to' the Credit Card in so far as:
a. there was no evidence from any witness that the 2001 Variation Application related to the Loan Facility; and
b. it was not put to any witness or to the court on behalf of the respondent that the 2001 Variation Application did relate to the Credit Card;

2. the Magistrate erred in admitting evidence of Mr Zhao [a Senior Associate employed by the NAB], about the appellant applying for the Credit Card, in so far as he:
a. did not have nor could not produce the appellant's application for Credit Card or any supporting documents;
b. was not familiar with the making of records relating to the Credit Card seeing that he had only been an employee of the NAB for the last 6 years; and
c. the respondent failed to adduce evidence2 from Mr Zhao as to the contents of the documents relating to the Credit Card in question which were unavailable (principally the application and 'Conditions of use for credit cards' in operation in March 19933);

3. it was not open for the court to infer that the appellant enter into an agreement with the NAB for the Credit Card based on the documentary evidence and the evidence of Mr Zhao; 4. the Magistrate erred in finding that the terms of the Credit Card were proved seeing that:
a. Exhibit B described as "Conditions of use for credit cards published by the National Australia Bank effective from 01/12/93 for the period until 31/10/96" ('Conditions') could not have been applicable to the Credit Card that was issued 11 March 1993; and
b. in cross-examination Mr Zhao could not confirm why the Conditions would apply to the Credit Contract;

5. the Magistrate erred in finding that the respondent was entitled to interest and "late payment fees" under the Credit Card contract seeing that:
a. the respondent could not produce NAB's Schedule to the Conditions;
b. the respondent did not produce any evidence as to the interest rate or rates or any evidence of late fees;
c. the court should not infer the interest rates from the evidence of Mr Vieira, the National Manager of Operations for the respondent on the basis that Mr Vieira:
i. was not an employee of the NAB; and
ii. did not disclose the basis of the calculation.

Further observations in the decision

Riordan J also made three interesting observations in his decision which should resonate strongly with banks and debt management companies seeking the auspices of the judiciary in similar type proceedings:

1. firstly, that the court will not hesitate to insist on 'best evidence-rule'4 in assessing secondary evidence tendered by a party;

2. secondly, he was surprised that a bank would not have retained documents past the statutory implied period of seven years seeing that the bank has "facility to retain mortgages and other contractual documents for longer periods of time"5 and that it "would destroy documents which evidence the terms of a continuing trading relationship without even retaining a copy"6; and

3. thirdly, the presumption of regularity should not be applied in circumstances where a party is claiming interest on an account particularly when "a very favourable inference is sought to be drawn by reason of the respondent's failure to produce"7 evidence of the said interest rate.

What does this mean for creditors generally?

The decision reinforces the courts position on proceedings premised mainly on inference. In a market which over the last 20 years has seen a proliferation of regulation and self-represented litigants, trade creditors need to be smarter about how they record commercial transactions.

This decision should prompt trade creditors to review their own debt recovery practices to ensure that any recovery proceedings they intend to take are not plagued by the same issues the respondent suffered in these proceedings. To achieve a more robust practice trade creditors can start by:

1. reviewing their document management process to ensure that original documents are imaged, stored, and can be accessed quickly for referencing – often disputes can be settled promptly by taking the debtor through the particulars of your claim and producing the evidence in support of those particulars;

2. ensure that any witness chosen to give evidence has the practical knowledge to comfortably depose as to the practices and procedure engaged by the company in commercial transaction (this employee should be at mid-senior level and have specific competencies and training relating to your credit procedures);

3. If the company is an assignee of a debt, ensure that it can clearly demonstrate:
a. the assignor's right to assign the debt;
b. the terms of the assignment (normally contained in a deed or agreement); and
c. that the debtor has received written notice of the assignment; 4. Particularise interest calculations, especially in circumstances where the plaintiff intends to charge a contractual default rate as opposed to a statutory or prescribed rate.

Wojtek Randla is a Legal Practitioner Director & Litigation Manager for Baycorp – Australia. Phone: (02) 9806 2598,

FOOTNOTES: 1 S CI 2014 01340 2 Under the auspices of s. 48(4) of the Evidence Act, a party may adduce evidence of the contents of a document in question that is not available to the party, or the existence and contents of which are not in issue in the proceeding, by (a) tendering a document that is a copy of, or an extract from or summary of, the document in question, or (b) adducing from a witness evidence of the contents of the document in question 3 The 'unavailability of the documents and things' is defined by clause 5 of Part 2 of the Dictionary to the Evidence Act 4 At paragraph 16 5 At paragraph 27 6 ibid 7 At paragraph 40

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