Richards v Lindley

The Tribunal hearing and decision

The application came before the Tribunal on 5 September 2023 in what is known as a group list where several matters are listed at the same time. As is the Tribunal's practice, the Member encouraged parties to reach an agreement if possible and sent them out of hearing room to have discussions. The transcript shows that Mr Richards and Mr Lindley returned to the hearing room and advised the Member that they were unable to reach an agreement. The Member then proceeded to discuss the matter with them. Mr Richards' carer, Wing Kung, attended the hearing with him and occasionally spoke on his behalf.
Mr Richards explained he was seeking $400 for the battery, $950 for the bike and $600 for damage to his property caused by the fire resulting from battery explosion. He also explained that the battery did not function well from the date of purchase and exploded 34 days later. When Mr Lindley explained that he had bought the battery from Zuma cycles, the Member queried whether Zuma needed to be joined as a party. She also queried how Mr Lindley could be held responsible for any damage and said to Mr Richards "perhaps a replacement battery is all Mr Lindley needs to give you".
The Tribunal Member also stated to Mr Richards that she did not know how Mr Lindley could be the cause of the problem as all he did was sell a battery manufactured by someone else. She suggested Mr Richards could bring a claim against the manufacturer (which was based in China). After further discussion the following exchange occurred: Member: Um, I'm just not sure you're going to be able to establish that it's Mr Lindley's… Well, your cause of action against him is going to get you across the line on property damage. All I could see happening is that there was a fault with that battery, and he would need to provide you with a battery or the cost to replace the battery. Mr Richards: Or the cost of replacing the bike. Member: Well, you didn't purchase the bike from him. Mr Kung: But he caused the, the battery caused the… Member: The battery caused it. He didn't. The battery wasn't made for him. It was sold by him. And he could give you the $400 for a new battery and then you could claim that from where you purchased the battery that that's a matter for yourself to then deal with. So that's the way it could be resolved today. And then you can bring an action in another jurisdiction even. Mr Richards: So maybe I will take the bike. I will take the bike that [Mr Lindley] is offering me.
There then followed a further discussion between the Member, Mr Richards and Mr Lindley about a replacement bike and a battery. The Member again stated that all Mr Lindley was obliged to give Mr Richards was a new battery and "giving you a bike is giving you more than what you're entitled to today". The member did note that that was not to say that would be the outcome if the matter proceeded to hearing. When Mr. Richards stated that according to the ACCC it's the supplier of the product who's responsible for any problem, the Member reiterated that Mr Lindley was probably liable to give him a new battery or pay him the purchase price but "that's all he has to do". She also stated that Mr Richards needed to go to Fair Trading and not the ACCC in relation to these matters.
The transcript of the hearing records that Mr Richards was very reluctant to accept a replacement bike without a working battery as that rendered the bike inoperable. Mr Lindley stated that the replacement bike would be the same model and age as the one destroyed but said that a battery he could supply was in an unknown condition. The Member gave the parties some further time to talk and when they returned to the hearing room Mr Richards said he had decided to accept the bike. After saying he would accept the bike Mr Richards took no further part in the hearing. Mr Lindley said he would make the bike and battery available but he did not know the condition of the battery. The Member then made the order and notation set out above.

Consideration

In Cominos v Di Rico [2016] NSWCATAP 5, at [13], the Appeal Panel noted that it may be difficult for self-represented appellants to clearly express their grounds of appeal. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [12] the Appeal Panel noted that where an appellant is not legally represented, it is necessary for the Appeal Panel to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations that might arise to the respondent. In such circumstances and having regard to the guiding principle in s 36 of the NCAT Act, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal.
We have had the benefit of reading a transcript of the hearing. The consent orders were made in the context of the Tribunal exploring and facilitating settlement in circumstances where a further hearing was necessary to finally determine the matter. Mr Richards' arguments are: 1. that he did not agree to the wording of the notation with respect to the working condition of the bike; and 2. in effect, that his consent to the orders was vitiated by the Member's error in concluding that he was unable to claim damages arising out of the battery explosion and was limited to a replacement battery or the refund of the cost of the battery.
The principles applicable to setting aside a consent order were outlined by the Appeal Panel in McDonald v McDonald [2016] NSWCATAP 252: 59. A review of the authorities dealing with when a consent order can be set aside can be found in the recent Appeal Panel cases of Prenc v Stojcevski [2016] NSWCATAP 244 at [43]-[45], [53]-[57] and Yuen v Thom [2016] NSWCATAP 243 at [36]-[54]. From those cases, the following principles can be discerned (omitting authorities): (1) At common law, a consent order may be set aside on the same basis as the underlying agreement may be set aside; (2) Whether the agreement constituting the compromise can be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or 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 and the like; (3) In order to set aside a consent order on one of the above bases, it must be possible to point to some contumelious conduct on behalf of the respondent for instance: (a) with respect to duress, it must be shown that illegitimate pressure was placed on the appellant such that there was no reasonable alternative but for her to submit; (b) with respect to undue influence, not only must there be a source of power to deprive the other person of free and voluntary consent, but it must be shown that the agreement was the result of the actual influence; (4) With respect to mistake: (i) the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party's motives for entering into the contract; (ii) a common mistake arises when the mistaken belief is held by both parties; (iii) a unilateral mistake is where one party is mistaken but 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 setting aside an agreement unless the mistake is a serious mistake in relation to a fundamental term of the agreement and the other party knew of, or contributed to, the mistake. (5) With respect to other doctrines which may be applicable, such as unconscionable dealing, it must be shown that one party to the transaction was at a special disadvantage in dealing with the other party because of illness, ignorance, inexperience, impaired faculties, financial need or other circumstances that affect their ability to conserve their own interests, and the other party takes unconscientious advantage of the opportunity. It must be emphasised that the disadvantage must be "special" to disavow any suggestion that the principle applies whenever there is some inequality of bargaining power between the parties. What must be present is some disabling condition or circumstance which seriously affects the ability of the innocent party to make a judgment in their own 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. (6) There may be other factors which arise such as non est factum which defence would arise in very limited circumstances to persons who, through circumstances such as blindness or illiteracy, are unable to have any understanding of the meaning of the document evidencing the agreement and who signed it in the belief it was radically different to what was in fact signed.
In addition, r 37 of the Civil and Administrative Tribunal Rules 2014 requires the Tribunal, in deciding whether to give effect to a settlement, to take into account the interests of a "vulnerable person" as that term is defined, namely a person who is totally or partially incapable of representing themself in proceedings before the Tribunal because of a disability. Mr Richards does have a disability and the letter from his GP makes clear his difficulty in being able to quickly assess issues. We note that this disability was not known to the Member at the hearing and that Mr Richards was able to participate in the hearing and discussions.
Whether consent orders may be set aside on the basis of mistake, duress or undue influence has been considered by the Appeal Panel in several other cases. In Yuen v Thom [2016] NSWCATAP 243 in relation to mistake at [39] the Appeal Panel said: In relation to mistake, the misapprehension must arise in relation to a fact, law or circumstances that affects the substance of an obligation or the mistaken party's motives for entering into the contract: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241, [39], [42]-[43]. Assuming for the purposes of argument, that the appellant was mistaken as to whether or not she could refuse the respondent's offer, the question is whether that mistake was of a type that vitiates her consent. A common mistake arises when the mistaken belief is held by both parties: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241, [41], applying Solle v Butcher [1950] 1 KB 671, 693. That does not arise here. A unilateral mistake is where one party is mistaken but the other party should have been aware of the mistake: Taylor v Johnson (1983) 151 CLR 422, 432. The appellant does not contend that the respondent ought to have known of any mistake upon which she was operating. A mutual mistake arises where both parties are mistaken, but their mistakes are different such that there is no meeting of minds: Charitou v The Owners of Strata Plan 10394 [2015] NSWSC 1059, [22]. Here, the parties both understood the bargain that was made; there is no misapprehension about the terms of the purported agreement. The issue is, was there an agreement reached even though the appellant did not understand the bargaining process. The Appeal Panel is of the view that the answer is yes because a reasonable observer would have concluded that an agreement was reached: see N Seddon, R Bigwood and M Ellinghaus, Cheshire & Fifoot Law of Contract (LexisNexis, 10th Aus ed, 2012) at [3.9].
In Aboriginal Housing Office v Harrison [2021] NSWCATAP 97 the Appeal Panel considered the grounds of undue influence and duress when an appellant seeks to set aside consent orders. The Appeal Panel, at [35], set out the observations of the Appeal Panel in Sylvaney v Carolan [2016] NSWCATAP 36 at [38]-[40]: 38 Undue influence is where there is ascendancy by a stronger party over a weaker party such that the relevant transaction is not a free, voluntary, and independent act of the weaker party (A v N [2012] NSWSC 534 at [475] (Ward J), citing Sir Anthony Mason in the Anglo-American Law Review 1998). This is in contrast to unconscionable dealing, as noted by Deane J in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at [13] as follows: The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party. Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogues. [Case citations omitted] 39 In A v N (supra), Ward J (as she then was) discussed the nature and scope of duress at [504] to [509] and whether it can be established by "illegitimate pressure", which her Honour noted has been criticised by the NSW Court of Appeal in Australian & New Zealand Banking Group v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149 as being inherently vague. Relevantly, her Honour observed at [509]: If Mitchell and Karam are correct, then the concept of duress in New South Wales, if not Australia (noting that Mitchell was decided in Queensland), is now limited to unlawful conduct. This limitation is not difficult to reconcile with the classic cases on duress to the person. In Barton v Armstrong, the 'duress' was constituted by several death threats. In McLarnon v McLarnon (1968) 112 Sol J 419, the threats were of incarceration. In Saxon v Saxon [1976] 4 WWR 300, death threats were made against not the signer, but the signer's children. The threatened acts in each of those cases are unlawful. Moreover, even if Karam is incorrect is limiting duress to unlawful acts, the cases show that there is a high threshold to be met with respect to the conduct of the party alleged to be exerting pressure, as these cases all exhibit a high degree of threatened violence. [Emphasis added] 40 In summary, the threshold to establish duress is high and the doctrines of undue influence and unconscionable conduct require evidence that the party complaining about the agreement is either weaker or has a special disability (for instance, was vulnerable within the meaning of r 37) or was unduly pressured by a stronger party into an agreement where there was, for instance, little or no benefit to be gained by the weaker party.
The situation in Harrison was similar to that which is alleged to have occurred in these proceedings in that the Tribunal Member incorrectly advised the landlord in that case that its notice of termination was invalid due to the Member misreading the applicability of a COVID-19 regulation which had been introduced at the time to prevent termination of a tenancy in certain circumstances. Ultimately, the landlord and tenant entered into a specific performance agreement which did not include any reference to termination. The landlord appealed on the basis that the Member's misstatement of the law led it to believe that termination could not be pursued. In these circumstances the Appeal Panel stated in Harrison at [37] that the analysis applied in Sylvaney by reference to concepts of contract law and principles that might apply in setting aside an agreement based on the conduct of the parties, is inappropriate when considering whether the conduct of the Member constituting the Tribunal is of a type which warrants the setting aside of orders made by that Member.
The Appeal Panel went on to state that an evaluation of the Member's conduct is more aptly undertaken by considering what is referred to in the context of commercial arbitrations as "misconduct" of an arbitrator which might justify a court setting aside a decision. The Appeal Panel referred to a number of authorities which noted that the use of the expression "misconduct" of an arbitrator, with its suggestion of moral values is apt to mislead, the issue being one of "an irregularity in procedure". The Appeal Panel then noted with reference to Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline Contractors Ltd [1978] VR 385 at 392 and E. Rotheray & Sons Ltd v Carlo Bedarida & Co. [1961] 1 Lloyd's Rep 220 that, where there is an irregularity in the conduct of an arbitrator, it is then necessary to determine whether the irregularity is such to warrant intervention.
Adapting these principles to the Tribunal, the Appeal Panel stated at [41] that a Member's conduct is to be considered in the context of the obligations imposed upon the Tribunal under the NCAT Act and the manner in which those obligations are performed. They must also be considered in the context of the role or roles the Member is to perform. We respectfully adopt the approach of the Appeal Panel in Harrison to our assessment of the Member's conduct in the matter under appeal before us.
The Tribunal is required to promote the use of resolution processes: s 37 NCAT Act. It is not unusual for a Tribunal Member to encourage and facilitate settlement when a matter comes before them for hearing. However, care must be taken to ensure that, if a Member acts as a facilitator or conciliator, he or she does not act in such a way that would make it inappropriate for the Member to make orders in relation to any agreement or subsequent hearing on the merits. A Member must always act in accordance with the objects set out in s 3 of the NCAT Act and in line with other procedural obligations set out in that Act. As noted in Harrison at [46], these obligations include: 1. affording the parties natural justice: s 38(2) NCAT Act; 2. acting with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: s 38(4) NCAT Act; 3. ensuring the parties to the proceedings understand the nature of the proceedings: s 38(3)(a) NCAT Act; 4. if requested, explaining any aspects of the procedure of the Tribunal or any decision or ruling made by the Tribunal that relates to the proceedings: s 38(3)(b) NCAT Act; 5. ensuring the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: s 38(3)(c) NCAT Act.
In order to set aside an order made by consent, there must be some conduct which is in breach of these obligations and which would give rise to a substantial injustice that should be corrected. An example might be where the Tribunal Member engaged in bullying behaviour or placed undue pressure on the parties to reach a settlement. As is relevant to this matter, as it was in Harrison, a statement made by a Member during the course of a settlement process, where no final decision is made on the evidence and where a party is not otherwise prevented from pursuing its claims would not, without more, be conduct that would give rise to an irregularity sufficient to justify the setting aside of an order made by consent: Harrison at [51].
The application filed by Mr Richards with the Tribunal was a consumer claim. While he made reference to the Australian Consumer Law, the Tribunal's jurisdiction to hear and determine the claim arose under the Fair Trading Act 1987. The Tribunal has jurisdiction under that Act to determine a "consumer claim". Division 2 of Part 3 of the Fair Trading Act applies the ACL as a law of NSW. However, for the provisions of the ACL to apply in the exercise of the Tribunal's jurisdiction under the Fair Trading Act, the claim must also fall within the ACL's provisions. In general, the consumer claim jurisdiction under the ACL is narrower than that which pertains under Part 6A of the Fair Trading Act.
During the hearing and discussions the Member dismissed any suggestion by Mr Richards that as a supplier Mr Lindley could be liable for any damage resulting from the explosion of the battery. Mr Richards referred to the ACCC, meaning the Australian Competition and Consumer Commission which administers the ACL, but was told by the Member he should go to Fair Trading not the ACCC. During the discussions at the hearing the Member did not at any time refer to the source of the Tribunal's power to deal with the claim by Mr Richards nor to any applicable law or principles. While that was not strictly necessary, the omission we think led the Member to make erroneous and misleading statements as to the Tribunal's jurisdiction and the remedies available to Mr Richards.
As noted above, the Tribunal's primary jurisdiction arises under the Fair Trading Act. Section 79E of the Fair Trading Act provides: 79E Meaning of "consumer claim" (1) For the purposes of this Part, a consumer claim means 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. (2) For the avoidance of doubt, a reference in this Part to a consumer claim includes a reference to a claim by a consumer against a supplier (for example, a manufacturer or wholesaler) who is not the direct supplier of goods or services to the consumer if the claim arises from or in connection with the supply of those goods or services by the direct supplier to the consumer.
Section 79D defines a supplier to mean "a person who, in the course of carrying on (or purporting to carry on) a business, supplies goods or services". The claim must be made by a "consumer" as defined in s 79D. A "consumer" includes a natural person. Damages is a remedy available under s 79N.
In our view it is plain that in accordance with the provisions of the Fair Trading Act Mr Richards is a consumer, Mr Lindley is a supplier and Mr Richards' claim is a consumer claim under the Fair Trading Act. Mr Richards may also have been able to bring a claim for breach of the consumer guarantees in the ACL, for example, that the goods (the battery) were not of acceptable quality. Damages would also have been a remedy available to Mr Richards as a consumer under the ACL.
In insisting to the parties that the most Mr Lindley could have been liable for was the cost of a new battery or a replacement battery, the Tribunal Member clearly misunderstood her jurisdiction. It was not the case, as she stated, that any claim in relation to the destroyed bike would need to be brought against the manufacturer of the bike and that damage to property could not be claimed. The transcript shows that Mr Richards was significantly influenced by the Member's statements in reaching an agreement with Mr Lindley. As he stated at the appeal hearing, when he was offered a second hand bike and a battery, it looked like a good deal, as the Member had told him all he could hope for at best was a replacement battery or a refund of the cost of the battery. He said he also accepted the offer because the Member said he would have to go to Fair Trading to claim damages and he did not want to do that.
We accept the medical evidence provided by Mr Richards concerning his disability and also accept that what he believed he was agreeing to was a working e-bike and a battery that may not have worked properly but at least worked to some extent. Unfortunately, the Member's notation on the orders, meant that he was supplied with a non-working e-bike and a defective battery. While the Member was unaware of Mr Richards' disability, she made no attempt to check that Mr Richards either understood or agreed to the final form of the orders made, including the notation, which is what would be expected. We are of the view that by the Member's erroneous view that the Tribunal did not have the power to make orders sought by Mr Richards, Mr Richards entered into an agreement with was disadvantageous. In addition, he did not fully understand the terms of that agreement. In that context we note that after saying he would accept the replacement bike, Mr Richards took no further part in the hearing or settlement discussions. Before us, it was apparent that towards the end of the appeal hearing Mr Richards lost focus and was unable to respond to what was being said.
We are of the view that the Member's misunderstanding of the law and her insistence to Mr Richards that he could not make the claim he had against Mr Lindley, in combination with Mr Richards' disability, prevented him from pursuing his claim for the full amount of his claimed his loss. The Member was in breach of her obligations to ensure that the parties understood the nature of the proceedings (by mischaracterising those proceedings) and to ensure that Mr Richards understood the agreement he was entering into. We are satisfied that these matters give rise to a substantial injustice such that the appeal should be allowed.
In the circumstances, as there has been no assessment of the merits of the case or evidence provided it is appropriate to remit the matter to the Tribunal for reconsideration.
We make no orders as to costs as we consider there are no special circumstances which would warrant such an order.

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Cases Cited (17)