The High Court struck out attempts by north Canterbury farmer Richard Watherson to re-open PGW Rural loan contracts for charging allegedly excessive interest rates. A one year time limit applies to interest rate challenges against financiers calling up current account loans.
Financially over-extended with redevelopment plans for a 2900 hectare north Canterbury property known locally as The Doone, Mr Watherston’s properties at both The Doone and Rocky Peaks were put into receivership by PGW Rural Capital Ltd in May 2013. The High Court was told PGW Capital suffered losses of some $1.8 million. Five years after the receivership commenced, Mr Watherston challenged interest rates PGW Capital charged. He wanted interest rates reduced under the Credit Contracts and Consumer Finance Act. He alleges the rates charged were above market rates, contrary to representations made at the time of the loan. He claims a reduced interest rate would have enabled successful redevelopment of The Doone.
The High Court was told PGW demanded Mr Watherston repay his current account debt in May 2013, the day receivers were appointed. The date demand was made to repay all advances became the date on which ‘the last obligation had to be performed under the credit contract’ Justice Dunningham ruled. Unlike a term loan, a current account debt does not have a due date for payment until demand is made. Mr Watherston had twelve months from the date repayment was demanded to challenge terms of the contract. Suing five years from that date was outside the twelve month time limit set by the Act. Being under a contractual obligation to also pay PGW Capital’s enforcement costs, which were incurred later in the course of the receivership, did not push out the start point for calculating time limits.
Watherstone v. PGW Rural Capital Ltd – High Court (23.01.19)
19.032