Pesec v Neo International Pty Ltd ACN 143 580 269 (Appeal) - [2020] ACAT 99

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

PESEC V NEO INTERNATIONAL PTY LTD ACN 143 580 269 (Appeal) [2020] ACAT 99

AA 17/2020 (XD 1127/2019)
Catchwords: APPEAL – claim for breach of contract – contract to deliver ‘how to vote’ flyers – appeal from decision to dismiss claim for lack of proof – onus of proof not discharged – alleged failure by original tribunal to consider partial refund of cost of delivering flyers – claim dismissed as no proven breach – where there is no breach, no damages (full or partial) can be awarded – application to appeal dismissed

Cases cited:Hart v McDonald (1910) 10 CLR 417
Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220
Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286
Pesec v Neo International Pty Ltd [2020] ACAT 34
Platt v Nutt (1988) 12 NSWLR 231
Watson v George (1953) 89 CLR 409

Tribunal: Presidential Member G McCarthy

Date of Orders: 2 December 2020

Date of Reasons for Decision:         2 December 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL  AA 17/2020

BETWEEN:
ANTHONY PESEC
Appellant

AND:
NEO INTERNATIONAL PTY LTD 143 580 269
Respondent

APPEAL TRIBUNAL: Presidential Member G McCarthy

DATE: 2 December 2020

ORDER

The Tribunal orders that:

The application for appeal is dismissed.

…………………………………..
Presidential Member G McCarthy

REASONS FOR DECISION

Introduction

In May 2019, the applicant stood (unsuccessfully) for election to the Federal Parliament as a senator for the Australian Capital Territory. The election was held on 18 May 2019.
As part of his campaign for election, the applicant contracted with the respondent for it to distribute 165,000 ‘How to Vote’ flyers to letterboxes in the suburbs of Canberra for a contract price of $12,523.50 (the contract).
Clause 5 of the contract stated:
Letterbox Distribution Services
This section 5 applies to the letter box distribution service forming the whole or part of the services provided by GABA DESIGN PRINT DISTRIBUTION CANBERRA.
5.1 The Customer acknowledges and agrees that:
5.1.1 Its Materials for distribution may be distributed together with, and may be bundled with, materials of other customers of GABA DESIGN PRINT DISTRIBUTION CANBERRA, and
5.1.2 GABA DESIGN PRINT DISTRIBUTION CANBERRA does not guarantee full distribution of all materials to all households within the agreed distribution areas and accepts no liability for any failure to deliver to all households with agreed distribution areas. Factors beyond GABA DESIGN PRINT DISTRIBUTION CANBERRA’s control such as health and safety issues, hazardous conditions, adverse weather conditions, accessibility of letterboxes, signs on the letterboxes and the independent nature of GABA DESIGN PRINT DISTRIBUTION CANBERRA’s distribution contractors may adversely affect distribution. We confirm that the maximum achievable penetration level will be eighty percent excluding the ‘NO JUNK MAIL’ letterboxes.
5.1.3 At any given time, a particular agreed distribution area may not be fully covered, or covered at all, by GABA DESIGN PRINT DISTRIBUTION CANBERRA’s distribution network. GABA DESIGN PRINT DISTRIBUTION CANBERRA reserves the right to change the scope and size of distribution areas at any time.
5.1.4 Letterbox counts provided to clients via our website or in writing are an estimation and should not be considered as actual quantities. The company uses various agencies, including Australia Post to estimate the number of letterboxes within postcode sectors in or specific geographical areas, as the data is provided by third parties. As a result, GABA DESIGN PRINT DISTRIBUTION CANBERRA does not guarantee the accuracy of letterbox counts.
The applicant contended that the “overwhelming majority of households in Canberra did not receive [his] flyers”.[1]
[1] See applicant’s written submission to the original tribunal, sent by email on 24 January 2020
in support of his claim, the applicant relied on an email he sent on 29 May 2019 to persons who had subscribed to his campaign, asking if they received a copy of his flyer in their letterbox. In an email to the respondent sent on 30 May 2019, which formed part of the evidence before the original tribunal, the applicant said that 5 of the 30 persons who responded said they received the flyer.[2] In his written submissions to the original tribunal sent on 24 January 2020, the applicant contended he received 39 responses and only 6 confirmed delivery of his flyer. This evidence was accepted, and nothing turned on the different numbers.
[2] Pesec v Neo International Pty Ltd [2020] ACAT 34 at [10]
The applicant also relied on a photograph showing approximately 50 of his flyers blown around in a street.
The applicant also relied on his own evidence, and the evidence of Mr Kent and Ms Hunter, who said that many voters they spoke with said they had not previously seen the applicant’s flyer or received it.
In his application to the Tribunal dated 27 August 2019, the applicant sought, by way of compensation, a refund of the amount he paid to the respondent to distribute the flyers ($12,523.50) and his cost of the flyers ($4,966.36) to a total of $17,489.86, plus the Tribunal filing fee ($572.50) and interest.
In reply to the applicant’s claim, the respondent led evidence that the persons engaged by it to put the applicant’s flyers into letterboxes throughout Canberra wore GPS tracking devices. The respondent provided maps or overhead photographs of the suburbs of Canberra onto which the movements of the distributors, by means of the GPS trackers, were shown. This evidence, the respondent said, proved that the flyers had been distributed.
The applicant contended that the maps and photographs did not prove what the respondent contended they proved because, he said, they showed that portions of many streets were missed. In addition, he noted that some of the lines created by the GPS trackers were ‘wriggly’ or ‘zig zag’ and some were comparatively straight. He said that the wriggly or zig zag lines showed that the distributor had deviated from a pathway along the street to place flyers in letterboxes and that the straight lines showed that the distributor had proceeded along a street but not deviated to individual letterboxes in order to distribute flyers.
The respondent accepted that between 5% and 10% of the flyers were not distributed. It also accepted that flyers were not placed in letterboxes that had ‘no junk mail’ signs, or that were inaccessible for different reasons. It contended that these aspects of non-distribution were within the terms of the contract, per clause 5.1.2, and that it was therefore not in breach of the contract. The respondent did not accept that wriggly lines meant distribution to letterboxes, and that straight lines meant no distribution. The respondent submitted that where it had not breached the contract, it was not liable to pay any damages.
The original tribunal dismissed the application because it was not satisfied that the respondent had failed to comply with the contract. At paragraph 25 of its reasons, the original tribunal said:
On the evidence before me, I cannot be satisfied, on the balance of probabilities, that the respondent failed to comply with the contract, in accordance with its terms, noting especially clause 5.[3]

The appeal

[3] Pesec v Neo International Pty Ltd [2020] ACAT 34 at [25]

The applicant appealed on the ground that the original tribunal failed to consider making an order that the respondent provide a partial refund. In his application for appeal, the applicant contended that he “had not sought a full refund from the Respondent nor via ACAT’s decision.”
In support of his ground of appeal, the applicant relied on paragraph 22 of the original tribunal’s reasons for decision which stated:
To be entitled to a refund of the entire cost of delivery and the entire cost of printing, the applicant would have to establish a breach of the contract so severe as to deprive him of any benefit from the contract. The evidence does not support that conclusion.
The implication of the applicant’s reliance on paragraph 22 seemed to be that the original tribunal focused only on a full refund of the applicant’s entire cost of delivery, and erred by not turning its mind to awarding a partial refund of the cost.
The applicant also relied on his written submissions to the original tribunal dated 24 January 2020, filed after the hearing, where he stated:
I trust that ACAT will consider my claim and supporting evidence (email responses and GPS maps) to determine that an overwhelming majority of Canberra addresses never received my flyers. I hope, and trust, that an appropriate proportion of this total cost should be refunded to me. I feel that after consideration of approximately 20% of households having “no junk mail” signs (which should’ve received my flyers anyway), 15% successful deliveries of the remaining 80% of households = 19% success rate, and therefore an 81% refund of my costs would be appropriate. As has been detailed in my earlier submissions to ACAT and the Respondent the total cost to me for the delivery of my “how to vote” cards was $17,489.86. [emphasis in original]
The applicant also relied upon correspondence dated 23 October 2019 from him to the Tribunal headed “CONFIDENTIAL and WITHOUT PREJUDICE” in which he stated “the best case scenario” he expected, being a refund of all his costs per the claim in his original application, and “the worst case scenario” he expected, being $4,000 that the respondent offered him in the past to resolve the dispute.
In his email to the Tribunal sent on 4 December 2019, the applicant relied on an email from the respondent sent on 29 July 2019 by which it made its offer of $4,000 and where the respondent said “we still want to resolve the matter amicably”.
Regarding the respondent’s offer, in his written submissions on the appeal sent by email on 29 July 2020, the applicant wrote:
Discussions between myself and the Respondent regarding a partial refund resulted in an offer by the Respondent as disclosed in the Statement to the Convener on 23 October 2019 (attached). This demonstrates that both the respondent and I considered that some proportion of my costs should be refunded (without having agreed on what that would be).
The applicant also relied on the following comments of the original tribunal in the course of the hearing held on 14 January 2020:
So what I can conclude from that - and you can tell me - each of you should tell me what you think. Where I see a suburb where the track is very wriggly then I can conclude that has probably a really good penetration. Where I see a suburb where the lines are mostly straight I can conclude that that suburb didn't have as good a penetration. And from that one street that I looked at there in Bruce it looks like two houses out of about eight or nine on one side of the road were delivered to. So, now, I have got no - I don't know why that would be the case, but what we've got at the end of the day is significantly less than 56 per cent of households in the ACT being delivered to, if I look at those maps.[4]
…
It is without doubt that some were delivered. It is impossible for me to say with any real degree of accuracy how many were delivered. But if I am satisfied, even with my low level of accuracy, that is significantly different from the 80 per cent penetration of households to whom it was possible to deliver, then you should have some damages. Now, generally speaking, that is just going to be a percentage. It is going to be a percentage cost of the delivery fee, because the respondent is entitled to be paid for what they did achieve, because that must have been some benefit to you.[5] [emphasis in original]
And you have also asked for some of the printing costs, and I think that the same percentage would apply to that of the cost of 165, minus the 10 per cent that were returned, which we would expect, minus something else for blowing away in the wind and all that sort of thing. I can do that sort of calculation. It is an art, not a science, but it is based on my long experience.[6]
[4] Transcript of proceedings 14 January 2020 page 83, lines 33-44
[5] Transcript of proceedings 14 January 2020 page 87, lines 4-11
[6] Transcript of proceedings 14 January 2020 page 87, lines 13-17
The applicant submitted that, taking all these matters into account, it was “very, very clear that I was expecting a proportional refund”.[7]
[7] Transcript of proceedings 21 August 2020 page 10, line 45
In his written submissions on the appeal, the applicant also contended:
Furthermore, in addition to the GPS maps which overwhelmingly demonstrate that deliverers did not approach letterboxes, my claim was based on having personally spoken to many hundreds of Canberrans at various polling booths, the feedback that my volunteers received from voters throughout Canberra and a transparent email survey to voters throughout Canberra for which the Respondent was directly copied by all respondents regardless of whether they received delivery of my flyers or not. The only evidence provided by the respondent was a claim that his investigation confirmed delivery to a handful of addresses throughout Canberra without any information of how many addresses were found to have not received delivery (therefore it’s not possible to determine a proportion of successful deliveries based on this information).[8]

Consideration

[8] Applicant submissions dated 29 July 2020

The applicant’s ground of appeal is misconceived, and in many respects.
First, the applicant’s contention that he did not seek a full refund is incorrect. The amount claimed in his original application is the full amount that the applicant spent to buy and distribute his flyers. In his email sent to the Tribunal on 4 December 2019, the applicant provided invoices and quotes showing the breakdown of his costs arising from the flyers to the total of $17,489.86, being the amount claimed in his application. There was no suggestion in his application of him seeking a partial refund.
The applicant did not take me to any reference in the transcript of the hearing before the original tribunal on 14 January 2020 where he indicated he was seeking only a partial refund, nor could I find any such reference. Indeed, as best I can ascertain, the question of how much the applicant should receive by way of damages, refund or compensation was raised only by the original tribunal towards the end of the hearing, and on the assumption that it would find the respondent had breached the contract. The original tribunal said:
I will reserve … the decision. I very quickly want to talk about damages. And I want you to understand this: I am not deciding that damages will be payable, but I want to finish off talking about what sort of damages would be payable if I decide there is a breach of contract.[9] [emphasis in original]
[9] Transcript of proceedings 14 January 2020 page 86, lines 18-22
It is clear that the original tribunal’s comment about the applicant receiving “some damages”, quoted at paragraph 20 above, on which the applicant relied was dependent upon it finding a breach of contract. In other words, the original tribunal was only observing that if the applicant established a breach of contract, he would not receive, by way of damages, the whole of the amount claimed. Rather, he would receive “some damages” by reference to the extent of the breach - meaning the extent to which the applicant had established that flyers had not been distributed in breach of the contract. However, none of those observations about damages had consequence because the original tribunal was not satisfied that the respondent was in breach at all. In its reasons for decision, immediately following its conclusion, per paragraph 25 of the original tribunal’s decision quoted in paragraph 12 above, the original tribunal said:
26. Given my conclusion above it is not necessary to deal in detail with the question of damages.[10]
[10] Pesec v Neo International Pty Ltd [2020] ACAT 34 at [26]
For the same reason, the applicant misconstrues the original tribunal’s comment about damages at paragraph 22 of its reasons for decision quoted at paragraph 14 above. The comment is nothing more than an observation about the severity of a breach of the contract that would be necessary for the applicant to recover the entirety of his costs (i.e. receive a full refund). Implicit is that a minor breach might have enabled the applicant to recover some of his costs (i.e. a partial refund). However, where the original tribunal was not satisfied that the respondent had breached the contract at all, no refund was payable.
I make a similar observation about the applicant’s reliance on the passage in his written submissions to the original tribunal dated 24 January 2020 quoted at paragraph 15 above.
The applicant’s submission that a partial refund of 81% would “be appropriate” flowed from his submission that the respondent achieved a “success rate” (meaning delivery of flyers to letterboxes) of 19%. The flaw in this argument on the appeal is that the original tribunal did not accept either submission. In its reasons for decision, at paragraphs 21 and 23, the original tribunal noted certain facts that it concluded were established, in particular that some voters did not receive the applicant’s flyers, but it was not satisfied (on the evidence) that the success rate of the distribution was so low as to place the respondent in breach of the contract. To the contrary, the Tribunal was satisfied that “the distribution of the flyers was widespread across Canberra suburbs.”[11]
[11] Pesec v Neo International Pty Ltd [2020] ACAT 34 at [23(b)]
It follows that even if the original tribunal should have understood that the applicant had modified his claim to a claim for a partial refund, despite him not saying so in the hearing, the modified claim does not establish error on the part of the original tribunal. To be entitled to any refund, full or partial, the applicant needed to establish a breach of the contract: he did not do so.
I cannot see any error on the original tribunal’s part by not accepting the applicant’s submission that the respondent had breached the contract. Courts have repeatedly confirmed that a person alleging a breach of contract carries the onus of proving it on the balance of probabilities.[12] As Kirby P of the NSW Court of Appeal succinctly put it in Platt v Nutt, “those who assert must prove.”[13] The original tribunal was not satisfied that the applicant had done so.
[12] See Hart v McDonald (1910) 10 CLR 417 at 428 and 433-434; Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 301 and 312; Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 230 and Watson v George (1953) 89 CLR 409 at 426
[13] Platt v Nutt (1988) 12 NSWLR 231 at 238
Under the contract, the respondent gave no promise or guarantee about minimum distribution of flyers. The contract provided for a maximum penetration level of 80% excluding “no junk mail” letterboxes, meaning it would not place flyers in “no junk mail” letterboxes. The contract stated that “a particular agreed distribution area may not be fully covered, or covered at all”.
In my view, the anecdotal evidence from voters who said they did not receive the applicant’s flyer and the photograph of flyers blowing the wind, upon which the applicant relied, does not establish a breach of the contract.
The hearsay evidence of the applicant, Mr Kent and Ms Hunter likewise does not prove that the flyers were not distributed. As the respondent pointed out, there are any number of other explanations for why a voter might say they had not received the flyer.[14]
[14] Pesec v Neo International Pty Ltd [2020] ACAT 34 at [18]
At the appeal hearing, the applicant seemed to accept that his own evidence did not establish a breach of the contract.[15] He relied primarily on the respondent’s GPS distribution data maps and the inference that he said should be drawn from wriggly lines, meaning no distribution to letterboxes and straight lines, meaning no distribution.[16]
[15] Transcript of proceeding 21 August 2020 page 40, lines 14-27
[16] Transcript of proceedings 21 August 2020 page 35, line 36 to page 36 line 3

In his written submissions on the appeal dated 29 July 2020, the applicant also relied on the original tribunal’s comment quoted at paragraph 20 above where, the applicant says, the original tribunal “acknowledged” that “at the end of the day [the distribution] is significantly less than 56% of households in the ACT being delivered to, if I look at those maps.”
In my view, the applicant misrepresents the original tribunal’s comment. It did not acknowledge that the distribution was significantly less than 56% of households in the ACT. Immediately following the Tribunal’s comment upon which the applicant relied, the original tribunal stated to Mr Gaba appearing on behalf of the respondent “Would you agree or disagree with that?”, meaning it was a proposition that the Tribunal member was putting to Mr Gaba, not a finding, acknowledgement or statement of a formed conclusion. In response, Mr Gaba said “I disagree with that”.
At that point, the original tribunal was left to determine what conclusion, if any, should be drawn from the GPS maps. It is apparent from its reasons that the original tribunal was not persuaded that wriggly lines meant a distributor placed flyers in letterboxes, and that straight lines meant a distributor did not. That inference may or may not have been drawn, but it was for the applicant to prove.
I see no error in the original tribunal not being satisfied that the GPS tracker maps proved that the respondent had breached the contract. The maps put into evidence were on a very large scale, each covering a whole suburb. There was no evidence about the location of letterboxes or the extent to which they were not on at least an approximately straight line, given the scale of the maps. There was no evidence about the accuracy of the GPS trackers. There was no evidence from any distributor about placement, or not, of flyers in letterboxes. There was no evidence of anyone seeing a distributor moving along a street and not distributing the applicant’s flyers.
I acknowledge that these may have been difficult things for the applicant to prove, but they were inherent difficulties in his reliance on the respondent’s evidence.
Mr Gaba accepted at the original tribunal hearing[17] and at the appeal hearing[18] that a straight line in the centre of a street or road meant that the flyers were not delivered, but rejected the proposition that a straight line (by itself) meant that flyers were not delivered. I cannot see any error in the original tribunal not being satisfied that a straight line, by itself, meant non-delivery. Most of the maps show GPS tracker lines moving up one side of a street and then down the other. It is implausible that a deliverer would walk all the way up and down both sides of a street and not deliver any flyers whilst doing so.
[17] Transcript of proceedings 14 January 2020 page 81, lines 20-21
[18] Transcript of proceeding 21 August 2020 page 52, lines 37-40
I am not persuaded that the original tribunal erred by not concluding from the GPS maps that in most, or many, cases distributors went along the indicated streets but did not distribute flyers. Indeed, had I heard the matter, I too would not have drawn that conclusion on the balance of probabilities.
For two reasons, the applicant’s email sent on 23 October 2019, marked “confidential and without prejudice”, does not assist his case.
First, as I understood it, the applicant sent the email for the purpose of trying to resolve the matter with the respondent on a without prejudice basis, prior to hearing. Where that was not successful, anything contained in that email could not have been used as evidence of any admission for the purpose of the hearing before the original tribunal. Consistent with that approach, there is (as best I can find), and appropriately so, no mention of the email by the applicant or the respondent during the hearing before the original tribunal.
Second, the applicant relied on the respondent’s offer of $4,000[19] as evidence that the respondent “considered that some proportion of [the applicant’s] costs should be refunded”.[20] I do not agree that the offer should be construed in that way. As the applicant noted in his email sent on 4 December 2019, the respondent made his offer prior to the applicant commencing proceedings in the Tribunal in an attempt to resolve the dispute “amicably”. It is commonplace for persons or entities to try and resolve disputes between themselves, without any admission of liability, and without recourse to courts or tribunals. It is apparent that that is what the respondent was endeavouring to do in this case.
[19] The offer was not confidential. The respondent disclosed it in his response to the applicant’s application.
[20] Applicant’s submissions on appeal dated 29 July 2020, quoted at paragraph 19
Regarding the respondent’s offer, the applicant states in his email sent on 4 December 2019:
I declined this and stated that I would commence legal actions for recovery of the money I had spent on these flyers.
He did so on 27 August 2019. Having been unsuccessful in his claim, the applicant cannot revert to or rely upon an offer that he rejected. I reject the proposition that the offer was, or implied, an admission by the respondent that it was partially at fault or liable to pay a partial refund.

Conclusion

For these reasons, the application for appeal will be dismissed.
………………………………..

Presidential Member G McCarthy

Date(s) of hearing	21 August 2020
Applicant:	In person
Respondent:	Mr Gaba, authorised representative