The Law Relating to Penalties
Bar News: The Journal of the NSW Bar Association, Vol. Spring, pp. 28-31, 2016
5 Pages Posted: 1 Nov 2016
Date Written: November 1, 2016
Abstract
On 27 July 2016, the High Court handed down the latest in a series of significant decisions on the scope and content of the rule against penalties (‘the penalty rule’). Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28 (Paciocco) involved a challenge to the enforceability of credit card late payment fees charged by the ANZ. The fees were impugned on two independent bases. It was first contended that the fees offended the general law rule against penalties. It was further argued that the charging of the fees contravened the statutory proscription of unconscionable conduct and that the relevant terms of the credit card contracts were unjust and unfair within the meaning of a number of statutory provisions. The court (constituted by French CJ, Kiefel, Gageler, Keane and Nettle JJ) rejected both of these contentions by 4:1 (Nettle J dissenting). This note summarised the reasoning of the court and places the decision in its broader context.
Keywords: Contract, Equity, Rule Against Penalties, Common Law Divergences, Bank Fees, Class Actions, Law Reform
JEL Classification: K10, K30
Suggested Citation: Suggested Citation