There have been ongoing debates as to the quantum of container detention fees charged by shipping lines. This has been a controversial issue, as many are of the view that the heavy fees imposed do not constitute a genuine pre-estimate of the damages expected to be suffered from the late return or non-return of a shipping container and are better considered as penalties and unenforceable.
This issue has been reawakened by a class action filed on 12 August 2014 against ANZ, Citibank and Westpac (“the New Class Action”). The New Class Action follows on from a series of previous litigation concerning the enforceability of the quantum of certain bank fees.
Previous litigation
In 2011, Justice Gordon in the Federal Court found that late payment fees are capable of constituting unenforceable penalties. In 2012 the High Court ruled on a preliminary question of law, deciding that bank fees can be considered penalties, depending on the fee and its size.
In February this year, Justice Gordon in the Federal Court found that late payment fees on credit cards and penalties should be repaid to bank customers to the extent that the fees exceeded the true cost to the bank. In addition, her Honour found that there was no retrospective time limitation on claims. However, her Honour found that other bank fees, such as over limit fees, were not unlawful. An appeal from that decision by both parties is listed for 18 and 19 August 2014 in the Full Court of the Federal Court (“the Appeal”).
The new class action
The new class action is more expansive than the previous class actions. The previous class actions only applied to bank customers who signed up to these class actions. However, the new class action is an ‘open class’ proceeding, which means it applies to all customers who have ever been charged a late fee.
What this means for you
This litigation has broad implications for contract law in general, especially where late fees are involved. If the Appeal affirms the decision that the quantum of the credit card late fees is unenforceable, it once again enlivens the argument as to whether the quantum of shipping line detention fees are unenforceable if they are deemed excessive and more than a ‘genuine pre-estimate of damages’ from the late return of the container. This would of course vary depending on the specific terms of the shipping line contract in question and the quantum of the fees. As there may be no retrospective time limitation on claims, shipping line customers may be able to instigate demands and litigation to recover late fees paid in the past.
