Paciocco & Anor v Australia and New Zealand Banking Group Limited

[2015] HCATrans 229

[2015] HCATrans 229

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne   No M62 of 2015

No M63 of 2015

B e t w e e n -

LUCIO ROBERT PACIOCCO

First Applicant

SPEEDY DEVELOPMENT GROUP PTY LTD (ACN 006 835 383)

Second Applicant

and

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522)

Respondent

Application for special leave to appeal

KIEFEL J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 11 SEPTEMBER 2015, AT 9.37 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friends, MR M.B.J. LEE, SC and MR W.A.D. EDWARDS, for the applicants in each matter.  (instructed by Maurice Blackburn Lawyers)

MR A.C. ARCHIBALD, QC:   May it please the Court, in these matters I appear with my learned friends, MR M.H. O’BRYAN, QC and MS C. VAN PROCTOR, for the Bank.  (instructed by Ashurst Australia)

KIEFEL J:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, as the Court will have seen, there are two applications for special leave to appeal.  Both concern what are described as “late payment fees”.  One involves whether the late payment fees are penalties under the general law.  On that issue, we succeeded before the primary judge but failed in the Full Court. 

The other involves whether the provision for payment of the late payment fees – and if I could just interpolate, your Honours, other fees were in issue as well; they are no longer in issue – was in contravention of a number of statutory provisions rendering unenforceable contractual provisions which are unconscionable, unjust or unfair.  The primary judge did not deal with these issues in relation to late payment fees, because she had already decided in our favour on the penalty issue, but we failed on this issue in the Full Court.

Could I deal, your Honours, first with the issue as to penalties?  The terms of the late payment fees, your Honours can see, are set out in volume 1 at page 27 in paragraphs 52 to 58 – your Honours, I do not think I need to go to the detail of them.  The late payment fee was payable if the monthly payment plus any amount due immediately was not paid within 28 days of the end of the statement period.  In that event, a late payment fee of $35, later $20, was added to the amount outstanding.  This was, of course, in addition to interest thereafter and interest accrued on any amounts outstanding which were not paid at the end of the statement period.

Your Honours, the late payment fee was an amount payable because money was not paid by a stipulated time.  It was payable in addition to interest on the money not paid on time.  The primary judge found – and, your Honours, this is something where the Full Court agreed; I will give your Honours the reference in just a moment – perhaps unsurprisingly, that the late payment fees were imposed as:

payable upon breach of contract, or as a collateral or accessary stipulation, as security for, or in terrorem of, the primary stipulation –

namely to pay on time.  Your Honours will see where the Full Court said that in volume 1 at page 281, paragraph 89.

Your Honours, the Full Court, however, differed from the primary judge on the ultimate question, whether the late payment fees were penalties.  At the heart of the reasoning of the Full Court is a combination of, fundamentally, two propositions.  One was that the primary judge had erred by looking at the contract as at the time of breach, as distinct from the time of its making, and the other was that the Full Court thought that there could be taken into account in determining the loss that might follow from the relevant breach two categories, namely, an increase by the bank in its loss provisions, and an increase in the costs of regulatory capital.

Your Honours, as to the first of those matters, the relevant time of assessment, the issue arises from the observation in Lord Dunedin’s speech in the Dunlop Pneumatic Tyre Company Case.  The passage, your Honours, is quoted at page 17 by the primary judge in paragraph 18 of her reasons.  Could I refer your Honours to the paragraph numbered 3 in the quotation at page 17?  You will see there, your Honours, in item 3, the concluding words:

judged of as at the time of the making of the contract, not as at the time of the breach.

Now, your Honours, could I just pause to say this.  Accepting the theory underlying that, if one looks at the particular case, what we are talking about is non‑payment on the due date in a month of a sum payable under a credit card facility.  The late payment fee is then added to the amount due.  It becomes part of the amount on which interest will be payable.  If the minimum amount payable is not paid timeously, the next month there is then added another late payment fee.

Your Honours, in circumstances like that, we would submit it is difficult, with respect, to see, in the case of simple cases of non‑payment of money by the due date, that the assessment of the likely damages payable for breach will be very different, whether the assessment is made as at the time of entry into a contract of that kind, or at the time of breach. 

Could I in that regard refer your Honours to the observation of the Privy Council per Lord Woolf, which we have quoted in our written submissions in volume 2 at page 727?  Your Honours will see, about line 14 on the page, a reference to Philips Hong Kong Ltd v The Attorney General of Hong Kong, and the observation is that:

The fact that the issue [of whether a sum is a penalty] has to be determined objectively, judged at the date the contract was made, does not mean what actually happens subsequently is irrelevant.  On the contrary it can provide valuable evidence as to what could reasonably be expected to be the loss at the time the contract was made –

Your Honours, could we say, in any event, it is difficult to see that there was in fact such an error by the primary judge.  Your Honours will see that the Full Court said on this issue, at page 272 in volume 1 – your Honours will see there, at the bottom of the page, there is a quotation from the primary judge’s reasons.  The passage goes on, your Honours, to – if I could refer your Honours particularly to paragraphs 52 and 53, and in particular, in paragraph 53, where they speak of the primary judge having obviously applied an “ex post analysis”, referring to the passage at the bottom of the previous page.

Could we just say this, your Honours, that if one looks at that passage, your Honours will see that that passage at the bottom of page 272 includes references to two earlier passages of the judge’s reasons, namely 48 and 126 to 130.  The passage from the judge’s reasons, at 48, is at page 26 of volume 1. 

Your Honours, what she says in paragraph 48 has to be read with what goes immediately before, particularly, your Honours, with paragraph 46, the first paragraph under the heading “Loss and Damage”, and your Honours will see that in the last sentence, the last four lines of paragraph 46, her Honour says:

Here, ANZ did not contend –

et cetera, and then referred to the fact of an ex ante basis.  That is the context in which the succeeding two paragraphs were stating the position, and speaking of the time of entry, not breach.  Secondly, if one goes to the other passage referred to, paragraphs 126 to 130 – you will see those, your Honours, at page 47 – if one goes to paragraph 126, your Honours will see, in the last two sentences of paragraph 126, her Honour is referring to:

an objective assessment of the possible loss that might be incurred, not the subjective views or calculations of the parties prior to entering into the contract –

and it is apparent, your Honours, that her Honour is aware of the time at which it is to be carried on, and the passage that the Full Court quoted at paragraph 50, in our submission, should be read in context.

Your Honours, that is one aspect of the matter.  The second aspect, your Honours, is this.  The primary judge took the view that two items relied on by the respondent were not relevant to calculation of the loss that might be seen and the consequence of breach at a relevant time.  They were increase in loss provisions on the one hand, and increase in the cost of regulatory capital.  Your Honours, the judge’s reasons on the first of those can be seen at page 52 in volume 1, and especially at paragraph 150.  She said, at paragraph 150:

A provision is merely an accounting entry, which is made to reflect –

et cetera, and the passage goes on.  Your Honours, the second matter was the increase in the cost of regulatory capital – that is page 54, paragraphs 152 to 155, and particularly, your Honours, paragraph 155, page 55, about six lines into the page:

I reject the contention that the alleged increase in cost . . . Put another way, provisions and regulatory capital are part of the costs of running a bank in Australia.

Now, your Honours, her conclusion as to loss was that there had been a potential loss of about $3 on each occasion.  You will see that at paragraph 173 on page 59.  Your Honours, the Full Court’s view as to an increase in loss provisions is at page 298, paragraphs 161 to 164.  Your Honours will see, if one goes to paragraph 162, third line in the paragraph:

It is, however, difficult to see why, in a forward looking analysis, provisioning which results in impairments to the balance sheet and the profit and loss account of ANZ, is not to be considered as a real cost, as a form of loss against which the obligee bank has a legitimate interest in protection.

Your Honours will see something similar in paragraph 164, the third line.  In paragraph 162, your Honours will see the reference to costs.  May I return to that?  On regulatory capital – page 300, your Honours – the Full Court’s views, paragraphs 167 to 170, and central to the view is what one sees in paragraphs 167 to 169 where, in essence, the cost of regulatory capital was treated as something which was, in theory, recoverable by the bank, about paragraph 169:

That ANZ does not seek to recover these costs –

Your Honours, could we say in relation to that, that that approach, with respect, seems to throw rather to the winds any part of the Hadley v Baxendale approach to damages.  That approach involves two rules, of course.  The first is whether the loss was reasonably foreseeable.  The second is whether the loss includes loss arising from special circumstances in which the party liable had actual knowledge – I am shortening the statement of it, your Honours.

The point we would seek to make is that it is clear that in this context of penalty, the Dunlop Case is talking of loss being damages, and it is clear, if one looks at the observations of this Court in Ringrow v BP Australia Pty Ltd, again, that what is spoken of is damages.  Could we just say, your Honours, in relation to it, no doubt it is – if one goes to paragraph 169 – the case that ANZ would not sue for, or be in the rare case that a customer – no doubt it would be in the rare case that the bank would be suing for these two costs, but no doubt that would be because it would be very rare that a customer, having a credit card account, would have the actual knowledge which would attract the second rule in Hadley v Baxendale.

Your Honours, the result of the decision of the Full Court is that it is likely to bring about a situation where the question whether a stipulation of the present kind is a penalty will vary depending on the circumstances of each issuer, large or small, bank or non‑bank.  There will need to be a lengthy examination of the situation of each issuer.  Considerable complication has been added by the decision, in our submission, to the rather simpler tests, and indicia previously thought applicable.

KIEFEL J:   Mr Jackson, what do you say to the Bank’s submission that this really turns upon a question of the evidence that was available, and that its evidence approached the matter in a forward looking way, but your evidence did not?

MR JACKSON:   Your Honour, could I just say, first, this about that?  That contention on behalf of the Bank really involves making a rather large assumption, in our submission, the assumption being that it would be appropriate to take into account what are the amounts of the two items, at least, to which I referred, because, in our submission, penalty in this area is one that turns on what might otherwise be recoverable as damages and, except in the very unusual case, costs of this kind would not be recoverable under the ordinary rules as to damages.  That is the first thing, your Honour.

The second thing is that no doubt there might be an issue, if that contention be erroneous, about whether the Full Court was right in taking the view that that is what had been done.  In our submission, it is the first of those points that is the one of considerable significance.

Could I say, your Honours, one further thing about the penalty case?  The Full Court placed a great deal of emphasis on two aspects of the statement of the test in Dunlop.  One was to use the expression, “extravagant and unconscionable”, and secondly, the greatest loss that could be conceivably be proved.  Could I say in relation to that, as to “extravagant and unconscionable”, they are not words of a statute, and their origin was really an expression in the Clydebank Case, where it spoke of “extravagant, exorbitant or unconscionable”, whatever word you like to select.

Your Honours, we would say, if I could go back to page 17 in volume 1 – the quotation from the Dunlop Case – your Honours will see that the test in question is really no more than a test, as one sees from the opening words of paragraph 4:

various tests have been suggested, which if applicable . . . may prove helpful, or even conclusive.

What is in 4(a) is not, to use the word again, part of the statute.  Your Honours, we would submit it is an appropriate case for the grant of special leave in the penalty case.

Your Honours, may I deal briefly with the other application for special leave. First, could I say something about the relationship between this application and the penalty case? The issues under the three statutory regimes arise if the late payment fees are held not to be penalties. There were then three statutory regimes which provided potential bases for relief in the circumstances. One – and your Honours, may I deal, for time, with only the first of them, and that is section 12CB of the Australian Securities and Investments Commission Act 2001 (Cth), which can be seen in volume 2 at page 442.

Your Honours will see that section 12CB(1) refers to a concept of unconscionability different from that referred to in 12CA(1), and 12CB(4) requires that the issue be looked at at the time of the contravention alleged – your Honours will see subsection (4)(a). That is a situation differing significantly from that held by the Full Court to obtain in the case of penalties under the general law.

Your Honours, as is apparent from the judgment of the Full Court in volume 1 at page 343, the late payment fees were dealt with together with the other fees which were not payable on breach. That brought about some difficulties, and if I could just go to one of them for the moment, page 344 in paragraph 332, at the bottom of the page. Your Honours will see that appears to disregard the requirement – your Honours, may I have one minute to finish – of section 12CB(4) that one looks at what was reasonably foreseeable at the time of breach. If one looks again at paragraphs 338 to 339 on page 346, they would appear to support our contention.

KIEFEL J:   Is part of your contention that the fees were prima facie unfair?  Is that the starting point?

MR JACKSON:   Yes, prima facie unfair and ‑ ‑ ‑

KIEFEL J:   Unconscionable.

MR JACKSON:   ‑ ‑ ‑ unconscionable, yes, your Honour.  That was the view taken that is not reflected in the judgment of the court.  Your Honours, those are our submissions.

KIEFEL J:   Yes, Mr Archibald.  I should have said the parties should not feel confined by time limits, given there are effectively two matters, but I am sure Mr Jackson did not need any further time.

MR ARCHIBALD:   I will try and be as brief as I may, in any event.  As to penalty, it was common ground that the matter needed to be looked at at the time of entering into the contract.  There is no controversy about that.  The inevitable corollary of that circumstance is that in examining whether or not the stipulated fee is extravagant one needs to fasten upon forward‑looking evidence, for it is forward‑looking evidence alone that can convey whether the fee exceeds the maximum conceivable loss.

KIEFEL J:   In relation to the question of penalties, I understood Mr Jackson’s submission – he says that this reliance upon evidence assumes the resolution of the question about the correct test in favour of what is, as I apprehend, a simplistic approach.  He is arguing for a more nuanced approach, as I apprehend.

MR ARCHIBALD:   Well, there was no controversy but that the first rule in Dunlop applied.  That was the case that was pleaded.  The core issue that arose on the appeal was whether, notwithstanding the circumstance that her Honour had articulated that to be the test, a forward‑looking test, whether her Honour had in fact determined the matter by reference to the circumstances which obtained at the time of the actual breach.  My friend has made submissions this morning about there being little difference, and I will come to that point in a moment.

The only evidence that the applicants adduced, notwithstanding their pleading of a test which necessitated a forward‑looking body of evidence, was not forward‑looking evidence but backward‑looking evidence addressing the actual loss said to be suffered when the late payment events occurred.  That was Mr Regan’s evidence.

NETTLE J:   Can you not draw some sort of inference from what happened subsequently as to what should have been foreseen at the outset?

MR ARCHIBALD:   There may be circumstances in which evidence of what does occur will throw light on the maximum possible loss that might be predicted at the time of entry into the contract.  Take the case in which the actual loss turns out to be greater than the fee.  That might be good evidence that the fee is not excessive.  But here, the evidence which was adduced from Mr Regan was not of that character, because it was looking only at the incremental disadvantage to the bank, essentially additional variable costs that may have been incurred by reference to the particular breaches.  Of course, the particular breaches may be atypical and not throw light on what is effectively the worst case.

As the Full Court held in these circumstances, while there were some parts of Mr Regan’s evidence that did throw light on the forward‑looking evidence, the burden of his evidence was incapable of throwing light on the maximum conceivable loss.  The respect in which the court did take account of Mr Regan’s evidence concerned the ways in which he criticised the approach of Mr Inglis, the witness for the Bank, who gave evidence of a forward‑looking kind.  There were criticisms by Mr Regan of some elements of the Inglis evidence, and the court took account of those – for example, at judgment paragraph 150, appeal book volume 1, page 296. 

So to the extent to which the Regan evidence was capable of bearing upon evidence as to forward‑looking loss, the court did take it into account, and in paragraph 150, line 9, the Chief Justice said:

Mr Regan criticised the approach of Mr Inglis [in] his evidence . . . He [Regan] did not attempt to look forward to assess what conceivably could be the damage from some (but not this particular) breach of the contract.  It may be that some of the criticisms of Mr Regan weaken or undermine Mr Inglis’ evidence.  Nevertheless, one cannot take from Mr Regan’s evidence or conclusion that, on a forward looking analysis, the amount of the fee was extravagant –

So the court did not rule out Mr Regan’s evidence, did not treat it as irrelevant, took account of what it said as far as it went, but reached the conclusion on the basis of the evidence, and the evidence alone, that Mr Regan’s evidence did not convey sufficient to show that the amount of the fee was extravagant.  Of course, that was natural enough because Mr Regan, as the court observed at paragraph 153, was not directing his attention to that circumstance.

It all turned ultimately on what the evidence was that was available to the court as to the maximum conceivable loss, viewed on a forward‑looking basis from the time of entry into the contract, and whether the onus which the applicants bore to demonstrate that the fee was excessive on that basis was satisfied.  The court held that it was not, simply on the evidence before it, and no more.  The principles concerned were not controversial in that respect.  The evidentiary findings were dispositive.

In relation to the proposition that the outcome from an actual breach might, in these circumstances, be thought not likely to differ much from the forward‑looking estimated maximum conceivable loss, we would draw these features to the Court’s attention.  There were three elements on the evidence which might contribute to the bank’s loss, including the bank’s maximum conceivable loss.  One was provisioning; two was the additional cost of regulatory capital; and the third, which my friend did not mention, were collections costs, which allude to the steps the bank needs to take to get in outstanding unpaid moneys.

The first two elements might produce wildly differing losses to the bank, depending upon the amount which turns out to be the amount that is late paid.  If I am late paying $20, the amount of provisioning will be affected by a margin of X.  If I am late paying $1,200, the provisioning will vary by Y, and Y might be very different from X.  The actual breach may throw no light on what the maximum additional provisioning might be.

Similarly, with regulatory capital, if there is a late payment, the bank is required by regulations to put aside more money into the regulatory capital basket.  Regulatory capital earns less return for a bank because of the constraints on it than its normal return, so there is a cost in putting more money into regulatory capital.  Again, depending upon the amount that is unpaid, the extra amount that has to be put into regulatory capital may differ wildly.  There is a substantial dynamism, even in those two matters alone.

The third matter is collections costs.  Collections costs include, but are not limited to, such matters as speaking on the telephone with the customer and dealing with the late payment.  Importantly, here, while provisioning in regulatory capital costs were contested, collections costs, as a category, were not.  Mr Regan’s evidence conceded the recoverability, the compensability, of collections costs. 

There were arguments about what should be comprised within collections costs, whether it was confined to variable costs, or whether it would include costs of premises and the like.  But on the forward‑looking evidence – and this is what the Full Court observed – even confining oneself to telephone costs on the lower band of Mr Inglis’ evidence of costs, the scenario showed that collections costs alone might exceed the amount of the fee. 

Whatever might be said about provisioning and regulatory capital, so far as the evidence is concerned in relation to collections costs, the evidence was such that that item of costs incurred by reason of breach alone may exceed the amount of the fee and, therefore, demonstrably establishing that the fee was not excessive.  One sees that at paragraph 176 of the judgment, page 302.  That is why, in our submission, the matter turned on the evidence alone, and there was no circumstance whereby the evidence before the court was able to establish the necessary excess.

My friend made submissions to the effect, I think, that it was not necessary to go to prove excess because here what one had was a case in which the burden upon the customer after the late payment fee required the payment of a larger sum than was required to be paid before the breach, invoking in substance rule 2, paragraph 4(b) in the Dunlop catalogue, that you did not need to go further.  It was sufficient in itself to observe that a larger fee was payable.

In our submission, the Full Court was correct to conclude, as it did, at paragraph 137, page 293, that this was not a case which engaged the second rule, for after the late payment event – after there was a failure to make timely payment of the outstanding debt – tendering of the same amount would still discharge the liability to pay that amount. 

What occurred by reason of a contractual arrangement between the parties was that a separate fee was incurred referable to the additional costs occasioned to the bank as a financial institution, whose business was lending money, by reason of that late payment; separate from the time value of money, which is covered by interest; separate from the debt, which would be discharged in full if tender was made.  The fee covers the costs of the kind that I have addressed the Court upon.

KIEFEL J:   I know that your approach is that there is no reason to doubt the decision of the Full Court, but is this not a matter in which there may be an opportunity to further elucidate principle?

MR ARCHIBALD:   No, because principles were not controversial.  The error that the court found was that although her Honour had correctly and impeccably stated the principle, her Honour ended up determining the matter inconsistently with the principles that she had stated.

KIEFEL J:   I understand your submission in that regard, but does not this case highlight what is often the case with principle, and that is it is best understood by reference to its application to the facts?

MR ARCHIBALD:   In our submission, not, because the decisive factor was simply the circumstance that there was not before the court the evidence from the applicants that addressed the requisite question.  That is what determined it.  One does not need to go into questions as to whether provisioning and extra‑regulatory capital costs are recoverable.  We say it is clear that they are recoverable.  They fall squarely in the case of a financial institution under limb one of Hadley v Baxendale; they flow naturally and directly from the breach.  The reason it is unnecessary to go to those questions is because the collections costs alone were determinative in this case.

KIEFEL J:   Your clear exposition of the evidence has at least made it sound interesting, Mr Archibald.

MR ARCHIBALD:   That is not the criterion for the grant of special leave.

KIEFEL J:   Is that right?

MR ARCHIBALD:   The matters of principle that are alluded to, dealt with, may be interesting, but this is not a case which raises those issues.  This is not a case which is a suitable vehicle for their being addressed or elucidated, in our contention.

In relation to the second application, we submit that irrespective of the outcome of the first, special leave should be refused on this matter.  Again, there was no controversy about the applicable principles here.  At trial, there was, as the Chief Justice said in his judgment in the Full Court, paragraph 259, page 323:

[a] lack of controversy . . . about the applicable principles –

There was no controversy on the appeal – again, demonstrated by the paragraph to which I have referred.  The whole focus of the argument about the statutory causes of action was that the fee was said to be unconscionable, or the terms unjust or unfair, because of what was asserted to be the size and extravagance of the fees, and it was said in substance if you have an extravagant fee, it follows, as of course, that the fee is unconscionable, et cetera.  But as the Full Court held, applying the correct test – the uncontroversial principles – the applicants failed on the evidence to demonstrate exorbitance; that is paragraph 334 at page 345 of the appeal book.

NETTLE J:   Is that both ex ante and ex post, or just ex ante?

MR ARCHIBALD:   It is effectively ex ante because it is the time of the contravention, and the time of the contravention has established the time of entry into the contract.  It is not an ex ante test that requires forward‑looking matters.  It is a question of whether it is demonstrated that the fee imposed at the time of entering into the contract is shown to be unconscionable.  The applicants sought to establish that by invoking the notion of exorbitance,

and a fortiori in relation to the statutory causes of action, they could not demonstrate that because they had not adduced evidence of the circumstances at the time of entry into the contract.  Moreover, that was the foundation upon which the case was pleaded.  They pleaded these elements as the foundation of the claims.

NETTLE J:   What about Mr Jackson’s 12CB point?

MR ARCHIBALD:   There is nothing in that.  The features to which my learned friend refers are necessarily confined to the statutory concept of unconscionability as articulated in 12CB.  The matter must, again, be a question of evidence, and my friend has not pointed to anything in the evidence, or anything in the Full Court’s reasoning, which would conduce to a conclusion that clause 12CB is engaged.

NETTLE J:   He says that paragraph 332 of the Full Court’s judgment showed a disregard – the difference between 12CB(4) and 12CA.

MR ARCHIBALD:   Not in our submission.  If one takes 330 – this is the argument that was put; this point was not put below, not pleaded, not put.  Paragraph 330 shows what the gravamen of the attack was.  It is focusing on the extravagance/exorbitance point.  Reliance was sought to be placed upon the excess of the actual damages sought to be established over the amount of the fee, and the court rightly, in our submission, concluded that that is not sufficient.  The next sentence is important:

The question whether the conduct of ANZ was unconscionable should be looked at from the perspective of all the circumstances.

The court proceeded, in the ensuing paragraphs, to look at all of the circumstances shown by the evidence, and at 337, the Chief Justice concluded that the primary judge’s conclusions:

were open.  It cannot be concluded on the evidence before the primary judge that ANZ engaged in unconscionable conduct.

In our submission, there is no ignoring or neglect by the court of any element thrown up by section 12CB. If the Court pleases.

KIEFEL J:   Anything in reply, Mr Jackson?

MR JACKSON:   Your Honours, may I say four things? First, in relation to the statutory cause of action, your Honours will have seen section 12CB(4), to which I took your Honours earlier. But your Honours will see in the Full Court’s reasons at paragraph 332 at page 344, and also 338 and 339 on page 346, that in the first place, at 332, there seems to have been an assumption that one should not really be looking at the situation at the time of breach. Then 338 and 339, your Honours, they are very difficult – I say so, with respect, of course – to construe quite what the court is trying to say. If one looked at 338, it says:

Even if it be concluded that Mr Regan’s evidence reflected the only appropriate assessment of ANZ’S legitimate interest . . . by reference to costs or loss caused by or arising out of them, I do not consider the conduct by ANZ to have been unconscionable.

That means, looking at the situation where a fee is payable because a sum was not paid on that day, if one is looking at the loss that might be sustained in that circumstance it seems difficult to see quite how that conclusion could be arrived at.  Then, your Honours, paragraph 339, perhaps something is missing from it.  It does not seem to make clear the situation in a way consistent with the Full Court’s view.

Your Honours, that is the first point.  The second point is this – I am now dealing with the other case.  Dealing with the penalty case, your Honours, our evidence, the evidence called in reply, did deal with the forward‑looking assessment.  I should also say all the rules, to use that expression, in the Dunlop Case were pleaded, and the question was what losses could be taken into account.  Your Honours, could I refer to our reply at volume 2, page 804, paragraphs 3 and 4, in that regard.

The third point, your Honours, is also something to which I would take your Honours to in our reply, relating to regulatory capital provisioning, but also the costs of collection.  Could I take your Honours to page 806, paragraph 8 of the reply, and the footnote following it – your Honours, I will not attempt to read it out, but if I could ask your Honours to read that part of it.

Could I come, really, your Honours, to the heart of the matter?  Our learned friend’s argument about provisioning, regulatory capital and so on, does, with respect, seem really rather remote from the circumstances.  This is a case of the simplest kind.  It is the simplest kind because it involves being late in payment of a credit card payment on the due date.  It is the simple and common case referred to in paragraph 4(b) of Dunlop.  Could I take your Honours for a moment to page 17, and your Honours will see the opening words of paragraph 4, and then 4(b):

It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid –

Now, your Honours, if that rule – and I appreciate it is not the decisive consideration – that is a simple workable rule, and if that simple workable rule is to be changed then it should, with respect, be by this Court rather than by the Full Court.

KIEFEL J:   The Court will adjourn briefly to consider the matter.

AT 10.25 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.26 AM:

KIEFEL J:   There will be a grant of special leave in each of these matters.  What is your time estimate, Mr Jackson?

MR JACKSON:   Your Honour, I think they are more than a day; I think a day and a half.

KIEFEL J:   Mr Archibald?

MR ARCHIBALD:   Yes, we agree.  There may be a point by way of contention, which might add a little bit of time, but I still think a day and a half should be enough.

KIEFEL J:   Thank you.  Would you kindly ask your instructing solicitors to obtain details of the timetable for submissions?  Thank you.

AT 10.27 AM THE MATTER WAS CONCLUDED