19 In traversing the governing principles, the majority (French CJ, Kiefel, Gageler and Keane JJ) noted the following considerations: The majority accepted that ANZ’s interests extended beyond the recovery of compensation for loss and that it was legitimate for it to seek to protect those interests.21 This being so, the relevant question to be applied, then, was whether the late-payment fees were out of all proportion to ANZ’s interests in receiving timeous payment of the Minimum Monthly Payment. For buyers, liquidated damage clauses limit their loss if they default. Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28, [74] per Gageler J. A liquidated damages provision fixes the sum payable as damages for a party’s breach and acts as a liability cap. Liquidated damages vs. penalties. A breach of contract is not required for the penalties doctrine to operate. He estimated that average collection costs attributable to late payment exceeded $5 and the total average cost incurred by ANZ as in excess of $50 per late payment. This must be a pre-estimate when the contract was entered into. Liquidated Damages; A liquidated damages (LD) clause is common in many building contracts for commercial or institutional buildings, but less common in residential contracts. In short, his Honour held that instead of undertaking an ex post inquiry of actual damage in assessing whether the fee was a penalty, as the primary judge had done,3 the correct approach was ‘to look at the greatest possible loss on a forward looking basis’ and to assess that loss by reference to the ‘economic interests to be protected.’4 As such, the Full Court held that ANZ’s expert evidence should have been considered and displayed precisely the sorts of interests which ought to be taken into account when considering the question of penalties.5. It’s important to remember that a liquidated damages clause doesn’t necessarily guarantee your confidential information remains private. He considered the maximum amount of cost that ANZ could conceivably have incurred and included not only the ‘operational costs’1 associated with the activities of ANZ's Collections Business Unit, as identified by the Appellant, but also other costs to ANZ’s financial interest such as ‘provisioning costs’ and ‘regulatory capital costs’2. The examination reveals that there is little difference because the courts in each jurisdiction have drawn on common precedents. Normally, the extent to which damage has been caused is specified in the contract itself, as a pre condition to pre empt any breach or violation of the contract by either party. An adjudicator awarded $277,755 to Shade and rejected Probuild’s liquidated damages claim. The inclusion of a liquidated damages clause in construction contracts is a common way of addressing what sanctions will apply if a breach of contract arises during the operation of the contract and particularly when a contract and a build is ongoing. it does not have to be a breach). In a much anticipated decision from the High Court on penalties, Mr Paciocco (the Appellant), who led the class-action appellants, was unsuccessful in a claim for the recovery of the late-payment fees he paid pursuant to the terms of contracts between him and ANZ in relation to two consumer-credit-card accounts. A liquidated damages clause (or an agreed damages clause), is a provision in a contract that fixes the sum payable as damages for a party's breach. In comparison, unliquidated damages are damages for a party's breach which have not been pre-estimated. 14. English law does not recognise the enforceability of “penalty clauses”, i.e. Such terms will be unenforceable as a penalty clause if the amount does not represent a genuine pre-estimate of the loss the non breaching party will incur as a result of the breach. The High Court’s decision highlights the significant difficulties faced by a party seeking to prove that a liquidated damages provision is a penalty and should not be enforced by a court. They are fairly common in the building industry and players in the industry should be aware of them. Where a positive sum of liquidated damages has been stipulated. The essence of an LD clause is that a party in breach of its obligations under a contract is obliged, by that contract, to pay a particular sum by way of compensation for that breach. 2. 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