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Commerce Commission loses bid to extend claim vs. Bluestone

Commerce Commission loses bid to extend fees claim against Bluestone Mortgages

By Paul McBeth

Aug. 20 (BusinessDesk) - The Commerce Commission has lost a bid to widen its claim against Australian lender Bluestone Mortgages NZ over fees charged on early repayments.

Judge Patricia Courtney turned down the competition regulator's application to extend the timeframe of its claim in the High Court on Auckland earlier this month, saying she had to strike a balance between the rights of borrowers and lenders. The judgment was published on the Justice Minister's website last week.

The regulator alleges Bluestone breached the Credit Contracts and Consumer Finance Act by charging unreasonable early repayment fees on loans that were typically granted for a 30-year term but usually repaid within the first four years. The commission is seeking a refund for a number of those fees.

Judge Courtney didn't accept the commission's argument that the limitation period shouldn't begin until the fee is actually charged rather than from when the loan agreement is made.

She also disagreed with the regulator's contention that its claim was always representative, and that the amended claim was "no more than a particularisation of the existing claim and is not time barred." Rather, she said each loan pleaded by the regulator represents a new cause of action with each fee charged specific to the terms of the individual loan.

"Although my finding may prevent some borrowers from claiming relief, I nevertheless consider that it would not be reasonable or fair if a borrower could circumvent the CCCF Act's limitation provisions simply by joining a representative claim," the judgment said.

The antitrust regulator was attempting to extend the timeframe of its initial claim between April 2005 and October 2006 by a further five years.


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