ANZ Customers Fees Suit Expanded by High Court Ruling

Australia & New Zealand Banking Group Ltd. (ANZ) customers can pursue claims to recoup more banking fees that they said were illegal, Australia’s top court ruled.

The High Court of Australia in Canberra today upheld the customers’ appeal of a lower-court ruling that limited their class-action lawsuit to fees relating to credit card late- payment charges.

“It’s a complete vindication of our position,” James Middleweek, managing director at IMF Australia Ltd. (IMF)’s Financial Redress Pty unit, said in a phone interview today. “Hopefully, the banks do the right thing and come to the table now.”

ANZ is the first of 12 banks that IMF Australia, the country’s biggest litigation funder, planned to sue in a bid to recoup as much as A$5 billion ($5.1 billion) that Australian account holders paid in fees since 2005, according to Middleweek. Today’s ruling expands the claims bank customers can pursue in the other lawsuits.

“This action is still at the preliminary stages and today’s judgment does not provide a resolution,” Philip Chronican, chief executive officer of ANZ, said in a statement today. The court rulings haven’t determined whether the fees charged were excessive, he said.

The High Court ruling expands the law of penalty with implications for many Australian businesses, the bank said in the statement. ANZ abolished 27 fees on personal accounts and reduced overdrawn, dishonor and late payment fees in December 2009, the bank said.

Penalty Law

Federal Court Justice Michelle Gordon in December dismissed complaints that charges for insufficient funds in accounts or for overdrawn bank accounts were illegal because she said they weren’t penalties. She allowed the lawsuit to proceed in relation to credit card late-payment charges.

Customers holding more than 249,000 accounts have registered to sue, according to IMF’s website.

The High Court unanimously rejected the proposition that the fees could only be considered a penalty if there were a breach of contract, as Gordon concluded.

“It has a profound impact in terms of getting us over that hurdle,” Middleweek said, referring to the ruling and the effect on the lawsuits against the other banks.

The banks will have to persuade the judge in federal court that fees charged, including a A$45 dishonor fee, or a A$29.50 fee for overdrawing an account, were reasonable to recover the cost incurred.

The credit card late-payment charges make up about 40 percent of the A$50 million in refunds for so-called exception fees sought by ANZ’s customers, according to Andrew Watson, a principal at Maurice Blackburn.

The case is: John Andrews v. ANZ Banking Group Ltd. VID811/2010. Federal Court of Australia (Melbourne).

To contact the reporters on this story: Joe Schneider in Sydney at Jason Scott in Canberra at

To contact the editor responsible for this story: Edward Johnson at

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