C LT COMMERCE COMMISSION Please refer to: 11528 852986_1 23 June 2009 Home Rescue Suite 435 2A Byron Avenue Takapuna 0622 AUCKLAND PO BOX 15615, Dinsdale 3243 HAMILTON Attention: Dennis Paul Dear Mr Paul Fair Trading Act 1986: Warning — Home Rescue ‘The Commerce Commission (‘the Commission’) has received a complaint in relation to services offered by a trader operating under the name of “Home Rescue”. Specifically, the complaint relates to claims made on the www.homerescue.org.nz website that Home Rescue is charitable trust that can prevent mortgagee sales and foreclosures. The Commission has investigated this complaint in relation to potential breaches of the Fair ‘Trading Act 1986, ‘The Complaint ‘The complainant states that the Home Rescue service, as desoribed on its website, is misleading consumers in relation to its claim that it is a charitable trust that can prevent mortgagee sales and foreclosures. The complainant alleges that Home Rescue attempts to do this by entering into an agreement for sale and purchase with the proprietors of the property facing mortgagee proceedings and then registers a caveat on the pertinent certificate of title in ‘the name of a claimed Maori incorporation on the basis of that interest. The mortgagee is then required to go to the High Court following the mortgagee sale to have the caveat removed, before the transfer of title, can be registered, The judgments in relation to the relevant Court proceedings show that the group secking to register these caveats and prevent the mortgagee sale are found not to have an enforceable interest under the agreement for sale and purchase. ‘Accordingly the caveats lapse, allowing the transfer of title to be registered and the mortgagee sale to be completed. AUCKLAND: | WELLINGTON: CHRISTCHURCH: 1.19, ASB Bulling 16, Vector Building 1.2, Riverlands House 135 Alber Streot 4 The Terace| 31 Victoria Steet PO. Box 105.222, PO. Box 2351, BO. Box 25-193 “AUCKLAND 1143, NEW ZEALAND | wWettmoToN 140, NEW ZEALAND CHIRISTCHURCH 8144, NEW ZEALAND AUCKLAND 1143, NEW ZEALAND | WELLINGTON 6140, NEW ZEALARID “Tel. (03) 964 3450 Fax: (03) 964 3451Accordingly, the complainant states that the claims on the Home Rescue website that it can prevent mortgagee sales and foreclosures are wrong and the Home Rescue service merely delays the mortgagee sale process as opposed to preventing it altogether. The Investigation The Commission’s investigation has established that: + The Home Rescue website ~ www.homerescue.org.nz, claims to be a charitable trust providing a service that can assist people facing mortgage stress and prevent mortgagee sales, + There is no incorporated society or charitable trust registered with the New Zealand Companies Office by the name of “Home Rescue”. + The Home Rescue service claims that it can prevent mortgagee sales, in retum for the payment of a fee, on the basis that mortgages in New Zealand are fraudulent. . ‘The fee specified for this service is one percent of the current valuation of the property plus one percent of the value of the outstanding mortgage. + The claimed method for preventing the sale is to transfer the ownership of the subject and to a claimed Maori incorporation (examples include Tapaeururangi Hapu Inc, and Nga Uri Whakatipurunga O Ngaerae Inc.). Once ownership is transferred, the Maori incorporation will then allow the home owner to remain at the property in return for the payment of an ongoing rental. + Inpractice, Home rescue requires the landowner to enter into an agreement for sale and purchase of the land with the Maori incorporation, and on the basis of that agreement, the Maori incorporation registers a caveat against the ttle of the land. The mortgagee is unable to register the transfer of ttle to the new owner following the mortgagee sale until this caveat has been removed, + The Commission understands that representatives of Tapaeururangi Hapu Ine. and Nga Uri Whakatipurunga O Ngaerae Inc. have sought to defend the removal of the caveats registered as part of this process in the New Zealand High Court, + The Commission understands that these proceedings have found (inter alia) that neither ‘Tapaeururangi Hapu Inc and Nga Uri Whakatipurunga O Ngarae Inc. are incorporated societies under any statute of New Zealand; and further that neither of these groups have a sufficiently arguable case to support the interest claimed under the caveat in the circumstances. Accordingly, the caveats have been removed allowing the transfer of title consequent to the mortgagee sale to proceed. + The Commission is not aware of any caveat removal proceedings involving either ‘Tapacururangi Hapu Inc and Nga Uri Whakatipurunga O Ngarae Inc. where these parties have been successful in arguing that the caveat remain, thereby preventing the transfer of title following the mortgagee sale.. Home Rescue claims that its service is within the law and further that it has successfully “saved” close to thirty homes. ‘The Law Jn the Commission’s view, the claims made in relation to the nature and effect of the Home Rescue service are at risk of breaching the Fair Trading Act 1986 (‘the Act’). Section 11 of the Act states: Misleading conduct in relation to services No person shall, in trade, engage in conduct that is liable fo mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of services. Sections 13(b) and (e) of the Act state: “'No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,~ (b) Make a false or misleading representation that services are of a particular kind, standard, quality, or quantity, or that they are supplied by any person of a particular trade, qualification or skill; or (@) Make a false or misleading representation that goods or services have any sponsorship, approval, endorsement, performance characteristics, accessories, uses, or benefits; or In our view, the absolute claims on the Home Rescue website that the service provided can prevent mortgagee sales and foreclosures are at risk of misleading consumers as to the “particular kind? and “quality” of the service, or as to the “uses ... or benefits” of the service on offer. As indicated by the outcome of court proceedings referred to above, representatives of both the groups identified as Tapaeururangi Hapu Inc and Nga Uri Whakatipurunga O ‘Ngaerae Ine (understood to be related to the Home Rescue service), have failed to establish a legal interest in the land sufficient to prevent those sales from occurring. Accordingly, the intervention in the mortgagee sale process instigated by Home Rescue serves merely to delay the mortgagee sale, not prevent it from occurring. The Commission further notes that there are a number of other claims made on the Home Rescue website relating to the kind, quality and benefits of the service on offer that are at risk of breaching the Act. These include: the description of “Home Rescue” as a registered charitable trust; the claims that Home Rescue has “saved” in the vicinity of 30 homes already; and that there are legal remedies available whereby homeowners are entitled to have the equity in their property repaid. The Commission is very concerned about the potential detriment to parties affected by the Home Rescue service in these circumstances, In this regard, we note that the failure of the Home Rescue service to meet the absolute claim that it can prevent mortgagee sales via costly