ODG members who are interested in the doctrine of penalties in contract may wish to read today's decision of Gordon J of the Federal Court of Australia in Paciocco v ANZ [2014] FCA 35 (judgment available here: http://www.abc.net.au/news/2014-02-05/anz-decision/5239476).

The case involves a long-running class action by customers against the ANZ bank in relation to various fees charged on the customers' accounts. Gordon J decided only late payment were illegal penalties, whereas honour fees, dishonour fees, overlimit fees and non-payment fees were not illegal penalties because these fees did not arise on breach of contract, or alternatively, they were not collateral stipulations - they were not in terrorem of the failure of the primary stipulation. The customer agreed to an extra service for a greater fee so these were alternative stipulations. Paciocco represents the application of the High Court case of Andrews v Australia and New Zealand Banking Group Limited [2012] HCA 30 after it was remitted back to the trial judge for decision (confusingly, a different representative plaintiff became the vehicle for the action after it was remitted back).

I have written a brief blog post (including more about the remedy - action for money had and received - and the impact this had on the period of limitations) on MLS's High Court Blog for those who are interested:
http://blogs.unimelb.edu.au/opinionsonhigh/2014/02/05/news-most-bank-fees-not-illegal-penalties/ I suspect this will end up in the High Court again one way or another.

Kind regards,

Katy

Dr Katy Barnett