Thursday, March 29, 2018 - Posted by Michael McCulloch
As you may be aware once a debt has been referred to External Dispute Resolution ("EDR") all collection action should cease pending the complaint or dispute being resolved. What happens though when you have a Judgment and a dispute or complaint is lodged?
Both of the current EDRs in the Financial Ombudsman Service ("FOS") and the Credit and Investments Ombudsman ("COSL") have Terms of Service which clarify their position when it comes to a Judgment with both indicating that where Judgment has been entered they have no jurisdiction but how does this work in a practical sense?
In our quest for answers we reviewed some of the outcomes where Judgment was entered and a complaint or dispute was lodged with an EDR. In our search we came across a Review by COSL in August 2016. The original complaint related to:
- a Security Certificate breach that appeared on the FSPs website on or around June 2012; and
- a Default Judgment obtained by the FSP from the Local Court of NSW on or around October 2015 to recover $47,454.49 from the consumer.
The outcome of the review has been transcribed below:
The claim that the FSP committed a breach of the consumer’s privacy by not remedying the security certificate breach
The claim that the consumer’s privacy was breached as the FSP did not remedy the security certificate breach. We would not be the appropriate forum to consider complaints about security certificates. Based on the available information, we consider it more appropriate that the consumer
direct this claim with the Office of the Australian Information Commissioner. The OAIC can investigate privacy complaints covered by the Privacy Act 1988 (CTH) and also complaints relating to handling of the consumer’s personal information by the FSP.
The consumer’s claim that the Statement of Claim was issued to the wrong address despite the consumer updating the consumer’s new address on xx July 2015
The FSP has provided us a copy of the judgment by the Local Court of NSW against the consumer dated xx October 2015 and a copy of the notice dismissing the consumer’s motion to set aside the default judgment dated xx May 2016. A court has ordered that the consumer pay the judgment debt. We cannot deal with a complaint if the subject matter of the complaint has been determined by the court. This is because we are not able to make a decision that would be seen to conflict with a decision of the court. Furthermore, only a court is able to set aside a court’s judgment. If the consumer wishes to set aside the default judgment, the consumer’s claim would be better raised with the Local Court of NSW.
The consumer’s claim that the FSP attended the hearing on xx May 2016 despite being aware of the complaint being open with CIO
We received the consumer’s complaint against the FSP on xx May 2016. When we receive a complaint, the financial services provider is required to cease enforcement action for as long as we deal with the complaint. On or around the same time the consumer lodged the complaint with us, the consumer approached the Local Court of NSW to set aside the default judgment obtained by The FSP. Both the parties attended the hearing to set aside the default judgment on xx May 2016. The court dismissed the consumer’s motion to set aside the default judgment and upheld its original default judgment against the consumer dated xx October 2015. We do not consider that the FSP breached our Rules by attending the court hearing. This is because the FSP already obtained a judgment against the consumer on xx October 2015 and was attending the court to respond to the consumer’s notice to set aside the default judgment. We are unable to find that this amounted to a continuation of enforcement action as The FSP is entitled to defend itself to legal proceedings commenced by the consumer.
With the consumer being unhappy with the Review the matter was referred to the Ombudsman for Determination. The Ombdusman concluded in their Final Decision
49. For the reasons set out in the Review and this Determination, I find that the consumer's claims have either not been made out or are outside our jurisdiction.
In summary it is now our opinion having read the Review, Determination and Decision that while enforcement of a Judgment Debt cannot continue while a complaint or dispute is before EDR that if a Defence or a Motion is filed by a consumer in the Court that the FSP has the right to respond to an action raised by a consumer.
Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.