Full Federal Court finds in favour of ASIC in two appeals concerning Sunshine Loans
The Full Federal Court of Australia has ruled in favour of the Australian Securities and Investments Commission (ASIC) in two separate appeals involving Sunshine Loans, a small amount lender.
The first appeal stemmed from a liability decision on 12 April 2024, where Justice Derrington found that Sunshine Loans had breached the National Credit Code by imposing unlawful fees in its small amount credit contracts. Sunshine Loans appealed the ruling, but the Full Court unanimously dismissed the appeal, criticising how it was conducted.
The second appeal was lodged by ASIC regarding a decision concerning Sunshine Loans’ request for Justice Derrington to recuse himself from the penalty hearing due to alleged bias. The Full Court agreed with ASIC’s appeal, finding that the primary judge had erred by treating the penalty hearing as a distinct process. Justices Colvin and Bromwich delivered separate judgements, with Justice Perram dissenting. Justice Colvin stated that the judge had incorrectly approached the penalty hearing without considering views formed in the initial hearing.
The matter will return to Justice Derrington to determine the appropriate penalty for Sunshine Loans.
Summary of Judgements:
- Sunshine Loans’ Appeal: The Full Court found that Sunshine Loans had unlawfully charged customers fees in violation of the National Credit Code. The appeal was dismissed in its entirety, with the Court highlighting deficiencies in the appeal process.
- ASIC’s Appeal: ASIC successfully appealed the decision regarding the recusal of Justice Derrington. The Full Court ruled that the penalty hearing should have been viewed in continuity with the initial hearing, rather than as an isolated matter.
This decision marks a significant victory for consumer protection, particularly for vulnerable financial consumers. The case will now proceed to determine the appropriate penalties for the unlawful conduct identified.