The loan agreements which RMBL entered into with borrowers required borrowers to pay (in addition to their regular interest payments) a ‘collection charge’, which was purportedly to reimburse RMBL its costs, charges and expenses of collecting the interest payments. In the case of the representative party, the ‘collection charges’ were initially set at 5.5% of the amount of the interest payments. However, during the period of the loan, the ‘collection charge’ rate was increased on multiple occasions, ultimately to 27.5% of the amount of the interest payments. This resulted in the representative party paying, throughout the period of the loan, ‘collection charges’ in excess of $200,000 (which, as noted above, were in addition to the regular interest payments).
In the class action, the representative party alleges that: (i) the clause of the loan agreement which authorised RMBL to impose the ‘collection charges’ only allowed it to recover the actual amount of costs, charges and expenses incurred by RMBL in collecting interest payments (and not at some pre-determined, arbitrary, rate); or (ii) alternatively, that the purported increases to the ‘collection charge’ rate from time to time were void and of no effect. Thus, it is alleged that in imposing the ‘collection charges’ which it did, RMBL acted in breach of contract and has engaged in misleading and deceptive conduct, and that the ‘collection charges’ which were paid by the representative party (and by the class members in the class action) were far in excess of what they were legally liable to pay under their respective loan agreements.