High Court of Australia

Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28

27 Jul 2016

Case Number: M219/2015 M220/2015


French CJ, Kiefel, Gageler, Keane, Nettle JJ


Banker and customer – Rule against penalties – Consumer credit card accounts – Late payment fees – Where late payment fees were $35 and $20 – Where costs actually incurred by respondent upon failure by first appellant to make timeous payment of amounts owing were approximately $3 – Where late payment fees not genuine pre-estimates of damage – Where respondent alleged it could conceivably have incurred loss provision costs, collection costs and regulatory capital costs as a result of first appellant's default – Whether late payment fees penalties – Whether late payment fees extravagant, exorbitant or unconscionable – Whether late payment fees out of all proportion to interests damaged – Whether respondent's legitimate interests confined to reimbursement of expenses directly occasioned by first appellant's default.

Contract – Rule against penalties – Essential characteristics of a penalty – Whether sum disproportionate to actual loss suffered amounts to a penalty – Whether sum incorporating loss too remote to be recoverable in action for damages amounts to a penalty – Relevance of Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.

Trade practices – Consumer protection – Late payment fees – Unconscionable conduct – Unjust transactions – Unfair terms – Whether late payment fees unconscionable, unjust or unfair.

Precedent – Apex courts of foreign jurisdictions – Status of unwritten law of United Kingdom in Australia.

Words and phrases – "exorbitant", "extravagant", "genuine pre-estimate", "in terrorem", "late payment fees", "liquidated damages", "out of all proportion", "penalty", "unconscionable", "unconscionable conduct", "unfair terms", "unjust transactions".

Australian Securities and Investments Commission Act 2001 (Cth) – ss 12BF, 12BG, 12CB, 12CC.

National Consumer Credit Protection Act 2009 (Cth) – Sched 1 s 76.

Fair Trading Act 1999 (Vic) – ss 8, 8A, 32W, 32X.

PDF MD5: a3025ca0bba2d3ed8068822c35da3b5d
RTF MD5: 412681922a52292b39ae8fccd5ff16d4