Livanis v Corner Office Carlingford Pty Ltd - [2009] NSWDC 38

No judgment structure available for this case.

CITATION: Livanis v Corner Office Carlingford Pty Ltd [2009] NSWDC 38

HEARING DATE(S): 6 March 2009

JUDGMENT DATE:
16 March 2009

JURISDICTION: Civil

JUDGMENT OF: Goldring DCJ

DECISION: 1. I allow the appeal, set aside the decision of the assessor, and vary the decision.
2. I find a verdict for the plaintiff in each claim.

CATCHWORDS: ADMINISTRATIVE LAW - Jurisdictional error - LOCAL COURT - Small Claims Division - whether court or tribunal - LOCAL COURT - Small Claims Division - Procedure

LEGISLATION CITED: Courts and Crimes Legislation Amendment Act 2008
Local Courts Act 1982
Practice Note No 2/2005 (Small Claims Division)
Local Courts (Civil Procedure) Rules
Civil Procedure Act 2005

CASES CITED: Kioa v West (1985) 159 CLR 550
Wakim v Mathiew Pty Ltd [2002] NSWSC 405; BC200202361
Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57
Muin v Refugee Review Tribunal (2002) 76 ALJR 966
Craig v South Australia (1995) 184 CLR 163
Arnoldus-Lewis v Murphy [2008] NSWSC 1103
Minister for Immigration and Muticultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323; 180 ALR 1; 75 ALJR 1105
Ex parte Hebburn Limited; Re Kearsley Shire Council (1947) 64 WN(NSW) 107,109

PARTIES: Dino Livanis trading as Five Star Complete Services (Plaintiff)
Corner Office Carlingford Pty Ltd (First Defendant)
Milka Milutinovic previously trading as Mortgage House Strata Management (Second Defendant)
Sashtron Pty Limited trading as National Andrews Real Estate (Third Defendant)
Corner Office Pty Limited tradng as Elders Real Estate Harris Park (Fourth Defendant)

FILE NUMBER(S): 4318 of 2008

COUNSEL: M A Robinson (Plaintiff)
J Weaver, solicitor (First, Second, Third and Fourth Defendant)

SOLICITORS: Barrak Lawyers (Plaintiff)
Cumberland Frank Commercial & Litigation Lawyers (First, Second, Third and Fourth Defendant)

JUDGMENT

1 This matter comes before this Court because the plaintiff originally appealed to the Supreme Court against the decision of the Local Court at Parramatta, Small Claims Division. By order of 9 September 2008, pursuant to the amendments made by the Courts and Crimes Legislation Amendment Act2008, the matter was transferred to this Court.

2 The plaintiff contends that the decision of the Local Court either was made without jurisdiction or that there was a denial of procedural fairness, to the extent that the appeal should be allowed, the decision set aside, and that I should determine the matter myself.

Relevant legislation

3 Some provisions of the Local Courts Act 1982 are relevant to this appeal:

70 Procedure generally in Small Claims Division
(1) The jurisdiction conferred by or under this Act on a Court sitting in its Small Claims Division is to be exercised by a Magistrate or an Assessor .
(2) Proceedings in a Court' s Small Claims Division are to be conducted with as little formality and technicality as the proper consideration of the matter permits.
(3) The rules of evidence do not apply to proceedings being heard or other proceedings in a Court ’s Small Claims Division.
(4) Witnesses may not be cross-examined except in circumstances in which, and to the extent to which, the cross-examination of witnesses is authorised by a practice note.
(5) An Assessor or Magistrate exercising the jurisdiction of a Court sitting in its Small Claims Division may inform himself or herself on any matter relating to proceedings being heard or other proceedings in the Small Claims Division in such manner as he or she thinks fit.
(6) Proceedings in a Court' s Small Claims Division (other than any judgment given or order made in respect of the proceedings) are not required to be recorded.

72 Judgments and orders final
Subject to this Division, all judgments and orders of a Court exercising jurisdiction under this Part are final and conclusive.

73 Appeals as of right
(1) A party to proceedings under this Part who is dissatisfied with the judgment or order of a Court sitting in its General Division may appeal to the Supreme Court against the judgment or order, but only as being erroneous in point of law.
(2) A party to proceedings under this Part who is dissatisfied with the judgment or order of a Court sitting in its Small Claims Division may appeal to the District Court against the judgment or order, but only on the ground of lack of jurisdiction or denial of natural justice.

75 Determination of appeals

76 Appointment of, and qualifications for,

Assessors

Term of office

1

Remuneration

2

Effect of certain other Acts . . .
3 (2) If by or under any Act provision is made:
(a) requiring a person who is the holder of a specified office to devote the whole of his or her time to the duties of that office, or
(b) prohibiting a person from engaging in employment outside the duties of that office,
that provision does not operate to disqualify the person from holding that office and also the office of an Assessor appointed on a part-time basis or, subject to subclause (3), from accepting and retaining any remuneration payable to the person under this Act as an Assessor appointed on a part-time basis.
(3) Subclause (2) does not operate to authorise an officer of a Local Court to accept or retain any remuneration payable to the officer as an Assessor .

Leave
4 …

Removal from office
5 The Minister may remove an Assessor from office for incapacity, incompetence or misbehaviour.

Vacation of office

6

4 The relevant provisions of the Local Courts (Civil Procedure) Rules are as follows:

7 Transfer of proceedings from Small Claims Division to General Division: complexity, difficulty or importance of matters in dispute
(1) Proceedings are to be transferred to the Court’s General Division if, at any time before judgment is given, the Court is of the opinion that the matters in dispute are so complex or difficult, or are of such importance, that the proceedings ought more properly to be heard in the Court’s General Division.
(2) Proceedings that have been transferred to a Court’s General Division under subrule (1) may be transferred back to its Small Claims Division if the Court considers it appropriate to do so.
(3) An application for proceedings to be transferred under subrule (1) or (2) may not be made by a party to the proceedings later than 28 days before the day fixed for the trial of the proceedings.

10 Procedure generally

5 Finally, Local Court Practice Note 2 of 2005 provides as follows:

8. Preparing for Trial
A ‘formal trial’, that is, the normal adversarial trial where oral evidence is taken on oath, and witnesses cross-examined is not available in the Small Claims Division. Where the court is of the opinion that the issues likely to arise in the proceedings are so complex or difficult as to law or fact, or that the action or cross-claim is of such importance that it should not be heard in the Small Claims Division, the Court may order its transfer to the General Division. Such an order may be made at any time before judgment on the court's own motion or on the application of any of the parties.

[I note that this Practice Note appears to conflict with Rule 7(3). As a matter of law, no such order may be made on the application of a party unless that party applies for a transfer 28 days before the hearing date.]

10. Witnesses

not

The facts

6 In this case the plaintiff claimed for work done and materials supplied to three companies and a Ms Milka Milutinovic. Ms Milutinovic appears to have been a director, and concerned in the management, of the three defendant companies. All the defendants appear to have carried on business as real estate agents or strata managers. The plaintiff, trading as Five Star Complete Services, carried on business as a handyman and repair contractor for the maintenance of various properties.

7 The statement of claim is in the ordinary form. The defence fell into two parts. The first alleged that the work done by the plaintiff was either not done or was not done in a satisfactory way. No evidence was presented about this, and it was not proceeded with. The second part of the defence was that the defendants were not acting on their own behalf as principals, but rather as agents for other persons, whose identity had not been disclosed. Therefore, the defendants contended, they were not personally liable to the plaintiff.

8 The evidence shows that Ms Milka Milutinovic had owned or worked for a number of different estate agencies. The plaintiff, by affidavit, alleged that he had done similar work for her over a period of some 12 years. The plaintiff's wife, who acted as office manager for him, by her affidavit, gave details of some of the transactions between the plaintiff and the defendants. The only other evidence before the learned assessor was an affidavit of Rebecca Siniska, who had worked as an assistant strata manager for a business called Elders Strata West, from March 2006 to October 2007. At that time she says that she was supervised by Ms Milka Milutinovic.

9 In her affidavit Ms Siniska says:

"I observed that ‘Work Orders’ were sent to Five Star Complete Services. Each Work Order requested that defined works be attended to at a particular property under our management. On some occasions I have assisted in typing and sending these Work Orders to Five Star Complete Services. Attached and marked ‘ Annexure A’ is a Work Order I sent to Five Star Complete Services on 3 February 2007."

She also stated in her affidavit, and in a conversation with Mrs Livanis (set out in Mrs Livanis' affidavit), that work orders were not issued in the office unless and until the agency had received money from its clients, and that money had been deposited in the agency's trust account, from which it was supposed to be paid. The work order is on the letterhead of Elders Strata West. That business is not a party to these proceedings. The work order is addressed to the plaintiff's business name. It is clearly indicated that the work is to be done for a particular Strata Plan and bears the comment ‘Note: Charge Account to the Owners - Strata Plan 70722’.

10 The assessor accepted the defendants' contention that they were acting as agent for principals, whom she appeared to describe as "disclosed". I will discuss the assessor’s findings and the means by which she reached them later.

11 In the evidence before me, it would appear that, in all the matters subject to the plaintiff's claim, there was no indication that any party, other than the defendant in each case, was a principal. That evidence is limited, being a bundle of invoices sent by the plaintiff to the defendants. I admitted this evidence provisionally, principally because it was relevant to the issue of whether or not, in the event that I should hold in favour of the plaintiff, I should determine the matter myself rather than remit it. In that sense, as that evidence was admitted for that purpose, the purposes for which I use it are not limited.

Procedural fairness

12 In Kioa v West (1985) 159 CLR 550, Mason J (as he then was) said (at 584-5):

“31. The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. It seems that as early as 1911 Lord Loreburn L.C. understood that this was the law when he spoke of the obligation to "fairly listen to both sides" being "a duty lying upon every one who decides anything" (

(1911) AC 179

, at p 182). But the duty does not attach to every decision of an administrative character. Many such decisions do not affect the rights, interests and expectations of the individual citizen in a direct and immediate way. Thus a decision to impose a rate or a decision to impose a general charge for services rendered to ratepayers, each of which indirectly affects the rights, interests or expectations of citizens generally does not attract this duty to act fairly. . .

32. . . . What is appropriate in terms of natural justice depends on the circumstances of the case and they will include, inter alia, the nature of the inquiry, the subject matter, and the rules under which the decision-maker is acting (

[1969] HCA 10

;

(1969) 122 CLR 546

, at pp 552-553;

[1984] HCA 29

;

(1984) 58 ALJR 308

, at pp 314, 318;

[1984] HCA 29

;

52 ALR 417

, at pp 427-428, 434).

33. In this respect the expression ‘procedural fairness’ more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, that is, in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations (cf.

, at p.451, per Jacobs J.).

34. When the doctrine of natural justice or the duty to act fairly in its application to administrative decision-making is so understood, the need for a strong manifestation of contrary statutory intention in order for it to be excluded becomes apparent. The critical question in most cases is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? It will be convenient to consider at the outset whether the statute displaces the duty when the statute contains a specific provision to that effect, for then it will be pointless to inquire what the duty requires in the circumstances of the case, unless there are circumstances not contemplated by the statutory provision that may give rise to a legitimate expectation. However, in general, it will be a matter of determining what the duty to act fairly requires in the way of procedural fairness in the circumstances of the case. A resolution of that question calls for an examination of the statutory provisions and the interests which I have already mentioned.”

13 In Wakim v Mathiew Pty Ltd [2002] NSWSC 405; BC200202361, at [20-35] O’Keefe J considered the legislation then governing the Small Claims Division of the Local Court, which is in virtually identical terms to that I have set out above, and applied the law governing the content of the requirements of procedural fairness.

14 The plaintiff in that case alleged that there had been a lack of procedural fairness, because the Magistrate constituting the Local Court had determined the issues on the basis of written statements of the parties, and had not allowed cross-examination of witnesses. His Honour rejected this argument because he found,

“[36] The approach adopted by each of the parties in the proceedings in the Small Claims Division of the Local Court operated as an acceptance by them of the fairness of the procedure. In any event there is nothing in that procedure which would run counter to the duties referred to in para. [21] above or in the legal principles set out above.”

15 The defendants in this case rely on a similar proposition. However, with the greatest of respect, O'Keefe J appeared to consider legislation which did not contain a provision equivalent to Rule 7(3) of the relevant Rules, which placed strict limits on the right of the party to apply to have the matter transferred to the General Division. It is not correct to assert that the plaintiff could have applied to transfer the proceedings to the General Division of the Court at any time after a date 28 days before the scheduled date of hearing.

16 Mr Weaver, for the defendants, referred me to a passage in the transcript of proceedings of the Local Court, which runs as follows:

BARRAK: Well as of the date of the invoice. For example, the one for $880 being annexure A to the Dino Livanis affidavit is dated 15 February 2007.

ASSESSOR: And there are other invoices that you are now telling me that you should rely upon which are from 2004, 2005.

BARRAK: Madam Assessor, if I’m forced to press on without the invoices, then I would be relying on these statements as a business record.

ASSESSOR: I’m happy to hear your case on the basis of the evidence that you say supports your case. It’s my call about whether that proves it.

BARRAK: Sure.

ASSESSOR: At the end of the day.

BARRAK: Absolutely.

ASSESSOR: I expect, as an absolute basic in any claim, if someone is suing for work that offset the invoice where issues are in dispute between the parties so to provide to me a statement, as far as I’m concerned, is no proof that the work’s been done.

Now if that isn’t(?) dispute and we’re only arguing about who’s responsible for paying it, and Miss Hadad did indicate at the beginning that she’s not arguing that the work is not completed. There aren’t, you know, defects, it’s not unfinished, if that ground is not being relied upon, the only argument is agency, then it may be that some of the - the content for those invoices are less relevant but what would be relevant, it seems to me, is who they’re addressed to perhaps. The work order, copies of those work orders. I mean all of those documents, it seems to me, are relevant ... I don’t know why they’re not -

BARRAK: Well Madam Assessor, I would seek to hand them up.

ASSESSOR: Well if you want to seek to hand them up and Miss Hadad is objecting to them, then we might have to look at an adjournment to give her an opportunity to get instructions in relation to - we’re not talking about two documents, you’re talking, on your own admission to me, probably close to forty, probably more.

BARRAK: Yes.

ASSESSOR: Probably eighty actually, if we’re looking at a work order and an invoice.
BARRAK: Probably.

ASSESSOR: Why didn’t you serve them before?

BARRAK: As I say Madam Assessor, they haven’t been served because we thought that the statements are sufficient as a business record.

ASSESSOR: Well if that’s your view, then I’m happy to push on and hear the case if you think they’re sufficient.

BARRAK: I’ll press on with it, yes.
ASSESSOR: All right. Go on then.

17 The defendant says that any argument by the plaintiff that it was not accorded procedural fairness is not consistent with the position that his counsel took here, because Mr Barrak, who appeared for the plaintiff in the Local Court, indicated, by what he said, an acceptance that the proceedings were fair. I cannot construe the exchange between Mr Barrak and the assessor as constituting any such acceptance. Mr Barrak was faced with the choice of seeking an adjournment or tendering the invoices. In the light of the decision reached by the assessor, the tender of the invoices, except in so far as I have referred to them already, had no relevance to the question of agency. The absence of the invoices might have influenced the assessor to find that there was no third party involved, but would not necessarily do so.

18 Mr Robinson, for the plaintiff, put his procedural fairness arguments in the following terms:

“A decision-maker should bring to a person’s attention the critical issue or factor on which the decision is likely to turn so that the person may have an opportunity to deal with it (eg: Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1 at [81]).

A decision-maker should not mislead a party as to the importance of a factor to the decision-maker (either actively or impliedly) ( Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; Muin v Refugee Review Tribunal (2002) 76 ALJR 966).
A public decision-maker should have regard to any promise (express or implied) or regular practice adopted by the decision-maker in the making of particular decisions when a failure to do so may result in some unfairness in the procedure now adopted ( Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1 at [48] and [105] per McHugh & Gummow JJ).”

He argues that the assessor emphasised the issue of agency, to the exclusion of other issues in the case. However, it appears to me, from the defence filed by each of the four defendants, that the substance of the defence was that they were acting as agents for some other person or persons and, therefore, had no personal liability to the plaintiff.

19 The plaintiff asserts that there was no evidence to support this contention. I shall deal with the substance of this argument later. It is clear, both from the documents filed in court and from the way in which Ms Hadad, for the defendants, put her case to the assessor, that she relied on the matters disclosed in the evidence filed and served by the plaintiff. Her contention, which the assessor accepted, was that the material contained in the affidavits filed by the plaintiff clearly indicated that the defendants were not acting on their own behalf.

20 That matter (agency) was squarely before the Court, and the issue for me is whether, in the circumstances, the assessor denied the plaintiff the right to present material, not whether the decision of the assessor was or was not correct, except if an incorrect decision of the assessor amounted to a jurisdictional error, which I consider later.

21 For this Court to entertain the issue of agency in the context of procedural fairness would, in my view, be contrary to s 75(2) of the Local Courts Act, because it is a matter either of fact or of law, which, absent any error going to jurisdiction, was squarely within the jurisdiction of the Local Court.

22 I am satisfied, from the transcript, that Mr Barrak presented some essential arguments on the principles of agency, and the application of those principles to the facts that he regarded as being disclosed in the material which he presented. He may not have addressed fully the question of whether the evidence before the Court was sufficient to sustain a finding that the defendants were acting as agents for undisclosed principals.

23 Because the issue of agency was clearly an issue on the pleadings, I find that nothing in the material placed before me shows that there was a lack of procedural fairness in the way the assessor dealt with this case.

24 The plaintiff also contended that there was an element of surprise in the way the proceedings were conducted. This submission was based on the absence of any written material filed by the defendant. However, it was clear at the hearing and, indeed, before the hearing, that the defendants intended to rely on the material contained in the affidavits filed and served by the plaintiff. In any event, Rule 10.2 makes it clear that proceedings in the Small Claims Division are to be conducted on the basis of material submitted in writing, without live evidence from witnesses, and without cross-examination. In this respect, I cannot find that there is any surprise in the way the proceedings were conducted.

Jurisdictional error

25 The leading statement on this subject is from the judgment of the unanimous High Court in Craig v South Australia (1995) 184 CLR 163:

“10. In considering what constitutes ‘jurisdictional error’, it is necessary to distinguish between, on the one hand, the inferior courts which are amenable to certiorari and, on the other, those other tribunals exercising governmental powers which are also amenable to the writ. Putting to one side some anomalous exceptions, the inferior courts of this country are constituted by persons with either formal legal qualifications or practical legal training. They exercise jurisdiction as part of a hierarchical legal system entrusted with the administration of justice under the Commonwealth and State constitutions. In contrast, the tribunals other than courts which are amenable to certiorari are commonly constituted, wholly or partly, by persons without formal legal qualifications or legal training. While normally subject to administrative review procedures and prima facie bound to observe the requirements of procedural fairness, they are not part of the ordinary hierarchical judicial structure. In what follows, the anomalous courts or tribunals which fall outside the above broad descriptions can be ignored. Since the District Court of South Australia is undoubtedly a court, the primary focus of discussion will be upon what constitutes jurisdictional error on the part of an inferior court. [my emphasis]

11. An inferior court falls into jurisdictional error if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist. Such jurisdictional error can infect either a positive act or a refusal or failure to act. Since certiorari goes only to quash a decision or order, an inferior court will fall into jurisdictional error for the purposes of the writ where it makes an order or decision (including an order or decision to the effect that it lacks, or refuses to exercise, jurisdiction) which is based upon a mistaken assumption or denial of jurisdiction or a misconception or disregard of the nature or limits of jurisdiction.
12. Jurisdictional error is at its most obvious where the inferior court purports to act wholly or partly outside the general area of its jurisdiction in the sense of entertaining a matter or making a decision or order of a kind which wholly or partly lies outside the theoretical limits of its functions and powers. An inferior court would, for example, act wholly outside the general area of its jurisdiction in that sense if, having jurisdiction strictly limited to civil matters, it purported to hear and determine a criminal charge. Such a court would act partly outside the general area of its jurisdiction if, in a matter coming within the categories of civil cases which it had authority to hear and determine, it purported to make an order of a kind which it lacked power to make, such as an order for specific performance of a contract when its remedial powers were strictly limited to awarding damages for breach. Less obviously, an inferior court can, while acting wholly within the general area of its jurisdiction, fall into jurisdictional error by doing something which it lacks authority to do. If, for example, it is an essential condition of the existence of jurisdiction with respect to a particular matter that a certain event or requirement has in fact occurred or been satisfied, as distinct from the inferior court's own conclusion that it has, there will be jurisdictional error if the court or tribunal purports to act in circumstances where that event has not in fact occurred or that requirement has not in fact been satisfied even though the matter is the kind of matter which the court has jurisdiction to entertain. Similarly, jurisdictional error will occur where an inferior court disregards or takes account of some matter in circumstances where the statute or other instrument establishing it and conferring its jurisdiction requires that that particular matter be taken into account or ignored as a pre-condition of the existence of any authority to make an order or decision in the circumstances of the particular case. Again, an inferior court will exceed its authority and fall into jurisdictional error if it misconstrues that statute or other instrument and thereby misconceives the nature of the function which it is performing or the extent of its powers in the circumstances of the particular case. In the last-mentioned category of case, the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern.”

26 This decision was applied by McCallum J in a case concerning the Small Claims Division of the Local Court, Arnoldus-Lewis v Murphy [2008] NSWSC 1103.

27 Mr Robinson, for the plaintiff, submitted that, for the purposes of the passage I have just quoted, the Local Court, Small Claims Division, when constituted by an assessor, is not an inferior court, but rather should be regarded as being a type of statutory tribunal. Craig's case concerned the issue of a writ of certiorari, which is not the remedy sought here. However, the terms of the statute are important in determining the jurisdictional question. It is clear from the provisions of Schedule 2, in the sense that assessors are appointed on a different basis from magistrates, and do not have the security of tenure afforded to other judicial officers. This lends force to the contention that the Small Claims Division should be regarded, for the purposes of jurisdiction, as a statutory tribunal rather than as a court. However, the fact that ss 72 and 73 preclude appeals on questions of law from the Small Claims Division, while such appeals are permitted in respect of the General Division, suggests that the issue of whether there is any review of legal questions becomes crucial. The Act provides for none. There is, therefore, a possibility that assessors, though legally qualified, may fail to apply the law correctly to the facts of cases before them, or may make errors of law. There is, accordingly, no assurance that matters in the Small Claims Division will be decided correctly according to law, even though parties are entitled to expect that the law will apply. It should be possible, in appropriate cases, for the courts to exercise a supervisory jurisdiction, if that is necessary, to ensure that the law will be applied properly. The whole tenor of the provisions governing the procedure for appeals suggests that, for the purposes of determining whether judicial review for lack of procedural fairness or jurisdiction, the Small Claims Division should be regarded as a statutory tribunal, rather than a court properly so-called.

28 The Small Claims Division is not part of a hierarchical system and its decisions are not subject to appeal or judicial review. Therefore, it falls within the category of bodies whose decisions are subject to judicial review on a wider application of the concept of jurisdictional error.

29 In Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323; 180 ALR 1; 75 ALJR 1105, Gleeson CJ at [41-2] said (omitting references):

“For the purposes of mandamus and prohibition, a tribunal is said to have failed to exercise its jurisdiction if it has wrongly denied the existence of its jurisdiction or mistakenly placed limits on its functions or powers. If the tribunal wrongly holds it has no jurisdiction or is not authorised to make a particular decision, there is said to be ‘an actual failure to exercise jurisdiction’. On the other hand, there is said to be a ‘constructive failure to exercise jurisdiction’ when a tribunal misunderstands the nature of its jurisdiction and, in consequence, applies a wrong test, misconceives its duty, fails to apply itself to the real question to be decided or misunderstands the nature of the opinion it is to form. A constructive failure to exercise jurisdiction may be disclosed by the tribunal taking an irrelevant consideration into account. Equally, it may be disclosed by the failure to take a relevant matter into account.
Although the notion of constructive failure to exercise jurisdiction developed in relation to the grant of prerogative relief and, later, the grant of relief under s 75(v) it is one that has some bearing on statutory schemes for judicial review of administrative decisions of the kind set out in . . . the Act. For example, it may be that the failure of the Tribunal to take a particular matter into account indicates that, in the circumstances, the Tribunal has misunderstood its duty or applied itself to the wrong question and has, on that account, failed to conduct a review as required by s 414 of the Act.”

Mc Hugh, Gummow and Hayne JJ said, at [82] (omitting references):

“It is necessary, however, to understand what is meant by ‘jurisdictional error’ under the general law and the consequences that follow from a decision-maker making such an error. As was said in Craig v South Australia , if an administrative tribunal (like the Tribunal)

‘falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.’

‘Jurisdictional error’ can thus be seen to embrace a number of different kinds of error, the list of which, in the passage cited from Craig , is not exhaustive. Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterization of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it. Nothing in the Act suggests that the Tribunal is given authority to authoritatively determine questions of law or to make a decision otherwise than in accordance with the law.”

The decision of the Full Court in Ex parte Hebburn Limited; Re Kearsley Shire Council (1947) 64 WN (NSW) 107, 109 is to the same effect.

30 Mr Robinson made the following written submissions:

“ 26. The Assessor lacked jurisdiction in the making of the decisions and thereby fell into in [sic] manifest jurisdictional error and/or she constructively failed to exercise her jurisdiction in that:

a. She simply failed to have any regard to or to give any legal effect to several plain and formal and contemporaneous admissions of liability for the contract debt between the plaintiff and the [sic] each of the defendants below as were in evidence before her (see for example at BB1 at page 56-58; 64 (at [21]) and 80);

b. She failed to have any regard for or in fact determine the actual terms of the relevant contracts and/or the terms and conditions based on the uncontested long standing course of trade and commerce between the parties and was evident before her; and/or,

c. She misdirected herself by impermissibly directing her attention solely or primarily to the question of whether the defendants each acted as “agents” of various or numerous properly owners who were clients or customers of the defendants from time to time. This distracted her from her true task that was before her, namely, establishing what were the terms of the contractual arrangements as existed between the parties in circumstances where it was not contested that the plaintiff undertook the work at the request of the defendants and who had paid him over the course of many years.

27. Close consideration of the reasons for the Assessor’s decision (at BB2 at transcript page 19. line 40 to page 23) reveals that she plainly allowed herself to be fundamentally distracted from her real duty by largely irrelevant concepts of agency, instead of determining the matter based on contract and long established arrangements.

28. The uncontested evidence before her (BB1 at page 47 at [14]) was that the subject invoices were all sent to the defendants ‘ identifying the work done and the address details’ (of where the handyman work was undertaken) and the defendants ‘ would pay my invoice’ .

29. Instead of accepting this (and the significant admissions made by the defendants before legal proceedings had commenced), the Assessor became fixated on the law of agency.

30. Incredibly, and without any evidence before her, she made the surprising finding that agents who act for disclosed principles [sic] ‘operate trust accounts because they are not personally liable’ (reasons - transcript page 21 line 45).

31. Further, she made a fundamental error in “assuming” (and thereby finding) (at reasons – transcript page 22 line 26) that the one work order that was in evidence before her (at BB1 page 81) was:

a. both typical of all the subject work orders; and,

b. this meant that the invoices were all addressed (or ‘charged to’) to the third parties and not the defendants.

32. These manifestly incorrect findings (made with no basis on the evidence before her and importantly, with no warning to the parties that she might possibly do this) led the Assessor into error such that is [sic] can be held that she constructively failed to exercise her jurisdiction and/or that she denied the plaintiff procedural fairness.

31 The relevant findings of the learned assessor are as follows. I have set out the relevant part of the decision as it appears in the transcript, including spelling, punctuation and transcription errors:

“The defendant doesn’t put on any evidence but relies on the evidence of the plaintiff saying that the plaintiff’s evidence does not support its claim.

The defence pleaded that the defendant wasn’t liable because the defendant was acting as an agent for, as the language has transpired, for a disclosed principle but agency’s been alleged by the defendant all along.

The defence also alleged that work hadn’t been completed properly. That part of that defence was not relied upon by the representative for the defendants today so the argument before me relates to whether or not the plaintiff had a contractual arrangement with the defendant or whether or not it was with the defendant as agent for disclosed principles. It seems to me that’s what the argument’s come down to today. Now the statement of claim say services provided by the plaintiff to the defendant at the defendant’s request.

So in relation to the plaintiff’s evidence, the plaintiff himself gives evidence of a relationship that commences with Miss Milatinovic around about 1996 and he’s worked for her just over 10 years it looks like. He’s done a lot of work in the past for various properties, various agencies. He says he works for her personally or for - in her capacity as director of a company operating a real estate agency so a large part of his evidence is about the relationship between the two and that falls down, looks to me, to be around 2007.

In any event, what the plaintiff says is, ‘Look, at that point our accounts - a number of accounts have remained outstanding’ and that’s the basis of the claims before me today.

In support of each of these proceedings, the plaintiff provides just a copy of the statements of account. I don’t have a copy of any of the work orders and I don’t have a copy of any of the actual invoices.

Now on the basis that the actual work itself is not contested, some of that evidence is not so crucial but it does become important when my job is to work out who the contractual arrangements really were between, I’ve only got one work order and I will comment on that shortly.

So it seems to me that the only evidence really of the establishment of the relationship is contained in the statement of Mr Livanis and he just says - at paragraph 6 he’d been working for her and paragraph 9 he receives a telephone call from Miss Milatinovic in 1996 and she gives him some written work orders and says “I’ve got some jobs for you, let’s see how you go” and then the usual procedure involved is, he’d get a written work order. He’d take it, he did the work. He puts in an invoice and he says all of them were paid by the agent.

He’s the only one there at the time of that agreement. His wife Maria Livanis puts on some evidence in relation to conversations she has are primarily about the relationship after there is a dispute about payments. Some of the comments she makes relate to record keeping et cetera, discussions about payments, her decision to stop referring management work but again, I don’t have any documents from her apart from the ones that pretty much are attached to the plaintiff’s statement. I’ve got a series of emails which I’m not sure are identical but in any event both of those statements contain some emails.

Miss Senisca tells me that she was a property manager and she says that work orders were sent. She typed them up sometimes. She attaches a copy of one. She says after the requested works were attended to, they’d get an invoice. After receiving the invoice, they’d send a cheque or an electronic funds transfer and she says, “The invoices were paid by us from the trust account. We personally attended to the payment of Five Star in respect of their invoices. The invoices were never paid directly by the owners of the property. This is because it was company policy that we cannot issue a work order except in cases of extreme emergency unless the money was placed in our trust account to cover cost”.

Now that assertion by the plaintiffs in relation to the claims by the defendant in emails that there has to be money in the trust account to cover work before a work order is issued is relied upon by the plaintiff as evidence that in fact the defendants were personally liable for these accounts.

I raised during the course of the proceedings, my concern with that line of argument as it seemed to me to support the opposite contention and Mr Barrak was given an opportunity to make his submissions in relation to that but that is certainly a major argument on the plaintiff’s point. They say the evidence of the relationship and the emails that are here, are that they are paid from the trust account. They know that the defendants are real estate agents and that work orders are not given unless money is paid in the trust account and they are paid by the agents with money from the trust accounts so that set of facts is relied upon by the plaintiff to assert personal liability by the defendant in these properties and not the owners of the properties themselves.

Now the defendant doesn’t put on any evidence - none of the defendants put any evidence of their own. They rely upon the plaintiff’s evidence to say there is no proof that there was any contractual agreement between the plaintiff and any of these defendants. That work orders were issued by the defendants to the plaintiff and the fact that orders are not placed until money is in the trust account is consistent with the way agents acting for disclosed principles operate trust accounts because they are not personally liable. They are acting as an agent on someone else’s behalf so that instructions are given to somebody on behalf of someone else, that person puts the money in the agent’s trust account. The trust account is then debited, money is taken out of that trust account and paid to the plaintiff or whoever else for work carried out on behalf of the disclosed principle.

Money in a trust account is not money belonging to the defendant. Clearly, they are acting as an agent on behalf of the third party. That’s pretty much what the representative of the defendant says.

In relation to the only copy of a work order that I have in these proceedings, the defendant draws to my attention certain aspects of that and the work order that I have is a work order for business entity run by the plaintiff and it has a description of work to be carried out. It says the work is for a strata plan, it’s got a strata manager’s name here and then it says “Note, charge account to the owners, strata plan, number, care of”, Elledestrata West and the defendant’s solicitor says to me that is, on that one document alone, that is evidence of instructions being given to the plaintiff by the defendant as agent for a disclosed principle and that is the relationship. On that basis, the defendant says it’s not personally liable, none of the defendants are personally liable.

Having regard to all of the evidence before me, I don’t think there’s much dispute about the way the work is given by the defendants to the plaintiff. I simply don’t have very much evidence but there’s nothing about what is before me that causes me surprise. If I just take the one work order, the plaintiff is contacted, given a work order to carry out work at various properties which are managed by the various agencies and therefore defendants in these proceedings, works are carried out.

I don’t know what invoices generated because I don’t have it here but the work order says who work is for, who’s it to be charged to and there’s a ‘care of’’ address to the strata agents so I would assume that the invoices although I don’t have them, are in accordance with the work order.

The argument by the plaintiff which is that because the defendant says in some of the emails that are orders not placed for work until money in the trust account, and the plaintiff says to me ‘That’s supportive of its argument that the defendants are personally liable’, I maintain my view that it’s exactly the opposite. Money that goes into a trust account is money belonging to the person who put it there in the first place and if the third party puts money in a trust account, that money is not - and puts it in specifically in the defendant’s trust account, that is not money that belongs to any of the defendants. That’s not money that the defendant can do what they feel like.

The defendant can spend that money as it is authorised and instructed to by the third party so the fact that money is paid to the plaintiff from a trust account says to me, quite clearly, that the person who’s paying for these services is the third party that put it there in the first place and that is consistent, it seems to me, with the workings of an agent who’s acting for a disclosed principle.”

32 I have already set out my finding that in this case there was no failure to accord the plaintiff ‘natural justice’ or procedural fairness. I must, therefore, consider whether the findings by the assessor constitute a jurisdictional error in the wide sense given to that expression in Craig and Yusuf.

33 In traditional administrative law terms, it seems that the first submission of the plaintiff is that the assessor failed to take into account a relevant consideration, namely, that the defendant admitted that she was liable to pay certain amounts to the plaintiff. Mr Robinson refers to a number of passages set out in the annexures to Mr Barrak's affidavit in the proceedings before me. These, in turn, are taken from affidavits in the Local Court proceedings. They refer to statements by Ms Milutinovic, which the plaintiff says constitute admissions. It is quite clear that, if it can be established that Ms Milutinovic did say what was alleged, and this was not challenged by the defendants, what she said constitutes an admission of liability to pay the debt to the plaintiff, no matter in what capacity. The assessor appears not to have considered the alleged admissions at all.

34 The second submission is that the assessor failed to take into account the plaintiff's evidence of the course of dealings between him and Ms Milutinovic over a 12 year period. The assessor did consider this evidence.

35 In my view, the learned assessor was quite right in determining that the issue before her was the point raised by the defendant, namely, whether the defendants were acting on their own account or as agents. The matters relating to alleged admissions that I have just set out are certainly relevant to that issue. The learned assessor failed to take them into account.

36 In determining that the defendants were acting as agents for third parties, whose identities the assessor seems to consider were disclosed, the assessor placed considerable weight on the single work order that was annexed to Ms Siniska's affidavit. As I have indicated, this work order appears not to have been issued by any of the defendants. I conclude that that work order is not a piece of information or evidence that is relevant to the present proceedings, and, in relying on it as heavily as she did it, the learned assessor gave undue weight to an irrelevant consideration.

37 I find that each of these matters is, within the meaning of what the High Court said in Yusuf's case (set out above), one where the assessor reached her decision by “identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute".

38 Therefore, I find that the decision of the assessor was reached through a jurisdictional error. It is therefore a nullity and must be set aside.

39 It seems to me that the material placed before the Local Court by the plaintiff does, however, raise a real issue as to whether or not the defendants were acting as principals or as agents. Apart from the work order that I have mentioned, the alleged admissions, and the plaintiff's account of the relationship between him and the defendants, the plaintiff's evidence is, on its face, consistent either with the defendants acting as principals, or as agents for undisclosed principals. In the course of the proceedings before me, the plaintiff tendered a bundle of invoices, which was apparently the bundle which Mr Barrak sought to tender to the assessor, but which she rejected. I admitted them provisionally, on the basis that, if I found that the assessor's decision had been made without jurisdiction, or there had not been procedural fairness, I would have to decide whether or not to remit the matter to the Local Court.

40 Those invoices are relevant. All of them are addressed to the defendants. Prima facie, in my view, that indicates that the plaintiff intended to contract with the defendants, as principals. That tips the balance in favour of the contentions of the plaintiff. It was open to the defendants to produce evidence of their relationship with the various persons that they claim to be principals, but they chose not to do so. Having raised the defence that they were acting not as principals, but as agents for undisclosed principals, they bear the burden of proof of establishing this relationship on the balance of probabilities. In my view they have not done so. I bear in mind that I have found that there was natural justice, or procedural fairness, to both parties, and both parties were able to present whatever evidence they wished, and also to put their arguments to the assessor.

41 In that situation, while I had in mind to remit the matter to the General Division of the Local Court so that it could be heard and determined according to law, in view of the evidence before me, I cannot see that any useful purpose would be served by that course of action, while remaining fair to the parties. This course of action would vastly increase the costs and time taken; see Civil Procedure Act 2005, s 58.

42 In the circumstances, it seems to me, that I can decide the issues on the evidence before me. Because, in my view, the defendants had the opportunity to do so, but have not adduced any evidence of their relationship to the alleged principals, while some of the plaintiff's evidence is ambiguous, on the balance of probabilities it is not difficult to determine that the plaintiff intended to contract personally with each defendant as principal.

43 I therefore allow the appeal, set aside the decision of the assessor, and vary the decision. I find a verdict for the plaintiff in each claim.

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Citations

Livanis v Corner Office Carlingford Pty Ltd [2009] NSWDC 38

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CITATION:	Livanis v Corner Office Carlingford Pty Ltd [2009] NSWDC 38
HEARING DATE(S):	6 March 2009
JUDGMENT DATE:	16 March 2009
JURISDICTION:	Civil
JUDGMENT OF:	Goldring DCJ
DECISION:	1. I allow the appeal, set aside the decision of the assessor, and vary the decision. 2. I find a verdict for the plaintiff in each claim.
CATCHWORDS:	ADMINISTRATIVE LAW - Jurisdictional error - LOCAL COURT - Small Claims Division - whether court or tribunal - LOCAL COURT - Small Claims Division - Procedure
LEGISLATION CITED:	Courts and Crimes Legislation Amendment Act 2008 Local Courts Act 1982 Practice Note No 2/2005 (Small Claims Division) Local Courts (Civil Procedure) Rules Civil Procedure Act 2005
CASES CITED:	Kioa v West (1985) 159 CLR 550 Wakim v Mathiew Pty Ltd [2002] NSWSC 405; BC200202361 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1 Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 Muin v Refugee Review Tribunal (2002) 76 ALJR 966 Craig v South Australia (1995) 184 CLR 163 Arnoldus-Lewis v Murphy [2008] NSWSC 1103 Minister for Immigration and Muticultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323; 180 ALR 1; 75 ALJR 1105 Ex parte Hebburn Limited; Re Kearsley Shire Council (1947) 64 WN(NSW) 107,109
PARTIES:	Dino Livanis trading as Five Star Complete Services (Plaintiff) Corner Office Carlingford Pty Ltd (First Defendant) Milka Milutinovic previously trading as Mortgage House Strata Management (Second Defendant) Sashtron Pty Limited trading as National Andrews Real Estate (Third Defendant) Corner Office Pty Limited tradng as Elders Real Estate Harris Park (Fourth Defendant)
FILE NUMBER(S):	4318 of 2008
COUNSEL:	M A Robinson (Plaintiff) J Weaver, solicitor (First, Second, Third and Fourth Defendant)
SOLICITORS:	Barrak Lawyers (Plaintiff) Cumberland Frank Commercial & Litigation Lawyers (First, Second, Third and Fourth Defendant)