Bunnings: perils of the fine print

... we can also take your house

The moral of this story is nobody reads the fine print, nobody. Even the person who wrote the fine print probably doesn’t read the fine print, except to check the spelling, and only on instructions from client to lawyer: “We pay you well, just make that fine print is tight”.

Yesterday, we established that if you signed up for Bunnings store-card you had agreed to a charge over all your land now and forever.


In the reasonable belief that it was unlikely that Bunnings, a business which sold watering-can nozzles, would have a clause in its store-card contract which took a charge over “all of the Customer’s right, title and interest in land (held now or in the future, wherever located)” we had to do some checking. Journalist stuff, boring but important.

Was it true, as Bunnings managing director had told us in a manicured PR statement that this was standard industry practice, taking a charge over a tradie’s land forever, wherever it was, and any land said tradie might ever acquire?

“This is an ordinary trading arrangement with commercial/business account customers and all details are well documented in our terms and conditions. Such arrangements are standard practice in the industry and we have had these in place for over 15 years”.  

So it was that we intrepidly hopped in the car and did the rounds of the local hardware suppliers. Firstly, to Tradelink, a national trade supplies mob owned by Kiwi building giant Fletcher Building. Paul, the bloke at the desk seemed stonkered at the notion that anybody could be expected to put a house or more on the line for the purchase of a slab of plywood. He put the terms sheet on email for us.

Never heard of it, he said. Neither had the lads around the corner at TLE Electrical and Industrial Suppliers, nor the store manager around the block at Kennards.

We checked the TLE terms, nothing there about a charge. Not in Kennards’ terms either, and as the manager said, he was hiring out $60,000 bits of equipment so had just as much at stake as Bunnings.

Better do one more, we thought. Around the block again it was to Hardware & General Supplies. And there it was, in black and white on the terms and conditions sheet; there was no more singling out poor little Bunnings:

“We hereby charge with the due payment of these monies all of our interest in real property both present and future and we each consent to the company lodging a caveat …” etc etc.

It was in much larger small print than Bunnings, to be fair to H&G, and buried in far less reams of small print but was essentially the same clause. When we got back to the michaelwest.com.au regional head office and checked the Tradelink email, there was that darn clause again:

“In consideration of the acceptance of this application by the Supplier and as an essential condition of the terms of supply, we jointly and each of us severally charge all of my, our, and its real property both present and future and wheresoever situated with the amount of my, our and its (as the case may be) indebtedness to the Supplier on any account whatsoever …”   

Finally to Mitre 10. It was too hard to find a credit agreement online, the local Mitre 10 had shut, and calls to the new owner Metcash were met with the usual Metcashian boorishness. If we ever get a response, we’ll fill you in, but with Metcash, it’s unlikely.

So, there you go, there must be tens of thousands of tradies and DIY types across the country who have no idea their supplier may have a caveat over their property.

Does it matter? Greatly. We also had a call from a builder yesterday whose loans were placed in default by his bank eight years ago. He later found out why he was in default. It was because the terms of his loan agreement stipulated clear title and there was a caveat on one of his assets. It triggered default.

The builder didn’t know about the caveat. It turned out the caveat was from Bunnings. Bunnings didn’t tell him about the caveat, he says, nor did it have to tell him. Once a customer signs a charge – via the application form for the store-card – the customer has agreed to a charge, and that’s it.

It was a Bunnings caveat wot got him.

The question is, does this constitute a fair contract under Australia’s credit laws? Could the builder be reasonably expected to read the fine print, given the potential ramifications of a default?

  • Banks don’t give credit without security, why should anyone else? One assumes that a caveat is not placed on a debtor’s assets unless the debtor is in default of the credit conditions …

    • BaldwinP

      Yes; the bank probably used the caveat as the simplest and least arguable explanation for the default but every bank has a more general “if we have reason to believe your financial position has deteriorated” type of clause to rely upon. The bank would have been acting on the knowledge that this builder had substantial debts to Bunnings and probably other trade suppliers too, and without the caveat they could have still cited that instead.

  • cscoxk

    Just because banks do it doesn’t make it right or the best way to do things. The issue is when there is a dispute. It is assumed the banks and Bunnings are correct in any dispute and that the customer is at fault. The customer now has to prove their innocence rather than the banks or Bunnings proving the person’s guilt.

  • BaldwinP

    Lots of suppliers do it. A lot of them just have their lawyer rip off the terms and conditions from company X anyway (whether it is Bunnings, Coles, ANZ, Harvey Norman, whatever). They probably don’t think of this up until the point where they have a major customer who owes them $200k and they’ve heard on the grapevine that the customer is going under. This would be a huge blow for the supplier. They ask their lawyer “what can I do?”, the lawyer looks at the terms and conditions the customer signed when they opened an account and says “You can lodge a charge over their land, let’s do a search and see if they have any”, and if the supplier is lucky they get in line directly behind the customer’s bank and there’s something left over to pay part of the debt. Most of the suppliers who do this are not Bunnings-size.

    I couldn’t possibly give general legal advice on whether this is still legal under the unfair contract legislation that covers small business from 12 November, but it really wouldn’t surprise me if it remains completely legal. People in business have a responsibility to protect themselves and understand what they sign up to. And the building industry is full of sharks who rack up debts, sink the company, and just open up a new company, personal guarantees in some form or other are a necessity. It would be a bit puzzling if it was fine for the banks to demand security over someone’s land in exchange for credit, but trade suppliers couldn’t do it.

  • Kaye Makovec

    Isn’t that what a Writ of Fi Fa is?
    I thought it had always been the case if a debt is owed then anything a person owns can be sold off to pay the debt.
    I have also heard that the Sheriff can take everything except for beds to be sold off.