Commerce Commission v Eagle M.A.N Group Limited - [2024] NZHC 3070

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-333

[2024] NZHC 3070

BETWEEN
COMMERCE COMMISSION

Applicant

AND

EAGLE M.A.N GROUP LIMITED

Respondent

Hearing: 11 October 2024

Appearances:

N F Flanagan and C R Andic for Applicant J B Hamlin and C L Webber for Respondent

Judgment:

28 October 2024

JUDGMENT OF CHURCHMAN J

(Redacted)

INDEX

Introduction 1

Background 3

The sampling 9

Orders sought  22
Legal principles  23
“Representative” contraventions  36

Expert report 36

Submissions 40

Analysis 44

Maximum penalty 48

Approach in TSB Bank 55

Starting point 61

Nature and extent of contraventions 61
Nature and extent of any loss, damage or gains 65

Circumstances in which the contravention took place 68

Deterrence 72

Comparable cases 80

Appropriate starting point 84

Discounts 87

Submissions 87

Analysis 91

Defendant’s ability to pay 97

Submissions 97

Analysis 102

Result 110

Costs 112

Introduction

[1] Following an investigation, the Commerce Commission (the Commission) brought proceedings against Eagle MAN Group Ltd (Eagle MAN) on 25 March 2023 alleging breaches of ss 17, 45E, and 45G of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) due to conduct between 11 October 2015 and 22 August 2022.

[2] After discussions, Eagle MAN admitted to the allegations. The remaining issues to be determined concerns the scope of the breaches under s 45E and 45G and what form of penalties should be imposed.

Background

[3] Eagle MAN is an incorporated company with one director, Mr Noli Alea. It began trading on 11 October 2015, being first incorporated as Eagle M.A.N. Limited on 21 October 2015 before changing its name to Eagle M.A.N. Group Limited on 15 April 2016. The company operated a small to medium sized lending business which provided loans both from its two physical branches in Christchurch and online via its website and Facebook page. Its clientele was primarily Filipino temporary workers and recent immigrants to New Zealand.

[4]Over the relevant period, Eagle MAN charged:

(a)Establishment fees of $30, $50 or $70 between March and August 2021, which increased to $120 in around August 2021 and then $250 in around August 2022.

(b)Various discretionary fees including Change Fees, Statement Fees, Default Fees, Letter Fees, Wage Assignment Fees, Direct Debit Cancellation Fees, Credit Agency Fees, Collection Agency Fees and External Collection Costs.

(c)Interest charges of 109.50 per cent, 127.75 per cent, or 182.50 per cent per annum prior to 16 November 2020, or interest charges of 49 per cent from 16 November 2020.

[5] Between 1 May 2020 and 16 November 2020 (the Sample Period), 222 loans were entered into with 174 borrowers with a total value of principal of $468,300 and a total amount to be repaid of $657,908.70.

[6] Over the s 45E breach period (1 May 2020 to 22 August 2022), Eagle MAN entered into 726 loan agreements with 351 borrowers, with the amounts payable comprising $1,950,300 principal and $594,747.09 in costs of borrowing.

[7] On 12 January 2021, the Commission opened its…

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: [2024] NZHC 3070
Decision Date: 28 October 2024

CaseChat Overview and Summary

In Commerce Commission v Eagle MAN Group Limited, the Commerce Commission brought proceedings against Eagle MAN alleging breaches of ss 17, 45E, and 45G of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) due to conduct between 11 October 2015 and 22 August 2022. Eagle MAN admitted to the allegations and the remaining issues to be determined concerned the scope of the breaches under s 45E and 45G and the form of penalties to be imposed. The court found that Eagle MAN breached ss 45E and 45G of the CCCFA by providing high-cost credit contracts that provided for costs of borrowing in excess of, or capable of being in excess of, the maximum costs of borrowing and by entering into high-cost credit contracts with borrowers at a time when those borrowers had entered into two or more high-cost credit contracts with Eagle MAN within the preceding 90 days. It also found that Eagle MAN breached s 17 of the CCCFA by failing to provide key information relevant to contracts set out in Sch 1 of the CCCFA during the Relevant Disclosure Period. The court imposed a penalty of $200,000 on Eagle MAN for its contraventions of ss 45E and 45G, with the penalty to be paid in 20 equal monthly instalments commencing on 20 November 2024. Costs were ordered to lie where they fell. The court also made an order for suppression and access restriction in relation to the financial information in the judgment.

Orders