Harmoney Ltd v Commerce Commission
| Jurisdiction | New Zealand |
| Judge | Miller J |
| Judgment Date | 07 August 2019 |
| Neutral Citation | [2019] NZCA 355 |
| Court | Court of Appeal |
| Docket Number | CA322/2018 |
| Date | 07 August 2019 |
[2019] NZCA 355
French, Miller and Williams JJ
CA322/2018
IN THE COURT OF APPEAL OF NEW ZEALAND
I TE KŌTĪ PIRA O AOTEAROA
Civil Procedure — appeal against decision to decline to strike out proceeding brought under s100A Commerce Act 1986 (“CA”) (Commission may state case for opinion of High Court) — whether the Court of Appeal had jurisdiction to hear the appeal
A R Galbraith QC, A M Callinan and S A Comber for Appellant
S J Mills QC and J D Cairney for Respondent
-
A The application for strike-out is dismissed.
-
B The respondent must pay costs to the appellant for a standard appeal on a Band A basis with usual disbursements. We certify for second counsel.
(Given by Miller J)
This judgment answers a preliminary question in an appeal brought by Harmoney Ltd. 1 The question is whether we have jurisdiction to entertain the appeal.
The decision appealed from was an opinion of the High Court on a case stated under s 100A of the Commerce Act 1986, which provides:
100A Commission may state case for opinion of High Court
(1) The Commission may at any time state a case for the opinion of the court on any question of law arising in any matter before it.
(2) The court may order the removal into the Court of Appeal of any case stated for the opinion of the court under this section.
(3) The court or the Court of Appeal, as the case may be, shall hear and determine the question, and shall remit the case with its opinion to the Commission.
The Commerce Commission says that no right of appeal lies from the High Court's opinion, either under the Commerce Act or under this Court's general appellate jurisdiction. Harmoney responds that an appeal lies in this case, because it was a party below and the decision appealed from had a practical effect on its rights sufficient to sustain a right of appeal.
Harmoney is a peer-to-peer lender which matches borrowers with investors on a web-based platform. It is licensed by the Financial Markets Authority under the Financial Markets Conduct Act 2013.
Harmoney charges borrowers a “platform fee”. It says the fee is for a service akin to brokerage. The Commission says the fee is an “establishment fee” as defined under the Credit Contracts and Consumer Finance Act 2003 (CCCFA). 2 If the Commission is correct the fee must be set at a level that is reasonable, gauged by reference to the costs incurred in establishing and administering the loan. 3 It is plausible that a fee set as a percentage of the loan, as Harmoney's is, may sometimes exceed these costs.
The Commission has issued two proceedings. The first in time is the case stated brought under s 100A, which as noted allows the Commission to state a case for the opinion of the High Court on any question of law arising in any matter before the Commission. 4 It says that it used the case stated procedure to ascertain the extent to which the CCCFA applies to peer-to-peer lending.
The Commission appears to have chosen Harmoney, the largest peer-to-peer lender, as an exemplar. It used Harmoney's documents and practices to frame the case stated. We were told that the Commission joined Harmoney to “assist the Court through the presentation of a contrary view” and that Harmoney consented to this. 5 All of the decisions below are intituled as judgments naming Harmoney as the defendant or respondent.
Harmoney's consent to joinder was evidently given not because it saw the case stated as an expedient way to resolve the legal issues once and for all but because it wanted to put a stop to the proceeding. The case stated has produced three judgments in the High Court. The first two dismissed Harmoney's successive interlocutory applications to strike it out. 6 The third was a substantive answer, given by Courtney J, to questions of law posed by the Commission. 7 The last of these judgments is formally the subject of this appeal, though as will be seen the argument covers some of the same ground as the strike-out judgments.
The second proceeding is a civil enforcement action brought against Harmoney in the High Court under the CCCFA. 8 The Commission pleads that the platform fee is excessive and seeks a declaration that the fee contravenes the CCCFA. It also seeks orders that the fee be reduced to a reasonable level or affected borrowers compensated to the extent that they have overpaid. That proceeding is still pending in the High Court. Whether it will be prosecuted depends on the result of the case stated appeal.
Harmoney sought to strike out the case stated proceeding on the ground that it fell outside the scope of s 100A. 9 The Commission resisted, saying among other things that only in the exercise of inherent jurisdiction could the High Court strike the proceeding out.
Harmoney's application succeeded in part. The Commission had posed five questions. Two were struck out because they were held to raise questions of fact: they were whether there was a transaction that was in substance or effect a credit contract, and whether the Harmoney platform fee was an establishment fee for purposes of the CCCFA. Courtney J otherwise declined the application. 10 She invited submissions as to costs while indicating that they might lie where they fell since both sides had enjoyed some success. It does not appear that either side applied.
Harmoney moved again to strike out the case stated, this time as an abuse of process. It did so because the Commission had filed the enforcement proceeding which Harmoney argued would determine all the relevant issues anyway. 11 The strike-out application was dismissed by Venning J in a judgment delivered on 3 October 2017. 12
Overlap between the two proceedings explains Venning J's refusal to strike the case stated out for prejudice or delay. 13 He reasoned that the answers to the questions in the case stated would largely dispose of the enforcement proceeding, which raised the same issues, and the hearing of the case stated was imminent. (It was argued on 25 October 2017.) His was a practical analysis resting on the assumption that the case stated questions would not be relitigated in the enforcement proceeding. He did not hold that the parties would be estopped if they tried to do so. So far as abuse of process was concerned, he observed that the Commission had brought
In the third decision, which was delivered on 18 May 2018 and like the others intituled as a judgment inter partes, Courtney J answered the three questions of law that had survived her first strike-out judgment. The questions and her answers were: 14
The answers were all adverse to Harmoney. Its case depended on the credit contract comprising just the standard loan contract, to which Harmoney itself is not a party.
-
(a) Question 1: Is the “credit contract” as defined in s 7 of the CCCFA, comprised of a number of the Documents operating together or just the Loan Contract?
Answer: The credit contract comprises the Loan Contract and Loan Disclosure.
-
(b) Question 2: On the basis of the Documents and the factual summary, which entity or entities are the “creditor(s)” for the purposes of the CCCFA, as defined in s 5 of the CCCFA?
Answer: the investors, Harmoney and [Harmoney Investor Trustee Ltd] are all creditors for the purposes of s 5 of the CCCFA.
-
(c) Question 3: On the basis of the Documents and the factual summary, is the Harmoney Platform Fee a “credit fee” as defined in s 5 of the CCCFA?
Answer: Yes.
The Judge invited submissions on costs. It appears the parties agreed to let costs lie where they fell.
The Commission has advised that, with benefit of Courtney J's decision, it now intends to pursue the enforcement proceeding against Harmoney. 15 Until her appointment to this Court, Courtney J was assigned to try that proceeding.
The Commission's stance is that all issues remain at large in the enforcement proceeding; put another way, the answers given to the case stated guide the Commission but do not bind the parties, by issue estoppel or otherwise.
We observe that the answers were given on facts that were accepted as correct. Transactions are effected through Harmoney's website and are fully documented, and the agreed facts are largely descriptive of the documents and what happens as individuals navigate the website. 16 We cannot exclude the possibility that different facts might be found at trial, and if so those facts presumably might bear on the question whether the platform fee is correctly characterised as a credit fee. But Venning J plainly did not think that likely and counsel gave us no reason to suppose that it would be.
However, the case stated proceeding did not address the reasonableness of the fee. A declaration that it is unreasonable is the first form of relief sought in the enforcement proceeding. Nor did it settle the remaining relief sought: what fee ought to be charged and what compensation (if any) ought to be paid to affected borrowers.
The notice of appeal challenges Courtney J's decision of 18 May 2018 on a number of grounds, all pertaining to the specific questions and answers. Generally, Harmoney says that the Judge misinterpreted the documents.
The Commission responded by filing a memorandum in which it invited the Court to dismiss the appeal for want of jurisdiction. 17 Presumably it did not bring an application because its stance is that the appeal is a...
To continue reading
Request your trial