The High Court will deliver its judgment on the bank fees class action case on Wednesday, ruling on whether late payment fees imposed by ANZ on credit card accounts constitute "penalties" within the meaning of established precedent and are, therefore, unconscionable.Paciocco v Australia and New Zealand Banking Group Ltd is the first of a series of class actions over bank fees. The original claim was in relation to five classes of fees charged on customer accounts.The plaintiffs argued that the fees were not genuine "pre-estimates of damage" and were illegitimate penalties.The present appeal to the High Court concerns only late payment fees on credit cards. The other classes of fees have been held not to be penalties and any appeal in relation to them has been dropped.When the case first went to trial the Federal Court held that honour fees, dishonour fees, non-payment fees and over-limit fees were incapable of being penalties because they were not triggered by a breach of contract.However, the credit card late payment fees were capable of being penalties because they were triggered by a breach - the failure to pay on time.Based on expert evidence, the court decided that the loss to the bank from a late payment was no more than $3 and in some cases as little as 50 cents. Given that the late payment fee was $35, it followed that the fee was vastly greater then the loss. The court found that the fee was "extravagant and unconscionable."On appeal, the Full Federal Court upheld the Federal Court judgment apart from its finding as to the status of the credit card late payment fees. It said the late payment fees were not penalties.It said the actual damage suffered by the bank was not decisive in determining whether the late payment fee was a penalty and other circumstances at the time of entry into the contract were relevant.The test of whether a fee is a penalty goes back to a 1915 British case called Dunlop, which said that a fee will be held to be a penalty "if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach."There is also a presumption that a fee is a penalty if it is a "single lump sum" on the occurrence of several different events, some more serious than others.The Federal Court and the Full Federal Court applied the Dunlop test in different ways in assessing ANZ's credit card late payment fees. It will be up to the High Court to decided the correct application.Summarising the progress of the class action in an article in the Sydney Law Review last year, Melbourne Law School associate professor Katy Barnett said: "It will always be easier to persuade a court that a term is unconscionable, unfair or unjust if there are elements of procedural unfairness. "However, that is difficult to show in this case because the contracts were clearly worded and the