Litigation and Regulatory Update: no knock-out blow in bank fees class actions (Paciocco v ANZ)

Both sides claimed victory when Justice Gordon of the Federal Court of Australia delivered her decision in the bank fees litigation, Paciocco v Australia and New Zealand Banking Group Ltd [2014] FC 35 (Paciocco v ANZ), and both sides are contemplating their respective positions in terms of an appeal. Therefore, the much anticipated clarity around the doctrine of penalties may be short lived.

Justice Gordon found that ANZ’s credit card late-payment fees are ‘penalties’ and are unenforceable. A necessary element of this finding was that Her Honour considered the late-payment fees were extravagant and unconscionable. However, it is important to note that Her Honour commented that ‘…there was no allegation of dishonesty, oppression or abuse of a commercially powerful position and none existed’.

Her Honour found that ANZ’s other fees such as dishonour fees, overdrawn and over-limit fees are not penalties and are therefore enforceable. The decision, in practical terms, is the same as Her Honour’s decision in Andrews v Australia and New Zealand Banking Group Ltd (2011) 211 FCR 53 (Andrews v ANZ). In that case, Her Honour found that only the late payment fees were penalties and that the other fees were not. However, her decision in the Paciocco case is informed by the High Court’s subsequent judgment in Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30 (Andrews HC)…

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