High Court hears banks fees submissions
The High Court has started hearing submissions from applicants in the bank fees class action to have the case include a wider range of fees.The action is on behalf of about 38,000 class members who were customers of ANZ. In its initial stage the litigation only involves ANZ as a test case.In total, the class action involves 170,000 customers of eight banks claiming more than $200 million of fees.In December last year, the Federal Court ruled that late payment fees were capable of being penalties, but found for ANZ on the other fees.It drew on a House of Lords case in 1983 to support its ruling that "a party can only be relieved against a penalty if it becomes payable for a breach of contract".The applicants had claimed that each of 17 exception fees was a penalty and was out of all proportion, or unrelated, to the likely damage sustained by the bank, and that the imposition of the fee was unconscionable.They claimed that the fees were in breach of the Australian Securities and Investments Commission Act, the Trade Practices Act, the Fair Trading Act and the Credit Code.The court ruled that the doctrine of penalties was limited to circumstances of breach of a contractual obligation, and "on the proper construction of the terms and conditions imposed on the applicants by ANZ, only the late payment fees on personal and business credit accounts were imposed in circumstances where the applicant had committed a breach of his or her contract with the ANZ and were therefore capable of being characterised as a penalty."The court ruled that the overdrawing of an account did not constitute a breach of contract and, therefore, the fees in those cases were not penalties.In May, the High Court granted the applicants leave to appeal the Federal Court judgement. The High Court said it would look at the issue of whether a person can only be relieved against a penalty if it becomes payable for a breach of contract.It said it would also look at whether the jurisdiction in respect of penalties was available only in law "or remains alive in equity and, if so, what is its scope and doctrinal basis."In their submission to the High Court, the applicants said: "The conclusion that the fees extracted by ANZ were incapable of constituting a penalty is, at least in equity, a-historical, contrary to the manifold authorities in which the penalty jurisdiction has been exercised, and in principle wrong."The applicants contend that the limitation that there must be a breach of contract has introduced new an substantial injustice in cases where formerly relief might be had."ANZ issued a statement yesterday, which said: "Our consistent position has been that while some of these fees have been unpopular, we believe they were lawful and today's hearing is a further opportunity to resolve many of the questions in this case."