Financiers
complaints that District Court staff are hampering debt collection procedures
were overruled by the High Court. Staff
can unilaterally refer cases to judges where creditors’ demands are unchallenged
and if there are any complaints about District Court procedures then they have
to be specified in detail if a definitive court ruling is required.
Diners Club took a test
case alleging misuse of the Credit Contracts and Consumer Finance Act by court
staff questioning terms of credit contracts.
It tacked on to its case a generalised complaint about court staff involvement
in debt-collecting procedures. Debt
collection claims often are not contested by debtors. Creditors can then ask court staff simply
rubber-stamp their claim as a default judgment; there is no need for any formal
proof. The High Court was told general
guidelines have been established by the Ministry of Justice with most default
judgment applications now being handled centrally from Wellington. Debt collection agencies complain these guidelines
fail to comply with the law. They allege
court staff are amending the amount claimed, disallowing costs incurred after a
forced sale, wrongly referring default judgment applications for a court
hearing and failing to distinguish between claims for trade debts and claims
for consumer debt. Justice Katz said
courts cannot be expected to give an ‘advisory opinion’ on generalised
complaints. Specific pleadings and
specific details are required.
In its test case,
Diners Club challenged specifically the administrative practice of referring
some default judgment applications to a District Court judge. It said court staff have no jurisdiction to
do this; they must simply seal the default judgment when requested. It is for the debtor personally, or the
Commerce Commission acting on behalf of consumers generally, to challenge a
claimed debt, Diners Club said.
The Act does give the
court jurisdiction to unilaterally reopen a credit contract, Justice Katz
ruled. A claim on the face of it may
indicate oppressive terms. The type of
claim may follow a pattern of previous claims found to be oppressive. Further evidence must be considered before
such claims can be enforced. Individual
borrowers cannot reasonably be expected to protect their own interests under
the Credit Contracts and Consumer Finance Act, she said. The Commerce Commission said in evidence many
debtors had limited financial means and were unaware of their rights. The Commission said it did not have
sufficient resources to intervene in individual cases. Issues commonly arise outside the Commission’s
one year time limit for action. The
Commission said it becomes involved when there are issues of significant general
consumer detriment and when it is in the wider public interest to act.
Diners
Club v. District Court at Auckland – High Court (25.10.17)
17.144