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What is a penalty?

PostPosted: Mon Sep 22, 2014 9:06 pm
by pitano1
i found this interesting.

also wondered,if a penalty charge notice,is still the correct
heading. :puzz:

Today the High Court handed down its decision in Andrews v ANZ, concerning the Court’s jurisdiction to relieve against penalties. The decision is likely to have an impact upon commercial arrangements and the drafting of commercial contracts.

In 2010 a representative action was commenced against Australia and New Zealand Banking Group Limited (“ANZ”) by some of its customers in respect of various fees imposed on them. As part of those proceedings, it was alleged that that the fees payable by the customers to ANZ were void or unenforceable as penalties. At first instance,
Justice Gordon held that the majority of those fees could not be penalties as the fees were not payable on breach of
contract. The question was removed to the High Court for consideration

The position before today’s decision:
A fee payable under contract will be a penalty where it is imposed to secure the performance of another obligation of the party required to pay, and the quantum of the fee is out of all proportion with the damage suffered by that non-performance.
Recent authority on penalties (e.g. Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd (2008) 257 ALR 292) had established that relief against penalties was only available for fees payable on breach of contract (“Recent Authority”).

Many commercial contracts have been drafted on the basis of this Recent Authority. Rather than such contractual fees being payable on breach of contract, such contractual fees are drafted permissively. For example, a fee payable on breach would be as follows:
(a) A leases a shop to B for $100 p/w, on the condition that the shop is not used on weekends.
(b) If (a) is breached, B agrees to pay A $500 for each breach.
If the fee of $500 is not a genuine pre-estimate of the damage suffered by A by B’s breach, it will be unenforceable as a penalty.
Yet, the same position could be validly achieved if the contractual terms were drafted permissively, for example:
(a) A leases a shop to B for $100 p/w for use Monday to Friday.
(b) B agrees to pay A $500 each time the property is used on the weekend.

The Decision
Today the High Court unanimously ruled that Recent Authority is incorrect on the basis that relief against penalties is potentially available even if a fee is not payable on breach of contract. The High Court decided that the correct approach to determining whether a fee is a penalty is to ask whether the purpose of the fee is to secure performance of a primary obligation by the party subject to the fee or whether the fee is truly a fee for further services or accommodation. If it is a fee for further services or accommodation, it will not constitute a penalty even where the fee payable is significant. If the fee is payable to secure performance of the party subject to the fee, it will only be
enforceable if it is a genuine pre-estimate of the damage suffered by reason of that party’s non-performance.

To emphasise the distinction between penalties and fees for services, the High Court outlined and approved of the
decision in Metro-Goldwyn-Mayer v Greenham [1966] 2 NSWLR 717. That case involved a contract for the hiring of films to exhibitors for public showing. The contract gave exhibitors the right to one screening of the film only. The contract provided that a sum four times the original contract fee was payable for each additional screening. It was
held that this fee was not a penalty, but merely a fee paid for the option to purchase the right to an additional screening.
It should be emphasised that although breach of contract is no longer a necessary ingredient for relief against penalties, where a fee is payable upon breach of contract, that will be a strong indication that its purpose is to secure performance of the obligation breached. Hence, unless such fees are a genuine pre-estimate of the damage suffered
by such breach, they will be unenforceable.

Consequence of the decision
As a result of today’s High Court decision, contractual fees drafted on the basis of the now overruled Recent Authority may be capable of constituting penalties and potentially unenforceable. Fees payable under a number of commercial contracts may now need to be considered, for example fees payable under contracts for services,
transport, shipping and construction, franchise agreements and leases (to name but a few).
The purpose of such fees may need to be evaluated to determine whether they are payable to secure the performance of a primary obligation. In that regard it will be relevant whether, for instance, some further accommodation is provided for the fee (such as an additional right to screen a film).

Re: What is a penalty?

PostPosted: Fri Sep 26, 2014 9:31 am
by Dreadlock
Reads like a good decision to me. Makes sense.

As for whether "PCN" is the correct terminology, it clearly is because it is being applied to "secure performance of a primary obligation by the party subject to the fee" - for example not parking on a double yellow line.
Is the PCN enforceable? That depends on whether or not, " is a genuine pre-estimate of the damage suffered by reason of that party’s non-performance."

So harm must be proven to have occurred. Did parking on the double yellow cause hindrance to anyone? This really is a good decision - it actually seems to be consistent with common law.

Was this an Aussie high court decision Pitano?

Re: What is a penalty?

PostPosted: Fri Sep 26, 2014 12:00 pm
by Dreadlock
Having thought about this some more, the rationale outlined by the court would not apply to statutory PCNs as there is no contract involved.
However it would apply to PCNs issued on private property.

Re: What is a penalty?

PostPosted: Fri Sep 26, 2014 3:42 pm
by pitano1
hi dreadlock

thanks for reply.

i thought,you may find this...amusing/interesting.
ps....yes,the court decision was australian.

Evening all....

I thought I'd share a little story with you....

Ok, so around 6 months ago I had to rush one of my lads to hospital, it was the usual drive round for ages looking for a spot and end up parking with everybody else on the grass banks around Kings Lynn Queen Elizabeth Hospital. No time to get a ticket due to a little bit of blood and a nice head wound...anyway long story short I got a "Parking Charge Notice". I have ignored it as per most advice online, had the letters from "County Parking" and then the letters from Philips Debt collectors. I got my Final letter today from County saying that they will be applying to Northampton court etc etc..

Anyway...again a few weeks back I had a routine appointment at said hospital, parked up (on the grass again) got my wallet out and was about 20p to short of the minimum £3.60 or what ever it is, I had some notes and plenty of time so off I popped to get some change from the shop inside the Hospital...guess what I had when i got back, I reckon the lovely enforcer was waitig for me lol!

This time though I didn't even open the PCN and left it in my car, the reason I didn't open it this time was because of the wording on it! "WARNING, Unauthorised persons must not remove or Interfere with this notice"

So today on one of my routine trips to the hospital I thoguht I do a little test. I park on the grass again, this time it took forever to even find a spare bit of grass! I put the old "PCN" back on the window, when I returned there was a parking attendent stood chatting to some workman by my car. He asked me what the ticket was on my car as he'd not issued it. I said I wasn't sure what it was as it had been there a while and I wasn't sure if I was authorised to open it due to the wording on it. He said "course your authorised" "its on your car!" I said I could't find it written anywhere saying who could open it, I even asked him if he was authorised, he refused to remove it or touch it and said it was mine! This little chat back and forth went on for a while (the workmen found it very ammusing). I was very polite at all times. The guy couldn't give me a valid answer though, he said that they'll come after me smile.gif I gave him a little wave as I drove off PCN still stuck on my screen. And the funny thing was he'd been stood there knowing I had no ticket and that I had an old PCN on my window...but must have been so confused about the situation that he hadn't issued a new one smile.gif

I'm not a trouble maker and make many visits to the hospital and others and always pay to park when its possible!

maybe....he should of added....well,if they are going to...come after me,why dont they just write instead,to
clarify...the question of....AUTHORITY.
it would have been much more fun.. :clap:

B.T.W..this carpark,is run by a private company.

ALMOST three thousand people have been given parking fines at Lynn’s Queen Elizabeth Hospital over the past year – but barely half have paid up.

A total of 2,887 people were given parking fines on hospital property during the past 12 months, a trust spokesman told the Lynn News yesterday.

The figure equates to an average of roughly 55 people a week or eight every single day.=evil cunts...this is a fucking..HOSPITAL

But, of those fined, only 1471 – or 50,95 per cent of the total, actually paid up.... :cheer: :cheer: :cheer:

However, the spokesman said he could not say what had happened in the 1,416 cases where no payment had been made.
[i`m not surprised]
The spokesman added that fines are administered on the trust’s behalf by a private company, County Parking Enforcement Agency, who make their profit from them.
But the company declined to comment on the matter when approached by the Lynn News this week, saying they were under no obligation to disclose any information which they described as being of a “commercially sensitive nature..”[newspeak...realy means-customers,can tell us to get fucked]

However, a spokesman added: “We are members of the British Parking Association and comply fully with their code of conduct in respect of our contractual obligations at the site.”.”[OH.....THATS OK THEN...]....whats,that you say,about the sick,and injured.?

NO names were given,in this report,from the office of pissed off-edness.
nor any spokemen...given a good kicking.. :no: ... :grin: