Only the other day, Sinclair Davidson and I were debating the nature of bank fees and whether they were penalties. In that post, I noted the case of Andrews v Australian and New Zealand Banking Group  FCA 1376 where customers of the ANZ were suing it in relation to a variety of fees the bank had charged them. I noted that the matter had gone on appeal to the High Court, but pessimistically predicted that Gordon J’s judgment would be upheld (with a caveat that I’ve been wrong before).
The breaking news is that I’m glad I added the caveat becuase I was wrong. The Press Release from the High Court this morning in relation to Australian and New Zealand Banking Group v Andrews  HCA 30 says as follows:
On 5 December 2011, the Federal Court held that only the late payment fees were payable upon breach of contract. Following the decision of the New South Wales Court of Appeal in Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd (2008) 257 ALR 292, the primary judge held that the penalty doctrine was limited to breaches of contract and thus could only be applied to the late payment fees. The applicants sought leave to appeal to the Full Court of the Federal Court of Australia.
The High Court unanimously rejected the proposition that the penalty doctrine applies only where there has been a breach of contract. The question is one of substance rather than form. The Court also rejected the proposition in Interstar that the doctrine had been absorbed into the common law. The fact that the honour, dishonour, non-payment and over limit fees were not payable for breach of contract did not prevent them from being characterised as penalties. It will be for the Federal Court on the further hearing of the matter to decide whether these exception fees are penalties.
The judgment is not available yet. But I can’t wait until it is. (Pity I’ve still got 20 papers to mark). I will do a post on it in more detail as soon as I’m able.
The full High Court judgment is available on Austlii now. More anon.