Appendix 3
Other forms of penalty

Statutory damages under the Credit Contracts and
Consumer Finance Act 2003

Under s 88 of the Credit Contracts and Consumer Finance Act 2003 creditors, lessors, transferees, and buy-back promoters are liable for statutory damages for breach of various disclosure obligations. For breach of the initial disclosure obligation under a consumer credit contract or consumer lease, the damages amount to the interest and costs of credit accruing during the period of the breach. In all other cases, the damages are 5 per cent of the amount of credit, subject to a $3,000 cap.

Statutory damages are not expressed to be punitive (in contrast to the Act’s predecessor, the Credit Contracts Act 1981, which referred to them as penalties). Nor are they compensatory since they are unrelated to damage or loss (and there is separate provision for compensation under s 94).Yet, the damages are paid to the party to the relevant contract. Gault on Commercial Law treats them as a punitive regime, aimed at obtaining compliance with the legislation.732  The regime also contains similar provisions to Australia’s uniform consumer credit legislation,733  and penalties in that jurisdiction have been treated like civil pecuniary penalties akin to the ones covered by this Issues Paper.734
732Thomas Gault (ed) Gault on Commercial Law (online looseleaf ed, Brookers) at [4C.6.02]. See also Commerce Commission v Galistair Enterprises Ltd DC Auckland CRI-2007-004-4009, 6 December 2007.
733National Consumer Credit Protection Act 2009 (Cth).
734See Gillooly and Wallace-Bruce, above n 609.