ANZ penalties class action trial commenced on 3 October 2011

On 3 October 2011 the class action initiated by Maurice Blackburn against ANZ commenced at trial in the Federal Court. The trial has been split into stages, the first of which is to determine if the various fees charged by the ANZ are penal in nature.

I wrote a blog article on this proceeding awhile back over an issue concerning an expert report: the ANZ was seeking time to file and serve an expert report explaining how the fees are calculated, and the court was critical of this because of the delay. The applicants suggested that the fact that a forensic report was needed to explain the fees suggested the fees had no basis and were arbitrary.

The Age website has a useful summary of the first day of trial, with Justin Gleeson SC giving submissions concerning the applicants' case against the ANZ. I have included an extract from the Age article below:

THE first stage of Australia's biggest class action has begun in the Federal Court with lawyers representing 34,000 ANZ customers arguing that certain fees charged by the bank amounted to an improper imposition of a penalty.

There is a way to go before any of those customers learn if they can get compensation from the bank since each stage of the class action is likely to run to appeal.

This week the court is considering if fees levied by the bank were, as the customers argue, penalties - and not, as the bank says, a service charge for applying its discretion about extending credit or honouring overdrawn accounts.

Lawyers for the ANZ customers told the court yesterday the bank appeared to have developed ''a nice little earner'' in levying fees against overdrawn accounts.

Counsel for the customers, Justin Gleeson, SC, traversed more than 700 years of legal history as he argued the law on penalties and contracts, at least as far as Australia is concerned, is not entirely settled.

Over five hours, the court heard about penal bonds in the 14th century, a dispute between two English fishmongers in 1670 after one disparaged the other's fish, developments after the passing of the 1875 Judicature Act, and was treated to some lines from The Merchant of Venice.

It also heard about 17 specific instances between 2004 and 2010 when ANZ charged ''honour'' or ''dishonour'' fees for overdrawing cheques or credit accounts, for late payments on credit cards and for exceeding specified limits on credit cards. The 17 instances are being used as quasi test cases as the court determines if the fees were in fact penalties. Outside the court, lawyer Andrew Watson of class action specialists Maurice Blackburn Lawyers, said the history of the law in this area demonstrated that ''a penalty provision will not be enforced by the courts''.

He said while the law indicated it was entirely appropriate in a breach of contract for an aggrieved party to recoup damages, the fees charged by the bank did not represent a genuine estimate of the loss or damage caused.

Mr Watson said while Maurice Blackburn was not yet aware of the precise level of fees ''we know it runs into hundreds of millions of dollars''. ''If we are successful, the bank will be required to pay back the excessive amount of fees.''