Business Law Assignment - Paciocco v ANZ Group Ltd & Retail Lease Act (NSW)

Running Head: BUSINESS LAW ASSIGNEMENT
Business Law Assignment
Name
Institution

BUSINESS LAW ASSIGNEMENT 2
Business Law Assignment
Part A
1. The Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28 case
was heard in the High Court of Australia. The proceedings of the case originally started
in the Federal Court before Gordon J who established that the provisions for late payment
were penalties founded on common law along with equity. The court case commenced
before Gordon J in the Federal Court in 2011, which constituted proceedings against
Australia and New Zealand Group Ltd (ANZ) on penalties. The decision held by Gordon
J was appealed to the Full Court of the Federal Court; nonetheless, the High Court
discarded the issues that surfaced in the appeal concerning the penalties of principle
(Lima & Wei, 2017).
2. The case is a civil case that involves civil proceedings. The appellant (Mr Paciocco) who
led the class-action appellants, was not successful in a claim for the recovery of the late-
payment fees he paid pursuant to the conditions and terms of contracts between him and
ANZ in line with two consumer credit card accounts. Therefore, Mr Paciocco bears the
onus of proof in this particular case (Barnett, 2012). The appellant contendeds that a sum
is a penalty bears the onus of proving that the sum is in reality a penalty and is faced with
an “elevated hurdle”. On the facts of Paciocco it seemed that the mainstream anticipated
the consumers to anticipate the bank’s interests and to adduce proof of the bank’s “costs”
of provisioning and regulatory capital as part of the discharge of the onus on the clients to
prove that the late payment fees were penal (Turner & Trone, 2013).

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3. The main legal issue in the proceedings was if the late payment fee provisions based on
the ANZ’s credit card accounts of the consumers constituted penalties. The only
challenged payment fee was a late payment fee of $35 or $20 charged when the client
made the minimum monthly payment after the due date. The clients claimed that the
payment fee was unenforceable as a penalty, as well as its imposition, was forbidden by
diverse statutes (comprising prohibitions against unconscionable behaviour along with
unfair terms).
4. The appellant supported the primary instance decision that the late payment fees were
exaggerated when contrasted with the biggest loss ANZ would recover by means of
damages at law that was unenforceable as penalties. The appellant too challenged the fees
reasons rather than that they were penalties. In this regard, the appellant claimed that the
fees charged by the bank were not genuine or unfair or unconscionable pursuant to the
statute (McCouat & CCH Australia Limited, 2010).
5. In the case, the doctrine of the precedent and the hierarchy is evident in the manner the
case proceeded from the federal courts to the High Court. Thus, the High Court in the
case considered an appeal by a client of the ANZ against the verdict of the Full Court of
the Federal Court that the late payment fee by the bank was not penalty. Consequently,
the High Court’s verdict helpfully investigates the law against penalties and the way it is
applied in Australia (Cranston, Avgouleas& Zwieten, 2017).
6. Construction contracts classically comprise “liquidated damages” provisions offering for
payment of a particular sum to one party by other if it fails to fulfil certain obligations.

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The case was a comparatively traditional penalty in the sense that it emanated in the
background of a contract that responded to the violation of a primary stipulation through
imposing a collateral obligation to pay the sum of money. Therefore, the reasoning in
Paciocco was probable to have application past bank fees, as well as apply to other
liquidated damages. Therefore, the position of penalty clauses in contracts founded on a
judgment that is currently over a century old. In Dunlop Pneumatic Tyre Co Ltd v New
Garage and Motor Co Ltd (1915) AC 79, the United Kingdom (UK) House of Lords
maintained a clause that offers for a liquidated sum to be paid for the violation of the
contract cannot amount to be a penalty. A liquidated sum is the specified, as well as
certain sum that is payable by a party who has violated a term of a contract to the other
party who has encountered a loss. The liquidated sum should be genuine pre-estimate of
the loss or damage incurred because of the breach of the contract. Thus, it will amount to
a penalty provided the sum needed to be paid is extravagant, as well as unconscionable in
contrast to the highest damage, which can believably be proved to have trailed from the
violation of the contract. In addition, if the clause is deemed a penalty, then it would be
invalid, as well as unenforceable based on the contract law. This precedent was the
foundation of the litigation against the bank (Lewison, 2015).
7. The decisions by the court were not fair because the judgment is probable to have
extensive consequences on the contract law, specifically in line with the liquidated
damages or losses clauses in contracts. This makes it harder to challenge liquidated
damages clauses due to the broad range of issues taken into consideration in ascertaining
the non-breaching party’s damage along with the degree, which may be warranted.