IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-002125 [2017] NZHC 1167
UNDER
Section 100A Commerce Act 1986
IN THE MATTER
of a case stated by the Commerce Commission relating to the Harmoney Limited transaction and ss 5, 6 and 7 of the Credit Contracts and Consumer Finance Act 2003
BETWEEN
COMMERCE COMMISSION Applicant
AND
HARMONEY LIMITED Respondent
Hearing:
3 February 2017
Appearances:
S J Mills QC, J D Cairney and A D Luck for Applicant A R Galbraith QC, A M Callinan and S A Comber for Respondent
Judgment:
31 May 2017
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 31 May 2017 at 11.30 am
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date……………………….
COMMERCE COMMISSION v HARMONEY LTD [2017] NZHC 1167 [31 May 2017]
Introduction
[1] Peer-to-peer lending is a form of lending under which an intermediary operating through a web-based platform matches lenders and borrowers. The intermediary contracts separately with each; the lenders and borrowers do not enter into a direct contract with one another.
[2] In New Zealand peer-to-peer lending is regulated by the Financial Markets Conduct Act 2013 (FMCA). The FMCA is directed towards the protection of the investors/lenders and does not provide specific protection for borrowers. The Credit Contracts and Consumer Finance Act 2003 (CCCFA), which was enacted to protect the interests of borrowers under credit contracts, does not refer to peer-to-peer lending. The Commerce Commission has brought a case stated for the purpose of clarifying the application of the CCCFA to peer-to-peer lending.
[3] The Commission’s case focuses on peer-to-peer lending transactions facilitated by Harmoney Ltd, which is licensed under the FMCA to operate a web- based peer-to-peer lending platform. One of the fees that Harmoney charges borrowers is a “platform fee”. The Commerce Commission considers that the “platform fee” falls within the definition of a “credit fee” under the CCCFA. If so, the CCCFA would require that the fee not be unreasonable. The Commission’s case poses questions about this fee and other aspects of peer-to-peer lending transactions effected through Harmoney’s platform. The answers could result in the Commission taking enforcement proceedings against Harmoney.
[4] Harmoney has applied to strike out the case stated on the ground that it falls outside the scope of the relevant empowering legislation, s 100A of the Commerce Act 1986 and s 113(g) of the CCCFA. It says that a case stated under these provisions is limited to “pure” questions of law and cannot extend to mixed questions of fact and law, which is the nature of the questions posed by the Commission.
[5] The Commission says that the questions are ones of law and, further, that this Court only has jurisdiction to strike out a case stated through its inherent jurisdiction, which ought not to be exercised in this case. If necessary, it invites the Court to permit the Commission to amend the case stated.
The case stated procedure under the Credit Contracts and Consumer Finance
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
AGLC
Commerce Commission v Harmoney Ltd [2017] NZHC 1167
Case
[2017] NZHC 1167
Decision Date
CaseChat Overview and Summary
The case involves a dispute between the Commerce Commission and Harmoney Limited regarding the application of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to peer-to-peer lending transactions facilitated by Harmoney. The Commission has brought a case stated to clarify whether certain aspects of the transactions, including a platform fee, fall within the scope of the CCCFA and, if so, whether they are reasonable. Harmoney has applied to strike out the case stated, arguing it falls outside the scope of the relevant empowering legislation and is not a pure question of law.
The court found that the case stated procedure under s 100A of the Commerce Act 1986, when exercised pursuant to s 113(g) of the CCCFA, was intended to equip the Commission with the means of consulting the Court on matters of law that arise in the course of its investigations so that it can discharge its obligations more effectively and economically. The court rejected Harmoney's argument that the case stated procedure was limited to questions of law and that it could not extend to mixed questions of fact and law, holding that questions involving the application of the law to facts may produce a question of law that is amenable to review or a case stated.
The court concluded that questions 1, 3 and 4 were appropriate for the case stated procedure, though they were to be slightly amended as explained. Questions 2 and 5 were not permissible because they required determination of factual questions before the relevant law could be applied. The application to strike out succeeded in relation to questions 2 and 5 only.
In summary, the court held that the case stated was within the intended purpose of the case stated procedure under s 113(g) and that questions 1, 3 and 4 were appropriate for the case stated procedure, though they were to be slightly amended. Questions 2 and 5 were not permissible because they required determination of factual questions before the relevant law could be applied. The application to strike out succeeded in relation to questions 2 and 5 only.