The Commerce Commission has won its appeal against a District Court decision to dismiss 19 charges against two finance companies.

In July 2016 Budget Loans Ltd and Evolution Finance Ltd were convicted on 106 charges under the Fair Trading Act.

The companies originally faced 125 charges but 19 were dismissed by Judge Sharp. Those charges concerned representations about the companies’ right to charge interest and costs on contracts entered into before 6 June 2015, following repossession and sale of borrowers’ property where Budget and Evolution had security interest over multiple items.

The Commission says it appealed the decision to dismiss the charges, and in the High Court at Auckland Justice Edwards has upheld that appeal (Commerce Commission v Budget Loans and Evolution Finance [2017] NZHC 695)  

The Commission says its case was that, for loans entered into before 6 June 2015, lenders were prohibited under the Credit (Repossession) Act from charging interest and costs after the first security item had been repossessed and sold. Budget and Evolution argued that where a loan was secured over multiple items, all items had to be repossessed and sold before they needed to stop charging interest and costs.

The Court agreed with the Commission’s view and found that once an item has been repossessed, a lender can no longer charge interest or costs, including the costs of further repossessions.

The 19 charges are to be considered again by the District Court.

Budget and Evolution also appealed all 106 convictions on multiple grounds. None were upheld by Justice Edwards.