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

HIGH COURT OF AUSTRALIA

FRENCH CJ, KIEFEL, GAGELER, KEANE AND NETTLE JJ

LUCIO ROBERT PACIOCCO & ANOR APPELLANTS

AND

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED RESPONDENT

Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28 27 July 2016 M219/2015 & M220/2015

ORDER

Matter No M219/2015

Appeal dismissed with costs.

Matter No M220/2015

Appeal dismissed with costs.

On appeal from the Federal Court of Australia

Representation

D F Jackson QC with M B J Lee SC and W A D Edwards for the appellants (instructed by Maurice Blackburn)

A C Archibald QC and M H O'Bryan QC with C van Proctor for the respondent (instructed by Ashurst Australia)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Paciocco v Australia and New Zealand Banking Group Limited

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.