2 finance companies headed by former Equiticorp boss Allan Hawkins have been found guilty in the Auckland District Court on 106 charges relating to enforcement of loan contracts. Sentences haven’t been imposed yet.
Mr Hawkins’ son Wayne was also a director of the 2 finance companies at the time of the events before the court, but resigned in February after setting up his own finance company, ABC Loans Ltd, last December.
Judge David Sharp dismissed another 19 charges due to a lack of certainty about the circumstances in which a lender could continue to charge interest & costs after repossessing & selling consumer goods under a continuing security agreement. The Commerce Commission said on Friday it would seek to have those charges reinstated.
Mr Hawkins’ companies, Budget Loans Ltd & Evolution Finance Ltd, failed in a bid to have 122 of the charges dismissed at a hearing in May on the grounds that the Fair Trading Act didn’t regulate them.
The companies bought National Finance 2000 Ltd’s loan book in 2006 and Western Bay Finance Ltd’s remaining loan receivables in 2008, and sought to distinguish those acquisitions from being “in trade” or “in connection with the supply or possible supply of services”.
Judge Sharp found that “in trade” representations about the 2 companies’ rights to the way they could recover money from debtors was an integral part of their businesses, and he found the companies guilty of representations made to 21 borrowers while enforcing loan contracts.
The commission filed proceedings against the companies under the Fair Trading Act in December 2014 alleging they misled consumers about their rights by:
- repossessing or threatening to repossess borrowers’ property when they didn’t have a right to repossess
- adding interest & costs to loan balances after borrowers’ property had been repossessed & sold, when that’s unlawful
- telling debtors they had to make loan payments at a higher rate than had been set by the court, and
- telling debtors they had a shorter time to remedy a loan default before their goods were repossessed than they were allowed under law.
The commission previously prosecuted Budget Loans in 2010, when the company admitted 34 charges of breaching the Fair Trading Act by charging interest & fees after it had repossessed & sold items of security on National Finance loans. It agreed to make substantial repayments and was fined $30,750.
The commission started the current investigation into Budget Loans & Evolution Finance in 2012, issued a “Stop now” letter to the 2 companies in November 2013 with regard to one aspect of their conduct while its investigation continued, and filed charges in December 2014.
Allan Hawkins headed the listed Equiticorp Group, which was placed in statutory management in 1989 after collapsing in the wake of the 1987 sharemarket crash. The Serious Fraud Office prosecuted Mr Hawkins & other Equiticorp directors and he was sentenced to a 6-year jail term in 1991. He was released in 1995.
17 December 2014: Commission files criminal charges against 2 Allan Hawkins finance companies
9 November 2013: Commission tells Allan Hawkins’ finance companies to stop repossessions
28 July 2010: “Welcome letter” from Hawkins’ Budget Loans to National Finance borrowers came with an illegal $15 fee
21 April 2008: Cynotech doubles receivables book to $60 million-plus in 4 months
Attribution: Commission release, judgments, Companies Register.