Ormiston College v Avent
[2018] QCATA 103
•18 July 2018
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Ormiston College v Avent [2018] QCATA 103
PARTIES:
ORMISTON COLLEGE
(applicant/appellant)v JOHN AVENT
(respondent)
APPLICATION NO/S:
APL107-17
ORIGINATING APPLICATION NO/S:
MCD02036/16
MATTER TYPE:
Appeals
DELIVERED ON:
18 July 2018
HEARING DATE:
19 October 2017
HEARD AT:
Brisbane
DECISION OF:
Member Allen
ORDERS:
Leave to appeal is refused.
CATCHWORDS:
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – PARTICULAR CASES INVOLVING ERROR OF LAW – leave to appeal – minor civil dispute – minor debt – application for refund of administration fee for late payment – where administration fee payable and immediately fees were outstanding – whether tribunal applied correct test in regard to penalties – whether leave to appeal should be granted
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 13(1), s 142(3)
Attorney-General v Kehoe [2001] 2 Qd R 350
Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28McIntyre v Tully [2001] 2 Qd R 338
APPEARANCES & REPRESENTATION:
Applicant:
Mr A. Khan
Respondent:
Self-represented
REASONS FOR DECISION
Mr Avent has children who are students at Ormiston College. He was late in payment of their tuition fees in the amount of $5,720 in respect of the second term in the 2015 year and as a result the College levied a $150 administration fee on him.
Mr Avent refused to pay the fee until the College made threats of legal action. He advised the College that he was only paying the fee because of the threats of legal action.
Mr Avent filed an application in the Tribunal’s Minor Civil Dispute jurisdiction for amongst other things an order that the $150 fee be reimbursed to him. He stated in application that the fee did not pass the test of reasonableness. That the basis of his claim is that the late payment fee must bear some resemblance to the actual cost involved in pursuing payment. That he had asked the College to substantiate how they arrived at the arbitrary figure of $150, however they simply told him that this is their policy and it’s in the agreement. He asked the Tribunal to determine whether the fee passes the test of reasonableness and bears any resemblance to the actual “out of pocket” cost incurred by the College.
The College submitted extensive evidence and made submissions at the hearing of the application before two Justices of the Peace who then made an order on 1 February 2017 that the College pay to Mr Avent the sum of $150 within 21 days.
The College has made application for leave to appeal and appeal in respect of that decision. Leave to appeal is required in this case as the appeal is in regard to a decision in the Minor Civil Dispute jurisdiction.[1]
[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), s 142(3).
Leave to appeal will ordinarily only be granted where there is some question of general importance upon which further argument and a decision of the appeal Tribunal would be to the public advantage; or, there is a reasonable case of error in the primary decision and a reasonable prospect that the appellant would obtain further substantive relief. Another question sometimes asked is whether leave is necessary to correct a substantial injustice to the applicant, caused by some error.
The College raised the following grounds of appeal:
(a)The Tribunal erred as a matter of law in determining that the $150 charge subject of the application was a penalty;
(b)There were errors in the decision making process;
(c)Alternatively, the Tribunal failed to give reasons for the decision.
The College submitted that their application demonstrated that on the grounds set out above there is a reasonable argument that the decision was attended by error and that an appeal is necessary to correct the substantial injustice caused to the College by the error and that leave to appeal should be granted and the appeal allowed.
First ground - The Tribunal erred as a matter of law in determining that the $150 charge subject of the application was a penalty
The College submitted that the basis upon which the $150 fee was charged was set out in its ‘Submissions by Respondent’ which were handed to the Tribunal at the hearing. This included an outline of the applicable legal test to determine if the payment was a penalty, a history of the dealings between the parties with copies of the contractual arrangements confirming that Mr Avent had been sent the 2015 schedule of fees and correspondence from Hanrick Curran, the College’s accountants, which confirmed that the appropriate amount for the administration charge was $150.
They set out the relevant part of the Tribunal’s decision as follows:
We’ve considered the evidence you’ve given us and we’ve also heard your testimony, to our view, this $150 appears to be a penalty.
We would have been much happier with some sort of sliding scale that was based on the number of days the debt was outstanding.
Accordingly, we are going to strike out this $150 charge and refund the $150 to the Applicant and we are going to order this be done in 21 days. Thank you very much.
The College submitted that the Tribunal erred as a matter of law in finding that the $150 fee was a penalty.
They then set out extracts from the decision in Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28 (‘Paciocco’). The High Court held in respect of the question to be determined regarding whether a contractual term is a penalty:
The question which may be identified... is whether a provision for the payment of a sum of money on default is out of all proportion to the interests of the party which it is the purpose of the provision to protect.[2]
…
It is only where the impugned provision requires a payment upon breach which is out of all proportion to the legitimate commercial interests of the party relying upon it that the punitive character of the provision stands revealed.[3]
[2]Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28, [29] (Kiefel J).
[3]Ibid [256] (Keane J).
The College submitted that in applying the decision in Paciocco to the facts here the relevant test is: is the $150 fee charged by the College to Mr Avent out of all proportion to the College’s interests (including its commercial interests) in receiving payment of its fees in a timely manner?
The College submitted that rather than applying the test referred to above, the Tribunal erred by applying a test based upon ‘some sort of sliding scale that was based on the number of days the debt was outstanding’. There is no basis in law for applying such a test to the consideration of whether or not a fee charged under a contract is a penalty. By applying an incorrect test to a question of law in the Application (namely, whether or not the $150 was a penalty) the Tribunal erred as a matter of law in reaching the decision.
They concluded that had the Tribunal applied the correct test, as set out above, it is reasonably arguable that the Tribunal would have reached an alternative decision favourable to the College.
At the hearing the College submitted that it had legitimate commercial interests of the College in receiving tuition fees and if paid late the administration fee is not out of all proportion to the Colleges legitimate interest supported by the opinion form Hanrick Curran with the law set out in Paciocco applied.
Mr Avent notes that he was approximately 11 days late in the payment of his fees. He does not dispute that there was a late fee in the contract, though he had no opportunity to negotiate it. He disputes the quantum of the fee. He notes the advice the College received from Hanrick Curran that ‘it is reasonable that this total monthly cost per family now exceeds the current fee charged of $150’, though he questions their independence. Mr Avent considered that the administration fee does not bear any resemblance to cost recovery for him being 11 days late. He considers the fee arbitrary and that the charges should apply on a sliding scale, and that the late fee must have some resemblance to the amount and time that the payment is late. In regard to Paciocco’s case, Mr Avent said this is an administration fee and that case may not apply. Mr Avent also raised as an issue that he had not received the 2015 schedule of fees which were different to the 2013 schedule which applied when he initially enrolled his children.
My perusal of the transcript for the initial hearing shows that the tribunal received the submissions from the College,[4] and the Tribunal had the Colleges representatives take them to the document which set out the fees for the 2015 year.[5] The College was able to bring the Hanrick Curran assessment of the fees to the Tribunal attention and set out the contents of that assessment,[6] One of the justices of the peace commented during the hearing:
So the administration fee – is that paid – it’s $150 for anyone who is late, whether it be two days or thirty days. With someone who’s - what – how did the accountants quantify it? Did they use an average period of lateness? Because I’m thinking there might be quite a difference between the number of emails, phone calls, chase ups that are made for someone who’s 10 days late than for someone who’s 30 days late. What can you tell me about that…[7]
[4]Transcript p 1-4, 15 to 45.
[5]Ibid p 1-9, 40 to 45.
[6]Ibid p 1-15.
[7]Ibid p 1-16, 5.
The response from the College at the original hearing was:
Well that’s exactly right. There will be. Obviously a difference but it’d be impossible to work out MIS – an administration fee based on each particular person which you charge. So that’s why we got the accountants to say, “well, see someone - Mr Avent – the time put into this has gone over years, and, you know, the amount that would be expected would be far more than $150. But and some people might, as you say, pay in a couple or three weeks late. That’s after three reminders that have already been done. So it’s not workable to try and work it on the basis of interest or how many days or the calculations there because … everyone varies.[8]
[8]Ibid p 1-16, 10.
Mr Avent then commented at the original hearing:
The follow-up involved in the 11 days or 10 days late was two emails came from the school. I don’t believe that represents $150 to the point made around you know, collecting the moneys … Impossible to work out fees for being two days late or 30 days late. I don’t accept that. I think at any company with an MIS, that the school would presumably have, would be able to calculate an interest rate of 10 or 20 per cent of the days late. [9]
[9]Ibid p 1-17, 10; 1-18, 5.
Following this the Tribunal members adjourned to consider their decision and when the Tribunal resumed they gave the reasons set out above.[10]
[10]Ibid p 1-19.
The College submits that these reasons show that, rather than applying the test set out in Paciocco, the Tribunal applied a test based on a sliding scale. I note that the obligation and extent of the obligation to provide full reasons varies according to the nature of the case.[11]. In the Tribunal’s Minor Civil Disputes jurisdiction, giving immediate oral decisions accords with the spirit and purpose of QCAT Act. Those decisions will not be exposed to criticism which fails to acknowledge the circumstances in which they are given.
[11]Attorney-General v Kehoe [2001] 2 Qd R 350, 356; Tully v McIntyre [2001] 2 Qd R 338.
Superficially the reasons of the justices of the peace appear to indicate that they have not considered the correct legal test. They did though make it clear that they were treating the administration fee as a penalty and as a result it should be repaid to
Mr Avent. That is the correct outcome if a fee has been found to be a penalty. Also it is clear that the evidence in regard to whether or not the administration fee was a penalty was that of the accountants Hanrick Curran and that evidence was provided to the Tribunal the respondents were given an opportunity to address it as was
Mr Avent and the Tribunal scrutinised it in asking in regard to how it was calculated.
Mr Avent was charged an administration fee of $150 and the evidence from Hanrick Curran was that a fee of $150 was appropriate. That though was in the context of ‘the total monthly cost per family’ which is clear form Hanrick Curran’s letter of advice.
Mr Avent was not one month late in the payment of his fees, he was 15 days late at most. Mr Avent believes that a fee could be calculated on a daily rate and this is reflected in the Tribunal’s reasons where they say ‘we would have been happier with some sort of sliding scale based on the number of days the debt is outstanding.’ In the Hanrick Curran advice it states at item 5 on page 1: ‘Divide the total cost per family for each task by 12 to break it down into a monthly cost amount’. There is therefore no reason why it could not have been broken down into a daily cost amount and that amount could have then been multiplied by the number of days the payment was late.
Mr Avent was fined an amount of $150 which represented the cost of payment of fees being outstanding for one month. His children’s fees were outstanding for less than half of one month.
I do not consider that the evidence of Hanrick Curran supports the payment of any immediate administration fees only ones where the fees are outstanding for at least one month.
Having regard to the above analysis it is therefore not clear that the justices of the peace have applied the wrong test and committed an error of law.
As noted, this application is in regard to a Minor Civil Dispute and leave to appeal is required. The law in regard to penalties is well known and so there is no question of general importance. I have not found there is a reasonable case of error in regard to ground one nor has there been a substantial injustice which requires correction. Leave to appeal in respect of ground 1 is refused.
Ground 2 – that there were errors in the decision making process
The College submitted that s 13(1) of the QCAT Act provides that ‘the Tribunal must make orders that it considers fair and equitable to the parties to the proceeding in order to resolve the dispute…’ Although the Tribunal ‘must’ make an order, the qualification in s 13(1) of the QCAT Act of ‘fair and equitable’ gives the Tribunal a discretion.
The College submitted that even though the Tribunal had a discretion in making the decision the correctness of the decision can be challenged by showing an error in the decision making process, citing Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at [21].
The College then submitted that the Tribunal had before it evidence, the Hanrick Curran letter, that demonstrated that the College had engaged a third party to review the administration fees charged by the College and that the fee had been calculated on the basis of the cost to the College of late payments. That the Tribunal ought to have given material consideration to that evidence and if it had applied the correct test, and had regard to that evidence the Tribunal would not have found it ‘fair and equitable’ to the parties to make the decision.
While the Tribunal is required to make orders it considers ‘fair and equitable’ as set out above, there is an overriding requirement that the Tribunal must act fairly and in accordance with the substantial merits of the case in s 28(2) of the QCAT Act. Member Stilgoe, as she then was, stated in Kellogg v Board of Trustees The Ipswich Girls’ Grammar School:[12] ‘The inescapable conclusion form reading the Act as a whole is that decision must be made by applying the relevant law.’
[12][2011] QCATA 210, [6].
I have not been satisfied that leave to appeal should be granted in respect of ground 1 so it is not clear that the wrong test was applied by the Tribunal. It is also clear from the above that the Hanrick Curran evidence does not necessarily support an immediate payment of an administration fee of $150 as the amount of $150 calculated in that advice represents the cost per family for a payment being outstanding for a month.
For ground 2 to support a grant of leave to appeal it must demonstrate a question of general importance and that has not been raised. I am also not satisfied that there is a reasonable case of error or that there is any substantial injustice in the decision based on ground 2. Leave to appeal in respect of ground 2 is refused.
Ground 3 – failure to give reasons for the decision
The College submitted that having regard to the error of law in not applying the correct test and the error of the decision making process in not giving material consideration to the evidence from Hanrick Curran that the Tribunal may have made its decision on the exercise of the discretion in s 13(1) alone. If the Tribunal made the decision by relying upon the general discretion provided by section 13(1) of the QCAT Act, then the Tribunal has failed to give reasons as to why the decision was made on that basis.
The College submitted that the reasons provided by the Tribunal explain why the Tribunal thought the $150 charge was a penalty but, if it was the case that the decision was based upon the Tribunal making an order that was ‘fair and equitable to the parties’, they fail to give any or any adequate reasons for a decision made on that basis. Indeed the basis for the decision is unclear.
Having regard to my findings that leave should to appeal should be refused in regard to ground 1 and 2 then ground 3 is not sustainable as it relies on the Tribunal being satisfied that there is a reasonable case that the decision of the Tribunal was not based on an application of the law in regard to penalty to the administration fee charged by the College supported by the evidence from Hanrick Curran. Failure to give reasons is clearly an error of law. While the reasons in this case were less than fulsome it is tolerably clear that they were based on a consideration of the appropriate test and had regard to the evidence. Leave to appeal in respect of ground 3 is refused.
Leave to appeal is refused.
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