Real Finance Ltd v Setefano [2017] NZDC 27629

Published 30 October 2018

Application for recovery of debt owing under loan agreement — matter remitted to District Court for reconsideration on basis of formal proof — default interest — establishment fees — duration of default — unreasonable delay — reasonableness of administration fee — whether court should reopen a contract — whether rights exercised oppressively — adjustment of interest rate — costs — Credit Contracts and Consumer Finance Act 2003. The applicant sought judgment against the defendant for relatively small sums owed under an old loan agreement; there had been extensive delays and history with the courts. The court found that there was no good reason for the plaintiff's delay in bringing the proceedings and that it should have been clear to the plaintiff that the defendant would or could not make payments on the defaulting loan after the passage of several months without a payment being made. The court found that the default interest claimed, of close to 40 per cent for the entire period from December 2013, when the plaintiff could have obtained judgment, until the date of the current hearing, was an unconscionable and an oppressive exercise of the plaintiff's rights. As a result, the court found that it was appropriate to reopen the contract and adjust the interest rate to reflect the 5 per cent interest rate that would have been applicable had the plaintiff pursued proceedings when the defendant had initially defaulted. In relation to costs, the plaintiff sought of $23,718.86 and disbursements of $1,800, the court finding that was harsh and unconscionable that the defendant bear the additional costs which were incurred by the plaintiff's attempts to justify their claim for administration costs, a claim which was abandoned at the last moment. The court awarded costs to the plaintiff of estimated actual Solicitor/Client costs of obtaining a formal proof judgment which did not include the claim for administration fees of $2,948.02 plus any additional court fees. Judgment date: 1 February 2018