In Paciocco v Australia and New Zealand Banking Group Limited [2014] FCA 35 Justice Gordon of the Federal Court of Australia (in a 105 page judgment, excluding annexures) considered 72 fees charged by the ANZ Bank in relation to a consumer deposit account, two consumer credit card accounts and a business deposit account.

Its customer complained the fees were either an unlawful penalty (either at common law or in equity) or unconscionable conduct within ss 12CB and 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and/or ss 8 and 8A of the Fair Trading Act 1999 (Vic) (FTA) or, in the case of the consumer credit card accounts were unjust under the National Credit Code.

Justice Gordon decided that:

• the Late Payment Fees charged by ANZ on Mr Paciocco’s consumer credit cards constituted a penalty at common law and a penalty in equity.
• The honour, dishonour, non-payment or overlimit fees charged to the Applicants by ANZ were of a different character. None of them constituted a penalty at common law or a penalty in equity. Further, none of the Exception Fee Provisions that entitled ANZ to charge the Applicants the Honour, Dishonour, Non-Payment or Overlimit Fees contravened any of the other statutory provisions.

UPDATE 6 March 2014: Customer appeals

There were 2 Exception Fees which ANZ admitted that the applicable contractual arrangements between ANZ and Mr Paciocco did not permit ANZ to charge each of the Exception Fees.

Similar actions have previously been commenced against Citibank, Commonwealth Bank, NAB and Westpac (16 December 2011), St George and BankSA (1 February 2012) and BankWest (18 April 2012).

The judgment discusses in detail the decision of the High Court in Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30

The 72 Exception Fees in issue and the Events which triggered their imposition are listed in Annexure 1 (page 106).

The amount of damages payable by ANZ are yet to be assessed: they will include the amount by which the Exception Fee exceeded the costs of ANZ by reason of the Exception Fee Event together with interest charged by, and paid to, ANZ.

The judgment reviews evidence of ANZ’s costs including the cost of regulatory capital and operational costs associated with late payments.

Finally it is worth noting some of Justice Gordon’s observations:

“290 Before turning to consider the particular circumstances relied upon by the Applicants, it is necessary to understand what was not alleged and what was absent. First, there was no allegation of dishonesty, oppression or abuse of a commercially powerful position and none existed. Second, there was no allegation that ANZ failed to disclose the Exception Fee Provisions to the Applicants at the time that they entered into the Saving, Card and Business contracts or when the Exception Fees were altered. The Exception Fees were disclosed…. Third, there was no allegation that the Applicants were unable to understand the Exception Fee Provisions. Fourth, there was no allegation that the Applicants were compelled to enter into the Saving, Card and Business Contracts with ANZ or that ANZ placed financial or other pressure on them to enter into those contracts. Fifth, there was no allegation that the Applicants were under compulsion to engage in the overdraw transactions. It was wholly a matter of choice for the Applicants whether they chose to do so. ANZ provided a facility to “switch off” the ability to overdraw their account and thereby avoid the incurring of Exception Fees associated with overdraw transactions …. If customers wished to borrow further funds from ANZ, ANZ offered various alternative loan products. While customers would incur fees in connection with those borrowings, those fees had a different structure than the exception fees, thereby offering choice to the customers. Other banks offered similar products subject to different fee structures. Sixth, each of the Saving, Card and Business contracts were terminable at will by the Applicants. If the Applicants were dissatisfied with the quantum of the Exception Fees at any time, they were able to terminate the contract and seek alternative services.”