Kennett v Financial Ombudsman Service Ltd

The Background to the Proceedings

1. It is acknowledged by both parties that the Appeal Panel accurately described the background to the proceedings before the New South Wales Civil and Administrative Tribunal ("NCAT", or "the Tribunal"): "Ms Kennett complained to the Financial Ombudsman Service Limited (FOS) about a decision of the National Australia Bank (NAB) that she owed the bank money. FOS investigated the complaint but Ms Kennett did not agree with the outcome. She lodged a consumer claim with the Consumer and Commercial Division of the Tribunal. The Tribunal decided that it did not have jurisdiction because the FOS had not provided Ms Kennett with services "in trade or commerce". In reaching that conclusion the Tribunal applied the wrong statutory provision": Kennett v FOS at [59].
2. The Tribunal's decision was made on 4 July 2016. On 1 September 2016 the plaintiff filed a notice of appeal to the NCAT Internal Appeal Panel under s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act"), an appeal as of right against the Tribunal's decision, on a question of law alone. The plaintiff and the defendant both agreed that the Tribunal had applied the wrong provision - having applied the definition of "services" under s 3 of the repealed Consumer Claims Act 1998 (NSW) rather than the definition of "services" under s 79F of the Fair Trading Act 1987 (NSW).
3. The Appeal Panel heard the appeal on 28 November 2016. It accepted that the wrong provision had been identified by the Tribunal.
4. On 17 March 2017 the Panel made the following orders: "1. The appeal is allowed. 2. The Tribunal's decision is set aside. 3. The issue of whether s 79F of the Fair Trading Act 1987 (NSW) requires that, to constitute a consumer claim, the services must be provided "in trade or commerce" is dealt with by the Appeal Panel by way of a new hearing. 4. The following order is made in substitution for the Tribunal's order: The application is dismissed."
5. In reaching its conclusion, the Appeal Panel applied the correct provision, s 79F of the Fair Trading Act, which was in slightly different terms to the provision applied by the Tribunal. However, the Panel came to the conclusion that, "…section 79F requires that, to be a consumer claim, the services FOS provided Ms Kennett have to be in 'trade or commerce.' In this case, they were not provided 'in trade or commerce' and the Tribunal has no jurisdiction" (at [2] Kennett v FOS).

The current appeal

1. On 18 April 2017, a summons seeking leave to appeal the Appeal Panel's decision was filed in this Court by the plaintiff under Part 50 of the Uniform Civil Procedure Rules ("UCPR"). The proceedings are brought pursuant to s 83 of the NCAT Act which provides (relevantly): "83 Appeals against appealable decisions (1) A party to an external or internal appeal may, with the leave of the Supreme Court, appeal on a question of law to the Court against any decision made by the Tribunal in the proceedings. (2) […] (3) The court hearing the appeal may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) the following: (a) an order affirming, varying or setting aside the decision of the Tribunal, (b) an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of the court. (4) […] (5) […]".
2. By order of the Registrar the application for leave and the appeal were heard at the same time. The plaintiff sought the following orders: "1. Leave to appeal from the whole of the decision below. 2. Appeal allowed. 3. Orders 3 and 4 of the Appeal Panel of NCAT made on 17 March 2017 are set aside. 4. Order that the NSW Civil and Administrative Tribunal has jurisdiction to hear NCAT proceedings GEN 16/10436."
3. The appeal grounds relied upon by the plaintiff are as follows: "1. The Appeal Panel of NCAT incorrectly interpreted section 79F of the Fair Trading Act 1987 (NSW) and misapplied that section because: (a) it held that to be a 'service' under subsection 79F(1)(a) the work carried out by the defendant was required to be provided in 'trade or commerce'; and (b) only subsection 79F(1)(i) (and not subsection 79F(1)(a)) contained any requirement of being provided 'in trade or commerce.' 2. The Appeal Panel of NCAT denied the Plaintiff procedural fairness because the contention that to be a 'service' under subsection 79F(1)(a) of the Fair Trading Act 1987 (NSW) work carried out by the Defendant was required to be provided in 'trade or commerce' was: (a) not contained in either party's submission (and was contrary to the Defendant's submission); and (b) was not put by the Appeal Panel to the parties. 3. The Appeal Panel of NCAT denied the Plaintiff procedural fairness because: (a) it held that the parties agreed that the services the Defendant provided to the Plaintiff were not provided in 'in trade or commerce'; but (b) the Plaintiff did not so agree; (c) the material before the Appeal Panel demonstrated that the Plaintiff did not so agree; and (d) the Appeal Panel did not put to the Plaintiff that it understood that she agreed that the services of the Defendant provided to the Plaintiff were not provided 'in trade or commerce.' 4. The Appeal Panel of NCAT's finding that the services the Defendnat provided to the Plaintiff were not provided 'in trade or commerce' was not based on any evidence because: (a) that finding was based on an 'understanding' that the parties agreed that the services the Defendant provided to the Plaintiff were not provided 'in trade or commerce'; but (b) the Plaintiff did not so agree; (c) the material before the Appeal Panel demonstrated that the Plaintiff did not so agree; and (d) the Appeal Panel did not put to the Plaintiff that it understood that she agreed that the services of the Defendant provided to the Plaintiff were not provided 'in trade or commerce'."
4. The plaintiff concedes that leave is required to bring the appeal.
5. The plaintiff's principal contention (ground 1) is that the Appeal Panel was wrong in determining that the dispute between her and the defendant ("FOS") was one which fell outside the jurisdiction of the Tribunal, because the work done by FOS was not a service provided in trade or commerce. She also contends that, in determining that issue, she was denied procedural fairness in a number of ways (grounds 2 - 4).
6. The defendant submits that the plaintiff is in error in the statutory construction argued for and that there was no error in that regard by the Appeal Panel. It does not accept that there was any denial of procedural fairness.

Ground 1

1. The plaintiff's complaint turns on the consideration by the Appeal Panel of s 79F(1) of the Fair Trading Act 1987 (NSW) ("the FT Act"), a provision which is found in Part 6A of the FT Act, which deals with "Jurisdiction of Tribunal in Relation to Consumer Claims". Section 79F(1) provides: "79F Meaning of "services" (1) For the purposes of this Part, a reference to services is a reference to any of the following: (a) the performance of work (including work of a professional nature), whether with or without the supply of goods, (b) the provision of gas or electricity or the provision of any other form of energy, (c) the provision, or the making available for use, of facilities for amusement, entertainment, recreation or instruction, (d) the letting of premises for vacation or recreational purposes, (e) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction, (f) the provision of insurance cover, (g) the rights or benefits provided, granted or conferred under a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking, (h) the provision of credit, (i) any other 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."
2. The Appeal Panel, in re-determining the matter pursuant to s 80(3)(a) of the NCAT Act, noted, "The issue is whether s 79F of the Fair Trading Act requires that, to constitute a consumer claim, the services must be provided "in trade or commerce". In our view it does" (Kennett v FOS at [5]).
3. It set out the nature of the dispute at [19]: "The issue of statutory construction is whether or not the specific examples of services in s 79F(1)(a) - (h) are affected by the general words in s 79F(1)(i). If they are, then 'the performance of work', must be provided 'in trade or commerce' for it to come within the definition of 'services'."
4. In construing that provision, the Panel had regard to s 33 of the Interpretation Act 1987 (NSW), to the nature and purpose of the FT Act, to the overall context of the section, and to relevant extrinsic material. It observed (at [25]), "If s 79F(1) is read as one sentence, it is apparent that the intended meaning is that the particular examples of services in s 79F(1)(a) - (h) must also be 'provided, granted or conferred in trade or commerce'. Section 79F(1)(i) is merely a catch-all provisions for 'other rights, benefits, privileges or facilities' that are 'provided, granted or conferred in trade or commerce'. [Emphasis in original]) That interpretation is supported by the extrinsic material including material related to the legislative history of the provision: Interpretation Act 1987 (NSW), s 33 and 34".
5. The Panel cited another decision of the Appeal Panel of NCAT, Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 at [11] - [118], as supportive of that conclusion.
6. The plaintiff argues that the structure of the provision is such that the words "provided, granted or conferred in trade or commerce" that appear in s 79F(1)(i) are intended only to apply to s 79F(1)(i), and not to s 79F(1)(a) - (h). She submits that the opening words of s 79F(1), "a reference to services is a reference to any of the following", must mean that each of the individual sub-sections (1)(a) - (1)(i) must be read individually. On that basis, she contends, the Panel erred.
7. The construction of s 79(F)(1) which the plaintiff submits should be adopted is one based upon the syntactical structure of the provision, but which ignores the objects of the FT Act as a whole, the context of the section, and the unreasonableness of the consequences of such a construction.
8. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 McHugh, Gummow, Kirby and Hayne JJ said (at [69] - [70]), "The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed. A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court 'to determine which is the leading provision and which the subordinate provision, and which must give way to the other'. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme [footnotes omitted]."
9. Thus, regard must be had to purpose, context, and text.
10. The FT Act is one which is intended to govern trade; that is suggested by the very name of the statute. "Trade" is a commercial activity, being the provision of goods or services for consideration. There is nothing in the Act that suggests its application is intended to go beyond the regulation of trade to regulate the provision of voluntary services, of the nature provided by FOS.
11. Such a reading is in conformity with s 33 of the Interpretation Act 1987 (NSW), which is in these terms: "33 Regard to be had to purposes or objects of Acts and statutory rules In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object."
12. Context is important. Section 79F appears in Division 1 of Part 6A of the FT Act. Division 1 deals with preliminary matters relevant to the jurisdiction of the NCAT in relation to consumer claims. The object of the Part is "to provide for remedies for, and the straightforward resolution of, disputes concerning the supply of goods and services to consumers": s 79B.
13. A "consumer claim" is defined by s 79E, it being a claim by a "consumer" for a remedy arising from a supply of goods or services by a supplier. Section 79D defines "consumer" by reference to the supply of goods and services. Section 79F with its definition of services follows. The next provision, s 79G, defines "supply", which is important in construing the meaning of a "consumer" and a "consumer claim". It provides: "79G Meaning of "supply" (1) For the purposes of this Part, a reference to the supply of goods includes a reference to any of the following: (a) supplying goods by way of sale, exchange, lease, hire or hire-purchase, (b) resupplying goods, (c) agreeing to supply goods, (d) supplying goods together with services. (2) For the purposes of this Part, a reference to the supply of services includes a reference to any of the following: (a) providing, granting or rendering services for valuable consideration, (b) agreeing to supply services, (c) supplying services together with goods."
14. The overall context of Division 1 of Part 6A is to provide the parameters for the conferral of jurisdiction on NCAT to determine consumer claims. It is apparent from consideration of the whole of the Part, and the definitions given in the Division, that the claims to be determined are claims relevant to the provision of goods and services for consideration.
15. That is the context in which s 79F must be read.
16. The text of the provision itself is structured in such a way that the work of the word "other" in s 79F(1)(i) is to refer back to ss (1)(a) - (1)(h), and to be additional to those sub-sections, rather than to be regarded as distinguished from them. That is, "other" is to be read as "other rights, benefits, privileges, or facilities […] provided, granted, or conferred in trade or commerce than those matters specifically referred to in ss (1)(a) - (1)(h)".
17. Such a reading of the text sits with the purpose of the overall Act, and with the immediate context of s 79F.
18. It seems clear that "services" for the purposes of Part 6A of the FT Act, means services provided for consideration.
19. That meaning is further confirmed if regard is had to the consequences of reading s 79F in the way the plaintiff contends for. Such a construction would lead to a distinction between "goods" on the one hand, and "services" on the other, with consumer claims able to be brought with respect to only those goods supplied in trade or commerce, whilst such a claim could be brought for services (as contemplated by s 79F(1)(a) - (h)) supplied other than in trade or commerce.
20. There is no apparent reason why the supply of goods should be subject to a different regime from the supply of services, dependent upon whether they were supplied in trade or commerce. There is no apparent reason why s 79F(1)(a) - (h) should be distinguished from ss (1)(i). Such an anomalous outcome could not have been intended by the Parliament.
21. The plaintiff complains that the Appeal Panel was wrong to have regard to the Second Reading Speech of Minister Ajaka on the introduction to the Legislative Council of the amending bill, the Fair Trading Legislation (Repeal and Amendment) Bill 2015 (NSW), but s 34(1) of the Interpretation Act permits such an approach.
22. Having considered the arguments of the parties, and applying the principles of statutory construction to s 79F(1), I am unable to accept that the Appeal Panel erred in its construction of the provision. This ground is not made out.

Ground 2

1. This ground is based upon the plaintiff's contention that it was the common position of the parties before the Appeal Panel that "trade or commerce" was not a requirement of s 79F(1)(a). She submits that she was denied procedural fairness by the Appeal Panel in not raising with her its conclusion that trade or commerce was a requirement, and giving her an opportunity to be heard on that aspect of the matter.
2. At [29] of Kennett v FOS the Appeal Panel said, "As we have said, we understand that the parties agree that the services the FOS provided to Ms Kennett were not provided 'in trade or commerce' […]."
3. The opening words of that sentence, "as we have said", appear to refer to what was said at [3] of the decision, which was: "The appeal was on a question of law: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2)(b). Ms Kennett submitted, and the FOS agreed, that the Tribunal had identified the wrong provision. The error was that the Tribunal applied the definition of 'services' in 'section 3 of the Act' instead of the definition in s 79F(1) of the Fair Trading Act. We agree with the parties that the Tribunal identified the wrong provision. The relevant definition of services is in s 79F of the Fair Trading Act."
4. The plaintiff argues that the Panel's "understanding" that no issue was taken with the construction of s 79F(1) was incorrect, and she should have been given an opportunity to make submissions on the construction of s 79(1).
5. This complaint should be considered in the light of how the plaintiff chose to conduct her appeal before the Appeal Panel, and what it was that the Panel was asked by the plaintiff to determine.
6. In her Notice of Appeal the plaintiff gave her ground of appeal as, "The Tribunal was wrong because it failed to consider the relevant legislation being: 'Part 6A-Jurisdiction of the Tribunal in relation to consumer claimes' of the Fair Trading Act 1987 (NSW). Instead the Tribunal relied upon irrelevant legislation of which neither the applicant nor the respondent made submissions upon as both parties made submissions in relation to FTA Part 6A, being the relevant Divisions 1 and 2 of this part of the FTA Act, more particularly these are from sections 79B to section 79K."
7. That is, what was put in issue was the application by NCAT of an incorrect statutory provision. There was no ground which sought to challenge the NCAT's conclusion that the work of the defendant was not conducted in trade or commerce. As the Appeal Panel correctly observed, at [6], "The Tribunal found that it did not have jurisdiction because the FOS did not provide her with services 'in trade or commerce'. There was no challenge to that finding on appeal."
8. If the plaintiff wished to dispute the conclusion at first instance that FOS did not provide services in trade or commerce, that should have been raised as a ground of appeal. Before this Court counsel for the plaintiff sought to excuse the narrow framing of the grounds of appeal by reference to the plaintiff's lack of legal qualifications, in that she completed the Notice of Appeal herself. However, an appellant is bound by the grounds of appeal he or she advances, subject to any leave that might be granted to amend them, and regardless of the legal qualifications of the drafter. It is also relevant to note that the plaintiff was represented by counsel at the hearing before the Appeal Panel, and no application was made to amend the grounds.
9. The rules of procedural fairness require that a party who will be affected by a decision to be made should be given the opportunity of being heard on the relevant issues, and be made aware of any adverse material: Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590. That obligation extends to require the decision maker to identify to the person affected "any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made" (ibid at 592).
10. The obligation, "…[does] not require the decision maker to disclose what he is minded to decide so that the parties may have a further opportunity of criticising his mental processes before he reaches a final decision: F Hoffman-La Roche and Co AG v secretary of State for Trade and Industry [1975] AC 295 at 369 per Lord Diplock."
11. Here, since NCAT had clearly found that the services provided by the defendant were not provided in trade and commerce, thus denying the Tribunal jurisdiction, and no complaint was made about that important conclusion, the Appeal Panel was entitled to proceed on the basis that that aspect of the first instance decision was not subject to challenge. There could be no denial of procedural fairness in circumstances where no ground of appeal put the matter in issue, and it should have been obvious to the plaintiff that the Panel would need to interpret and apply s 79(1) of the FT Act (and Part 6A more broadly) in the ordinary course of determining the appeal.
12. Ground 2 is not made out.

Grounds 3 and 4

1. These grounds can be dealt with together, adopting the approach of the parties. They relate to and echo what was advanced in support of ground 2.
2. The grounds assert that the Appeal Panel was in error in concluding that both parties agreed that the services of the defendant were not provided in trade or commerce. The plaintiff contends that, "Ms Kennett did not accept that the services provided by FOS were provided 'in trade or commerce'. This was apparent from the following: (a) during the course of the hearing counsel for Ms Kennett stated the following: 'before the Tribunal Member and now, the appellants rely on sub-paragraphs (a) and (i) of that definition' A consequence of reliance on sub-paragraph (i) was the need to demonstrate that FOS provided services 'in trade or commerce.' (b) Ms Kennett's written submissions before the Appeal Panel referred to the need for the Appeal Panel to apply section 79F(1) and referred to Ms Kennett's submissions at first instance in that respect. Those submissions (which were also before the Appeal Panel) put forward Ms Kennett's position that FOS provided services 'in trade or commerce'."
3. The difficulty for the plaintiff in advancing these grounds is that she did not, at any stage, address or seek to challenge NCAT's finding that the defendant's services were not made in trade or commerce. As noted, the grounds of appeal that the Appeal Panel was to consider and determine did not complain of that factual finding, and nor did the written submissions clearly articulate it.
4. It imposes too great a burden on an appellate body to trawl through the submissions of an appellant to determine whether there is any other aspect of the first instance decision which the appellant may wish to challenge. The appellate body is entitled to proceed on the basis that the grounds of appeal disclose the matters with which issue is taken.
5. No issue was taken with NCAT's finding as to the nature of the services provided by the defendant. It is not open to the plaintiff to use these proceedings to raise what should have been pleaded as a ground before the Appeal Panel. I make the same observations as were made with respect to ground 2.
6. These grounds have not been made out.

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