Motor Trade Finance plans to appeal High Court ruling that loan contracts were unreasonable
Motor Trade Finance [NZDX: MTFHC], which has a lending book of about $460 million, said it intends to appeal a High Court judgment that some fees in its loan contracts were unreasonable.
"Motor Trade Finance is disappointed with the decision that some fees were considered unreasonable and considers that the court's narrow basis for that finding does not recognise normal commercial practice," the Dunedin-based company said in a statement.
"The court's finding did not acknowledge that borrowers would have paid higher interest rates on the loans to recover costs not recovered through fees and, as a result, had suffered no loss," the company said.
The High Court rejected other aspects of the Commerce Commission claims that Motor Trade Finance and Sportzone Motorcycles failed to make proper disclosure of components of credit fees payable under the loan contracts. The Court also rejected a claim that the labels used for establishment and account maintenance fees were misleading, deceptive and breached the Fair Trading Act.
The Commerce Commission had alleged breaches of the Credit Contracts & Consumer Finance Act and the Fair Trading Act relating to fees charged in 39 loan contracts originated by Sportzone between May 2005 and July 2008. The judgement, dated Sept. 27, follows a trial in November 2012.
MTF has $40 million of perpetual preference shares listed on NZX's debt market, which were last at 60 cents in the dollar.