Snowtime Tours Pty Ltd v Rundle

NCAT Appeal Panel|2022-02-21

Summary

In this appeal, the respondent, a consumer who wished to travel to Thredbo from inner Sydney to take up ski field accommodation, was prevented from doing so by a "stay-at-home" Public Health Order enforced by the New South Wales Government on the inner Sydney area in response to the emergence of the Delta strain of COVID-19. However, the appellant, which provides a service booking ski holiday accommodation, was not prevented from providing the service or facilitating provision of the accommodation in Thredbo to the respondent.
On the appellant's case, the respondent's part of the bargain as mutually understood was simply to pay for the accommodation. Whether he later travelled to Thredbo to use it was, in that sense, irrelevant to the bargain struck and there was no relevant illegality preventing his performance of what the contract required.
The issue in this appeal is whether there was appealable error in respect of the Tribunal's conclusion that the doctrine of frustration applied and allowed the respondent to be released from the bargain and refunded his payment.
For the reasons set out below, we have decided to refuse leave to appeal and dismiss the appeal.

Facts not in contention

Most of the relevant facts, including jurisdictional prerequisites were not in issue: 1. The respondent was a consumer of services in NSW; 2. The appellant was a supplier of services in NSW; 3. The respondent paid the appellant the total sum of $5,677.00 for the accommodation; 4. The respondent lived within an area described in subsequent Public Health Orders which prevented travel outside that area during the period the accommodation was booked. Thredbo fell outside that area; 5. The relevant restrictions in the Public Health Order prevented the respondent from lawfully travelling to use the accommodation he booked but did not prevent the appellant from lawfully facilitating provision of the accommodation; 6. The respondent sought a refund when he could not utilise the accommodation; 7. The appellant refused to provide it; and 8. Neither party formally terminated, nor purported to terminate, the contract.

Scope and nature of internal appeals

An appeal to the Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. To succeed in an appeal, the appellant must demonstrate either an error on a question of law, which, except in an appeal from an interlocutory decision, may be argued as of right; or that permission (that is, "leave") to appeal should be granted to bring the appeal: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2).
Where the appeal is from a decision made in the Consumer and Commercial Division (other than in respect of interlocutory decisions), there is a requirement that leave may only be granted where we are first satisfied that the elements of cl 12(1) of Sch 4 of the NCAT Act are made out, in that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
We agree with the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 where it said, at [76], that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act may have been suffered where: ... [T]here was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance."
Even if these conditions for the grant of leave are satisfied, the Tribunal has a discretion concerning the grant of leave which it will ordinarily only exercise in the circumstances described in Collins v Urban at [84(2)], namely. Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
We may decide to conduct a new hearing if we are satisfied that the grounds for appeal warrant it: NCAT Act, s 80(3)(a). A new hearing under s 80(3) of the NCAT Act is a hearing de novo, or "from the beginning": Yuen v Thom [2016] NSWCATAP 243 at [17].

The Notice of Appeal and Appellant's Submissions

The Notice of Appeal was completed in the form of a commentary on the Tribunal's reasoning, alleging questions of law which for the most part cannot, as drafted, be properly considered to meet that description and seeking leave to appeal predicated on each of the terms of cl 12 of Sch 4 NCAT Act.

Alleged errors of law

The main question of law raised by the appellant was whether the Tribunal had applied the correct test as to frustration. In particular, it was contended that it should have applied a test under which it asked the question whether the lockdown was unforeseeable. There were also questions of law about whether the Tribunal in dealing with foreseeability of the risk of a lockdown had reversed the onus of proof and concerning judicial notice. The appellant alleged that the Tribunal had reversed the onus of proof by finding that the frustrating event needed to be "foreseeable", and also asserted that the correct test was that it not be "unforeseeable" and that the Tribunal improperly took judicial notice in noting its belief, referred to above at [21] of the reasons, that "[i]t was common ground that at the time [the booking was made], there were no or almost no new daily community transmission infections of COVID-19 as it was prior to the date that the first Delta strain was discovered on about 16 June 2021…".

Alleged errors of fact

To support its argument about foreseeability, the appellant sought leave to rely upon a letter from Booking.com of 9 November 2021 obtained after the Tribunal's decision as proof that, relevantly, the generic warnings (set out at [7] above) it put in evidence formed part of each booking made in the relevant period through the Booking.com platform.
Whilst we may decide to conduct a new hearing, the parties did not ask us to do so and we were not satisfied that the grounds for appeal warranted it.
We decline to allow the letter from Booking.com of 9 November 2021 into evidence. The appellant provided no specific details of when it made enquiries with Booking.com to obtain the letter, or of any specific obstacles it faced in obtaining it. There is also no suggestion that the appellant sought an adjournment to obtain such evidence. In fact, the appellant makes it clear that, at the relevant time, it considered such evidence to be superfluous. The terms of cl 12(1)(c) of Sch 4 of the NCAT Act are not made out as we cannot be satisfied the evidence was not reasonably available on the principles set out in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111.
In any event, the appellant submitted that the conclusion about foreseeability was clearly wrong given the documented history of the pandemic and regardless of whether the Tribunal should have accepted that the warnings about the effect of COVID-19 were communicated to the respondent and whether or not the Tribunal accepted the statements from the appellant's director, which it submitted it should have done, that the warnings were part of every booking.
It seems to us that it was also part of the appellant's case on appeal that, if not involving an error of law, the Tribunal was wrong, as a matter of fact, in concluding that the situation that eventuated was different from the foundation of the contract. 1. The appellant also submitted that the Tribunal's decision was against the weight of the evidence. 2. Finally, the appellant submitted that, even if unsuccessful in establishing that the contract was not frustrated, it should be entitled to an order varying the decision to allow it various expenses it incurred. 3. In that regard, s 13 of the Frustrated Contracts Act 1978 (NSW) provides:
13 Adjustment of certain losses and gains (1) Where a contract is frustrated and, by reasonably paying money, doing work or doing or suffering any other act or thing for the purpose of giving performance under the contract (not being performance which has been received) the performing party has suffered a detriment, the performing party shall be paid by the other party to the contract an amount equal to one-half of the amount that would be fair compensation for the detriment suffered. (2) Where a performing party referred to in subsection (1) has, as a consequence of doing or suffering the acts or things that caused that party to suffer the detriment so referred to, acquired or derived any property or improvement to property, the performing party shall pay to the other party so referred to one-half of the value of the property or improvement so acquired or derived.
However, despite being directed to lodge and serve any new evidence it sought leave to rely upon, the appellant did not support these claims with evidence as to those expenses which went beyond its bare assertion. It had failed in those claims on the basis of its lack of probative evidence at first instance: Decision at [25]. It cannot now succeed on this issue in the appeal, both because the lack of evidence remains and due to the terms of cl 12 (1)(c) of Sch 4 of the NCAT Act as there is no suggestion the evidence was not reasonably available to it when the decision was made.

The Nature of Frustration of Contract

We agree with what the Appeal Panel said in the recent decision in Snowtime Tours Pty Ltd v Lavecky [2022] NSWCATAP 219 (at [20] - [22] concerning the test to be applied, namely: 20. In Codelfa Construction Pty. Ltd. v. State Rail Authority of N.S.W. (1982) 149 CLR 337 the High Court generally accepted the test put forward by Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3 (1956) AC 696, when determining whether a frustration event has occurred. Mason J (with whom Stephen J agreed) relevantly stated at [39] - [40]: 39. In Brisbane City Council v. Group Projects Pty. Ltd. (1979) 145 CLR 143, at pp 159-163, Stephen J. discussed the authorities. The more recent authorities, National Carriers Ltd. v. Panalpina (Northern) Ltd. (1981) AC 675 and Pioneer Shipping v. B.T.P. Tioxide (1982) AC 724 , do not call for any revision of that discussion. I agree with Stephen J.'s acceptance of the approach adopted by Lord Reid and Lord Radcliffe in Davis Contractors. Lord Reid said that the task of the court is to determine "on the true construction of the terms which are in the contract read in light of the nature of the contract and of the relevant surrounding circumstances", "whether the contract which they did make is . . . wide enough to apply to the new situation: if it is not, then it is at an end" (1956) AC, at pp 720-721. Later he described frustration as "the termination of the contract by operation of law on the emergence of a fundamentally different situation" (1956) AC, at p 723 . (at p357) 40. Lord Radcliffe (1956) AC, at p 729 said: ". . . frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. […] It was not this that I promised to do." His Lordship, noting that special importance attaches to an unexpected event, observed "There must be as well such a change in the significance of the obligation that the thing undertaken would, if performed, be a different thing from that contracted for". (at p357) 21 That position is also adopted by Aiken J: see [26]- [27] 22 In summary, frustration will be satisfied (1) If the frustration event causes the contractual obligation owed by either party under the contract to become impossible or radically different from the obligation contemplated at the time that the parties entered the contract. (2) The frustration event was not the fault of either party; and (3) The contract does not deal with what will happen on the occurrence of the alleged frustration event.
In the circumstances in Codelfa, Mason J (as he then was) stated at [47]: The critical issue then is whether the situation resulting from the grant of the injunction is fundamentally different from the situation contemplated by the contract on its true construction in the light of the surrounding circumstances.
A clause in a contract which deals with the frustrating event will generally preclude the application of the doctrine of frustration, so long as it makes "full and complete" provision for the effects of the supervening event upon the parties' rights and obligations: Bank Line v Arthur Capel & Co [1919] A.C.435 at 455; The Florida [2006] EWHC 1137 per Tomlinson J at [12].
Unforeseeability is not part of the relevant test of frustration: see Lavecky at [23]. On the other hand, if the contract or surrounding circumstances objectively establish that the relevant event was expected or foreseen or reasonably foreseeable then what occurred could not be said to be radically different from what was contemplated and the party seeking to have the contract discharged can be seen to have assumed the risk of the relevant event.

Consideration - alleged errors of law

We have already dealt with and rejected the appellant's contention that to succeed in establishing frustration it was necessary for the respondent to show that the frustrating event was unforeseeable.
We also do no agree that the Tribunal reversed an onus of proof about foreseeability. As we refer to below, we consider that the Tribunal did apply the correct test at [20] of its reasons. At [22], the Tribunal merely recites a finding as to a submission said to have been made by the appellant that the changed position brought about by the stay-at-home orders "was foreseeable" on 9 April 2021. We do not consider that this involved any reversal of the onus of proof.
Otherwise, it seems to us the Tribunal's conclusion that the foundation of the contract was radically different from what was contemplated was an application of the correct test, as outlined above, which was applied in coming to a factual evaluation as to whether a frustrating event had occurred.
We address below the challenges to this conclusion in respect of which leave to appeal is required but for now point out that this was not a conclusion of fact made without evidence or a conclusion that has resulted in a decision that was legally unreasonable, nor does it appear that the Tribunal misconstrued the contract, all of which would be questions of law. The appellant did not contend otherwise.
In this regard, it seems to us that support for the respondent's case is derived from the decision in the "coronation case" in the English Court of Appeal in Krell v Henry [1903] 2 KB 740, along with the facts that the present case proceeded on the basis that the pandemic restrictions did prevent the appellant from personally enjoying the benefit of the contract; there was nothing in the terms of the contract, as found by the Tribunal, that addressed the possibility of such restrictions and there was nothing in the surrounding circumstances, as found by the Tribunal, that showed that the frustrating event was in contemplation.
We see no error of law by the Tribunal taking "judicial notice" of the state of affairs as regards community transmission of COVID-19 at the relevant time, nor as to the lack of relevant Public Health Orders, at [21] of the reasons. In Woods v Multi-Sport Holdings Pty Ltd [2002] HCA 9; 208 CLR 460; 186 ALR 145; 76 ALJR 483 McHugh J explained at [64] that: As a general rule, facts in issue or relevant to a fact in issue must be proved by admissible evidence. The doctrine of judicial notice is an exception to this rule. A court may judicially notice a fact whenever it "is so generally known that every ordinary person may be reasonably presumed to be aware of it."
In our view, given the level of publicly available information as to the state of the pandemic over the last several years, the evidence the Tribunal took notice of clearly falls within this category.
Furthermore, the Tribunal is not bound by the rules of evidence and may inform itself in any manner it thinks fit: s 38 (2) of the NCAT Act.

Consideration - alleged errors of fact

As outlined below, we have decided that leave to appeal should be refused, principally, because the appellant has not succeeded in persuading us that the Tribunal's conclusion was anything more than arguably wrong. Furthermore, it was not a conclusion that raises any question of principle, nor was it a conclusion, in our opinion, that was arrived at in a manner that was likely to produce an unfair result.
As to errors of fact, the appellant focussed upon two aspects. First, the Tribunal's finding about foreseeability. Secondly, the Tribunal's conclusion as the foundation of the contract.
As to the question of foreseeability, it seems to us that this was a conclusion upon which different minds may differ, but it was a conclusion that was not, plainly, wrong for the reasons which the Tribunal gave. In saying this, we do not accept the criticism about the failure to accept the alleged statements from the appellant's director about the booking form. In the first place, the appellant did not establish through provision of the transcript just what the director had said on this subject. In any event, it was a broad assertion unsupported by better evidence that could have been, but was not, presented by the appellant.
Furthermore, we are not in a position to criticise the Tribunal, as the appellant did, about failing to deal with all the arguments put by the appellant about foreseeability because we were not provided with anything approaching a full transcript to know what arguments the appellant ultimately advanced.
As to the factual question as to what comprised the foundation of the contract, again this was a matter upon which minds might differ, but it seems to us it was reasonably open to the Tribunal to conclude that it could be inferred from the context in which the contract was made that enjoyment of the accommodation by the respondent himself was part of that foundation.
Finally, we reject the contention that the decision was against the weight of the evidence. In this regard it is sufficient to say that we were not supplied with all of the material presented to the Tribunal below, including the oral evidence at the hearing.
On that basis, leave to appeal should be refused and the appeal dismissed.

Orders

Our Orders are as follows: 1. Leave to appeal is refused; 2. The appeal is dismissed.

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: 01 August 2022

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