Fees? Not So Simple: Andrews and ORS V Australia New Zealand Banking Group Ltd [2012] HCA 30 (6 September 2012)

Article excerpt


On 22 September 2010 the appellants commenced representative proceedings in the Federal Court of Australia against the Australia New Zealand Banking Group ('ANZ') pursuant to Part IV of the Federal Court of Australia Act 1976 (Cth). There were approximately 38,000 group members. John Andrews, Angelo Saliba and Geoffrey Field were the 'head' applicants, or representatives, for the group members. Their claim was based upon the premise that certain 'fees' charged by the ANZ are not, in effect, fees at all, but penalties imposed upon the Bank's customers and, as such, are void or unerforceable pursuant to the doctrine of penalties. As a consequence, the appellants further claimed restitution for money had and received of, in the alternative, damages.

At first instance, Gordon J held that the majority of the lees charged by the ANZ could not be characterised as penalties because the penalty doctrine cold only be invoked when the impost arose from a breach of contract or where there was no responsibility or obligation upon the appellants to avoid the events which triggered the imposition of the fees.

The appellants appealed against this finding to the High Court, which allowed the appeal with costs, determining that the penalty doctrine could be applied where there was no breach of contract of occurrence of an 'uncontrolled' event. The High Court remitted the matter to the Full Court of the Federal Court for determination as to whether the ANZ fees were penalties within the parameters discussed in its judgment.

In addition to the proceedings under consideration, six similar proceedings were commenced in the Federal Court against other Australian financial institutions, including the other major banks, bringing the total of represented litigants to approximately 170,000 and the total value of the claims in excess of $223 million.

Apart from the significance of the number of litigants involved in the representative actions, the ultimate effect of the High Court's decision and the subsequent findings of the Full Court of the Federal Court in this matter upon banking and finance practice, bank/client relations and financial institution profitability, cannot be overstated. (1)


The Federal Court proceedings were commenced in the Victorian Registry of the Federal Court (2) and claimed relief against:

   fees identified as honour, dishonour, and non-payment fees charged
   by the ANZ in respect of various retail deposit accounts and
   business deposit accounts, and lees identified as over limit and
   late payment fees charged by the ANZ in respect of consumer credit
   card accounts and commercial credit card accounts. (3)

Although the initial pleadings filed by the applicants contained a number of grounds upon which their claim was based, including unconscionable conduct on the part of the ANZ (4) and the use by the Bank of 'unfair' terms (5) in its contracts and which were accordingly 'unjust' transactions, (6) the principal emphasis of their claim was for:

1. declarations that the disputed 'fees' were void or unenforceable as penalties; and

2. the repayment of all or part of the disputed fees by way of restitution for money had and received or damages.

In addition, separate questions were presented to the court for resolution. These questions included the issues of:

1. whether the fees were payable by the applicants upon breach of contractual obligations and, or in the alternative,

2. whether the applicants had a responsibility to ensure that the circumstances giving rise to the fees did not occur.

As pointed out on appeal by the High Court in its judgment: 'If there was an affirmative answer to either of the alternative questions, it was then asked whether the fees were capable of being characterised as a penalty by reason of that fact. …


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