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- Release Date: 08/10/13 14:07
- Summary: GENERAL: MTF: High Court judgement released
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MTF
08/10/2013 12:07
GENERAL
REL: 1207 HRS Motor Trade Finances Limited
GENERAL: MTF: High Court judgement released
On 27 January 2010, Motor Trade Finances Limited (MTF) advised that it had
received notice of a High Court civil proceeding brought by the Commerce
Commission against a shareholder in MTF, Sportzone Motorcycles Limited
(Sportzone, (now in liquidation)), MTF and MTF Securities Limited. The
Commission alleged breaches of the Credit Contracts & Consumer Finance Act
2003 (CCCFA) and the Fair Trading Act 1986 (FTA) in respect of various fees
charged in 39 loan contracts originated by Sportzone between May 2005 and
July 2008.
The trial in the proceeding was held in November 2012 and a judgment dated 27
September 2013 has now been delivered.
The Court rejected the Commission claim that Sportzone and MTF failed to make
proper disclosure of components of credit fees payable under the loan
contracts.
The Court rejected the Commission claim that the labels Sportzone and MTF
used for establishment and account maintenance fees were misleading and
deceptive in breach of the FTA.
The Court decided that some fees charged under the loan contracts were
unreasonable in terms of the CCCFA. The Court has not quantified the amount
by which it considers the fees to be unreasonable, or any amount to be repaid
to the relevant borrowers. The Judge has called for the parties to discuss
quantification and to make further submissions to the Court, if necessary.
MTF is pleased that the Court rejected the Commission allegation of failure
to make proper disclosure and the Commission allegation of misleading and
deceptive conduct. MTF is disappointed with the decision that some fees were
considered unreasonable and considers that the Court's narrow basis for that
finding does not recognise normal commercial practice. Furthermore, in MTF's
view, the Court's finding did not acknowledge that borrowers would have paid
higher interest rates on the loans to recover costs not recovered through
fees and, as a result, had suffered no loss.
MTF considers that the approach taken by the High Court to determine whether
a fee is unreasonable is significant for the consumer lending industry
generally, and may remain significant despite the current legislative process
which may amend the CCCFA. MTF intends to appeal that aspect of the
judgment.
As the matter remains before the Courts, MTF will not be making any further
comment.
End CA:00242112 For:MTF Type:GENERAL Time:2013-10-08 12:07:32
