High Court says that bank fees may be penalties

By Legal Eagle

In Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30, the Australian High Court decided that bank fees may potentially be penalties, notwithstanding the fact that the trigger for the imposition of most of the fees was not a breach of contract. I’ve already outlined the law against penalties in some detail in this earlier post. In short, parties are allowed to stipulate the amount payable for certain breaches of contract (known as ‘liquidated damages’), but if the amount payable is not a genuine pre-estimate of loss and is instead in terrorem of the other contracting party (i.e. designed to scare them into performance rather than compensate for loss) then the clause may be struck down by the law against penalties: see Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656, affirming Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.

As I noted in the other post, Andrews is a class action case where certain customers of the ANZ Bank are suing it in relation to a variety of fees the bank had charged them. At first instance (in Andrews v Australian and New Zealand Banking Group [2011] FCA 1376) the plaintiffs were largely unsuccessful in their claim. Gordon J held that only late payment fees were capable of being characterised as a penalty, whereas honour fees, dishonour fees, overlimit fees and non-payment fees were held not to be penalties. She followed the New South Wales Court of Appeal in Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310 and held that it was necessary for a breach of contract to trigger the necessity to make the payment, so that the law of penalties had no application to contractual payments that arose upon the occurrence of an event which did not constitute a breach of contract. The honour fees, dishonour fees, overlimit fees and non-payment fees were not incurred as a result of breach of contract, but were payable because ANZ had met a request for a loan or an advance from a customer. By contrast, credit card late payment fees were capable of being a penalty, as they were imposed when a customer failed to make a payment within the time stipulated (in other words, the contract had been breached).

As this extremely useful summary by King & Wood Mallesons notes, the effect of Interstar was that contracts drafted on a permissive basis would not contravene the law against penalties, despite the fact that a permissive clause effectively amounted to the same thing as a penalty:

For example, a fee payable on breach would be as follows:

(a) A leases a shop to B for $100 p/w, on the condition that the shop is not used on weekends.

(b) If (a) is breached, B agrees to pay A $500 for each breach.

If the fee of $500 is not a genuine pre-estimate of the damage suffered by A by B’s breach, it will be unenforceable as a penalty.

Yet, the same position could be validly achieved if the contractual terms were drafted permissively, for example:

(a) A leases a shop to B for $100 p/w for use Monday to Friday.

(b) B agrees to pay A $500 each time the property is used on the weekend

You can see from this that the substance of the two clauses is the same (B has to pay A a fee of $500 if the property is used on the weekend) but the form is different. The second clause would not be in breach of the Interstar version of the rule against penalties, even if the $500 is not a reasonable pre-estimate of the loss, because the obligation to pay $500 is not triggered by a breach of contract; instead, it arises because B has agreed with A that B will pay that sum on the occurrence of an event which is not stipulated to be a breach of contract (i.e. using the property on the weekend). However, the High Court did not accept that the second clause was different in substance from the first.

The High Court judgment in Andrews was a unanimous one from French CJ, Gummow, Crennan, Kiefel and Bell JJ. The judgment is learned and historical,  with an emphasis on the historical background of the jurisdiction against penalties, which in fact has its origins in Roman times. (Do I sense the pen of Gummow J making use of its last splash of judicial ink?)

The important and central message from the High Court in Andrews is that it is substance of the clause which matters, not the form. The penalties doctrine is not prevented from operating because there is no express contractual promise to perform the condition, and indeed (as the example above illustrates) a promise that the condition will be satisfied may often be the same in substance as a penalty which arises on the failure of a condition. Moreover, it is made clear that the doctrine against penalties is equitable and that the rule against penalties arose in a context where express contractual promises to perform were not common; instead the usual means of drafting a contract was as a ‘bond upon a condition’, which looked a little more like the permissive contract example above (‘If I do not do X, I will owe you a debt of $Y’). Consequently equity is more than equal to dealing with the present situation. Equity has long had a jurisdiction to set aside unconscionable bargains, and indeed, in the past, was much less circumspect in the way it operated.

It should be noted that parties are still free to put a clause in their contract which allows for payment if further services are provided by one party (effectively, an option to obtain an additional service for a fee). Among other things, the High Court refers to Pomeroy’s A Treatise on Equity Jurisprudence, 5th ed (1941), vol 2, §437 (at [81] of the judgment). I went to Pomeroy and I saw that he says that parties to a contract may put a term in a contract where:

the contracting party so binds himself that he is entitled to perform either one of two alternative stipulations, at his option; and if he elects to perform one of these alternatives, he promises to pay a certain sum of money, but if he elects to perform the other alternative, then he binds himself to pay a larger sum of money…In such a case equity regards the stipulation for a larger payment, not as a penalty, but as liquidated damages agreed on by the parties. It will not relieve the contracting party from the payment of the larger sum…nor, on the other hand, will it deprive him of his election by compelling him to abstain from performing whichever alternative he may chose to adopt.

The High Court also adopts Metro-Goldwyn-Mayer Pty Ltd v Greenham [1966] 2 NSWR 717, a case which involved a contract for the hiring of films to exhibitors for public showing. The standard form contract conferred the right to one screening at a particular time, and if the exhibitor wished to make additional showings, he was obliged to pay a sum which was four times the original fee. A majority of the New South Wales Court of Appeal decided that this additional payment was not a penalty, but a legitimate option to obtain further screenings. The case was further complicated by the fact that the contract in question was a standard form contract prescribed by the Cinematograph Films Act 1935 – 1938 (NSW). I’ve now had a chance to look at that decision and it makes for interesting reading. Jacobs JA based his conclusion on the interpretation of the contractual terms, and argued that the date and place for screening was central to the contract, and accordingly, the clause as to the additional fee was not penal. He said at 723:

Upon such an approach it seems to me that cl. 56 is properly regarded as one providing for an additional hiring fee in the event of an additional showing of a film. It may well be intended by the agreement that such an additional showing should be strongly discouraged. For this reason a very large hiring fee compared with the original hiring fee is provided. However, that does not make the clause a penalty clause: cf. Bridge v Campbell Discount Co. Ltd., [1962] 1 All E.R. 385; [1962] A.C. 600.

Holmes JA, who was also in the majority, similarly found that the clause was not a penal clause. Unlike Jacobs JA, he considered whether the value of the fee (four times the original fee) might indicate a penal aspect, saying at 726:

The view that cl. 56(a) relates to damages or to penalty for breach of the agreement for hire in the end depends upon the circumstance that in the events described in the clause the exhibitor becomes liable to pay as hire four times the amount of hire otherwise payable, if I may be permitted to so describe it. It is the apparent enormity of the multiplication that gives colour to the argument that there is a penalty involved. Of course the hire need not be, as in this case, a fixed sum but may be a sum arrived at by a formula related to the gross receipts of the theatre in which the film is exhibited on the particular occasion. Four times the hire might then give a very large sum or it may not. This would all depend upon the method of hire chosen by the parties as the method to apply in respect of an ordinary exhibition of the film. …Four times the hire is a multiplier which would suggest that a penal sum and not liquidated damages is involved.

However, he then goes on to say that it could be likened to a lease to a farmer where a particular rate of rent was stipulated for one area of land with a covenant not to cultivate another area. The lease would say that if the farmer wished to cultivate that other area, he would have to pay a higher rate of rent. [Although Holmes JA does not reference it, this example must be derived from the scenario suggested by Lord St Leonards in French v Macale (1842) 2 Drury 269, 275-6 which the High Court cites in the instant case at [80]]. Holmes JA says that the clause in the screen contract is essentially analogous to this situation, as the additional use of a film beyond what was authorised might entitle the distributor to a much higher rent. He notes that further showings would result in greater profit for the exhibitor and will affect the rate of hire which the distributor can get from another exhibitor in the area, and that accordingly the clause is not a penalty.

Wallace P dissented. He decided that the clause was a penalty, partly because it operated as a sanction for breach of the negative covenant not to show the films at unauthorised times. Moreover, it did not represent a genuine pre-estimate of damages because the minds of the parties did not turn to the making of the contract – it was a statutory fixed term contract providing “an elaborate fixed menu of stipulations and conditions” (citing Lord Radcliffe, Bridge v Campbell Discount Co Ltd [1962] AC 600, 626).

Having diverted into a discussion of Metro-Goldwyn-Mayer, I now return to the main decision, but I hope you can see why I discussed it in such detail. The High Court’s endorsement of that case may make or break the plaintiffs’ case. The decision has now been remitted back to the Federal Court for determination according to the principles the High Court has outlined. I am wondering with the greatest of interest what the result will be. Will the banks be able to argue that the fees are simply options to gain further rights for greater sum? Or are they really penalties designed to force the other party to comply with their part of the bargain? In comments on an earlier post, Desipis argues as follows:

[T]he dishonor and non-payment fees would seem to be penalties. The over-limit fees however would be about the bank granting, and the account holder taking advantage of, additional rights (additional overdraft/credit) that would not exist without the same contractual terms containing the fees, and therefore not necessarily constitute a penalty. The honor fees would seem to be somewhere in between, although I would hope that withdrawing an account an additional few dollars beyond an already overdrawn amount would not constitute an ‘additional right’ within the context of this doctrine.

Even if a fee is a stipulation for an additional service, I think the law should still query whether the additional fee represents a fair value for the service or additional rights granted, or whether the substantive effect is that the additional fee is really in terrorem (i.e. designed to punish, because the fee does not fairly reflect the value of the service provided). Otherwise we are back at an Interstar position – you can avoid the rule against penalties by drafting your contract in such a way that it offers two alternative stipulations, even though it is still the same in substance as it was before. I think that at the least, Holmes JA’s judgment in Metro-Goldwyn-Mayer points to the possibility that some considerations of the fair value of the service in question are relevant. Surely the High Court’s emphasis on substance over form in the primary judgment indicates that they would not favour an effective return to the Interstar position? I guess we’ll have to watch to see how this battle unravels in court. My conclusion is that although the judgment appears to be an expansion of the previous law, it may be that its effect is less radical than it first appears because of the exception carved out for what Pomeroy calls ‘alternative stipulations’.

Presuming that the changes this judgment heralds are more substance than form, I wonder what other contracts will be affected by this decision? The kind that immediately popped into my mind after the decision was mobile phone contracts($); but some energy contracts may be affected too. Some businesses which thought that it was safe to impose carefully drafted ‘service fees’ and ‘late payment fees’ after Interstar may be in for a rude shock.


  1. Posted September 10, 2012 at 6:07 pm | Permalink

    Great article LE.

    I checked the ComCourts site and there is presently no listing for Andrews v ANZ to come back before Justice Gordon in the Federal Court.

    Also I checked the class actions in the Fed Court running against the other major banks of CBA, NAB and Westpac and they have all been stayed until 7 Dec 2012, pending HCA and other developments.

  2. Posted September 10, 2012 at 6:20 pm | Permalink

    Good article by Adam Schwab on bank penalty fees today:

    (behind paywall)

    Also Adam was apparently an early-agitator with a Disclosure that he successfully took legal action in 2008 against Citigroup regarding an illegal penalty fee but has no involvement or association in the IMF matters

    Me, I’ve also run some bank fees litigation in the Federal Court… which had no involvement with IMF… although it did take a defamation action in the VSC against IMF and its Managing Director Hugh McLernon to address our separateness (settled on confidential terms in August 2012)

  3. Posted September 10, 2012 at 7:10 pm | Permalink

    LE @3,

    There is a good regime in Defamation Acts for an offer of amends. An apology can be a feature of this. And if it’s not made then there is a lost opportunity to mitigate damages (including potentially aggravated damages) and moreover to actually settle the dispute before things get out of hand. Sometimes, perhaps even often, it is enough to say sorry and mean it.

  4. Sinclair Davidson
    Posted September 11, 2012 at 2:23 am | Permalink

    I suspect the HC will push Australia back into the era of capital rationing and/or higher fees and charges, if not interest rates. Doesn’t worry me, my mortgage is paid off – or the judges I suspect on their high salaries – but young people starting out may be a bit annoyed.

  5. ben
    Posted September 11, 2012 at 5:51 am | Permalink

    my gas/electricity supplier has early discounts which i assume are an alternative to late fees 🙂

  6. Stephen
    Posted September 11, 2012 at 6:02 am | Permalink

    I think the key is the word “elect”. I think the thing that annoys people is that they don’t want to be able to overdraft their account, but the bank allows it at the bank’s discretion, not the customers.

    If I were able to say, “turn off the overdraft function”, then I am electing that option. But to the best of my knowledge, banks either don’t allow it, or don’t make the option clear.

    To me, that is where the penalty aspect comes in. And that is what might change?

  7. Posted September 11, 2012 at 7:49 am | Permalink

    Ben, well yes. Substantively they are late fees, but the energy company spins them as a “discount”. Previously such things have not been held to be penalties, but in the wake of this decision, I wonder.

    Moreover, I’m also wondering about the $15 late fee I had to pay to my phone company when I was late paying my phone bill by 1 day. Yep, I totally understand that it’s a bad thing if people pay bills late (I have witnessed a number of insolvent trading cases). But 1 day = $15? Hmmm. No leeway there.

  8. Posted September 11, 2012 at 7:53 am | Permalink

    Okay, taking a step back in the timeline, I note that LE speculates as to whether it was Nicole Rich’s report for the Consumer Law Centre Victoria that may have got things rolling for the bank fees class actions.

    Well, the Nicole Rich 2004 report has had some influence — it was even referred to in the Federal Court Fast Track case summary for the ANZ Bank Fees class action.

    However, the key drivers as I seem were:

    (1) 2008 and 2009 developments in the UK bank fees cases. After much disarray in excessive bank fee claims being brought in local UK courts, on the condition that all these minor skirmishes be stayed the banks agreed to a Test Case to be run by the UK Office of Fair Trading (OFT). The Banks won (there was a breach of contract required and bank fees were considered ‘fees for service’). The Banks appealed their own win (sort of) to the UK Supreme Court where they triumphed again when it was found on a narrow question that the OFT did even have the authority to go about inquiring into the ‘value for money’ of bank fees as far as the consumer affairs legislation that regulated the OFT activities was concerned. So major loss. See Office of Fair Trading v Abbey National Plc [2008] EWHC 875 (Comm) and Office of Fair Trading v Abbey National plc & others [2009] UKSC 6. Even so, the issue of excessive banking fees was now on the radar Down Under.

    (2) The Australian Securities and Investments Commission (Fair Bank and Credit Charges) Amendment Bill 2008 (Cth) introduced into the Senate on 14 February 2008 as a private member’s Bill by Family First Senator Steve Fielding. This was referred to the Senate Economics Committee on 19 March 2008 and a Senate Inquiry ensued. Out of that someone thought to ask APRA if it could please provide some hard data on just how much the Banks were charging their customers for these pesky bank fees.

    (3) Turns out that APRA and the RBA had been collecting this bank fee data all along just not making it public. This all changed with the May 2009 RBA Bulletin on Banking Fees in Australia. See Table 5 on Exception Fees. The Banks had been gorging on over $1 Billion p.a. !!!

    ==>> this was shocking and from there the momentum built for a class action.

    (4) Starting with an NAB media release on 29 July 2009, all of the major banks announced they were significantly dropping their banking fees from October 2009.

    (5) The Australian Consumer Law (ACL) national consumer credit legislation was also due to commence from 1 July 2010 and there was some growing awareness about how financial services would be scooped up in it all for unfair terms.

    (6) On 12 May 2010, the ASX-listed litigation funder IMF (Australia) Limited beat the drum with a successful media campaign to sign-up group members online. The first IMF-funded class action was launched against ANZ on 22 September 2010. To freeze the limitation clock other class actions were instituted from late 2011 once there was a successful toehold that late payment fees on credit cards were capable of being penalties given Gordon J found they were contractually based — with these subsequent class actions presently stayed until December 2012.

    On 24 May 2010, I thought I’d test the waters myself by instituting personal legal proceeding on the Fast Track List of the Federal Court for my $60 of CBA bank fees: VID398/2010 David Charles Barrow v Commonwealth Bank of Australia That matter first came before Finkelstein J on 18 June 2010.

    I thought there was a simple inferential argument that could be run that on the balance of probabilities the banks were overcharging their customers before the changes given there was such a big drop after the informational veil was lifted on the practice in May 2009. So I ran it. The ABA and Sinclair Davidson at Catallaxy argue that the reductions in banking fees were just due to competitive forces. They may well be right. Especially if it is a competitive force that excessive fees have a voidable penalty or involve unconscionable conduct that can give rise to litigation exposure — as well as reputational damage to the bank.

  9. Posted September 11, 2012 at 12:49 pm | Permalink

    Thanks for that very useful summary, David. So it was the RBA banking fees report which provided the immediate impetus. May 2009 Report – July 2009 Banks cut fees.

    Edited to add: sorry spaminator ate your comments. I don’t know what’s up with it at the moment. I deleted the duplicate ones.

  10. Posted September 11, 2012 at 12:57 pm | Permalink

    Stephen, well yes – with an option you have to actually CHOOSE to take the option. Do consumers really have a choice with these kind of banking contracts? I would argue not (it’s a bit like Lord Radcliffe’s “elaborate fixed menu of stipulations and conditions”). I guess the bank’s answer to that is that you do have a choice – you can choose not to let your bank account get into overdraft (for example) and thus it’s like the person using the farm land – all you have to do is avoid going onto that land (or avoid overdrawing your account). But does the analogy really hold?

  11. Sinclair Davidson
    Posted September 11, 2012 at 1:20 pm | Permalink

    LE – it isn’t what you and the courts have a “problem with” that is important – it is what the providers of capital have a problem with that is important. People who overdraw their accounts or are late-payers are more risky than those who do not. ideally the banks would identifiy these people in advance, but often cannot. The “penalty” rates adjust for that risk. So it isn’t just the accounting cost of the transaction that becomes important. If the banks cannot change risky clients more for their risk they will spread it over the entire customer base.

    You may be correct that the fees are not declared to be penalties, but the HC could have nipped this in the bud and is simply adding to the regime uncertainty that now envelopes Australian policy.

  12. Sinclair Davidson
    Posted September 11, 2012 at 1:21 pm | Permalink

    Sorry for quick comment – on the move with just a tablet.

  13. kvd
    Posted September 11, 2012 at 2:41 pm | Permalink

    You may be correct that the fees are not declared to be penalties, but the HC could have nipped this in the bud

    Not yet read LE’s post, but have to say that the above is a very strange way of defining (any part of) the role played by the HC.

  14. kvd
    Posted September 11, 2012 at 4:31 pm | Permalink

    The examples LE gives (via Mallesons) of the shop tenant and then the movie distributor -v- theatre operator seem to me to be none of the court’s business. The ‘commercial power balance’ between owner and tenant, or distributor and theatre are fairly equal in that the ‘penalty’ is known beforehand, and the potential payer is in a position to decide (under no incapacity) that use of the premises or film is profitable. This is not breaking a contract; more potentially taking advantage of a contract extension.

    Surely you don’t want the HC to decide for them such a basic business decision?

    The ANZ (and yes, LE’s mention of mobile phone contracts) position is more, far more, asymmetrical in terms of power to willingly enter into a variation of contract involving onerous terms. I’d accept a role for ‘commercial fairness’ in this, but not in the simple examples given earlier in this post.

  15. Posted September 11, 2012 at 4:57 pm | Permalink

    Having had a chance to read some more (in particular this post and Dunlop v Greenham) I think I’ve managed to almost reverse my position from the comment quoted in the post.

    I can’t help but wonder if the banks might put forward an argument to support the dishonour fees, similar to the one put forward by Dunlop. The bank would have a legitimate interest in protecting the value of its various payment systems. A dishonoured payment would cause inconvenience for the third party expecting payment. This would reduce the apparent efficiency and reliability of the payment system. It is possible that the cumulative damage would so undermine the reputation of the payment system that it significantly harms the bank. It would be “almost an impossibility” to make a pre-estimate of the damage of each transaction, thus the amount specified in the contract might stand as an estimation of the damage.

    The rebuttal to this would involve the fair value consideration that the post puts forward. Along the lines of the dissent in Metro-Goldwyn-Mayer, the contracts here were standard form and arguably the customers would have not had any ability to negotiate the value. Additionally it’d be interesting to see the total of the fees collected against the apparent value of the payment system, or the other revenue it provides. That comparison might show the fees to be “extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved” (per Lord Dunedin in Dunlop), or it might not.

    I should clarify that the ‘overlimit’ fee I was referring to in the quoted comment was the fee charged based on the monthly closing balance being over the limit (see [304]-[307] of the FCA case), as there seem to be a number of ‘overlimit’ fees that are transaction based like the honor fees. This would seem to be a penalty on the basis of the second test provided by Lord Dunedin in Dunlop:

    It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid (Kemble v. Farren(4)).

    In substance it appears this particular type of overlimit fee seems to late payment fee so would also be classified as a penalty, and given its nature, one the court would not support at all.

    As for honour fees, the problem I see now is they seem to lack proportionality with the apparent service they supposedly compensate for. The problem is that neither of the two components of that service, credit assessment and credit supply, involve a per transaction cost. The former would be costed per account (and perhaps over time), while the later (the ‘additional right’) would depend on the amount of the transaction and would appear to be already compensated by the interest (including additional margin) provided for in the contract. An account holder who overdraws their account through ten $5 transactions on the same day can hardly be considered to impose ten times the burden (or risk as Sinclair argues) as an account holder who overdraws their account through a single $1000 transaction. The fees seem to be structurally flawed in the way they might protect any interest of the bank (as far as I can see), and thus seem to me to be an unfair penalty.

    This argument would seem to be supported by the references to Lord Watson in Dunlop:

    There is a presumption (but no more) that it is penalty when “a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage” (Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co.(6)).

    The rebuttal to this presumption regarding uncertainty over the damage might apply to the dishonour fees (as I discussed above), but a bank really ought to be able to make a reasonable pre-estimate of the cost and risks associated with authorising overdrawing an account so it shouldn’t apply to the honour fees.

    I wonder what other contracts will be affected by this decision?

    The two that come to my mind are gambling and insurance contracts. Although I suspect both industries to be able to entrench special law to protect themselves, if they haven’t done so already.

  16. Patrick
    Posted September 11, 2012 at 6:28 pm | Permalink

    D, I can’t see how insurance contracts could be challenged under this – what charges are you specifically thinking of?

    Great analysis LE, really well done!

    I would recommend, if you are charged something like that $15 fee, to complain. You’d be surprised, it can work!

  17. Posted September 11, 2012 at 9:21 pm | Permalink

    LE @11:

    So it was the RBA banking fees report which provided the immediate impetus. May 2009 Report – July 2009 Banks cut fees.

    Yes, I think that’s when the cat was de-bagged. Politicians had something to lambaste. As did the media. And the lawyers had something to potentially sue. And so the banks were relatively fast to move. With NAB the first on 29 July 2009, and by so doing make it look like they were not like the other nasty banks (a successful PR campaign for NAB — still they didn’t give back all those previous higher bank fees).

    The May 2009 RBA revelations (espec Table 5) also seem to have been the impetus for an obscure little consumer firm in WA called Financial Redress Pty Ltd with big dreams — which was challenging high bank fees at the letter-writing and local court level — to be courted by the IMF (Australia) ASX-listed litigation funding giant [IMF have won $1.5billion now in 132 odds cases, keeping a very large chunk of those winnings]. IMF snuggled up to Financial Redress (as a wholly owned subsidiary) to be its sort of kindly front-end to engage the mums and dads.

    A simple and effective online registration system was built but alas the wheels of the vehicle got bogged.

    Actually the wheels of the whole litigation funding business got bogged because on 20 October 2009 the Full Court of the Federal Court in Brookfield Multiplex Limited v International Litigation Funding Partners Pte Ltd [2009] FCAFC 147 found that litigation funding was a Managed Investment Scheme (MIS) — and so requiring all the onerous bells and whistles that go with giving advice. That could be a bit tricky for a few hundred thousand mums and dads group members so the bank fees class action was put on the cold stuff.

    This was excruciating for IMF as every day that a class action was not filed was a day that would slip away from the 6 year limitation period (and the IMF 25% success fee would slip away with it).

    Deus Ex Machina: On 5 May 2010 The Hon Chris Bowen MP, then Minister for Corporate Law, announced at an IMF sponsored conference that litigation funding of class actions would be excluded from the definition of MIS in the Corporations Act 2001 (Cth).

    A week later, on 12 May 2010, IMF announced the most ambitious class action in Australia history and the biggest civil claim Australia had ever seen against 12 identified banks.

  18. kvd
    Posted September 12, 2012 at 3:35 pm | Permalink

    [email protected] thanks for follow up. You asked if the fact that the contract terms were statutorily mandated would make a difference to my view? I think not, mainly because the theatre owner was not obliged to make use of what I think of as an onerous contract extension. He had the option to decide if doing so was profitable, with presumably no disincentive if he decided against?

    That somehow seems different to me if compared to the continued use of either a bank or phone facility – sticking to the examples raised earlier – but I guess even there that the consumer is not penalised for deciding to discontinue use?

    All rather confusing now – am more inclined towards the view that provided the penalised party is fully informed and able to elect to avoid the default or penalised action without cost, then suffering the penalties attached are his fault, and the court should play no part.

  19. Sinclair Davidson
    Posted September 14, 2012 at 2:57 am | Permalink

    LE – sorry for delay – been out of wifi contact. Good question – will have a look when I get back to Oz.

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