Beyond the banks - Paciocco affects others too

The High Court's decision in Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28 provides helpful guidance to contracting parties around the circumstances in which clauses will be found to be penal.

Though the High Court's decision specifically deals with a late payment fee for a credit card account, like the decision in Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30; 247 CLR 30, to which it is a sequel, it will have wide-ranging effects.

THE SCOPE OF THE DISPUTE

By the time this class action reached the High Court (this time), the dispute was narrow. The only challenged fee was a late payment fee of $35 or $20, charged when a customer made the minimum monthly payment after the due date. Customers argued this fee was unenforceable as a penalty and its imposition was prohibited by various statutes (including prohibitions against unconscionable conduct and unfair terms).