Simons v ANZ Bank NZ Ltd

• Jurisdiction: New Zealand
• Judge: Venning J
• Judgment Date: 29 July 2022
• Neutral Citation: [2022] NZHC 1836
• Docket Number: CIV-2021-404-001190
• Court: High Court

UNDER the Credit Contracts and Consumer Finance Act 2003 and High Court Rule 4.24

Between

Anthony Paul Simons

First Plaintiff

Andrew John Beavan and Mei Lim

Second Plaintiffs

Philip Charles Dunbar and Sheryn Valeri Dunbar

Third Plaintiffs

Bruno Robert Bickerdike and Emma Renae Punter

Fourth Plaintiffs

Glenn Jonathan Marvin and Anna Mary Cuthbert

Fifth Plaintiffs

and

ANZ Bank New Zealand Limited

First Defendant

ASB Bank Limited

Second Defendant

[2022] NZHC 1836

Venning J

CIV-2021-404-001190

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Banking and Finance, Civil Procedure — application for leave to represent customers of the respondent banks — requirements for a representative action — same interest — common issues — opt in or opt out basis

Appearances:

D M Salmon QC and AC van Ammers for Plaintiffs

S M Hunter QC, S V A East, J H Stevens and S R Hiebendaal for First Defendant

J S Cooper QC, K M Massey, and J Wilson for Second Defendant

JUDGMENT OF Venning J

This judgment was delivered by me on 29 July 2022 at 9.30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date

TABLE OF CONTENTS

Introduction	[1]
Background	[5]
ANZ	[6]
ASB	[11]
The plaintiffs' claims	[18]
The Banks' defences	[27]
The statutory setting	[29]
The current applications	[39]
The evidence	[45]
Jurisdiction	[49]
Requirements for a representative action	[56]
Are the requirements for the “same interest” and the need for “common issues” met?	[58]
Analysis – same interest	[93]
Funding issues	[111]
Merits	[119]
Access to justice	[134]
No adverse effect	[136]
Prejudice	[137]
Conclusion - representative orders	[138]
Common fund orders (CFOs)	[142]
Result	[183]
Review	[186]
Costs	[187]

Introduction

1 The plaintiffs are or were customers of ANZ Bank New Zealand Limited (ANZ) or ASB Bank Limited (ASB). They allege the Banks failed to provide them with variation disclosure required under s 22 of the Credit Contracts and Consumer Finance Act 2003 (CCCFA). The plaintiffs seek a number of declarations including that the Banks breached s 22 of the CCCFA and, ultimately, if necessary, orders under the CCCFA directing the Banks to fully refund or credit the payments made by them under their credit contracts with the Banks.

2 The plaintiffs seek leave to represent other customers of the Banks who they say were also not provided with variation disclosure as required during certain defined periods.

3 In their amended application dated 28 January 2022 the plaintiffs seek:

• (a) leave to bring the proceedings as a representative action under r 4.24 High Court Rules 2016;

• (b) common fund orders (CFOs);

• (c) notification orders; and

• (d) summary judgment.

4 The parties agreed that the hearing and judgment were to be restricted to the applications for representative orders and CFOs. The application for notification orders and summary judgment are to be dealt with at subsequent hearing(s).

Background

5 The proceedings follow settlements reached by both Banks with the Commerce Commission (Commission) arising from errors in process acknowledged by the Banks which they had disclosed to the Commission.

ANZ

6 Between 30 May 2015 and 28 May 2016 (ANZ relevant period) ANZ sent letters to its consumer loan customers regarding changes made to their loans. Some of those letters contained incorrect information.

7 The incorrect information was generated by a calculator that was part of an automatic computer system called Frontline Tools. The calculator did not take into account interest that had accrued but had not yet been charged. Following customer complaints ANZ identified the error in May 2016 and promptly amended its calculator.

8 On 19 June 2017 ANZ reported to the Commission that it had made errors in the production of loan variation letters sent to some consumers who varied their loans between 30 May 2015 and 28 May 2016.

9 Following a review by the Commission, ANZ admitted that, in failing to take sufficient steps to ensure the loan variation letters were correct, it breached s 9C(2)(a)(iii) of the CCCFA. It accepted that it had failed to exercise the care, diligence and skill of a responsible lender in its subsequent dealings with its borrowers. The Commission accepted the breaches were inadvertent and not reckless. ANZ agreed to pay an agreed remediation amount to its affected customers.

10 The second plaintiffs, Andrew Beavan and Mei Lim were customers of the ANZ during the relevant period. They received a total of $927.58 by way of remediation.

ASB

11 Between 6 June 2015 and 18 June 2019 inclusive (ASB relevant period) ASB's standard operating procedure for providing variation disclosure was not consistently followed where customers requested certain changes to home and personal loans in branch or by telephone.

12 In September 2019 ASB reported an issue relating to the agreed variation disclosure to the Commission. ASB advised the Commission it had identified that it could not confirm the process of preparing and issuing a customer with the relevant variation disclosure required by the CCCFA had been followed consistently. As a result some customers were not provided with the required disclosure.

13 The customers fell into two cohorts, A and B. Cohort A (26,088 customers) entered home loan contracts before 6 June 2015 but had at least one relevant variation after 6 June 2015. Cohort B (47,032 customers) entered home loan contracts on or after 6 June 2015 and had at least one variation.

14 ASB admitted it was in breach of s 9C(2)(a)(iii) of the CCCFA in failing to ensure that its systems and processes were sufficient to ensure that the required variation disclosure was provided during the ASB relevant period. ASB also admitted that, during the period, it failed to have appropriate controls in place to promptly identify the failure and rectify it within a reasonable period.

15 Paul Simons, the first plaintiff; Philip and Sheryn Dunbar, the third plaintiffs; Bruno Bickerdike and Emma Punter, the fourth plaintiffs; and Glenn Marvin and Anna Cuthbert, the fifth plaintiffs were all loan customers of the ASB during the ASB relevant period.

16 The first, fourth and fifth plaintiffs fell into cohort B and received a payment or credit of $135. The third plaintiffs fell into cohort A and received a payment of $68.

17 Although both settlements with the Commission expressly recorded that nothing in the settlement agreements constituted any wider admission of liability and did not directly address or refer to s 22 of the CCCFA, the plaintiffs say the Banks' failings breached that section. Mr Salmon QC also referred to internal Consumer Division reports prepared by the Commission's officers which referred to s 22. However, the settlement agreements did not refer to or address s 22. The Banks' admissions in the settlement with the Commission were expressly limited to the admissions as to the breach of s 9C(2)(a)(iii) of the CCCFA.

The plaintiffs' claims

18 The plaintiffs each raise one cause of action based on breach of s 22 of the CCCFA. In the case of ANZ, the second plaintiffs allege that, during the ANZ relevant period, ANZ provided loan variation letters to them and other affected ANZ borrowers which contained incorrect information and so did not constitute variation disclosure under s 22 of the CCCFA. They plead that, pursuant to s 99(1A) of the CCCFA the ANZ representative plaintiffs and the other affected ANZ borrowers are not liable for costs of borrowing in relation to an agreed change to an ANZ post-amendment loan. 1

19 Further, they allege that, pursuant to s 99(1) of the CCCFA the ANZ representative plaintiffs and the other affected ANZ borrowers were and are not liable for costs of borrowing relating to any periods during which ANZ was or is in breach of s 22 in relation to an agreed change to an ANZ existing loan.

20 They then plead that, to the extent they or other affected ANZ borrowers paid costs of borrowing while ANZ was in breach of s 22, ANZ was not, and is not, entitled to receive or retain the amounts paid by them. Pursuant to s 48 of the CCCFA, ANZ was, and is, required to refund the costs of borrowing paid by them during the relevant period.

21 Declarations and orders are sought that:

(a) the loan variation letters did not comply with s 22 of the CCCFA;

(b) ANZ breached s 48 of the CCCFA by failing to fully refund or credit the ANZ breach period payments; and

(c) where a breach of s 22 is established triggering s 99(1A) and/or s 99(1) and s 48 and ANZ has not complied in full with s 48 a plaintiff is entitled to orders under s 94(1)(a), requiring ANZ to refund or credit all

costs of borrowing received by it during the period it was in breach of s 22; and

(d) pursuant to ss 93(a) and 94(1)(a) of the CCCFA ANZ is to fully refund or credit the ANZ breach period payments; and

(e) to the extent the Court declines to make the above orders, further orders under s 90 of the CCCFA directing ANZ to pay the ANZ representative plaintiffs and other affected ANZ borrowers statutory damages under ss 88(1)(b) and 89(1)(d) of the CCCFA; and

(f) interest.

22 The ASB plaintiffs similarly plead that, in breach of s 22 ASB did not provide the ASB representative plaintiffs or other affected ASB borrowers with variation disclosure in relation to relevant variations made to the ASB loans during the ASB relevant period (and has still not provided that disclosure).

23 They then plead that, pursuant to s 99(1A) the ASB representative plaintiffs and other affected ASB borrowers were, and are, not liable for the costs of borrowing relating to any...