February 2011

The CTTT's Legal Bulletin provides an overview of signficant appeals to the Supreme Court and District Court against decisions of the Tribunal. 

The information contained in this Bulletin is not legal advice and is intended as a general guide only.  You should rely on your own advice or refer to the full cases and legislation in any proceedings before the CTTT.

The full text of the cases and legislation is available on Lawlink.

Keywords: Reasons, amount in dispute, credit not predominantly for personal, domestic or household purposes.

Background

The consumer entered into a ‘Prestige Purchase Agreement’ with a finance company, under which the consumer hired a car from the owner and agreed to make payments to the finance company over 60 months. He fell behind in his payments and the car was repossessed.

An application was made to the Tribunal for orders under the Consumer Credit Code (the Code) the effect of which would have been to extend the period over which he could repay the loan, to have the car returned to him and for the finance company to pay a penalty.

The Code only applied if the credit was provided for or intended to be provided wholly or predominantly for personal, domestic or household purposes.

At the time of entering the contract the consumer had signed a number of documents. One of those documents was a declaration under the Code that was relevant to the purpose of the loan.

The consumer told the Tribunal that the first document he signed was the contract. He had then signed a bundle of other documents, including the declaration, without reading them. This meant that he had not made the declaration before he had entered into the contract.

His evidence in relation to signing the declaration after signing the contract was not accepted by the Tribunal.

The consumer also argued that the declaration was ineffective under section 11(3) of the Code because the finance company knew, or had reason to believe, at the time the declaration was made, that the credit was in fact to be applied wholly or predominantly for personal, domestic or household purposes.

Again the Tribunal did not accept the consumer’s version of what he had told the finance company. In addition it did not accept the consumer’s submission that the contemporaneous documents corroborated his oral evidence.

The Tribunal found that the finance company had shown that it did not know and had no reason to believe that the credit was to be applied wholly or predominantly for personal purposes. Accordingly the Tribunal found that the Code did not apply and that it had no jurisdiction to deal with the matter. The Tribunal ordered the consumer to pay the finance company’s costs.

The consumer appealed the decision to the District Court pursuant to section 67 of the Consumer Trader and Tenancy Tribunal Act 2001 (the Act).

Appeal – preliminary point

A preliminary point arose where the consumer sought to confine the reasons for the decision to the written reasons for decision supplied at his request under section 49 of the Act and to exclude the oral reasons given at the time of the decision. The consumer claimed that to have two conflicting reasons denied to him a fundamental right of procedural fairness.

The Court held that both the oral reasons and the written statement of reasons must be taken into account when determining whether there has been any error in the Tribunal’s deciding a question with respect to a matter of law.

Costs

There was a discrepancy between the oral reasons given by the Tribunal on the day of the hearing and the statement of written reasons. The statement gave as the reason for the ordering of costs that the amount in dispute was over $25,000 – subsection 4 of clause 20 of the Regulation. The oral reasons disclosed that the costs order was based not only on subsection 4 but also on subsections 2 and 3, that is the Tribunal was satisfied that there were exceptional circumstances that warranted the awarding of costs – a failure of the consumer to substantiate his case.

The consumer submitted that his application to have the terms of his loan altered meant that there was no amount “claimed or in dispute” other that the claim for a penalty which could not have exceeded $5,000. Therefore subsection 4 could not apply.

Judge Balla stated that she was satisfied that the proper interpretation of the expression “the amount claimed or in dispute” was “a question with respect to a matter of law” and accordingly reviewable in the appeal. Her Honour accepted that the expression “amount in dispute” meant something different to “amount claimed”. The finance company submitted that the Tribunal was correct in considering the amount in dispute as the amount due under the loan. The plaintiff submitted that if he had obtained the orders he sought there would be no alteration to the total amount he would be required to pay.  Her Honour considered, in the circumstances, that there was no amount in dispute. What was in dispute was the term of the loan. Accordingly, she was prepared to find that the Tribunal had made an error. However, she also found that there was evidence on which it was open to the Tribunal to arrive at the finding that there were exceptional circumstances and that therefore the costs order was supported by subsections 2 and 3.

Predominant purpose for the credit

The Tribunal rejected the consumer’s argument that the declaration was ineffective under s. 11(3) of the Code, on the basis that the finance company had shown that it did not know and had no reason to believe that the credit was to be applied wholly or predominantly for personal, domestic or household purposes.

The consumer did not dispute the Tribunal’s finding that the finance company did not believe that the credit was predominantly for a personal purpose. However, he argued that the Tribunal failed to consider what a reasonable person standing in the shoes of the finance company would have objectively understood.

The Court found that the Tribunal did make a finding in relation to both issues and that those findings were open on the evidence before it.

Jurisdiction

The consumer argued that the Tribunal had erred in its assessment of the credibility of his evidence and that it failed to give sufficient reasons why it preferred the evidence of the finance company.

The Court found that these matters are findings of fact and therefore not reviewable under s. 67 of the Act. In the event that she was wrong, her Honour was satisfied that there was evidence on which the Tribunal’s findings could be made and that the Tribunal gave sufficient reasons for preferring the evidence from the finance company.

The decision of the Tribunal was affirmed.

Note: From 1 July 2010 the Tribunal no longer deals with applications for financial hardship and other credit matters. The Australian Securities and Investment Commission (ASIC) became the national regulator taking over consumer credit and aspects of finance broking from states and territories.

The new National Consumer Protection Act 2009 replaces the state and territory consumer credit code to create a single, uniform national credit law.

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Keywords: Errors of law in allowing a new case to be brought.

Nature of the dispute

The consumer wanted to build a website to target students located in non-English speaking countries endeavouring to gain entry into Western education systems. The purpose of the site was to provide an e-test system designed to test and assess the English proficiency of students. The consumer engaged a trader to build the website. The consumer lodged an application with the Tribunal claiming that it had paid for a service for which a working product had not been delivered and that it had received no value from the work that had been done to date.   

After hearing the evidence of the parties the Tribunal made orders for the trader to pay the consumer $30,000.

The appeal

At the hearing of the appeal both parties agreed that they had not been ready for the final Tribunal hearing. They consented to orders being made for the matter to be remitted to the Tribunal for rehearing.

Her Honour Judge Gibson gave a short judgment explaining why she was prepared to set aside the decision of the Tribunal.

The grounds of the appeal were:

(a) Contrary to s. 28(2) of the Consumer, Trader and Tenancy Tribunal Act 2001 (the Act) the Tribunal failed to accord procedural fairness to the Trader by refusing to permit the tender of its documentary evidence or alternatively by refusing the application for an adjournment of the hearing.

(b) Contrary to s. 38 of the Act the Tribunal did not ensure the trader had a reasonable opportunity to present its case

(c) The Tribunal misapplied the law by finding the trader had breached a contract to which it was not a party.
(d) Contrary to procedural fairness, the Tribunal permitted the consumer on the day of the hearing to expand and enlarge its claim from reinstatement of a website (with no claim for financial damages) to a claim for $30,000.

(e) Contrary to s. 28(2) the Tribunal failed to accord procedural fairness in permitting the consumer to proceed at hearing with this new claim without there being any notice of it to the trader prior to the hearing date.

Procedural background

The problems arose from the following circumstances. The parties were given a timetable on 11 June requiring the consumer to serve documents on which it relied by 24 July and the trader to serve documents by 21 August, for a hearing on 10 September. The consumer’s documents were not served until 2 September and the 10 September hearing was vacated, but without further orders being made for the service of the trader’s documents. When the trader’s representative turned up at the hearing with these documents, the Tribunal said it was too late to serve them, and refused an adjournment. The case proceeded without these documents (which included the relevant contractual documents, including material that would have been relied upon to establish that the consumer had contracted with another party as well as with the trader).

The explanation given for this was that those representing the trader were not lawyers and did not understand what to do with documents where there was no date by which they had to be served.

Consideration

Her Honour observed that the real difficulty the parties had was that at the hearing the consumer produced, for the first time, expert reports to the effect that the relief that it had been seeking (namely reinstatement of the website and not damages) was unrealistic. The consumer sought and obtained an order for $30,000. The trader had no prior notice of this financial claim and was unable to meet it.

Judge Gibson stated,

“In conclusion, it is clear that the CTTT:

(a) by refusing to allow the trader to rely upon the documents brought to the hearing effectively refused to permit it to rely upon any documentary evidence;
(b) allowed the consumer to bring a new case at the hearing based on documents not served prior to the hearing, including expert reports;
(c) refused an application to adjourn the hearing;
(d) dealt with the privity of contract argument by indicating that the additional party could be joined so that the judgment handed down could be entered against him; and
(e) allowed the consumer to relief in the form of a monetary sum which had not been claimed prior to the hearing.“

Her Honour quoted case law as authority for the propositions that the duty to accord natural justice is a duty to act fairly and that the concern of the law is to avoid practical injustice. She also stated that any claim brought before the CTTT must be done in accordance with s. 6 of the Act and contain the information required under clause 11 of the Consumer, Trader and Tenancy Tribunal Regulation.

Judge Gibson held that the errors made by the Tribunal were errors of law and, accordingly, made consent orders setting aside the decision of the Tribunal and remitting the matter back to the Tribunal for rehearing.

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Keywords: Contract terms, liquidated damages and delay.

Background

A builder undertook a building project and hired a sub-contractor to do the gyprock work on the ceilings and walls. The builder and sub-contractor put their agreement in writing. The contract was quite clear in its terms. It had a clause specifying the commencement and completion of the construction period for the work to be undertaken by the sub-contractor.

The sub-contractor’s work proceeded but it was not finished by the specified deadline. A few days after the completion date, the builder sent the sub-contractor a facsimile referring to the “delay in your work” and saying that “liquidated damages will apply for delays”.

Eventually the sub-contractor finished the work for the builder. But the sub-contractor claimed that the builder did not pay it the full amount which it was owed under the contract. After chasing payment unsuccessfully, the sub-contractor took the builder to the Local Court seeking just over $20,000.

The builder lodged a defence, and cross claimed saying that the sub-contractor failed to complete the contract work. The builder maintained that the value of the work not completed together with the damages suffered by delay exceeded the amount claimed by the sub-contractor.

The case was transferred to the Tribunal where this time the builder instituted a claim and for the first time, on 5 June 2009, referred to a delay of 135 days and alleged that liquidated damages was payable in accordance with the contract in the sum of $67,500.

The Tribunal heard the evidence and determined the cases by dismissing both claims, ordering each party to pay its own costs. The decision was given orally on 9 December 2009. Written reasons for the decision were requested and supplied in a document dated 10 March 2010.

The builder appealed the decision in the District Court pursuant to section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (CTTT Act). Judge Cogswell dealt with several preliminary matters before moving on to the three grounds of appeal.

Preliminary issues

Preliminary issue 1
The sub-contractor disputed the validity of the contract because it was not witnessed and because the builder was unable to provide the original contract. The matter proceeded at the Tribunal relying on a carbon copy of the contract provided by the sub-contractor.

His Honour stated that the validity of the contract was not affected in circumstances where both parties had signed without a witness. He remarked that both parties worked together in reliance upon the contract despite its not being witnessed.

His Honour observed that the Tribunal had not decided any “question with respect to a matter of law” regarding the issue. An appeal would not therefore lie.

The sub-contractor also argued that the head contract was not signed. Judge Cogswell said that he could not find anywhere in the Tribunal’s reasons where it decided a question of law on that topic and, thus, no appeal could be taken on the issue.

Preliminary issue 2
An issue arose as to what constituted the reasons for decision in the case, and where there was an inconsistency between the oral reasons and the written reasons which should be referred to.

His Honour expressed agreement with the position put by the sub-contractor that the oral reasons are relevant. “In my opinion the ‘question with respect to a matter of law’ from which an appeal may lie does not necessarily have to be included in a s. 49 statement of reasons for the Tribunal’s decision”.

Preliminary issue 3
The sub-contractor argued that the appeal had been lodged out of time. The Tribunal had delivered its orders supported by oral reasons on 9 December 2009. Notices of those orders were sent on 22 December 2009, while requested written reasons for decision were delivered on 10 March 2010.

His Honour stated that time limits for appeals are dealt with in the Uniform Civil Procedure Rules, Part 50. The rules provide that an appeal must be filed within 28 days after the “material date”. The material date in this case was the “date on which notice of the decision was given”. His Honour regarded the expression “notice of decision”, in the case of an appeal under the CTTT Act, as referring to the provision of a statement of reasons, if requested, under section 49 of the CTTT Act.

Appeal grounds

The builder asserted that the Tribunal had misinterpreted the contract. The Tribunal had found that the contract required the builder to give notice of its reliance on the liquidated damages clause.

His Honour found that the contract clearly provided for the commencement date, the completion date, the amount of liquidated damages and that payment would be triggered in the event that the sub-contractor failed to complete by the specified date. His Honour quoted Deane J in AMEV-UDC Finance Limited v Austin (1986) 162 CLR 170 at 199 to the effect that the liability arises where parties have agreed that a payment will be made “either on or in default of the occurrence of an event”.

The Tribunal also found that the clause concerning the calculation of liquidated damages was not referrable to any other clause in the contract so as to entitle the builder to claim liquidated damages in the event of the sub-contractor’s delay. His Honour found this to be wrong. He pointed to further provisions which, when read together, coherently and clearly made a provision for the payment of a specified amount on the occurrence of a specified event.

The third legal question involved the Tribunal’s reference to evidence that the sub-contractor had incurred difficulties in completing work on time due to having to work around other trades people which the builder had engaged. The builder argued that the Tribunal had erroneously applied the “prevention principle”.

However, his Honour was of the opinion that the Tribunal was more likely to have been referring to a condition of the contract (clause 2(c)) which provided that the builder “must allow a fair extension of time in respect of any delay not caused or contributed to by an act or default” of the sub-contractor. Moreover, this operated in the same way as the liquidated damages clause; that is it was unnecessary for the sub-contractor to give notice to trigger the operation of the condition.

Resolution of the appeal

Judge Cogswell found that the Tribunal had made errors in deciding a number of questions with respect to matters of law. However, he found that the Tribunal had decided the matter on alternative bases. The Tribunal had stated that even if it was wrong about (the liquidated damages clause) then it found that the builder had failed to discharge its clause 2(c) (allow fair extension of time) obligation. The second basis involved a factual finding and did not involve a question with respect to a matter of law. It therefore could not be the subject of a challenge on appeal and remained to support the Tribunal decision. His Honour accordingly dismissed the appeal.

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Keywords: Error of law in finding that quotation could be relied upon as written contract in compliance with s. 7 of Home Building Act 1989 – Claim of quantum meruit not tenable in face of oral contracts.

Background

A painter brought a claim for $5,060 in the Tribunal for painting work undertaken by him for homeowners.  The work was undertaken in two parts, the first sometime in June, July or August (there being a disagreement about the dates) and the second part in September.

The painter’s case was that for the first part of the work he had provided a written quote of $5,060 comprising of $4,600 for the work and GST of $460. For the second part of the work he maintained that he charged the rate of $400 per day plus the cost of materials.

The painter claimed that he was only paid in respect of the second part of the works, that is, $2,700 as claimed in an invoice provided to the homeowners. The homeowners agreed that they had paid this invoiced amount.

The homeowners said they never received any written quote in respect of the works.  They said the painter was asked to quote on the job in or about March.  At some point the painter made two phone calls to the homeowners.  In the first call he quoted $4,600 – cash.  A few days later, unsolicited, he rang back and volunteered to reduce the quote to $3,600 cash.  The homeowners said they accepted the $3,600 cash quote and the painter started in or about late June/early July.

The homeowners said that the painter’s work was unfinished when it was interrupted as there was other building work going on. They claimed that they said to the painter, “You’ve gone as far as you can go.  When the renovations finish I’ll get you back to do the front.  How much do you want for now?” The homeowners paid the $2,000 in cash the painter requested. The painter denied that he requested or received the $2,000.

The painter said that he returned in late September upon the homeowners’ advice that the builders had finished their work.  He said he entered into an agreement to do extras (the “Extras Agreement”) at $400 labour per day plus materials.  The painter recommenced works on 22 September and finished the extras on 29 September.

The painter said that he then gave to the homeowners an invoice for the “First Works” ($5,060) and an invoice for the extras $2,700.  At the homeowner’s request he also gave them a page from his note pad detailing the “extras” the subject of the $2,700 claim.

The homeowners said the painter agreed to waive the balance of $1,600 in relation to the first part of the works on the basis that the remainder of the work would be charged at the rate of $400 per day plus materials. The homeowners stated that at the completion of the “extras” they paid $2,700.00 by cheque to the painter.  They disputed ever receiving two invoices, one for $2,700 and one for $5,060.  They said on 30 September a heated discussion arose about the $1,600 the painter then alleged was still owed on the First Works. The homeowners maintained that the painter’s claim for $5,060 was an invention arising from their refusal to pay $1,600 and on their version of events there was nothing further owed to the painter.

Tribunal findings

The Tribunal Member hearing the matter expressed doubts about the credit of all of the parties, but ultimately accepted the evidence of the painter that a written quotation was provided. The member found that the parties negotiated the quotation down to $3,600 cash. The Member also, relying on Cultured Stone Australia Pty Ltd v Compton & Ors (Home Building) [2009] NSWCTTT 114, held that the quotation contained a sufficient description of the work so as to comply with section 7 of the Home Building Act 1989 (the Act) and thus avoid the sanction in section 10 of the Act (not being able to sue upon the contract).

However, the Member on the evidence also found that the homeowners paid the painter $2,000 in cash. As a fact the member found that the parties entered into the extras agreement, that the extras agreement did forgive the $1,600 owed under the First Works agreement (the extras agreement included work unable to be completed under the First Works agreement) and that the homeowners paid the painter the $2,700 invoiced under the extras agreement. Accordingly, there was no money owing by the homeowners to the painter and the application was dismissed.

District Court appeal

Her Honour stated that the in the current case the quotation was not accepted and therefore, quite apart from its non-compliance in many respects with the requirements of section 7 of the Act, could not be construed to be a contract. As a consequence she held that the Tribunal Member’s finding that the quotation represented an enforceable contract for the purposes of the Act was an error of law.

The painter submitted that his claim must be determined on a quantum meruit basis and that the Tribunal Member was in error in not so finding.

Her Honour observed that the Member did not just find that there were two oral contracts. The Member accepted that the homeowners had paid, on the first contract, the sum of $2,000 and on the second contract, the full amount claimed of $2,700. The Member therefore accepted that there was evidence that established that there was nothing remaining to be paid to the painter. In her Honour’s opinion these were findings of fact that were not challengeable on appeal.

Judge Sidis went on to state that in any event the painter was not in a position to pursue a claim on a quantum meruit. She noted that in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, the majority stated that it was a pre-condition to a claim in quantum meruit that the builder had done work for which the property owner had refused to pay the agreed remuneration.

Quoting Justices Mason and Wilson at paragraph 12,

“If the effect of bringing an action on a quantum meruit was simply to enforce  the oral contract in some circumstances only, though not in all the circumstances in which an action on the contract would succeed, it might be  persuasively contended that the action on a quantum meruit was an indirect means of enforcing the oral contract. So if all the plaintiff had to prove was  that he had fully executed the contract on his part and that he had not been paid the contract price, there would be some force in the suggestion that the  proceeding amounted to an indirect enforcement of the contractual cause of action. However, when the success in a quantum meruit depends not only on  the plaintiff proving that he did the work, but also on the defendant’s acceptance of the work without paying the agreed remuneration, it is evident  that the court is enforcing against the defendant an obligation that differs in character from the contractual obligation had it been enforceable.”

Her Honour dismissed the appeal.

Read the full text of this case on the Lawlink website.

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Keywords: Power to order right of re-list, constitution of the Tribunal on rehearing, social housing – mandatory considerations.

Background in the CTTT

The landlord sought orders for the termination of the tenancy agreement on the grounds that the tenant persistently breached the agreement by causing or permitting a nuisance.

After hearing the evidence the Tribunal found there had been substantial breaches of sections 23(b) and (c) of the Residential Tenancies Act 1987 (RT Act) by the tenant. After considering the circumstances of the case the Tribunal declined to order termination and possession but ordered the tenant to strictly observe all elements of section 23. It also made the following order:

"2. If the tenant fails to comply with this order in any respect the landlord has leave to request (by relist) an urgent hearing to determine whether the tenancy should be terminated."

The landlord alleged further breaches and exercised its right to relist. A different Tribunal member heard the matter and delivered a reserved decision which ordered the termination of the agreement and possession to the landlord.

The tenant sought and was granted a rehearing, the Chairperson stating that the reasons for the reserved decision did not disclose that any consideration was given to the circumstances of the case as required by the legislation in section 64(2)(b) RT Act and the Supreme Court.

The rehearing proceedings was conducted by yet a different Tribunal member. The member found that there had been breaches and in all of the circumstances the tenancy should be terminated. However, in his reasons he stated that the application was not a social housing case and thus section 64(4) of the RT Act did not apply. Accordingly, he did not take into account any of the factors listed there.

Supreme Court appeal

The tenant lodged an appeal in the Supreme Court pursuant to section 69 of the Supreme Court Act 1970.

Before turning to the complaints made, Garling J considered the inherent jurisdiction of the Court to review tribunal decisions and the extent to which this jurisdiction is restricted by s.65 of the Consumer, Trader and Tenancy Tribunal Act 2001 (CTTT Act). His Honour held – agreeing with the plaintiff’s submission – that s.65 of the CTTT Act does not preclude judicial review by the Court where the plaintiff can establish jurisdictional error on the part of the Tribunal. Garling J also commented that even if s. 65, on its proper construction, excluded judicial review for jurisdictional error, he would read down s.65 so as to preserve the Court's jurisdiction to review Tribunal decisions for jurisdictional error. ln this regard, his Honour relied on the High Court decision of Kirk v lndustrial Court of NSW (2009) 239 CLR.

His Honour drew attention to the limited exercise that the Court engages in when its judicial review jurisdiction is invoked. The Court does not engage in a review on the merits of the dispute, nor does it determine the appropriate weight to be given to matters which are required to be taken into account by the decision maker.

The tenant challenged three decisions of the Tribunal. The first, the decision to grant a right of relist to the landlord, was argued to be beyond power

The second decision (the member nomination issue) was the conduct of the Chairperson in permitting the Tribunal to be constituted by a member on rehearing other than the one who granted the right of relist. It was submitted that in the absence of a written decision under section 11 of the CTTT Act, the Tribunal could not be constituted by any member other than the one who had heard the initial proceedings.

The third decision challenged was the final decision that the tenancy of the plaintiff ought to be terminated. 

Decision

First Decision (right to relist)
It was argued by the tenant that the only source of power for the first decision was section 43 of the CTTT Act and by its terms did not support the order.  His Honour did not agree with this submission however, and found that there were multiple sources of power to support the order, including s 85(1)(d) of the RT Act and s 28 of the CTTT Act.

Second Decision (member nomination issue)
The tenant argued that where a matter is relisted to deal with enforcement of an order made by the Tribunal, under its powers in section 43 of the CTTT Act, then the matter must be heard by the original Tribunal member unless a direction in writing was given in accordance with section 11 of the CTTT Act. The tenant submitted that in the absence of any such direction the Tribunal was not properly constituted, had no jurisdiction and any decision made ought to be quashed.

His Honour found that the Chairperson determines the constitution of the Tribunal for the purposes of a rehearing under section 68(9) and not section 11 of the CTTT Act. His Honour stated that on the evidence, the Chairperson had probably made such a determination and that, even if section 11 was the appropriate section he was not satisfied that the direction needed to be in writing or that the direction had not been made. 

Third Decision
Section 64(4) of the RT Act requires the Tribunal to have regard to certain matters, as they are relevant, if the matter concerns social housing premises, before making an order for termination. Neither party at the Tribunal alerted the member to the fact that the matter involved social housing premises and the termination order was made on the basis that the premises were not social housing premises and in disregard of the factors listed at section 64(4). 

His Honour found that the failure to take into account the mandatory considerations amounted to jurisdictional error. His Honour considered that it was appropriate to exercise the Court’s discretion to grant relief and ordered the Tribunal’s decision quashed and the matter remitted to the Tribunal to be reheard.

Read the full text of this case on the Lawlink website.

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Keywords: Procedural fairness, error of law on the face of the record

Background

The tenant had rented premises from the NSW Land and Housing Corporation (the landlord) for approximately six years without incident. A friend of the tenant visited regularly and on occasion stayed at the premises. Police conducted a search of the house pursuant to a search warrant and found a variety of illegal drugs and certain stolen goods. The friend pleaded guilty to being in possession of the drugs. The tenant was charged with goods in custody offences, but was not charged with any offences related to the possession of drugs.

The landlord served a notice of termination of the tenancy claiming that the tenant had breached clause 7 of the agreement by using the premises, or causing the premises to be used, for the possession, storage, packaging and/or supply of prohibited drugs.

In due course the landlord lodged a termination application with the Tribunal. The tenant attended three listings for conciliation and directions. On the last occasion the Tribunal made an order that “the matter would be listed on the next occasion for hearing, but the applicant notes the possibility of a further adjournment if the criminal proceedings against the respondent have not been completed.”

A notice of hearing was sent to the parties however, the tenant did not appear and an order terminating the tenancy was made in her absence.

The tenant successfully applied for a rehearing of the matter but again failed to appear at the hearing. In her absence on 19 November 2010 the Tribunal ordered termination of the tenancy. In a further rehearing application, the tenant claimed that she did not receive the notice informing her of the hearing date. One application for hearing having been granted, the second, by law, had to be refused.

The tenant sought review of the decision of the Tribunal on 19 November 2010 in the Supreme Court.

Grounds of the appeal

The tenant argued that she was denied procedural fairness in that the hearing was conducted without notifying her of the listing date. Further the tenant argued that the Tribunal had taken into account irrelevant considerations and erred by failing to take into account relevant considerations.

Procedural fairness
Justice Hoeben first considered whether the tenant had in fact received the notice of hearing. His Honour held that the Tribunal had complied as best it could with the procedures for service of notices prescribed by the Consumer, Trader and Tenancy Tribunal Act 2001. However, he was satisfied by the evidence given by the tenant and her past record of attendance at the Tribunal that she had not in fact received the letter of notice. 

Next his Honour considered whether the attendance of the tenant at the hearing would have made any difference to the outcome so as to invoke the supervisory discretion of the Supreme Court. While the tenant’s evidence may not have had any effect on the finding that the tenant had permitted the premises to be used for illegal purposes, his Honour held that the tenant’s attendance would have likely affected the Tribunal’s consideration of the circumstances of the tenant, as required by s. 64 of the Residential Tenancies Act 1987 (the Act).

Accordingly, Justice Hoeben found that the plaintiff had been denied procedural fairness.

Jurisdictional error
For completeness, his Honour went on to deal with claims by the tenant that the Tribunal had made a jurisdictional error on the face of the record. The basis of the claim was that the Tribunal had no evidence before it on which to make findings pursuant to s. 64 of the Act.

In considering whether the Tribunal made a jurisdictional error, Justice Hoeben reviewed the principles affirmed in the recent High Court case of Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32.

His Honour considered that there was no evidence before the Tribunal to suggest that the tenant herself was engaged in the possession or storage of drugs on the premises, or that drugs were kept on the premises other than on the specific occasion when the Police conducted the search. As such, it was not open to the Tribunal to find that persons outside the premises, such as neighbours, would be affected by the actions of the plaintiff given that this finding was based on a small amount of drugs being found in the possession of someone other than the tenant. There was also no evidence before the Tribunal that the tenant would be able to relocate to suitable accommodation if the Tribunal terminated the tenancy agreement. As such, the conclusions by the Tribunal were not arrived at by a “rational process of decision making according to law”, as described by French J in Kostas.

Accordingly, his Honour ordered that the matter be remitted to the Tribunal for rehearing.

Note: The NSW Land and Housing Corporation has lodged an appeal against this decision.

Read the full text of this case on the Lawlink website.

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Keywords: Supply of electricity to residents.

Background

The appellant occupied a site in a residential park pursuant to a residential site agreement made in 2004. Clause 6 of that agreement provided:

"Electricity

The resident agrees to pay all electricity charges in connection with the residential site where:

6.1 the residential premises are individually metered in compliance with the Code of Practice for Electricity Supply to Long-term Residents of Caravan Parks prepared by the Department of Energy, and

6.2 any charges for the supply or resupply of electricity to the resident are calculated in accordance with the Code (whether by reference to a published domestic tariff or otherwise), and

6.3 the resident is provided with a receipt for any amount paid to the park owner for electricity consumption or availability, and that receipt is separate from any rent receipt provided to the resident or is identified separately on the rent receipt, and

6.4 the resident is issued with accounts that comply with section 37 of the Residential Parks Act 1998, and with any relevant provisions of the Code that are not inconsistent with that section."

The Code that was current at the time that the resident entered into the Agreement was issued by the Department of Energy in 1995 (the 1995 Code).

In August 2006 the Department of Commerce, through the NSW Office of Fair Trading, published a document entitled ‘Customer Service Standards for the Supply of Electricity to Permanent Residents of Residential Parks’ (the 2006 document).

The Dispute

The resident maintained that the 2006 document was a code that replaced the 1995 Code. He maintained that since he agreed to pay electricity charges calculated in accordance with the 1995 Code, he was not obliged to pay what he considered to be an additional charge imposed by the 2006 document. The charge that he believed to be additional was referred to in the 2006 document as a Service Availability Charge or ‘SAC’.

The matter had previously been before the Tribunal and was remitted back to the Tribunal by the District Court for further hearing in relation to “the acceptance of the appellant of the introduction into the lease of the August 2006 Code”.

The Tribunal heard argument on that issue and published reasons for decision on 29 September 2009. The resident appealed on the ground that the issue remitted to the Tribunal was not dealt with in those reasons.

The resident pointed to the paragraph in the reasons that stated:

"The 2006 Code is silent on the question of whether it replaces the 1995 Code. For the present purposes I have assumed that it does. Given my finding that (the resident) is liable under the 1995 Code to pay the SAC, I do not need to consider whether the 2006 Code has been incorporated into his agreement."

Consideration

His Honour, Judge Sidis, stated that with respect to the Judge and Tribunal Members who had previously heard the proceedings, he did not consider that the 2006 document was a Code. It dealt only in part with matters contained in the 1995 Code.

His Honour characterised the 1995 Code as one imposing obligations on managers of caravan parks concerning electrical installations, metering equipment and commercial arrangements for the re-supply of electricity.

In particular, Part 4 of the 1995 Code dealt with the obligations that concerned the commercial arrangements for re-supply of electricity. Clause 4.1 compelled the manager to resell electricity at a rate not exceeding the domestic tariff set in accordance with the Electricity Act 1945 (now the Electricity Supply Act 1995). Clause 4.2.2 required that the amount payable by a resident be calculated in accordance with the local electricity distributor’s domestic tariff.

His Honour observed that there was a note to clause 4.2.2 which may have been the source of the resident’s concern about an additional charge because it made no reference to the SAC. It read:

"Note: Domestic tariffs are structured in three rates. The primary rate applies to the first 300kWh/quarter, the secondary rate to the next 600kWh/quarter and the balance rate to the consumption beyond 900kWh/quarter."

His Honour stated that, by contrast, the 2006 document was issued by a different State Government department. It imposed minimum standards of customer service on park owners or managers. It created additional rights for park residents, for example, the right to compensation in certain circumstances where electricity supply was disrupted. It also dealt in some respects with commercial arrangements for supply.

Judge Sidis found that the 2006 document was not and could not be a Code that replaced the 1995 Code. He considered that it supplemented the 1995 Code by imposing additional obligations on the park manager.

Did the 2006 document permit the manager to impose an additional charge for electricity?

His Honour was satisfied that the Tribunal committed no error of law in dealing with this issue and endorsed the Tribunal’s statement that neither the 1995 Code or the 2006 document imposed an obligation on residents to pay for electricity.

That obligation was dealt with in the residential site agreement. Clause 6 of the agreement, His Honour observed, adopted much of the wording of section 37 of the Residential Parks Act 1998.

Section 37 of the Act refers to a “relevant code” only in dealing with the conditions upon which an agreement to pay electricity charges may be entered into. They include the provision of individual meters, calculation of charges in accordance with the relevant code, provision of receipts and accounts. The conditions do not empower a park manager to set or restructure tariffs for electricity.

His Honour stated that once the resident agreed under the Residential Site Agreement to pay all electricity charges, the function of the 1995 Code was to dictate to the manager the practices to be observed when calculating and billing for electricity charges as regulated under the Electricity Supply Act 1995.

Judge Sidis observed that the pricing and structuring of tariffs are matters for the Independent Pricing and Regulatory Tribunal (IPART) operating under the provisions of the Electricity Supply Act 1995. If IPART increased the tariff or restructured components of the tariff, the manager may resell electricity at a rate not exceeding the tariff as increased or restructured, provided that in doing so the manager complied with the 1995 Code, as supplemented by the 2006 document.

His Honour found that there was no provision in the Residential Site Agreement or the 1995 Code that limited the manager to bill the resident at the tariff fixed at the date on which the agreement was signed or on the basis of the structure of the tariff at that date.

Further, the 2006 document maintained the restriction that the amount billed to the resident was not to exceed the relevant tariff as set under the Electricity Supply Act 1995. It also added an additional restriction on the amount that the manager was permitted to bill. This related to the way the SAC was dealt with. By the time the 2006 document was published the relevant tariff was structured so that the SAC and the charge per kilowatt hour of electricity were separately dealt with.

The 2006 document set a maximum rate for the SAC that depended on the rate of amps at which electricity was supplied to a site. In the resident’s case, the rate was between 30 to 59 amps and therefore the manager was restricted to charging him 70% of the SAC. In this respect the charges for electricity supply to the resident were reduced.

The resident however, read the 2006 document as imposing upon him an additional charge. His Honour stated that there were two responses to the resident’s argument that this was not a charge that he agreed to pay when he signed his Residential Site Agreement:

1. The SAC was always part of the tariff. The only change made in 2006 was that it was separated out from the tariff charge per kWh and the manager was restricted in certain circumstances to billing less than 100% of the SAC.

2. The resident agreed to pay all electricity charges under the Residential Site Agreement. Changes in the tariff as to it nomenclature, amount or structure were recognised in both the agreement and the 1995 Code.

Accordingly, his Honour dismissed the appeal and affirmed the orders made by the Tribunal.

Read the full text of this case on the Lawlink website.

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