High Court Reconsiders Tribunal Appeal Provisions

November, 2010

The High Court has shed new light on appeals from inferior courts and tribunals in the decision of Kostas v HIA
Insurance Services Pty Limited [2010] HCA 32.1 The case is the first occasion that the High Court has been called upon to consider a statutory appeal from a decision of the Consumer, Trader and Tenancy Tribunal (the Tribunal), deciding that such an appeal may be made on the basis of the so called “no-evidence” ground.2

In light of the case, appellants from decisions of tribunals may now not be limited to identifying an error in a “decision with respect to a matter of law”.3 Arguably, the case has widened the scope of such provisions to permit an appeal where an error or failure by a judicial officer to follow a rational process can be identified, such as the making of findings without sufficient evidence in support, even if it is not possible to isolate an error in a particular decision, or a distinct question of law.

Tribunal proceedings
The appellants were husband-and-wife owners of a single dwelling, and beneficiaries under a home owners warranty insurance policy issued by the respondent under the Home Building Act 1989 (NSW). The appellants commenced the original proceedings in the Tribunal as an appeal against the respondent’s decision to deny their insurance claim. The claim was for incomplete and defective residential building works. The appeal, progressing over a period of ten years from the Tribunal to the Supreme Court, the Court of Appeal and ultimately the High Court, was only of an interlocutory decision by the Tribunal on a preliminary question. The High Court took no issue that the preliminary question decided by the Tribunal was an appropriate one for separate determination.

The preliminary question put to the Tribunal at first instance, and reconsidered with varying results by the higher courts thereafter, was whether the appellants had validly terminated their contract with the builder of their home. The respondent contended that, if the appellants had failed to validly terminate the building contract, and instead had in fact repudiated that contract, the policy of insurance would not respond to the claim. The respondent insurer was successful at first instance before the Tribunal, obtaining an order that the owners had repudiated the contract and therefore could not claim on the insurance policy.4 In reaching this conclusion, the Tribunal member made an adverse finding in relation to the credit of the appellants as witnesses. Importantly, without referencing the evidence on which he relied, the member determined that certain extension of time notices had been served by the builder. The question of whether or not these notices had been served was an element to consider when deciding whether the contract had been validly terminated, or alternatively had been repudiated by the appellants.

Supreme Court, Court of Appeal
Section 67(1) of the Consumer,Trader and TenancyTribunal Act 2002 (NSW) (the Act) provided at the time: “(1)
If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the
proceedings who is dissatisfied with the decision may, subject to this section, appeal to the Supreme Court against
the decision.” Subsequently, the District Court replaced the Supreme Court in this provision by amendments effective 1 July 2008.5

On appeal to the Supreme Court,6 the appellants contended that there was “no evidence” before the Tribunal
member to support a finding that the extension of time notices were served. The relevant builder had previously
been a party to the proceedings, and an affidavit from him which covered the issue was on the Tribunal file.
However, that affidavit was not formally tendered at the hearing, despite being used in cross-examination of other witnesses and referred to in submissions. Nor was the builder made available for cross-examination.

It will be known that the Tribunal is an informal jurisdiction which may determine its own procedure and inform
itself in any manner it deems fit, subject to the rules of procedural fairness. While the Tribunal’s apparent reliance
on evidence not formally tendered may appear to give rise to an issue of denial of procedural fairness, this was not a point taken by the appellants at Court of Appeal level (a point apparently conceded by the appellants at the High Court hearing). In the Supreme Court Justice Rothman found in favour of the appellants, accepting their argument that the builder’s affidavit was not before the Tribunal, and overturning a number of findings made by the Tribunal member. Notably, Justice Rothman overturned the Tribunal member’s finding as to the appellants’ credibility.

His Honour substituted his own findings on the issue of service of the termination notices. The respondents appealed to the Court of Appeal.7 The Court of Appeal held unanimously that the decisions of the Tribunal considered by Rothman J at first instance did not constitute “decisions with respect to a matter of law” for the purposes of s.67(1) of the Act.8 The majority held additionally that, while a factual finding made in the absence of supporting material will involve an error of law and thus support judicial review, it does not form a basis for a statutory appeal under s.67 of the Act.9

High Court appeal
The Court of Appeal made a finding that a determination regarding the service of a contractual extension-of-time notice could be said to be a question of fact, or a mixed question of fact and law. It would, on that basis, not be susceptible to appeal under s.67 of the Act, which is limited to decisions on a question with respect to a matter of law. However, on appeal the High Court unanimously held that a finding of the Tribunal made with no evidence in support can be characterised as a “matter of law” within the context of s.67 of the Act.10 At the same time the majority decision of Justices Hayne, Heydon, Crennan and Keifeln also states that “what amounts to material that could support a factual finding is ultimately a question for judicial decision”.11 In his minority judgment, Chief Justice French gave further consideration to the proper manner in which a tribunal must operate, stating that “the Tribunal’s modus operandi must also serve its function … That function implies a rational process of decision-making according to law”.12 The respondent argued that, even if the builder’s affidavit should not properly have been considered by the Tribunal member – if indeed it was – there was evidence before the Tribunal of the service of the extension-of-time notices, in the form of the notices themselves. However, the High Court rejected this proposition, and in doing so considered not only the existence of evidence but its probative value.

The case seems to signify a potential, though not definitive, extension of the avenues for appeal of a Tribunal decision, requiring an appellate court to not only determine whether there was in fact evidence before the Tribunal, but also to take the further step of considering whether that material was capable of supporting the decision made.

In his minority judgment, Chief Justice French stated: “A decision based on no information at all, or based on findings of fact which are not open on the information before the Tribunal, is not compatible with a rational process.”13 Additionally, the findings of Chief Justice French in the minority go further than the majority decision, in accepting that an appeal brought from the Tribunal might lie in respect of errors in respect of questions of mixed fact and law.14 That suggestion is a departure from the established Court of Appeal authority15 that s.67 of the Act must be construed narrowly in its reference to matters of law. The decision is likely to influence appeals brought under similar provisions to those found in s.67 of the Act.16 In light of the High Court’s decision, arguably emphasis need not be placed so heavily on the concept of an erroneous ‘decision’, and instead an appeal may lie in the failure to follow a rational process, including, as in the case, on the basis of findings of fact made without sufficient evidence.

Endnotes
1. (Unreported, French CJ, Hayne, Heydon, Crennan and Kiefel JJ, 29 September 2010).
2. Per the plurality at [90]–[91].
3. In this instance as provided by s.67 of the Consumer, Trader and Tenancy Tribunal Act 2001.
4. Kostas v HIA Insurance Services[2005] NSWCTTT 345.
5. Courts and Crimes Legislation Amendment Act 2008.
6. Kostas & Anor v HIA Insurance Services Pty Ltd trading as HomeOwners Warranty & Anor [2007] NSWSC 315 (Unreported, Rothman J, 30 October 2007).
7. HIA Insurance Services Pty Ltd v Kostas [2009] NSWCA 292 (Unreported, Spigelman CJ, Allsop P and Basten JA, 16 September 2009).
8. Per Basten JA, Spigelman CJ and Allsop P agreeing, at [1], [24], [132]- [159].
9. Per Basten JA, Spigelman CJ agreeing, at [1], [137].
10. Per the plurality at [90]-[91].
11. Per the plurality at [91].
12. Per CJ French at [16].
13. Per CJ French at [16].
14. Per the plurality at [59].
15. Kalokerinos v HIA Insurance
Services Pty Limited [2004] NSWCA
312; HIA Insurance Services v Kostas
[2009] NSWCA 292.
16. For example, Consumer Credit Act 1981, s.208; Commercial Tribunal Act 1984, s.20; Residential Tribunal Act 1998 (NSW), ss.61 and 62.

“Arguably, the case has widened the scope … to permit an appeal where an error or failure by a judicial officer to follow a rational process can be identified, such as the making of findings without sufficient evidence .”

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