Slee v De Graaf; Slee v Clough; Slee v Davies

NCAT Appeal Panel|2017-08-29|Before: Dr J

Reasons for Decision

The Appeal Panel has before it three related appeals.
The appellant, Olivia Slee, operated in the year 2015 a vocational training business known as Flawless Makeup Academy in Shellharbour NSW. Six of the students who enrolled in the 2015 Certificate of Makeup course took action in the Tribunal in 2016 seeking to recover their course fees, as well as compensation for other claimed losses.
The Tribunal upheld the claims of three of the claimants, Ms De Graaf, Ms Clough and Ms Davies. The Tribunal found it proven that Ms Slee had made certain statements to the claimants that had induced them to enrol in the course and that they were misleading and deceptive. It ordered Ms Slee to repay each of them immediately the course fees, $8,999.00. The Tribunal rejected their other loss claims.
The Tribunal was satisfied that the statements contravened s 18 of the Australian Consumer Law (ACL) as set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Section 18 of the ACL provides: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3‑1 (which is about unfair practices) limits by implication subsection (1).
This provision has its origins in the Trade Practices Act 1974 (Cth) (TPA), s 52 (which had applied the standard to a 'corporation' as distinct from a 'person').

Right to Appeal

A party may appeal against a final decision of the Tribunal at first instance 'as of right on any question of law' (Civil and Administrative Tribunal Act 2013, s 80(2)(b)). The Act also provides that an appeal 'may be made with the leave of the Appeal Panel, on any other grounds', i.e. grounds other than questions of law (s 80(2)(b)). This discretion is the subject of special provisions in the case of appeals of the present kind, from the Consumer and Commercial Division. Schedule 4, cl 12 provides: 12 Limitations on internal appeals against [Consumer and Commercial] Division decisions (1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). Note. Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds. (2) [not applicable].

Grounds of Appeal

Ground 1 in the three notices of appeal is in common form. Ground 1 is, in essence, that the Tribunal failed to apply properly the standard applicable in civil litigation (the balance of probabilities) in finding that Ms Slee had represented that the Certificate of Makeup course offered by her Academy was 'industry recognised' (in the case of De Graaf and Clough) or was 'internationally recognised' (in the case of Davies).
The third appeal (relating to the order made in favour of Ms Davies), has an additional ground specific to that case. Ground 2 contends that the Tribunal miscalculated the amount order for damages. There is no dispute that the amount of the order was stated correctly in the De Graaf and Clough orders. Ms Slee challenged the Tribunal's finding that Ms Davies had paid her fees in full, and was therefore entitled to an order in her favour for the full amount.

Tribunal's Reasons

Ms De Graaf and Ms Clough gave evidence that Ms Slee had made the representations that misled them during the presentation she gave to prospective students at the open day held on 4 October 2014.
In its decision on the De Graaf claim, the Tribunal said: The course was industry recognised and nationally accredited 42. The respondent's account of what she said t the group of attendees at the open day is not detailed. All she recalls is that she stated: FMA is not a government training facility, we're totally independent. We don't offer government courses. Our Certificate of Makeup is skills based and has been developed from industry experience. 43. I find on the competing evidence between the parties that the respondent did state to the applicant that the Certificate of Makeup course was industry recognised, but not that it was nationally accredited. I make this finding in connection with industry recognition because the applicant has the greater recollection of what was said at the open day on 4 October. The respondent has recalled very little of what was said at the group meeting. 44. It is not credible that the statement that the respondent recalls was all that was said at the open day about the Certificate of Makeup course. In the absence of any evidence contradicting what the applicant states was said at the open day, I accept her evidence 45. In connection with national accreditation, the respondent was at pains to be clear the Certificate of Makeup course was not government based or associated. I find it improbable that she would have represented that the course while not being a government recognised course had government accreditation or accreditation with some other body.
Findings in similar terms are made in the Clough decision at [45]-[46].
In Ms Davies' case, Ms Davies gave evidence that the representations upon which she relied had been made at a private meeting in a local café between her and Ms Slee on 11 August 2014. The Tribunal said: Certificate of Makeup course was equivalent to Certificate !V course 42. I am persuaded that the respondent told the applicant that the Certificate of Makeup course would be the equivalent of a 'Certificate IV' in make up since the respondent has stated in her evidence that she created the Certificate of Makeup course as a non-government equivalent of the Certificate IV in makeup course, but which added things which she thought the government certificate lacked. The respondent also stated in the Tribunal that the course was equivalent to a Certificate IV in makeup, the closest non-government comparable course. Certificate of Makeup course was internationally recognized which would enable applicant to work anywhere in the world 43. I find on the competing evidence between the parties that the respondent did state to the applicant that the Certificate of Makeup course was internationally recognized which would enable applicant to work anywhere in the world. I make this finding because the applicant has the greater recollection of what was said at the 11 August 2014 meeting. The respondent has recalled very little of what she said at that meeting. 44. It is not credible that the statement that the respondent recalls having made was all that was said at the meeting with the applicant. About the Certificate of Makeup course. In the absence of any evidence contradicting what the applicant states was said at the meeting, I accept her evidence and do so on the basis that all of the evidence of the meeting induces in my mind an actual persuasion that the respondent told the applicant the Certificate of Makeup course was internationally recognized which would enable the applicant to work anywhere in the world and the probabilities of the respondent having said those words were greater than the possibility that she did not. I have had regard to paragraph 163(c) of the respondent's 17 November affidavit in reaching this conclusion. I find that evidence does not have relevance in the context of this statement since a statement that a qualification will enables a person to work is quite different to a statement that a qualification that will guarantee employment. 45. Based on the findings above I further that the applicant enrolled in the FMA to undertake the Certificate of Makeup course on the basis of the conduct of the respondent in making the statements referred to in [23] above. 46. I also find that the statements that I have found were made by the respondent were made in trade or commerce. It was not in dispute that the FMA operated by the respondent was a business being operated for profit in the training and education sector of the economy.

Material before the Appeal Panel

We note that Ms Slee was not represented at first instance. She appeared on her own behalf, as is the usual practice in the Consumer and Commercial Division in respect of consumer claims (the claimants had sought orders for compensation of $20,000).
The Appeal Book filed by Ms Slee contains: the eleven written statement of evidence relied upon by Ms Slee at first instance; and the documentary material relied upon by the present respondents (Ms De Graaf, Ms Clough and Ms Davies), comprising: the joint evidence bundle presented by all six original claimants, and individual statements of evidence prepared by Ms De Graaf, Ms Clough and Ms Davies. In addition we have Ms Slee's written submissions at first instance in each of the cases. We do not have a transcript or a complete record of the hearing as it was conducted. It is apparent from the member's reasons that Ms Slee gave oral evidence and was cross examined, as were Ms De Graaf, Ms Clough and Ms Davies. Ms De Graaf, Ms Clough and Ms Davies did include in their submissions in reply some typed passages from the oral recording of the hearing.

Consideration

Ms Slee's written submissions for the appeal address each set of reasons separately (De Graaf, pp 27-41); Clough (1-13); and Davies (14-27).

Ground of Appeal 1

Ms Slee submitted that the Tribunal had erred in applying the civil standard of proof by not showing the degree of caution that should be brought to the making of adverse findings based on a witness's recollection of oral communications. Alternatively (if no error of law is demonstrated), Ms Slee submitted that we should grant permission to have the findings reconsidered, having regard to the criteria set out in cl 12 of Sch 4 of the NCAT Act.
She began by referring to the observations made by McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319, in connection with a claim that oral misrepresentations had been made in breach of s 52 of the TPA (as previously noted, the predecessor to s 18 of the ACL). McClelland CJ referred to the frailty of human memory, especially as time passes, and the need for exactness of proof of what the representor is alleged to have said. Citing the well-known caution sounded by Dixon J in regard to reliance on inexact proofs in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361, McClelland CJ emphasised that there the trier of fact needed to feel an actual persuasion of the occurrence or existence of the matter alleged. He continued: Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of causes of action based on s 52 of the Trade Practices Act 1974 ... in the absence of some reliable contemporaneous record or other satisfactory corroboration.
In that case the Commonwealth Bank ('the Bank') had appointed a receiver to administer assets of a commercial demolition and excavation business. The business contended that two members of the Bank staff had, in breach of s 52 of the TPA, made promises (orally) that were deceptive and misleading. The promises were said to have involved offers of financial support which, had they been fulfilled, would have assisted the business in avoiding the financial difficulties into which it had now fallen.
The case was heard in 1995 and the relevant representations were said to have occurred in 1987 and 1990. It is apparent from the brief account of the relationship between the Bank and the business in the reasons for decision that the business was a substantial one, the debt that had accrued by 1995 was a very substantial one, and that the promises said to have been made that might have alleviated the business's difficulties were ones of a highly commercial character. McClelland CJ was not persuaded on the balance of probabilities, that the Bank officers had made the oral statements attributed to them by the business, and regarded the evidence the managing director gave as 'predominantly a reconstruction made some years after the event' (at 319).
Ms Slee noted that McClelland CJ's observations were approved by Brereton J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813. In that case a maritime construction business was unsuccessful in seeking to establish a proprietary estoppel which relied on alleged oral representations said to have been made by officers of the port authority as to the future use of port land.
In the present case, the claimants sought to prove statements said to have been made in the relatively recent past and made in an environment where Ms Slee was promoting to potential students the value to them of enrolling in her course.
This a long way from the settings seen in Watson v Foxman and Harbour Port Consulting. In each of these cases the allegation was that substantial promises had been made by senior officers of the respondent organisation (a major bank, and a port authority) but the plaintiff could point to no independent documentation that might confirm the making of those promises or other corroborative evidence.
Ms Slee also sought to rely on the legal principles that allow for a trial judge's finding of fact to be overturned because of failure to have regard to competing contradictory evidence of an objective kind. She referred to the High Court's decision in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118. There the judge at first instance had preferred the recollection of one driver over that of the other driver as to the position of the other driver's vehicle at the time of a collision. The decision was overturned by the Court of Appeal on the basis that the judge's finding was inconsistent with contemporaneous and incontrovertible police evidence taken at the scene which showed the skid marks of the other driver's vehicle to be on the correct side of the road, contrary to the judge's finding.
The High Court (Callinan J dissenting) dismissed the appeal. Ms Slee sought to draw support from the following passage in the reasons of Gleeson CJ, Gummow and Kirby JJ at 129[31]: ... in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately ... Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearance of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles of witness credibility; but it tends to reduce the occasions where those principles are seen as critical.
Ms Slee's representative also drew our attention to Leggatt J's compendious statement in Gestmin SGPS SA v Credit Suisse Ltd [2013] EWHC 3560 at [16]-[23] of the factors that arise in civil litigation that diminish the reliance that can be placed on alleged memory or recollection of events as a basis for a finding of fact. She also drew on his Honour's analysis of the difference between recollection and reconstruction.
In that case a very wealthy investor was seeking to recover multimillion euro losses said to have resulted from bad oral advice given by a major bank. This again, like the NSW cases to which were taken, provides an instance of judicial caution in fact finding about oral communications in a commercial case. It is noteworthy that Leggatt J expressly confined his conclusions to that kind of case. He said at [23]: In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.
We also accept, as noted by Ms Slee, that Leggatt J's observations have recently been cited, with approval, by Davies J in The Nominal Defendant v Cordin [2017] NSWCA 6 at [160]. There the Court held by majority (Macfarlan JA (dissenting), Emmett AJA, Davies J) that a trial judge had erred in law in accepting a motor cyclist's recollection that his dislodgement from his motor bike giving rise to severe injuries resulted from a motor vehicle bumping him from behind. The majority referred to contemporaneous documents that contained no report by the plaintiff of such an occurrence (most notably, in the hospital treating doctor's notes).
In closing submissions Ms Slee's representative pressed the view that the Tribunal was wrong to say that the recollection evidence given by Ms De Graaf and Ms Clough had not been contradicted. In our view, this submission overstates the nature of the evidence given in the witness statements relied upon by Ms Slee.
We have not had our attention drawn to any piece of objective, documentary evidence that contradicts the Tribunal's finding, or places it in serious doubt, in the way seen in both Cordin and Fox v Percy. As we have noted, Ms Slee's witness statements included statements from some of the other prospective students who attended the open day presentation. Those witness statements did not, on our reading, refer to the broader representations put in issue in this appeal - i.e., those relating to 'industry recognition' (De Graaf, Clough) or any relating to 'international recognition'. They focussed on the issue of whether Ms Slee suggested that the course was accredited or had government approval. Moreover, they could have little relevance to the representations found proven in Ms Davies' case as those representations were made at a private meeting between her and Ms Slee on 11 August 2014.
Because of the absence of a transcript of the proceedings we were hampered, as previously noted, in taking into account precisely what occurred at hearing and the oral evidence given. We only have the limited record provided by the respondents in their submissions.
This is a case that is entirely concerned with oral interchanges between a business promoter and interested potential students, young students who were at the beginning of their work careers.
To adopt in a rule-like way, as submitted on behalf of Ms Slee, the approach of the courts in the commercial cases to which we were taken would make it extremely difficult for consumers to prosecute claims based on alleged oral representations in settings such as the present. Business promoters could say what they like, keep no credible records of what they have said, and then resist a consumer claim alleging misleading and deceptive statements on the basis that the consumer's proof was no stronger than theirs, and is too inexact to meet their obligation to discharge the burden of proof.
In cases involving competing accounts of oral communications it will be necessary for the trier of fact, here the Tribunal, to undertake an assessment of the respective accounts of the parties. The representor may have no records of what was said and the representees may have no records of what was said. The court or tribunal will often, as occurred here, have a relatively specific account as to what is alleged to have been said from a consumer party for whom the occasion would often have been a significant one, and a less specific account from a trader party who may have a less specific memory of the occasion and of what was said, because for the trader occasions of that kind are frequent. Much will turn on the inherent likelihood or otherwise that the trader might have made statements of the kind alleged, and the plausibility and consistency of the consumer's account of what was said.
Prospective students are likely to be highly influenced by what was said by a course director about the nature, quality and employment prospects of a vocational course. They are likely to have listened carefully to any statements that were positive in that regard. Equally there may be cases where listeners have unreasonably misunderstood or disregarded less positive statements.
In Fox v Percy it will be seen that Gleeson CJ, Gummow and Kirby JJ ended their remarks, set out at [30] above, by saying: 'This does not eliminate the established principles of witness credibility; but it tends to reduce the occasions where those principles are seen as critical.'
On our reading of the reasons and the underlying material that we have, the Tribunal gave attention to factors such as those to which we have referred and in each case reached a state of persuasion of the kind to which Dixon J referred in Briginshaw.
In our view, the Tribunal sufficiently explained its basis for preferring Ms De Graaf's and Ms Clough's account over that of Ms Slee. It acknowledged in its reasons the statements of the other witnesses especially in regard to the issue of what Ms Slee said regarding accreditation. In the case of Ms Slee's conversation with Ms Davies, there were no other attendees at the event. We know of no documentary evidence that was before the Tribunal that might contradict Ms Davies' account, such as records of the conversation kept by Ms Slee.
We accept that Ground 1 raised a question of law. We find no error of law in the three decisions in that regard.

Ground 2 (Davies Case)

The dispute here relates to the accuracy of the order made by the Tribunal. Ms Slee's position is that Ms Davies did not pay the full amount, $8,999, and that the Tribunal made a factual error at [56] of its reasons as published to the parties ([59] on the internet site) in stating: The applicant has provided satisfactory evidence that she has paid all money due to the FMA, such evidence being at page 42 of exhibit A in the form of a letter from Debit success which is I find conclusive evidence of the payments made by her.
In her affidavit at first instance, Ms Slee said [81]-[84]: On 26 May 2015, Justine Davies again spoke to me regarding financial difficulty. I recall that we had an exchange in words to the following effect: Justine: Hi Liv. I've been let go from my job and am struggling a bit at the moment. I wanted to ask if there's any way that I can hold off my payments and pay it back later. Me: I'm sorry to hear that Justine. Yeah, that's fine. We can suspend your payments for a while, and you can pay it as you go You can apply for a scholarship if you want to help out. Justine: Thanks Liv. I really appreciate it. I directed the company Debit Success to stop making deductions from Justine from that time. Justine did not apply for a scholarship, or make any further payments toward her course fees. I have looked at the records of FMA. Justine currently owes $4,738.54. Annexed and marked 'J' is a copy of the record of payment for Justine.
Ms Slee submitted that the Tribunal construed in isolation the letter to which this passage refers (dated 27/05/2015 and now found at p 623 of the Appeal Book). The material parts of the letter were as follows: We write to confirm that we have finalised your contract with Flawless Makeup Academy that commenced on 26/01/2015 and there are no other payments to be made under this particular contract. Thank you for your business. If there are any outstanding matters regarding your contract please do not hesitate to contact us on [number given].
Against this background the word 'finalised' in the above letter may have meant no more than no further payments are required, or, possibly, as the Tribunal held, justified an inference that payments amounting to the full fee, $8999, had been received.
At hearing Ms Slee's representative explained that Ms Slee accepted that Ms Davies had owed her $4738.54 as at 26/05/2014, though the Debit Success records set out at pp 484-485 of the Appeal Book does not show payments totalling $4260.46 by 26/05/2015. However that record does show Ms Davies' 'balance to settle' as $4,738.54, with which she agrees. Her case is that the proper amount of the reimbursement order should have been the difference between $4738.54 and $8999, i.e. $4,260.46.
The material attached to Ms Davies' original application includes a copy of the Certificate of Makeup awarded to her at the award giving ceremony. It is dated 14 December 2015 and bears Ms Slee's signature. Ms Davies submitted to us at hearing that the fact that she was awarded the certificate is evidence that she had met the full costs of the course, as receipt of a certificate was conditional on full payment of the fees.
In her statement of evidence at first instance, Ms Davies did not address the history of her payments and did not provide any evidence of payment of the full fees or of waiver of the full fees, if that was the upshot of the conversation of 26 May 2015 to which Ms Slee deposed.
Ms Slee's evidence of their conversation on 26 May 2015 was not referred to by the Tribunal, nor was the absence of any clear payment record showing payment of the full fee of $8,999. It is not clear to us what submissions were made on this issue at the hearing.
In our view Ms Slee has demonstrated an error of law in the finding of the Tribunal in that it has failed to provide adequate reasons for finding that the letter of 27/05/17 provides conclusive evidence of full payment. In particular, it has not reconciled that finding with the apparently conflicting account given by Ms Slee in her affidavit, and with the absence of any evidence as to the making of payments from Ms Davies that demonstrated that she had paid the full amount.
We think in these circumstances the best course is to reduce, for the time being, the amount of the reimbursement order to the undisputed figure of $4,260.46; and to remit to the Tribunal for reconsideration the question of whether a further order should be made in favour of Ms Davies for the balance, $4,738.54, or part thereof. That will require some proof of payment from Ms Davies, whether documented or non-documented. (Ms Davies said, for example, from the bar table at our hearing that not all payments were receipted.)

Application for Leave to Appeal on Other Grounds

The applications for leave to appeal on grounds other than questions of law are in common form in each of the three cases.
Clause 12 of Sch 4 to the NCAT Act requires us to have regard to whether the applicant for leave has demonstrated: 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).
The submission in the three notices of appeal under (a) is essentially one repeating the issues raised by Ground 1, which we have dealt with in these reasons.
The submission under (b) argues that the findings were against the weight of the evidence, to a degree that resulted in a substantial miscarriage of justice. The submission refers to the witness statements relied upon by Ms Slee. As we have indicated those witness statements dealt primarily with the question of whether Ms Slee made claims of government approval or accreditation for her course. The Tribunal found in her favour on that point. This appeal concerned other representations said to have been made by Ms Slee. In our view the Tribunal's decision could not be said to be against the weight of the evidence, such that a substantial miscarriage of justice occurred.
Ms Slee did not seek to rely on criterion (c). She did not seek to bring forward new evidence.
The application for leave to appeal on other grounds is rejected.

Costs

In light of our decision, there is no basis for Ms Slee's application for her costs of the appeal, one premised on the possibility that the appeals would be allowed. It has only been successful on a narrow point, which we will remit for reconsideration. That success is not sufficient to warrant consideration of whether there are special circumstances that might warrant a departure from the usual rule that each party bears their costs of these proceedings.

Orders 1. Appeal No. 17/22903: Slee v De Graaf. Dismissed. 2. Appeal No. 17/22919: Slee v Clough. Dismissed. 3. Appeal No. 17/22926: Slee v Davies: 1. Appeal in respect of Ground 1 dismissed; 2. Appeal in respect of Ground 2 allowed. Order of Tribunal varied to require Olivia Slee to pay Justine Linda Davies the sum of $4,260.46 immediately; and 3. Ms Davies' application is remitted to the Tribunal ( either as previously constituted or differently constituted) to redetermine the question of whether there should, in addition, be an order in favour of Ms Davies for the balance of the course fee ($4,738.54), or part thereof.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 October 2017

Trade Practices Act 1974(Cth)

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Judgment (12 paragraphs)

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Cases Cited (7)