The Commerce Commission has won its appeal against a District Court decision to dismiss 19 charges against two finance companies.

In July 2016 Budget Loans Limited and Evolution Finance Limited (Budget and Evolution) were convicted on 106 charges under the Fair Trading Act.

The companies originally faced 125 charges but 19 were dismissed by Judge Sharp. Those charges concerned representations about the companies’ right to charge interest and costs on contracts entered into before 6 June 2015, following repossession and sale of borrowers’ property where Budget and Evolution had security interest over multiple items.

The Commission appealed the decision to dismiss the charges, and in the High Court at Auckland Justice Edwards has upheld that appeal.

The Commission’s case was that, for loans entered into before 6 June 2015, lenders were prohibited under the Credit (Repossession) Act from charging interest and costs after the first security item had been repossessed and sold. Budget and Evolution argued that where a loan was secured over multiple items, all items had to be repossessed and sold before they needed to stop charging interest and costs.

The Court agreed with the Commission’s view and found that once an item has been repossessed, a lender can no longer charge interest or costs, including the costs of further repossessions.

The 19 charges are to be considered again by the District Court.

Budget and Evolution also appealed all 106 convictions on multiple grounds. None were upheld by Justice Edwards. The full decision can be read here.

The Commission will not be commenting further as the matter is before the Court.


The Credit (Repossession) Act was repealed by the Credit Contracts and Consumer Finance Amendment Act 2014.

Section 83ZM of that Act makes it clear that, where a lender repossesses one item of security on a contract entered into after 6 June 2015, they are prohibited from charging interest and fees even if they still have a security interest over other goods.