CGU Insurance Limited v Plummer

Appeal Panel's jurisdiction

1. This appeal relates to a decision of the Tribunal in its general jurisdiction. The application was made by "consumers" for the purpose of s 3A and s 7 of the Consumer Claims Act 1998 (NSW) (repealed). As such, it is an internally appealable decision within the meaning of s 32 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
2. The Appeal Panel's powers relevant to this decision are set out in s 80 of the NCAT Act: 80 Making of internal appeals (1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made. Note : Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27 (1). (2) Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance-with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance-as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. (3) The Appeal Panel may: (a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and (b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances.
3. The insurer's appeal was lodged with the Tribunal on 2 September 2015. The insurer states they received notice of the decision on 7 August 2015. The appeal is lodged within the time required by clause 25 (4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules).

Background and Tribunal's decision

1. The respondents, Simon Plummer and Angela French, are the owners of a residential unit in a strata plan. The Owners Corporation, on behalf of the strata scheme, obtained insurance from the insurer for the period 12 June 2013 to 1 September 2013.
2. On or about 22 July 2013 water entered the owners' unit from other units in the building and damaged the parquetry flooring. At the time the unit was tenanted for $460.00 a week. The Owners Corporation subsequently submitted a claim under the policy for the repair and damage to the flooring and on 25 September 2014 the insurer agreed to pay the Owners Corporation $15,540.00 for the cost of repairing the parquetry flooring.
3. The tenant had remained in occupation of the unit until December 2014 but had sought reductions in rent for interference with quiet enjoyment. On 3 December the homeowners made a claim with the insurer for loss of rent. The insurer denied that claim. The tenant vacated the unit on 14 December 2014. Since that time the unit has not been relet due to the damaged flooring.
4. Despite the payment of $15,540.00 being made to the Owners Corporation for the costs of repairing the parquetry flooring, the works have not been undertaken due to the need for repair works that are required to be done to prevent water ingress to the unit. The homeowners agreed that the repairs to the flooring cannot be undertaken until the repairs to prevent water ingress have been addressed. It is not in dispute that the damage causing the water ingress is not covered by the insurance policy.
5. The Tribunal decided that the owners are consumers for the purposes of s 3A of the Consumer Claims Act 1998 (NSW) and that the Tribunal has jurisdiction to hear and determine the claim. The Tribunal then noted that the owners had provided a copy of the insurance policy which demonstrates that they are covered for certain items including claims for loss of rent and reletting costs.
6. The Tribunal did not refer expressly to the particular provisions of the policy but it is relevant to set them out. Beginning on page 9 "Additional Benefits" are listed. Those benefits include, at point 18 at page 12 of the Policy, "Loss of Rent, Temporary Accommodation and Removal Costs". The policy states that: 18 Loss of Rent, Temporary Accommodation and Removal Costs We will pay the following costs where your Unit or Common area suffers Damage and is unable to be occupied for its intended purposes or when reasonable access to or occupancy of your Unit or Common Area is prevented by Damage happening to other property within the immediate vicinity of Your Unit or Common Area; a. Loss of Rent Where a Unit or Common Area is leased out, or you can provide evidence by means of a signed agreement that it would have been leased out, We will pay an amount equal to the actual rent lost. We will pay up until the time the Unit is re-leased. b. Reletting Costs Where a lease agreement is terminated as a result of Damage to Your Unit or Common Area, not excluded by this Section, We will pay the reasonable re-letting costs of that Unit or Common Area. The most We will pay is $1,200.
7. One option for paying a claim is by way of "Cash Settlement". At p 15, the policy states that: We will only pay Additional Benefits for the reasonable time it would have taken for the repairs or replacement to have been carried.
8. The Tribunal made the following findings: I find that the applicants have suffered loss of rent from 15 December 2014 until the date of hearing, due to their inability to relet the premises because of the water damage to the premises. Although the Owners Corporation has entered into an agreement and release of the insurer, that relates to property damage, being water damage to parquetry floors in the subject unit. The amount agreed of approximately $15,000 has been paid to the Owners Corporation but repairs have not been effected. No doubt it would be premature to repair the floors until the source of the water leak is rectified, but meanwhile the applicants continue to suffer loss of rent. I am satisfied the applicants have proved the case on the balance of probabilities and note that the evidence has not been challenged or disputed by the respondent.
9. The sum of $16,073.51 was comprised $14,982.86 for loss of rent, $552.50 re-letting fees and $538.15 in interest at 5.75%.

Concessions and submissions by insurer

1. By the time the appeal was heard, the insurer had conceded the following matters: 1. there was nothing preventing the homeowners from making a claim under "Additional Benefit 18" (relating to the loss of rent, temporary accommodation and removal costs), even though they were not named as the insured under the policy; 2. the effect of the Additional Benefit clause is that the homeowners suffered a loss of rent as a result of their unit not being able to be occupied by their tenants because of the damage.
2. Despite these concessions, the insurer submitted that the policy must be read as relating to the repairs of the Unit only, not to the repairs of the block as the insurer does not have control over the repairs to the building. The insurers had settled with the Strata Plan for the repair costs some 3 months before the unit was vacated by the tenant and had no control over when or if those repairs would be carried out. In those circumstances any liability to pay the homeowners must be limited to "… the reasonable time it would have taken for the repairs or replacement to have been carried out".
3. Based on fresh evidence of emails dated 9 October 2013 and 29 October 2013 and a statement of Peter Iles, a loss adjuster, dated 8 October 2015, the insurer submitted that its liability to the homeowners under the Policy amounted to $2,392.50 comprising $1,840.00 for loss of four weeks' rent and $552 re-letting fees.

Grounds 1, 2 and 4 - breach of procedural fairness

1. The insurer alleges that despite being present at the first hearing, it did not receive notice of the second hearing date and did not attend that hearing. Orders were made in its absence. The insurer submits that the Tribunal's decision should be set aside because it has not been given a reasonable opportunity to be heard as required by s 38(5)(c) of the NCAT Act. In particular the insurer submits that the Tribunal denied it the opportunity to: 1. provide its loss adjusting evidence on the question of quantum relating to the duration of repairs; (Ground 1) 2. make submissions to the Tribunal on the interpretation of the policy; (Ground 2) and 3. provide contradictory evidence in relation to the assessment of the quantum of claim for loss of rental income arising from the damage to the property; (Ground 4).
2. On 4 June 2015 the insurer received a Notice of Conciliation and Hearing (Group List) by email. The Notice stated that Mr Plummer and Ms French had made an application to the Tribunal, that the application has been listed before the Tribunal on 15 June 2015 at 9.15 am. The insurer was required to attend. The insurer did attend and was represented by Mr Hawkins. The matter was not resolved on that day and the homeowners were given leave to amend the claim and add a further respondent by 29 June 2015. The hearing was adjourned to a date to be fixed by the registrar. The insurer was advised by letter dated 15 June 2015 that, "A separate written notice of the new hearing date will be sent to you in the future". Prior to the hearing on 15 June 2015 the insurer had file some evidence (a Deed or Release Document) but no directions were made on 15 June for the insurer to file or serve any evidence.
3. On 18 June 2015 the insurer received an email from the owners advising that they had joined the Owners Corporation as a respondent.
4. On 30 July 2015 the hearing took place. The insurer did not attend and orders were made in its absence. In the reasons for decision the Tribunal found that the insurer had been served with a notice of hearing by post and that it was aware of the proceedings: There is no appearance by the respondent today. I am aware of the registry practice in relation to sending notices of hearing. At the time of sending a notice by post, a copy of the notice is placed on the tribunal file. I am satisfied the notice of hearing was posted to the respondents registered address on 9 July 2015 and has not been returned. I am satisfied that the respondent is aware of these proceedings and today's hearing. No correspondence has been received from the respondent in relation to an inability to attend today or to seek an adjournment. The applicants have filed a substantial volume of evidence and appear today ready and able to argue their case. In those circumstances the interests of justice require the matter to proceed in the absence of the respondent.
5. On 7 August 2015 the insurer received another email from the owners providing their nominated bank account details and seeking payment in line with the Tribunal's order entered on 30 July 2015 for the sum of $16,073.51.
6. The insurer gave evidence that despite receiving the notice of conciliation and hearing (group list) by email, it did not receive the subsequent notice of hearing or the notice of order. Three employees of the insurer, Andrea Petrocco, Hilary Whitely and John Hawkins, the person who attended the first hearing, gave evidence that they had not received a Notice of Hearing listing the matter on 30 July 2015. According to the insurer, had they known the time, date and location of the hearing they would have attended. That assertion is supported by the fact that they attended the initial hearing on 15 June 2015. There is no need to make a finding as to whether the insurer would have attended if the notice of hearing had been received because that is a hypothetical matter.
7. The Tribunal is required to comply with the rules of procedural fairness which are sometimes called the rules of natural justice: NCAT Act, s 38(2). Those rules require that a person be given a fair hearing before decisions are taken which affect their interests: Re Refugee Tribunal; ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at [101]. A fair hearing includes adequate notice of the hearing so that a party may participate fully and effectively. Commentators Aronson and Groves make the point that notice should alert the recipient to the issues which need to be addressed and provide sufficient information to enable adequate participation: Aronson and Groves, Judicial Review of Administrative Action, (5th ed 2013 Lawbook Co) at 518.
8. The rules relating to the service, giving and lodgement of notices or documents are found in cl 13 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules). The relevant parts of that clause are set out below: 13 Service, giving and lodgment of notices or documents (1) Application of rule This rule applies for the purposes of each of the following: (a) the Act and the statutory rules under the Act, (b) the Administrative Decisions Review Act 1997 and the regulations under that Act. (2) Means for service or giving of notices and documents A notice or document may be served on or given to a person or body: (a) by means of personal service, or (b) by posting a copy of the notice or document, addressed to the person or body: (i) to the person's or body's address for service, or … (g) in the case of a person or body that has consented to electronic service by means of an email address or mobile phone number specified by the person or body-by transmitting the notice or document in an electronic format, addressed to the person or body, to that address or number, or (h) in the case of service on a corporation-by serving a copy of the notice or document on the corporation in any manner in which service of such a notice or document may, by law, be served on the corporation, or (i) in such other manner as the Tribunal or a registrar may direct in a particular case.
9. Clause 13(4)(a) of the NCAT Rule sets out when a notice which has been posted is taken to have been served, given or lodged: (4) When notice or document taken to be served, given or lodged Unless the contrary is proved, the time at which a notice or document is taken to be served, given or lodged is: (a) in the case of a copy of a notice or document that is posted-at the end of the fourth working day after the date on which the notice or document was posted to the person, or
10. Clause 13 (2) deals with the fact of service while cl 13(4) deals with the timing of service. At issue in this case is the fact of service. The Tribunal made the following finding of fact about service: At the time of sending a notice by post, a copy of the notice is placed on the tribunal file. I am satisfied the notice of hearing was posted to the respondents registered address on 9 July 2015 and has not been returned.
11. The insurer did not challenge that finding directly. Rather, its evidence went to the issue of whether the Notice of Hearing had been received. As DC Pearce and RS Geddes note in Statutory Interpretation in Australia, (8th ed 2014, LexisNexis Butterworths) at 302, " … if service is allowed to be effected by post, proof of non-receipt will not displace the presumption of service if there is no proof of non-delivery." Authority for that proposition comes from Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87 at 96, where the High Court stated that: ... delivery may be different from receipt by the intended recipient and, provided that delivery is not disproved, the fact of non-receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of the post.
12. The Court of Appeal came to the same view in Deputy Commissioner of Taxation v Meredith [2007] NSWCA 354 at [78] (Basten and Ipp JJA): ... although the purpose of "service" is to bring a document to the notice of the intended recipient, statutory provisions which deem service to have occurred in particular circumstances will not fail in their purpose because of evidence of non-receipt.
13. There is no basis for setting aside the Tribunal's finding that the notice of hearing was posted to the insurer's registered address on 9 July 2015 and has not been returned. The precise time when the notice is deemed to have been served is not material in this case. Nevertheless, there is a presumption created by cl 13(4) of the NCAT Rules that, unless the contrary is proved, the time at which the notice was served was at the end of the fourth working day after the date on which the notice was posted. It was not the insurer's case that the notice was served at a different time. On that basis, the notice is deemed to have been served at the end of the working day on 15 July 2015.
14. In all the circumstances we find that the Notice of Hearing was delivered and that it is deemed to have been served. The Tribunal did not breach the rules of procedural either by failing to give notice of the hearing or by conducting the hearing in the absence of the insurer. It follows that the insurer's non-attendance does not justify the decision being set aside and remitted to the Tribunal or re-heard by the Appeal Panel: NCAT Act, s 80(3).
15. The remaining issue is whether there is a ground, other than procedural fairness, which would justify the Tribunal setting aside the decision.

Grounds 3 and 5 - misinterpretation of policy and preferring the evidence of the homeowners

1. The insurer submitted that the Tribunal erred in finding that they were required to indemnify the homeowners for loss of rent for a period of 30 weeks. According to the insurer, this interpretation is inconsistent with the terms of the policy. The insurer now seeks to tender emails and a statement from a loss adjuster in support of its claim that it is only liable for four weeks' rent and $552 in re-letting fees.
2. The insurer did not adduce this evidence or make this submission to the Consumer and Commercial Division because it was not present at the hearing. In those circumstances, it is not an error of law, or a basis for giving leave to appeal on other grounds, that the Tribunal preferred the homeowners' evidence.
3. An appeal to the Appeal Panel does not involve a new hearing. While the Appeal Panel may decide to deal with an internal appeal by way of a new hearing, it may only do so if the grounds for the appeal warrant a new hearing: NCAT Act, s 81. There are insufficient grounds in this case. It is unfortunate that the insurer has been denied the opportunity to put its case in circumstances where it says it did not receive the notice of hearing, but the NCAT Rules are clear. One purpose of deeming that a notice is served when posted to the body's address for service is to ensure that a determination made in the absence of a party is final despite later evidence that that party did not actually receive the notice. Despite the effect of our conclusion on the insurer, the public interest in favour of the finality of litigation should prevail in this case.

Orders 1. Leave for the appeal to proceed on questions other than questions of law is refused. 2. The appeal is dismissed.

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: 11 April 2016