In brief - Andrews v ANZ to have significant impact on
drafting of construction contracts
Whether or not a payment is triggered by a breach of contract,
it may still be classified as a penalty. However, if the party
liable to make the payment cannot prove that it was not a genuine
pre-estimate of loss, it would not be classified as a penalty.
Landmark judgment widens definition of penalties
In September 2012 the High Court handed down a landmark
judgement in the case of Andrews
v ANZ. This decision has paved the way for a wider range
of fees to be categorised as penalties.
The High Court held that a fee or other sum that is payable on
the occurrence or non-occurrence of an event may still be
characterised as a penalty, even if the event itself is not a
breach of contract. (For more information please see our earlier
article
Andrews v ANZ revives equitable jurisdiction concerning
relief against penalties.)
