Seeking a substantially reduced penalty for making excessive high-cost loans in breach of consumer credit legislation, Eagle MAN’s lawyers said evidence before the court indicated the money-lender was not profitable, was running down its loan book and was not making any new high-interest loans.
Noli Alea’s Christchurch-based Eagle MAN subsequently sported a high-profile internet presence, touting for business, with its webpage updated indicating that it has learnt its lesson after the earlier Commerce Commission intervention.
Past profitability, or unprofitability, of Eagle MAN is unknown. The High Court redacted financial information about Eagle MAN from its published judgment. In addition, Eagle MAN got a court ruling pre-emptively refusing any requests to search the court file.
The only published disclosure was that Mr Alea has been withdrawing no more than $500 each fortnight from Eagle MAN and that cash from Eagle was being used to fund a related business owned by Mr Alea, described at Companies Office as operating a dairy superette.
Commerce Commission took legal action against Eagle MAN Group Ltd in 2023 alleging breaches of the Credit Contracts and Consumer Finance Act over a six year period.
In particular, it was looking to enforce new rules coming into effect since 2020 which circumscribe what are called high-cost consumer credit loans. In general, these are loans where the annual interest rate is fifty per cent or greater. Consecutive loans to the same borrower can be lumped together in assessing the fifty per cent threshold, catching the practice of rolling over unpaid debt.
The High Court was told most of Eagle MAN’s loans were to Filipino temporary workers and recent immigrants.
Eagle MAN admitted breaches of the Act, whilst disputing the extent.
It said the Commerce Commission had wrongly extrapolated the extent of its wrongdoing from a small sample of loans investigated. It disputed a Commerce Commission claim that Eagle MAN’s failure to follow the rules resulted in a commercial benefit of some $270,000.
Imposing a reduced $200,000 penalty, in partial recognition of Eagle MAN’s inability to pay, Justice Churchman allowed payment be made in twenty equal monthly instalments.
Credit was also given for Eagle MAN’s assistance with the Commission’s investigations and its pro-active steps to improve business procedures.
Eagle MAN’s website now advertises its short-term loans at an effective interest rate of 49 per cent. A minimum loan of one thousand dollars attracts an establishment fee of $250.
Commerce Commission v. Eagle M.A.N Group Ltd – High Court (28.10.24)
25.022