Media Releases

Court of Appeal rejects MTF Sportzone credit fees appeal

31 March 2015

The Court of Appeal has dismissed Motor Trade Finance Limited (MTF) and Sportzone Motorcycles Limited’s appeal in the long-running credit fees case brought by the Commerce Commission.

The Court’s ruling, made public today, upheld earlier High Court judgments that backed the Commission’s approach to assessing whether credit fees charged by lenders are reasonable as required by the Credit Contracts and Consumer Finance Act (CCCFA).

The Commission alleged that MTF and Sportzone charged unreasonable establishment and other credit fees on 39 finance contracts entered into between 2005 and 2008.

In September 2013 the High Court found the fees were unreasonable in breach of the CCCFA. In October 2014, it released a further judgment clarifying the practices lenders should adopt when charging fees. MTF and Sportzone appealed both decisions to the Court of Appeal.

Commissioner Anna Rawlings said the Court of Appeal has provided a clear statement on the approach lenders should take to the fees they charge.

"The Court’s ruling provides easy to understand guidance for lenders, making it clear that credit fees should only cover costs that are closely related to the particular loan transaction. The Court of Appeal agreed with the Commission that the purpose of the CCCFA is to protect borrowers, especially vulnerable borrowers, by ensuring transparency in the costs of borrowing. Fees should not be used to recover general business costs or to generate profits – that is what interest is for," Ms Rawlings said.

"The Commission will be publishing further credit guidance to reflect the judgments of the High Court and Court of Appeal, and to ensure that lenders are clear about what the law requires. These judgments and important upcoming changes to the CCCFA, which include new Lender Responsibility Principles, will help to shape our programme of work aimed at ensuring that lending practices comply with the law."

A copy of the Court of Appeal’s ruling can be found on the Enforcement Response Register.

The Court has instructed MTF and Sportzone to pay the Commission’s costs. The companies have 20 days to seek permission to appeal the ruling to the Supreme Court.


Sportzone was a Christchurch-based company that sold, serviced and repaired motorcycles. It offered financial services, through MTF, to customers that purchased motorcycles. Sportzone has since gone into liquidation. MTF is a co-operative company that provides financial services to the customers of its associated dealers. Sportzone was a shareholder in MTF.

The Commission began investigating MTF and Sportzone in 2006 after receiving a complaint about their lending practices. Both companies were subsequently charged with charging unreasonable establishment fees, account maintenance fees, and arrears fees on 39 specific loan transactions to borrowers of motor vehicle finance, in breach of section 41 of the CCCFA.



The Commission begins investigating MTF and Sportzone


The Commission files a statement of claim in the Auckland High Court, alleging MTF and Sportzone charged unreasonable fees in breach of the CCCFA

September 2013

The High Court releases its first judgment, ruling MTF and Sportzone charged unreasonable fees

October 2014

The High Court releases its second judgment, further clarifying the rules lenders must follow when charging credit fees

November 2014 

MTF and Sportzone’s appeal is heard in the Court of Appeal

March 2015

The Court of Appeal dismisses MTF and Sportzone’s appeal


The October 2014 High Court judgment can be found here.

The earlier judgment of September 2013 can be found here.