Fitness First v Chong

LEGISLATION CITED : Consumer, Trader and Tenancy Tribunal Act 2001

Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456 Italiano v Carbone [2005] NSWCA 177 CASES CITED : Kalokerinos & Anor v HIA Insurance Services Pty Ltd & Anor [2004] NSWCA 312 Maconachie v Kullenburg & Ors [2005] NSWCA 294 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Ors (2004) 211 ALR 342

Fitness First (Australia) Pty Limited (Plaintiff) PARTIES : Suh Yoke Chong (First Defendant) CTTT (Second Defendant)

SOLICITORS : S Y Chong (First Defendant) Crown Solicitor (Second Defendant)

LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW

LOWER COURT JUDICIAL OFFICER : Tribunal Member Reid

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30101/2007 - FITNESS FIRST (AUSTRALIA) PTY LIMITED v SUH YOKE CHONG

JUDGMENT (Appeal decision of CTTT - refund of fee for cancellation of gym membership) 1 HER HONOUR: By summons filed 14 September 2007, the plaintiff seeks firstly, a declaration pursuant s 67(1) of the Consumer, Trader and Tenancy Tribunal Act 2001 that the order of the Consumer, Trader and Tenancy Tribunal made by Tribunal Member Reid on 15 August 2007 is invalid on the basis that Tribunal Member Reid erred in law; secondly, an order pursuant to s 67(3) of the CTTT that the order of the Tribunal be set aside; thirdly, an order pursuant to s 67(3)(a) of the Consumer, Trader and Tenancy Tribunal Act that, in the opinion of the Court, should have been made by the Tribunal in accordance with law, namely that the first defendant is bound by the terms and conditions of the contract dated 9 April 2007 between the first defendant and the plaintiff; and fourthly, in the alternative to order 3, an order pursuant to s 67(3)(b) of the Consumer, Trader and Tenancy Tribunal Act that the decision be remitted to the Tribunal for rehearing of the proceedings in accordance with law. 2 The plaintiff is Fitness First (Australia) Pty Limited (Fitness First). The first defendant is Suh Yoke Chong. The second defendant is the CTTT. Both defendants have filed submitting appearances. Ms Chong was present at Court. Fitness First relied on the affidavit of Rodney Kent dated 11 January 2008 and the affidavit of Peter Angelidis dated 28 July 2008. 3 The amount in dispute is $200. It should be noted that Fitness First is not seeking the payment of costs from Ms Chong.

The relevant statutory provisions 4 Section 65 of the Consumer, Trader and Tenancy Tribunal Act 2001 provides: "(1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of: (a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or

(c) an injunction, in respect of any matter that has been heard and determined (or is to be heard or determined) by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter." 5 Section 65(3) however provides: "(3) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the Tribunal has made an order if the ground on which the relief or remedy is sought is that:

(a) the Tribunal had no jurisdiction to make the order, or

(b) in relation to the hearing or determination of the matter, a party had been denied procedural fairness." 6 Prerogative relief under s 65(3) of the Consumer Trader and Tenancy Tribunal Act is discretionary and may be refused where there has been delay on the part of the applicant or it can be said that the applicant has waived or acquiesced in the validity of the decision (Italiano v Carbone [2005] NSWCA 177 per Basten JA at [117]; Maconachie v Kullenburg & Ors [2005] NSWCA 294 per McColl JA (Giles JA agreeing) at [59]). 7 Section 67 of the Consumer Trader and Tenancy Tribunal Act allows for an appeal to be made to this court on a question with respect to a matter of law. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal (s 67(8)). The onus lies on the plaintiff to demonstrate that there has been an error with respect to a matter of law. 8 Section 67(3) of the Consumer Trader and Tenancy Tribunal Act provides that, after deciding the question of the subject of an appeal, the court may affirm the decision of the Tribunal, or it may make an order in relation to the proceedings in which the question arose as it, in its opinion, should have been made by the Tribunal, or it may remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal. 9 The width of s 67 was discussed in Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456. Hodgson JA (with whom Beazley and Tobias JJA agreed) stated succinctly [at para 33]: "… in my opinion, to establish an error of law by the Senior Member, it was necessary to show that he applied a wrong principle of law. That could be shown either from what he said, or because the ultimate result, associated with the facts that he expressly or impliedly found, indicates that he must have applied the wrong principle of law". 10 See also Kalokerinos & Anor v HIA Insurance Services P/L & Anor [2004] NSWCA 312 at paragraphs [39], [40], [41], [47] and [59].

Grounds of appeal 11 Fitness First appeals the whole of the decision of Tribunal Member Reid dated 15 August 2007 on the following grounds. Firstly, the Tribunal Member made an error of law in declaring that (a) the contract between the first defendant and the plaintiff dated 9 April 2007 was not valid; and/or (b) the "fee of $200 is not due and owing by the applicant to the respondent", in that the Tribunal Member failed to state the appropriate test to be applied at law and thereafter failed to apply it; secondly, the Tribunal Member made an error of law by failing to state the appropriate test of law to be applied in respect of the finding that "a valid contract requires the parties have [a]…meeting of the minds in that they each fully know and understand the terms and conditions of the agreement."; thirdly Tribunal Member Reid made an error of law because he made findings of fact that were not open on the evidence, including in respect of the finding that the plaintiff was asked to "sign here, here and here"; fourthly, the Tribunal Member made an error of law by failing to provide reasons, or providing insufficient reasons, for his decision; and fifthly, the errors of law referred to rendered the Tribunal's decision invalid and of no force and effect.

The proceedings in the Tribunal 12 Ms Chong sought a refund of $200 cancellation fee she paid to Fitness First. In the Tribunal, Ms Chong stated: "…I have a lupus SL and because of that I took steroid for quite some time and I put on a lot of weight and recently I have sleep apnoea and the specialist told me that to do exercise maybe it can help to reduce weight and also to improve my sleep apnoea; and because I'm putting on weight I have been thinking of doing exercise … … and the specialist say, what's he say, I thought I could at Fitness First to enquire whether I can join the gym. So when I see the consultant I told him my medical condition, I have lupus, I have thyroid, sleep apnoea and everything, all my medical condition; but the reason I told him is that I hope that he will be honest with me that whether my condition can do the gym and he told me that "Oh you find the right place, this is the best place to lose weight". So I was very happy that he encouraged me to join it; and I signed the contract with him without reading to it all the Terms and Conditions, because he just told … point at me to sign here, here and here. So … … gave me the term and condition; and I thought that the terms and conditions were not written in front of him and for the first two weeks in the gym I was quite okay I can manage and four weeks - after four weeks I felt blurred vision and headache. So I had one month break from the gym hoping that one month break I can - I will be better. Then after the four week the first two days I can't - I still feel very tired and very … and I had my blood tests checked, my blood pressure was high and I usually don't have blood pressure at all, my blood pressure was normal. Now I'm on medication now because of that, the blood pressure medication. So I think that I should I have to stop. Then I went to Fitness First and they want a letter from my doctor. My doctor wrote me a letter and they want me to pay $200.00 fine - fee. I felt that because at the beginning I was honest with them that I told him my medical condition, they should have warned me or let - tell me to consider before tell me to sign the contract straight away. So I felt that I shouldn't pay the $200.00. And I'm on a disability pension, the money to me is very important." 13 Fitness First did not agree with Ms Chong's version of events as to the circumstances surrounding the signing of the contract. 14 It is necessary to consider some of the written provisions of the contract. Both parties signed the written contract dated 9 April 2007. It relevantly stated: "I acknowledge that I have been given the option of choosing a membership based on a fortnightly billing Contract with the options of a minimum term of either one month or 12 months. I am also aware that this Contract is subject to a cooling off period. This is an ongoing Membership Contract. The Contract will continue until either Fitness First or myself terminates it in the way described in the Membership Terms & Conditions. If an automatic debit arrangement is in place, membership fees will continue to be debited from my credit card or account until I or Fitness First cancels the arrangement by notifying my bank or credit provider. If I terminate the Contract or stop the automatic debt arrangement in a manner not prescribed in the Contract (refer to Cancellation Paragraph in Membership Terms & Conditions Booklet), then I may be liable to Fitness First for breach of contract." 15 The cooling off period was 15 days. 16 On 25 July 2007, Ms Chong terminated her membership in writing. The cooling off period had elapsed. The notice of termination relevantly stated: "Please terminate my membership. I understand and agree that a membership may be cancelled only after the expiry of the minimum subscription period by giving the Club one full calendar months notice (or four (4) weeks for fortnightly paying members) from the first of the month, ensuring all outstanding monies are paid to the Club. I understand that my cancellation will be reversed if my last direct debt is unsuccessful & I will have to re-apply for cancellation. I understand that I can only cancel my membership prior to the expiry of the minimum subscription period because of medical reasons (conclusive medical documentation must be supplied) … In this case, if I choose not to transfer my membership contract to someone I introduce to the club (relevant fees apply), then I hereby agree to pay the cancellation fee of: Months remaining 1 - 3 $100, 4 - 6 $150, 7 - 9 $170, and 10 - 12 $200 and agree that these fees may be debited from my credit card currently being used by Fitness First. NOTE: If I am breaking my contract, I understand that terminations will only be accepted because of the reasons outlined above and that without relevant documentation requested by Fitness First my termination will not be accepted and my original agreement upheld." 17 Clause 12 of the document entitled "Membership Terms & Conditions" similarly states that upon cancellation of the 12 month membership a fee of $200 will be payable (Ex A). 18 Fitness First also submitted that Ms Chong approached them to join the club. It submitted that it does not say in their terms and conditions that their consultants are in any way doctors or able to prescribe what is best for the member. However, Ms Chong did say did say that it was her doctor who had suggested that exercise might be something that she wished to pursue and by approaching them their consultant would have said that Fitness First could absolutely provide that service within the club if Ms Chong wished to join.

Tribunal Member's decision 19 In his written reasons for decision, Tribunal Member Reid stated: "I am satisfied that the applicant has met the onus of proof in her application and that the $200 fee should be waived. I am satisfied that the applicant was instructed to sign here, here and here as outlined in her evidence and that at no time did she read the terms and conditions nor have them fully explained before signing the contract. A valid contract requires that the parties have the requisitive consensus ad idem (meeting of the minds) in that they each fully know and understand the terms and conditions of their agreement. I am satisfied that this applicant did know this. Accordingly, I declare that fee of $200 is not due and owing by the applicant to the respondent." 20 The contract, membership terms and conditions and the notice of termination all stipulate that if a member terminates a 12 month membership, he or she is liable to pay a fee of $200. The application form and the notice of termination were signed by both parties. Ms Chong admitted that she signed these documents. She also paid the sum of $200, which was in accordance with the terms of the contract. 21 In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Ors (2004) 211 ALR 342 the High Court of Australia said [at 57]:

"…The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document…" 22 Ms Chong was bound by the conditions of the contracts. In view of this the Tribunal Member erred in law when he stated that a valid contract requires that the parties have the requisitive consensus ad idem in that each fully know and understand the terms of their agreement. 23 The appeal is upheld. The order made by Tribunal Member Reid dated 15 August 2007 is set aside. Judgment is entered in favour of Fitness First (Australia) Pty Limited. I make no order as to costs.

(2) The order made by Tribunal Member Reid dated 15 August 2007 is set aside.

(3) Judgment is entered in favour of Fitness First (Australia) Pty Limited.

(4) There be no order as to costs. **********

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