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ARTICLE · 03 DECEMBER 2014

Secured creditor’s enforcement action restrained while a decision of FOS was appealed

Corrs Chambers Westgarth
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A new trend could emerge, where debtors seek to delay enforcement action by appealing against determinations made by FOS.

AustraliaLitigation, Mediation & Arbitration
David Abernethy
David Abernethy
Jason Salman
Jason Salman
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BACKGROUND

Goldie Marketing Pty Ltd's (GM) business involved the manufacture and distribution of products associated with well recognised popular culture characters.

The creditor advanced GM around $8.8m and took security over its assets. After falling into default, GM lodged a dispute with the Financial Ombudsman Service (FOS) alleging that the creditor:

  • negligently lent $2.5m to GM when it was "over-leveraged";
  • delayed in assessing and approving seasonal funding for its business activities; and
  • failed to give enough assistance to GM to help it overcome its financial difficulties.

The creditor argued that the dispute should be excluded under the FOS Terms of Reference on grounds that:

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