Commerce Commission v Ace Marketing Limited - [2022] NZHC 1785

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-869

[2022] NZHC 1785

UNDER Parts 1A and 4 of the Credit Contracts and Consumer Finance Act 2003, and Parts 4A and 5 of the Fair Trading Act 1986

BETWEEN

COMMERCE COMMISSION

Plaintiff

AND

ACE MARKETING LIMITED

Defendant

Hearing: 3 December 2021

Appearances:

J Dixon QC, J Barry and N Herewini for the Plaintiff No appearance for the Defendant

Judgment:

6 December 2021

Reasons:

25 July 2022

REASONS JUDGMENT OF ROBINSON J

This judgment was delivered by me on 25 July 2022 at 10:00am pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors:
Meredith Connell, Auckland Russell McVeagh, Auckland

COMMERCE COMMISSION v ACE MARKETING LIMITED [2022] NZHC 1785 [6 December 2021]

Introduction [1]

Background [3]

Procedural Background [3]

Factual Background [5]

Ace’s customers [8]

Ace’s contracts [12]

Repayment plans [16]

Delayed Delivery Provisions [20]

Ace’s additional documentation [34]

Ace’s sales catalogues [35]

Sales verification calls [36]

Reminder Document [38]

Ace’s explanation [42]

Causes of Action One and Two - Breach of Responsible Lender Principles [43]

Was Ace a lender? [46]

Were Ace’s customers borrowers? [62]

First Cause of Action: Were the terms of the contract expressed in plain language in a clear, concise, and intelligible manner? [63]

Second Cause of Action: Was the information Ace provided its customers presented in a manner that is, or is likely to be, misleading, deceptive or confusing? [79]

Relief for Causes of Action One and Two [86]

Declaratory relief [86]

Injunctive relief [91]

Fourth Cause of Action – Unfair Contract Terms – s 46L of the Fair Trading Act 1986 (FTA)[94]

Is the contract a consumer contract? [97]

Is the consumer contract a standard form contract? [99]

Is the declaration prohibited by s 46K(i)? [103]

Are the Delayed Delivery Provisions unfair in the sense described in s 46L? [104]

Significant imbalance  [107]
Was there a significant imbalance between the contracts?  [109] Were the Delayed Delivery Provisions reasonably necessary to protect Ace’s interests?  [115] Would enforcement of the Delayed Delivery Provision cause detriment to consumers?  [122]
Relief for Fourth Cause of Action  [127]

Form of declaration [128]

Introduction

[1]On 6 December 2021, I issued a results judgment in which I: 1

(a)declared that by its conduct Ace Marketing Ltd (Ace) breached s 9C(1) via s 9C(2)(b) and each of ss 9C(3)(b)(ii) and 9C(3)(b)(iii) of the Credit Contracts and Consumer Finance Act 2003 (CCCFA);2

(b)directed that Ace is not to provide credit under the contracts that are the subject of this proceeding unless and until it complies with ss 9C(3)(b)(ii) and 9C(3)(b)(iii) of the CCCFA;3

(c)declared (amongst other things) that pursuant to s 46I(1) of the Fair Trading Act 1986 (FTA) that certain terms and provisions of Ace’s contract described as the Delayed Delivery Provisions amounted to an unfair contract term in a standard form contract within the meaning of s 46L(1) of the FTA;4 and

(d)declared pursuant to s 26A of the FTA…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 1785
Decision Date: 6 December 2021

CaseChat Overview and Summary

This case involved a claim by the Commerce Commission against Ace Marketing Limited for breaches of the Credit Contracts and Consumer Finance Act 2003 and the Fair Trading Act 1986. The Commission alleged that Ace breached responsible lending principles by not expressing the terms of its contracts in plain language and by providing information to its customers in a manner that was misleading, deceptive, or confusing. The Commission also alleged that certain terms of Ace's contracts, known as the Delayed Delivery Provisions, were unfair contract terms within the meaning of the Fair Trading Act. Ace did not defend the proceedings. The court found that Ace was a lender under the Credit Contracts and Consumer Finance Act and that its customers were borrowers. The court found that Ace breached responsible lending principles by not expressing the terms of its contracts in plain language and by providing information to its customers in a manner that was misleading, deceptive, or confusing. The court also found that the Delayed Delivery Provisions were unfair contract terms within the meaning of the Fair Trading Act. The court made declarations that Ace had breached certain provisions of the Credit Contracts and Consumer Finance Act and that the Delayed Delivery Provisions were unfair contract terms. The court also granted injunctive relief and ordered that Ace is not to provide credit under the contracts that are the subject of this proceeding unless and until it complies with certain provisions of the Credit Contracts and Consumer Finance Act. The court further declared that a person must not include, apply, enforce, or rely on the Delayed Delivery Provisions in a standard form contract. The court's declarations and orders are intended to ensure compliance with consumer protection legislation and to deter similar conduct in the future.

Orders