Melbourne Office

PO Box 16013

Melbourne VIC

Tel +61 3 8636 4400

Fax +61 3 8636 4455

justiceconnect.org.au/homelesslaw

Money matters & Risk management

Anna Lyons - Senior Lawyer,

Homeless LawMay 2015

Today’s topics

• Credit and debt

• Guardianship and administration

• Running files and managing risk

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Credit and debt

What we’ll cover today:

• Relevant law

• Tips for running matters

• Advising ‘judgment proof’ clients

• Options: hardship, negotiation, dispute resolution, defending a claim

• Homeless Law resources3

Common issues

• Credit contracts with financial

institutions (eg loans and credit

cards)

• Utilities and phone debts

• ‘Payday loans’

• Judgment debts

• Mortgage arrears4

Legislative landscape –consumer law

Up to 31 December 2010

• Trade Practices Act 1974 (Cth)

• Fair Trading Act 1999 (Vic)

From 1 January 2011 (goods and services)

• Competition and Consumer Act 2010 (Cth) (CCA)

• Australian Consumer Law (Schedule 2 to the CCA) (and changes to the ASIC Act 2001

(Cth)) (ACL)

• Introduced in Victoria via Australian Consumer Law and Fair Trading Act 2012 (Vic)

Financial services

• Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act)

• Corporations Act 2001 (Cth)

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Legislative landscape –consumer credit

Up to 30 June 2010

Consumer Credit (Victoria) Act 1995 (Vic)

Uniform Consumer Credit Code

From 1 July 2010

National Consumer Credit Protection Act 2009 (Cth)

National Credit Code (Schedule 1 to the NCCPA)

Consumer Credit (Victoria) Act 1995 (Vic)

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Things to know about before you start

• External Dispute Resolution

• Industry codes that regulate the creditor or supplier

• Restrictions on debt collectors (ASIC Regulatory Guide 96, Debt Collection Guideline: For Collectors and Creditors)

• Hardship teams – use them!

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Which legislation applies?

• Consumer credit contracts (eg. loans

and credit cards) – consider both the

ACL protections (under the ASIC Act) and

the consumer credit regime

• Other consumer contracts (eg. mobile

phone and utilities) – only the ACL and

relevant industry codes will be relevant

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Taking instructions

• Get a picture of the debt, loan or contract

• Piece together information about the client’s

circumstances

• How did the client come to enter the contract?

• What outcome is the client seeking?

• Use the Taking Instructions Checklist (refer to

workbook & www.hlp.org.au)

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Sample budget

Homeless Law Credit and Debt Training 201410

Expense Amount per f/n

Rent

Groceries

Mobile phone

Bills and other debts

Transport (PT or petrol)

Medication

Child support

Other (specify)

TOTAL

Risk Management

1. Conflict checks

• Note other parties

• Check commercial conflicts with your firm

• Check Justice Connect/Homeless Law conflicts

2. Confirmation of instructions

• Send client engagement letter setting out scope of engagement

3. Update PIMS

• Up to date record of matter

• For each separate matter (ie, debt matter and tenancy matter)

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First steps – where to start?

• What stage is the matter at?

• How old is the debt?

• Put a hold on enforcement

• Gather relevant documentation

• Get instructions on the client’s circumstances

• Obtain to consent to make an appointment with a

financial counsellor

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First steps – stage?

Limitation of Actions Act 1958 (Vic) s 5 (6 years or 15 years (judgment debts)).

• overdue bills

• being contacted by a debt collector

• has defaulted on a mortgage or a secured loan

• court documents served i.e. being sued to recover the

debt

• has received a default notice in relation to a secured loan

Timeframes eg. 30 days from default notice13

First steps – hold on enforcement

Consumer contracts – call the hardship team, refer to their policies or regulations, file note, EDR

Consumer credit contracts – if it is a Code compliant default notice:

• request postponement of enforcement within prescribed

period (30 days) (Code s 94)

• company has 21 days to give notice (and reasons)

• if no postponement, EDR and/or court application (Code s

96)

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First steps – gathering documents

• Credit contract or contract for service, bills and

correspondence from the creditor or debt collector

(obligations under the Code s 185 and ACL ss 100

and 101)

• Relevant codes of practice for the industry or

particular creditor

• Any court documents

• Supporting reports (from client’s GP, caseworker,

drug and alcohol worker, psychologist etc)

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Is the client judgment proof?

• Only income is from Centrelink

• Doesn’t own/is not buying a house

• Does not own any assets (eg. savings or

jewellery not ordinary household items or

one car worth less than $7,200 or “tools of

trade”)

• Limited capacity to earn in the future

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Advising judgment proof clients

• Make them aware of this option

• Inform them of the consequences of relying

on being judgment proof

• Get clear instructions

• Negotiate on the basis of the client’s

hardship

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Options for dealing with a credit or debt matter

• Short term measures – hardship

• Negotiation or dispute resolution – most common

• Defending a claim

– Timeframe (21 days in the Magistrates’ Court)

– Judgment proof

– Negotiation

– Table of defences

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Case study – Elaine

• Elaine owed $750 to a phone company for a home phone bill

• The debt was incurred about two years ago when Elaine was

living in a private rental property

• The debt had been sold to a debt collection company and was

around three years old

Elaine's circumstances

• 25 years old and unemployed

• Has a brain injury resulting from a car accident and

schizophrenia

• She is currently living in emergency accommodation

• She has been homeless on and off for several years

• Elaine had been unable to make repayments on the debt

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Case study – Elaine

(1) What questions to ask Elaine?

(2) What legislation applies?

(3) What codes of conduct apply?

(4) What are Elaine’s options?

(5) What are the first steps to take?

(6) Any other legal or non-legal issues?

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Matter closure letter

The letter to the client must include:

• The instructions you were given

• The steps you took to resolve the matter

• The outcome

• The matter will now be closed, documents

will be kept for seven years

• The client should contact Homeless Law if

they have any legal issues in the future

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PIMS matter closure

PIMS must be updated with:

• instructions given, steps taken, outcome (eg. size of debt waived)

• a statement about the client’s satisfaction with the outcome

• a copy of the matter closure letter

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Risk management recap

• Conflict checks

• Updating PIMS

• Be aware of timeframes

• Always make thorough file notes

• Presume capacity – contact Homeless Law if unsure

• Consult Homeless Law if counsel might be needed

• Matter closure letters and PIMS must tell the whole story

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A word on file notes…

- File notes must go on PIMS

- Every time you contact a client or try to contact them

- Include the date and time

- Note what you have said and asked, as well as the client’s instructions

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Credit and debt - Resources

• Homeless Law in Practice: www.hlp.org.au

• Policies & Procedures Manual

• Your firm supervisors and Team Leaders

• The Homeless Law team (8636 4408)

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Guardianship and Administration

What we’ll cover today:

• Key legislation

• Key concepts

• Brief overview of hearings at VCAT

• Capacity

• Reassessment and review of VCAT orders

• Resources & where to go for further information

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Legislation

• Guardianship and Administration Act 1986 (Vic) (Guardianship Act)

• Victorian Civil and Administrative Tribunal Act 1998(Vic) (VCAT Act)– Sets out procedure at VCAT (matters heard in the Guardianship List – Human

Rights Division)

• Charter of Human Rights and Responsibilities Act 2006 (Vic) (Charter)– May impact upon the interpretation of the Guardianship Act. Section 32(1) of

the Charter: “so far as it is possible to do so consistently with their purpose, all

statutory provisions must be interpreted in a way that is compatible with

human rights”.

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Guardianship

Guardianship is the appointment by an order of VCAT (a

guardianship order) of a person (a guardian) to make

personal decisions for an adult with a disability (the

represented person).

It is possible to apply for a temporary guardianship

order for a period not exceeding 21 days.

Joint guardians may be appointed.

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Administration

Administration is the appointment by an order of VCAT (an administration order) to make financial and legal decisions for an adult with a disability (the represented person).

VCAT can make a temporary administration order for a period not exceeding 21 days.

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Guardian vs Administrator

To recap:

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Guardian Administrator

Personal/lifestyle decisions

• health care

• accommodation

• employment

• access to services

• access to visitors

Financial / Legal

• property rights

• contractual rights

• sign deeds and instruments

When can a guardian or administrator be appointed by VCAT?

VCAT must be satisfied that the person:

1) is a person with a disability; and

2) is unable by reason of the disability to make

reasonable judgments in respect of:

- for guardianship: all or any of the matters relating to

their person or circumstances; or

- for administration: all or any part of their estate; and

3) is in need of a guardian and/or an administrator of

their estate.

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Criteria 1: What is a ‘disability’?

Disability is defined in s 3(1) of the Guardianship Act to mean intellectual impairment, mental disorder, brain injury, physical disability or dementia.

VCAT typically requires a current medical report or reports supporting the view that the client has a disability (s94). The form required for a report is available on the VCAT website.

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Criteria 2: When is a person ‘unable to make reasonable judgments’?

This is assessed by VCAT with the assistance of professional

assessments and testimony of friends and family of the client.

It should not be presumed that simply because a person has a

disability, they are unable to make reasonable judgments.

Must be:

• Related to the disability;

• Does not require complete ‘incapacity’, but must be ‘lacking or

severely impaired’ – see XYZ v State Trustees Ltd

• Is assessed for all aspects of the potential order (health care,

financial matters, accommodation, employment, etc).

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3 – When is there a ‘need’ for a guardian or administrator?

VCAT must consider the following:

• Whether the needs of the client could be met by means less restrictive of their freedom of decision and action;

• The wishes of the client, so far as they can be ascertained;

• (guardianship only) the wishes of family members of the client; and

• (guardianship only) the desirability of preserving existing family relationships that may be affected by the making/not making of a guardianship order.

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Homeless Law clients

Your client may have a guardian or administrator.

It could be:

• a family member

• a friend

• Public Advocate (guardian of last resort – only if there is no other suitable person)

• State Trustees (as administrator)

• another professional (lawyer / accountant)

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Case study – John

• Received notice to attend VCAT for a guardianship hearing

• Application was made by a psychiatric nurse when John

was involuntarily hospitalised and put on a Community

Treatment Order

• State Trustees already appointed as administrator

• On Disability Support Pension (managed by State Trustees)

• Diagnosed with schizophrenia

• Client’s instructions:

1) avoid a guardianship order being made;

2) avoid being put into supported accommodation; &

3) maintain independent living and remain living in

his public housing flat.

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Appearing in VCAT –Before the hearing

• Notify VCAT in writing if you are representing a client - provide a written authority to act.

• Must act on instructions – NOT what you perceive to be the client’s best interests.

• Explain the process to the client.

• Explore less restrictive options available for the client.

• Obtain all necessary paperwork from VCAT.

• If the client’s disability is in dispute, obtain an independent medical report.

• If the client agrees, contact the applicant, family members, carers and other interested

parties to assist in preparation for the hearing;

• Check the date, time and location of the hearing and inform the client of the details in

writing.

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Appearing in VCAT –During the hearing

• Seek leave to appear

• Remember: the hearing is not adversarial

• Be aware that the VCAT member will probably want to speak

to the client directly

• Raise with VCAT the client’s activities and interests and

make sure these are taken into account in any order made

• At the end of the hearing, explain the outcome to the client

and make sure the client understands what has taken place

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Appearing in VCAT –After the hearing

• Arrange a time for the client to meet with the

guardian or administrator (if one has been

appointed)

• Seek instructions to obtain a statement of reasons

• Speak to the client about their appeal rights

• If an administrator is appointed, find out any fees or

charges for the service and inform the client

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Capacity to instruct

• The law presumes each person has capacity.

• Fundamentally, capacity is the ability to make decisions for yourself and understand the consequences of those decisions.

• Capacity is decision specific.

• Capacity is fluid and may also fluctuate over time.

• Just because a person has a disability does not mean that they do not have capacity.

• To assess the person’s decisions-making ability – not the decision they make (ie, can make ‘bad’ decisions).

• Contact Homeless Law if any concerns.

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Reassessment of order

• Must be reassessed within 12 months.• After first reassessment, then at least

once ever 3 years.• Client can apply for an early

reassessment.• VCAT may amend, vary, continue or

replace the order with conditions it sees fit.

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Rehearing of VCAT order

• If a person believes VCAT made an error – can apply for a rehearing of the original decision.

• Fresh rehearing of the merits of the matter.

• Right to a rehearing if unaware of the hearing where the order was made, or if there is new evidence.

• Generally made before a more senior VCAT Member.

• Must be made within 28 days after the day on which the original order was made or/written reasons received (if requested).

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Resources

• Homeless Law in Practice: www.hlp.org.au

• Guardianship & Administration

• Policies & Procedures Manual

• Supervisors, Team Leaders and the Homeless Law team (8636 4408)

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