Bluesfest Services Pty Ltd v The Cajun Kitchen Pty Ltd

NCAT Appeal Panel|2021-04-22

fest Services Pty Ltd (Appellant) The Cajun Kitchen Pty Ltd (First Respondent) Cakes by Sweethearts Pty Ltd (Second Respondent ) Sukkupmaida Saragih t/as Balinese Street Food (Third Respondent) Kerry Williams t/as Gatinha Beachwear (Fourth Respondent) Safe House Pty Ltd (Fifth Respondent) Moreton Bay Sea Farms Pty Ltd (Sixth Respondent) Rebecca Stewart and Hay Maclure t/as Voodoo Burgers (Seventh Respondent) Paul Daly t/as The Fish Taco Co (Eighth Respondent) Kristy Papp and Arpi Papp t/as Langos (Ninth Respondent) Wayne Jeffery t/as The Hat Empire (Tenth Respondent) Liza-Lee Campbell t/as 24:7 Sunglasses (Eleventh Respondent) Representation: Counsel: M Southwick (Appellant)

Solicitors: Australian Law Group (Appellant) Barefoot Law (Respondents) File Number(s): 2021/00056079 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 05 January 2021 Before: G Ellis SC, Senior Member File Number(s): GEN 20/28490; GEN 20/28491; GEN 20/28493; GEN 20/28495; GEN 20/28497; GEN 20/28498; GEN 20/28505; GEN 20/28507; GEN 20/28509; GEN 20/28510; GEN 20/28514

REASONS FOR DECISION

This appeal relates to eleven decisions made by the Tribunal in separate applications brought by companies and individuals (stallholders) who had entered into contracts (stallholder contracts) with the appellant, Bluesfest Services Pty Ltd, to run stalls at a music festival called "Bluesfest 2020" (Festival). The stallholder contracts were in writing. The applications were heard together.
The Festival was due to commence on 9 April 2020.
The Festival was cancelled by reason of the COVID-19 pandemic because the Public Health (COVID-19 Public Event) Order 2020 (Health Order) made by the Minister for Health on 15 March 2020 had the effect of preventing the Festival from proceeding. In each of the eleven applications, the Tribunal found that the stallholders were entitled to a refund of all fees paid to the appellant because the contracts with the stallholders had been frustrated.
The individual application numbers, parties and the amounts awarded in each application (original award) are set out in Schedule 1 of these reasons.
In ordering a refund, the Tribunal considered and rejected a claim by the appellant that it was entitled to retain a portion of the amount received as compensation under s 13 of the Frustrated Contracts Act 1978 (NSW) (FCA) or by reason of s 15 of the FCA.
The Tribunal published reasons for its decisions ("reasons").
A notice of appeal was filed on 2 February 2021. The appeal was filed in time.
For the reasons that follow, we have decided that the appeal should be allowed in part and the orders made by the Tribunal varied to the amounts specified under the heading "varied award" in Schedule 1 hereof.

Grounds of appeal and submissions

The grounds of appeal are as follows: 1. The Tribunal erred in finding the only invoices relevant to the stallholders are those relating to the provision of tents/marquees. 2. The Tribunal erred in its finding the only financial information the Tribunal has that is specific to the Respondents is the evidence that it received $801,693 from stallholders and the related analysis. 3. The Tribunal erred in assessing significant imbalance in holding the stallholder contract did not "oblige" the Respondents to do anything. 4. The Tribunal erred in assessing reasonable necessity in s 24(1)(b) [of the Australian Consumer law] by failing to take into account: a. The [appellant's] admitted obligation imposed by credit card companies to repay all tickets purchased by credit card (in excess for $8.5 million) in the event Bluesfest 2020 did not proceed. b. The [appellant's] obligation to Bluesfest Touring Pty Ltd for the full contract price of the artist plus accommodation travel expenses and any visa cost. 5. The Tribunal erred in assessing reasonable necessity by having regard to refunds from contracts with third party Festivals. 6. The Tribunal erred in assessing Detriment in finding: a. That in the absence of clause 5.2 the stallholder fee would be refundable; b. There was a total failure of consideration; c. In finding the Bluesfest event as a whole should not be considered. 7. The Tribunal erred in finding the Stallholder contracts unfair in the absence of financial or other information as to the [stallholders'] financial position at the time of the contracts. 8. The Tribunal erred in finding that if a term is found unfair within the Australian Consumer Law the successful party has a remedy under s 79N Fair Trading Act. 9. The Tribunal erred in holding the Frustrated Contracts Act applied to the contracts the subject of the proceedings. 10. The Tribunal erred in finding the Tribunal has power under the Frustrated Contracts Act. 11. The Tribunal erred holding there had been no part performance of the Stallholder contract by the [appellant]. 12. The Tribunal erred in not finding the [stallholder] had failed to prove any entitlement to payment after part performance by the [appellant]. 13. The Tribunal erred in its interpretation of s 12 of Frustrated Contracts Act. This clause applies to payments to third parties.
In addition the appellant sought leave to appeal because the decision was not fair and equitable or was against the weight of evidence.
In respect of the decision not being fair and equitable, the appellant said: If the Appeal Panel finds that the Tribunal decision [in ground 1] above was not an error of law: a. The admission [the details of which we will explain later] was formally made by parties who were legally represented prior to the preparation of evidence. b. The admission was formally incorporated into the Respondents' evidence. c. The ruling was made after completion of the evidence. d. The ruling was made after both sides had made written submissions. e. In the event the Respondents were unable to reasonably provide further evidence to support that decision.
In relation to the decision being against the weight of evidence, the appellant said: 1. If the Appeal Panel finds that the Tribunals decision [in ground 3] above is a finding of fact and not an error of law: a. The finding is contrary to the unchallenged evidence of Peter Noble at paragraph [19]. b. None of the Applicants witnesses gave evidence to the contrary. 2. If the Appeal Panel finds that the Tribunals decision at [in ground 6 above] is a finding of fact and not an error of law: a. The Tribunal has overlooked the detailed and unchallenged financial information at Noble page 243 & in relation to each of the individual contracts eg 240.
For the purpose of the appeal, the parties provided an agreed bundle of documents. In addition, the parties provided written submissions and made oral submissions in support of their respective positions at the hearing on 22 April 2021.
In its written submissions the appellant said that while there are number grounds of appeal the issues "break down into four elements". These are: 1. The Tribunal was in error in permitting the stallholders to withdraw a formal admission and in subsequently failing to find that there was an implied term of each contract that the appellant would produce and promote the Festival. The appellant contends this decision resulted in "the evidence, costs and liabilities and risk to [the appellant] not being taken into account in determining whether Cl 5.2 of the Stallholder contracts was unfair". 2. The Tribunal was in error in determining the stallholder contracts were unfair in circumstances where: 1. The contracts were between two small businesses, the appellant and each of the stallholders; 2. There was no evidence that the stallholders were unable to understand Cl 5.2; 3. There was no evidence of any financial or other information about the stallholders at the time the contracts were entered into, it being noted that the stallholders gave evidence of events to the end of the 30 June 2020 year; 4. There was no other evidence of unfairness. In short, the stallholders gave no evidence to prove their case. 1. In finding at [105] of the reasons that each of the stallholders is entitled to a refund of their stallholder fee under s 79N of the Fair Trading Act 1987 (NSW) (FT Act), the Tribunal failed to have regard to the expenditure of the appellant. 2. The Tribunal erred in finding it had jurisdiction under the FCA in circumstances where the stallholder contracts dealt with what happened in the event of a pandemic. Further the Tribunal erred in failing to have regard to the appellant's expenses and liabilities in assessing what repayment should be made.
In relation to the withdrawal of formal admissions, these were identified as the following: 1. It was an implied term of the Stallholder Contracts that the appellant would produce and promote the Festival. 2. A significant majority of ticket sales were purchased by credit card. Credit card companies impose a term on credit card sales to the effect that if the paid services were not received, the credit card holder had to be repaid, including from April 2019.
The appellant says it relied on those admissions and had prepared its evidence on that basis. It did so with a view to avoiding costs and on the basis of an agreement that cross examination would not occur. The appellant says that the reason expressed by the legal representative of the respondents to support withdrawal of the admission concerning the implied term, namely that there was an "oversight", was inadequate and the Tribunal's reasons in granting the withdrawal were "not supported by reference to any particular document or submission".
Further, the term should properly be implied because; 1. It is reasonable and equitable; 2. It is necessary to give business efficacy to the contract; 3. It is so obvious it goes without saying; 4. It is capable of clear expression; and 5. It does not contradict any express term of the contract. This test for implication is found in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; [1977] UKPC 13. It was followed by the High Court in Secured Income Real Estate v St Martin's Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 606 and Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 146 CLR 337 (Codelfa) per Brennan J at 404.
Of this implied term and the nature of the arrangements with the stallholders, the appellant said the contract with each stallholder necessarily involved "production and promotion of Bluesfest 2020".
In making these submissions, the appellant said that the stallholder contracts were not cancelled. Rather, public gatherings were prohibited by reason of the Health Order. Consequently, if there was no obligation on the appellant to produce and promote the Festival then "there was no basis put forth to say the stallholder contracts were frustrated".
Having made that submission, the appellant then dealt with grounds 1-7 of the notice of appeal said to constitute errors of law.
In respect of grounds 1-4, the appellant said: 1. The Tribunal failed to find that costs associated with complying with the implied term were relevant to assessing whether the stallholder contracts, in particular Cl 5.2, was unfair; 2. The Tribunal should have taken account of the expenditure of the appellant at the date of entry of each Stallholder Contract which should have included "all of the money and obligations incurred by [the appellant] to that date in procuring and promoting Bluesfest 2020"; 3. The Tribunal should also have taken account of future expenditure of the appellant subsequent to the entry of the Stallholder Contracts; 4. The Tribunal should have taken account of the fact that many the appellant tickets were purchased by credit card in consequence of which the appellant would be required to refund amounts received from those who purchased tickets to the Bluesfest event.
In relation to ground 5, the Tribunal was in error in its reasons at [79], [82] and [83] in relying upon what had occurred at other festivals. There was scant evidence on this subject, the contracts for those other festivals were not in evidence and the hearsay nature of the evidence before the Tribunal was such that it should be given little or no weight. Further, how a third party might have acted in refunding fees after an event of frustration is not relevant to determining whether a term is unfair at the time a contract was entered into. In this regard reliance was placed on the decision of the Federal Circuit Court in Ferme v Kimberly Discovery Cruises Pty Ltd [2015] FCCA 2384 (Ferme) a case involving "evidence of the post cyclone conduct".
In relation to ground 6, the Tribunal failed to have regard to both past consideration and future consideration provided in the form of ongoing expenditure by the appellant in producing and promoting the Festival. In addition, the absence of Cl. 5.2 would mean there was no clause dealing with the pandemic, consequently there would be no requirement for a refund.
Having dealt with matters arising from the withdrawal of the admission concerning the implied term to produce and promote the Festival, the appellant then dealt with ground 7, namely the Tribunal erred in finding stallholder contracts were unfair in the absence of financial or other information of the stallholders financial position at the time each of the contracts was entered into.
After setting out Cl 5.2 and the definition of "force majeure" in that clause the appellant made the following submissions: 1. There was evidence from the appellant concerning the expenditure of money and liabilities which the appellant incurred in respect of the festival. There was also evidence concerning ticket sales (totalling $9,601,312.00) which were refundable if the Festival did not proceed and evidence of contractual obligations which the appellant had totalling $707,568.00. Each stallholder purchased an opportunity to operate a stall to make a profit in the environment created by the expenditure and commercial risk undertaken by the appellant. Each contract made with the stallholders was between two small businesses. Clause 5 was capable of being understood by the stallholders and in the absence of any demonstrated financial disadvantage or other evidence of unfairness there was no basis to conclude the contracts were unfair. 2. As determined in Ferme at [58], the point of time to assess unfairness under s 23(1) of the Australian Consumer Law (NSW) (ACL) is at the point when the contract is formed. The Tribunal correctly held in its reasons at [66] that the stallholders had not provided information as to their financial position at this time. Consequently, the appellant said the Tribunal should have concluded that stallholders had failed to satisfy their onus of proof and should have dismissed their claims that the contract was unfair. 3. As to the Tribunal's finding at [66]-[78] that the appellant had conflated a variety of companies in making submissions concerning its financial position, the appellant said this finding was not open to the Tribunal. Reference was made to the evidence of Mr Noble confirming the invoicing of the appellant by various related companies for particular services including artists' costs and travel expenses of artists. The appellant said it was never put to Mr Noble that his evidence was conflated nor was a submission put to the Tribunal to this effect. Further, the Tribunal overlooked other evidence of expenses and liabilities "including the admitted obligation to refund the entirety of the $9,985,178 in ticket sales". Consequently, the Tribunal was in error in concluding that the appellant was entitled to keep all payments made by stallholders without obliging it to do anything. 4. Unlike the position in Ferme, Cl 5.2 only operated if a stallholder could not operate their stall and that inability arose from circumstances outside control of the appellant.
Consequently, the appellant submitted: The Tribunal in looking at what [the appellant] was to do also entirely missed the point that the Stallholder contracts purchased the right to engage in commercial activity utilising the benefit of the expenditure and liabilities [the appellant] had already made or incurred towards [the Festival].
Risk was allocated by each contract and each of the respondents "made a commercial decision as to the allocation of risk".
In relation to ground 8 and the Tribunal's reasons at [104] and [105], the Tribunal erred in determining the claim based on principles of restitution and what happened in consequence of the pandemic. Rather the Tribunal should have looked at the unfairness "at the time the contract was entered into".
The Tribunal also failed to consider the nature of the transaction particularly that each of the respondents "purchased a right to engage in commercial activity utilising the benefit of the expenditure and liabilities [the appellant] had already made or incurred towards [the Festival]. In this context, any unfairness must take account of the expenses and liabilities referred to in [37] of the reasons. In this regard reference was made to the Baltic Shipping case (Baltic Shipping Company v. Dillon [1993] HCA 4; 176 CLR 344; 67 ALJR 228; 111 ALR 289) which the appellant said was a case involving "sinking of the ship … due to the negligence of the Ship owner", not circumstances beyond the control of either party that prevented the contract being performed.
In relation to Grounds 9-13 and the FCA, the appellant said that frustration could only occur if Cl 5.2 was found unfair and accordingly void.
Of frustration and whether this has occurred, the appellant referred to a passage in the reasons of Mason J (as he then was) in Codelfa where, referring to a speech of Lord Radcliffe in Davis Contractors Ltd. v. Fareham Urban District Council [1956] UKHL 3; (1956) AC 696, his Honour said at 357: I agree with Stephen J.'s acceptance of the approach adopted by Lord Reid and Lord Radcliffe in Davis Contractors. Lord Reid said that the task of the court is to determine "on the true construction of the terms which are in the contract read in light of the nature of the contract and of the relevant surrounding circumstances", "whether the contract which they did make is . . . wide enough to apply to the new situation: if it is not, then it is at an end" (1956) AC, at pp 720-721 . Later he described frustration as "the termination of the contract by operation of law on the emergence of a fundamentally different situation" (1956) AC, at p 723 .
The appellant submits that Cl 5.2 was wide enough and operated in the circumstances of the pandemic and the Tribunal was therefore in error at [116] in concluding frustration of the contract had occurred.
Consequently, the Tribunal did not have jurisdiction under the FCA.
Alternatively, if the contract was frustrated, the appellant asserts that the Tribunal was in error in failing to take account of the expenditure it had incurred in relation to the Festival.

Consideration

There is a right of appeal on a question of law. Otherwise leave to appeal is required: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). The grant of leave is regulated by Sch 4 cl 12(1) of the NCAT Act.
The grounds of appeal substantially raise questions of law. They involve the interpretation and application of the ACL and the FCA.
To the extent required, we grant leave to appeal on grounds other than questions of law. This is because various factual issues are entwined in the legal issues which we are required to determine and we are satisfied that the issues, collectively, are matters of public importance which might have general application: Collins v Urban [2014] NSWCATAP17 at [84(2)].
We will deal with the appeal under four headings: 1. Withdrawal - of admissions; 2. Implied term argument; 3. Unfair contract finding; and 4. Failure to take account of expenditure by the appellant in ordering repayment.
As necessary, we will refer to the submissions of the respondent in dealing with each of these topics.

Withdrawal of admissions

The appellant says the Tribunal erroneously permitted the stallholders to withdraw an admission that there was an implied term in the stallholder contracts that the appellant would produce and promote the Festival.
By reference to various authorities, including Mindshare Communications Ltd v Orleans Investments Pty Ltd t/as Orleans Media Consultancy [2007] NSWSC 637 and Hill End Gold Ltd v First Tiffany Resource Corp [2008] NSWSC 866, the appellants said the respondent were required to provide "a sensible explanation based on evidence of a solid and substantial character to withdraw an admission" and that "for reasons of policy and the due conduct of the business of a court an application to withdraw the admission, especially at appeal should not be freely granted".
Consideration of this ground of appeal requires a brief examination of what occurred in the proceedings at first instance.
The hearing before the Tribunal proceeded on the basis of the documents the parties had filed pursuant to directions of the Tribunal and written and oral submissions provided in support of each party's position. There was agreement between the parties that all documents would be admitted and that no point would be taken by the other party about a failure to cross-examine any witness. This was recorded in the transcript by way of a statement from the stallholders' representative, Mr Swivell: Appeal Bundle (AB) pp 659.9- 660.
The documents exchanged included points of claim and points of defence as well as documents by which attempts were made to agree facts (statements of agreed facts). In addition the Tribunal was provided with evidence from various witnesses in the form of affidavits. The documents before the Tribunal, both Exhibits and documents marked for identification (MFI), are recorded in the reasons at [8].
The statement of agreed facts and chronology prepared by the parties are identified by the Tribunal as MFI 3 - MFI 6 inclusive. They include primary statements made by each party and a response by the other.
Of these documents and the approach taken by the Tribunal concerning their content the Tribunal said at [15] of its reasons: From the four relevant documents (MFI 3 to MFI 6 inclusive), a number of [stallholders'] contentions in its Statement of Agreed Facts (MFI 3) attract a response (MFI 5) which suggested that matter will require proof. A number of inclusions in the [appellant's] corresponding document drew a strikethrough response (MFI 4). The chronology prepared by the respondent (MFI 6) is limited. In these circumstances, it is preferable to proceed by reference to the evidence, considered below, and to construct a chronology from that evidence.
The statements of agreed facts identified by the parties as relevant to this appeal are found in the Appeal Bundle (AB) and consist of the following documents: 1. The Stallholders' document entitled "Applicants-Answer To Respondents Agreed Facts" dated 27 August 2020: AB pp 88-90; and 2. the appellant's document entitled "Respondents Answer To Applicants Statement Of Agreed Facts" dated 10 September 2020: AB pp 91-93.
The document "Applicants Answer To Respondents Agreed Facts" was identified to us as the document containing the admissions the stallholders were said to have made and which were permitted to be withdrawn by the Tribunal. The relevant statements are paragraphs 16 and 17 which state: 16. In order to give business efficacy to the Stallholder Contract the [appellant] was obliged to produce and promote the 2020 Bluesfest Event. 17. It was an implied term of the Stallholder Contract the respondent would produce and promote the 2020 Bluesfest Event.
In the Notes to this document (AB p90) the stallholders said: 3. Para 16 and 17- if the [appellant] claims it incurred costs in preparation for Bluesfest 2020 it should put on evidence of its costs directly related to the Stallholder Contracts and only those costs.
Aside from what is said at [15] of the reasons, the dispute concerning withdrawal of the admission is not dealt with in the Tribunal's reasons. Consequently, it is necessary to have regard to the transcript of proceedings. In oral submissions, the parties drew our attention to the exchange between the parties and the Tribunal at AB p 666-667: Mr Swivell: Ah…essentially Member, although there is one issue that I would like to immediately clarify. You adverted to the issues compression [sic-version] control and you acknowledge ?????? as if there, Respondents understandably see as an admission on our part. This relates to MFI-5 Exhibit 15 which is the Applicant's Answer to Respondent's Agreed Facts. Member Ellis: It's MFI-4 which is the claim…. Mr Swivell: MFI-4, apologies. In any event, we failed to cross out as a result of our lack of compression [sic-version] control, item or paragraph 17 Respondent's understandably…. Member Ellis: Sorry, I lost that from background noise. Mr Swivell: No problem. Member, there's still a lot of background noise, Member. Member Ellis: Yes, someone needs to be muting themself, I think. Yes, Mr Swivell, I have a 3-page document dated 27 August headed Applicant's Answer to Respondent's Agreed Facts, there's a paragraph in that you wish to strike through or change, is there? Mr Swivell: That's correct Member, and its paragraph 17 and as I mentioned a minute ago, understandably the Respondent interpreted that as an admission but from out submissions it's clear…. Member Ellis: I read that in the submissions. I understand that, there's not a problem with that Mr Southwick. Mr Southwick: We relied upon the admission and indeed it's all through our evidence that we're right from that admission, and we don't consent that the admission being withdrawn without my explanation. Member Ellis: What's the explanation Mr Swivell? Is it just oversight is it? Mr Swivell: It was an oversight Member, correct. Member Ellis: I'll allow that change simply because it was clear to me from reading the documents including the submissions that that implied term was not in fact admitted and there doesn't appear to be any prejudice to the Respondent from doing that minor change at this late stage. Now, other than that Mr Swivell, submissions from you then submissions from Mr Southwick and you in Reply.
The basis of the challenge is essentially that the Tribunal's exercise of discretion miscarried, the grounds of appeal variously asserting the stallholders were legally represented, evidence had been completed and submissions had been made.
In our view no error is shown for the following reasons.
First, aside from seeking an explanation and withholding consent on that basis, once an explanation had been given by the stallholders' representative, Mr Swivell, that an error had occurred, no further challenge was made by the appellant's representative Mr Southwick and no application was made by the appellant to adjourn the proceedings for the purpose of adducing further evidence.
Secondly, it was not suggested to us that any evidence could have been adduced relevant to this matter. Indeed, it would seem to us that in relying on the reasoning in Codelfa, namely that the proposed term is so obvious it goes without saying, the appellant was and is asserting that the term arises by implication based on the proper construction of the agreements in question.
Thirdly, the appellant was afforded an opportunity to make oral submissions in the proceedings at first instance, including about whether a term of the type contended for should be implied.
Fourthly, the Tribunal had reviewed all of the documents filed by the parties and concluded the implied term was not in fact admitted having regard to that material. No submission was made that this finding was incorrect.
Lastly, no relevant prejudice has been pointed out to us that would suggest that the Tribunal's decision was unfair or led to a relevant injustice. The prejudice contended for in the submissions was to the effect that the Tribunal's ruling caused it to ignore evidence of the appellants costs and liabilities incurred in organising the Festival. That consequence, whether or not true, does not assist in determining the existence of the alleged implied term.
In reaching this conclusion that there was no injustice, we should not be taken as accepting the proposition that the Tribunal is bound by pleadings and/or admissions in the same manner that might operate in a court. As is clear from s38 of the NCAT Act, issues of practice and procedure which might apply to courts, including the making and withdrawal of submissions by way of pleadings or notices to admit or deny facts are not processes which ordinarily apply to this Tribunal.

Implied term argument

The appellant asserted there should be implied into each stallholder contract a term to the effect the appellant would produce and promote the Festival.
Brennan J (as he then was) said in Codelfa at 404: If it appears from the written contract that a term is to be implied, there are conditions which any proposed term must satisfy. They were stated by the majority judgment in B.P. Refinery (1977) 52 ALJR, at p 26 and adopted by Mason J. with the concurrence of the other members of this Court in Secured Income Real Estate v. St. Martin's Investments Pty. Ltd. [1979] HCA 51; (1979) 144 CLR 596, at p 606 . Those conditions are: "(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
In our view the term proposed does not satisfy these requirements.
First, it is not so obvious that it goes without saying. The promise under each stallholder contract is to provide a venue from which food or merchandise might be sold at the Festival called Bluesfest 2020. There is no dispute that the Festival is a well-known event which has been in existence for many years. The alleged obligation expressed in the implied term is not one that would necessarily attach to the particular stallholder contracts. All that is required from the appellant is to stage the Festival and provide relevant space to each stallholder.
Secondly, the term is not necessary to give business efficacy to the contract. What is necessary is provision of the relevant space at the venue to enable the stallholder to set up and operate for their agreed purpose.
Thirdly, the term proposed lacks clear expression in the sense that the obligation to "produce and promote" and the activities and input required by the appellant to meet this obligation are amorphous.
For these reasons we reject the implied term claim.

Unfair contract finding

The Tribunal found Cl 5.2 was unfair and therefore rendered void under the provisions of s 23 of the ACL. In doing so the Tribunal applied the test of unfairness in s 24(1) of the ACL and found that at the date each stallholder contract was entered into: 1. there was a significant imbalance "in that clause 5.2 entitled the [appellant] to retain the entire stallholder fee if a force majeure event occurred. While a force majeure event is one beyond the control of the appellant, the provision entitles the appellant "to keep the payments made by the stallholders without obliging the respondent to do anything (as was the case in Ferme)": reasons at [78]. 2. Cl 5.2 was not reasonably necessary: reasons at [84]. Contrary to the appellant's submissions, the Tribunal concluded retention of the fees was unnecessary to meet obligations to the artists who might appear at the Festival. This was because the appellant had no obligation to make payments to the artists[80] because of the corporate structure in which the appellant was a member. Also the Tribunal found that seven of the eight artists contracts, provided for a refund of the deposit in a force majeure situation. The eighth was silent. None of the artists contracts "had a provision to the same effect as the provision within clause 5.2": reasons at [81]. Consequently, as none of the contracts with the artists permitted the artists to retain any deposit paid in a force majeure situation, Cl 5.2 was not reasonably necessary. In reaching this conclusion, the Tribunal also considered whether the term was "reasonably necessary in the industry of the stallholders". Having regard to the evidence of the approach taken to a refund of stallholder fees in connection with other festivals, the Tribunal said that that evidence supported the proposition that a clause like 5.2 was not reasonably necessary in the stallholder industry. 3. Cl 5.2 would cause detriment, financial or otherwise to the stallholders. The Tribunal rejected the submission that it was the pandemic, and not the term, that caused detriment, because in the absence of the clause the stallholder would be refundable: reasons at [85]. Further, it was not a case of Cl 5.2 doing no more than allowing the loss to remain where it fell. Rather, in this case the facts are more akin to circumstances where there is a total failure of consideration. Accordingly the principles in the Baltic Shipping and Ferme cases apply. The Tribunal concluded that the respondents suffered financial detriment due to the operation of Cl 5.2: reasons at [88].
In reaching these conclusions, the Tribunal considered the contract as a whole, in particular the ability of the stallholder to cancel the contract, also permitted by Cl 5.2. While the Tribunal accepted the clause permitted cancellation by the stallholders, this resulted in a "lesser penalty" because any notice to be given under that clause would have been given within 30 days of the Festival, due to the date on which the Health Order was made. This would have resulted in a loss of 50% of the stallholder fee. In doing so the Tribunal referred to, and appears to rely upon, the decision of Australian Competition and Consumer Commission v Chrisco Hampers Australia Limited [2015] FCA 1204 (Chrisco).
In making findings as to the operation of cl 5.2, the Tribunal noted that both a security deposit and stallholder fee were payable under the stallholder agreement. However, there was no evidence concerning the amount of the security deposit or when it was repaid: reasons at [91].
Clause 5.2 of each stallholder agreement was in the following terms: 5.2 Cancellation Any cancellations by Stall Holders: a. after application and up to 30 days prior to the Festival will result in the Security Deposit(bond) being retained; and b. less than 30 days prior to the Festival will result in forfeiture of the Security Deposit(bond) and an additional 50% of the total site fee. If a Stall Holder is unable, due to weather or any other force majeure event, to conduct and operate their stall, Bluesfest Services Pty Ltd has no liability or obligation to refund their deposit or stall fees. "Force majeure" means any circumstance beyond the reasonable control of a party, including an act of God, terrorism, act of public enemy, civil commotion, war, blockade, riot, fire, flood, earthquake, explosion, or any form of government intervention that prevents fulfilment of obligations under these Terms and Conditions.
In summary, this clause operates in the manner set out in the Tribunal's reasons at [89] as follows: Circumstance What does the stallholder lose? More than 30 days before event 100% of security deposit Less than 30 days before event 100% of security deposit and 50% of stallholder fee Force majeure event (in contract) 100% of security deposit and 100% of stallholder fee What occurred 100% of stallholder fee
Section 23 of the ACL provides that a term of a consumer or small business contract is void if the term is unfair. That section says: 23 Unfair terms of consumer contracts and small business contracts (1) A term of a consumer contract or small business contract is void if: (a) the term is unfair; and (b) the contract is a standard form contract. (2) The contract continues to bind the parties if it is capable of operating without the unfair term. (3) A consumer contract is a contract for: (a) a supply of goods or services; or (b) a sale or grant of an interest in land; to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption. (4) A contract is a small business contract if: (a) the contract is for a supply of goods or services, or a sale or grant of an interest in land; and (b) at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and (c) either of the following applies: (i) the upfront price payable under the contract does not exceed $300,000; (ii) the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000. (5) In counting the persons employed by a business for the purposes of paragraph (4)(b), a casual employee is not to be counted unless he or she is employed by the business on a regular and systematic basis.
The meaning of unfair is defined in s 24 of the ACL which provides: 24 Meaning of unfair (1) A term of a consumer contract or small business contract is unfair if: (a) it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and (b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and (c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on. (2) In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following: (a) the extent to which the term is transparent; (b) the contract as a whole. (3) A term is transparent if the term is: (a) expressed in reasonably plain language; and (b) legible; and (c) presented clearly; and (d) readily available to any party affected by the term. (4) For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.
Section 25 of the ACL provides examples of unfair terms as follows: 25 Examples of unfair terms Without limiting section 24, the following are examples of the kinds of terms of a consumer contract or small business contract that may be unfair: (a) a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract; (b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; (c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; (d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; (e) a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract; (f) a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract; (g) a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, under the contract; (h) a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning; (i) a term that limits, or has the effect of limiting, one party's vicarious liability for its agents; (j) a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party's consent; (k) a term that limits, or has the effect of limiting, one party's right to sue another party; (l) a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract; (m) a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract; (n) a term of a kind, or a term that has an effect of a kind, prescribed by the regulations.
In Chrisco Edelman J explained how these provisions operate. At [43]-[44], His Honour said: 44 In his eloquent submissions, senior counsel for Chrisco emphasised a number of matters concerning the construction of s 24, all of which I accept: (1) for a term to be unfair it must satisfy the requirements of all of s 24(1)(a) to (c); (2) the onus is upon the applicant to prove the matters in ss 24(1)(a) and 24(1)(c) but it is upon the respondent in relation to s 24(1)(b); (3) s 24(2)(a) only requires the Court to consider transparency in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in s 24(1)(a) to (c); (4) similarly, the assessment of the contract as a whole in s 24(1)(c) only requires the Court to consider the contract as a whole in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in s 24(1)(a) to (c); (5) as the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) provided at [5.39], "if a term is not transparent it does not mean that it is unfair and if a term is transparent it does not mean that it is not unfair"; and (6) guidance can be had to s 25 which provides examples of unfair terms. 44 Although there was some dispute about (5), a contextual approach to statutory interpretation cannot ignore the matters provided in s 25 which are specifically provided for the purpose of giving examples of potentially unfair terms: see also Jetstar Airways Pty Ltd v Free [2008] VSC 539, [110] and [114] (Cavanough J); Director General of Fair Trading v First National Bank Plc [2001] UKHL 52; [2002] 1 AC 481, 481 [17] (Lord Bingham). Further, the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) in which these provisions were introduced, provided in [5.44] that the examples in s 25 "provide statutory guidance on the types of terms which may be regarded as being of concern. They do not prohibit the use of those terms, nor do they create a presumption that those terms are unfair". See also the second reading speech of the Trade Practices Amendment (Australian Consumer Bill) 2009, Hansard, House of Representatives, 24 June 2009, 6986 (Dr Emerson).
The assessment is to be made at the time the parties enter the contract: Ferme at [58],
In the present appeal, there is no issue that the contracts in question were small business contracts. There is no issue concerning the transparency of the particular term or that the Tribunal did not consider the stallholder contracts as a whole. Lastly, there is no issue the stallholder contracts are standard form contracts.
The focus of the appellant's submissions was on the failure of the Tribunal to have regard to the financial position of the appellant, the costs which it had incurred or would incur in putting on the Festival, the failure to have regard to the "Bluesfest event" as a whole and its conclusions concerning significant imbalance, reasonable necessity and detriment to the stallholders.
In evaluating this aspect of the appeal, namely whether the term is unfair, it is important to note the following provisions in the stallholder contracts: 1. Each of the stallholders was required to pay the relevant fee and a security deposit. In all cases, these amounts were payable no later than 31 January 2020: see "Key dates" in each of the market stall and food stall agreements. Contracts entered into after 31 January 2020 therefore required immediate payment in full. 2. Each stallholder was required to effect insurance: cl 1.9. 3. The physical stalls were to be provided by Bluesfest and of the dimensions and features specified: cl 1.3. 4. For the payments made each stallholder would be entitled to operate a stall on a nominated site during specified hours of operation of the Festival: cl 1.6. 5. The Festival was to be staged by Bluesfest from 9 April 2020 until 13 April 2020. 6. While each stallholder could cancel their contract at that time, they would forfeit 50% of the fee and 100% of their security deposit by exercising this right. If they did not do so, cl 5.2 would otherwise operate with the consequence they would lose 100% of the fee paid and 100% of their security deposit: cl 5.2.
The Health Order came into force within 30 days of the date when the Festival was due to commence, which prevented the Festival occurring. As the Festival did not proceed, none of the intended benefits, namely a stall on a site from which food or merchandise could be sold during the Festival, were received by any of the stallholders who had otherwise paid the full amount due to Bluesfest.
At the outset, it seems to us that Cl 5.2 is a term that fits within the examples of terms that may be unfair found in s 25 of the ACL. To paraphrase the language of s 25(a) and (c), Cl 5.2 of each stallholder agreement is a term that: 1. permits or has the effect of permitting one party (but not another party) to avoid or limit performance of the contract or 2. penalises, or has the effect of penalising, one party (but not another party) for termination of the contract.
The appellant challenged each of the three findings required to be made by the Tribunal under s 24(1) of the ACL in determining cl 5.2 was an unfair term.

Section 24(1)(a)- term causing a significant imbalance in the parties' rights and obligations arising under the contract

The Tribunal was required to determine whether the term "would cause significant imbalance".
The Tribunal determined significant imbalance arose from the fact that a force majeure event would entitle the appellant to keep all fees paid even though there was no obligation on the respondent "to do anything".
The appellant submitted it did undertake activities including the promotion of the Festival, the organisation of artists and that it incurred expenses in this regard. It challenged the Tribunal's conclusions concerning the conflating of expenses incurred by different companies within the Bluesfest group engaged in delivering the Festival and said that the Tribunal did not take account of the "commercial risk" of Bluesfest associated with the Festival, particularly the requirement that all ticket sales made by credit card needed to be re-funded in consequence of the cancellation of the event.
At [76] of the reasons the Tribunal described the competing position of the parties as follows: 76. The disparity between the arguments of the applicants and those of the respondent was that the applicants contended for a consideration of the contract while the respondent contended for a consideration of the event of as a whole.
At [77] the Tribunal correctly identified that the question of significant imbalance is to be determined by reference to the "rights and obligations arising under the contract" as provided in s 24(1)(a) of the ACL. Having done so the Tribunal concluded the imbalance arose from the fact that the appellant was able to retain the whole of the fee payable in some circumstances where the stallholders receive no benefit as intended under their respective agreements. That is, the stallholders were unable to operate their stalls and would not receive any commercial benefit which would have been derived if the Festival had not been cancelled.
The statement in the reasons at [78] that there was no obligation on the appellant "to do anything (as was the case in Ferme)" might appear to suggest the Tribunal had reached a conclusion that the appellant had done nothing in connection with the Festival. In our view, a fair reading of this statement in the context of financial risk and benefits to be derived from the stallholder contracts to which the Tribunal referred is no more than recognising the whole of the financial risk under the stallholder contracts of the Festival not proceeding by reason of a force majeure event was, by Cl 5.2, placed upon the stallholders.
As we indicated above, Cl 5.2 is a type of term falling within the examples of terms which might be unfair. In the absence of any evidence to suggest there had been a commercial negotiation that might provide a fair basis to impose such a term and assign all risk to the stallholders, and when the term is read in the context of the whole contract (including the provision permitting termination by a stallholder), it seems to us that no error is shown in the Tribunal's conclusion there was a relevant "imbalance"[78] in the parties' rights and obligations arising under the contract.
Even if one accepts an error was made in the manner in which the Tribunal dealt with the evidence of the appellant concerning its expenses in putting on the Festival, it seems clear to us that a relevant imbalance is nevertheless established. This is because it would be unfair for an individual stallholder entering into a stallholder contract to be placed in a position to carry the whole of its financial risk in the event of the Festival not proceeding and, in effect, forfeit all monies paid in circumstances where they received no benefit.

Section 24(1)(b) - not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term

In respect of this challenge it is to be remembered that the onus is upon the appellant to show that the term was reasonably necessary: s 24(4) of the ACL.
The Tribunal rejected the submission that the term was necessary "to enable obligations for goods, services and artists to be met": reasons at [80] and following.
Again, the appellant relied on the fact it, or its related companies, incurred significant expenses in promoting and preparing for the Festival and that there was a requirement to refund ticket sales made by credit card. The appellant also relied on the fact that there was "scant evidence" concerning the position taken by promoters of other festivals in respect of a refund of fees that might be given in the event such festivals were cancelled by reason of a pandemic or other force majeure event.
In our view what is "reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term" is to be considered in the context of the contract under review and not in the broader business operations of the supplier. The "legitimate interests" are those arising from the contract and its performance. In the context of a term dealing with non-performance due to a force majeure event, the legitimate interests might include protecting against costs incurred in performing that contract, and the profit, if any, to be derived. What is "reasonably necessary" is to be evaluated in the context of what, if any, risk should be assigned to the stallholders as consumer/small businesses and whether the term is expressed to operate in circumstances unconnected with any performance actually rendered.
In the present case, the clause permitted both retention of the security deposit and the fees paid whether or not the Festival had commenced and independently of when the force majeure event occurred relative to the date the Festival was due to commence.
There could be no legitimate interest in such a protection which operated in the sense we have described above. Indeed, as the assessment is made at the time the contract is entered into, the scope of the term and its effect upon the stallholder is unfair. This is because: 1. the only reasonable need of Bluesfest at the time of entry into the contract was to recoup expenses then incurred (before the particular stallholder agreement was signed); 2. the clause would operate so that if a force majeure event occurred immediately after signing the contract and payment by a stallholder, the security deposit and fee would be forfeit to Bluesfest; 3. there is no adjustment based on whether the Festival proceeded in whole or in part.
The potential need to refund ticket sales and/ or pay its related company, Bluesfest Touring Pty Ltd "the full contract price of the artist plus accommodation travel expenses and any visa cost (as asserted in ground 4(b) of the Notice of Appeal), being expenses incurred independently of any particular stallholder agreement, did not otherwise make necessary such a term. This is because the purpose in such a clause was to shift a risk already assumed by Bluesfest to each stallholder immediately on entry of the contract and payment of the relevant fee and security deposit.
Consequently, no error is established in respect of this challenge.

Section 24(1)(c) - term would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on

The issue for determination under this subsection is whether the term would cause detriment to each of the stallholders.
The appellant submitted that: 1. the "benefit of the expenditure to the date of the contracts was part consideration"; 2. the benefit of ongoing expenditure in producing and promoting the Festival "was further consideration"; and 3. in the absence of Cl 5.2 there would be no clause dealing with the pandemic and no requirement for a refund.
As to there being no entitlement to refund in the absence of Cl 5.2 in the event of a pandemic, this is not correct. Subject to any entitlement of the appellant to compensation, the FCA provides for a refund of all monies paid.
Whether one characterises what occurred as a total failure of consideration or not, it seems to us that a benefit to each stallholder is only derived if the Festival proceeds in whole or in part and the appellant provides to each stallholder a site and relevant stall to operate during the Festival as contemplated by the terms of the stallholder agreements.
Clearly the operation of Cl 5.2 would cause detriment to the stallholders if a force majeure event occurred before the Festival commenced in the sense that it has the same effect whether there was part or no performance. As we said above, the clause operates indiscriminately. As demonstrated by what occurred, detriment has been suffered by each stallholder. At the time each stallholder contract was entered into it is clear the term would cause detriment if it was applied or relied on.
Consequently, no error is shown in the Tribunal's conclusion.
It follows from the above that the appellant has not established error in the Tribunal's conclusion that Cl 5.2 was unfair. Accordingly this ground of appeal is dismissed.

Failure to take account of expenditure by the appellant in ordering repayment

As found by the Tribunal, Cl 5.2 is void by reason of the operation of s 23(1) of the ACL.
In the absence of a force majeure clause, the stallholder contracts are properly taken to have been frustrated by the pandemic. Neither party contended to the contrary.
There is no agreement between the parties to exclude the operation of the FCA: cf s 6(e) of the FCA. Consequently, the FCA applies to determine the rights arising upon frustration.
Divisions 1 and 2 of the FCA provide for what is to occur in the event of frustration. In the present case, the starting point in applying the FCA is that the stallholders, as parties who have paid money, are entitled to a refund of the amounts paid being the security deposit and stallholder fee. Section 12 of the FCA provides: 12 Return of money paid Where a contract is frustrated and a party to the contract has paid money to another person (whether or not a party to the contract) as, or as part of, an agreed return for performance of the contract by another party (whether or not that other party is the person to whom the payment was made and whether or not there has been any such performance) that other party shall pay the same amount of money to the party who made the payment.
Section 12 applies (not s 11) because no performance has been received by the stallholders. In this regard what they were to "receive" was the provision of a stall on the site of the Festival which they could operate during the Festival. In relation to the stallholders' claims, there is no dispute concerning the security deposit. The only issue is the claim by each stallholder for a refund of the fees paid. Neither party raised any dispute about the security deposits which were, apparently, returned.
However, the Appellant, as the performing party, claims it is entitled to an adjustment of the amount of refund, either under s 13(1) or 15(1) of the FCA. Section 13 provides: 13 Adjustment of certain losses and gains (1) Where a contract is frustrated and, by reasonably paying money, doing work or doing or suffering any other act or thing for the purpose of giving performance under the contract (not being performance which has been received) the performing party has suffered a detriment, the performing party shall be paid by the other party to the contract an amount equal to one-half of the amount that would be fair compensation for the detriment suffered. (2) Where a performing party referred to in subsection (1) has, as a consequence of doing or suffering the acts or things that caused that party to suffer the detriment so referred to, acquired or derived any property or improvement to property, the performing party shall pay to the other party so referred to one-half of the value of the property or improvement so acquired or derived.
In relation to moneys payable under sections 12 and 13, s 14 provides: 14 Recovery of money as a debt A person entitled under Division 1 or 2 to be paid an amount of money by another person may recover the amount from that other person as a debt in a court of competent jurisdiction.
In addition, Section 15 provides: 15 Adjustment by court (1) Where the court is satisfied that the terms of a frustrated contract or the events which have occurred are such that, in respect of the contract: (a) Divisions 1 and 2 are manifestly inadequate or inappropriate, (b) application of Divisions 1 and 2 would cause manifest injustice, or (c) application of Divisions 1 and 2 would be excessively difficult or expensive, the court may, by order, exclude the contract from the operation of Divisions 1 and 2 and, subject to subsection (8), may, by order, substitute such adjustments in money or otherwise as it considers proper. (2) Orders which the court may make under subsection (1) include: (a) orders for the payment of interest, and (b) orders as to the time when money shall be paid. (3) In addition to its jurisdiction under subsections (1) and (2), the Supreme Court or the District Court may, for the purposes of this section, make orders for: (a) the making of any disposition of property, (b) the sale or other realisation of property, (c) the disposal of the proceeds of sale or other realisation of property, (d) the creation of a charge on property in favour of any person, (e) the enforcement of a charge so created, (f) the appointment and regulation of the proceedings of a receiver of property, and (g) the vesting of property in any person. (4) Sections 78 and 79 of the Trustee Act 1925 apply to a vesting order, and to the power to make a vesting order, under subsection (3). (5) Section 78 (2) of the Trustee Act 1925 applies to a vesting order under subsection (3) as if subsection (3) were included in the provisions of Part 3 of that Act. (6) In relation to a vesting order of the District Court, sections 78 and 79 of the Trustee Act 1925 shall be read as if "Court" in those sections meant the District Court. (7) Subsections (2) to (6) do not limit the generality of subsection (1). (8) This section does not authorise the Local Court to give a judgment otherwise than for the payment of money.
There is little or no guidance as to the meaning and operation of these provisions in decided cases, at least to which we have been referred or could locate.
The interpretation of these sections is to be undertaken in accordance with the general principles set out by the plurality (McHugh, Gummow, Kirby and Hayne JJ) in Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]. There their Honours said (citations omitted): The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.
The entitlement of a performing party to a payment under s 13(1) arises "where the performing party has done work or has done or suffered any other act or thing for the purpose of giving performance under the contract" and "the performing party has suffered a detriment". The amount the performing party is entitled to be paid is "an amount equal to one-half of the amount that would be fair compensation for the detriment suffered".
Section 13(1) applies, as opposed to s 11, as no performance has been received by the stallholders.
The entitlement under s 13(1) arises where either work is done under the contract or where "any other act or thing" has been done or suffered for the purpose of giving performance under the contract. In our view these words of generality require the Tribunal to determine what work has been undertaken directly in performing the contract and any matters done which might be ancillary or necessary for the purpose of giving performance. Having done so, the Tribunal must be satisfied that the performing party has suffered a relevant detriment.
Detriment is not defined. However it can be readily accepted that the incurring of costs and expenses preparatory to or as part of giving performance are relevant to assessment of detriment.
Having determined the precondition for compensation has been met, the Tribunal is then required, by reference to the detriment suffered, to determine "fair compensation". The factors to be considered in relation to "fair compensation" are not defined.
Of these sections (and other sections in Division 1 and 2 of the FCA that deal with the varying circumstances that might arise from an event of frustration), Mr JD Heydon QC, the author of Heydon on Contract - Lawbook Co. 2019, said at 23.800: Critics of the New South Wales Act have seen s 15 as a confession of failure. They argue that the provisions of the Act before s 15 should have been adjusted in order to avoid inadequacy, inappropriateness, injustice, difficulty or expense. A contrary view would be that there is a certain realism in s 15. The complexity of the earlier sections could well operate in unintended and unfortunate ways. To the charge that the earlier sections are excessively complex, a defence of confession and avoidance may be made. It verges on inconsistency simultaneously to attack the common law for its crude and obscure outcomes while attacking bona fide attempts by able lawyers to avoid them being extremely thoughtful schemes - even if the schemes may not be entirely satisfactory.
Despite Mr Heydon's comments, we are required to give meaning to the sections in order to apply them to what has occurred.
In accordance with s 34 of the Interpretation Act 1987 (NSW), guidance as to the meaning is to be found in the second reading speeches of Parliament.
In the Legislative Assembly the then Attorney General and Minister for Justice, Mr Walker said: …Clause 13 deals with the situation where a contract is frustrated after a party has incurred preliminary expenses, not amounting to part performance of the contract, but nevertheless incurred in order to enable him to perform his promise. Perhaps it is best to illustrate the operation of the present law and the effect of clauses 10 to 13 of the Frustrated Contracts Bill on it by way of example. Say there is a contract between A and B under which A is to do work and supplying materials for B for a price in money. A starts work but is injured in an accident - not his fault - and is unable to finish the work; the contract is frustrated. Under the present law the result of this situation is that A can keep anything B has paid him, whether it is not enough or too much for the amount of work done. So if B has not paid anything to A, then A will get nothing for his work. Also under the present common law there is no right to damages on either side. The scheme now put forward to replace the common law requires that money paid must be repaid. If A has partly performed the contract, then: first B must pay for what A has done, less an allowance for loss of value by reason that performance will not be completed; second, if the cost to A of the work he has done exceeds the value of that work to B then B must pay half the excess to A, and third, if A incurred cost with a view to starting work but has not actually started that work, then B must pay half of those costs of A, subject to an allowance for any materials left on A's hands. I think it must be conceded that this new scheme is much more flexible than the present common law and therefore much more capable of producing an equitable result all round.
Of clause 15 the Attorney General said: Clause 15 is a very significant provision. If the scheme as outlined to date seems manifestly inadequate or inappropriate; or its application would cause manifest injustice, or would be excessively difficult or expensive, then a court is given power to make adjustments at discretion. Clause 15 empowers a court to exclude the operation of the proposed Act under certain circumstances, and to substitute its own scheme of adjustment between the parties to a frustrated contract. The Supreme Court and the District Court are given wide powers to make an order appropriate in the circumstances of the particular case. For example, they may make orders for any disposition of property; the sale or other realization of property; the disposal of the proceeds of sale or other realization of property; the creation of a charge on property in favour of any person and the enforcement of a charge so created; the appointment and regulation of the proceedings of a receiver of property; and the vesting of property in any person.
Thereafter, in debate, Mr Maddison, Member for Ku-ring-gai said: On some occasions the performing party to a contract may incur expenditure prior to frustration which it is difficult to allocate precisely in the costing of that portion of the contract that has been performed. For example, general overheads are not easy to apportion. Employees may be working on several different jobs at the same time as the particular contract in respect of which it is hard to allocate a precise cost factor, and materials to fulfil the contract may be drawn from stock on hand. A cost then has to be established as representing fair compensation to the performing party for his costs associated with his part delivery or part performance under the contract. The test is what costs were reasonably incurred for the purpose of giving the performance received.
Mr Maddison had earlier said: Clause 15 has some saving provisions which give a court the power to make adjustment to provide an equitable solution to the respective rights of the parties where the precise provisions of the legislation are, as clause 15 states, manifestly inadequate or inappropriate, would cause manifest injustice or the remedies provided by the specific clauses of the bill would be excessively difficult or expensive. In such a case the court can make such orders by way of adjustments in money or otherwise as the court sees appropriate.
In the Legislative Council by the Hon DP Landa, Minister for Planning and Environment and Vice-President of the Executive Council, said: Clause 15 enables a court to exclude the operation of the proposed Act if the scheme as outlined seems manifestly inadequate or inappropriate; or its application would cause manifest injustice or would be excessively difficult or expensive, when the court can substitute its own scheme of adjustment between the parties. Both the Supreme Court and the District Court are given wide powers and may make orders for any disposition of property; the sale or other realization of property; the disposal of the proceeds of sale or other realization of property; the creation of a charge on property in favour of any person-and the enforcement of a charge so created; the appointment and regulation of the proceedings of a receiver of property; and the vesting of property in any person.
Having regard to the above, it seems to us that "fair compensation" is to be determined by reference to the performing party in the context of the particular contract and what the performing party has done and does not involve taking account of the circumstances of the other party. This seems clear from both the second reading speeches and the context of s 13 which operates (in combination with s 12) where part performance is not received. In this regard s 13 is directed to the position of the performing party, the detriment that party may suffer and their entitlement to compensation in consequence of suffering detriment. Section 12 is directed to the paying party. Application of the formula may entitle the performing party to be paid money where none has been received or to receive a payment in addition to what has been received based on the detriment suffered.
However, the assessment of what is fair must take account of the fact that work undertaken by the performing party may be work that benefits a number of third parties with whom the performing party might also contract. In the present case, that would include all the other stallholders and/or recipients of goods and services (such as those attending the Festival and paying an entry fee) who might benefit from the Festival and the work done by the appellant.
Section 13 is somewhat formulaic and, in some circumstances, difficult to apply. This is particularly so having regard to the considerations identified in the previous paragraph, namely the need to determine compensation in circumstances where work has been performed that might benefit a number of different parties under different contracts.
Section 15 of the FCA permits "the court" to exclude a particular contract from the operation of the provisions of Divisions 1 and 2 of the FCA, including section 13, where the provisions contained in those Divisions are manifestly inadequate or inappropriate or where their application would cause manifest injustice or would be excessively difficult or expensive to apply.
In making its claim under the FCA, the appellant relied on s 13(1) and, alternatively, s 15.
Neither party suggested that the Tribunal did not have power under s 15 of the FCA to exclude the operation of s 13 as permitted by that section.
Nonetheless, we should briefly note that section refers to the power of "the court".
The word "court" is defined in section 5 of the FCA as follows: court, in relation to any matter, means the court or arbitrator before whom the matter falls to be determined.
In our view the word "court" includes the Tribunal. Our reasons are as follows: 1. The definition is not expressed to mean the Supreme Court, District Court or Local Court of New South Wales and the definition does not otherwise provide words of limitation. 2. What is a "court" is to be determined by the characteristics of the body said to be a court: Trust Company of Australia Ltd v Skiwing Pty Ltd [2006] NSWCA 185; (2006) 66 NSWLR 77. 3. The meaning of "court" in the FCA is to be determined in the context of the Act, the purpose of the legislation and the body (in this case the Tribunal) that is given statutory power to make a binding determination in respect of the parties' rights: Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289 (Steak Plains) 4. The purpose of the FCA, is to ameliorate the harsh position of the common law and prescribe a flexible procedure to adjust the rights between parties in the event of frustration of a contract. These procedures are prescriptive in Divisions 1 and 2, which prescription can be excluded in circumstances set out in s 15(1). 5. The FCA applies to all contracts, including those over which the Tribunal has jurisdiction to exercise judicial power and determine disputes under the Fair Trading Act, 1987 (NSW). 6. As stated in Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib, Mohammad Chahrouk Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib [2014] NSWCATCD 67 at [106]: The Tribunal is required to determine issues before it according to law. As indicated by Hope JA, when referring to an earlier decision of Yeldham J in Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 at 321, the Court of Appeal accepted that the Tribunal "is not concerned with "palm tree justice"" and "the Tribunal must act in accordance with and must apply the general law in determining the claim which has been made to it": see Hope JA in State Rail Authority at page 477. The authorities make clear the Tribunal is exercising judicial power. Hope JA accepted that the Consumer Claims Tribunal exercised judicial power (at 478D). The Consumer Trader and Tenancy Tribunal Act provides in section 28(3) that the Tribunal is to act "according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms". While this may be a general statement of the approach to be taken by the Tribunal where the rules of evidence do not apply, it suggests that issues of equity must be considered. 1. To construe "court" more narrowly would prevent the Tribunal from doing so. 2. This view is consistent with the analysis of White J (as he then was) in Steak Plains at [66] and following when considering whether the Tribunal was a court for the purpose of the Law Reform (Law and Equity) Act 1972 (NSW). 3. Further and in any event, the definition of court also includes an arbitrator. The expression "arbitrator" is not defined in the FCA and is not limited to an arbitrator appointed under an agreement, for instance one that might be appointed under the Commercial Arbitration Act 2010 (NSW). The ordinary meaning of arbitrator is an independent decision maker who makes a decision.
In these circumstances, there is no reason to limit the expression "court" in a manner which excludes the Tribunal.
Finally, it might be thought that the reference to the Supreme Court and District Court and Local Court in subs 15(3), (6) and (8) should lead to a different conclusion. However, properly understood these subsections simply define powers of those courts to grant particular remedies in exercising functions under the FCA. Otherwise, as subs 15(7) indicates, the generality of the power conferred by 15(1) is not limited by subs 15(2)-(6). As to the Tribunal's order making powers, these are found in the FT Act, subs 15(1) of the FCA permitting the Tribunal to exclude the operation of Divisions 1 and 2 if it is appropriate to do so.
It is against this background that the appellant's appeal and claims under ss 13(1) and 15 needs to be determined.
The Tribunal rejected any entitlement to relief under these sections.
The Tribunal determined: 1. The appellant had not established either whole or part performance of its contract with each of the stallholders: reasons at [122]; 2. The appellant had not proven any detriment "particularly to [the appellant] and attributable to the stallholder contracts" and therefore had no entitlement under s 13 of the FCA: reasons at [123]; and 3. Because matters (a) and (b) had not been established no circumstances existed so as to permit an order under s 15 of the FCA: reasons at [124].
The appellant's submissions were brief on this point. The error was said to be the Tribunal failing to have regard to its expenditure towards the Festival. The appellant said there was relevant evidence of the costs it had incurred. If the FCA applied an adjustment should be made.
The stallholders' position in written submissions was that the Tribunal "did have regard to the financial position and liabilities of the appellant in considering the application of the [FCA]. In short, the appellant "chose not to put on evidence of the costs related to the contract and decided instead to provide evidence that related only to the event as a whole".
In oral submissions, the stallholders said they received nothing from the bargain, that they were entitled to a refund and that any assessment under s 13 of the FCA was impossible having regard to the evidence presented.
In our view, the Tribunal was in error in concluding the appellant has suffered no detriment. While it can be accepted that performance is received by each stallholder contract when the Festival takes place and the site and stall is made available to each stallholder, it is clear that the appellant "did work …for the purpose of giving performance under the contract". Consequently, pursuant to s 13(1) the appellant is entitled to one-half of the amount that would be fair compensation for that detriment.
The Tribunal took the view that the expenses identified and money paid by was not attributable to the stallholder contracts. We disagree with this conclusion.
For the purpose of giving performance under the stallholder contracts the appellant was required to stage the Festival, make available the stallholder sites and provide the relevant stall infrastructure during the Festival. The costs associated with meeting those obligations includes not only costs attributable to performing obligations under the stall holder contracts such as making available the particular sites and stall infrastructure, but also the costs associated with putting on the Festival as a whole.
While the expenses varied over time as money was expended by the appellant in preparing for the Festival, a summary of the costs said by the appellant to have been incurred at the time one of the stallholders agreement was signed, namely 2 March 2020, is recorded in the Tribunal's reasons at [37]. At that date a net loss of $488,504.23 had apparently been made. This submission was based on the evidence of the appellant's witness, Mr Peter Noble, in his affidavit made 19 October 2020: see AB p 359. In recording this matter, the Tribunal also noted at [38] of its reasons that the appellant had submitted: … since Bluesfest makes its profit from ticket sales and sales made during the event, it bears a risk which is disproportionate to that of the applicants since its liability to repay ticket holders means it loses all of its income stream in contrast to the applicants who were said to only lose their overheads for one weeks' trade.
We note there was no cross examination concerning this evidence by reason of the agreements reached concerning factual matters and how the hearing was to proceed. Whether or not there was evidence concerning the incurring of costs associated with providing the particular sites and stallholder infrastructure, it seems to us that the evidence to which the Tribunal referred is evidence of detriment in a financial sense suffered by the appellant in putting on the Festival as was necessary to perform its obligations under the stallholder agreements.
Prima facie, the statutory test found in s 13(1) should be applied which requires the Tribunal to assess "fair compensation for the detriment suffered".
The problems with this assessment are the very problems identified by the Members of Parliament in the Second Reading Speech and debate on the introduction of the FCA to Parliament. It would require this Tribunal to undertake some complicated apportionment exercise to determine what part of the costs incurred should be allocated to particular stallholder contracts for the purpose of determining fair compensation. This exercise is further complicated because: 1. the position of the appellant is that it made its profit from ticket sales and not from the provision of facilities to stallholders; 2. apparently not all stallholders have sought a refund of amounts paid, and 3. the evidence was that other companies related to the appellant incurred some expenses.
In our view, it is not possible to simply apply the provisions of s 13(1) in the present circumstances. This is because there is an absence of detailed financial evidence and, even if all financial evidence was provided, the exercise in determining what is fair compensation would be unnecessarily protracted and likely involved substantial accounting evidence.
Accordingly, we are satisfied that it would be manifestly inadequate or inappropriate, excessively difficult and expensive and/or would cause manifest injustice if Divisions 1 and 2 of the FCA were to operate. Consequently, in our view the operation of those divisions should be excluded as permitted by s 15(1) of the FCA.
That leads to the question of what orders should be made in substitution for the position that applies under Division 2 having regard to the detriment suffered. This requires a consideration of both the position of the appellant and the stallholders.
If each stallholder agreement had been fully performed, the appellant would have provided the necessary stall facilities and the Festival would have proceeded on the nominated days. In that circumstance the appellant would have been entitled to retain the fee. On the other hand, each stallholder has received have no benefit from the contract, that benefit being the ability to conduct a stall during the Festival.
It was not suggested that any of the stallholders entered into contracts knowing that the Festival might be cancelled in the circumstances that occurred. Rather, the simple fact is that the Festival was cancelled prior to its commencement and neither party got the benefits ultimately intended by the arrangement, other than the appellant receiving payment of the stallholder fees upfront.
Taking account of these matters, it seems to us it would not be proper to order the repayment of the whole of the fee to each stallholder. To do so would not make any allowance for the detriment suffered by the appellant. On the other hand, not to require repayment of a substantial amount of the fee would work and injustice on each stallholder who, in effect, receive nothing for the consideration paid.
No precision can be brought to an assessment under s 15 in determining what money adjustment is proper. This is particularly so having regard to the consideration payable under each stallholder agreement and the large costs which the appellant has necessarily incurred in organising the Festival. Further, it would be quite inappropriate to allow the "loss to lie where it falls".
Weighing up these consideration and the entitlements of each of the appellant and the stallholders, in respect of each stallholder contract we are satisfied that an amount of 25% of the fee should be retained by the appellant. We assess this amount by reference to the following matters: 1. The stallholders received no benefit from their contracts and, prima facie, should be refunded monies paid; 2. The Festival did not in fact proceed, however work in organising the Festival had been substantially completed - the Health Order coming into operation only a few weeks before the Festival was due to commence. 3. The expenses incurred by the appellant in staging the Festival were for the benefit of the stallholders, ticket holders and the artists, as well as for its own motive to make a profit; 4. We were not referred to any direct costs incurred by the appellant attributable to providing each physical stall from which each stallholder would operate. In this regard, the financial accounts of the appellant only include a single expense line item for "Rent- Festival site" which as at 28 February 2020 was said to be $377,220.63: AB 6444. Similar line items are found in accounts prepared at different dates: see eg accounts dated 2 March 2020 where the amount of "Rent-Festival site" is recorded as $478,602.45: AB 647. There was no line item for any costs associated with providing the physical stalls. 5. The fact the appellant incurred indirect expenses warrants some allowance being made in its favour,
Accordingly, we will vary the orders made by the Tribunal in each of the original applications to provide for repayment to each stallholder of an amount equivalent to 75% of the fee paid.
The amount to which each award is varied is set out in Schedule 1.

Costs

Having regard to the amounts in issue in each claim, it would appear that s 60 of the NCAT Act applies so that a party claiming costs would need to demonstrate special circumstances. Each party has had some success in this appeal.
We will permit the parties to make submissions on costs if they wish to do so.

Orders

The Appeal Panel makes the following orders: 1. Leave to appeal is granted, the appeal is allowed and the orders made by the Tribunal on 5 January 2021 in each application listed in Schedule 1 are varied to the amount recorded in that schedule. 2. In the event either party applies for costs, the following directions apply to that application: 1. The applicant for costs (costs applicant) is to file and serve any evidence and submissions on costs within 14 days of the date of publication of these orders; 2. The respondent to the costs application (costs respondent) is to file and serve any evidence and submissions in reply within 14 days of the date of publication of these orders; 3. The costs applicant is to file and serve any submissions in reply within 21 days from the date of publication of these orders; 4. The submissions of the parties are to include submissions about whether an order should be made dispensing with a hearing of the costs application pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013.

Schedule 1 File number Applicant Respondent Original award Varied award GEN 20/28490 The Cajun Kitchen Pty Ltd Bluesfest Services Pty Ltd $13,385.00 $10,038.75 GEN 20/28491 Safe House Pty Ltd Bluesfest Services Pty Ltd $10,160.00 $7,620.00 GEN 20/28493 Moreton Bay Sea Farms Pty Ltd Bluesfest Services Pty Ltd $9,560.00 $7,170.00 GEN 20/28495 Rebecca Stewart and Hay Maclure t/as Voodoo Burgers Bluesfest Services Pty Ltd $9,410.45 $7,057,84 GEN 20/28497 Paul Daly t/as The Fish Taco Co Bluesfest Services Pty Ltd $9,950.00 $7,462.50 GEN 20/28498 Kristy Papp and Arpi Papp t/as Langos Bluesfest Services Pty Ltd $8,510.00 $6,382.50 GEN 20/28505 Wayne Jeffery t/as The Hat Empire Bluesfest Services Pty Ltd $5,400.00 $4,050.00 GEN 20/28507 Liza-Lee Campbell t/as 24:7 Sunglasses Bluesfest Services Pty Ltd $3,400.00 $2,550.00 GEN 20/28509 Cakes by Sweethearts Pty Ltd Bluesfest Services Pty Ltd $12,285.00 $9,213.75 GEN 20/28510 Sukkupmaida Saragih t/as Balinese Street Food Bluesfest Services Pty Ltd $4,790.00 $3,592.50 GEN 20/28514 Kerry Williams t/as Gatinha Beachwear Bluesfest Services Pty Ltd $3,400.00 $2,550.00 TOTAL $90,250.45 $67,787.84

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 October 2021

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