Witness withdraws from money trap trial due to ‘stress’

A former Super Rugby player and another man may yet face court about their companies, which loaned consumers $35m but charged more than $70m in late fees.

Former Super Rugby player Mark Swanepoel.

A witness in ASIC’s court case against alleged loan sharks Cigno and BSF Australia has withdrawn due to stress.

Three witnesses were due to give evidence on Tuesday to a trial in which the Australian Securities and Investments Commission has accused the companies of avoiding regulation and offering credit without a licence. However, just one of the witnesses was cross examined.

The companies are owned by former Super Rugby player Mark Swanepoel and Brenton Harrison. ASIC has alleged that by October last year more than 100,000 consumers borrowed $35m for small loans but were charged more than $70m in late fees.

Barrister Luke Livingston, SC, for ASIC told the court on Tuesday one of its witnesses who withdrew a loan and was due to be cross examined was subpoenaed to attend court but would not be forced to give evidence.

“We are instructed … due to stress of litigation (the witness) is seeing a psychologist or psychiatrist today,” Mr Livingston said.

Earlier, ASIC called another witness, Hannah Kim.

Ms Kim, under cross examination from Cigno and BSF’s barrister, Lachlan Gyles, SC, agreed she took out a loan of $350 in September 2019 and another of about $300 last year.

She paid an extra $300 on her first loan, in total paying back $650, after she asked for an extension to pay her final instalment, the court heard.

But when that direct debit payment did not work because there was no money in Ms Kim’s account, she received a default notice for $100, and emailed the company.

“I sent a lot of emails to them. I get mixed up. I never check my bank account. It’s like whatever they take the money out of my bank account,” she said.

The court heard Ms Kim emailed the company to request they waive their fees, saying they were “absurd”.

After saying she originally believed the transaction worked, she disagreed with Mr Gyles when he said she knew “full well” the money had not been deducted and that she wanted to avoid late fees.

Referring to the second loan, Ms Kim agreed she ultimately paid back $453, including an additional $159 on top of what she would have handed over last year.

Asked if she “told lies” when communicating via email with the company again about knowing there would be fees linked with a default payment, Ms Kim responded she tried to “negotiate how much I can pay all at once”.

“I’m not aware of the fees that much. I’m not aware (of the) fees … how much it goes up,” she said.

According to court documents, Cigno marketed the loans, processed applications and managed repayments. BSF then advanced the loans, ASIC claimed.

A “major” source of revenue for BSF was the loan application of $19.95, which it received regardless of its success, the court heard. It also received default fees of $20 if a payment were late.

Consumers had to pay a weekly account-keeping fee, a default fee of $67 and a change-of-schedule fee of $15 if they asked for a change to their payments, court documents said.

After barristers for ASIC and the respondents sped through their opening remarks on Monday and the remaining two witnesses were not cross examined on Tuesday, Federal Court judge Ian Jackman said the case had not “moved significantly if at all in a day and a half”.

It is the second time Mr Swanepoel and Mr Harrison have been embroiled in a court stoush over the loan schemes, after they lost a case last year.

The men may be called to give evidence in the case, likely on Monday or Tuesday of next week when it resumes.