Australian Securities & Investments Commission wins High Court ruling allowing Justice Derrington to set penalties in Sunshine Loans unlawful fees case

The Australian Securities & Investments Commission (ASIC) has secured a unanimous High Court decision dismissing Sunshine Loans’ appeal over the recusal of the trial judge from the penalty phase, confirming that Justice Derrington may determine the appropriate penalties in the civil penalty proceeding. The dispute arose after Justice Derrington found Sunshine Loans liable for contraventions of the National Credit Act for charging unlawful fees under small amount credit contracts. Sunshine Loans then sought his recusal from determining penalty on the basis of apprehended bias, pointing to credibility findings and the language used in the liability judgment. The High Court rejected that argument across six judgments, including findings that carrying credibility assessments into the penalty determination is part of deciding the case on its legal and factual merits, that the penalty phase is a continuation of the final hearing, and that there was nothing “extreme” about the primary judge’s remarks. The underlying liability findings included that, between July 2016 and November 2020, Sunshine Loans entered into over 670,000 contracts containing an amendment fee not permitted by the National Credit Code, required payment of the fee over 12,000 times, accepted payment over 8,000 times, and received around AUD 300,000. The matter will return to Justice Derrington for a hearing on the appropriate penalty.