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Court Of Appeal Issues Ruling In Case Regarding Harmoney’s Lending Model

The Court of Appeal has largely dismissed peer to peer lender Harmoney’s appeal against a High Court opinion on a question of law, and upheld the Commerce Commission’s cross appeal.

Harmoney Limited was appealing the High Court’s May 2018 findings which included that Harmoney’s “platform fee” is a credit fee under the Credit Contracts and Consumer Finance Act 2003 (CCCF Act).

In a judgment issued on 8 July the Court confirmed that:

  • Harmoney Limited is a creditor
  • its contracts are consumer credit contracts which are subject to the requirements of the CCCF Act
  • its platform fee is therefore a credit fee that is required by the CCCF Act to be reasonable.

The Court of Appeal overturned an earlier finding of the High Court which found that investors are creditors.

The Court denied Harmoney’s appeal against the High Court findings that the consumer credit contracts were simply comprised of the Loan Contract and the Disclosure Document.

It also upheld the Commission’s cross appeal against the High Court finding that the Borrower Agreement did not form a part of the consumer credit contract, confirming that all three documents comprise the consumer credit contract.

The Court allowed Harmoney’s appeal against the High Court finding that investors are not creditors. Neither Harmoney nor the Commission submitted in support of the High Court’s finding.

The Commission is considering the judgment and will make no further comment at this time.


The case stated

A case stated seeks the opinion of the Court on any question of law. Under Section 100A of the Commerce Act the Commission may at any time state a case for the opinion of the Court.

In August 2016  the Commission issued case stated proceedings, seeking the High Court’s view on legal questions relating to Harmoney, which documents formed the loan contract and the status of its “platform fee”.

In May 2018 the Court issued its opinion that Harmoney is a creditor under the CCCF Act and that its platform fee is a credit fee under the Act.

Harmoney appealed those findings, contending that fee was akin to a brokerage fee. The Commission cross-appealed on one aspect of the Court’s findings about which documents comprised the loan contract.

The Court of Appeal hearing was in March this year.

The Commission’s proceedings against Harmoney

After filing the case stated proceedings the Commission also filed High Court proceedings against Harmoney Limited and Harmoney Investor Trust Limited in August 2017. The Commission alleged that the companies had breached the CCCF Act which prohibits lenders from charging unreasonable credit fees, and that Harmoney’s platform fee is a credit fee under the CCCFA and is unreasonable.

A 3-week hearing is set down for September 2021.

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