Boehme v Castro t/as Mid North Coast Refrigeration & Air Conditioning

Hearing on 13 January 2023

The matter came before the Tribunal for final hearing on 13 January 2023. At the beginning of the hearing the Tribunal Member investigated whether Mr Castro was willing to provide a refund to William Boehme in order to settle the matter. Mr Castro indicated that he was not able to do so and the Member then commenced to hear the matter. The Member also noted that she did not have a copy of the Power of Attorney but stated she would allow Mr Boehme to represent his father.
Mr Boehme provided a report from Nigel Somers of Coolcene Air Conditioning Specialists who stated that he attended William Boehme's house and found that the only issue was a faulty remote controller which was not communicating with the indoor receiver. He replaced the remote and carried out a minor service for a total cost of $248.00. Mr Somers also stated that the cost to replace the system with one of the same capacity would be in the region of $3,200.00 fully installed. He could not identify any work carried out by Mr Castro.
Mr Castro did not have any independent evidence about the air conditioning system and its faults. He alleged that the system inspected by Mr Somers was not the system he inspected and that it had been replaced. The Member noted that the letter provided by Mr Somers did not identify the air conditioning system that he had examined with any precision. Mr Boehme sought to give evidence on behalf of his father that the system had not been replaced.
When presenting his case on behalf of his father Mr Boehme stated that Mr Castro was unlicensed. Mr Castro stated he was licensed. During the hearing the Member checked the NSW Fair Trading Licence Check website and noted that Mr Castro's licence had been suspended but the website recorded that the suspension was lifted on 30 June 2021 and the licence reinstated. She therefore concluded that Mr Castro was appropriately licensed at the time he entered into a contract with William Boehme in June 2022.
Mr Boehme also raised issues relating to Mr Castro's honesty in his dealings with his father. Mr Boehme acknowledged that he did not have a statement from his father relating to any discussions his father had had with Mr Castro. Mr Boehme raised allegations that Mr Castro had pressured William Boehme to make payments to him for a new air conditioner. In a letter apparently provided to the Tribunal prior to the hearing (of which we have not been provided with a copy) Mr Castro denied this and stated that Mr Boehme's sister was present when the payments were made. Mr Boehme did not have a statement prepared by his sister or other evidence to contradict Mr Castro's statement.
The Tribunal Member pointed out to Mr Boehme that the evidence he sought to rely upon, being his evidence about what his father and sister had told him, was hearsay evidence. Mr Boehme acknowledged that he did not have complete evidence for the hearing. The Member noted that neither party was fully prepared for the hearing and would have to come back another day. There then followed a process of negotiation. Mr Boehme telephoned his father who would not accept an amount of $5,000 from Mr Castro. Ultimately, Mr Boehme accepted Mr Castro's offer that he would pay $5,500 within two weeks. The Tribunal Member made an order in those terms reflecting the agreement.

Consent orders

Mr Boehme states that the basis of the claim to the Tribunal made by him on behalf of his father was that the full amount paid to Mr Castro should be repaid as Mr Castro was not licensed to do the work. He states that, when the Member incorrectly identified Mr Castro as being licensed, this removed the primary reason for full repayment of the money paid by his father. This then put him in an unfair position in negotiating a settlement. He also states that the outcome was unjust as Mr Castro received an amount of $1,225.40 for performing no work.
Mr Boehme states that he felt pressured to reach a compromise and felt he had to negotiate the best outcome for his father.
We have had the benefit of reading a transcript and listening to the sound recording of the hearing. The consent orders were made in the context of the Tribunal exploring and facilitating settlement where deficiencies in the evidence filed by both parties had been identified and where a further hearing was necessary to determine the matter. Mr Boehme's arguments are, in effect, that his consent to the orders was vitiated by the Member's error in concluding that Mr Castro was licensed to do the work.
The principles applicable to setting aside a consent order were outlined by the Appeal Panel in McDonald v McDonald [2016] NSWCATAP 252: 59. A review of the authorities dealing with when a consent order can be set aside can be found in the recent Appeal Panel cases of Prenc v Stojcevski [2016] NSWCATAP 244 at [43]-[45], [53]-[57] and Yuen v Thom [2016] NSWCATAP 243 at [36]-[54]. From those cases, the following principles can be discerned (omitting authorities): (1) At common law, a consent order may be set aside on the same basis as the underlying agreement may be set aside; (2) Whether the agreement constituting the compromise can be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence and the like; (3) In order to set aside a consent order on one of the above bases, it must be possible to point to some contumelious conduct on behalf of the respondent for instance: (a) with respect to duress, it must be shown that illegitimate pressure was placed on the appellant such that there was no reasonable alternative but for her to submit; (b) with respect to undue influence, not only must there be a source of power to deprive the other person of free and voluntary consent, but it must be shown that the agreement was the result of the actual influence; (4) With respect to mistake: (i) the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party's motives for entering into the contract; (ii) a common mistake arises when the mistaken belief is held by both parties; (iii) a unilateral mistake is where one party is mistaken but where there are no other vitiating circumstances, such as misleading or deceptive conduct, fraud or misrepresentation, a unilateral mistake will not generally constitute a basis for setting aside an agreement unless the mistake is a serious mistake in relation to a fundamental term of the agreement and the other party knew of, or contributed to, the mistake. (5) With respect to other doctrines which may be applicable, such as unconscionable dealing, it must be shown that one party to the transaction was at a special disadvantage in dealing with the other party because of illness, ignorance, inexperience, impaired faculties, financial need or other circumstances that affect their ability to conserve their own interests, and the other party takes unconscientious advantage of the opportunity. It must be emphasised that the disadvantage must be "special" to disavow any suggestion that the principle applies whenever there is some inequality of bargaining power between the parties. What must be present is some disabling condition or circumstance which seriously affects the ability of the innocent party to make a judgment in their own interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. (6) There may be other factors which arise such as non est factum which defence would arise in very limited circumstances to persons who, through circumstances such as blindness or illiteracy, are unable to have any understanding of the meaning of the document evidencing the agreement and who signed it in the belief it was radically different to what was in fact signed.
In addition, r 37 of the Civil and Administrative Tribunal Rules 2014 requires the Tribunal, in deciding whether to give effect to a settlement, to take into account the interests of a "vulnerable person" as that term is defined, namely a person who is totally or partially incapable of representing themself in proceedings before the Tribunal because of a disability. Mr Boehme, acting on behalf of his father, does not submit that he is such a person and there is no evidence to suggest that he suffers from a disability. There is also no evidence to suggest that William Boehme is such a person, although we note Mr Boehme was acting on his behalf.
Whether consent orders may be set aside on the basis of mistake, duress or undue influence has been considered by the Appeal Panel in several cases. In Yuen v Thom [2016] NSWCATAP 243 in relation to mistake at [39] the Appeal Panel said: In relation to mistake, the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party's motives for entering into the contract: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241, [39], [42]-[43]. Assuming for the purposes of argument, that the appellant was mistaken as to whether or not she could refuse the respondent's offer, the question is whether that mistake was of a type that vitiates her consent. A common mistake arises when the mistaken belief is held by both parties: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241, [41], applying Solle v Butcher [1950] 1 KB 671, 693. That does not arise here. A unilateral mistake is where one party is mistaken but the other party should have been aware of the mistake: Taylor v Johnson (1983) 151 CLR 422, 432. The appellant does not contend that the respondent ought to have known of any mistake upon which she was operating. A mutual mistake arises where both parties are mistaken, but their mistakes are different such that there is no meeting of minds: Charitou v The Owners of Strata Plan 10394 [2015] NSWSC 1059, [22]. Here, the parties both understood the bargain that was made; there is no misapprehension about the terms of the purported agreement. The issue is, was there an agreement reached even though the appellant did not understand the bargaining process. The Appeal Panel is of the view that the answer is yes because a reasonable observer would have concluded that an agreement was reached: see N Seddon, R Bigwood and M Ellinghaus, Cheshire & Fifoot Law of Contract (LexisNexis, 10th Aus ed, 2012) at [3.9].
In Aboriginal Housing Office v Harrison [2021] NSWCATAP 9 the Appeal Panel considered the grounds of undue influence and duress when an appellant seeks to set aside consent orders. The Appeal Panel, at [35], set out the observations of the Appeal Panel in Sylvaney v Carolan [2016] NSWCATAP 36 at [38]-[40]: 38 Undue influence is where there is ascendancy by a stronger party over a weaker party such that the relevant transaction is not a free, voluntary, and independent act of the weaker party (A v N [2012] NSWSC 534 at [475] (Ward J), citing Sir Anthony Mason in the Anglo-American Law Review 1998). This is in contrast to unconscionable dealing, as noted by Deane J in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at [13] as follows: The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party. Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogues. [Case citations omitted] 39 In A v N (supra), Ward J (as she then was) discussed the nature and scope of duress at [504] to [509] and whether it can be established by "illegitimate pressure", which her Honour noted has been criticised by the NSW Court of Appeal in Australian & New Zealand Banking Group v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149 as being inherently vague. Relevantly, her Honour observed at [509]: If Mitchell and Karam are correct, then the concept of duress in New South Wales, if not Australia (noting that Mitchell was decided in Queensland), is now limited to unlawful conduct. This limitation is not difficult to reconcile with the classic cases on duress to the person. In Barton v Armstrong, the 'duress' was constituted by several death threats. In McLarnon v McLarnon (1968) 112 Sol J 419, the threats were of incarceration. In Saxon v Saxon [1976] 4 WWR 300, death threats were made against not the signer, but the signer's children. The threatened acts in each of those cases are unlawful. Moreover, even if Karam is incorrect is limiting duress to unlawful acts, the cases show that there is a high threshold to be met with respect to the conduct of the party alleged to be exerting pressure, as these cases all exhibit a high degree of threatened violence. [Emphasis added] 40 In summary, the threshold to establish duress is high and the doctrines of undue influence and unconscionable conduct require evidence that the party complaining about the agreement is either weaker or has a special disability (for instance, was vulnerable within the meaning of r 37) or was unduly pressured by a stronger party into an agreement where there was, for instance, little or no benefit to be gained by the weaker party.
The situation in Harrison was similar to that which occurred in these proceedings in that the Tribunal Member incorrectly advised the landlord in that case that its notice of termination was invalid due to the Member misreading the applicability of a COVID-19 regulation which had been introduced at the time to prevent termination of a tenancy in certain circumstances. Ultimately, the landlord and tenant entered into a specific performance agreement which did not include any reference to termination. The landlord appealed on the basis that the Member's misstatement of the law led it to believe that termination could not be pursued. In these circumstances the Appeal Panel stated in Harrison at [37] that the analysis applied in Sylvaney by reference to concepts of contract law and principles that might apply in setting aside an agreement based on the conduct of the parties, is inappropriate when considering whether the conduct of the Member constituting the Tribunal is of a type which warrants the setting aside of orders made by that Member.
The Appeal Panel went on to state that an evaluation of the Member's conduct is more aptly undertaken by considering what is referred to in the context of commercial arbitrations as "misconduct" of an arbitrator which might justify a court setting aside a decision. The Appeal Panel referred to a number of authorities which noted that the use of the expression "misconduct" of an arbitrator, with its suggestion of moral values is apt to mislead, the issue being one of "an irregularity in procedure". The Appeal Panel then noted with reference to Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline Contractors Ltd [1978] VR 385 at 392 and E. Rotheray & Sons Ltd v Carlo Bedarida & Co. [1961] 1 Lloyd's Rep 220 that, where there is an irregularity in the conduct of an arbitrator, it is then necessary to determine whether the irregularity is such to warrant intervention.
Adapting these principles to the Tribunal, the Appeal Panel stated at [41] that a Member's conduct is to be considered in the context of the obligations imposed upon the Tribunal under the NCAT Act and the manner in which those obligations are performed. They must also be considered in the context of the role or roles the Member is to perform. We respectfully adopt the approach of the Appeal Panel in Harrison to our assessment of the Member's conduct in the matter under appeal before us.
The Tribunal is required to promote the use of resolution processes: s 37 NCAT Act. It is not unusual for a Tribunal Member to encourage and facilitate settlement when a matter comes before them for hearing. However, care must be taken to ensure that, if a Member acts as a facilitator or conciliator, he or she does not act in such a way that would make it inappropriate for the Member to make orders in relation to any agreement or subsequent hearing on the merits. A Member must always act in accordance with the objects set out in s 3 of the NCAT Act and in line with other procedural obligations set out in that Act. As noted in Harrison at [46], these obligations include: 1. affording the parties natural justice: s 38(2) NCAT Act; 2. acting with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: s 38(4) NCAT Act; 3. ensuring the parties to the proceedings understand the nature of the proceedings: s 38(3)(a) NCAT Act; 4. if requested, explaining any aspects of the procedure of the Tribunal or any decision or ruling made by the Tribunal that relates to the proceedings: s 38(3)(b) NCAT Act; 5. ensuring the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: s 38(3)(c) NCAT Act.
In order to set aside an order made by consent, there must be some conduct which is in breach of these obligations and which would give rise to a substantial injustice that should be corrected. An example might be where the Tribunal Member engaged in bullying behaviour or placed undue pressure on the parties to reach a settlement. As is relevant to this matter, as it was in Harrison, a statement made by a Member during the course of a settlement process, where no final decision is made on the evidence and where a party is not otherwise prevented from pursuing its claims would not, without more, be conduct that would give rise to an irregularity sufficient to justify the setting aside of an order made by consent: Harrison at [51].
As stated previously, there is no doubt that the Member made an error in concluding that Mr Castro was licensed at the relevant time. The transcript shows that she conveyed this conclusion to the parties during the hearing following her perusal of the NSW Fair Trading Licence Check website. It is unclear whether Mr Castro was aware he was unlicensed. While he should certainly have been aware that his licence had expired, he told the Member that his licence was current, thus adding to the confusion. The Member suggested Mr Castro contact NSW Fair Trading to clarify if there was a mistake on the website.
Mr Boehme states that, when the Member incorrectly identified Mr Castro as being licensed, this removed the primary reason for full repayment of the money paid by his father and this then put him in an unfair position in negotiating a settlement. It is not clear to us why this was so, particularly as Mr Boehme's more substantial claim was that Mr Castro did not work despite being paid and had charged excessively for his assessment of the problem with the air conditioner.
The Member's discussion with both parties during the initial stages of the hearing leading up to the settlement negotiations made it clear that there were deficiencies in the evidence provided by each of them. In relation to the licence issue, the Member said to Mr Boehme "that's not the biggest part of your problem", referring to the lack of evidence. The transcript shows that matters relating to the lack of evidence to support Mr Boehme's contentions about Mr Castro's dishonesty and behaviour were raised with him more than once. The Member stated at about the 30 minute mark: "You're not ready for hearing today, Mr Boehme." He was then asked by the Member whether he wanted to withdraw and come back when he was ready. Mr Boehme initially said he did and set out the evidence he would obtain, which included statements from his father and sister. At the appeal hearing, Mr Boehme acknowledged that the Member said he could come back for further hearing when he had obtained additional evidence to support his case.
The transcript shows that Mr Castro made an offer of $5,000 to settle the matter. Mr Boehme asked the Member: "Could I request Mr Castro to pay $6,000?". When Mr Castro said no, the Member suggested they meet in the middle. In response, Mr Castro, offered $5,250. When asked what he thought, Mr Boehme stated that he felt an injustice was happening. The Member then said: "You don't have to agree to it". The Member also encouraged Mr Boehme to telephone his father to ascertain whether his father would agree to settle. This was done in the context of Mr Boehme not having provided a full copy of the power of attorney which meant the Member could not be satisfied he had full authority to act for his father.
During the discussion that followed, the Tribunal Member again referred to the lack of evidence from both parties, which meant that the hearing could not be concluded that day. She also referred to the fact that either party may be able to seek costs if a further hearing was necessary and she explained the basis for that statement. It is fair to say that she strongly encouraged the parties to settle the dispute to avoid delay and a further hearing. At no point, however, did she say that a further hearing would not be held if they were unable to agree. We do not consider that the conduct of the Member went beyond the bounds of what was reasonable and appropriate in the circumstances.
Ultimately, Mr Boehme and Mr Castro agreed to an amount of $5,500 to be paid within two weeks. The Member explained to both parties the enforceable nature of a Tribunal order and the fact that interest would accrue if the amount was not paid on time. Mr Boehme expressed his satisfaction with that and stated: "As long as Mr Castro understands that, then yes, I'll, I will accept 5,500 by the 27th of January".
In our view, Mr Boehme was not prevented from pursing his claim for the full amount if he so chose. The licence issue was a subsidiary matter about which Mr Boehme could have sought further information from NSW Fair Trading (as he has now done). The primary issue on the day of the hearing was the unpreparedness of both parties. It was in this context that the Member encouraged and facilitated an agreement between the parties. It could not be said, however, that the Tribunal Member denied Mr Boehme an opportunity to be heard and present his case. Rather, discussions took place with both parties reaching a settlement which was reflected in the consent orders made by the Tribunal.
Mr Boehme states that he felt pressured to reach a compromise and felt he had to negotiate the best outcome for his father. We do not consider that the consent order should be set aside by reason of duress, undue influence or other conduct of the Member which might constitute an irregularity of procedure. As stated above, the Member strongly encouraged the parties to settle their dispute but at no time did she apply undue pressure or engage in any improper conduct. Mr Boehme was consistently advised that he could return another day when he had further evidence to support his case. Furthermore, the Member checked with Mr Boehme that he agreed to the terms of the settlement. While Mr Boehme may have had second thoughts after the hearing, the transcript shows that he entered into the agreement at the hearing fully understanding its terms. We are therefore not satisfied that there was any conduct of the Member which would give rise to a substantial injustice.
In our view the issue of mistake as set out in Yuen does not arise on the facts of this case. While the Member's conclusion that Mr Castro was licensed was mistaken, there is nothing in the transcript or in the appeal documents or in Mr Boehme's statements at the appeal hearing that would indicate he (or the other party) did not understand that he was entering into an agreement to end the dispute or that he was confused or misunderstood the terms of the agreement: see Yuen at [39].
Mr Boehme also states that the outcome was unjust as Mr Castro received an amount of $1,225.40 for performing no work. No decision was made by the Tribunal Member on the issues in dispute. The parties themselves agreed that Mr Castro would refund William Boehme an amount of $5,500. At the appeal hearing Mr Boehme acknowledged that at no time did the Member tell him he could not seek to be repaid the full amount. In these circumstances there was no conduct of the Member which would give rise to any irregularity warranting the setting aside of the consent order. In any event, we note that Mr Boehme's contention seems to be based on his assumption that, if the matter had proceeded to hearing, William Boehme would have been refunded the entire amount. That is by no means certain, as evidence was still to be provided and tested. We also note that, even though Mr Castro is unlicensed, it may have been open to the Tribunal in determining the application to order Mr Castro to arrange for the work to be done by a licensed contractor rather than to order a refund of the monies paid.
Even though the Member made an erroneous statement with respect to Mr Castro's licence status, we are not able to identify any denial of procedural fairness or any other basis upon which the consent orders should be set aside. We are therefore not satisfied that the grounds set out on the Notice of Appeal have been made out.
Accordingly, the appeal must be dismissed.

At a glance

Court

Decision date

Source

Judgment (10 paragraphs)

Parties

Cases Cited (16)