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Ann: GENERAL: MTF: Second High Court judgment released

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    • Release Date: 22/10/14 08:30
    • Summary: GENERAL: MTF: Second High Court judgment released
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    					MTF
    22/10/2014 08:30
    GENERAL
    
    REL: 0830 HRS Motor Trade Finances Limited
    
    GENERAL: MTF: Second High Court judgment released
    
    The High Court has released a second judgment in the Sportzone case (the
    Quantification Judgment), relating to various fees charged in 39 loan
    contracts originated by Sportzone Motorcycles Limited between May 2005 and
    July 2008.
    
    This follows the 27 June 2014 High Court hearing, where the Court heard
    arguments on the application and quantification of the original 27 September
    2013 judgment (the Liability Judgment) in the 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 original High Court hearing was held in November 2012.
    
    In the Liability Judgment the High Court upheld the Commission's allegations
    that certain fees charged were unreasonable in breach of the Credit Contracts
    & Consumer Finance Act 2003 (the CCCFA).  The Court rejected other
    allegations of inadequate disclosure and breach of the Fair Trading Act 1986
    (FTA).
    
    The Quantification Judgment is the High Court's application of the 'close
    relevance test' introduced in the Liability Judgment.  That application is
    intended to provide guidance on what costs can reasonably be recovered
    through a credit or default fee, rather than through the interest rate
    charged to the customer.
    
    While the Quantification Judgment seeks to apply the 'close relevance test'
    to types of costs, it does not precisely quantify the amounts by which the
    relevant fees have been deemed to be unreasonable.  Such precise
    quantification would require further calculations to be made by the Commerce
    Commission and MTF.
    
    MTF remains disappointed with the original Liability Judgment, where some
    fees were considered unreasonable, and considers that the High Court's narrow
    basis for that finding does not recognise normal commercial practice,
    although the Court did acknowledge that costs not recovered through fees can
    be recovered through loan interest rates.
    
    Both the Liability Judgment and the Quantification Judgment are subject to
    appeal with a hearing set down for 19-20 November 2014.  Consequently, MTF is
    not in a position to quantify any ultimate liability in relation to the 39
    Sportzone loans, or any other loans originated by MTF shareholders.
    
    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 in the development of the Responsible
    Lending Code, currently being developed by the Ministry of Business,
    Innovation and Employment, as part of the legislative amendments to the
    CCCFA.
    
    As the matter remains before the Courts, MTF will not be making any further
    comment at this stage.
    End CA:00256665 For:MTF    Type:GENERAL    Time:2014-10-22 08:30:12
    				
 
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