RMBL class action

Maurice Blackburn, Australia’s leading class action firm, filed a class action against RMBL Investments Ltd (RMBL) for alleged breaches of contract and for allegedly engaging in misleading or deceptive conduct in relation to ‘collection charges’ imposed on borrowers. The class action has settled, and the settlement was approved by the Court on 13 May 2020.

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 were 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 the class 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 stated that RMBL was not obliged to accept early repayment of the loan prior to the due date.

This class action alleged that in imposing the ‘collection charges’ which it did, RMBL acted in breach of contract and engaged in misleading or 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 agreed to pay $3 million inclusive of interest and costs (Settlement Sum) in full and final settlement of the claims of the Applicant and Class Members. As noted above, that settlement was approved by the Federal Court on 13 May 2020, and the Settlement Sum (after deduction of legal and funding costs approved by the Court) was distributed in 2020 to the Applicant and eligible Class Members (being those Class Members who registered their claims before the Court-imposed deadline of 4.00 pm (AEST) on 7 April 2020).

Key Documents

FAQs - your questions answered

The claim was against RMBL Investments Ltd (RMBL), and was 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) and have registered for the class action before the Court-imposed deadline (which has now passed).

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 alleged 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 was alleged that in imposing the ‘collection charges’ which it did, RMBL acted in breach of contract and engaged in misleading or 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.