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Media release: Motor Finance Wizard: the court says "yes" - consumers are protected

10 Oct 2013

The NSW Supreme Court has handed down an important decision confirming the rights of consumers against attempts to avoid the provisions of the Consumer Credit Code.

photo of lawyer with clients

In a decision handed down on 27 September, Justice Peter Hall resolved a long running legal dispute over whether a company could avoid the requirements of the Consumer Credit Code through offering "interest free" loans.

The case, funded by Legal Aid NSW, involved a woman who bought a car from Motor Finance Wizard with an "interest free" loan from an associated company - Kwik Finance. When a dispute arose between the woman and Kwik Finance, she sought to resolve it in the Consumer Trader and Tenancy Tribunal.  However, the company said that the Code did not apply because they had not charged the customer for the loan.

"The Code is designed to ensure that there is a level playing field between consumers and lenders" says Legal Aid's Executive Director of Civil Law, Monique Hitter. "There is usually a huge imbalance in the knowledge and experience of borrowers and lenders, and the Code sets out the information lenders must give consumers and the steps which have to be followed if a borrower defaults and a company wants to repossess secured property such as a car."

Motor Finance Wizard and Kwik Finance said they did not owe any of those obligations to Ms Walker because the Code did not apply.

The customer argued that the car was overpriced, and that the difference between the value of the car and the price paid by her was in fact a charge for the loan made to her. The court accepted this. The court found that the Code still applied even if the charge for credit was imposed by another entity (Motor Finance Wizard).

The court also found that various contracts involved in the purchase of the car, including a deal whereby Motor Finance Wizard paid Kwik Finance a fee for the sale of each car, could be regarded as one contract for the purposes of the Code.

"This case is a real win for consumers because the decision of the court reinforces the purpose of the Code in protecting borrowers. Companies who devise strategies to avoid the requirements of the Code should heed this decision" said Ms Hitter.

Walker v Consumer Trader and Tenancy Tribunal of NSW [2013] NSWSC 1432

Further contact: Monique Hitter, Director Civil Law, Legal Aid NSW, Mobile 0417 659 293