Real Finance Ltd v Setefano

[2016] NZHC 2293

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2015-485-1019 [2016] NZHC 2293

BETWEEN

REAL FINANCE LIMITED

Appellant

AND

TOFI SETEFANO Respondent

Hearing:

15 April 2016 (further information provided 26 September

2016)

Appearances:

E Horner for the Appellant
No appearance by the Respondent
M Smith as Amicus Curiae

Judgment:

27 September 2016

JUDGMENT OF MALLON J

Table of contents

Introduction ....................................................................................................................................... [1] The background facts........................................................................................................................ [3]

The first loan .................................................................................................................................. [4]

The second loan.............................................................................................................................. [9]

The District Court proceeding ....................................................................................................... [12] Background................................................................................................................................... [12] This claim ..................................................................................................................................... [13]

Jurisdiction ...................................................................................................................................... [23] The statutory provisions ............................................................................................................... [23] District Court procedural rules .................................................................................................... [37] Can the court act on its own motion ............................................................................................. [41]

Exercise of the jurisdiction ............................................................................................................. [57]

Result ................................................................................................................................................ [62]

REAL FINANCE LIMITED v SETEFANO [2016] NZHC 2293 [27 September 2016]

Introduction

[1]      Real Finance Limited commenced proceedings to recover sums owing under a loan agreement with Mr Setefano.  Mr Setefano took no steps to defend the claim. Acting on its own motion at a formal proof hearing the District Court declined to allow Real Finance to recover that part of the sums claimed which were for unpaid monthly administration fees charged under the loan agreement.  It did so on the basis that these fees were oppressive under the Credit Contracts and Consumer Finance Act 2003 (the Act). The District Court entered judgment for the balance.

[2]      Real Finance appeals against the District Court’s refusal to enter judgment for

the monthly administration fees. The appeal raises two issues:

(a)       whether the Court had jurisdiction under s 120 of the Act to reopen a contract of its own initiative; and

(b)if so, whether the jurisdiction to reopen the contract was properly exercised.

The background facts

[3]      Mr  Setefano  had  previously  obtained  loans  from  Real  Finance.    These included loans in 2007 and 2008 for $3,980, $1,550 and $1,800 which were repaid in full.1    This proceeding concerns two further loans, described below as the first and second loans, which were entered into in 2012.

The first loan

[4]      On 23  May 2012  Mr  Setefano  entered  into  a  loan agreement  with  Real

Finance for $3,415 (the first loan).  This sum was made up of a principal advance of

$3,041 and two fees.  The two fees were an establishment fee of $370 and a PPSR

search/registration fee of $4.   It seems that the principal advance was to refinance other loans, as the loan agreement described the loan as being for a “refinance

1      The evidence does not indicate whether Mr Setefano had any other loans from Real Finance, prior to the loans at issue in this proceeding, which were not repaid.

amount” of $1,784 and a “refinance other contract” sum of $1,257.   It is unclear

whether they were loans from Real Finance or another lender.

[5]      The loan agreement provided for 40 weekly payments beginning on 29 May

2012.  These payments were for $110, except the final payment which was for $80. The interest rate was 29.8735 per cent per annum.  The loan agreement…