The Law Handbook 2024

444 Section 5: Managing your money goods for a greater amount, that greater amount (s 103(2) NCC). Sale of repossessed goods If payment is not made within 21 days of the Form 14 notice, the credit provider must sell the goods: • to the nominated purchaser as soon as reasonably practicable or at a time agreed between the credit provider and mortgagor; or • if there is no nominated purchaser or the nom­ inated purchaser does not buy the goods, for the best price reasonably obtainable (s 104(1) NCC). If the price received for the goods is less than the net balance due to the credit provider, the debtor can be sued for the difference (s 104 NCC). It is possible for goods to be sold at a fraction of their real value and for the credit provider to sue the debtor for money still owing after the sale. It is important to seek legal advice if the credit provider demands money after selling repossessed goods. The debtor can apply to a court for a determination about whether the credit provider exercised its power of sale in accordance with section 104(1) of the NCC. The court can award the debtor compensation if it is not satisfied that the credit provider sold the goods as soon as reasonably practical, or at a time the mortgagor had agreed to, for the best price reasonably obtainable. However, it has been held that sale by public auction will in most cases constitute a sufficient attempt by the credit provider to receive the best price reasonably obtainable. The credit provider can sue up to six years after the sale of repossessed goods. If payments are made later, the credit provider can sue up to six years after the last payment ( Limitation of Actions Act 1958 (Vic)). Mortgagor’s remedies Division 6 of Part 5 of the NCC allows a debtor to apply to a court for orders that a credit provider return repossessed goods where the credit provider has failed to comply with Part 5–2 (see ‘Restrictions on the right to repossess’, above) and 5–4 (see ‘Sale of repossessed goods’, above) of the NCC. Such a remedy may be available even where the secured credit contract remains in default. However, neither the legislation nor the explanatory memorandum provides any guidance as to the factors a court would consider in making such an order. Consumer leases What is a consumer lease? A ‘consumer lease’ is defined in the NCC as a contract for the hire of goods by a person for a specified time at a specified rental under which they have no right or obligation to purchase the goods (s 169 NCC). Consumer leases are regulated by Part 11 of the NCC. If the lease contains an option or right to purchase the goods, it may be a ‘sale by instalments’ agreement under section 9 of the NCC, and thus potentially be a regulated credit contract and not a consumer lease. The NCC does not apply to leases with fixed periods of four months or less (s 171(1)) or to leases for indefinite periods unless the criteria in section 171(1A) of the NCC apply. The NCC (s 171(2)) also does not apply to goods hired by an employee in connection with their remuneration or other employee benefits. Section 172 of the NCC provides that where a party claims that the NCC applies to a consumer lease, and that it was entered into for personal purposes, it is presumed to be so unless the contrary is established. This is consistent with the equivalent provisions of the NCC in respect of credit contracts. However, section 172 applies only to contracts entered into on or after 1 July 2010. For contracts entered into before 1 July 2010, section 150 of the Uniform Credit Code (‘ Old Code ’) applies (item 3(3) sch 1 National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth)). A consumer lease must be in writing and disclose, at a minimum, the following: • a description of the goods (s 174(1)(a) NCC); • the amount the lessee must pay before the goods are delivered (s 174(1)(b) NCC); • the amount of stamp duty and other government charges the lessee must pay (s 174(1)(c) NCC); • any charges additional to rental (s 174(1)(d) NCC); • the amounts and timing of rental payments (s 174(1)(e) NCC); • the number of rental payments and the total amount payable (s 174(1)(f) NCC); • the conditions on which the lessee may terminate the lease (s 174(1)(g) NCC); and • the liabilities of the lessee on termination of the lease (if any) (s 174(1)(h) NCC).