News: Bank fees back to High Court

In December 2013, I predicted that the now long-running case involving bank fees would end up again before the High Court. That prediction appears to be about to come true.

In February 2014, after the High Court’s earlier decision in Andrews v Australia and New Zealand Banking Group Limited [2012] HCA 30, Federal Court judge Gordon J decided that most of the disputed fees were not penalties, apart from late credit card payment fees (as I posted here). Yesterday, in a resounding victory for the banks, the Full Federal Court in Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 held that none of the fees were penalties, including the late payment fees. Moreover, none of the fees were unconscionable or unfair.

The Full Federal Court overturned her Honour’s judgment with regard to the late payment fees on the basis that she incorrectly looked at whether the fees paid by Mr Paciocco and his company were ex post (after the event) exorbitant and extravagant, rather than looking at the greatest ex ante (predictable) loss which could have flowed from the breach and assessing the reasonableness of the fees in that light (see [51]-[52] of Allsop CJ’s judgment, with which Besanko J and Middleton J agreed in separate judgments). In light of yesterday’s decision, the plaintiffs have indicated that they intend to appeal to the High Court. The Age reports today:

After ANZ’s appeal was allowed on Wednesday, Maurice Blackburn’s national head of class actions, Andrew Watson, who is representing customers, said he would appeal against the Federal Court’s ruling in the High Court:”Obviously we’re still digesting the details of what’s a very large decision, but based on what we’ve read, we think there are grounds for appeal and we will be making an application for special leave to appeal to the High Court,” he said.

“It is perhaps appropriate that Australia’s largest consumer class action will ultimately be determined by Australia’s highest court, and as a result of today’s decision, that’s where we’re headed…”

Meanwhile, the banks are hoping that their latest win will signal the end of the litigation. I predict that there’s scant chance of that.

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About Katy Barnett

Katy Barnett is an Associate Professor at Melbourne Law School. She was awarded her PhD in 2010, and it was published in 2012 by Hart Publishing as a monograph entitled Accounting for Profit for Breach of Contract: Theory and Practice. In 2013 she was a visiting scholar with Brasenose College, Oxford as part of the Melbourne-Oxford Faculty Exchange.