Palm tree justice banned at VCAT

Justice Sifris banned palm tree justice in VCAT in a mercifully concise judgment: Christ Church Grammar School v Bosnich [2010] VSC 476, overturning President Morris’s decision in Law v MCI Technologies Pty Ltd [2006] VCAT 415, which was against the tide of NSW authorities.  Peter Riordan SC led Will Alstergren for the School. As the keener readers of this blog would be well aware, VCAT has a general jurisdiction, unlimited as to amount, in relation to disputes between the suppliers and recipients of goods and services, broadly defined.  In a sub-set of such disputes (consumer disputes and trader-trader disputes), it is empowered by s. 109(1) of the Fair Trading Act, 1999 to ‘make any order it considers fair’. The definition of ‘consumer disputes’ and ‘trader-trader disputes’ is at the end of the post. Oversimplified, however, they are disputes in relation to the supply of goods or services (a) for personal, household or domestic consumption, or (b) for a price of $10,000 or less.

At the start of his schooling, the applicants agreed with the school to give a full term’s notice of any withdrawal of their son from the school.  In default, they had to pay a term’s fees.  Some years into their son’s education, they gave notice 9 days into fourth term, on 15 October,  They got a bill from the school for $3,628 for term 1 the next year.  They applied to VCAT for a declaration that they need not pay the fees.  The reasons why the member granted the application were as follows:

‘I consider that the fair outcome is that the Applicants should not be liable to pay a term’s fees to the Respondent. In making this decision, I make no finding regarding the effect of these terms and conditions in general, and restrict my findings to the facts of this case. It seems to me that the giving of notice by the Applicants in these particular circumstances may be said to have constituted substantial compliance with the term of the contract. On reflection, in reaching my decision I was conscious of the fact that there was no actual loss suffered by the Respondent as a result of the Applicants’ conduct. The financial ‘penalty’ imposed by the clause … in these circumstances was not referrable to any actual monetary or other quantifiable damage suffered by the Respondent.’

Justice Sifris held that VCAT:

‘is required, when deciding the merits of a case, to apply the law and not merely be guided by it. Any flexibility relates only to the form of the order and of course, to procedural and evidential matters. If this was not the case absurd results could follow. To the extent that the Supreme Court of Victoria has concurrent jurisdiction [fn: Although the Court has concurrent jurisdiction, it must stay proceedings if the Tribunal is the more appropriate forum (see s 112(2) VCAT Act)] different results could follow. The Court, not having the benefit of s 109, would have to apply the law while the Tribunal could do what it considered fair even if the law was to the contrary. Further, such a result would encourage idiosyncratic notions of fairness and justice. [fn: To use the phrase in Muschinski v Dodds [1985] HCA 78; (1984) 160 CLR 583, 615 (Deane J)].  If the intention was to exclude the operation of the law (as a matter of substance and not merely procedure or form) a specific section to such effect, clear and unambiguous, should have been inserted.’

True it might be, his Honour said, that the courts are relatively free to decide what ‘unconscionability’ is for the purposes of s. 51AC of the Trade Practices Act, 1974, but it is one thing to give a court rope in relation to a specific cause of action, and another thing to grant the right to dispense palm tree justice in relation to a broad class of civil disputes.  There is no concept of ‘substantial compliance’ in contract law, his Honour concluded, so that the decision was contrary to law, and the only other reason given — the penalty point — should not have been a basis for decision because it was something raised without adequate notice with the Tribunal itself in breach of the requirements of natural justice.  Worse, ‘It engaged in cross-examination of [the headmistress] in an effort to support its own ground upon which to decide the application,’ and decided the case by reference to its own argument, even though it was apparent that the headmistress (the school being unrepresented) was unprepared to meet that argument, and so unable to say what actual costs the school had suffered as a result of the parents’ breach of contract.

Of course it may well be that when the decision goes back to VCAT to be heard by a different member, the fee will be found to be a penalty.  We will see.

As an aside, this seems to be an example of written reasons not conforming to the bounds of oral reasons (see [55]).  I have seen it before.  It seems desirable that written reasons for decisions given orally be exactly that, and not an opportunity to improve on the reasons for making the finding that was in fact made.

Now, those definitions:

consumer dispute means a dispute relating to the supply or possible supply of goods or services of a kind ordinarily used for personal household or domestic purposes but does not include a dispute relating to the supply or possible
supply of goods if the supply or the possible supply of the goods is for the purpose of re-supply, in trade or commerce, or for the purpose of using the goods up or transforming the goods in trade or commerce;

trader-trader dispute means a dispute between a purchaser or possible purchaser and a supplier or possible supplier in relation to the supply or possible supply of goods or services in trade or commerce which involves-

(a) a claim for payment of money in an amount not exceeding $10 000; or

(b) a claim for performance of work of a value not exceeding $10 000.’

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