Persian Art Gallery P/L v Lorang & Anor

CATCHWORDS : Appeal decision of CTTT - damage to persian rug

Consumer Trader & Tenancy Tribunal Act 2001 (NSW) - ss 28(4), 35, 65(3), 67, 68(8) LEGISLATION CITED : Suitors' Fund Act

Kioa v West (1985) 159 CLR 550 Italiano v Carbone & Ors [2005] NSWCA 177 CASES CITED : Mah v Consumer Trader & Tenancy Tribunal [2005] NSWSC 476 Rowland v Consumer Trader & Tenancy Tribunal & Anor [2003] NSWSC 730

Persian Art Gallery Pty Limited (Plaintiff)

Margaret Lorang PARTIES : (First Defendant)

Mr M Rush (Plaintiff) COUNSEL : Mr R Weaver (First Defendant)

Mr M Davidson, SOLICITORS : Davidsons Solicitors (First Defendant)

Crown Solicitors (Second Defendant)

LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW

LOWER COURT JUDICIAL OFFICER : Tribunal Member Deamer

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

30044/2005 - PERSIAN ART GALLERY PTY LIMITED v MARGARET LORANG & ANOR

JUDGMENT (Appeal decision of CTTT - damage to persian rug) 1 HER HONOUR: By summons filed 9 May 2005 the plaintiff seeks firstly, an order setting aside the decision of the Consumer Trader and Tenancy Tribunal (CTTT) dated 12 April 2005; secondly, an order pursuant to s 67(3)(a) of the Consumer Trader and Tenancy Tribunal Act 2001 (NSW) (the Act) setting aside the decision of the CTTT dated 10 March 2005; and thirdly, an order pursuant to s 67(3)(b) of the Act remitting the substantive matter to the CTTT for rehearing according to law. The plaintiff relied on the affidavit of Ali Shabestari sworn 27 June 2005. The first defendant relied on her affidavit sworn 19 July 2005. 2 The plaintiff is Persian Art Gallery Pty Limited (Persian Art Gallery). The first defendant is Margaret Lorang (Dr Lorang). The third defendant is the CTTT which has filed a submitting appearance.

The law 3 Section 65(3) of the Act provides that a court is not prevented from granting relief or a remedy of a kind referred to in a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or a declaratory judgment or order, or an injunction, 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 the Tribunal had no jurisdiction to make the order, or in relation to the hearing or determination of the matter, a party had been denied procedural fairness. 4 Section 67 of the 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 CTTT. The onus lies on the plaintiff to demonstrate that there has been an error with respect to a matter of law. 5 Section 67(3) of the Act provides that, after deciding the question of the subject of an appeal, the court may affirm the decision of the CTTT or it may make an order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the CTTT, or it may remit its decision on the question to the CTTT and order a rehearing of the proceedings before the CTTT.

The CTTT generally 6 At the outset, it is helpful to set out some of the provisions of the Act. The functions of the CTTT are to adjudicate disputes between consumers and commercial disputes between landlords and tenants. The CTTT is not constrained by the rigour of the courtroom. Its objects are to ensure that the CTTT is accessible, its proceedings are efficient and effective, its decisions are fair and to enable proceedings before the CTTT to be determined in an informal, expeditious and inexpensive manner. The CTTT is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 28(3)). 7 Evidence must be given on oath or statutory declaration (s 39(1)) but the CTTT is not bound by the rules or practice of evidence and the CTTT may inform itself on any matter in such manner as it considers appropriate (s 28(2)). The CTTT must conform to the rules of natural justice, but broadly speaking, has control of and responsibility for its own procedures (s 28(1) and (2)). Its business is conducted in public (s 33). Section 35 provides that the CTTT must ensure that each party in any proceedings is given a reasonable opportunity to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise); and to make submissions in relation to the issues in the proceedings. Normally, a party to the proceedings has carriage of his or her own case and is not entitled to be legally represented (s 36(1)). The CTTT has the power to award costs (s 53), but usually each party bears its own costs. Pursuant to s 54 of the Act, the CTTT is obliged to use its best endeavours to bring the parties to a settlement before making an order. The CTTT has a power to correct its decision (s 50) and the Registrar can issue a certificate, which operates as a judgment (s 51).

Grounds of appeal 8 Persian Art Gallery claims that in relation to the hearing and determination of the decision made on 10 March 2005 it was denied natural justice. The grounds of appeal are (i) the plaintiff did not understand that the matter was being heard and determined; (ii) the plaintiff was not given an opportunity to properly and fairly present the evidence in support of its case; (iii) the plaintiff relied to its detriment on the advice of the second defendant that the matter would not be heard on 10 March 2005; (iv) the plaintiff was not given an opportunity to adjourn the proceedings; (v) the plaintiff was not given an opportunity to be heard in relation to all of the evidence; (vi) the Tribunal Member failed to fairly and properly delineate between the conciliation and hearing of the matter; (vii) the Tribunal Member relied on evidence given during conciliation in coming to its decision and in support of its reasons; and (viii) the Tribunal Member unfairly and unreasonably departed from the procedure outlined in the information accompanying the application and in its oral advice to the plaintiff such as to cause the plaintiff confusion and misapprehension. The crux of the plaintiff's case is that its director, Mr Shabestari, was under the misapprehension that he was involved in a conciliation hearing and the actual CTTT hearing, if there was to be one, would be at a later date. 9 Persian Art Gallery submitted that in relation to the rehearing made on 12 April 2005, it was denied natural justice. The grounds of appeal are (i) the Tribunal Member failed to properly, adequately or reasonably give reasons with respect to the decision; (ii) the plaintiff was not given an opportunity to properly and fairly present the evidence in support of its case; (iii) the plaintiff was not given an opportunity to be heard in relation to the matter; and (vi) the Tribunal Member misdirected herself as to the law in relation to a denial of natural justice. 10 On 10 March 2005 the Tribunal Member ordered Persian Art Gallery to pay Lorang the sum of $9,200.00 on or before 24 March 2005 for the replacement value of carpet $8,000.00 and the refund of costs of cleaning and trimming $1,200.00. The rehearing application was dismissed.

Natural Justice and procedural fairness 11 In Kioa v West (1985) 159 CLR 550 the High Court held that the duty to accord natural justice is a duty to act fairly. In the normal course, a party to judicial proceedings (as are those in a tribunal) could expect to be apprised of the nature of the case sought to be made against it, and of the date and time fixed for hearing so as to give it a reasonable opportunity to meet that case and to advance its own. 12 In relation to procedural fairness, Mason J stated in Kioa at 584-585 that the law had now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. Procedural fairness is a notion of a flexible obligation to adopt fair procedures, which are appropriate and adapted to the circumstances of the particular case. Whether there is a denial of procedural fairness depends on the circumstances in each case. 13 In the CTTT the Tribunal Member must act in accordance with the provisions of ss 28(4) and 35 of the Act. They provide: "28 Procedure of Tribunal generally

(4) The Tribunal is to take such measures as are reasonably practicable to ensure that the parties in any proceedings understand: (a) the nature of the assertions made in the proceedings and the legal implications of those assertions, and (b) the procedure of the Tribunal and any decision or ruling made by the Tribunal that relates to the proceedings. 35 Opportunity for parties to present case The Tribunal must ensure that each party in any proceedings is given a reasonable opportunity: (a) to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise), and

(b) to make submissions in relation to the issues in the proceedings."

The proceedings in the CTTT 14 The directors of Persian Art Gallery decided that Mr Shabestari, an associate director, would represent the company in these proceedings. Mr Shabestari has been in Australia for 7 years. He qualified as a dentist in Iran. When Mr Shabestari gave evidence and was cross-examined before this court, I formed the view that he was articulate, intelligent and has an excellent grasp of the spoken and written English language. Prior to these CTTT proceedings, he had never been involved in legal proceedings. 15 On 2 March 2005, Mr Shabestari received Dr Lorang's application form (the application) which had been lodged with the CTTT registry together with a notice to attend conciliation and hearing. The notice relevantly said that the application had been listed before the CTTT on Thursday 10 March 2005 at 1:15pm and then "If you do not appear at this time and place, the Tribunal may decide the matter in your absence. The decision made will be binding on you". 16 This notice goes on to say: "For your information

1. Do not bring any witnesses to the first hearing. The Tribunal will tell you if you need to bring witnesses to a later hearing. However you should bring with you all relevant documents or materials to support your case such as: · a copy of your tenancy agreement or other residence contract; · copies of all relevant correspondence between you and the other party; · copies of rent receipts or other payment records; · any photographs showing the condition and state of repair of the premises (or other comparable premises if relevant); · incoming and outgoing condition reports; · copies of any quotes, accounts or receipts for work carried out or to be carried out to the premises; · any written reports, statements, statutory declarations or affidavits from persons who can provide relevant information about your case.
2. If you seek an adjournment you must advise the Registrar prior to the hearing and obtain consent of the other party. If a new hearing date is set you will be advised in writing. …" 17 At approximately 3:30pm on 2 March 2005, Mr Shabestari made a telephone call to an officer at the CTTT. He deposes that he was told by an officer at CTTT (at [5]): "You don't need to bring any documents to the hearing date, its only a preliminary conference to discuss relevant issues between Dr Lorang and your company. You don't need to bring witnesses or any other material until the second hearing date. It will be allocated on 10 March. Matters usually take several hearings to resolve" I said: "Do I need my lawyer because I'm not very familiar with the Australian legal system" The officer replied: "You don't require a lawyer no"." 18 There is a print out of the company's telephone bill that confirms that a call was made to CTTT on that day. There was conflict between the advice given by the CTTT in the letter and the subsequent telephone conversation. However, both sources of information confirmed that witnesses were not to be brought to the first hearing. As a result of this advice, Mr Shabestari did not see a lawyer or arrange for any documents to be prepared. 19 Mr Shabestari's evidence is that on 10 March 2005 the Tribunal Member advised the parties to try and resolve the matter in a separate room and discuss ways to settle the claim. Dr Lorang refused to participate in this process and said to Mr Shabestari that she did not want to discuss the matter with him unless there was another person present (aff [6]). Then Dr Lorang told the Tribunal Member that she wished to discuss the matter before her (aff [7]). This version of events is substantially in accord with the transcript. 20 There were a number of matters listed in Member Deamer's list. She called through the list and then said to all the parties appearing in matters in her list: "Right. Well, everybody is here this afternoon, which is fairly unusual. You'll notice from the - that the matter has been listed today for conciliation and hearing. The primary focus of today is to get you together to have a discussion to try and see if you can resolve to have a discussion to try and see if you can resolve your dispute. You probably think, "Well, we've tried to do that before. How different is it going to be down at the Tribunal?" There are a couple of reasons why it's worthwhile you attempting to do it. First of all, we've got the assistance of two conciliators here this afternoon, very experienced in trying to encourage parties to come to some practical resolution of their dispute. You are now in litigation with each other so (inaudible) intends to focus on trying to see whether or not there's some resolution. Be aware that it is unlikely that certainly not all of the matters would be dealt with this afternoon if matters are now unable to settle. In some cases, you may require further evidence, you may wish to bring witnesses, documents might need to be exchanged between the parties, or there simply will not be enough time. So we really do try and encourage you to see whether you can resolve the dispute. Everything you say in conciliation is confidential and it's not to be brought back to the Tribunal member who will hear the matter. It is - you are encouraged to have as open and frank discussion as possible with an attempt to try to negotiate finality this afternoon." [t 2.6-35] 21 The Tribunal Member made further mention of a conciliator coming around to the room and there being a notice on the wall which set out the steps of conciliation. She outlined that the parties were to show each other documents that they proposed submitting to the CTTT and to commence having discussions [t 3.7-16]. 22 After the Tribunal Member instructed the parties to find each other and for them to find a conciliation room Dr Lorang said: "Ms Deamer, as a result of some previous very unpleasant experience of conciliation, I would particularly request that the conciliation be in the presence of at least a third party." [t 3.27-30] 23 The Tribunal Member replied that she could not arrange that straight away and that if Dr Lorang did not want to go to conciliation it was not mandatory for her to go to conciliation but whether "we can deal with the matter today or not, I don't know. It depends on what evidence that you have got here today." [t 3.32-40] 24 Dr Lorang then said: "But I have got three copies of my documents and I've hired a laptop computer so that I can demonstrate (inaudible). I have also tried to obtain mediation through the Office of Fair Trading, but that was totally rejected by the respondent, so I was very much hoping that we may proceed to a hearing today." [t 3.42-47] 25 The Tribunal Member said: "As I say, it's completely - it's not compulsory to go to mediation, but see what we can do. Just come forward to the table, thanks. …" [t 4.2-5] 26 Then the hearing commenced. The Tribunal Member did not specifically say words to the effect that she was going to proceed to the actual hearing of the claim. Nor did the Tribunal Member ask Mr Shabestari whether he was ready to proceed with the hearing. Mr Shabestari stated (aff at [9]) that at all times he thought that he and Dr Lorang were presenting their case so that Member Deamer could understand the matter in order to "conduct the mediation". 27 It is common ground between the parties that during the course of the discussion the defendant provided the plaintiff with a black file with tabs numbering 1-10 containing a covering page titled 'Summary of Claim for Damage to Rug'. The plaintiff conceded that he was permitted to put forward his opinion on the substance of the allegations made by Ms Lorang. 28 At one point the plaintiff deposed (aff [9]) he advised Tribunal Member Deamer: "supporting evidence can be provided from rug experts as to what Ms Lorang is saying." However, this does not appear in the transcript. 29 The plaintiff deposed in his affidavit that during the proceedings he indicated to the Tribunal Member that he could provide further documents and witnesses to support his case and the rug could be fixed if it was in fact damaged. These assertions do not appear in the transcript. According to the transcript Mr Shabestari indicated that he had not seen the carpet since it had been delivered and if there was a problem with the washing Dr Lorang should have contacted Persian Art Gallery, instead she took the carpet to a competitor. 30 Mr Shabestari told the Tribunal Member that Persian Art Gallery became aware of the problem when Dr Lorang gave them notification of the problem about three months after the carpet was delivered. Mr Shabestari likened this to a situation where a car is taken to a mechanic for repairs and three months later the customer brings the car back saying the repairs were wrong. He stated once the carpet was delivered, he could not be sure what happened to it over the three months [t 6.15-19; 6.39-7.16]. 31 Although Mr Shabestari availed himself of the opportunity to present a verbally spirited defence to Dr Lorang's claim he did so without the benefit of evidence to support his contentions. Evidence such as that contained in his rehearing application. He had one piece evidence, namely a book that contained pictures which demonstrated how carpets where washed. He showed these pictures to the CTTT. 32 Later, the transcript records that Member Deamer stated to an unidentified party seeking her attention: "I don't know if I'll have time…I'm in the middle of another hearing" [t 15.36]. Member Deamer's concluding remarks to Dr Lorang and Mr Shabestari were: "I'm just going to reserve my decision and you'll be notified shortly of my findings in relation to this. Okay, so you're free to go" to which Mr Shabestari replied: "Fantastic…Thanks very much. See you later" [t 17.45 - 18.01]. 33 Mr Shabestari deposed that the end of their discussion the Tribunal Member indicated that she wished to reserve her decision in order to have another look at the documents and to get information from independent sources. Dr Lorang in her affidavit denied that the Tribunal Member said that she would require further information from independent sources. Dr Lorang's her version is borne out by the transcript [t 15.1-3]. 34 Mr Shabestari stated in his affidavit at [11] that at the end of the hearing before Member Deamer he "understood that we were coming back for another hearing". The plaintiff also deposed that as he was walking out of the room the Tribunal Member and Ms Lorang continued to discuss the case. Dr Lorang denied that any discussion took place between her and the Tribunal Member as the plaintiff was leaving the hearing room. The transcript does not support Mr Shabestari's contention. 35 Tribunal Member Deamer in her reasons dated 10 March 2005 stated: "I am satisfied on the evidence that the respondent, in washing the carpet, caused vegetable dye to run, leaving an appearance of blotchiness and a change of colour in some of the carpet. I do not accept the respondent's evidence that it is part of the natural look of such a carpet to have evidence colour runs. The respondent did not warn the applicant that the dye may run during the washing period and it was aware from initial enquires of the applicant this was a specific concern. I am satisfied the damage to the carpet is irreparable. I find the respondent liable for the damage to the carpet. I accept the applicant's evidence that the cost to replace the carpet with a similar one is $8,000 (a valuation having been provided) and I note that the applicant paid about the same amount for the carpet in about August 2001. The respondent should pay the applicant the cost of replacement of the damage carpet. The applicant paid $1,200 to have the carpet cleaned and trimmed. That was money thrown away given the damaged state in which the carpet was returned. I am also satisfied that the respondent should pay the applicant's costs of having the rug inspected and certified. Such an expense would not have been necessary had the respondent not damaged the carpet." 36 Section 35 provides that the Tribunal "must ensure" that each party is given "a reasonable opportunity" to present its case. Where necessary this will entail offering an appropriate adjournment, whether sought or not. There are provisions which allow the Tribunal a significant degree of flexibility in adapting its procedures to the exigencies of the case in determining the manner in which the proceedings will be conducted. Nevertheless, those provisions should not be construed so as to derogate from other provisions cast in obligatory language which constitute core elements of procedural fairness - see Italiano v Carbone & Ors [2005] NSWCA 177 at [105] and [106]. 37 It is my view that as this was the parties first appearance before the CTTT in this matter, the Tribunal Member should have ensured that the parties were aware that the formal hearing was about to take place. The Tribunal Member should also have asked Mr Shabestari whether he was ready to proceed. While I accept that Mr Shabestari may not have been initially aware that he was participating in the full hearing, later when the Tribunal Member said to other parties that she was in the middle of another hearing and when Dr Lorang had produced evidence in support of her case he should have realised that it was the actual hearing which was taking place. 38 Nevertheless, in the light of the advice given by the CTTT prior to 10 March 2005, that he was not required to bring witnesses on that day and in the absence of the Tribunal Member informing him that the hearing was to take place and that if he had not marshalled his evidence for the hearing, he could apply for an adjournment. It is my view that the plaintiff has been denied procedural fairness. The decision dated 10 March 2005 is quashed. This matter is to be remitted to the CTTT to be determined according to law.

The rehearing application 39 On about 21 March 2005, Persian Art Gallery lodged an application for rehearing. On 12 April 2005 the Tribunal Member in his or her written reasons did not grant the rehearing. 40 Section 68(8) of the Act states: "(8) The Chairperson's decision whether to grant or refuse the application: (a) may be made without the need for any hearing or meeting, and (b) is not to be considered to be part of the Tribunal's proceedings, and (c) is final and not subject to review of any kind." 41 In Mah v Consumer Trader & Tenancy Tribunal [2005] NSWSC 476 Master Malpass (as he then was) held, at [23], that s 68(8) makes it clear that ss 65 and 67 have no application to refuse or grant a rehearing and that the legislature has made it clear that such a decision is to be final and not to be the subject of review of any kind. Conversely, in Rowland v Consumer Trade & Tenancy Tribunal & Anor [2003] NSWSC 730, Gzell J at [4] stated that it was open to argument for the plaintiff to show that she was denied procedural fairness in the refusal by the CTTT to rehear the matter. 42 As this matter is to be remitted to the CTTT for determining, the issue of whether the decision upon a rehearing application can be the subject of challenge in this court does need not be determined. 43 Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff's costs as agreed or assessed. The defendant is to have a certificate under the Suitors' Fund Act. 44 The orders I make are:

(1) The decision of Tribunal Member Deamer dated 10 March 2005 is quashed.

(2) The matter is remitted to the CTTT for determination according to law.

(3) The defendant is to pay the plaintiff's costs as agreed or assessed.

(4) The defendant is to have a certificate under the Suitors' Fund Act . **********

14/09/2005 - Amended judgment coversheet to include date of judgment - Paragraph(s) Coversheet

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