Coverall NSW Pty Limited v Chaw

ex tempore Judgment 1The defendant, Mr Chi Chaw, commenced proceedings against Coverall NSW Pty Limited ("Coverall") in the Consumer, Trader and Tenancy Tribunal ("the Tribunal") alleging misleading conduct and claiming the sum of $25,537.63. 2The Tribunal made an order in favour of Mr Chaw awarding him the sum of $20,000. Coverall as plaintiff appeals against this order, alleging a want of jurisdiction. This Court proposes to affirm the decision of the Tribunal.

BACKGROUND 3The background facts are set out in the Tribunal's reasons: "It is agreed that in early July 2011 the applicant and respondent entered into a franchise agreement whereby the applicant paid the respondent $25,000 and in return the respondent was to train the applicant to carry out cleaning services in commercial offices, provide the applicant with a client base, i.e. offices the applicant was to clean and with cleaning equipment. It is also agreed that the individual client would pay the respondent for the cleaning service. The applicant would invoice the respondent for the cleaning work he did each month and the respondent would pay the applicant. It is further agreed that the applicant did carry out this cleaning work during the months of July, August and September 2011. It is in dispute whether the applicant carried out any work in October 2011. It is agreed however that since October 2011 the applicant has not done any work under the franchise agreement." 4The Tribunal member then found: "In light of the above I am satisfied that the Tribunal has jurisdiction as the applicant is a "consumer", the respondent is a "supplier" who supplied "services" and "goods" as these terms are defined under the Consumer Claims Act 2001 [sic]." 5It is this finding with which Coverall takes issue. 6The Tribunal member also found: "Having considered the evidence and submissions I am satisfied that the applicant has established his case, on balance, that the respondent engaged in misleading conduct on which the applicant relied, that the respondent is in breach of the Australian Consumer Law and as a result the applicant is entitled to damages." 7The Tribunal gave further detailed and cogent reasons for that finding. 8Coverall takes no issue in these proceedings with these reasons, but seeks that the finding of misleading conduct be set aside because of the errors of the Tribunal in its finding about the meaning of the terms in the Consumer Claims Act 1998 and the basis for jurisdiction. Coverall contended that Mr Chaw was not a "consumer", that Coverall was not a "supplier", that it did not supply "goods" or "services" and that it followed from this that the Tribunal had no jurisdiction to make the findings under the Consumer Claims Act 1998. 9The summons filed by Coverall also made reference to a wrongly granted adjournment. That ground was not maintained on this appeal. The summons sought an order that the appeal be allowed but no reference was made to setting aside the Tribunal's decision. On application of Coverall I granted leave by consent of Mr Chaw to add to the summons an order that the Tribunal's order be set aside. 10Section 3 of the Consumer Claims Act 1998 contains the following definitions: "consumer means: (a) a natural person, or (b) a firm, or (c) a small proprietary company... ... to whom or to which a supplier has supplied or agreed to supply goods or services, whether under a contract or not, or with whom or which a supplier has entered into a contract that is collateral to a contract for the supply of goods or services." "goods means any tangible thing that is or may be the subject of trade or commerce, but does not include money or an interest in land." "services includes any rights (including rights in relation to, and interests in, property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce and, without limiting the generality of the foregoing, includes: (a) the performance of work (including work of a professional nature), whether with or without the supply of goods, ... (e) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction, ... (h) the provision of credit, but does not include rights or benefits being the supply of goods or the performance of work under a contract of employment." "supplier means a person who, in the course of carrying on, or purporting to carry on, a business, supplies goods or services." "supply: (a) in relation to goods, includes supply goods by way of a contract for the sale, exchange, lease, hire or hire-purchase of goods or an alleged contract for the sale, exchange, lease, hire or hire-purchase of goods, and (b) in relation to services, includes provide, grant or render services for valuable consideration under a contract or for valuable consideration claimed to have been agreed to under an alleged contract." "trade or commerce includes any business or professional activity." 11Section 3A of the Consumer Claims Act 1998 provides: "3A Meaning of "consumer claim" (1) For the purposes of this Act, a consumer claim is: (a) a claim by a consumer for the payment of a specified sum of money... ... that arises from a supply of goods or services by a supplier to the consumer, whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of goods or services." 12Further, s 4 of the Consumer Claims Act 1998 provides: "4 Persons presumed to be consumers ... For the purposes of this Act, a person who claims to be a consumer is to be presumed to be one until the contrary is proved, and in any legal proceedings (including proceedings before the Tribunal), the onus of proving that a person who claims to be a consumer is not a consumer is on the party who seeks to establish that fact." 13On the findings of fact made by the Tribunal it seems to me to be plain that the cleaning equipment supplied to Mr Chaw fell well within the meaning of "goods". Cleaning equipment is a tangible thing that may be the subject of trade or commerce. I am inclined to think that the "client base" provided to Mr Chaw may be a supply of goods. If not, it fell within the meaning of "services", as did the cleaning training given to Mr Chaw. 14It follows that Mr Chaw was a consumer: he is a natural person and he was supplied with goods and services. Coverall is a supplier because it supplied the goods and services, namely the cleaning equipment, the training and the client base. 15Accordingly, I am of the view that there is no error in the Tribunal's finding. 16Coverall challenges these findings only barely. It advanced no reasons as to why the construction placed upon these terms by the Tribunal was wrong or why the facts as found by the Tribunal, and not disputed by Coverall, did not fall squarely within these definitions. 17Rather, Coverall's principal challenge was based on the proposition that the relationship of franchisee and franchisor was excluded from these definitions. 18Coverall's submissions stated: "13. Coverall submits that contrary to the Tribunal's Reasons, the above facts support Coverall's argument that the relationship between it and the defendant was one of Franchisor/Franchisee. This is supported not only by the above facts but by the Franchise Agreement that was entered into by both parties as well as the numerous documents provided to the defendant and which are annexed and exhibited to the two affidavits filed in these proceedings. 14. Coverall submits that the Tribunal erred in failing to give any consideration to the fact that the claim brought by the defendant related directly to the above Franchise Agreement. It's Coverall's submission that the relationship between the parties is that a franchisor/franchisee and ought to be governed by the Franchising Code of Conduct". 19I do not think that the circumstance that the agreement between the parties is a franchise agreement has any bearing on the conclusions of the Tribunal. Franchise agreements are not expressly excluded from the operation of the Consumer Claims Act 1998 (see s 7) and there seems to be no good reason of principle or policy why I should find them to be in an exceptional class and excluded from the plain terms of the Act. 20Coverall developed this submission further orally and in supplementary written submissions. It referred to s 86 of the Competition and Consumer Act 2010 (the Commonwealth Act), which relates to the conferral of jurisdiction in relation to Pt IVB of the Commonwealth Act. Part IVB is concerned with industry codes. Section 86, after conferring jurisdiction on the Federal Court and the Federal Magistrates Court states in subs (2): "(2) The several courts of the States are invested with federal jurisdiction within the limits of their several jurisdictions, whether those limits are as to locality, subject-matter or otherwise, and, subject to the Constitution, jurisdiction is conferred on the several courts of the Territories, with respect to any matter arising under Part IVB in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission." 21The argument of Coverall appeared to be as follows: - (a) The jurisdiction of the Tribunal is contained in s 21 of the Consumer, Trader and Tenancy Tribunal Act 2001 ("CTTT Act"), subs (1) of which states: "(1) The Tribunal has such jurisdiction to decide matters, and such powers to make orders and otherwise exercise any function in connection with any such decisions, as is conferred on it by this or any other Act." (b) Section 5(2) of the CTTT Act provides: "(2) The Tribunal has and may exercise such functions as are conferred or imposed on it by or under any Act." The note following this subsection indicates that the Consumer Claims Act 1998 is an Act that confers jurisdiction on the Tribunal. The note makes no reference to the Commonwealth Act. (c) It follows that s 86 of the Commonwealth Act does not confer jurisdiction upon the Tribunal with respect to the franchising code and in respect of matters arising under Pt IVB. (d) The matter before the Court is a matter arising under the franchising code because it involves an agreement which in cl 19 refers to the Franchising Code of Conduct. 22I am of the view that the order made by the Tribunal is not in respect of a matter "arising under Pt IVB" of the Commonwealth Act. The existence or otherwise of the Franchising Code is not the foundation of the cause of action brought by Mr Chaw. Rather, the cause of action arises under the Consumer Claims Act 1998. It is a consumer claim for misleading conduct where the Tribunal is required to make orders that it considers fair and equitable under s 13(1) having considered any material matters in s 13(2) of the Consumer Claims Act 1998. 23Coverall also relied upon s 13 of the Consumer Claims Act 1998, which indicates matters that the Tribunal should take into account in deciding whether to make orders and what orders to make. Subsection (3) provides: "(3) Without limiting subsection (1), when the Tribunal is considering whether or not to make an order or orders under section 8, it is appropriate for the Tribunal to take into account, so far as material to the particular circumstances of the case: (a) any code of practice prescribed under the Fair Trading Act 1987, and (b) where the Director-General has brought to the attention of the Tribunal any other code of practice, whether or not prescribed by or under any other Act-that code of practice." 24Coverall said that the Tribunal did not consider the Franchising Code. The application to the Tribunal by the defendant contained a reference to "franchise code". But there is no indication in the material before me that Coverall urged the Tribunal to consider any aspect of the Franchising Code. Further, Coverall could not indicate any provision in the Code relevant to the dispute before the Tribunal that might properly impact on the Tribunal's orders. 25Further, Coverall had no evidence or other material to establish the items listed in section 13(3), that is, that the Franchising Code of Conduct was "prescribed under the Fair Trading Act" or "brought to the attention of the Tribunal" "by the Director-General". 26In any event, if the Franchising Code was a matter that should have been taken into account by the Tribunal under section 13, this would not operate to preclude a Tribunal from exercising jurisdiction but would tend to support the jurisdiction exercised by the Tribunal. It would be an odd thing for Parliament to indicate that the Tribunal should take into account a particular code before making orders in circumstances where the Tribunal had no jurisdiction to make the orders. If such an odd result was intended, Parliament would have been expected to have expressed this result in far plainer language. 27I mentioned earlier that the Application Form in the Tribunal, in the section entitled "Reasons for the Order/s", stated "1 give outdate disclosure document. against franchise code [sic]". 28This particular reason does not appear to have been considered by the Tribunal. Accordingly, I would conclude that the claim as actually presented, heard and determined by the Tribunal did not include this reason. 29However, if I am wrong in that conclusion and if the inclusion of the words "franchise code" in a reason in the written application was alone sufficient to render the matter before the Tribunal one which arises under Pt IVB of the Commonwealth Act, because Pt IVB deals with industry codes of which the Franchising Code is one, it nevertheless seems to me that the conferral of jurisdiction in s 86(2) of the Commonwealth Act includes a conferral of jurisdiction on the Tribunal subject to the Tribunal's limitations on the remedies that it can grant. In any event, the matter is also a "consumer claim" and s 7 of the Consumer Claims Act 1998 remains a source of jurisdiction which is not excluded by s 86 of the Commonwealth Act. 30Accordingly, I propose to give judgment in favour of the defendant and affirm the decision of the Tribunal and order the plaintiff to pay the defendant's costs. As the defendant was self-represented in the hearing before me there are limitations on the costs that the defendant can recover in accordance with the decisions of Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14, Preston v Commissioner of Fair Trading [2011] NSWCA 40 at [183], Everett v Neale [2012] NSWDC 73 at [147], and see also Everett v Neale [2012] NSWDC 83. 31The orders of the Court shall be: