[1956] HCA 81
Byrnes v Kendle (2011) 243 CLR 253[2011] HCA 26
Collins v Urban [2014] NSWCATAP 17
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447[1983] HCA 14
Harvey v Phillips (1956) 95 CLR 234[1956] HCA 27
Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392[2013] HCA 25
Loch v New South Wales Land and Housing Corporation [2014] NSWCATAP 110
Taheri v Vitek (2014) 87 NSWLR 403
[2014] NSWCA 209
Taylor v Johnson (1983) 151 CLR 422
Judgment (20 paragraphs)
[1]
Introduction
The appellant, Mrs Prenc, was the tenant of a residential property in Leichardt, New South Wales, under a residential tenancy agreement with the landlord, Ms Stojcevski, the respondent on this appeal. Disputes arose between the parties in relation to the tenancy and both parties eventually lodged applications in the Consumer and Commercial Division of the Tribunal. At the hearing of the applications on 28 June 2016, the parties entered into a settlement agreement. As a consequence, the Tribunal made orders, by consent, to dispose of both sets of proceedings on that day, without the need to make findings of fact or determine the application of the law to those facts. Mrs Prenc appeals against these consent orders.
For the reasons set out below, we have decided that the appeal should be dismissed and leave to appeal should be refused.
[2]
Background
In the understandable absence of findings of fact made by the Tribunal below, the Appeal Panel notes the following matters which appear from the relevant tribunal files and the record of what occurred before the Appeal Panel. The Appeal Panel does not understand any of these matters to be in dispute.
Mrs Prenc lodged an application in the Tribunal (file number RT 16/21679) on 8 May 2016, which sought the following orders:
Section 187(1)(d) - An order as to compensation $2000
Section 45 - An order reducing the rent payable where the premises are unusable or uninhabitable or destroyed
Section 175 - An order regarding the payment of a rental bond
Section 65(1)(b) - An order that the landlord reimburse the tenant an amount for urgent repairs carried out by the tenant $100
Section 103 - A termination order where the landlord has breached the residential tenancy agreement
Mrs Prenc's application was set down for hearing on 19 May 2016. On that day, Ms Stojcevski lodged an application in the Tribunal (file number RT 16/23555), which sought the following orders:
Section 106 - An order that the premises have been abandoned by the tenant on a specified date 16/05/2016
Section 107 - An order for the tenant to pay compensation for any loss caused by the abandonment of the residential premises $7800.00
Section 187(1)(b) - An order that requires an action in performance of a residential tenancy agreement
Section 187(1)(c) - An order for the payment of an amount of money $8790.00
Section 187(1)(d) - An order as to compensation $990.00
Section 187(1)(g) - An order that requires rent paid to the Tribunal be paid towards the cost of remedying a breach of the residential tenancy agreement or towards the amount of any compensation
Section 187(1)(h) - An order directing a tenant to comply with a requirement of this Act of the regulations
At the hearing on 19 May 2016, Mrs Prenc's matter (RT 16/21679) was adjourned. The Member directed that Mrs Prenc's and Ms Stojcevski's applications be heard together. The Registrar subsequently set both matters down for hearing on 28 June 2016.
On 28 June 2016, the Tribunal commenced hearing both matters. About two hours into the hearing, and after indicating to the parties that Mrs Prenc's application for a termination of the tenancy under s 103 of the Residential Tenancies Act 2010 (NSW) (RT Act) would be likely to fail because the tenancy had already been terminated, the Member suggested that the parties might consider settling their disputes on a basis put forward by the Member. The parties subsequently signed a written document which contained an agreement to settle both proceedings and consent orders were made by the Tribunal. It is these consent orders in proceedings RT 16/21679 from which Mrs Prenc appeals. Precisely what was said by the Member and the parties, as well as the terms of the agreement, will be considered later in these reasons.
[3]
The Decision Below
On 28 June 2016 the following orders were made in matter RT 16/21679:
"1. By consent, in full and final settlement of this claim and RT 16/23555 the tenants are to pay the landlord the sum of $7,800 on or before 08-July-2016.
2. By consent, the tenant agrees to pay the landlord the whole of the rental bond of $5,200. This amount is to be credited against the money order.
3. This agreement represents full and final settlement of all claims arising out the tenancy."
On the same day, the following orders were made in the landlady's application (RT 16/23555):
"1. By consent, the orders made in the related matter RT16/21679, represent full and final settlement of this matter."
[4]
The Appeal
On 12 July 2016, Mrs Prenc's husband, Mr Prenc, lodged a notice of appeal with the Tribunal. That is to say, the notice of appeal specified "Philip Prenc" as the appellant and the notice was signed by Mr Prenc only. The notice of appeal was lodged within the 14 day appeal period established by r 25(4)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules).
Mr Prenc, however, was not named as a party to the proceedings below (RT 16/21679), or the related proceedings (RT 16/23555). At the hearing of the appeal on 19 October 2016, the Appeal Panel raised this with the parties' representatives, Mr Prenc and Mr Murabito. Since Mr Prenc had a letter from Mrs Prenc authorising him to conduct the appeal on her behalf and neither party objected to the Appeal Panel ordering that the name of the appellant be amended to Anna Prenc, such an order was made. Hence these reasons will refer to the appellant as Mrs Prenc.
[5]
Grounds of Appeal and Orders Sought on Appeal
In her notice of appeal, Mrs Prenc sought the following orders from the Appeal Panel:
"Section 103 - A Termination order for landlord breach
Section 45 - An order reducing rent payable
Section 65(1)(b) - An order for landlord reimbursement of tenant costs
Section 187(1)(d) - An order for compensation
Section 175 - An order regarding payment of rental bond"
The grounds of appeal which Mrs Prenc identified were as follows:
"1. The Tribunal did not have the power to make the orders under s 59(1) of the Civil and Administrative Tribunal Act 2013 (CAT Act) because the purported agreed settlement was not in writing or signed by the parties.
2. The Tribunal did not have the power to make the orders under s 59 CAT Act because there was no agreed settlement between the parties. The Tribunal made a determination of the claim, and then suggested that the parties enter an agreement in terms of the determination. The settlement was not reached through a conciliation process or by agreement between the parties.
3. The Tribunal failed to accord the Appellant procedural fairness by failing to clearly delineate between adjudicative and conciliation functions, as required in NCAT CCD Procedural Direction 3, and s 26 CAT Act."
The Appeal Panel has proceeded on the basis that these grounds raised questions of law and Ms Stojcevski's agent, Mr Murabito, did not raise any objection that this was not so.
Although the "No" box adjacent to the question "Are you asking for leave?" was checked, suggesting that leave to appeal was not sought, Mrs Prenc's notice of appeal included text in the boxes under the headings "i. Decision not fair and equitable" and "ii. Decision of the Tribunal against the weight of evidence". Under the first heading, Mrs Prenc stated:
"The evidence submitted was not sufficiently considered and/or given appropriate weight.
The respondent did not turn up and their representative did not have the appropriate authorisations
The defendant representative was aggressive and extremely disruptive
Not all orders being sought were considered
No consideration of respondent's frequent and sustained breaches of the lease agreement"
Under sub-headings relating to the decision being against the weight of the evidence, Mrs Prenc stated:
"We provided a detailed full submission that involved a full audit trail of all discussions held (by each party)
The defendant provided a small submission that lacked integrity in that it selectively provided correspondence (not the full picture)"
[6]
Reply to Appeal
Ms Stojcevski's reply to appeal did not specifically respond to the grounds of appeal but rather covered factual matters relevant to the underlying dispute.
[7]
Nature of the Appeal
In Loch v New South Wales Land and Housing Corporation [2014] NSWCATAP 110, an Appeal Panel held that a consent order can be an "internally appealable decision" (at [10]):
"A consent order is an order of the Tribunal and is binding on the parties in the same way as a decision given after a contested hearing: Kinch v Walcott [1929] AC 483; Frackelton v McQueen; Re a Solicitor [1910] St R Qd 1. It is an 'internally appealable decision" as defined in s 32 of the NCAT Act.'"
The consent orders under appeal were a decision made in proceedings for a general decision, within s 32(1)(a) if the NCAT Act, and thus are an internally appealable decision, within s 32(4). Mrs Prenc was a party to those proceedings and thus was entitled to appeal under s 80(1) of the NCAT Act.
By s 80(2)(b) of the NCAT Act, an appeal from an internally appealable decision, other than an interlocutory decision, lies, as of right, on any question of law or, with the leave of the Appeal Panel, on any other ground.
[8]
The Hearing
At the hearing of the appeal on 19 October 2016, Mr Prenc was granted leave to appear for his wife, Mrs Prenc. Mr Murabito appeared as agent for the landlady, Ms Stojcevski, having been granted leave to appear by the Appeal Panel at a call over on 15 September 2016.
Both parties filed written submissions that included supporting documents. No objection was taken by either party to this supporting material. Mrs Prenc's material included partial transcripts from the Tribunal hearings on 19 May 2016 and 28 June 2016. At the outset of the hearing on 19 October, the Appeal Panel raised with the parties that the partial transcript of the hearing on 28 June 2016 did not cover what was said by the Member and the parties in relation to the settlement agreement. Neither party objected to a transcript of the hearing of 28 June 2016 from 2 hours 9 minutes and 51seconds to the end being received into evidence. This additional transcript became Exhibit A on the appeal.
Ms Stojcevski's material included a copy of a document headed "Conciliation Report to Tribunal" in RT 16/21679. That document was signed by Mrs Prenc and Mr Murabito, was dated 28 June 2016 and was in the following terms:
"BY CONSENT
1 In full + final settlement of RT 16/21679 + RT 16/23555 the tenants agree to pay to the LL [landlord] the sum of $7,800 on or before 8-July-2016.
2 The tenant consents to the landlord retaining the bond money of $5,200, and this represents a credit for the money order
3 This agreement represents full + final settlement of all disputes arising out of the tenancy"
It can be seen that the orders made by the Tribunal below on 28 June 2016 in matter RT 16/21679 reflect this agreement, almost word for word. The orders made in RT 16/23555 are also consistent with the agreement.
The authenticity of this signed agreement was not challenged by Mrs Prenc and the Appeal Panel notes that the original of the agreement, signed by Mrs Prenc and Mr Murabito and dated 28 June 2016, was on the file in matter RT 16/21679.
The fact that the agreement which had given rise to the orders made on 28 June 2016 was in writing and signed by the parties created a difficulty with Mrs Prenc's grounds of appeal as set out in the notice of appeal because it directly contradicted Mrs Prenc's first ground of appeal and could be seen as inconsistent with part, at least, of the second ground of appeal.
[9]
Ground Two - Whether the Tribunal had power to make the orders by consent and whether any agreement was a proper basis for making the orders
As formulated in the notice of appeal, the second ground of appeal expressly involved the following contentions:
1. The Tribunal did not have the power to make the orders under s 59 NCAT Act because there was no agreed settlement between the parties; and
2. The settlement was not reached through a conciliation process or by agreement between the parties in that the Tribunal made a determination of the claim, and then suggested that the parties enter an agreement in terms of the determination.
[10]
First Contention - the Tribunal lacked power to make consent orders under s 59
As to the first contention that the Tribunal lacked power to make the consent orders, this turns upon the terms of s 59 of the NCAT Act and whether there was an agreed settlement between the parties.
Section 59(1) is the relevant provision and states:
"(1) The Tribunal may, in any proceedings, make such orders (including an order dismissing the application or appeal that is the subject of the proceedings) as it thinks fit to give effect to any agreed settlement reached by the parties in the proceedings if:
(a) the terms of the agreed settlement are in writing, signed by or on behalf of the parties and lodged with the Tribunal, and
(b) the Tribunal is satisfied that it would have the power to make a decision in the terms of the agreed settlement or in terms that are consistent with the terms of the agreed settlement."
Unless the agreement contained in the document signed by the parties on 28 June 2016 is void or should otherwise be set aside, it appears to the Appeal Panel that the document signed on 28 June 2016 meets the description of an "agreed settlement … in writing, signed by or on behalf of the parties and lodged with the Tribunal" within the meaning of s 59(1)(a). Consequently, if that 28 June 2016 agreement is not void or set aside, the contention that the Tribunal did not have power to make the orders under s 59 of the NCAT Act because there was no agreed settlement must be rejected.
It can be noted that no argument was put that the Tribunal lacked power to make the types of orders that it did.
For these reasons and if the settlement agreement is not void or liable to be set aside, Mrs Prenc's first contention has not been made out.
[11]
Second Contention - the agreement was not reached through conciliation but by the Member determining the claim and then the parties agreeing to that determination
As to the second contention that the settlement was not reached through a conciliation process or by agreement between the parties, the Appeal Panel accepts that any settlement in this case was not reached through a conciliation process. Nothing, however, turns upon this fact. Whether or not a settlement is reached through conciliation, mediation, unassisted negotiations between the parties or some other means, if a settlement agreement in writing signed by or on behalf of the parties is lodged with the Tribunal, the requirements of s 59(1)(a) will be satisfied.
Further, to the extent that the second contention involved the argument that there was no relevant agreement between the parties because the Tribunal made a determination of the claim and then suggested that the parties enter an agreement in terms of the determination, it should not be accepted. The record of what occurred does not support such findings.
In particular, the transcript of the latter part of the hearing indicates relevantly, and we find, that:
1. After about 2 hours and 10 minutes of hearing, the Member expressed the view that Mrs Prenc's application for a termination order under s 103 of the RT Act was unlikely to succeed because the tenant left before the order was made. Some minutes later, the Member expressly noted that she had not heard any closing submissions from Mrs Prenc on that topic. This later comment, in our view, supports the conclusion that the view earlier expressed was suitably tentative in nature.
2. The Member expressly did not state any view or conclusion concerning any other claims, including in particular the claims for compensation made by both parties in their respective applications. Mrs Prenc's monetary claims totalled $2,100 (being $2,000 under s 187(1)(d) and $100 under s 65(1)(b)) and there was also a claim, under s 175, for return of the bond of $5,200. Ms Stojcevski's monetary claims totalled $17,580 (being $7,800 under s 107 for compensation for abandonment (being the break fee of 6 weeks' rent specified in cl 41.1 of the residential tenancy agreement), $8,790 under s 187(1)(c) and $990 under s 187(1)(d)) although during the appeal hearing Mr Murabito stated that the claim was only for $16,200.
3. The Member noted that there was a bond in the sum of $5,200 to which Mrs Prenc was entitled unless Ms Stojcevski could prove that she was otherwise entitled to it.
4. The Member then asked the parties whether they would consider resolving the balance of the claims on a basis that the tenant paid the "break lease fee". The Member went on to say:
"I'm only making that as a suggestion and I'm just making it as a suggestion. If you both find that that suggestion would be too unpalatable, then I'll proceed to hear the balance of the claims. Um, it's a way that I think represents some compromise from … There's going there's going there's going to be an accounting at the end of it. There might be some part of the applicant - the tenant's - claim for compensation that they may succeed with, there may be some part of your claim that might be that you might succeed with. You both, there might be aspects of both parties' compensation claims that are not going to be found in each of your favours."
1. Mrs Prenc asked in respect of the proposal "So how much does all that cost me?", Mr Murabito said "$7,800" and the Member explained that this was the equivalent of 6 weeks rent and a cost of $2,600, presumably after offsetting the amount of the bond.
2. The Member then allowed the parties time to consider the suggestion and, in Mrs Prenc's case, she was given time to telephone her husband, who had left the hearing about an hour and 10 minutes earlier.
3. After about 5 minutes Mrs Prenc returned and the Member enquired whether she wished to speak to Mr Murabito about trying to resolve the matters. There was then an exchange as follows:
"Mrs Prenc: Do I have to or can?
Member: Well, I don't want to hear - if there's offers being made - it's either it's either the parties have got instructions to settle it on that basis but I don't want to hear any I don't want to hear any negotiation. Alright? So … because I don't - that's that's not proper, it's improper for me to be. I don't want to hear the negotiation. If there's negotiation to settlement for this, this or this, if you've got instructions to settle it on the basis that I just suggested then I guess you can say yes, you've got those instructions, you and your husband agree to that.
Mrs Prenc: Yeah, it's fine.
Member: Mr Murabito?
Mr Murabito: [inaudible]?
Member: Yep.
Mr Murabito: [inaudible]
Member: Alright, okay.
Mrs Prenc: That's it? No more for me?
Member: No. That's it. All final and settled. Well done. Can I, I'm going to write it down, and then you can [inaudible]. When can you pay the 2600?
Mrs Prenc: [inaudible]
Member: You have to have a date.
Mrs Prenc: [inaudible]
Member: No, no no, I can't recommend. Can you pay it within, say, 14 days?
Mrs Prenc: Yes."
1. There were then further exchanges about possible dates for payment and amounts. The Member wrote out a document containing the terms and then handed it to the parties and the following exchange occurred:
"Member: I'll hand this down to you so you can both read it. I'll read it in case you can't read my writing. The orders will be by consent, in full and final settlement of matters RT 16/21679 and RT16/23555, the tenants agree to pay the landlord the sum of $7800 on or before the 8th of July 2016. Order two, the tenant consents to the landlord retaining the bond money of $5200 and this represents credit for the money order. And order three, this agreement represents full and final settlement of all disputes arising out of the tenancy. Now you take a look at it please Mrs Prenc. If you agree to those orders, you can borrow my little pen and I'll ask you can sign it and then Mr Murabito I'll get you ... before you sign I think he wants to add something.
Mr Murabito: I'd like a forwarding address. I don't have any forwarding address.
Member: I can't force a person to give a forwarding address.
Mr Murabito: [inaudible]
Member: Yep. Yep.
Mr Murabito: Where do I sign?
Member: Down the bottom? Yep. Alright, I'll copy this and then I'll give you both a copy of this and come back and make the orders. Would you mind just waiting for a few minutes?"
1. The document that was provided to the parties was the "Conciliation Report to Tribunal" in RT 16/21679, the original of which, signed by Mrs Prenc and Mr Murabito and dated 28 June 2016, is on the Tribunal file.
2. After a break of about 6 minutes, the Member returned and the hearing ended as follows:
"Member: Alright, now I've done the orders. What I've done is I'll do the orders in matter 16/21679, which is the application where you're the applicant, it's your application. In the matter that's been brought by the landlord the orders will be the orders in this matter will be the orders in that matter. Alright, so that finalises both matters.
These are the orders that I make in relation to the resolution of this matter, both matters:
By consent, in full and final settlement of this claim, which is the matter where you're the applicant, and 16/23555 the tenants are to pay the landlord the sum of $7,800 on or before 08-July-2016.
By consent, the tenant agrees to pay the landlord the whole of the rental bond of $5,200. This amount is to be credited against the money order.
This agreement represents full and final settlement of all claims arising out of the tenancy.
Now I've just got to ask you this question: do you ask to me to make these orders as a resolution?
Mrs Prenc: [inaudible]
Member: Yes, and Mr Murabito?
Mr Murabito: Yes
Member: And do you both understand that this is full and final settlement, there is nothing further … any further claims arising from anything that's occurred within the or as a result of the tenancy agreement. You understand? Okay. Alright, I'll make those orders. Those orders I'll print that button and the orders will be made. Just make sure that Mrs Prenc has some bank account detail and that will enable her to have the balance of the monies deposited into the landlord's account on or before the 8th of July. A copy of the orders will be sent to both parties. Thank you both very much. I'll give you back these. I'm not sure what you can do with them. Thank you both. Thanks."
[12]
Conclusion on the two contentions contained in Ground 2
These conclusions deal with both contentions contained in Mrs Prenc's second ground of appeal as formulated in her notice of appeal. To this extent, the Appeal Panel, therefore, rejects the appeal based on ground 2.
[13]
Further contentions raised in oral submissions
In oral submissions, however, Mr Prenc developed the case in a somewhat different way. Having accepted that there was, in fact, a written and signed document purporting to be an agreed settlement, Mr Prenc submitted that:
1. Mrs Prenc was misled by, or misunderstood, the Tribunal Member, such that she mistakenly believed the Member was indicating that the totality of her claim had failed or was likely to fail; and
2. Mrs Prenc was suffering from a special disability or disadvantage because she was inexperienced or had "impaired faculties", to use Mr Prenc's expression, at the time she entered into the agreement.
As a result, Mr Prenc in effect contended that the consent orders in the present cases should be set aside because there existed grounds for setting aside the agreement upon which the consent orders were based. Although these bases for setting aside the consent orders were not expressly raised in Mrs Prenc's notice of appeal, Mr Murabito did not object to their being raised orally and the Appeal Panel considers that they can be addressed without injustice to either party.
The relevant principles are well established. A consent order can properly be described as an order which expresses an agreement in a more formal way than usual and can be set aside on any basis upon which the underlying agreement could be set aside: Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 at [71]. In Harvey v Phillips (1956) 95 CLR 234; [1956] HCA 27, Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ stated, at 243 -4:
"The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like. … [T]here is a dictum of Lindley L.J. which is distinct enough: "… nor have I the slightest doubt that a consent order can be impeached, not only on the ground of fraud but upon any grounds which invalidate the agreement it expresses in a more formal way than usual .... To my mind the only question is whether the agreement on which the consent order was based can be invalidated or not. Of course if that agreement cannot be invalidated the consent order is good": Huddersfield Banking Co. Ltd. v. Henry Lister & Son Ltd [(1895) 2 Ch 273 at 280]."
[14]
Was the Agreement liable to be set aside because Mrs Prenc was misled or mistaken?
In the light of our findings as to what occurred in the latter part of hearing on 28 June 2016, as set out above, if Mrs Prenc believed that the Tribunal below had already made a determination of the claim and then suggested that the parties enter an agreement in terms of the determination, she misapprehended what happened on that occasion.
As we have already found, towards the end of the hearing, the Member indicated to the parties that it was her tentative view that Mrs Prenc's s 103 application would fail. The Member then suggested that the parties consider resolving "the balance of their claims" on the basis that Mrs Prenc pay the break fee of $7,800. Nonetheless, the Member expressly indicated that she would "proceed to hear the balance of the claims" if the parties found the suggestion of settlement "too unpalatable", and that "there might be aspects of both parties' compensation claims that are not going to be found in each of your favours." It is not the case that the Member determined the whole, or indeed any part, of Mrs Prenc's claim, although she did express a tentative view, before hearing any closing submissions, that the claim for termination under s 103 would fail. Nor did the Member suggest that the parties enter into an agreement in the terms of a determination already made by the Member. The Member's explanation as to what was proposed and what was occurring at various stages throughout the discussion was sufficiently clear to be accurate and not misleading.
As a result, the Appeal Panel is satisfied that, if Mrs Prenc formed the view that the Tribunal had already made a determination of the claim and was suggesting that the parties enter an agreement in terms of the determination, this was not something for which the Member could be said to be responsible. In other words, there was no misleading conduct by the Member that induced any mistake or misapprehension on Mrs Prenc's part. It should also be noted here that it was not submitted that Mrs Prenc was misled by Mr Murabito, in this regard.
In addition, even though it was submitted that Mrs Prenc misunderstood what occurred and was misled, there was no evidence before the Appeal Panel from Mrs Prenc. Consequently, the Appeal Panel was left in the position that there was no evidentiary material upon which it could be satisfied as to what Mrs Prenc understood occurred on 28 June 2016, why she signed the agreement or whether or not she did in fact misunderstand what was happening on that occasion.
[15]
Was the Agreement liable to be set aside because Mrs Prenc was inexperienced or had "impaired faculties"
In oral submissions, Mr Prenc also argued that, when she signed the settlement agreement, Mrs Prenc was so inexperienced or had "impaired faculties" and as a consequence there was no real agreement to settle the proceedings or the agreement should be set aside.
In this regard, Mr Prenc referred the Appeal Panel to Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81 and, as we understood it, thereby sought to invoke the doctrine of unconscionable dealing as a basis for setting aside the settlement agreement and consequently the consent orders.
In Blomey v Ryan, Kitto J described that doctrine as follows, at 415:
"It applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands" (emphasis added).
The elements of the doctrine of unconscionable dealing were considered by the High Court in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 in which Mason J described unconscionable dealing in the following terms, at 462:
"[A] general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party."
In particular, Mr Prenc relied upon his wife's inexperience, especially relative to Mr Murabito, and her "impaired faculties" as constituting the relevant "special disadvantage", which is also referred to by the High Court as "special disability" (see, for example, Mason J in Amadio at 474-5).
[16]
Conclusion on the second ground of appeal
For all of these reasons, the appeal based on the second ground of appeal should be dismissed.
[17]
Ground Three - Whether the Appellant was denied procedural fairness by the Tribunal failing to clearly delineate between adjudicative and conciliation functions
Mrs Prenc's third ground of appeal states:
"3. The Tribunal failed to accord the Appellant procedural fairness by failing to clearly delineate between adjudicative and conciliation functions, as required in NCAT CCD Procedural Direction 3, and s 26 CAT Act."
What occurred during the latter part of the hearing establishes that the Member was not conciliating the matter. While the Member did suggest to the parties the basis for a possible settlement, namely "that the matter be resolved on the basis that you pay the landlord the break lease fees in accordance with the residential tenancy agreement that you signed", this was not part of a conciliation process in the sense of a process which involved the Member discussing offers of settlement passed or to be passed between the parties and assisting them to reach a compromise settlement. The Member said that she would determine the claims, if the parties did not wish to settle.
Further, as we found above, the Member expressly stated that she did not want to hear what offers had been made or any negotiation. We take this to be an indication that she was expressly indicating that she was not seeking to conciliate the claims in the proceedings.
The Member gave both parties time to consider their position and, in Mr Murabito's case, seek instructions from the landlord and, in Mrs Prenc's case, discuss the matter with their husband, if she wished. It was only when the parties each indicated that they were prepared to resolve the matter on the basis suggested, that the Member then assisted by parties by reducing their agreement to writing so that they could then consider whether or not to sign the written agreement.
In these circumstances, we are of the view that the Member did not engage in conciliation and differentiated appropriately between her suggestion as to a basis upon which the parties might choose to settle and her hearing and determining the matter if they chose not to settle.
Mr Prenc referred to NCAT Consumer and Commercial Division Procedural Direction 3 - Conciliation and Hearing by Same Member and s 26 of the NCAT Act under which procedural directions can be issued. As we understood it, this procedural direction was relied upon as establishing that if a Member had conciliated a matter, the Member should not go on and determine the matter or, at least, should not do so without asking the parties if they objected to such a course. Paragraph 11 of the direction states:
"If the Member has taken part in the conciliation of a matter, the Member will ask the parties if they object to the Member proceeding to determine the matter. The Member will, in considering the objections raised, determine whether he/she will conduct the hearing or adjourn the matter to a later date before another Member."
[18]
Leave to appeal
Mrs Prenc sought leave to appeal on two bases: that there may have been a substantial miscarriage of justice in that the decision was not fair and equitable and that it was against the weight of evidence, having regard to the requirement in cl 12(1) of Sch 4 to the NCAT Act and the fact that this was an appeal from a decision made in the Consumer and Commercial Division. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel summarised the principles relevant to the grant of leave to appeal from decisions of the Consumer and Commercial Division ([76] to [79]):
"Accordingly, it should be accepted that a substantial miscarriage of justice may have been suffered because of any of the circumstances referred to in cl 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 to the particular grounds in cl 12(1)(a) and (b), without seeking to be exhaustive in any way, the authorities establish that:
1) If there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" - Hutchings v CTTT [2008] NSWSC 717 at [35], Atkinson v Crowley [2011] NSWCA 194 at [12].
2) The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153].
If in either of those circumstances the appellant may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved then the Appeal Panel may be satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or because the decision was against the weight of the evidence.
In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b) or (c), it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred - see the general discussion in Kyriakou v Long [2013] NSWSC 1890 at [32] ff concerning the corresponding provisions of s 68 of the CTTT Act and especially at [46] and [55]."
[19]
Conclusion
The consent orders made by the Tribunal were within its power and based upon a written and signed settlement agreement. Mrs Prenc has not established any ground upon which the Appeal Panel should allow the appeal and set aside the orders of the Tribunal below. No basis for granting leave to appeal has been made out.
Therefore the orders of the Appeal Panel are:
1. The name of the appellant is amended to Anna Prenc.
2. Mr Philip Prenc has leave to represent the appellant.
3. Leave to appeal is refused.
4. The appeal is dismissed.
[20]
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: 11 November 2016
In furtherance of the Tribunal's obligation under s 38(4) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) to "to act with as little formality as the circumstances of the case permit and … without regard to technicalities or legal forms", the Appeal Panel will treat Mrs Prenc's notice of appeal as seeking leave to appeal to the extent that it raises questions other than questions of law.
It was no doubt for this reason that, at the beginning of the appeal hearing, Mr Prenc stated that Mrs Prenc was not pressing ground one, which was to the effect that, because the purported agreed settlement was not in writing or signed by the parties, the Tribunal did not have the power under s 59(1) of the NCAT Act to make the orders that it did.
In these circumstances, we shall deal only with grounds 2 and 3 and, to the extent necessary in order to deal with any question of leave to appeal or for completeness, the matters raised as to whether the decision was not fair and equitable or was against the weight of the evidence.
In these circumstances, in our view what occurred during the hearing cannot properly be characterised as the Tribunal making a determination of any claim and then suggesting that the parties enter an agreement in terms of the determination, as Mrs Prenc contended in her second ground of appeal. Consequently, the Appeal Panel does not accept that there was no agreement on this basis.
It might be noted that the High Court in that case refused to set aside the compromise despite the "very unwilling and ephemeral character of the consent which the plaintiff was led to give." The High Court in this regard said, at 244:
"But it is enough if she expressed a real intention to consent, even if experience might have suggested that it was an attitude she was not likely to maintain. In the circumstances one might have expected that she would be asked to sign a written authority. But that was not done. However the finding of the Supreme Court, supported as it is by evidence, suffices to establish that she definitely did give her authority, however reluctant it may have been. It is impossible to regard the authority she thus gave as insufficient to support the compromise. The issue is one which must be considered from the defendants' point of view as well as from hers."
The Appeal Panel has taken the same approach to setting aside consent orders of the Tribunal, see for example Loch v New South Wales Land and Housing Corporation [2014] NSWCATAP 110 at [27].
Thus, in order to deal with the contentions raised in oral submissions the Appeal Panel will consider whether either of the bases raised by Mr Prenc justifies the agreement upon which the consent orders were based being set aside.
In these circumstances, the Appeal Panel does not accept that Mrs Prenc was misled as to what occurred or that the Member or Mr Murabito was responsible for misleading Mrs Prenc. It follows from this that the Appeal Panel should reject the argument that the consent orders should be set aside on the basis that the underlying settlement agreement was void or should be set aside because Mrs Prenc was misled.
Furthermore, even if there had been evidence that Mrs Prenc actually misunderstood what occurred on 28 June 2016, this does not of itself otherwise provide a basis for setting aside the settlement agreement and the consent orders. It was not suggested that Mr Murabito, as Ms Stojcevski's representative, was operating under a similar misunderstanding when the agreement was signed. At most, any misunderstanding on Mrs Prenc's part could only be characterised as a unilateral mistake.
Where there are no other vitiating circumstances, such as misleading or deceptive conduct, fraud or misrepresentation, a unilateral mistake will not generally constitute a basis for the setting aside an agreement unless the mistake is a serious mistake in relation to a fundamental term of the contract and the other party knew of or contributed to the mistake. The High Court in Taylor v Johnson (1983) 151 CLR 422; [1983] HCA 5 formulated some of the relevant propositions in relation to equitable relief in cases of unilateral mistake, at 432-3, as follows:
"a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension. … Moreover, and perhaps more importantly, it is a principle which is best calculated to do justice between the parties to a contract in the situation which it contemplates. In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party's actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it. Our comment can, for present purposes, be limited in its application to the case where the second party has not materially altered his position and the rights of strangers have not intervened."
More recently, Heydon and Crennan JJ, in Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26, made the following observations concerning the relevance of the actual state of mind of parties to a contract, at [101]:
"In consequence the actual state of mind of either party is only relevant in limited circumstances, for example, where one party relies on the common law defences of non est factum or duress; where misrepresentation is alleged; where one party is under a mistake and the other knows it; where the contract is liable to be set aside by reason of equitable doctrines of undue influence, unconscionable dealing or other fraud in equity; where the equitable remedy of rectification is available; where a question of estoppel arises; or where there is a question whether the "contract" is a sham." [footnotes omitted]
In the present case, any misunderstanding on Mrs Prenc's part, even if it had been established in evidence, was not a unilateral mistake relating to the terms of the settlement agreement but rather to her prospects of success should she have forgone settlement and chosen to have the whole of the matter heard and determined by the Tribunal. Further, there was no material before the Appeal Panel which would support the conclusion that Mr Murabito was aware that Mrs Prenc was acting under any misunderstanding or mistake in entering into the settlement agreement or contributed to, or was responsible for, the misunderstanding or mistake in some way.
Moreover, the resolution agreed to was not so unfavourable to Mrs Prenc that it could support the conclusion that she was operating under a mistake or that it would have been obvious to Mr Murabito that she was likely to be mistaken in agreeing to the terms recorded in the written agreement.
Taking all of these matters into account, the Appeal Panel is of the view that the settlement agreement and the consent orders are not liable to be set aside on the basis that Mrs Prenc was misled or was mistaken as to any relevant matter. Thus, this aspect of the second ground of appeal must fail.
In his submissions, however, Mr Prenc did not elaborate in any particular detail upon why the Appeal Panel should conclude that Mrs Prenc was relevantly inexperienced. There was no evidence to which our attention was directed that Mrs Prenc lacked education, commercial or professional experience or similar matters that might have established that she lacked experience in tenancy matters to such an extent as to amount to a "special disability" in the context of the proceedings at first instance. The Appeal Panel accepts that Mr Murabito may have been experienced in relation to real estate matters. Indeed, it is recorded in the partial transcript and we find that Mr Murabito said to the Member during the hearing on 28 June 2016:
"I've been here quite often, for matters of law back to front, I've been a practicing real estate agent for 25 years.
…
I know the law back to front. I probably know the law better than you. Alright."
Nonetheless, by itself and without evidence as to any lack of education, training or experience of commercial or similar matters on Mrs Prenc's part, Mr Murabito's experience does not establish that Mrs Prenc was so inexperienced that she should be found to be suffering such a disability that she was not able to judge and protect her own interests in relation to the claims before the Tribunal.
Accordingly, we are not satisfied that Mrs Prenc suffered a "special disadvantage" because of any inexperience.
As to the submission that Mrs Prenc's faculties were impaired, the impairment was said to arise out of Mrs Prenc being under stress and feeling uncomfortable and threatened. As the Appeal Panel understood it and in the absence of direct evidence from Mrs Prenc, her feeling stressed, threatened and uncomfortable at the relevant time was said to have been caused by, and was able to be inferred from, the following:
1. Mr Murabito's conduct during the course of the tenancy which was characterised as aggressive or intimidating including:
1. A phone call on Thursday 5 May at 2.15pm in which, it was submitted, Mr Murabito shouted at Mrs Prenc;
2. Mr Murabito, or another agent of Ms Stojcevski, breaking into (or at least entering) the premises to repair or replace the top rack of the dishwasher while the Prencs were away from the house;
1. Mr Murabito's conduct earlier in the hearing on 28 June 2016, as recorded in the partial transcript, which Mr Prenc characterised in submissions as repeatedly interrupting, accusing Mrs Prenc of lying and perjury and being aggressive and extremely disruptive;
2. Mrs Prenc's responses recorded in the transcript of the later part of the hearing, such as "Do I have to or can?" to the Member's question "Do you want to speak to Mr Murabito?", Mrs Prenc's unwillingness to provide a forwarding address to Mr Murabito when he requested it and the exchange:
"Mrs Prenc: Yeah, it's fine.
Member: Mr Murabito?
Mr Murabito: [inaudible]?
Member: Yep.
Mr Murabito: [inaudible]
Member: Alright, okay.
Mrs Prenc: That's it? No more for me?"
In all these circumstances, it was submitted that the Appeal Panel should conclude that Mrs Prenc's faculties were impaired at the time the settlement agreement was concluded.
In the absence of evidence from Mrs Prenc, the circumstances recorded in the transcript and the conduct concerning the tenancy itself, do not, in our view, whether considered in isolation or together, amount to material sufficient to establish that Mrs Prenc, at the time she entered into the agreement, had "impaired faculties" so that her ability to judge and protect her own interests was seriously affected or compromised. Whilst it is not appropriate to seek to impose any definitive limit on what might constitute "impaired faculties", that expression would apply to impaired physical and mental faculties including temporary impairment resulting from particular circumstances to which a person is subject at the relevant time such as stress or panic. What is essential in order to constitute "special disadvantage", however, is that the impairment be such as to affect seriously and adversely the person's ability to judge and protect his or her interests in the circumstances under consideration.
The Appeal Panel is aware that proceedings in the Tribunal can be stressful. Examples of what occurred in during the hearing at first instance can be found in the partial transcript which was put before us by Mrs Prenc and which Mr Murabito did not object to or challenge in any way. Based on that partial transcript, we find that, during the hearing at first instance, Mr Murabito talked over and interrupted the Member, interrupted the other side's evidence saying things such as "Stop there. Stop your lying. Don't lie to the member. No one here threatened you on the 29th" and "I won't stand for any perjury in the court. You will be punished." and demanded that a Bible be brought in, which led to the following exchange:
"M I'll get the bible and I'll get you to reswear on the bible if you're prepared to do so but as far as I'm concerned I have sworn the parties in. I have sworn the parties in. I am doing this because you are asking me to.
[Prencs swear oath on bible]
M Mr Murabito and I'll get you to swear on the bible.
S I'll raise my hand to the bible but I won't be touching anything after they've touched it
M Mr Murabito you have just asked. Mr Murabito this is, I am conducting these proceedings, You have asked me to ask the tenants to swear on the bible. I am going to ask you to swear on the bible
S [Murabito swears oath on bible]"
("M" refers to the Member and "S" refers to Steve Murabito)
Such an approach by a representative in the Tribunal does nothing to reduce the level of stress and is not conducive to the proper disposition of matters. Nonetheless, the Member did maintain control of the proceedings in what appear to have been difficult circumstances.
As to what occurred during the tenancy between Mrs Prenc and Mr Murabito, there was reference to SMS and email messages and conversations and the fact that a representative of Ms Stojcevski entered the house when the Prencs were absent without their express permission to fix the top layer of the dishwasher.
From all of this, the Appeal Panel has no doubt that by the time of, and during, the hearing there was a significant level of animosity and tension in the relations between the Prencs and Mr Murabito. We also accept that this caused Mrs Prenc to feel uncomfortable and threatened and to be under considerable stress.
We also note, however, that approximately one hour and five minutes into the hearing and after the swearing on the bible incident, Mr Prenc, who had been present with his wife, left the hearing, leaving Mrs Prenc to conduct her case by herself. This suggests that Mr Prenc did not perceive any inability on Mrs Prenc's part to judge and protect her own interests at that point. At no point was an adjournment sought by Mrs Prenc because of Mr Murabito's conduct. Furthermore, it does not appear that the Member considered it necessary at any point to adjourn the hearing because of any obvious distress or inability to protect her interests, on Mrs Prenc's part. These observations, in the context of all the material before us as to what occurred during the tenancy and during the hearing at first instance, lead us to conclude that, despite the strained relations between the Prencs and Mr Murabito and the stress and discomfort caused to Mrs Prenc, her faculties were not so impaired in the circumstances that she was rendered unable effectively to judge and protect her relevant interests during the hearing.
Consequently, we are not satisfied that Mrs Prenc was suffering from special disadvantage or a special disability vis-à-vis Mr Murabito, acting as Ms Stojcevski's agent, or Ms Stojcevski herself, whether based upon inexperience or impaired faculties.
In addition, even if we are wrong in our conclusion stated above and Mrs Prenc was suffering from a disability or disadvantage which seriously affected her capacity to judge or protect her own interests, we are not satisfied that Ms Stojcevski, or her agent Mr Murabito, knew of that special disadvantage or unconscientiously took advantage of it. In Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25, the High Court said (at [161]):
"Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm's length commercial transaction. Inadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned."
We do not believe it would be proper to conclude on the material before us that Mr Murabito, or Ms Stojcevski, had a "predatory state of mind" or unfairly exploited Mrs Prenc's inexperience or "impaired faculties", if they had been found to constitute "special disadvantage".
In these circumstances, the Appeal Panel is of the view that Mrs Prenc has not established that Mr Murabito or Ms Stojcevski should be found to have acted unconscionably in entering into or seeking to maintain the settlement agreement.
Thus, the second ground of appeal insofar as it was based on Mrs Prenc's alleged inexperience or impaired faculties as a ground for setting aside the settlement agreement and consent orders should be rejected.
We do not accept that this direction had any relevant application in this case because, in our view, the Member at first instance had not taken part in the conciliation of the proceedings. Even if we are wrong as to that matter, this was not a case where the Member went on to conduct a full hearing and determine the matter. In the present case, the Member had before her a written and signed settlement agreement and she merely made orders giving effect to that agreement. As a result, even if she had participated in a conciliation of the proceedings, there was nothing to prevent her from giving effect to a written settlement agreement by making orders under s 59 of the NCAT Act.
Mr Prenc also submitted that there was a denial of procedural fairness because the Member determined the claims, or at least the claim under s 103, without regard to the evidence or the law and then had the parties agree to the determination. This is a misunderstanding of what occurred. As we have explained above, the Member did not determine any of the claims for monetary sums. Nor did the Member determine Mrs Prenc's claim under s 103 for termination of the tenancy. The Member expressed a tentative view that such a claim was unlikely to succeed and gave an, albeit short, explanation of her thinking. Mrs Prenc was not forced to accept that view and the Member effectively indicated that she would listen to any closing submissions that Mrs Prenc wanted to make, including concerning the s 103 claim before determining that claim, if Mrs Prenc did not wish to settle on the basis proposed. Nor was Mrs Prenc forced or required to settle the proceedings. The Member made it clear that if either party did not wish to settle she would continue and determine all the claims, including the claims for compensation as well as termination under s 103, taking any further evidence and hearing submissions.
We are not satisfied that the Member denied Mrs Prenc procedural fairness in any relevant respect.
The matters said by Mrs Prenc to support the grant of leave to appeal were as follows (with numbers added for ease of identification):
"[1] The evidence submitted was not sufficiently considered and/or given appropriate weight.
[2] The respondent did not turn up and their representative did not have the appropriate authorisations
[3] The defendant representative was aggressive and extremely disruptive
[4] Not all orders being sought were considered
[5] No consideration of respondent's frequent and sustained breaches of the lease agreement
[6] We provided a detailed full submission that involved a full audit trail of all discussions held (by each party)
[7] The defendant provided a small submission that lacked integrity in that it selectively provided correspondence (not the full picture)"
None of these matters provides a basis for the Appeal Panel to grant leave to appeal in respect of the grounds of appeal relied upon by Mrs Prenc, for the reasons we have already given.
Further, the issues raised in 1, 4, 5, 6 and 7 are not relevant or applicable in circumstances where the parties entered into a settlement agreement and the proceedings were determined by consent and not after a full hearing and determination of the matters in issue by the Tribunal. The settlement and the subsequent consent orders obviated the need for the Tribunal to hear and weigh all of the evidence, consider all of the orders sought and receive and consider the submissions of the parties. If the consent orders are not liable to be set aside because the settlement agreement was void or voidable, then it could not be found that the decision in this case was not fair and equitable on the bases relied upon by Mrs Prenc. For similar reasons, the decision was also not against the weight of the evidence.
Point 2 related to the representation of Ms Stojcevski at the original hearing. There was no appeal against the decision of the Tribunal at first instance to grant leave to Mr Murabito to appear for Ms Stojcevski on that occasion. As to point 3, although it might be accepted that Mr Murabito's conduct was aggressive and disruptive during the hearing at first instance, we have already determined that this was not such as to render the settlement agreement liable to be set aside. Such conduct, having been properly managed by the Member in difficult circumstances, does not provide an independent basis for finding that the decision was not fair and equitable.
In these circumstances, we are not satisfied that the decision, namely the consent orders, was not fair and equitable or that it was against the weight of the evidence, in any sense relevant for the purposes of cl 12(1) of Sch 4 to the NCAT Act.
Further, we are not satisfied that Mrs Prenc might have suffered a miscarriage of justice on one of the bases relied upon. Accordingly, we are not in a position to grant leave to appeal, even if it were otherwise appropriate.