WARNING:
This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 29 August 1996.
CONTENTS
Veterans' Affairs Legislation Amendment Bill (No. 1)
1996
Date Introduced: 22 May 1996
House: House of Representatives
Portfolio: Veterans' Affairs
Commencement: While the amendments outlined in
this Digest commence on Royal Assent, the amendments proposed by
Schedule 2 will apply to pension claims made from 1 June 1994.
The major amendments proposed by this Bill:
- ensure that loan beneficiaries under the Defence Service Homes
Scheme have rights similar to those other borrowers will have under
the State and Territory Consumer Credit Codes; and
- provide that where a member of the Defence Force or a
Peacekeeping Force dies from an injury or disease that has already
been determined to be defence or war caused, their dependants when
claiming a pension will not have to re-establish the service
relationship.
As there is no central theme to the Bill, a brief background to
each major amendment will be outlined below.
Amendments to the Defence Service Homes Act
1918
Consumer Credit Code
In July 1993 the State and Territory Governments agreed to
introduce uniform legislation (the Consumer Credit Code) to
regulate the provision of consumer credit.
The Consumer Credit Code is intended to regulate all forms of
personal, domestic and household credit, including:
- personal loans;
- housing loans;
- hire purchase agreements; and
- retail credit.
The Consumer Credit Code regulates the activities of all
financial institutions and providers of personal credit,
including:
- banks;
- finance companies; and
- retailers providing credit.
The Consumer Credit Code will apply where credit the credit is
provided or intended to be provided wholly or predominantly for
personal, domestic or household purposes.
The proposed start date for the Consumer Credit Code is 1
November 1996.
Mortgages and the Consumer Credit Code
Mortgages are regulated by the Consumer Credit Code where they
secure obligations under a credit contract or related guarantee and
the mortgagor is a natural person or strata corporation.
General restrictions imposed by the Consumer Credit Code on
mortgages include:
- a mortgage must describe/identify the property which is subject
to the mortgage;
- where a mortgage charges all property of the mortgagor, the
provision in a mortgage which does so is void;
- generally, a provision in a mortgage which charges future
property is void; and
- a mortgage cannot be created over an employee's remuneration or
employment benefits or superannuation benefits unless the
regulations specify otherwise.
The amendments proposed by Schedule 1 of this Bill are intended
to ensure that loan beneficiaries under the Defence Service Home
Scheme have rights similar to those other borrowers will have under
the Consumer Credit Code.
Defence Service Homes Scheme
Housing assistance has been available under the provisions of
the Defence Service Homes Act 1918 to certain men and
women who have served Australia since 1918. As at June 1994, there
were 107 124 persons in receipt of Defence Service Homes (DHS)
assistance. Assistance includes housing loan interest subsidies,
comprehensive homeowners' insurance cover and home contents
insurance. The maximum loan available is $25 000 repayable over 25
years. Under an arrangement between the Commonwealth and the
Westpac Banking Corporation, the Commonwealth subsidises Westpac
for low interest loans it provides to eligible persons.
Amendments
Exclusion of Consumer Credit Codes -The principal effect
of item 3 of Schedule 1 is to provide for the
application of the State and Territory Consumer Credit Codes to
Defence Service Homes Scheme (DSH Scheme) borrowers, to the extent
not provided for by the amendments proposed by this Bill.
Item 4 of Schedule 1 inserts a new Part
IIIA (proposed sections 23A-23L) in the Defence
Service Homes Act 1918 which provides DSH Scheme borrowers
with remedies against certain unjust transactions.
Power to Reopen Unjust Transactions
Proposed section 23A accords a court power,
subject to two exceptions, to re-open a contract, mortgage or
charge where it is satisfied that at the time it was entered into
or changed it was unjust. The two exceptions are to the annual
rates, or change to the annual rates, of interest under a contract
or mortgage, and an unconscionable establishment fee or charge, or
other fee or charge (see proposed section 23F in relation to fees
and charges).
Matters to be Considered by Court
In determining if a particular contract, mortgage or guarantee
is unjust (the term 'unjust' is defined in proposed section 23L to
include unconscionable, harsh or oppressive), a court must
have regard to the public interest and the circumstances of the
case, and may take into account certain matters,
including:
- the relative bargaining power of the parties;
- the consequences of compliance, or non-compliance, with all or
any provisions of the contract, mortgage or guarantee;
- whether or not any provisions of the contract, mortgage or
guarantee impose conditions that are unreasonably difficult to
comply with;
- the form of the contract, mortgage or guarantee and the
intelligibility of the language in which it is expressed;
- whether the Bank or any other person used unfair pressure,
undue influence or unfair tactics on the borrower, mortgagor or
guarantor;
- whether the Bank took measures to ensure that the borrower,
mortgagor or guarantor understood the nature and implications of
the transactions and, if so, the adequacy of those measures;
and
- any other relevant matter [proposed subsection
23B(1)].
Proposed subsection 23B(2) is a DSH Scheme
specific provision which provides that a court must when
determining whether a term of a contract, mortgage or guarantee is
unjust have regard to certain matters, including that in some
circumstances the Bank would not provide advances to an eligible
person if it were assessed on ordinary commercial lending criteria
instead of the criteria set out in the Principal Act. The proposed
subsection also specifies two matters which the court is not to
have regard to, namely, any inequality in bargaining power between
the Bank and the borrower that arose because the borrower obtained
a subsidised loan from the Bank and not from another institution,
and the borrower's age.
Orders on Reopening of Transactions
Proposed section 23E sets out the orders that a
court may make if it re-opens an unjust transactions. The orders
may include:
- relieving the borrower and any guarantor from payment of any
amount in excess of the amount that the court considers to be
reasonably payable;
- set aside wholly or partly, or revise or alter, an agreement
made or mortgage or guarantee given in connection with the
transaction; and
- order any steps necessary to discharge the mortgage.
Review of Unconscionable Fees and Charges
Proposed section 23F provides a court with
power to review, annul or reduce unconscionable fees and charges.
When making a determination as to whether a fee or charge is
unconscionable, the court must consider whether the amount
of the fee or charge is equal to the Bank's reasonable costs of
determining an application for credit and the initial
administrative costs of providing the credit; or is equal to the
Bank's average reasonable costs in respect of that class of
contract.
Time Limit
A person will have two years from the time a contract, mortgage
or guarantee is rescinded, discharged, or the Bank writes off the
debt to ask a court under proposed section 23A to reopen the
contract, mortgage or guarantee [proposed subsection
23G(1)]. The same two year time limit will apply in
respect to a fee or charge charged under a contract, mortgage,
guarantee or the Bank writes off the relevant debt
[proposed subsection 23G(2)].
Exceptions to Proposed Part IIIA
Proposed section 23H lists exceptions to
proposed Part IIIA. Proposed Part IIIA will not apply to:
- a contract, mortgage or guarantee under which the borrower,
mortgagor or guarantor is not an individual;
- a contract under which the borrower is borrowing for a purpose
that is not wholly or predominantly a personal, domestic or
household purpose;
- a change to a contract, mortgage or guarantee where the change
was a consequence of the amendments proposed by this Bill, any
other Act or amendment of the agreement between the Commonwealth
and Westpac; or
- a contract, mortgage or guarantee entered into before the start
of this paragraph.
Legal and Financial Assistance
Proposed section 23J provides for financial
assistance for challenges under proposed sections 23A or 23F (see
above). Financial assistance may be granted where the
Attorney-General or an authorised person is satisfied that it would
involve hardship to the applicant to refuse the application, and
that, in all the circumstances, it is reasonable that the
application should be granted. Assistance may be granted either
unconditionally or subject to conditions.
Amendments to the Veterans' Entitlements Act
1986
Eligibility for a pension is determined having regard to the
relationship between the death, injury or disease and service as a
member of the Defence Force or a Peacekeeping Force. The principal
effect of the amendments proposed by Schedule 2 of this Bill is to
provide that where a member of the Defence Force or a Peacekeeping
Force dies from an injury or disease that has already been
determined to be defence or war caused, their dependants when
claiming a pension will not have to re-establish the service
relationship.
Section 8 of the Veterans' Entitlements Act 1986 (the
Principal Act) sets out when the death of a veteran will be taken
to have been 'war-caused'. The circumstances include: where the
death of the veteran resulted from an occurrence that happened
while the veteran was rendering operational service; the death
arose out of, or was attributable to, any eligible war service; or
the death resulted from an accident that occurred while the veteran
was travelling to a place for the purpose of performing duty or a
way from a place of duty.
Subsection 70(1) of the Principal Act provides that the
Commonwealth is liable to pay the dependants of a member of the
Defence Force or a Peacekeeping Force a pension where the members
death was defence-caused; or to pay the member compensation where
they become incapacitated from a defence-caused injury or
disease.
Subsection 70(5) of the Principal Act sets out, for the purposes
of pension eligibility, when the death, injury or disease of a
member of the Defence Force or a Peacekeeping Force will be taken
to have been 'defence-caused'. The circumstances include where the
death, injury or disease arose out of, or was attributable to, any
defence service or peacekeeping service of the member.
Item 1 of Schedule 2 inserts a new
paragraph 8(1)(f) in the Principal Act which provides that
the death of a veteran will be taken to be war-caused if the injury
or disease from which he/she died is one which has already been
determined to be war caused.
Item 2 of Schedule 2 inserts a new
paragraph 70(5)(d) in the Principal Act which provides
that the death of a member of the Defence Force or a Peacekeeping
Force will be taken to be defence-caused where the injury or
disease which caused the death is one which has already been
determined to be defence-caused.
Item 3 of Schedule 2 inserts a new
paragraph 70(5A)(d) in the Principal Act which
provides that the death of a member of the Defence Force who has
rendered hazardous service will be taken to be defence-caused where
the injury or disease which caused the death is one which has
already been determined to be defence-caused.
The amendments proposed by Schedule 2 will apply to claims made
on or after 1 June 1994 (item 4 of Schedule
1).
Ian Ireland Ph. 06 277 2438
21 August 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1323-9032
Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library,
1996.
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Commonwealth of Australia
Last updated: 23 August 1996
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