ANZ welcomes court ruling
BusinessDay reporter Chris Zappone discusses the court ruling to throw out four of the five fee types of class action brought against ANZ.
The country’s biggest class action against the banks and the billions of dollars in penalty fees and late fees that were allegedly charged unfairly and wrongly to their customers hit a big snag today when a judgement found in favour of only one in five charges.
The test case involved ANZ Bank versus 34,000 ANZ customers who joined a class action bankrolled by litigation funder IMF to sue the banks over an estimated $50 million in fees. These customers had a victory on late fees and credit cards, but suffered a defeat on other fees such as dishonour fees, honour fees, over limit fees and non payment fees.
The 134-page judgement is complex but boils down to Justice Michelle Gordon in the Federal Court of Australia adopting a strict definition of a penalty and therefore a breach of contract. The hearing was a first step in deciding whether the five fees could be considered penalties or if they were a fee for a service provided by the bank.
It means up to one third of the 34,000 customers had a victory over the late payment of credit cards, which is the biggest economic component of the class action, and equivalent to more than $18 million of the $50 million claimed. The next step is the main trial next year which will hear work out how much these customers were allegedly over-charged by ANZ.
For the other banks, including Commonwealth Bank, National Australia Bank, BankWest, Citigroup and Westpac, it means IMF will stick with its plan to take them on one at a time in the courts over late fees on credit cards.
But in the case of the other four penalties that were lost in today’s judgement, the biggest being the dishonour fees charged to businesses, IMF will undoubtedly seek leave to appeal for a wider definition of the meaning of penalty or even whether Justice Gordon was right to conclude they were not capable of being penalties.
In late 2009, ANZ and most of the other banks abolished a number of fees on personal accounts, reduced overdrawn, dishonour and late payment fees.
The other banks no doubt watched closely at the ruling today and will think long and hard about whether to settle or wait to see what the courts decide next year.
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