Harmoney Ltd v Commerce Commission

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeMiller J
Judgment Date07 August 2019
Neutral Citation[2019] NZCA 355
Date07 August 2019
Docket NumberCA322/2018

[2019] NZCA 355




French, Miller and Williams JJ


Harmoney Limited
Commerce Commission

A R Galbraith QC, A M Callinan and S A Comber for Appellant

S J Mills QC and J D Cairney for Respondent

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

The Court held that s100A CA did not preclude an appeal. There was no provision ousting appeal rights. Section 100(2) CA (court may order the removal into the Court of Appeal of any case stated for the opinion of the court) and s100(3) CA (court can hear and determine the question and shall remit the case with its opinion to the Commission) should not be taken to do so. A power of removal did not normally preclude a right of appeal. The very wide range of circumstances in which s100A CA may be employed went against the Commission's argument that an appeal could never lie. The possibility could not be excluded that the Commission may ask questions the answers to which did affect a person's rights or liabilities. The jurisdiction was not entirely within the Commission's control. The HC may refuse to give an opinion on the ground that the question posed was really one of fact or too dependent on facts yet to be proved. The term “opinion” was not dispositive.

The Commission had not engaged the Court in a purely consultative or advisory capacity. In substance, though not in form, it had asked the Court to decide issues of a preliminary or jurisdictional nature in an enforcement proceeding to be brought against Harmoney in the same jurisdiction. Harmoney was chosen because it was the largest peer-to-peer lender and the case stated was aimed at its practices. Harmoney was also joined as a party to the case stated, and not by courtesy alone because the questions engaged its obligations under the CCCFA, the answers could not have been given without affording it an opportunity to be heard. The opinion was intituled as a judgment inter partes, suggesting on its face that it was susceptible to appeal under s66 JA. The HC answers to the questions posed had a substantive effect on Harmoney's rights. One of the reasons given for refusing to strike out the s100A CA application was that the answers to two of the questions posed were likely to be determinative of the same issues in the enforcement proceeding. The decision of Courtney J is a judgment for purposes of s 66 of the Judicature Act and is accordingly susceptible to appeal.

The Commission's application was treated as an informal invitation to dismiss the appeal for want of jurisdiction as an interlocutory application to strike the appeal out. The application was dismissed. The Court had jurisdiction under s66 JA to entertain the appeal.

  • 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.

The first strike-out judgment

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.

The second strike-out judgment

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

the enforcement proceeding for a proper reason — to stop time running — and was content to stay it until the case stated had been answered. Venning J awarded costs to the Commission
The answers to the case stated

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...

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