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Second judgment in Motor Trade Finance fees case leaves open further work

Wednesday 22nd October 2014

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The second judgment in the antitrust regulator's case against auto-lender Motor Trade Finance over its loan contracts has been released, and leaves more work for the financier and Commerce Commission to calculate the quantum of fees deemed unreasonable in an earlier ruling.

The Dunedin-based company said the High Court judgment, which followed an earlier ruling finding MTF charged unreasonable fees in breach of the Credit Contracts and Consumer Finance Act, sought to apply the 'close relevance test' to types of costs, but doesn't "precisely quantify the amounts by which the relevant fees have been deemed to be unreasonable" and that will "require further calculations to be made by the Commerce Commission and MTF," it said in a statement.

The finance company is appealing both judgments, with a hearing set down for Nov. 19 and 20 this year, and "is not in a position to quantify the ultimate liability in relation to the 39 Sportzone loans, or any other loans originated by MTF shareholders," it said.

In September, the first judgment found some of MTF's fees breached the legislation, while rejecting other aspects of the Commerce Commission claims that the finance company 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.

MTF has $40 million of perpetual preference shares listed on NZX's debt market, paying annual interest of 6.26 percent, which last traded at $70 per $100 face value, and have gained 15 percent over the past 12 months.


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