Profitability Consulting Pty Ltd v Thorpe

NCAT Appeal Panel|2018-08-30

Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 Equuscorp v Haxton (2012) 246 CLR 498 Jackson v NSW Land & Housing Corporation [2014] NSWCATAP 22 Johnson v Johnson (2000) 201 CLR 488 Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 Lewis v Bell (1985) 1 NSWLR 731 Michael Wilson & Partners Limited v Nicholls [2011] HCA 48; (2011) 244 CLR 427 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Radaich v Smith (1959) 101 CLR 209 Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339 WABZ v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 134 FCR 30 Walker Corporation v Sydney Harbour Foreshore Authority (2009) 168 LGERA 1 Category: Principal judgment Parties: Profitability Consulting Pty Ltd (Appellant) Joanne Thorpe and Arthur Peterson (Respondents) Representation: Counsel: S Richardson (Appellant)

Solicitors: Maguire & McInerney Lawyers (Appellant) J Thorpe & A Peterson (Self Represented)(Respondents) File Number(s): AP18/28091 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Nil Date of Decision: 24 March 2018 Before: J Lennard, General Member File Number(s): GEN 17/24977

REASONS FOR DECISION

Joanne Thorpe and Arthur Peterson, the respondents to this appeal, are the owners of a unit in a strata title holiday resort complex in Jindabyne, New South Wales. The respondents' unit is one of 43 separate holiday units. The respondents purchased that unit from the appellant, Profitability Consulting Pty Ltd, in December 2016.
For convenience, in the balance of these reasons we will refer to the appellant as Profitability and the respondents as the Owners.
At the time the Owners acquired the unit they also entered into an agreement with Profitability for the management by Profitability of the Owners' unit as a holiday unit available for short term lettings. Profitability managed the Owners' unit, along with other units which Profitability owned and units owned by other parties, as part of a pool, with all owners sharing revenues from the letting of any unit within the pool.
The parties disagreed as to what constituted the agreement between them. The Owners relied upon a document, executed by the parties, titled Management Letting Agreement (MLA). Profitability asserted that the parties were also bound by the terms of a Product Disclosure Statement (PDS) which was provided to the Owners at the same time as they received the contract for purchase of the unit and the MLA.
In proceedings GEN 17/24977 commenced on 1 June 2017 the Owners sought orders for the refund of fees and commissions and other deductions charged by Profitability from 14 December 2016 in respect of the management of the Owners' unit. The Owners also sought compensation for the cost of a locksmith and lost rent said to have been caused by Profitability's refusal to return possession of the premises after termination of the management agreement between the parties.
By a decision (the Decision) dated 24 March 2018 a Member of the Tribunal ordered Profitability to pay the Owners the amount of $13,582.78. Profitability lodged this appeal against the Decision on 21 June 2018.
In the Decision the Tribunal Member found that Profitability had charged fees and commissions in breach of the requirements of the Property Stock and Business Agents Act 2002 (NSW) (the PSBA Act) and had made deductions of other amounts in breach of contract, and ordered Profitability to pay the owners: 1. $4251.54 refund of management fees 2. $87.55 refund of bookkeeping fees 3. $1003.28 refund of costs of unauthorised purchases 4. $500.00 refund of costs of cleaning incorrectly charged 5. $800.00 compensation for the cost of a locksmith 6. $6940.41 compensation for lost rent as a result of Profitability's refusal to return possession of the premises after termination of the agreement.
In her Reasons for Decision, the Member concluded: 1. That the agreement between the parties consisted of the MLA alone and that the PDS was not part of the agreement (at [6]); 2. That the Owners terminated the agreement with effect from 17 May 2017 on the basis of serious breaches of the agreement by Profitability (at [27]); 3. That Profitability was not at relevant times licensed under the PSBA Act (at [9]); and 4. That Profitability was "an agent" for the purposes of the PSBA Act and was required to hold a licence to conduct its business of managing the letting of units including the Owners' unit (at [10]).
The notice of appeal was lodged 13 weeks after the first instance decision was said to have been received, that is 9 weeks after the expiry of the time within which rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW) required such an appeal to be lodged. Accordingly, if Profitability is to prosecute its appeal, it requires an extension of time for the lodgement of the appeal under s41 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
On 3 July 2018 a stay of the operation of the order made by the Member on 24 March 2018 was granted, on condition that the amount of $13,582.78 was paid to the Registrar of the Tribunal to be held pending determination of the appeal. That sum has been paid and is held by the Tribunal.

Procedural background

The procedural background to the proceedings in the Consumer and Commercial Division is as follows: 1. On 20 June 2017 at the first listing of GEN 17/24977 in the Tribunal, leave was granted for the Owners to amend their claim to specify each alleged breach, providing documents in support. Further directions were made for Profitability to provide its evidence. An application by Profitability for leave to be legally represented was refused. 2. The matter was set down for hearing on 16 August 2017. 3. On 6 July 2017 the timetable for provision of documents was extended at the request of the Owners, and the hearing date of 16 August 2017 was confirmed. 4. On 2 August 2017 a further request by Profitability to be legally represented, and for an extension of time for the filing and serving of evidence and the adjournment of the hearing, was refused. Profitability lodged an internal appeal against those decisions. 5. On 16 August 2017 the hearing of the substantive application was adjourned, because the Owners had filed their amended application after the time specified in the orders made on 20 June 2017 and sought to further amend the application, and because there was evidence that one of the directors of Profitability, Ms Roberta Faddoul, who was directly involved in the arrangements between the parties, was overseas until 20 August 2017. The Member who adjourned the hearing noted that Profitability had not complied with procedural directions to file and serve documentary evidence. The hearing was next listed for 15 November 2017. 6. Profitability's appeal against the refusal to grant leave for legal representation was listed for hearing on 28 September 2017. However Profitability withdrew that appeal, which was consequently dismissed on 26 September 2017. 7. The hearing on 15 November 2017 was adjourned part heard to 5 February 2018, further adjourned to 5 March 2018, and further adjourned to 21 March 2018.
Profitability was represented at the first instance hearing by its director Ms Roberta Faddoul. Mr Byron Heath, an employee of Profitability and hotel manager, also attended. The Owners appeared in person.
Profitability has provided a transcript of extracts from the hearings on 5 February 2018 and 21 March 2018 and a copy of the sound recording of parts of the hearing. The Owners accepted the accuracy of the transcript extracts.

Extension of time to lodge the appeal

Profitability explains the delay in lodging this appeal as being a consequence of its having filed an appeal in the District Court, which it accepts was the wrong jurisdiction. That application was lodged on 17 April 2018, within the time in which the internal appeal under s 80 of the NCAT Act should have been lodged. The Owners were on notice within the appeal period that Profitability intended to appeal. Once it became clear that the application was made in the wrong jurisdiction, the Owners having filed a Notice of Motion in the District Court, there was no further delay. Profitability submits that the merits of the appeal require determination.
The Owners oppose an extension of time, submitting that Profitability was represented by a solicitor at the time it lodged the District Court application, and that Profitability had an opportunity to lodge the current appeal within time. The Owners also submit that the delay is part of a continuing pattern of behaviour on the part of Profitability in failing to pay the amount of $13,582.78 by 30 March 2018 as ordered and failing to pay a costs order made against it in the District Court. The Owners have had no access to the funds awarded. The Owners argue that Profitability's case on the appeal is weak, as the claimed "errors of law" have been canvassed continuously throughout the matter. They submit that the length of the delay is excessively long having regard to s 36 of the NCAT Act and the fact that the matter commenced in May 2017.
In Jackson v NSW Land & Housing Corporation [2014] NSWCATAP 22 an Appeal Panel of the Tribunal set out at [21]-[22] the relevant principles in relation to the grant of an extension of time in which to bring an appeal (references omitted): 21. Time limits, including the specification of the time within which an appeal from an internally appealable decision to the Appeal Panel of the Tribunal must be lodged, are established by legislation for the purpose of promoting the orderly and efficient conduct of proceedings in the Tribunal, providing certainty for the parties to proceedings, especially the party in whose favour orders have been made, and achieving finality in litigation. For these reasons, these time limits should generally be strictly enforced. That is not to say, however, that exceptions should not be made where the interests of justice so require. The express power in s 41 of the Act to grant extensions of time allows the Tribunal to prevent the rigid enforcement of time limits becoming an instrument of injustice. As the decision in Gallo v Dawson quoted above makes clear, it is generally the case that in order for the power to extend time to be exercised in an appellant's favour there must be material upon which the Appeal Panel can be satisfied that to refuse the application for an extension of time would work an injustice. 22. The considerations that will generally be relevant to the Appeal Panel's consideration of whether to grant an extension of time in which to lodge a Notice of Appeal include: (1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal), and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable.
A delay of approximately 3 months, in the context of the 28 day period specified in rule 24(4)(c), is not short. Moreover, we regard the reasons for the delay as unconvincing. As the District Court proceedings were commenced on behalf of Profitability by a solicitor (not the solicitor representing it on this appeal), Profitability ought to have been aware of the provision for internal appeal under s 80 of the NCAT Act. Profitability had previously availed itself of its right of internal appeal in the appeal against the refusal to grant leave for legal representation. There is no reasonable explanation as to why an internal appeal was not lodged in April 2018.
We are satisfied that, while the Owners were on notice that Profitability was contesting the Decision from the time they received a letter dated 30 April 2018 providing a copy of the summons commencing an appeal in the District Court, the delay in lodging this appeal, and the consequent extension of time before they can be paid the money ordered in GEN 17/24977, does constitute prejudice to the Owners.
The primary factor justifying an extension of time is the prospects of success on the appeal. As noted in Jackson, in a context where the explanation for the delay is less than satisfactory, Profitability needs to show that its case has more substantial merit than merely being fairly arguable. For the reasons outlined below we have concluded that the Member did make substantial and significant errors of law in the Decision. We have concluded that it is appropriate to grant an extension of time for the lodgement of the appeal.

Availability of Appeal

An internal appeal may be brought as of right on a question of law or, with the leave of the Appeal Panel, on other grounds. As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of cl 12(1) of Sch 4 to the NCAT Act, leave to appeal may only be granted under s 80(2)(b) if the Appeal Panel is satisfied an 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).
In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarised at [71] and [79] as follows: [71] …[I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred… … [79] 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 … 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.
Even if an appellant from a decision of the Consumer and Commercial Division satisfies the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). As discussed in Collins v Urban, an appellant must demonstrate something more than that the Tribunal was arguably wrong. Leave is ordinarily granted only where the matter involves an issue of principle, questions of public importance, where the injustice is reasonably clear or where the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result.

Grounds of Appeal

There are 11 grounds of appeal specified in the Grounds of Appeal provided with the Notice of Appeal. We understand those grounds to be that the Tribunal Member: 1. Denied Profitability procedural fairness, in failing to allow Profitability to be legally represented; 2. Denied Profitability procedural fairness, in conducting the hearing so as to raise an apprehension of bias, and in denying Profitability a meaningful opportunity to be heard at the final hearing; 3. Denied Profitability procedural fairness, in refusing leave for Profitability to rely on its final submissions; 4. Failed to establish that there was jurisdiction to determine the claim by finding the facts necessary to conclude that Profitability was a "real estate agent" as defined under the PSBA Act; 5. Mistakenly asserted jurisdiction to determine the claim for damages for breach of contract; 6. Applied a wrong principle of law, that Profitability met the statutory requirement of being the holder of a licence under the PSBA Act and that the Tribunal could review the fees and charges; 7. Applied a principle unknown to the law, that Profitability could not avoid the provisions of the PSBA Act by failing to obtain a licence; 8. Failed to take into account a relevant consideration, namely s 55A of the PSBA Act; 9. Erred in the exercise of discretion in determining the entitlement of Profitability, and ought to have determined that it was entitled to retain the sum of $9,617.71; 10. Failed to take into account relevant considerations and failed in the exercise of discretion in determining the Owners' claim for the refund of charges, and ought to have determined that the Owners were not entitled to any refund other than for bookkeeping fees in the sum of $87.55; and 11. Failed by reason of the breaches of procedural fairness asserted in grounds 1 to 3 to justly determine the claim for refund of charges levied in breach of contract.
Profitability also seeks leave to appeal under s 80(2)(b) of the NCAT Act on the ground that the decision was not fair and equitable. In support of that proposition Profitability contends that the failure to afford procedural fairness means that Profitability may have suffered a substantial miscarriage of justice.
At the hearing of the appeal Profitability sought leave to amend the Grounds of Appeal. The Owners opposed leave to amend, submitting that the appeal was out of time, the Notice of Appeal was drafted by lawyers, and the Owners were deprived of the opportunity to put on material in reply. We refused Profitability leave to make certain amendments but permitted amendments: 1. To add to the claims of denial of procedural fairness, a claim (as part of ground 2) that: The Tribunal breached the hearing rule as the Tribunal decision maker failed to engage with many claims and submissions advanced by the appellant and meaningfully consider them. The decision record is replete with instances where the decision maker has failed to consider claims and submissions of the appellant. In so doing, the appellant [sic] has breached the requirement of procedural fairness. 1. To amend the contention relating to the claim for refund of charges levied in breach of contract, to add a reference to "compensation", and a particular that: 10.b. The Tribunal decision-maker has acted irrationally and, therefore, unreasonably in fact finding, including in respect of the product disclosure statement and the use of the unit after 16 May 2017 by the respondents and committed errors of law.

Reply to Appeal

The Owners support the decision under appeal, and oppose leave to appeal, contending that the asserted errors of law cannot be substantiated based on the history of the proceedings, the conduct of the parties and the nature of the substantive matters under consideration.

Whether the Tribunal erred on questions of law

In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13] the Appeal Panel identified as questions of law:

whether there has been a failure to provide adequate reasons;
whether the Tribunal identified the wrong issue or asked the wrong question;
whether a wrong principle of law has been applied;
whether there was a failure to afford procedural fairness;
whether the Tribunal failed to take into account relevant considerations;
whether the Tribunal took into account an irrelevant consideration;
whether there was no evidence to support a finding of fact;
whether the decision is so unreasonable that no reasonable decision-maker would make it.

The Grounds of Appeal assert a denial of procedural fairness, errors in the determination of jurisdiction, and errors in the application of the law and in findings made in respect of the substantive issues.

Grounds 1, 2 and 3 - Whether there was a denial of procedural fairness

The Grounds of Appeal as amended at the hearing include the contention that there was a denial of procedural fairness in four respects: failure to allow legal representation; apprehended bias; failure to provide a meaningful opportunity to be heard at the final hearing; and failure to engage with many claims and submissions advanced by Profitability.
Profitability contends that there was a failure to afford procedural fairness in not affording a right to legal representation. Section 45 of the NCAT Act provides: (1) A party to proceedings in the Tribunal: (a) has the carriage of the party's own case and is not entitled to be represented by any person, and (b) may be represented by another person only if the Tribunal grants leave: (i) for that person to represent the party, or (ii) in the case of representation by an Australian legal practitioner - for a particular or any Australian legal practitioner to represent the party.
Profitability sought, and was refused, leave to be legally represented on two occasions before the substantive hearing. The reasons given for the second refusal on 2 August 2017 were: Reasons: Pursuant to section 45 of the NCAT Act a party has carriage of their own case and is not entitled to be represented. The Tribunal is not satisfied that there are sufficient circumstances to warrant leave being granted for the respondent to be legally represented in the matter. If Roberta Faddoul is unable to attend then another director of the company and/or another authorised company employee must attend the hearing to represent the company.
Profitability submits that the granting of legal representation was necessary to secure a fair hearing. In WABZ v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 134 FCR 271, at [69], French and Lee JJ identified as considerations relevant to the question whether disallowing representation amounts to a denial of procedural fairness: 1. The applicant's capacity to understand the nature of the proceedings and the issues for determination. 2. The applicant's ability to understand and communicate effectively in the language used by the Tribunal. 3. The legal and factual complexity of the case. 4. The importance of the decision to the applicant's liberty or welfare.
Profitability has not established how, in the context of the statutory discretion, any of those factors pointed squarely towards the conclusion that it was entitled to be legally represented. Profitability was entitled to obtain whatever legal advice and assistance it required to prepare its documents and submissions for the hearing. In a statement dated 31 July 2018 provided in support of the appeal Ms Faddoul stated that, having not been given leave for legal representation, as the hearing progressed she thought that was a mistake. Profitability had appealed against the second refusal of leave on 2 August 2017, however it withdrew its appeal shortly before the listed hearing. There is no indication that Ms Faddoul or any other person renewed a request for leave for legal representation after 2 August 2017, despite having been informed by the Registrar by letter dated 23 February 2018 that she could make another request in writing before the next hearing or at the hearing.
In the absence of any renewed request for leave to be legally represented, Profitability has not established there was a denial of procedural fairness in the hearing proceeding with neither party legally represented.
Profitability's second contention is of apprehended bias, based on: 1. Improper communications with the Owners during an adjournment; 2. Improper communications with third parties; 3. Granting leave for the Owners to amend the relief sought.
The test of apprehended bias is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide: Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 at [6]; Michael Wilson & Partners Limited v Nicholls [2011] HCA 48; (2011) 244 CLR 427 at [31]. The person asserting apprehended bias must identify what might lead a decision-maker to decide a case other than on its legal and factual merits, and secondly, identify the logical connection between the matter and the failure to decide the dispute on its merits: Ebner at [72].
An apprehension of bias must be established by reference to the "fair minded lay observer", that is a hypothetical observer, and not by reference to the subjective feelings of a litigant: Johnson v Johnson (2000) 201 CLR 488.
By 5 February 2018 the proceedings had, as noted above, been listed for hearing on two previous occasions, on 16 August 2017, which was adjourned, and 15 November 2017 in Queanbeyan. It is clear that on 5 February 2018, at Cooma, Ms Faddoul was having difficulty in identifying relevant documentary evidence in response to the Member's questions as to each element of the claim, and the hearing became heated. It is apparent, from those parts of the sound recording that have been provided, that Ms Faddoul became argumentative, interrupting and shouting, and that the Member raised her voice as well. Before Ms Faddoul was directed to leave the hearing room the Member had been trying to understand the basis on which Profitability had claimed a $90 cleaning fee, and the Member asked questions to understand how the claim was substantiated. The Member announced that she would take a 10 minute break to allow Ms Faddoul to consider whether she could continue to represent Profitability without shouting at anyone, or Mr Heath would take over the case and she would disqualify Ms Faddoul as representative. The difficulties continued however, with Ms Faddoul continuing to assert that Profitability had done work for which it had made deductions while being unable to identify documentary evidence that the work had been done. Shortly after 3.10pm the Member directed Ms Faddoul to leave the hearing room and the hearing was adjourned.
In support of its contention of apprehended bias Profitability relied on Ms Faddoul's statement dated 31 July 2018 in which she stated: 1. She thought that she was prejudiced because of the way she was treated by the Member; 2. She did not get a fair chance to submit her evidence on behalf of Profitability and did not have a chance to say anything as the hearing progressed, and felt that the Member was making up her mind without listening to her side of the story; 3. She repeatedly asked for forensic evidence and other evidence to be submitted by the Owners; 4. The Tribunal did not change the date for the first occasion after she gave evidence she would be overseas, and her partner who was unprepared had to attend to represent Profitability; 5. The Member changed the hearing venue to Bega despite Ms Faddoul's protests and argument it should have remained in Queanbeyan; 6. After the Member removed her from the hearing room on 5 February 2018 she was very upset and rattled; 7. She felt that the Member was abusing her power after she yelled at her and she felt intimidated; 8. She was shocked when Mr Heath told her the Member had continued to hear the case in her absence on 5 February 2018 and that on that day she had discussions with the Owners without her in the room; 9. On 5 February 2018 she was frustrated because she was never given a chance to properly give evidence and make submissions and was constantly shut down by the Member; 10. Only after her complaint was she allowed to present her evidence but by then she felt that the Member had made up her mind; and 11. She felt the Member did not like her.
It may be accepted that Ms Faddoul did not find the hearing process a pleasant one; however her subjective feelings about the Member's attitude towards her are not the test, and in any event, are not borne out by how the Member conducted the hearing as reflected in the matters discussed and the comments made. The Member stated the need to have evidence. Profitability has not established how the matters identified above could meet the test stated in Ebner as giving rise to an apprehension of bias.
The only possible qualification to that conclusion relates to the assertion that the Member engaged in ex parte communications with the Owners in the absence of any representative of Profitability. There are two reasons why that assertion does not support a claim of apprehended bias. First, it is clear from the transcript that the Member engaged in conversation, at times when the hearing had been adjourned, both with Mr Heath and with the respondents. The conversation after Ms Faddoul and Mr Heath had left the room was recorded and the recording was provided to the Appeal Panel. It is clear from that recording that the discussion in the absence of Ms Faddoul and Mr Heath did not traverse any matters of evidence going to the substantive issues in the proceedings, and was related to the further progress of the matter and procedural issues. After Mr Heath returned to the hearing room the Member outlined in detail the issues that had been heard, and the issues remaining, and her availability for a resumption of the hearing in Bega in early March for a limited period. Mr Heath then raised with the Member his concern that there had been conversation after he and Ms Faddoul left the hearing room; and he acknowledged Ms Faddoul's emotional and argumentative state. Whether or not it was appropriate for the Member to have continued to speak to the Owners after Ms Faddoul and Mr Heath left the hearing room, Profitability has not pointed to any specific matter discussed that could establish any logical connection to a failure to decide the dispute on its merits as required by Ebner.
The hearing continued after 5 February 2018, on 5 March 2018 in Bega and 21 March 2018 in Queanbeyan. By that time, as noted in a letter from the Registrar to Ms Faddoul, Profitability had been given information about how to ask Members to disqualify themselves from hearing a matter. No submission was made, and there is nothing in the material before us to suggest, that any application was made on behalf of Profitability that the Member recuse herself from further hearing of the application.
Decisions such as: whether to allow a party, in particular a self-represented party, to amend their application; determining the venue for an adjourned hearing; and management of hearing time so as to allow all parties an adequate opportunity to present their case, must be made in accordance with the guiding principle in s36(1) of the NCAT Act, taking into account the efficient management of Tribunal business and allocation of resources, including Member and venue availability. In a context where the Owners, who were self-represented, had been granted leave to amend their claim by Tribunal Members other than the Member who determined the application; where there was no evidence that hearings were scheduled otherwise than in accordance with Member and venue availability; and where the Member reminded the parties that they needed evidence to substantiate their claims, Profitability has not established its claim of apprehended bias.
The third basis on which Profitability contends there was a denial of procedural fairness is the claim that the Member did not allow Profitability to rely on its Final Written Submissions at the final day of hearing on 21 March 2018.
The directions made on 5 March 2018 when the hearing was adjourned included: 2. The applicants and the respondent shall provide to the other party and the Tribunal, either in person or by post, a copy of all further submissions and documents, on which the applicant intends to rely at the hearing by 16-Mar-2018. 3. The parties are directed that the final written submissions must address, at least: 1) the ATO audit document provided by the Respondent and its impact on the issue of the claim for a refund of fees and commissions; 2) the breaches of contract alleged by the Applicants to have been caused by the Respondent and what, if any, compensation is appropriate; 3) the misrepresentations alleged to have been made by the Respondent to the Applicants, the impact of those misrepresentations and what, if any, compensation is appropriate; 4) the factual basis for the claim of refusal by the Respondent to allow the Applicants access to their unit and what , if any, compensation is appropriate; 5) the factual basis for the claim of trust fund misuse by the Respondent and what, if any, compensation is appropriate; NOTE: At the next hearing each party will be allocated 30 minutes to sum up their submissions and reply to the submissions of the other party.
A separate Notice of Hearing was sent to the parties advising them that the adjourned hearing would be on 21 March 2018 in Queanbeyan.
Profitability's submissions were not filed or served in accordance with the directions, being, according to Ms Faddoul's statement, emailed to the respondents on 19 March 2018 and filed in person at the Tribunal on 18 or 19 March 2018. A copy of the Final Submissions has been provided to the Appeal Panel. It consists of 12 typed pages, plus 18 pages of annexures. The Member did not reject Profitability's Final Submissions, but stated that she had not had an opportunity to read them. She allowed Ms Faddoul to speak to them at length during the final hearing on 21 March 2018. The transcript confirms that the Member told Ms Faddoul that she would read the Final Submissions, but may put less weight on it than she would have otherwise had it been filed on time, not because it was late but because the Owners had not had a chance to address it.
The Member did not refuse leave for Profitability to rely on its Final Submissions, and there was no denial of procedural fairness in the manner in which the Member dealt with Profitability's Final Submissions.
Profitability also contends that there was a denial of procedural fairness in that the Member failed to engage with all Profitability's claims and submissions and meaningfully consider them. In CG Constructions Pty Ltd v Hanson Constructions Materials Pty Ltd [2017] NSWCATAP 130 the Appeal Panel stated: 34. In Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088, Gummow and Callinan JJ (Hayne J agreeing) said at [24] that a failure to respond "to a substantial, clearly articulated argument relying upon established facts was at least" a failure to accord an applicant natural justice. A failure of that kind has also been described as a constructive failure to exercise jurisdiction. Such a failure will constitute an error of law.
It is not clear whether Profitability is asserting that the Member failed to consider a claim, or that she failed to consider, or at least, refer to, all the evidence on which Profitability relied in defending the application. If the latter, that may be relevant to the grounds of appeal based on an asserted failure to have regard to relevant considerations. In terms of the procedural fairness contention, the Member's reasons indicate that she addressed each element of the asserted bases on which the Owners were claiming an entitlement to a refund. The transcripts of passages from the hearing provided to the Appeal Panel do not support a claim that the Member failed to consider the submissions of Ms Faddoul. Rather, they demonstrate that Ms Faddoul was unable to support many of her assertions by reference to the documentary evidence.
Profitability has not established that there was a denial of procedural fairness, and its Grounds of Appeal based on that contention are not made out.

Grounds 4, 5 and 6 - Jurisdiction to determine the Owners' claims

It is convenient to deal with Grounds 4, 5 and 6 together as each ground challenges the Member's assumption of jurisdiction to determine the Owners' claims.
The Member concluded she had jurisdiction to determine the Owners' claims by virtue of s 36 of the PSBA Act and s79J of the Fair Trading Act 1987 (NSW).
Section 36 of the PSBA Act relevantly provides: 36 Review of commission and fees (3) If money has been paid to or is or has been retained by a licensee (out of money received by or paid to the licensee) in respect of any transaction by or with the licensee as a licensee and has been so paid or retained as remuneration or as reimbursement for expenses in connection with the transaction, the person paying the money or the person who would be entitled to the money had the money not been retained, may require the licensee to furnish the person with an itemised account of the transaction in accordance with the regulations. (3A) A requirement by a person under subsection (3) must be in writing. (4) A person who … is provided with an itemised account of a transaction as provided by this section may apply to the Tribunal for the determination of a consumer claim within the meaning of Part 6A of the Fair Trading Act 1987 in relation to: (a) the entitlement of the licensee to the whole or any part of the amount specified in … the itemised account, or (b) whether the whole or any part of the amount is reasonable, or both. (5) For the purpose of the application of Part 6A of the Fair Trading Act 1987 to that person, a reference in that Part to a consumer is taken to include a reference to that person. (6) The Tribunal has jurisdiction to hear and determine any such consumer claim despite: (a) the terms or conditions of any agreement or contract entered into between the licensee and the applicant, and (b) the amount being more or less than the maximum amount (if any) of remuneration to which a licensee is entitled under this Act. (7) This section does not limit Part 6A of the Fair Trading Act 1987. (8) In this section: expenses means expenses or charges incurred in connection with services performed by a licensee in his or her capacity as a licensee. remuneration means remuneration by way of commission, fee, gain or reward for services performed by a licensee in his or her capacity as a licensee.
Section 79J of the Fair Trading Act provides: The Tribunal has jurisdiction, except as otherwise provided by this Division, to hear and determine a consumer claim the subject of an application under this Division.
Before s 36 of the PSBA Act could apply it was necessary that Profitability be a "licensee" within the meaning of that Act. The Member appears to have taken the view that s 36 was applicable where an unlicensed person acted as an "agent" within the meaning of the PSBA Act, stating in paragraph [9] of her reasons "the respondent company cannot avoid the provisions of the PSBA Act on the grounds that it failed to obtain the requisite licence or licences". We see no warrant for that interpretation. If the legislature intended the section to apply to unlicensed agents it would have used the term "agent" rather than "licensee".
"Licensee" is defined in s 3 of the PSBA Act as "the holder of a licence under the Act". It is not in contest that Profitability was not, at relevant times, a licensee within that definition.
Nevertheless, in our view, there can be no doubt that the Owners' claim was a "consumer claim" as defined in s 79E of the Fair Trading Act.
Section 79E defines a consumer claim as: a claim by a consumer, for one or more of the following remedies, that arises from a supply of goods or services by a supplier to the consumer (whether or not under a contract) or that arises under a contract that is collateral to a contract for the supply of goods or services: (a) the payment of a specified sum of money, (b) the supply of specified services, (c) relief from payment of a specified sum of money, (d) the delivery, return or replacement of specified goods or goods of a specified description.
The Owners' claim was a claim for the payment of a specified sum of money arising from a supply of services, as that term is defined in s 79F(1)(a) of the Fair Trading Act, that is "the performance of work (including work of a professional nature), whether with or without the supply of goods". The work in this case being letting management services. We note that the Owners in their written submissions relied upon s 79F(1)(d) which includes within the definition of "services" "the letting of premises for vacation or recreational purposes". However the services provided by Profitability to the Owners did not involve the letting of premises to the Owners.
The Owners were natural persons and therefore "consumers" within the meaning of s 79D of the Fair Trading Act. Profitability was a "supplier" as that term is defined in s 79D of the Fair Trading Act, that is a person who supplies services in the course of carrying on a business.
Accordingly, regardless of whether s 36 of the PSBA Act applied, the Tribunal had jurisdiction under s 79J of the Fair Trading Act to determine the Owners' claim. We do not accept the submission made on behalf of Profitability that the Member's reliance upon s 36 of the PSBA Act infected the whole of the Decision, rendering it a nullity which must be set aside. The Member addressed the Owners' claims that expenditures had been incurred in breach of contract and for compensation for the failure to return possession after termination without reference to the PSBA Act.
The significant issue in relation to the Owners' claim to reimbursement of management fees or commissions, which we consider the Member did not adequately address, was whether Profitability was carrying on the business of an "agent" as that term is defined in s 3 of the PSBA Act, that is: (a) a real estate agent, or (b) a stock and station agent, or (c) a business agent, or (d) a strata managing agent, or (e) a community managing agent, or (f) an on-site residential property manager.
Section 9 of the PSBA Act provides: 9 Corporations require corporation licence (1) A corporation must not act as or carry on the business of (or advertise, notify or state that the corporation acts as or carries on the business of or is willing to act as or carry on the business of) an agent unless the corporation holds a corporation licence. Maximum penalty: 200 penalty units. (2) A corporation is not entitled to bring any proceeding in any court to recover any commission, fee, gain or reward for any service performed by the corporation as an agent unless the corporation was the holder of a corporation licence at the time of performing the service.
Accordingly if Profitability was carrying on the "business of an agent" without a licence, it was doing so in contravention of s 9, and the question would arise whether, given the provisions of s 9(2), Profitability was entitled to retain the commissions it had deducted from moneys received on the Owners' account either from the letting of units in the pool or specifically from the letting of the Owners' unit.
If Profitability was conducting a business which fell within the definition of "agent", it was doing so either as a real estate agent or as an on-site property manager. No other part of the definition of "agent" is potentially relevant.
"Real estate agent" is defined in s 3 of the PSBA Act as: a person (whether or not the person carries on any other business) who, for reward (whether monetary or otherwise), carries on business as an auctioneer of land or as an agent: (a) for a real estate transaction, or (b) for inducing or attempting to induce or negotiating with a view to inducing any person to enter into, or to make or accept an offer to enter into, a real estate transaction or a contract for a real estate transaction, or (c) for the introduction, or arranging for the introduction, of a prospective purchaser, lessee or licensee of land to another licensed agent or to the owner, or the agent of the owner, of land, or (d) collecting rents payable in respect of any lease of land and otherwise providing property management services in respect of the leasing of any land, or (e) for any other activity in connection with land that is prescribed by the regulations for the purposes of this definition, but does not include a person who carries on business as an auctioneer or agent in respect of any parcel of rural land unless the regulations otherwise provide.
"Real estate transaction" is defined as "the purchase, sale, exchange, lease, assignment or other disposal of land, whether or not an auction is involved".
"Land" includes a lot within a strata scheme.
The Member did not in the Decision address the factual question whether the holiday lettings which Profitability managed on behalf of the Owners constituted a lease or disposal of land. By clause 1 of the MLA the Owners appointed Profitability "to lease the Apartment as a serviced apartment". The letting of an apartment as a serviced apartment would not ordinarily involve the grant of exclusive possession which is required for the grant of a lease: Radaich v Smith (1959) 101 CLR 209; Lewis v Bell (1985) 1 NSWLR 731.
An "on-site residential property manager" is defined in s 3 of the PSBA Act as: a person (whether or not the person carries on any other business) who, for reward (whether monetary or otherwise): (a) carries on business as an agent for giving possession of residential premises under a lease, licence or other contract, or (b) carries on business as an agent for collecting bonds, deposits, rents, fees or other charges in connection with any such lease, licence or other contract, or (c) carries on any other business that is prescribed by the regulations for the purposes of this definition.
"Residential premises" is not defined in the PSBA Act. The Member did not in her reasons for decision address the question whether the apartments managed by Profitability as part of the pool were "residential premises".
The Member's discussion of whether Profitability was an "agent" within the meaning of the PSBA Act was limited to paragraphs [9] to [11] of the Decision in which the Member: 1. Noted that Profitability had obtained a licence but that during the relevant period Profitability had not been licensed and stated: "Thus during the entire contractual period the respondent [Profitability] was acting unlawfully. The respondent company and Roberta Faddoul only obtained the relevant and requisite licences after an investigation by Fair Trading. However the respondent company cannot avoid the provisions of the PSBA Act on the grounds that [it] failed to obtain the requisite licence or licences. That Act regulates the activity of persons acting as agents in New South Wales"; 1. Referred to an Australian Tax Office audit determination in respect of Profitability, recorded that "in that document the ATO concludes that the respondent is not an agent", and noted that that did not establish that Profitability was not an agent within the PSBA Act; and 2. In the last sentence of paragraph [11] stated: "it was not contested by the respondent company that it had operated the business of a real estate agent without the appropriate licences under the PSBA Act."
This last proposition simply cannot stand with the Member's acknowledgment (in paragraph [10]) that Profitability maintained throughout the hearing that it was not an agent.
In circumstances where Profitability did apparently maintain at the hearing that it was not required to be licensed, it was necessary for the Member to address the statutory definitions and make a determination whether Profitability (or more strictly the business of Profitability) fell within those definitions. The Member did not do so and in failing to do so the Member made an error of law.
We do not consider that the question whether Profitability was acting as an agent within the meaning of the PSBA Act can be satisfactorily resolved on the material before us. It will be necessary to address the factual issues involved in the questions whether the holiday lettings constituted leases and whether Profitability or its director, Ms Faddoul, was carrying on the business of an on-site residential property manager.
For that reason, to the extent the Member's decision is dependent upon the conclusion that Profitability was acting as an agent, we consider that the matter should be remitted for further hearing. However, as we have noted, even if Profitability was not acting as an agent, the Tribunal had jurisdiction pursuant to s 79J of the Fair Trading Act to determine the Owners' claims.
In paragraph [14] of the Decision the Member determined that the Owners were entitled to damages by reason of Profitability's: "frequent breaches of contract, including the failure to account for funds within the timeframe set out in the contract, the unauthorised expenditures, the false representations as to the qualifications and experience and licences of the respondent and the failure to comply with the regulations of the PSBA Act, the failure to operate a properly constituted trust account and the continuing false representation that a trust account existed" which the Member concluded meant that Profitability was in breach of ss 18 and 60 of the Australian Consumer Law (NSW) (the ACL). Section 18 of the ACL prohibits misleading and deceptive conduct in trade and commerce. Section 60 of the ACL provides a guarantee that services supplied by in trade and commerce to a consumer will be rendered with due care and skill.
The Member did not attempt to assess how Profitability's breaches of ss 18 and 60 had caused the Owners to suffer loss. The Member concluded, at [11], that Profitability was in breach of s 55 of the PSBA Act by failing to provide a signed copy of the MLA to the Owners within 48 hours of the agreement being signed and by failing to ensure that the MLA included a number of matters required by the Property, Stock and Business Agents Regulation 2014 (NSW).
Section 55 of the PSBA Act provides: 55 No entitlement to commission or expenses without agency agreement (1) A licensee is not entitled to any commission or expenses from a person for or in connection with services performed by the licensee in the capacity of licensee for or on behalf of the person unless: (a) the services were performed pursuant to an agreement in writing (an agency agreement) signed by or on behalf of: (i) the person, and (ii) the licensee, and (b) the agency agreement complies with any applicable requirements of the regulations, and (c) a copy of the agency agreement signed by or on behalf of the licensee was served by the licensee on that person within 48 hours after the agreement was signed by or on behalf of the person. Note. Section 55A allows a court or tribunal to order that commission and expenses are recoverable in certain circumstances despite subsection (1). (2) The regulations may make provision for or with respect to regulating the form of agency agreements and the terms, conditions and other provisions that an agency agreement must or must not contain. Without limiting this subsection, the regulations may prescribe one or more standard forms of agency agreement. (3) Without limiting the means by which a copy of the agency agreement may be served on a person, it may be served by electronic means or by such other means as the regulations may allow.
We note that some of the Member's conclusions regarding the MLA's compliance with the regulations appear to be clearly incorrect. For example, the Member stated that the agreement did not contain a termination clause. Clause 7 of Schedule 7 to the Property, Stock and Business Agents Regulation provides that: "If the agreement provides for its termination by a party to the agreement, the agreement must indicate how and when it can be terminated". Clause 2 of the MLA provided for termination of the agreement by the Owners by giving notice of intention to sell and by Profitability in the event it ceased to hold for management on similar terms more than 30 of the apartments at the resort. Otherwise the MLA had a fixed term of three years (by virtue of clause 2(a) and Item 6B in the Information Schedule incorporated within the agreement).
We also note that s 55, like s 36, explicitly applied to "licensees" and was therefore, in our view, not applicable to the agreement between Profitability and the Owners. Therefore, to the extent that the Member relied upon s 55 in finding that Profitability was liable to reimburse the Owners in respect of commissions and management fees deducted from moneys otherwise due to the Owners, the Member made an error of law.
The consequence of the Member's conclusion that Profitability was in breach of s 55 was presumptively that Profitability was not entitled to any commissions in respect of services provided to the Owners. Nevertheless, the Member determined (at [15]) that, in recognition of the fact that the Owners had received some benefit from management services provided by Profitability, it should retain half the commission it had charged the Owners for the period until the Owners gave notice terminating the MLA on 16 May 2017.
In determining that it was appropriate to allow Profitability to retain some commission, the Member referred to the decision of the Court of Appeal in Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd [2017] NSWCA 339. That decision concerned a failure by a licensed agent to provide a sales inspection report in breach of the requirements of the regulations. The Court of Appeal determined that the failure was a "minor failure" within the meaning of s 55A of the PSBA Act, that the principal had not suffered loss by reason of the failure and that it would be unjust to make an order that the agent's commission was recoverable.
Section 55A of the PSBA Act provides: 55A Relief from disentitlement to commission and expenses (1) A court or tribunal before which relevant proceedings are taken may order that commission or expenses are wholly or partly recoverable by a licensee who would otherwise not be entitled to the commission or expenses (under section 55) because of: (a) a failure by the licensee to serve a copy of the relevant agency agreement on the person within 48 hours after it was signed by or on behalf of the person, or (b) a failure of the relevant agency agreement to comply with the requirements of the regulations. (2) A court or tribunal is not to make such an order in circumstances of a failure to serve a copy of the agency agreement within the required time unless satisfied that: (a) the failure was occasioned by inadvertence or other cause beyond the control of the licensee, and (b) the commission or expenses that will be recoverable if the order is made are in all the circumstances fair and reasonable, and (c) failure to make the order would be unjust. (3) A court or tribunal is not to make such an order in circumstances of a failure of the agency agreement to comply with the requirements of the regulations unless satisfied that: (a) the failure is a minor failure, and (b) no loss has been suffered as a result of the failure by the person for whom or on whose behalf the services concerned were performed, and (c) failure to make the order would be unjust. (4) Proceedings are relevant proceedings if they are proceedings taken by a licensee for the recovery of commission or expenses from a person or proceedings on a consumer claim relating to commission or expenses (as referred to in section 36) in relation to which a licensee is a respondent.
Notwithstanding the Member's reference to the decision in Ryde Developments, the Member did not specifically address the requirements of s 55A. If s 55A had been applicable, the Member's failure to address the requirements of s 55A would have been an error of law.
Accordingly we consider that the Member's findings in respect of the reimbursement of management fees must be set aside and the application remitted to the Consumer and Commercial Division of the Tribunal for consideration of the Owners' claims to reimbursement of management fees or commission consistently with these reasons.
If it is determined on that rehearing that Profitability was acting as an agent within the meaning of the PSBA Act, its entitlement to management fees or commissions will not be governed by ss 36 and 55 of the PSBA Act which, as we have found, are not applicable where an agent is unlicensed. Profitability's entitlement to management fees or commission will be determined by reference to the provision in s 9(2) of the PSBA Act, that an unlicensed agent is not entitled to bring proceedings to recover any commission.
Although s 9(2) does not explicitly provide a right to bring proceedings to recover commissions deducted from moneys received by an unlicensed agent, it would appear likely (although, as the parties did not address this issue in submissions, we do not express a final opinion on the issue) that, if an unlicensed agent deducts commissions from moneys received on account of its principal, the principal would be entitled to bring a restitutionary claim for benefits received under a contract which is unenforceable for illegality. The outcome of such a claim would depend upon whether it would be unjust for Profitability to retain the benefit of the commissions: Equuscorp v Haxton (2012) 246 CLR 498 at 518 [33] - [34]. Such a claim would constitute a claim arising from the supply of services by Profitability to the Owners and would fall within the jurisdiction of the Tribunal pursuant to s 79J of the Fair Trading Act.

Grounds 7 and 8

We have, effectively determined grounds 7 and 8 in the preceding section of these reasons. We accept that the Member made an error of law in determining that ss 36 and 55 were applicable to an unlicensed agent. That conclusion renders irrelevant the question whether the Member failed to have regard to s 55A. As we have discussed above, it is apparent from the Member's reference to Ryde Developments that the Member may have had s 55A in mind when determining that Profitability should reimburse the Owners only 50% of fees deducted from December 2016 to May 2017 and, to that extent, we do not accept that the Member failed to take s 55A into account. However, in failing to refer to s 55A and in failing to address the specific requirements of that section, the Member failed to provide adequate reasons and failed to have regard to relevant considerations and thereby made an error of law.

Ground 9

As expressed in Profitability's Notice of Appeal this ground does not raise a question of law. However, in sub paragraph (c) of what are described as "particulars" of the ground, Profitability states: "The Tribunal mistakenly acted upon a wrong principle that a finding of misleading and deceptive conduct or a failure to deliver services with due care and skill and refusal of access to the premises disentitled the Appellant to retention of its fees pursuant to the MLA."
As we have noted above, the Member did not address the question how any misleading or deceptive conduct or failure to deliver services with due care and skill gave rise to any loss on the part of the Owners. It is not apparent that, ultimately, the Member relied upon such matters in ordering reimbursement of management fees.
As the question of Profitability's entitlement to retain management fees will be the subject of further hearing it is not necessary to further address the matters raised by Ground 9 in the Notice of Appeal.
At the further hearing, the Owners may maintain the position that, even if Profitability was not acting as an agent, they have suffered loss by reason of misleading conduct or breach of contract on the part of Profitability. However to succeed in such a submission they would need to identify how any misleading conduct or breach of contract caused them loss.

Ground 10

Although this ground of appeal and its "particulars", including the additional paragraph (b) (set out at [25(2)] above), is not expressed with clarity, we understand it to challenge the Member's findings concerning the content of the agreement between the parties, specifically the finding that the PDS was not part of the agreement, and the award of compensation to the Owners in respect of the change of locks and Profitability's failure to return possession to the Owners until 14 July 2017 despite the Owners having served notice of termination on 16 May 2017.

The content of the agreement

The finding that the PDS was not part of the agreement was a finding of fact. We are not persuaded that the Member's conclusion was in error. Having noted that the PDS was "not executed by the parties", the Member held (at [6]): On the evidence before me, and taking into account the general lack of cohesion, the wide ranging matters covered by the PDS, and the information provided by [Profitability] that the PDS had been based on a document they obtained through a real estate agent, and which was apparently used by Rydges Hotels, and used by [Profitability] to ensure compliance with ASIC requirements, I have concluded that the entire agreement relating to the management of the unit is contained in the MLA. Some of the terms of the PDS could be contractual in nature - but many of them are information/promotional material and some of them contradict the terms of the MLA. The MLA is able to be enforced in its entirety, as a stand-alone contract.
Profitability sought to challenge this finding by reference to evidence which it submitted established that the Owners were aware of the contents of the PDS and by reference to communications between the parties after commencement of the agreement between them.
The fact that the Owners were aware of the contents of the PDS is not sufficient to make it part of the agreement. The document was brought into existence for other purposes. Even if the Owners had signed the PDS that would not, without more, have made it part of the agreement.
Post-contractual communications between the parties to a written contract could be relevant to the question whether a particular document forms part of the contract only to the extent that they constitute admissions on the part of the parties as to the contents of the contract (Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [25] - [26]; Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [122]).
The correspondence relied upon by Profitability did not contain any admission on the part of the Owners that the PDS constituted part of the agreement. On the contrary, the email from the Owners on which Profitability relied included the express assertion: "It is our understanding that the MLA is the relevant contract for the management of our apartment, not the PDS". Ms Faddoul's statement in response that the PDS: "was also meant to be signed by you prior to settlement and makes up our entire agreement" does not constitute an admission on the part of the Owners and is irrelevant.
As we have found the Member did not err in finding that the PDS was not part of the agreement between the parties, it follows that (provided that no double counting is involved) the elements of the Member's award in favour of the Owners in respect of items incorrectly deducted from moneys due to the Owners should stand. Those elements are: 1. $87.55 Refund of Book keeping fees (Profitability did not dispute its liability in respect of this item) 2. $1,003.28 Refund of costs of unauthorised purchases 3. $500 Refund of costs of cleaning incorrectly charged. A total of $1,590.83

The award of compensation in respect of the failure to return possession

Subject to three matters, we find no error in the Member's approach to the assessment of the loss sustained by reason of Profitability's failure to return possession of the Owners' unit. The Member received evidence, which she accepted, of the income which the Owners might have received if they had had possession of the unit. The Member deducted from that income the amounts the Owners would have had to pay in agents' commission and in respect of housekeeping fees and the amount the Owners actually received from Profitability by way of distribution from pool revenue in the relevant period. The Member awarded the Owners compensation in the amount so calculated plus $800 in respect of the costs of changing the locks to the unit at the time the Owners recovered possession.
Profitability submitted that the conclusion that the Owners would have retained another agent and made the unit available for rent is against the weight of evidence. It points to three emails from Ms Thorpe in which she expressed the Owners' intention to occupy the unit themselves. The Member accepted the evidence of the Owners given at the hearing that they would have engaged another agent to rent the unit and would themselves have stayed in a caravan which they apparently had available to them. This conclusion is not inherently unlikely and was available on the evidence.
The three reservations we have about the Member's conclusions regarding the loss arising from the failure to return possession of the unit are: 1. That, if Profitability was required to reimburse to the Owners the management fees it had retained in respect of the period after 16 May 2017, that amount should also be deducted from the notional revenue in calculating the Owners' loss. There would otherwise be double counting. 2. It is not clear precisely how much of the amount of $1,590.83 allowed at [101] above was deducted from revenues credited to the Owners in respect of the period after 16 May 2017. It is apparent from the invoices included in the evidence that one charge of $250 in respect of a "deep clean" was deducted in July 2017 and the other in December 2016. Any deductions made from revenue the Owners would otherwise have received in respect of the period after 16 May 2017 should also be deducted from the notional revenue in calculating the Owners' loss. Again, there would otherwise be double counting. 3. It is not clear from the Member's reasons why Profitability should be liable for the cost of changing the locks on the unit. The Member noted that the Owners had changed the locks "to prevent access to the apartment by the respondent" and concluded "I am satisfied on the evidence that this was necessary". The fact that it was necessary to change the locks was not sufficient to impose an obligation upon Profitability to pay for it unless the necessity in some way arose from a breach of contract on the part of Profitability. The Member did not identify any such breach. It is apparent that the existing locks were electronically keyed locks over which Profitability had control. The need to change the locks arose from the Owners' decision to remove the management of the unit from Profitability rather than from any breach by Profitability of the MLA.
Profitability did not in its Notice of Appeal challenge the conclusion that the MLA was terminated on 16 May 2017 by reason of Profitability's breach of the MLA and we need not therefore consider whether that conclusion was correct.
Upon termination of the MLA Profitability was obliged to return possession of the unit to the Owners. The loss sustained by the Owners by reason of Profitability's failure to return the unit was a consequence of Profitability's breach of contract. The Owners' claim in respect of that loss was a claim that arose from the supply of services by Profitability to the Owners.
Accordingly, the Tribunal had jurisdiction to make the award of compensation to the Owners in respect of the failure to return possession of the unit to the Owners. The Member's award of $6,940.41 in respect of lost rent is not affected by the Member's errors in respect of the application of the PSBA Act and Profitability's entitlement to retain management fees or commissions from pool revenues allocated to the Owners.

Ground 11

Ground 11 is dependent upon success on grounds 1-3. As Profitability has failed to establish those grounds, it is not necessary to further consider ground 11.

Conclusion

We have concluded that the award of $4,251.54 in respect of the refund of management fees and the award of $800 in respect of the changing of locks should be set aside.
We have concluded that the awards of $1,590.83 in respect of unwarranted charges and $6,940.41 in respect of lost rent should be upheld except to the extent that the award of both sums would involve double counting. It is clear that $250 of the amount awarded in respect of cleaning would involve double counting and $250 would not. Profitability did not dispute its obligation to reimburse the amount of $87.55 charged for book keeping fees.
We are not in a position to determine how much, if any, of the remaining $1,003.28 was deducted from revenues allocated to the Owners before 16 May 2017. Accordingly that question must also be remitted to the Consumer and Commercial Division for determination.
The result of the foregoing is that we find that the Owners are entitled to payment of at least $7,277.55 ($6,940 + $250 + $87.55). We will order that the Owners be paid, from moneys held by the Tribunal, the sum of $7,277.55 plus interest pursuant to rule 39 of the Civil and Administrative Tribunal Rules 2014 (NSW) from 30 March 2018 to the date of payment. We will set aside the decision insofar as it requires Profitability to pay any amount in excess of that sum and in consequence will direct that the balance of the moneys held by the Tribunal be paid to Profitability.
We will remit to the Consumer and Commercial Division, for determination according to law, the questions: 1. Whether the Owners are entitled to reimbursement from Profitability of management fees deducted by Profitability from moneys otherwise payable to the Owners in respect of the period up to 16 May 2017. 2. Which, if any, of the items making up the amount of $1,003.28 referred to in paragraph [19] of the Decision were deducted from moneys otherwise payable to the Owners in respect of the period up to 16 May 2017.
As we have noted above, any reimbursement of management fees or other deductions in respect of the period after 16 May 2017 would result in an equivalent reduction in the amount payable to the Owners in respect of lost rent.
Although we did not find Profitability's allegations of apprehended bias to be warranted, in light of those allegations and in light of the way in which the hearing before the Member proceeded, including the Member requiring Ms Faddoul to leave the hearing room, we consider it appropriate to direct that the proceedings be remitted to the Consumer and Commercial Division of the Tribunal, differently constituted: Walker Corporation v Sydney Harbour Foreshore Authority (2009) 168 LGERA 1 at [119] - [121]; Brown Brothers v Pittwater Council [2015] NSWCA 215 at [214].

Costs

Pursuant to s 60 of the NCAT Act, in the absence of special circumstances parties to proceedings in the Tribunal are usually required to bear their own costs. Neither party indicated at the hearing of the appeal that they intended to seek the costs of the appeal. Unless either party makes application for an order with respect to the costs of the appeal within 14 days of the date of this decision, we will not make any order in respect of the costs of the appeal.

Orders

Our orders are: 1. Extend time for lodgement of the notice of appeal to 21 June 2018. 2. Allow the appeal in part. 3. Vary the orders made on 24 March 2018 by substituting the amount of $7,277.55 for the amount of $13,582.78. 4. Lift the stay granted on 3 July 2018 of the orders made on 24 March 2018. 5. Direct the Registrar to pay to the respondents from moneys paid to the Tribunal by the appellant the amount of $7,277.55 plus interest pursuant to rule 39 of the Civil and Administrative Tribunal Rules 2014 (NSW) from 30 March 2018 to the date of payment. 6. Direct the Registrar to pay to the appellant the balance of moneys paid to the Tribunal by the appellant. 7. Remit to the Consumer and Commercial Division of the Tribunal, differently constituted, for determination according to law, by reference to the evidence before the Tribunal at the previous hearing and such further evidence as the Tribunal, in its discretion, may admit: 1. Whether the respondents are entitled to reimbursement by the appellant of management fees deducted by the appellant from moneys otherwise payable to the respondents in respect of the period up to 16 May 2017; and 2. Which, if any, of the items making up the amount of $1,003.28 referred to in paragraph [19] of the Member's decision dated 24 March 2018 were deducted from moneys otherwise payable to the respondents in respect of the period up to 16 May 2017; and for the making of appropriate orders consequential upon the Tribunal's findings. 1. Either party may within 14 days of the date of publication of this decision file written submissions concerning the costs of the appeal. Such submissions should address the question whether the issue of costs can be determined on the papers without a hearing. 2. If a party files submissions in accordance with Order (8) above, the other party may file written submissions in response within a further 14 days, such submissions should address the question whether the issue of costs can be determined on the papers and without a further hearing.

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: 16 January 2019

Property Stock and Business Agents Act 2002(NSW)

Property, Stock and Business Agents Regulation 2014(NSW)

At a glance

Court

Decision date

Source

Judgment (21 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (21)

Cited By (2)