Pfeiffer v Chadwick

NCAT Appeal Panel|2022-01-13

REASONS FOR DECISION

By notice of appeal filed on 18 October 2021, the appellant challenges a decision of the Tribunal published on 7 October 2021. By such decision, the Tribunal dismissed an application made by the appellant claiming the amount of $947.10, being the residue of an amount paid by the appellant to the respondent for accommodation. By letter dated 13 December 2021, the appellant notified that she wished to increase her claim by the costs associated with the Tribunal process, namely $52.21 for the initial application and $110 for the appeal application, making a total increase above $947.10 by the amount of $160.21.

Tribunal finding

The Tribunal found that the claim was brought against the respondent as a "consumer claim" for the purposes of section 79E of the Fair Trading Act 1987 (NSW) ("the Act"); that the application constituted such a claim because the claim related to "the letting of premises for vacation or recreational purposes as defined in section 79F(1)(d) of the act; as well as "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": the Act, s 79F(1)(i).
The essential facts, as stated above were not disputed. The Tribunal found that the appellant was on notice of the cancellation terms given the initial reservation which had been made through booking.com; and that those terms and conditions were identical to those of the second booking but if that was not clear, then the cancellation terms were made clear in the confirmation sent and received by the respondent on 15 April 2021.
The Tribunal found that even though the terms and conditions sent on 15 April 2021 were sent after payment for the accommodation, the applicant was taken to have accepted those terms since no objection was raised by the appellant following receipt by her of the confirmation, nor within a reasonable period thereafter.
In response to the appellant's claim that it was unfair for the balance of the payment to be retained, the Tribunal found that the respondent suffered a lost opportunity since only a short time was available for possible reletting after receipt of the cancellation notice. The Tribunal also found that the respondent used her best endeavours to assist the applicant by attempting to relet the accommodation. The Tribunal found that the respondent was entitled to retain the balance of monies paid for the booking given the timing of the appellant's cancellation. The Tribunal found that there was no basis for disregarding the cancellation provision nor its modification for the purposes of the act nor of the Australian Consumer Law. Lastly, there was no evidence to substantiate the cancellation was due to government imposed restrictions and accordingly no issue arose under the Frustrated Contracts Act 1978 (NSW).

Notice of Appeal

The appellant raises the following grounds of appeal: 1. the appellant challenges a finding of the Tribunal that the appellant was on notice of the same cancellation provisions by virtue of the initial reservation made through Booking.com; 2. the reservation made through the Internet was categorically different in context: that the Internet booking was made "via an online platform managed by a multinational corporation whereas the contract at the centre of the dispute was made with an individual by several text messages. The individual concerned (the respondent) did not declare during the course of these text messages that she was in fact representing a business. 3. The first contract included the terms and conditions whereas the second reservation included the terms and conditions only after the contract was made; 4. The respondent's "bad faith action" confirms the unorthodox nature of the entire contract and speaks of poor business practices; 5. The statement by the Tribunal namely "Whether the applicant may have read those terms and conditions was a matter of her own discretion". However, section 47A of the act requires that a supplier must, before supplying a consumer the goods and services, take reasonable steps to ensure "the consumer is aware of the substance and effect of any term or condition relating to the supply of the goods or services that may substantially prejudice the interests of the customer." In particular, where the term requires a consumer to pay an exit fee, it must be disclosed; 6. The appellant challenges the finding that she was "taken to have accepted those terms and conditions since she did not raise any objection on 15 April 2021 or within a reasonable period thereafter". The appellant maintains that disclosure was required, by virtue of section 47A of the act, of terms and conditions prior to the sale.

The respondent has filed a Reply which supports the existing order and states that the question of law arising in the appeal has already been determined by the Tribunal.

Appellant's Submissions

The appellant through her agent, Mr Tim Hartnett, made oral submissions which reiterated the claims which were considered by the Tribunal.

Respondent's Submissions

The respondent appeared in person and supported the Tribunal's decision

Appellant's supplementary submission

Following the hearing, the appellant, through her agent, submitted a further submission in response to discussion by the Appeal Panel during the hearing. The effect of that discussion was that if the terms and conditions were unenforceable a contract would nevertheless exist and the overall result in the Tribunal at first instance conformed to standard contractual considerations on breach and loss. In answer to such submission, the appellant submits that: 1. such a consequence could have grossly unfair consequences; 2. that "it is not reasonable to assume that any consumer who makes an informal arrangement by text messages will understand the niceties of contract law as it pertains to contracts which have no terms and agreements or that they would expect to find themselves in such a predicament"; 3. that "if the respondent (the business owner) had abided by her obligation under the law, the appellant could only find herself in one of three conditions: (a) she could have chosen not to into a contract knowing that cancellation without penalty was not possible. (b) she could have chosen to enter the contract with full knowledge that she would have to forfeit all money exchanged and then had to abide by that. (c) she could have accepted all terms and conditions and carried on with the holiday"; 4. the appellant reiterates the effect of section 47A of the Fair Trading Act.

Principles governing appeals

Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (CATA) provides that any internal appeal may be made: as of right on any question of law, but only with the leave of the Appeal Panel on any other grounds. The Tribunal must discern the nature of the appeal: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [12].
Grounds sought to be argued by the appellant which raise issues of law and of fact do not constitute a "question of law": see Thomas v R (1937) 59 CLR 279 at 306; [1937] HCA 83 where Dixon J observed that a "mistake as to the existence of a compound event consisting of law and fact is in general one of fact and not a mistake of law".
Such principle has been followed with approval: see Ianella v French (1968) 119 CLR 84 at 114 - 115; [1968] HCA 14; see also Williams v R (1986) 161 CLR 278 at 287 and 314; [1986] HCA 88. For completeness, it might be observed that in Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515 at 5 to 7; [1990] FCA 689, Ryan J said that: "if the question, properly analysed is not a question of law, no amount of formulary like "erred in law" or "was open as a matter of law" can make it into a question of law".
For observations to the same effect, see Orr v Cobar Management Pty Ltd (2020) 103 NSWLR 36; [2020] NSWCCA 220 at [52] where the Court noted that a question may, in its form sufficiently identify a possible error of law, but may nonetheless not qualify as a "question of law" or be readily answered as a question of law.
Accordingly, for those grounds a grant of leave of the Tribunal is required to bring the appeal: see section 80(2)(b) of the CATA which states: Any internal appeal may be made: (a) (not relevant); (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel on any other grounds.
As a precursor to the requirement for leave under section 80(2)(b), Schedule 4, cl 12(1) of the CATA relevantly states: 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because - (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). Note - Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.
In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76], "Accordingly, it should be accepted that a substantial miscarriage of justice may have been suffered because of any of the circumstances referred to in clause 12 (1) (a), (b), or (c) where there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance."
As was also stated in Collins at [79], in order to show that a party has been deprived of a "significant possibility" or a "chance which is fairly open" of achieving a different more favourable result because of one of the circumstances referred to in Schedule 4, clause 12(1)(a), (b) or (c), it will "generally be necessary for the party to explain what its case would have been and show that it was fairly arguable".

Error on a question of law

The Appeal Panel notes the submissions of the appellant that the Tribunal did not refer, in its decision, to its submissions concerning the effect of section 47A of the act. Section 47A (1) thereof states: A supplier must, before supplying a consumer with goods or services, take reasonable steps to ensure the consumer is aware of the substance and effect of any term or condition relating to the supply of goods or services that may substantially prejudice the interests of the consumer.
The Tribunal member referred to the fact that the applicant (now appellant) "cited provisions from the Act [Fair Trading Act 1987 (NSW)] and Australian Consumer Law (ACL) with respect to the perceived unfairness". The applicant (now appellant) relied upon this section in her claim. It was a pivotal matter for the applicant, and it required reasons to be provided why s 47A had no application. The Tribunal's reasons however make no mention of the application of section 47A of the act.
An error on a question of law arises where a critical issue is not considered in the decision. It is essential to expose the reasons for resolving a point vital to the contest between the parties, and to explain the reasons for the non-application of that issue so that a party will understand why their claim cannot succeed.
A failure to deal with a claim critical to a contested issue can be regarded as a failure to have regard to a relevant consideration, a failure to have regard to critical evidence or a failure to give adequate reasons: see Mifsud v Campbell (1991) 21 NSWLR 725 at 727 - 728; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [62] - [63]; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 (CA) at 259, 270 - 272, 280 - 281; Wainhou v NSW (2011) 243 CLR 181; [2011] HCA 24 at [58]; NSW Land and Housing Corp v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231. It may also be characterised as a breach of the obligation to provide a hearing which is procedurally fair, or a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088, per Gleeson CJ at [24], Kirby J at [87] and Callinan J at [95].
No matter how characterised, in the absence of reasons concerning the operation and application of s 47A relied upon by the applicant (now appellant) the Appeal Panel considers that an error on a question of law has occurred. Accordingly it is necessary to set aside the decision under, and it follows that leave to bring the appeal under section 80(2) of the CATA is not required. If possible on the material and findings made by the Tribunal, it is preferable that we re-determine the matter.

Construction of the contract

The Appeal Panel is to determine, objectively, the rights and liabilities of the parties to the relevant contract: see Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [40], the High Court said: "This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction".
The initial reservation comprised a separate contract. It was terminated by the appellant but with the consent of the respondent. The respondent then made it plain that the cancellation conditions of that contract would not be applied to that reservation as per the email sent by the reservation service to the appellant referred to in [3] above.
The second reservation comprised a new contract made by text based messaging. The respondent offered to rebook the applicant and the applicant (now appellant) accepted that offer and made payment for the accommodation for the relevant period. However, at that point in time, no terms or conditions had been supplied by the respondent in respect of the second reservation. It was only after payment that the confirmation was forwarded to the appellant, and the purported terms and conditions relating to cancellation made known.
For the respondent to be able to rely upon the cancellation terms and conditions of the second contract, it was essential that they be brought to the notice of the appellant at the time that a binding contract was formulated, and not after, as has occurred. In Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805 the defendant could not rely upon terms and conditions which were much wider than had been stated to the plaintiff. Denning LJ found that the conduct of the defendant disentitled it from relying upon the exclusion except in relation to the extent to which the terms had been explained to the plaintiff. Lord Justice Denning said at 809: "In my opinion any behaviour, by words or conduct, is sufficient to be a misrepresentation if it is such as to mislead the other party about the existence or extent of the exemption. If it conveys a false impression, that is enough. If the false impression is created knowingly, it is a fraudulent misrepresentation; if it is created unwittingly, it is an innocent misrepresentation; but either is sufficient to disentitle the creator of it to the benefit of the exemption…" And further: "In the present case the customer knew, from what the assistant said, that the document contained conditions. If nothing was said she might not have known about it. In that case the document might reasonably be understood to be, like a boot repairer's receipt, only a voucher for the customer to produce when collecting the goods, and not understood to contain conditions exempting cleaners from their common-law liability in negligence. In that case it would not protect the cleaners: see Chapleton v Barry Urban District Council. I say this because I do not wish to be supposed that the cleaners would have been better off if the assistant had simply handed over the document to a customer without asking her to sign it; or if the customer was not so inquiring as the plaintiff, but was an unsuspecting person who signed whatever she was asked without question. In those circumstances the conduct of the cleaners might well be such that it conveyed the impression that the document contained no conditions, or, at any rate, no condition exempting them from their common law liability, in which case they could not rely on it."
Accordingly, it is necessary to determine what can be inferred by the conduct of the parties in order to determine, objectively, the agreement. In Hardwick Game Farm v Suffolk Agricultural and Poultry Producers Association Ltd [1966] 1 WLR 287, Diplock LJ at 339 said: "The task of ascertaining what the parties to a contract of any kind have agreed shall be their legal rights and liabilities to one another as a result of the contract is a familiar one in all systems of law. It is accomplished not by determining what each party actually thought those rights and liabilities would be, but by what each party by his words and conduct reasonably led the other party to believe were the acts which he was undertaking a legal obligation to perform."
To similar effect, in Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31, Lord Pearce at 113 said: "The Court's task is to decide what each party to an alleged contract would reasonably conclude from the utterances, writings or conduct of the other."
Unlike the authorities referred to above where a party to a contract has either signed the terms but has not read them or has ticked a box indicating that they agree to be bound by the terms, no notice was given in respect of the second reservation that terms and conditions relating to cancellation would apply. The respondent's cancellation policy was first displayed on the confirmation issued by the respondent only after the reservation had been made and payment accepted.
Terms and conditions from prior dealings may be incorporated if there has been a long history of dealings between the parties and there has been a series of previous transactions: see for example Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31. However, that cannot be applied in the present circumstances because the initial reservation does not constitute a long series of transactions; and secondly, when the initial reservation was cancelled, it was expressly stated that terms and conditions would not apply to that booking.

Terms and conditions are unenforceable

In these circumstances, it could not be found that the appellant, in the absence of prior notice, had consented to the booking terms and conditions. In so far as it might be asserted that the initial reservation gave notice of the terms and conditions, as found by the Tribunal, the respondent had expressly stated that the terms and conditions relating to that reservation concerning cancellation would not apply. There was no indication, express or implied, that the same or similar terms would necessarily apply to a future reservation.
It follows that the cancellation provisions contained in the second reservation was not part of the contract between the parties. The respondent is not entitled to rely upon the terms and conditions of booking as they had not been notified, prior to the contract being made, to the appellant.

Statutory provisions

In view of the Appeal Panel's finding that the terms and conditions of cancellation of the second reservation are unenforceable at common law, it is unnecessary for the Appeal Panel to consider the implication of s 47A of the act. However, the Appeal Panel agrees with the submission made by the appellant that, since the cancellation policy was not notified until after the contract was made, s 47A would otherwise have operated to prevent the respondent from relying upon such provision.
It follows that the cancellation policy cannot be relied upon by the respondent, and the terms and conditions of cancellation are unenforceable. Such finding does not void the whole contract; the remainder of the contract is valid: Curtis v Chemical Cleaning & Dyeing Co.
The effect of this is that, absent other considerations, the common law would still allow the respondent to recover her actual loss on termination of the contract by the appellant, less any amount by which she was able to mitigate that loss. In other words, the result would be the same as that determined by the Tribunal, albeit for different reasons.

Claim for damages on cancellation is unenforceable

However there is a further consideration. The fact is that the second reservation was made: 1. at a time within 30 days of the reservation taking effect. It follows that, as was known at least to the respondent, the proposed cancellation provisions would operate so that there was no prospect of any refund being granted to the appellant from the moment that the second reservation was made; 2. where the respondent had, with respect to the initial booking, waived cancellation fee but did not tell the respondent that any loss on cancellation would be claimed with respect to the second booking.
The Appeal Panel considers that the conduct of the respondent, in failing to draw the attention of the appellant to the fact that no waiver of loss would be given on a subsequent cancellation, constituted misleading conduct, or conduct which was likely to mislead as set out in s 18(1) of the Australian Consumer Law NSW, (contained in Schedule 2 to the Competition and Consumer Act 2010) s 4 (1) as incorporated into the Fair Trading Act 1987 (NSW). In applying such law, the question is whether the appellant was misled by the respondent's conduct into believing, when the contract was made at the time of payment, that no cancellation fee or claim for loss would apply to the second reservation.
The Appeal Panel considers that the fact that damages for loss would not be waived if the second reservation was cancelled should have been drawn to the attention of the appellant before the second reservation was made. This is especially so as the respondent invited the appellant to rebook through her personally. At that time the respondent had made it plain, in respect of the initial reservation, that cancellation fees or a claim for loss would not be applied on that occasion. However, the respondent did not tell the appellant that cancellation fees of 100% of the reservation cost (albeit disallowed by us for the reasons above) would apply in respect of the booking which she invited the appellant to make, since it was made within the 30 day period. Nor did she make it plain that, contrary to her conduct in respect of the initial booking, she would otherwise make a claim for any loss.
The Appeal Panel considers that such omission constitutes misleading conduct, inclusive of the respondent's silence. In Metalcorp Recyclers Pty Limited v Metal Manufactures Ltd [2003] NSWCA 213, the Court of Appeal found that a misrepresentation by silence constituted misleading conduct. In that matter, a quantity of copper for recycling was delivered to the purchaser. The purchaser had learnt that the copper was stolen. When delivered, the purchaser, in a telephone conversation with the vendor, commented that the amount of copper was less than was stated: no mention was made of the fact that the copper was stolen. The vendor, acting on the belief that payment would be made for the copper's supplied, made payment to its supplier. The appellant then sought payment for the copper but the respondent refused to make payment on the basis that the copper was stolen. At [47], Handley JA said: I have held that the critical conversation conveyed a representation that the buyer on inspection had found no reason for rejecting the delivery, that it had accepted it, and intended to pay for it in the ordinary course.
In Demagogue v Ramensky (1992) 39 FCR 31, at 32, Black CJ said: Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive… To speak of "mere silence" or a duty of disclosure can divert attention from the primary question… The significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.
The question of intent of the respondent is irrelevant when applying the provisions of the Consumer Law, since intention is not an element of the statutory cause of action. Rather, the question is whether the conduct, in this case including the respondent's silence, led the appellant to believe that no cancellation fee or claim for loss on cancellation would be applied to the second reservation.
As was observed in Inova Pharmaceuticals (Australia) Pty Ltd v Reckitt Benckiser (Australia) Pty Ltd [2018] FCA 1209 by Bromwich J: [24] In relation to misleading or deceptive conduct: (1) conduct is misleading or deceptive, or likely to mislead or deceive if it has a tendency to lead into error, but there must be a sufficient causal link between the conduct and error on the part of the person exposed to it: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at [39].
The evidence establishes that the appellant was misled, unwittingly, by the respondent's conduct into the belief that she could cancel a reservation without penalty or claim for loss. The Appeal Panel also finds that the respondent's failure to draw to the appellant's attention that she would take a different course on cancellation of the second reservation did not result from any fraudulent intent, but was entirely innocent.
Importantly, it is not only the respondent's silence which constitutes the misleading conduct. Otherwise, the silence would have to be deliberate and intentional to be actionable (Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193) and that is not the case here.
Rather, the respondent's conduct which misled the appellant consisted of: 1. accepting cancellation of the initial reservation without seeking to apply the cancellation terms of the contract or otherwise claim for loss; 2. actively contacting the appellant to arrange a rebooking without any reference to terms and conditions before the contract was complete; and 3. remaining silent as to the different position which would apply if the second booking was cancelled.
We are satisfied that a causal link between the misleading conduct and the appellant's belief that she could terminate the contract without loss is clearly established, given the lack of other factors which could have led the appellant to the conclusion she reached.
For these reasons the Appeal Panel finds that the cancellation provision cannot be relied upon and that the contract between the parties is rescinded. The respondent is prevented from claiming damages for breach and the appellant is entitled to a refund of the funds she has paid to the respondent.
The appellant has claimed the costs of filing this appeal. The Tribunal may award costs only if there are special circumstances shown: s 60 of the CATA. There are no special circumstances in this appeal and accordingly no order for costs will be made.

Orders

The Appeal Panel orders that: 1. The Appeal be upheld; 2. The respondent is to pay the appellant the sum of $947.10 within 21 days of the date of these orders.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 February 2022

Trading Act 1987(NSW)

(2019) 100 NSWLR 578

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