RMBL class action

Maurice Blackburn, Australia’s leading class action firm, has filed a class action against RMBL Investments Ltd (RMBL) for alleged breaches of contract and for allegedly engaging in misleading and deceptive conduct in relation to ‘collection charges’ imposed on borrowers. The class action has recently settled and the proposed settlement will not take effect until it receives Court approval.

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RMBL conducts business as a mortgage lender, accepting investments from members of the public and then lending those funds to borrowers under a contributory mortgage fund scheme.

Under the loan agreements between RMBL and borrowers, borrowers are required to pay ‘collection charges’ to RMBL (in addition to their regular interest payments), purportedly to compensate RMBL for its costs, charges and expenses incurred in collecting those interest payments. In the case of the lead applicant in this action, those ‘collection charges’ were originally set at 5.5% of the amount of interest payable each month (or each quarter), but during the course of the loan were increased successively to 27.5%, purportedly in the exercise of RMBL’s discretion. The loan agreement also states that RMBL is not obliged to accept early repayment of the loan prior to the due date.

This class action alleges that in imposing the ‘collection charges’ which it did, RMBL acted in breach of contract and has engaged in misleading and deceptive conduct.

The initial trial of the RMBL Class Action commenced on 7 August 2019 and having heard the evidence, the Court directed the parties to attend a mediation. That mediation commenced on 8 August 2019, and continued over the following weeks. Ultimately the parties agreed to an in-principle settlement of the proceeding under which RMBL will pay $3 million inclusive of interest and costs (Settlement Sum) in full and final settlement of the claims of the Applicant and Class Members.

The proposed settlement does not come into effect unless it is approved by the Federal Court.

Registration

Persons identified by RMBL as potential class members were sent a Registration and Settlement Approval Notice in the week commencing 9 March 2020.

If you are a class member, in order to be eligible to participate in the proposed settlement of the class action you must register by 4.00PM AEST on 7 April 2020. Failure to register your claim before the deadline will forfeit your right to participate in the settlement and receive a settlement payment, absent further order from the Court.

You can register online and obtain more details regarding the registration process by clicking the “REGISTER NOW” button at the top of this webpage.

Please contact the Maurice Blackburn team on 1800 931 361 or RMBLclassaction@mauriceblackburn.com.au if you have any queries.

Key Documents

FAQs - your questions answered

The claim is against RMBL Investments Ltd (RMBL), and has been heard as a class action in the Federal Court of Australia in Melbourne in the name of a representative party on behalf of class members, being persons who entered into a loan agreement with RMBL, pursuant to which they were required to pay, and did pay, ‘collection charges’ to RMBL.

To be eligible to participate in the claim, you need only have paid ‘collection charges’ to RMBL (at any time).

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.

The detailed allegations are set out in the Applicant’s Statement of Claim filed with the Federal Court on 4 September 2018 which is available for download under the “Key Documents” section of this website.

Where seven or more people have claims that arise out of similar circumstances (such as, in this case, paying excessive ‘collection charges’ to RMBL), a class action can be brought by one claimant on their own behalf and as a representative of others. The class action process saves time and expense and avoids the need for the courts to determine common issues of fact or law more than once and enables disputes and claims involving large numbers of people to be resolved via a single case.

Class actions are an important part of the legal system and alongside regulatory action ensure corporate accountability. Maurice Blackburn has the leading class actions practice in Australia.

The costs of the RMBL Class Action have been, and will continue to be, funded by Litigation Lending Services Ltd (LLS), initially pursuant to a Funding Agreement between LLS and the Applicant, and subsequently pursuant to orders made by the Court on 2 May 2019 (commonly referred to as a ‘Common Fund Order’).

If the proposed settlement is approved by the Court and you are eligible to participate in the settlement distribution, it is likely that the Court will order that your share of the settlement will be calculated and paid to you after deduction of legal costs. Under no circumstances will you, by registering to participate in the settlement, be liable to pay any ‘out-of-pocket’ costs, whether to LLS, Maurice Blackburn or otherwise.

As noted above, the settlement does not come into effect unless it is approved by the Federal Court. If the proposed settlement of $3 million is approved by the Court there are likely to be some substantial deductions from the Settlement Sum before distribution of any monies to eligible Class Members. If the Court approves the proposed deductions from the Settlement Sum there will be approximately $1.295 million available for distribution to Class Members. Further information regarding the deductions can be found in the Registration and Settlement Approval Notice a copy of which is available for download in the “Key Documents” section above.

At the present time, it is not possible to estimate how much each registered Class Member will receive by way of a distribution from the proposed settlement, because that will depend on factors including (1) the amount of the payments to LLS and Maurice Blackburn on account of legal and litigation funding costs which the Court approves as reasonable; (2) the number of Class Members who register before the applicable deadline, and (3) the amount of the ‘collection charges’ which each registered Class Member paid.

If you have previously opted out of the class action, you are no longer considered a Class Member in the class action. This means that the settlement, if approved, will not affect your legal rights, but it also means that you are not eligible to participate in the settlement and receive a distribution.

We will only use and/or disclose your personal information strictly for the purpose of the class action, or as required by the Court or by law – that may include disclosure to RMBL for the purpose of verifying your claim for the purposes of the settlement distribution scheme. In all other cases, we will seek your consent before disclosing any of your personal information.

Any corporate entities who borrowed money from, and paid ‘collection charges’ to, RMBL, but are currently deregistered, are not presently class members in the class action, and are therefore not entitled to register to participate in the proposed settlement of the class action unless the corporate entity is re-registered with ASIC before 4.00 pm (AEST) on 7 April 2020. However, such entities are also not bound by the proposed settlement of the class action.
If you are a beneficiary of the trust for which the corporate entity was a trustee, you may however still be eligible to register a claim. Please contact us should this be the case.

If you are a class member in the class action, but do not register to participate in the class action before the deadline of 4.00 pm (AEST) on 7 April 2020, you will (subject to any contrary orders of the Court) still be bound by the settlement if it is approved by the Court (which means that you cannot pursue the same or similar claims against RMBL in the future), but will not be entitled to receive any distribution from the settlement sum.

If the proposed settlement is not approved by the Court, then the parties will either have to renegotiate the terms of the settlement, or otherwise abandon the settlement and continue with the class action.