Ormes v Lewis & 1 Ors [2006] NSWSC 659 | Case summary

JUDGMENT 1 His Honour: The Plaintiff and the Defendants entered into a Contract for the sale of land. It concerned a residential property near Dapto. The Plaintiff was the vendor. The Defendants were the purchasers. 2 I shall briefly mention certain of the relevant provisions. The price was to be payable by 300 monthly instalments of $1,600.00 over twenty-five years. The purchasers would not acquire any equity until payment of the final instalment. The Defendants were given a licence to occupy. They had the options of refinancing, earlier payment of the price or selling. 3 In the event of default, the Plaintiff was required to serve a Default Notice. Failure to comply with that Notice enabled the Plaintiff to serve a Notice of Termination. Clause 9.5 of the Contract specified consequences upon termination. One consequence was forfeiture to the Plaintiff of the deposit and all instalments paid under the Contract. 4 The Plaintiff came to terminate the Contract. At that time, moneys in the sum of $58,085.00 had been paid. 5 The Defendants brought an application in the Consumer, Trader and Tenancy Tribunal (the "Tribunal"). Relief was sought pursuant to ss 70 and 71 of the Consumer Credit Code 1996. 6 Section 70 enables the reopening of an unjust transaction. Sub-section (2) thereof specifies that in making a determination whether a term of a particular contract is unjust in the circumstances relating to it at the time it was entered into or changed, regard must be had to the public interest and to all the circumstances of the case. The provision also allows regard to be had to the circumstances listed in (a) to (o) thereof. Sub-section (7) provides an inclusive definition of "unjust" (it includes unconscionable, harsh or oppressive). As a consequence the concept of "unjust" is not restricted to the enumerated matters. Section 71 sets out what may be done where a transaction is reopened. 7 The Defendants at the proceedings came before Senior Member Connelly. His written decision is dated 18 July 2005. He found in favour of the Defendants. He ordered the repayment of the sum of $28,630.00. The Senior Member reached this result by deducting the sum of $29,455.00 from the total amount paid ($58,085.00). This was based on a calculation of notional rent at the rate of $215.00 per week for 137 weeks. 8 The Plaintiff has brought an appeal pursuant to s 67(1) of the Consumer, Trader and Tenancy Tribunal Act (the "Act"). He now proceeds on a Further Amended Summons. It contains five grounds of appeal. The grounds are as follows:- "1. The Tribunal was in error in holding that the transaction at the time it was entered into was unjust within the meaning of section 70 of the Consumer Credit Code (New South Wales) ("the Code"). 2. The Tribunal was in error in holding that the transaction must be re-opened. 3. The Tribunal was in error in holding that it was not satisfied that the terms of Clause 9.5 of the Instalment Payment Schedule of the Contract between the parties dated 31 July 2002 were reasonably necessary for the protection of the legitimate interests of the plaintiff (respondent) at the time the transaction was entered into. 4. The Tribunal was in error in holding that it was satisfied compensation should be awarded to the defendants (applicants) pursuant to section 71 of the Code. 5. The Tribunal was in error in calculating the award of compensation be made without taking into account the damages available to the plaintiff (respondent) for termination of the Contract." 9 On one view, it may be that the appeal was brought one day out of time. If that be the case, the Plaintiff seeks an extension of time. The Defendants take no issue on the question and it can be immediately put aside. 10 Section 67(1) enables an appeal where the Tribunal decides a question with respect to a matter of law. It is a provision that has excited considerable comment. One view may be that the comment has done little to identify with precision what may fall within the ambit of such an appeal. 11 It seems clear that the ambit is not equivalent to error in point of law. It seems to be regarded as being somewhat narrower. There is dicta that it has application only when there is a pure question of law. 12 It may be that it will be generally easier to determine what falls outside its ambit as opposed to determining what is contemplated by it. 13 The task of the Court is assisted by precise articulation of the questions of law which were the subject of alleged erroneous decision. In this case, the plaintiff fell short in the performance of that task. 14 The Plaintiff bears the onus of demonstrating that there has been error in respect of such a question and that such error justifies the disturbing of the decision. In my view, the Plaintiff has failed to discharge such onus in this case. 15 The grounds of appeal have been supported by detailed written submissions. These have been supplemented by oral argument. A similar approach has been taken on behalf of the Defendants. 16 I do not propose to repeat what appears in the submissions. This case can be determined without so doing. Also, I put aside any question of whether or not submissions fell within the ambit of the grounds of appeal. 17 It is unnecessary to expressly deal individually with each ground and argument. It can be said that what is complained of falls within one of two categories. Either it involves misconception as to what was done by the Senior Member and/or concerns a finding of fact. 18 The Plaintiff has invited the attention of the Court to certain specific passages in the written decision. The passages include the following:- "The Tribunal has carefully considered the submissions (and reply) of both parties in respect of the public interest, and it thanks the various legal representatives for the cogency of those submissions. The Tribunal however remains left with a feeling of unease when it contemplates the proposition that the effect of Clause 9.5 (when the transaction giving rise to the contract was entered into) is that should a purchaser default at instalment 299 in the 24th year and 11th month of the contract, the Vendor would be entitled to retain all of the instalments paid i.e. $1,755.00* x $1755 x 299 = $324,745.00 x 299 $324,745.00 as well as continue to retain ownership of the property and any appreciation in the value of the property. (*Assuming the same repayment instalment for the illustration of the example). … The Tribunal rejects the respondent's submission (at paragraph 24) to the effect that if it chose to re-open the transaction the Tribunal should limit any relief contemplated to the operation of Clause 9.5. This is simply inconsistent with the everyday meaning of Section 70 of the Code. … The Tribunal is satisfied that the respondent's failure to make the necessary enquiries in respect of the applicants' ability to pay instalments of at least $1,600.00 per month for 25 years, the inevitability of the only result this failure to enquire would cause and the draconian provisions of Clause 9.5 are determinative. The transaction at the time it was entered into is unjust, it must be reopened." 19 It may be helpful if I make some brief additional observations concerning some of the matters that cropped up during submissions. 20 In my view, it is erroneous to contend that the Tribunal was in error in setting aside the whole of the Contract. Counsel for the Plaintiff was invited to identify passages in the written decision which were said to support that proposition. He was unable to do so. 21 In my view, what the Tribunal Member did was to reopen the transaction (the Contract). I consider that a reading of the written decision leaves no doubt that he had regard to the public interest. In my view, it also shows that he had regard to all of the circumstances of the case (including matters specified in (a) to (o) of s 70). This exercise led him to making a determination in respect of Clause 9.5 of the Contract. He then exercised the powers conferred by inter alia (c) and (f) of s 71. This brought about the ultimate result reached by him. I am not satisfied that there was any relevant error in what was done. 22 Whilst considerable complaint has been made as to certain of the findings made in the reaching of that result, it does not seem to me to matter whether or not those findings were erroneous. The findings concerned questions of fact. I should add for completeness that I am not satisfied that any of the findings were erroneous. 23 I should also add that some confusion arose concerning the observations made by the Senior Member in relation to paragraph 24 of the respondents' submissions to him. Although it was traversed during argument, the confusion was never really cleared up. I mention it only for completeness, as the observations were of no significance in this case. 24 The appeal fails. The proceedings are dismissed. 25 Save for one aspect, the Plaintiff is to pay the costs of the proceedings. The exception relates to what happened on 8 May 2006. The proceedings had been fixed for hearing on that day. The hearing date was vacated because counsel for the Defendants was then in hospital. I order that the Defendants pay the costs thrown away by reason of the vacation of that hearing date. 26 The Exhibits may be returned. **********

Ormes v Lewis & 1 Ors

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Judgment (14 paragraphs)

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