MTF’s views on result

The high court’s second judgement in the Sportzone Motorcycles case – also known as the quantification judgement – relates to various fees charged in 39 loan contracts it originated between May 2005 and July 2008, says Motor Trade Finances Ltd (MTF). It follows the June 27 hearing when the court heard arguments on the application and quantification of the original – or liability – judgement handed down on September 27, 2013. That civil proceeding was brought by the Commerce Commission against a shareholder in MTF, Sportzone, MTF and MTF Securities Ltd. The original hearing was held in November 2012. In the liability judgment, the high court upheld the commission’s allegations certain fees charged were unreasonable and in breach of the Credit Contracts and Consumer Finance Act (CCCFA). The court rejected other allegations of inadequate disclosure and breaching the Fair Trading Act (FTA). “The quantification judgement is the court’s application of the close relevance test introduced in the liability judgement,” says MTF. “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 doesn’t 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 commission and MTF. “MTF remains disappointed with the original liability judgment where some fees were considered unreasonable. “It considers the court’s narrow basis for that finding doesn’t recognise normal commercial practice, although it did acknowledge costs not recovered through fees can be recovered through loan interest rates.” MTF adds in its statement that it isn’t 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 the approach taken by the court to determine whether a fee is unreasonable is significant for the consumer lending industry generally. “It may remain significant in the development of the responsible lending code 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.”