Club Mediterranee (Australia) Pty Ltd v Rutstein

Background to the Matter

1. On 25 March 2014 the respondents purchased a 7-night stay at a brand new resort in China. The stay was for the period from 28 June 2015 to 5 July 2015 and included airline tickets from Australia to Hong Kong with a 1-night hotel stay in Hong Kong so that the respondents could catch a ferry to the resort.
2. On 9 October 2015 the respondents made an application to the Tribunal stating that when they arrived the resort was not to the standard that was advertised. The respondents' complaints related to a sewerage odour outside their rooms, the ocean water being polluted and not fit to swim in, that the staff were poorly trained and in many cases were not able to speak English and that services reasonably and normally expected by Australian tourists including chilled bottled water were not provided.
3. They sought an amount of $12,720.00 for refund of all costs associated with the holiday.

Jurisdiction

1. In cases other than 'residential proceedings,' an appeal must be lodged within 28 days from the day on which appellant was notified of the decision or given reasons for the decision, whichever is the later: Civil and Administrative Tribunal Rules 2014 (NSW), r 25(4)(c).
2. Allowing for the four days for the decision to be sent by the Tribunal (the postal rule) the appeal has been lodged within time.

The Appeal

1. An internal appeal may be made as of right on any question of law or with the leave of the Appeal Panel, on any other grounds pursuant to s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
2. In relation to appeals from the Consumer and Commercial Division, leave to appeal on grounds other than a question of law can only be granted in the limited circumstances set out in cl 12 of Sch 4 to the NCAT Act: (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
3. The appellant raised the following issues on appeal: 1. The appellant appeals on a question of law on the basis that the Tribunal erred because it failed to identify a cause of action in its decision. 2. The appellant seeks leave to appeal on the basis that the decision was against the weight of evidence because the respondent had been informed prior to the holiday that certain services would not be available at the resort and they had accepted a complimentary upgrade. They also stated that the Tribunal did not properly deal which each of the respondent's issues and that many of the complaints made by the respondent had been resolved by the appellant earlier or lacked merit. 3. The appellant seeks leave to appeal on the basis that the decision was not fair and equitable because the witness statements of the appellants were not correctly considered and ignored and the Tribunal failed to provide appropriate reasons as to why the amount of $12,270.00 was awarded.

Failure to Give Adequate Reasons

1. As a preliminary issue, the appellant made submissions that the Tribunal had failed to provide adequate reasons. The Appeal Panel was not provided with a transcript of the Tribunal hearing. The written reasons which were provided to the Appeal Panel stated: In my ex tempore decision and reasons I set out in some detail why I have concluded the applicants have proved their case on the balance of probabilities. I summarise those points here.
2. The notice of appeal checklist made it clear to the appellant that they needed to provide a copy of all documents that they were relying upon in support of their notice of appeal. In addition at a directions hearing on 29 January 2016, the appellant was directed to lodge with the Tribunal, by the 28 of January 2016, the sound recording or transcript of the hearing at first instance if oral reasons were given and/or if what happened at the hearing was being relied on. The only document relevantly provided to the Appeal Panel was the notice of order dated 23 November 2015 which stated clearly that detailed reasons were given ex tempore and that the notice of order was a summary only. Accordingly the Appeal Panel had only before it that summary.
3. The Appeal Panel decision in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 recognised that a failure to provide reasons can amount to an error of law. At paragraph 13 the Appeal Panel relevantly stated: 13 Without expressing exhaustively possible questions of law, they include in no particular order: Whether there has been a failure to provide proper reasons: Stoker v Adecco Gemuale Constructions Pty Ltd [2004] NSWCA 449 per Santow JA at [41]; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 444 per Meagher JA; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [56] per McColl JA (Ipp JA and Bryson AJA agreeing); Qushair v Raffoul [2009] NSWCA 329 at [52] and the following paragraphs, per Sackville AJA (Campbell JA and Bergin CJ in Eq agreeing). Section 62 of the Act requires the Tribunal to furnish reasons. This requirement was earlier reflected in s 49 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW). Recently, the Appeal Panel (Wright J, President; G Walker, Senior Member; and M Bolt, General Member) in Director General, Department of Finance & Services v Porter [2014] NSWCATAP 6 said in relation to the similar provision in s 89 of the Administrative Decisions Tribunal Act 1997 (NSW) at [32]: 32 Notwithstanding the words in the chapeau to subs (5), there is no reason as a matter of principle why the requirements set out in that subsection do not apply equally to reasons for decision which were not given as a result of a request under subs (3). Further, given the right of appeal from a decision of the ADT to the Appeal Panel under s 113 of the ADT Act and from the Appeal Panel to the Supreme Court on a question of law under s 119 of that Act, the Tribunal's obligation to give reasons should be commensurate with that of courts whose decisions are subject to appeal to the Supreme Court - see generally the discussion of principles in Campbelltown City Council v Vegan (2006) 67 NSWLR 372. As this matter was not the subject of any substantial submissions by the parties, however, it is inappropriate to deal with the topic in more detail and it can be accepted for the purposes of this appeal that the Tribunal was obliged to give proper reasons for its decision. Such reasons would include making findings on material questions of fact, referring to the evidence on which those findings were based, setting out the Tribunal's understanding of the applicable law and explaining the reasoning processes that lead the Tribunal to the conclusions it made. In assessing such reasons, however, it is appropriate to bear in mind the High Court's endorsement of the view that in the case of administrative decision makers this assessment is not best approached with an "eye keenly attuned to the perception of error": see Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272.
4. It is clear from the written reasons that were provided to the Appeal Panel that they were only a summary of a more detailed ex-tempore judgement that was given by the Tribunal. Despite directions being made for the appellant to provide the sound recording or transcript if oral reasons were given, the appellant has failed to provide any such transcript or recording. Given those circumstances, the Appeal Panel does not find an error of law in relation to the reasons given by the Tribunal. Further, the Appeal Panel has proceeded in determining the appeal on the basis of the summarised reasons which was provided to it.

No cause of Action identified

1. The appellant made submissions that the Tribunal did not identify the cause of action which it decided the matter on. They made submissions that although the decision did not expressly identify the causes of action relied on by the respondents, it appeared that the cause of action relied on by the respondents would have been either a breach of contract or breach of the statutory consumer guarantees as contained in schedule 2 of the Competition and Consumer Act 2012 (Cth) (ACL)
2. The appellant also made submissions that the failure to identify the cause of action lead to a failure to apply the correct legal test to the facts when the Tribunal assessed any breach of the statutory guarantees. In particular they refer to the Senior Members reasons in which he stated: I find the applicants did not receive what they paid for and that this was not a case of the type that some items were not provided or some days were spoilt. It is clear this was not a pleasant experience nor of the standard expected, for the whole of the stay.
3. The appellant made submissions that the test expressed by the Senior Member fell short of the statutory guarantees in s 60 of schedule 2 of the Competition and Consumer Act 2012 (Cth) (ACL) in that the appellant was only required to provide services at the resort with "due skill and care".
4. The failure to expressly identify the cause of action is not necessarily an error of law unless the Tribunal has applied the incorrect legal test to the facts.
5. In the summarised reasons, the Senior Member stated: The applicants' case is that they did not receive what they paid for, at all: a 1-week holiday in a brand-new, high standard luxury resort.
6. From that statement, the Appeal panel is satisfied that it can be inferred that the Tribunal proceeded to determine the matter as one of breach of contract and that the Senior Member proceeded to decide the matter on that basis. The matter has not been decided for breach of statutory warranties as contained in the ACL.
7. Having identified the cause of action as breach of contract it is also clear from the reasons provided that the Tribunal found there was a breach. The Tribunal found that the respondents did not receive what they had paid for and that the stay was not of the standard expected and was not a pleasant experience. Having found that breach of contract it would not have been necessary for the Tribunal to consider breach of the statutory warranties as contained in the ACL or the relevant test applicable to it. The Appeal Panel is satisfied that while not expressly identified, the Tribunal did proceed on the basis of a breach of contract and is not satisfied that this grounds raised by the appellant amount to an error of law of law by the Tribunal.

No breach of Contract

1. The appellant sought leave to appeal on this ground. The appellant made submissions that there had been no breach of contract as the appellant had provided the bulk of what it had contracted to do including the accommodation, food, open bar and that the respondents had the benefit of that. In addition, the appellant submitted that the odour was not a sewerage smell but the smell of the sea and that pollution was not a problem. They stated that the respondents own photographs showed the resort beach was empty but the public beach next to it was full and that indicated it was not polluted.
2. The appellant submitted that they had provided witness statements from Mr Vincent Grandshire and Mr Kurt Spies and that the Tribunal should have preferred the respondents evidence over the appellants
3. The Appeal Panel in Collins v Urban [2014] NSWCATAP considered the authorities in relation whether a decision is against the weight of evidence and relevantly stated at para 77: (2) The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153].
4. In the summarised reasons the Tribunal stated: In my view they have proved that case in that their complaints included serious issues such as a prevailing odour of sewerage from immediately outside their rooms, that the ocean water was polluted and was not fit to swim in, that the staff were poorly trained at least in many cases not being able to speak English and that some services reasonably and normally expected by Australian tourists including chilled bottled water were not provided.
5. The Senior Member considered the appellants rebuttal of the respondents evidence and continued: The respondent provided some evidence to rebut these claims, including a statement from the "Chef de Village" Mr Grandsire who stated the odour, for example, was not as severe as that complained of. I prefer the evidence of the applicants and in any case Mr Grandsire's evidence does not specifically refute the applicants' evidence. I note that Mr Rutstein states he is a plumber of 30 years experience and can recognise a sewerage odour when he smells one. This evidence was not challenged by the respondent. I find the applicants and particularly Mr Rutstein were reasonable and truthful in their evidence and that their evidence was not effectively rebutted by the respondent. The issues complained of, or some of them including the serious issues of the odour and polluted water, were present for the whole of the stay at the resort. It appears to me this resort had some teething problems which may well be properly resolved but were present for the whole of the stay by the applicants.
6. Applying the principles set out in Collins v Urban, and considering those reasons, the Appeal Panel finds that the decision was not "against the weight of evidence", in that the evidence in its totality did not preponderate so strongly against the conclusion found by the Tribunal, that it can be said it was not one a reasonable Tribunal member could reach. The summarised reasons demonstrate that the Senior Member has considered the evidence of both parties and not unreasonably preferred one side over the other.
7. The Appeal Panel does not find that there has been substantial miscarriage of justice and is not satisfied to grant leave on this point.

Incorrect Damages Awarded

1. The appellant made submissions that the respondents had received benefits provided by the appellant. They stated that even if there was a breach of contract by the appellant, the decision to allow the respondents a full refund of all of its expenses including taxi fares, ferry charges, visa costs, travel insurance, overnight stays in a Hong Kong hotel and airfares to and from Hong Kong was unfair.
2. The appellants main contention on this point is that there was no appropriate reason as to why the amount of $12,720.00 was awarded and that it was excessive on account of the fact that the respondents and his family must have received some benefit from the holiday including the 2 nights that were spent in Hong Kong without complaint.
3. At the beginning of his summarised reasons the Senior Member stated: The applicants purchased from the respondent, through a travel agent, a 7-night stay at a brand new resort in China, being in the village of Dong'ao. The applicants also purchased airline travel from Australia to Hong Kong together with a 1-night hotel stay to catch the ferry to the resort on the way in, and the reverse services on the way home, together with other necessary expenses such as visas etc. The applicants calculate the total claim to be $12,789.50 (covering themselves and their two teenage children), but the claim is discounted slightly to $12,720.00.
4. Those reasons demonstrate that the Tribunal was aware that the expenses being claimed were not only for the five nights stay at the resort, but also for airline travel, one night's stay both ways in a hotel in Hong Kong to catch the ferry to the resort and associated expenses such as visa's.
5. The Tribunal also found that it was not the case that only some items were not provided or that only some days were spoilt, instead it made a finding that the stay at the resort was neither a pleasant experience nor the standard expected for the whole of the stay. The Tribunal found "serious issues" in relation to the sewerage odour, polluted ocean water, staff and service. The Appeal Panel has already accepted that those were not unreasonable findings and were open for the Tribunal to make given that Tribunal preferred the respondents evidence.
6. The Tribunal also found that: The associated expenses for the items listed above, including the travel expenses, all related entirely to the purchase of the stay in the resort and in my opinion are all reasonably claimed by the applicants.
7. Together with the application to the Tribunal, the respondents included receipts and invoices in relation to those costs. The accommodation in Hong Kong was paid for using the respondents frequent flyer points. The Appeal Panel accepts that although payment was made by the respondent through frequent flyer points, it still had an assessable value for the respondents, being the cost of the accommodation.
8. The case of Hadley v Baxendale (1854) 9 Exch 341 provides well-established principles in relation to the assessment of damages for a breach of an agreement. Damages can be recovered if the loss results from the usual course of events or if the loss was in the contemplation of both parties at the time the contract was entered into. In this case it was open to the Tribunal to find on the evidence that the additional expenses incurred by the respondents were in connection with stay at the resort, including having to catch flights from Australia to Hong Kong and stay overnight in accommodation in order to catch the ferry to the resort. Both parties conceded at hearing that the resort was not accessible by direct flight. We conclude that it was open to the Tribunal to find that visa costs, transfer taxi fares, ferry charges and insurance costs are all associated expenses with travel to the resort and that the whole of the stay at the resort was not to the standard expected. Having found serious issues with the resort and the breach of contract we also accept that it was open to the Tribunal to make a finding for the associated damages. We find no error of law in relation to the assessment of damages by the Tribunal or that the decision was not fair and equitable and on that basis leave is also refused.

Orders 1. Leave to appeal is refused. 2. The appeal is otherwise 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: 03 August 2016