Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 32

Corporations Act 2001 (Cth) s 912A

Cases cited: Goldie Marketing Pty Ltd v Financial Ombudsman Service Limited & Anor [2015] VSC 292

Mickovski v Financial Ombudsman Service Limited & Anor [2012] VSCA 185

Savellis v Financial Ombudsman Service Limited & Anor [2016] NSWSC 1771

Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corp Ltd [1974] QB 57

1. Pursuant to section 32(2) of the ACT Civil and Administrative Tribunal Act 2008 the applicants' application filed on 4 August 2017 is dismissed.

1. On 5 February 2018 the Tribunal heard and determined an application[1] by QBE Insurance (Australia) Limited (the respondent) that Ian Winn Gore and Evelyne Phyllis Gore (the applicants') debt claim be dismissed in accordance with section 32(2)(b) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) as the claim is frivolous, vexatious or an abuse of process. The application was opposed by the applicants.
2. After hearing submissions from the respondent's counsel and the applicants, the Tribunal ordered pursuant to section 32(2)(b) of the ACAT Act that the applicants' application filed on 4 August 2017 is dismissed.
3. The Tribunal was satisfied that the matter was a claim in contract and had been determined by the Financial Ombudsman Service (FOS) in May 2016 as:
   • (a) The applicants submitted a complaint to FOS the subject of which is identical to that raised in the tribunal proceedings and in doing so the parties became bound in a tripartite contract and the terms of the agreement are FOS' Terms of Reference (TOR).
   • (b) The FOS TOR relevantly stated:

Clause 8.7(b) A determination is a final decision and is binding upon the Financial Service Provider if the Applicant accepts the Determination within 30 days of receiving the Determination.

Clause 8.8 Applicant acceptance of a Recommendation or Determination

In order to accept a Recommendation of Determination, the Applicant must provide the Financial Services Provider)if the Financial Services Provider so requests) with a binding release of the Financial Services Provider from liability in respect of the matter resolved by the Recommendation or Determination The release must be for the full value of the claim the subject of the Dispute, even if this amount exceeds the amount of the remedy decided upon by FOS. The Release shall be effective from the date on which the Financial Services Provider fulfils all of its obligations under the Recommendation or Determination.

Clause 8.9 Consequences of an Applicant refusing to accept a Recommendation or Determination

If an Applicant does not accept a Recommendation or a Determination in relation to the Applicant's Dispute, the Applicant is not bound by the Recommendation or Determination and may bring an action in the courts or take any other available action against the Financial Services Provider.

1. The applicants accepted the Determination by email dated 17 May 2016 and are bound by the Determination and cannot bring an action in the courts or take any other available action against the respondent in respect of that dispute.
2. On 10 April 2017 the applicants requested reasons for decision. These are the reasons for the Tribunal's decision.

1. The applicants are the lot owners of Unit 35 of a property in Pearce in the Australian Capital Territory (the property).
2. Intermittently in the ten years leading up to December 2014 water entered the roof cavity of the property during a storm or very heavy rain causing rain damage to the ceiling, walls and to a floor level window sill. Attempts by the applicants, their family, plumbers, roofers and an expert engaged by them to locate and remedy the entry point(s) of the water failed.
3. On the nights of 8 and 9 December 2014 the property was flooded internally during a storm and the applicants arranged for professional roofers who had tried previously to locate and rectify the problem to attend the property. They recommended that the only practical solution was re-roofing the property. The applicants did not report this damage or the earlier damage to the respondent. The applicants proceeded with and paid for the reroofing of the property which was carried out on 14 and 15 February 2015. They subsequently obtained a quotation for consequent internal repairs and repainting.
4. The Owners Unit Plan 199 had insurance cover with CHU Underwriting Agencies Pty Ltd (CHU) who issued a CHU Residential Strata Insurance plan policy number 46566 for the period 17 June 2015 to 17 June 2016 (the policy). The policy covered the applicants' property for, amongst other things, accidental loss or damage to the property[2] subject to the full terms, conditions and limitations of the policy. It was underwritten by the respondent. The policy had been renewed annually with CHU commencing 26 May 1997.
5. The applicants obtained a roof report prepared by Danny Hately dated 14 February 2015 (Hately report) before the reroofing was undertaken which identified significant building defects with the roof which caused the water ingress, including:
   • (a) existing roof battens were too far apart for the roof profile of the applicants' property which caused the roof to sag which in turn allowed the moisture ingress through laps in the roof sheets;
   • (b) the existing insulation was sagging due to batten spacing and the battens had also been cut too short causing moisture condensation to track into the roof space of the applicants' property; and
   • (c) the corners of the underlap roof sheeting had not been cut which allowed water to flow off the top sheet and track back on the underlap sheet and then into the roof space.

1. On 16 March 2015 the applicants, through their Managing Agents, ACT Strata Management Services, submitted a claim on their CHU Residential Strata Insurance policy for the cost of the total roof repair of $8,500 and for acceptance of the building quotation from Champness Builders Pty Ltd dated 6 March 2015 for the window, plasterboard and painting damage repairs of $11,300.
2. On 7 April 2015 CHU instructed Crawford & Company Australia (loss adjuster) to attend the applicants' property and provide a report to CHU outlining the circumstances of the loss, the observations provided by the applicants, the extent of loss/damage and policy liability. The loss adjuster instructed CRD Building Consultants & Engineers (CRD) to report on the extent and cause of the damage, the timeframe the damage had been occurring and if the damage would have been evident to an average person.
3. On 25 May 2015 CRD attended the applicants' property to prepare a report in regard to the cause of the water ingress.
4. CRD prepared a report dated 18 June 2015 (CRD Report) which concluded that the cause of water ingress to the applicants' property was a maintenance issue and defective workmanship.
5. On 23 June 2015 the loss adjuster reported to CHU. After reviewing the CHU and CRD reports, on 22 July 2015 CHU wrote to the applicants confirming that the proximate cause of damages to their property was due to lack of maintenance and deterioration over time[3]; policy exclusions[4] non-rectification of a defect[5] whereby the damage was not covered under the policy.
6. On 5 August 2015 the applicants submitted a complaint via email to the respondent that the claim should be accepted by CHU on the basis that "the damage was the result of rainstorm water ingress over an indeterminate period of time, with this ingress occurring only when sufficiently strong winds forced a sufficiently heavy rain downpour into the ceiling cavity."
7. The issues in dispute were that the applicants refuted CHU's application of policy exclusions, specifically:
   • (a) lack of maintenance and lack of general cleaning;
   • (b) carelessness on the part of the roofing specialist; and
   • (c) gradual deterioration.
8. The respondent reviewed the applicants' complaint and advised the applicants by letter dated 9 September 2015 that they were unable to accept the claim and that carriage was returned to CHU. The respondent stated in this letter:

Whilst it is apparent that you have sought remedial action and that the replacement of the roof and the addition of downpipes appears to have resolved the issues, the terms and conditions of cover contained in the PDS are specific in this regard.

An "event" is a happening or an incident. Where a series of damages occurs they must first stem from a 'happening of that one event'.

No "one event" has been established by you that gave rise to roof damage resulting in water ingress in each subsequent rain event.

You have not established that the "resultant damage" component of repairs you are seeking were proximate upon one event.

On your own admissions you have been experiencing the ingress over several years and, rather than seek indemnity from your Insurer, accepted liability for the roofing repairs and improvement to the guttering etc.; undertaking the work prior to submitting the claim to CHU.

In this regard there has been a breach of the policy terms and conditions of cover specifically stated on Pages 16 to 17 [of the policy] whereby you did not immediately inform CHU of conditions that may give rise to a claim when you were clearly aware of the water ingress over an extended period of time; CHU was not afforded the opportunity to inspect the damage in the first instance or approve the repairs.

You accept that the manner in which the damage occurred (long term seepage due to design and construction of the roof) is excluded from cover under the policy. However, you claim that CHU should acknowledge resultant damage.

Under the terms of the policy, the exclusions relied upon by CHU apply to all damage caused by the excluded factors, including both immediate and resulting damage.

Therefore, CHU is entitled to deny the Lot Owner's claim for damage to the individual lot at this time.

The (roofing) works were not undertaken by a CHU approved builder, nor were the works approved by CHU. The contract for works were those between yourself and the roofing contractor. CHU has no liability in this regard. (emphasis in original)

1. In the respondent's letter to the applicants dated 9 September 2015 the respondent advised the applicants that they may refer their dispute to the Financial Ombudsman Service and that FOS provides a free and independent dispute resolution service for consumers who have general insurance disputes that are covered by its TOR.
2. FOS was established to provide an independent forum for the resolution of disputes between retail clients and providers of financial services. Pursuant to sections 912A(1)(g) and 912A(2) of the Corporations Act 2001 (Cth) financial service providers are required to have in place dispute resolution procedures that include membership of one or more external dispute resolution schemes approved by ASIC. FOS is such an external dispute resolution scheme and the respondent is a member of the scheme.
3. On or about 29 September 2015 the applicants chose to refer the dispute to FOS.
4. In a letter to the applicants dated 12 January 2016 FOS provided a preliminary view and asked the applicants to provide further submissions following the receipt of which it would hand down its final determination. In that letter FOS stated:

Please see the attached fact sheet on the full process your dispute will follow. You can also find other fact sheets and policies, such as on handling personal information and resolving disputes, on our website: www.fos.org.au

1. The fact sheet enclosed with that letter included the following statements:

A Determination is our final decision. FOS will progress to a Determination when we consider this is appropriate.

Our Determination is binding if you accept it within 30 days. You cannot appeal a Determination. If you do not accept our Determination you can still pursue your dispute in another forum such as a court.

Our TOR set out the types of disputes FOS can consider, and the methods we use to investigate and resolve disputes.

1. On 27 January 2016 the applicants provided a written submission to FOS.
2. In a letter dated 15 February 2016 to the applicants FOS stated:

As the dispute is not resolved it will progress directly to our final stage and an Ombudsman will issue a final decision called a Determination.

We will consider all of the submissions and information provided by both parties when making our final decision.

Our Determination is final and binding on QBE if you accept it within 30 days. You cannot appeal it, but are not bound by it and can still pursue the dispute elsewhere.

Further information about our Terms of Reference is available at www.fos.org.au

1. In a letter to the applicants dated 12 May 2016 FOS enclosed the Determination made on 10 May 2016 in favour of the respondent in respect of the claim for damages to the applicants' property, with a recommendation that the respondent pay to the applicants $500 in compensation in respect of service issues. It found that:

QBE is entitled to deny the applicants' claim because the material provided establishes that although the interior of the applicants' property was damaged by water ingress after rain, the proximate cause of the loss was the defective build and installation of the roof. Such cause of loss is excluded by the policy terms and conditions; and

The applicants are entitled to compensation. The claim was not complex and yet too much time was taken to make a claims decision and review the claims decision which caused physical inconvenience and interfered with the applicants' expectation of enjoyment and peace of mind.

1. Pursuant to the FOS TOR, the applicants were put to an election whether to accept the Determination or refuse to accept the Determination. The FOS letter dated 12 May stated:

We need to know if you accept the Determination

You must now decide whether or not to accept the Determination.

You will need to tell me within 30 days of receiving the Determination whether you accept or reject the Determination.

You may accept the Determination by return email or letter confirming that you accept the Determination in full and final settlement of the issues raised under case number 415496.

If you accept the Determination QBE must comply with the terms of the Determination.

If you do not accept the Determination, QBE is not required to comply with the terms of the Determination. You retain whatever rights you might otherwise have to pursue your dispute in another place such as the courts.

1. By email dated 17 May 2016 the applicants accepted the Determination, with consideration to be paid by the respondent to the applicant. In this email the applicants stated:

While we maintain that there were a number of significant flaws in the consideration that led to the adverse decision in the subject claim, we are now determined to draw a line under this very unhappy affair and to get our lives back on track. To do this we are firstly required to gather the monies required to meet the forthcoming repair and replacement costs as outlined in our claim and thus the offer of a $500 cheque is accepted.

1. FOS advised the respondent on 18 May 2016 that the applicant had accepted the Determination.
2. By letter dated 18 May 2016 to the applicants FOS confirmed that they "have accepted the determination made in the above dispute." and stated - "We have notified QBE and it must now undertake the steps necessary to comply with the determination ... As you have accepted the determination, this concludes our involvement in your dispute and our file has now been closed."
3. The respondent complied with the Determination and on 20 May 2016 posted a cheque for $500 to the applicants which the applicants accepted.

1. On 4 August 2017 the applicants filed a civil dispute debt application against the respondent seeking $19,800 following water damage to their property over the period of approximately 10 years culminating on the nights of 8 & 9 December 2014.
2. In the statement accompanying the application the applicants acknowledged that they had made a claim for the same amount against the respondent pursuant to their insurance policy and asserted that the respondent had refused the claim with "spurious, non-specific reasons under the pretexts of: (1) lack of maintenance; (2) roofing specialist carelessness and (3) gradual deterioration." The applicants also acknowledged that the dispute was escalated to the FOS and stated that "FOS recrafted the reasons for rejection of their claim as (1) gradual deterioration, (2) general wear and tear and (3) lack of maintenance and highlighting that these three conditions were specifically excluded by the policy."
3. The applicants further stated that "FOS introduced a fourth supposed reason for exclusion - the "Wayne Tank" principle."
4. The applicants stated:

In all, it is not difficult to assess CHU/QBE/FOS approach as being wholly adversarial and of intending to employ whatever means, however questionable, to deny this claim.

To this might be added a well-founded suspicion that the tactics of delay, more delay and still more delay might resolved the claim as we, an elderly couple, are approaching the end of our days.

1. In its response filed on 4 September 2017 the respondent disputed the applicants' claim on a number of grounds:
   • (a) the application is a contract application, not a debt application;
   • (b) the matter has been determined by FOS and that decision was accepted by and is binding on the applicants; and
   • (c) The applicants' claim is frivolous, vexatious or an abuse of process and should be dismissed in accordance with section 32(2)(b) of the ACAT Act.
2. Further and in the alternative and under cover of an objection that the applicants' pleadings are inadequate and vague, the respondent denied that the applicant was entitled to cover under the policy and stated, in relation to the statement attached to the applicants' application:
   • (a) that it admitted that:
     • (i) the property was insured by CHU pursuant to a policy which was underwritten by the respondent;
     • (ii) the policy covered the applicants' property for, among other things, accidental loss and damage to the property subject to the full terms, conditions and limitations of the policy;
     • (iii) the applicants made a claim on the policy for $19,800 for water ingress and damage to the property;
     • (iv) it denied the applicants' claim but denies any allegation that it did so wrongfully or in breach of the terms and conditions of the policy;
     • (v) on occasion, water entered the applicants' home intermittently after heavy rain which caused damage to the applicants' ceiling walls and floor level window sills; and said:
       • (A) it was a condition of the policy that the applicants take all reasonable steps to reduce the loss and damage as soon as the applicants discovered that an event was likely to result in a claim has occurred[6];
       • (B) the applicants admitted they informed the respondent of the loss and damage after 10 years; and
       • (C) while the applicants replaced the roof after being advised to do so, it was a condition of the policy that:
         • (I) the respondent's approval was needed for repairs; and
         • (II) the respondent was entitled to nominate whether to repair or replace the damage and to nominate the supplier to be used.[7]
   • (b) that it was entitled to rely on the CRD report and the Hately report to support its conclusion to deny the claim on the basis that the damage was caused by lack of maintenance, wear, tear, gradual deterioration (which the applicants' conceded) or failure to maintain all of which are excluded by the policy[8] and by non-rectification of a defect which is also excluded by the policy;[9]
   • (c) that the CRD report concluded that the damage to the plasterboard wall/ceiling junctions was a result of replacement of the roof and that the loss and damage caused by defective workmanship was excluded under the policy;[10]
   • (d) it denied that:
     • (i) it was required to be aware or should have been aware of the condition of the applicants' property; and
     • (ii) that the deterioration of the applicants' property in any way affected the applicants' insurance premiums; and
     • (iii) that each renewal of insurance was an acceptance of the "as is" condition of the property.
   • (e) it says that it was a condition of the policy and the applicants' continuing disclosure obligations that they advise the respondent of any changes in circumstances affecting the applicants' property which increase the risk of loss of damage;[11]
   • (f) it was not required to inspect the applicants' property in order to renew the policy of insurance and, while gradual deterioration is inevitable, the policy only covers accidental loss or damage;[12]
   • (g) FOS determined that the respondent was entitled to deny the claim on the basis that the proximate cause of the damage to the roof, and the resulting water ingress, were roof defects, based on the Hately report submitted by the applicants and due to an exclusion contained in the policy for damage caused by non-rectification of an insured property defect that the applicant should have been reasonably aware of;[13]
   • (h) the applicants' attempting to "locate and remedy the storm water entry point(s)" falls short of the applicants' carrying out necessary maintenance. Attempting to locate water entry points but doing nothing when they could not be located proves the applicants neglected to carry out the necessary maintenance. Maintenance requires a positive action to repair damage, which the applicants did not do until 10 years after the issue first became apparent;
   • (i) the Wayne Tank[14] principle was established law which entitled the respondent to deny the claim where there was more than one proximate cause of damage and one of the causes was excluded. While the applicants are covered for accidental damage, which included damage by storm/rain water, the FOS concluded on the applicants' own evidence[15] that the proximate cause of the damage was the defective roof and the W_ayne Tank_ principle entitled the respondent to deny the claim;
   • (j) there was not one event that caused water ingress and damage to the applicants' property; the damage was the result of water ingress and moisture entering the roof over a prolonged period;
   • (k) regardless of why the claim was originally denied FOS determined that the respondent was entitled to uphold its denial because of the defective roofing identified in the applicants' roofing report;
   • (l) the applicants have misunderstood the FOS decision as it decided the FOS dispute on the material provided by the applicants, not on any material provided by the respondent; and
   • (m) the applicants were not required to refer the dispute to FOS; they chose to do so. When FOS made the Determination in the respondent' favour the applicants chose to accept the compensation awarded and have attempted to reject the portion of the decision they did not agree with and to bring this claim.
3. The parties attended a conference and evaluation on 30 October 2017 which was unsuccessful and a directions hearing on 22 November 2017 when the matter was set down for hearing on 5 February 2018 and directions were made for the filing of material by both parties.

1. The respondent's application for summary dismissal is made pursuant to section 32 of the ACAT Act which provides:
   1. Dismissing or striking out applications

(1) This section applies if the tribunal considers that an application, or part of an application is--

(d) made by a person who has been dealt with by a court or tribunal in Australia as frivolous or vexatious.

(2) The tribunal may, by order, do 1 or more of the following:

(a) refuse to hear the application or part of the application;

(b) dismiss the application or part of the application;

_(c) direct that the person who made the application not make a subsequent application to the tribunal of the kind stated in the direction - _

Note If the application is for review of a decision under the Heritage Act 2004, the Planning and Development Act 2007 or the Tree Protection Act 2005, the tribunal may also order the applicant to pay costs (see s 48 (2) (d)).

(3) The tribunal may make an order under subsection (2) on its own initiative or on application by a party.

_(4) The tribunal may vary or revoke a direction given under subsection (2) (c) - _

(b) on application by the person who is the subject of the order.

Note The tribunal must observe natural justice and procedural fairness (see s 7).

1. The applicants represented themselves at the hearing. Mr Seya Onitiri, of Counsel, represented the respondent.
2. At the commencement of the hearing the Tribunal considered the respondent's application for summary dismissal of the applicants' claim.

1. Mr Onitiri provided the Tribunal and the applicants with a written outline of submissions.
2. Mr Onitiri submitted that the question before the Tribunal was not whether the FOS Determination was correct; rather it was "what was the legal relationship when the applicants submitted their complaint to FOS?"
3. He submitted that the applicants' application was founded on the basis that there was a dispute between parties. The applicants made a complaint to FOS in identical terms to their application to the tribunal. FOS accepted the complaint and undertook its review. Once a complaint was lodged in terms of dealing with the dispute the TOR form a tripartite agreement between the parties.
4. Mr Onitiri referred the Tribunal to a number of authorities in support of this submission.
5. Firstly, he referred the Tribunal to the decision of Supreme Court of Victoria of Goldie Marketing Pty Ltd & Ors v Financial Ombudsman Services Limited & Anor (Goldie)[16] where her Honour Cameron J said:

[16] There is no dispute between the parties that the Terms of Reference constitute a tripartite contract. Therefore, FOS is governed and constrained by its contractual obligations.

[17] It is common ground that the court is not conducting a merits review of FOS's decision nor is it acting in an administrative law capacity. This case purely centres around the construction of the Terms of Reference.

What constitutes the contract between the parties?

[19] The Terms of Reference constitute the contract between the parties.

1. Secondly, Mr Onitiri referred the Tribunal to an earlier decision of the Supreme Court of Victoria Court of Appeal of Mickovski v Financial Ombudsman Services Limited & Anor (Mickovski)[17]. Mickovski was an appeal from a judgment given in the Common Law Division of the Victorian Supreme Court. One of the issues in the hearing before Pagone J in the Common Law Division was whether there was a contract between the parties concerning Mr Mickovski's complaint which required FOS to deal with the complaint in accordance with FOS's terms of reference. Pagone J held:

...there was a tripartite contract between Mr Mickovski, MetLife and FOS in accordance with the terms of reference...[18]

The making of a complaint to FOS changes the position. It seems to me that a tripartite contract was established between Mr Mickovski, as complainant, MetLife as respondent, and FOS, as the decision maker of the complaint, upon a complaint being made pursuant to the facility for alternative dispute resolution. Mr Mickovski is not a current member of FOS and is not ordinarily bound by its terms, however the terms of reference invited him, and entitled him, to make a complaint, and upon the making of the complaint he became bound to comply with the terms of reference to the extent to which they applied to him and, correspondingly, became entitled to expect the rules to be applied correctly.[19]

1. Two of the issues before the Court of Appeal in Mickovski were (i) whether Pagone J had erred in concluding that there was a tripartite contract between Mr Mickovski, FOS and MetLife and (ii) in concluding that there was an implied term of the tripartite contract that the FOS TOR would be applied correctly.
2. In the Court of Appeal the plurality said:

35 To start with, we agree with his Honour that, upon Mr Mickovski and MetLife agreeing to submit their dispute to the processes of FOS, they became bound in contract to observe the rules of the process and entitled as a matter of contract to require that FOS proceed in accordance with those rules.

36. We reject the respondent's submission that the agreement was not supported by sufficient consideration. As we see it, the consideration which moved from Mr Mickovski was his submission to the processes of FOS and the consideration which moved from the FOS and the respondent respectively, was their promise to arbitrate the dispute in accordance with the terms of reference and be bound by FOS' decision. It does not detract from that conclusion that, under the terms of reference, it was open to Mr Mickovski to withdraw from the arbitration before it was completed or to elect not to be bound by the determination once completed. It was enough that, so long as Mr Mickovski submitted himself to the process of the FOS dispute resolution service and conformed to the terms of reference, he was entitled to have FOS and the respondent perform their parts of the process in accordance with the terms of reference.

1. The above two paragraphs from Mickovski were cited with approval by White J in the NSW Supreme Court in Savellis v Financial Ombudsman Services Ltd (Savellis)[20] which was the third authority Mr Onitiri referred the Tribunal to:
   1. It was common ground that on submission of the dispute by Mr Savellis to FOS a tri-partite contract came into existence between Mr Savellis, FOS and NAB that the dispute be determined in accordance with the applicable rules (called Terms of Reference) applied by FOS to resolve disputes between applicants and financial service providers (Mickovski v Financial Ombudsman Service ltd at [35] - [36])

1. The question in these proceedings is not whether the FOS Determination was correct. The question rather is whether it was made in accordance with the tripartite contract.
2. Mr Onitiri further submitted that the applicants had not made any submission that the Determination was not made in accordance with the TOR. The fact is that the Determination was handed down. Before it was handed down the FOS wrote to the applicants and provided their preliminary view (see [22] above). In that same letter FOS confirmed that a Determination is their final decision and binding if the applicants accept it within 30 days.
3. He submitted that this is not a case of once the applicants lodged a complaint with FOS they were trapped by it. He submitted that they were in control and holding the trump card as they had an opportunity not to accept the Determination when it was handed down.
4. The FOS scheme is underpinned by the contractual arrangement with the TOR and would not work otherwise. A party cannot determine which part of a Determination it wishes to accept and then proceed to recover another part through the courts. The process is dealing with the matter as a whole.
5. The applicants emailed FOS and accepted the offer in the Determination of a cheque for $500 (see [28] above). In doing so they accepted the Determination. FOS had advised the applicants that their Determination is binding if they accept it within 30 days and that they cannot appeal a Determination (see [23] above).
6. Mr Onitiri submitted it is in breach of the contract between the parties for the applicants to now say we will accept the $500 for compensation and continue to bring proceedings in a form that is against the agreement.

1. The applicants told the Tribunal that they relied on CHU's Product Disclosure Statement (PDS) under 'Dispute Resolution' that:

The FOS resolves certain insurance disputes between consumers and insurers and will provide an independent review at no cost to you. We are bound by the determination of the FOS but the determination is not binding on you.[21]

1. They also relied on a letter from FOS to them which they said contained a statement that if they were unhappy with the Determination that was not the end of the matter as the Determination was binding on the respondent but not binding on them.
2. The applicants denied that a contract existed. They submitted that they were not, in any sense, made aware of the TOR and that they proceeded on the basis of the PDS, which they said was not ambiguous, and on the basis of the advice they had received from FOS itself set out in the previous paragraph.
3. Mr Gore told the Tribunal that his case was not like Savellis as it was not 'common ground' that there was a tripartite contract. He said "we have never ever been on that common ground in relation to a tripartite contract. We have never seen the TOR, the terms of the contract and the alleged terms of the contract are in straight defiance of the PDS and of the FOS letter." He said as we have not seen the TOR we could not have entered into a contract.
4. Mr Gore posed the question - What is the offer? He submitted that the $500 was not the offer, it was compensation for services, not money in lieu or payment for their losses of $19,800. That was quite clearly given to them as compensation. It was not anything to do with the damage to their house.
5. In response to the Tribunal asking if the applicants accepted that a Determination had been made, Mr Gore said that they accepted that a Determination had been made but that they did not accept that they would not proceed further with their claim. He said he carefully worded his email sent to FOS on 17 May 2016 (see [28] above). He said what he had written in that email does not mean and he did not intend it to mean that he and his wife accepted the Determination.
6. Mr Gore acknowledged that he had received the letter from FOS on 18 May 2016 confirming that he had accepted the Determination. He did not write to FOS disputing his acceptance of the Determination. He knew that FOS had also written to the respondent advising them that the complainants had accepted the Determination.
7. Mr Gore said he would make the point that nowhere did they intend to accept $500 in full and complete satisfaction for $19,800. He said $500 was miniscule, but they were given a very short time frame - seven days from the date of their Determination - to accept or deny or not accept that $500 offer as compensation. He said "we are quite clear that they said it was compensation."
8. When the Tribunal pointed out to Mr Gore that the letter actually provided him with 30 days and not seven days to accept the Determination Mr Gore conceded that he had misread the letter.
9. Mr Gore again submitted that the question needing to be examined was whether a contract existed. He said "We deny that by actually approaching FOS to look at our complaint we were entering into a tripartite contract. We did not know FOS' TOR. In all honesty we believed we were talking to an honest broker but we were obviously already bound when discussing this with FOS."

1. Mr Gore expressed his high level of frustration at the process that the applicants had had to endure in making a claim on their insurance policy for damage to their property. He said they are appalled and feel downtrodden. They regret the three wasted years of their life that it has taken them since claiming on their insurance policy. He said that the original decision had three clauses for excluding their claim; they answered those clauses; the respondent went away and found new clauses and the applicants answered those. Eventually legal assistance came to the respondent's aid and they came up with 19 points of denial none of which hold water. Every step of the way has been horrendous for the applicants.
2. Mr Gore also told the Tribunal that it was unfortunate that they came to the hearing expecting to follow the trail of the claim; not to hear that there was a contract out there which the Tribunal is bound by and which they did not know about. The whole thing in Mr Gore's mind has been handled according to law. He stated that FOS was supported financially and otherwise supported by the financial services people.
3. Mr Gore also said they relied on the letter from FOS saying that this decision is binding on Financial Services Provider but not on the applicants. He said there was no warning that should the applicants accept the Determination they would be bound by it or the TOR would be crucial to this decision. Now he said the applicants find in the small print the reference to TOR. The applicants knew nothing about a tripartite contract.

1. Mr Onitiri submitted that it was correct that when the Determination was made the only parties then bound by it were the FOS and Financial Services Provider. It was not binding on the applicants unless and until they accept the Determination which they did on 17 May 2016. It is a contract and is binding on the applicants. That is how the FOS scheme operates.

1. The applicants made a complaint to FOS following what they determined was an unsatisfactory outcome to their insurance claim against the respondent for damage to their property. They received correspondence from FOS and the material the respondent had provided to FOS.
2. The letter from FOS to them dated 12 January 2016 comprised five pages which included a 'fact sheet' which set out 'the steps the dispute will take', 'what is a Preliminary View', 'what is a Determination', 'the FOS TOR' and the link to the TOR online. The applicants said they did not access the TOR link in that letter.
3. The fact that the applicants did not, for whatever reasons, access the TOR electronically is unfortunate but it is not the respondent's problem. The respondent cannot make the applicants open the link, or indeed, if the TOR were posted to the applicants, make them read them. The FOS letter clearly set out the procedure that would be followed following the applicants' complaint. The Tribunal finds that a reasonable person in the applicants' position would have read the TOR.
4. The applicants also told the Tribunal that they did not seek legal advice or consumer advice from the Consumer Law Centre in Canberra during the currency of this matter. This was unfortunate, as had the applicants sought such advice even after receiving the Determination and before accepting it they might not have accepted the Determination and not be in their present predicament.
5. The applicants were on notice since September 2017 when the respondent filed its response that it was seeking summary dismissal of the applicant's claim. It was very clearly set out in their response. Mr Gore admitted that he had read the response adding "We also read the 19 grounds from the respondent (in the response) and it (the summary dismissal application) didn't even register as something that we should be aware of or warned of."
6. The Tribunal considered the respondent's application for summary dismissal of the applicants' claim at the beginning of the hearing.
7. Having considered all of the documents, the parties' submissions and the case law provided to the Tribunal the Tribunal is satisfied that the applicants' claim was a contract claim and not a debt claim. The Tribunal is also satisfied that FOS clearly set out in its correspondence with the applicants the process it would be following after it had received the applicants' complaint and that it followed that process. FOS more than once referred the applicants to the TOR link. The Tribunal rejects the applicants' submission that they should not be bound by the TOR because they did not read it.
8. In their letter of 12 May 2016 enclosing the Determination FOS stated that the applicants now needed to decide whether or not to accept the Determination and stated:

You may accept the Determination by return email or letter confirming that you accept the Determination in full and final settlement of the issues raised under case number 415496.

1. This letter also set out a telephone number and an email address if the applicants had any questions or wanted more information. The applicants emailed their acceptance of the Determination to FOS. They did not contact FOS by email or by telephone with any questions. They did not raise with FOS their understanding of the PDS (see [56] above) nor did they refer to the FOS letter which they said stated that they would not be bound by the Determination. If the applicants had genuinely intended either not to accept the Determination or be bound by it they should have taken such action as set out above.
2. The Tribunal has carefully considered the applicants' email accepting the Determination and finds it is unequivocal and unambiguous. The email referred to the FOS decision describing it as "the adverse decision in the subject claim" and variously stated "we are now determined to draw a line under this very unhappy affair and to get our lives back on track ... thus the offer of a $500 cheque is accepted." The Tribunal rejects the applicants' submission that Mr Gore carefully crafted this email to represent that the applicants were only accepting the compensation and not the Determination. The TOR and the FOS letters leave no doubt that if the applicants accepted the Determination it was in full and final settlement of the issues raised in the claim. The applicants subsequently received the respondent's cheque for $500 and the matter was finalised.
3. The Tribunal found Mr Onitiri's submissions compelling and the cases he relied upon persuasive. In coming to this finding the Tribunal did take into consideration and raised by Mr Gore, that in the present matter, unlike Savellis, it was not common ground between the parties that there was a tripartite agreement. However the Tribunal was satisfied from the findings in Mickovski and Goldie (see the relevant passages in [46], [47], and [49] above) that, in the present matter, by agreeing to submit their dispute to the processes of FOS, the applicants, the respondents and FOS became bound in contract to observe the rules of the process and entitled as a matter of contract to require that FOS proceed in accordance with those rules.
4. The Tribunal finds that the obligations of each party pursuant to the contract were certain and the applicants were in breach of the contract in bringing these proceedings in the Tribunal. The application is an abuse of process.
5. The Tribunal makes some final observations. It was apparent that Mr Gore, in his submissions to the Tribunal and in his various letters and emails in this matter, had become significantly emotionally invested in this matter. This may have clouded his ability to carefully read and understand the reasons why the insurers denied his claim. The reasons are set out in [18] and [37] (a) to (m) inclusive above. The policy and a claim on it are subject to the full terms, conditions and limitations (or exclusions) of the policy.
6. While Mr Gore may have wished to 'to follow the trail of the claim' when he attended the hearing on 5 February 2018 and expressed his consternation that the matter was 'handled according to law' the reality is that the insurance policy is a contract between respondent and the applicants which determines the claims which the respondent, as the insurer, is legally required to pay. The Tribunal refers to the matters in the previous paragraph. Further, the Tribunal has already set out above that the applicants were on notice from September 2017 that the respondents were seeking summary dismissal of the application on the basis that there was a tripartite contract between the applicants, respondent and FOS. Therefore, it was proper for the Tribunal to consider this application, according to law, at the commencement of the hearing.

1. For the above reasons the Tribunal decided that pursuant to section 32(2)(b) of the ACT Civil and Administrative Tribunal Act 2008 the applicants' application filed on 4 August 2017 is dismissed

[1] Response filed 4 September 2017 at [2] and [3]

[3] "...we believe lack of maintenance to the property has resulted in these damages. The decay to the timber framing would have been visible by the way of the deforming of the flat timber staining. This would have been visible and noticed when carrying out general cleaning. The cracking of the plasterboard wall/ceiling junctions is a result of the recent works in the removal and replacement of the roofing materials.

The cover provided under the abovementioned policy is in respect of an accident or event happening to the insured property and does not extend to cover damage which results through deterioration over a period of time."

[14] Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corp Ltd [1974] QB 57

[15] The Hately report - which states that the defective construction of the roof allowed water ingress

[16] [2015] VSC 292

[17] [2012] VSCA 185

[20] [2016] NSWSC 1771