Trotman v Disputes Tribunal
[2020] NZHC 2040
•12 August 2020
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2020-442-01
[2020] NZHC 2040
UNDER Section 8 of the Judicial Review Procedure Act 2016 IN THE MATTER
of an application to review a decision made by the Disputes Tribunal at Nelson
BETWEEN
PAUL DAVID TROTMAN
Applicant
AND
THE DISPUTES TRIBUNAL
First Respondent
ELMZ HOLDINGS LIMITED
Second Respondent
Hearing: 21 July 2020 Appearances:
Y E Clarisse for the Applicant
S Sansom for the Second Respondent
Judgment:
12 August 2020
JUDGMENT OF COOKE J
Table of Contents
Background facts[3]
The basis of the challenge[14]
Approach to interpretation[21]
Purpose[23]
Rights[28]
The division of claims under ss 14 and 15[31]
Interpretation[32]
Application to the present case[38]
Financial limit on “claims”[44]
Availability of judicial review[53]
Jurisdiction of the District Court[55]
TROTMAN v THE DISPUTES TRIBUNAL [2020] NZHC 2040 [12 August 2020]
Jurisdiction of the High Court[62]
Conclusion and costs[69]
[1] In 2016 the applicant, Mr Trotman entered a contract with the second respondent (ELMZ) under which ELMZ was to construct a swimming pool at his property at Hope near Nelson for a total price of $115,000. The parties fell into dispute, and Mr Trotman did not pay all amounts due under the contract. The dispute was taken to the Disputes Tribunal. In a first determination the Tribunal awarded ELMZ $8,460.65 after recognising the legitimacy of Mr Trotman’s complaints in relation to particular matters and deducting amounts that would otherwise be payable by him. In a second determination the Tribunal awarded ELMZ a further $6,539.35, representing less than what ELMZ was finally entitled to under the contract but limited as a consequence of the financial limits on the Tribunal’s jurisdiction.
[2] In this proceeding Mr Trotman challenges the second determination by way of judicial review. He does so on the basis that the Tribunal had no jurisdiction to award the further $6,539.35, and that the Tribunal should either have dismissed the second claim in its entirety, or limited any award to the amount of $1,500. He seeks orders setting aside the Tribunal’s decision, or alternatively orders requiring the Tribunal to reconsider its decision within the limits of its jurisdiction so identified.
Background facts
[3]The parties filed an agreed statement of facts for the purposes of the hearing.
[4] The relevant contract was entered in August 2016. It contemplated payment for the installation of the pool being made in the following instalments:
(a)Progress payment one of $10,000 on the signing of the contract.
(b)Progress payment two of $41,750 being 35 per cent of the contract price on the arrival of the pool shell.
(c)Progress payment three of $51,750 being 45 per cent of the contract price on commencement of work.
(d)Final payment of $11,500 being the last 10 per cent of the contract price on completion of the work.
[5] Mr Trotman paid instalments one and two in December 2016. Installation work commenced on 1 December and continued through to May 2017. Mr Trotman paid only $38,250 as part payment of progress payment three given that disputes had emerged. He withheld the amount of $13,500. On 23 May 2017 ELMZ stopped all work on the pool.
[6] I need not record all of the issues raised by Mr Trotman at that time, but it is apparent there were reasonably significant problems. They included, for example, that due to an error with compacting the ground one side of the pool was bowed. The Tribunal concluded that although the bow was not great it was visible to the naked eye and it could not be remedied.
[7]In June 2017 ELMZ initiated proceedings in the Disputes Tribunal seeking the
$13,500. On 17 August 2017 Referee Tunnicliffe adjourned the hearing of the dispute part-heard, and following a further hearing issued a decision on 28 September 2017.1 In that decision the Tribunal deducted from the claim of $13,500 certain amounts: an agreed amount of Mr Trotman’s time and machinery for correcting errors; compensation for the bow in the side of the pool; reimbursement for the payment made to an electrician; and compensation for labour to replace pool pavers. These amounts totalled $5,039.35. This led the Tribunal to award ELMZ only $8,460.65 of the
$13,500 it claimed.
[8] The Tribunal also concluded that Mr Trotman had validly cancelled the contract, and that the amounts awarded were compensation under s 39(2) of the Consumer Guarantees Act 1993, which includes the power to make following order:
(c) Without prejudice to any right to recover damages, direct any party to the proceeding to pay to any other such party such sum as the Court or Tribunal thinks just.
1 ELMZ Holdings Ltd v Trotman DT Nelson CIV-2017-042-257, 28 September 2017 [First determination].
[9] At the time that this claim was heard by the Tribunal ELMZ explained that it had not yet sent its invoice for the final payment as the contract works had not, at that point, been completed. The Tribunal noted this, and also noted that there was a “reasonable argument that any Disputes Tribunal claim by ELMZ for the final payment that was due once the project had been completed can be treated as a separate claim”.2
[10] In October 2017 ELMZ then sent its final invoice for an amount of $11,500. Mr Trotman did not pay. At this time Mr Trotman also appealed the Tribunal’s September decision to the District Court. By judgment dated 29 November 2017 Judge Zohrab dismissed the appeal.3
[11] Some time later ELMZ initiated further proceedings in the Disputes Tribunal seeking the $11,500. This claim was addressed by Referee Brennan who concluded in a decision dated 31 May 2019 that Mr Trotman should pay a further $6,539.35 (the second determination).4
[12] As will be explained in greater detail below, at the time of these determinations the limit on the Tribunal’s jurisdiction was $15,000. This was the reason why the Tribunal limited what ELMZ was entitled to recover. The Referee held:
18. Based on the Waitoto decision, I am satisfied that ELMZ’s claim for Progress Payment 4 is sufficiently connected with the First Claim because both relate to payments due under the Contract, and that s 15 of the DT Act therefore prevents ELMZ from splitting its cause of action into two claims for the purpose of bringing those claims within the jurisdictional limit of the Tribunal. I have taken into consideration that, had ELMZ claimed damages in the First Claim for Progress Payment 4 (had it been due and payable at that time) in addition to Progress Payment 3, ELMZ would have only been able to claim damages totalling $15,000. Given that ELMZ was awarded damages of
$8,460.65 by the Tribunal on the First Claim, it is not appropriate to now allow ELMZ to claim further damages of $11,500 for Progress Payment 4.
[13] The end result of the Tribunal’s decisions was that Mr Trotman paid $105,000 of the overall contract price of $115,000. An amount of $5,039.35 was deducted for
2 At [58].
3 Trotman v ELMZ Holdings Ltd [2017] NZDC 26608.
4 ELMZ Holdings Ltd v Trotman DT Nelson CIV-2019-042-55, 31 May 2019 [Second determination]. The decision also dealt with a separate matter – payment for a shed not contemplated by the contract.
Mr Trotman’s counterclaim, and the balance was held not recoverable as a consequence of the limits on the Tribunal’s jurisdiction. Mr Trotman now challenges the second determination by way of judicial review.
The basis of the challenge
[14] Although Mr Trotman’s statement of claim pleads three separate causes of action, each of those causes of action, and the arguments advanced in relation to them ultimately challenge the jurisdiction of the Tribunal in the second determination. The arguments all turn on the limits on the jurisdiction of the Tribunal as set out in the Disputes Tribunal Act 1988 (the Act).
[15] The primary section prescribing the jurisdiction of the Tribunal is s 10. It materially provides as follows:
10 Jurisdiction of Tribunal
…
(1A)The Tribunal has jurisdiction to exercise any power conferred on a court by any enactment listed in Part 1 of Schedule 1 if—
(a)the occasion for the exercise of the power arises in the course of proceedings properly before the Tribunal; and
(b)the total amount sought in the proceedings does not exceed
$15,000.
…
(3)For the purposes of subsection (1), a claim is within the jurisdiction of the Tribunal only if the total amount in respect of which an order of the Tribunal is sought does not exceed $15,000, including,—
(a)where a claim is made for the recovery of property, the value of that property; and
(b)where a claim is made for a work order, the value of the work sought to be included in the order.
…
[16]In addition ss 14 and 15 provide:
14Abandonment to bring claim within jurisdiction
A person may abandon so much of a claim as exceeds $15,000 in order to bring the claim within the jurisdiction of the Tribunal; and in that event the approval of an agreed settlement under section 18(3) or, as the case may require, an order of the Tribunal under this Act or any other enactment, in relation to the claim, shall operate to discharge from liability in respect of the amount so abandoned any other person—
(a)who is a party to that agreed settlement; or
(b)against whom the claim and the subsequent order are made.
15Cause of action not to be divided
A cause of action shall not be divided into 2 or more claims for the purpose of bringing it within the jurisdiction of the Tribunal.
[17] I note that the orders the Tribunal can make are set out in s 19, which provides that the Tribunal may not order a requirement to pay an amount of money exceeding
$15,000.5 There are other relevant legislative provisions, but the above provisions
capture the essential legislative foundations for Mr Trotman’s argument.
[18] Since the determinations of the Tribunal in this case the Act has been amended to increase the maximum amounts to $30,000.6
[19] Counsel for Mr Trotman described the jurisdictional error made by the Tribunal in five ways, namely:
(a)That the Tribunal had no jurisdiction to address the second claim because it arose from the same contractual dispute and was advanced in breach of s 15 of the Act.
(b)That the Tribunal misinterpreted ss 10 and 14 of the Act in concluding it had jurisdiction to consider the second claim when it had been divided to fit within the jurisdictional limit.
5 Disputes Tribunal Act 1988, ss 19(4) and (5).
6 Tribunals Powers and Processes Legislation Act 2018, s 35. I note there appears to not be any transitional provision, and that the capacity to extend the monetary amount by agreement under the former s 13 was repealed.
(c)That the Tribunal erred in allowing ELMZ to supplement a damages award up to the Tribunal’s jurisdictional limit of $15,000, and by concluding that the amount payable in the first claim did not exhaust that limit.
(d)That the Tribunal wrongly concluded it had jurisdiction to consider the second claim when the total amount was sought by ELMZ and that each of the claims added up to $25,000 which was contrary to s 10 of the Act.
(e)That the Tribunal wrongly concluded that it had jurisdiction to make an award up to an amount of $15,000 rather than focusing on the wording of the section which allowed for claims for amounts up to that limit.
[20] In response counsel for ELMZ emphasised the non-technical focus of the role of the Tribunal under the Act, argued that the claim had not been divided up in order to come within the jurisdiction of the Tribunal, and focused on the words “amount in respect of which an order of the Tribunal is sought” in s 10(3). ELMZ also questioned whether the decision of the Tribunal was properly challenged by way of judicial review.
Approach to interpretation
[21] As part of his submissions for ELMZ Mr Sansom contended that the Disputes Tribunal played an important role to allow members of the community to achieve civil justice without undue expense. He further submitted that experience suggested that decisions of the Tribunal were well respected, and that it performed its functions well.
[22] I agree with the thrust of these submissions. It seems to me that it raises important background matters that are relevant to the interpretation of the provisions of the Act, as well as the way those provisions are implemented. This is so in two respects.
Purpose
[23] First, it is well established that the text of an enactment should be interpreted in light of its purpose, and that the purpose should always be considered when addressing interpretation questions.7 This involves making the Act work as Parliament must have intended.8 It follows that the interpretation issues need to pay full regard to the purpose of the regime established by Parliament.9
[24] As has been stressed in a number of decisions, the Disputes Tribunal exists to provide a speedy, cheap, and informal way of resolving disputes for relatively small amounts not requiring the oversight by lawyers nor their involvement as advocates.
As Fogarty J held in Shepherd v Disputes Tribunal:10
[37] … The goal of [the] statute is to provide for low cost speedy and final resolution of small disputes. To achieve that end Parliament was not interested in providing appeals on the merits of decisions.
[38] That may result in what might be described as rough justice from time to time. That has to be balanced against the overall goal of the Act to enable persons who could not possibly afford the very expensive litigation costs in the District and High Courts, the opportunity of taking claims before referees and getting justice. …
[25] That overall approach can be seen from a number of provisions in the Act, including primarily s 18(6) which provides:
18 Functions of Tribunal
…
(6) The Tribunal shall determine the dispute according to the substantial merits and justice of the case, and in doing so shall have regard to the law but shall not be bound to give effect to strict legal rights or obligations or to legal forms or technicalities.
…
7 Interpretation Act 1999, s 5(1); and Commerce Commission v Fonterra Co-Operative Group Ltd
[2007] NZSC 36, [2007] 3 NZLR 767 at [22].
8 Northland Milk Venders Association Inc v Northern Milk Ltd [1988] 1 NZLR 530 (CA) at 538.
9 See the comprehensive review by Thorp J in NZI Insurance New Zealand Ltd v Auckland District Court (1993) 6 PRNZ 276 (HC).
10 Shepherd v Disputes Tribunal [2004] NZAR 319 (HC). See also NZI Insurance New Zealand Ltd v Auckland District Court, above n 9, at 280.
[26] Whilst it is true that s 18(6) only directly applies to the manner in which the Tribunal is to carry out its functions and not the question of its jurisdiction,11 it nevertheless remains important to the interpretation exercise as it illuminates the purpose of the Act.
[27] This is also demonstrated by other provisions. The Act also sets out an untechnical procedure. The right to be represented at its hearings is limited by s 38, the proceedings are held in private under s 39, what the Tribunal may receive by way of evidence is broad under s 40. Under s 44 the Tribunal has a discretion in the following terms:
44 Procedure where no provision made
Subject to this Act and to any rules made under this Act and any practice notes issued under section 6C(1)(ha), the Tribunal shall adopt such procedure as it thinks best suited to the ends of justice.
Rights
[28] There is a second important consideration to the overall approach to interpretation. Access to civil justice can be described as a fundamental right.12 The right is recognised in s 27 of the New Zealand Bill of Rights Act 1990, although with reference to more specific aspects. Section 28 of the New Zealand Bill of Rights Act confirms that the rights so set out are not intended to abrogate or limit other existing rights. Whilst the right is usually expressed as a right of access to the Court, the existence of procedures such as those before the Tribunal are a way in which such access to justice rights are given practical effect. Having access to an effective system for resolving civil disputes is a fundamental aspect of civil society. The cost of bringing civil claims in the District Court, or the High Court can be prohibitive. For this reason the Disputes Tribunal, and other similar bodies, play a significant role. Without such tribunals ordinary members of the community would not be able to have disputes between them resolved. Access to an adjudicative system where disputes can be resolved objectively by members of a tribunal, appointed by the Governor-General,
11 See Tower Insurance v Disputes Tribunal at Nelson (2000) 14 PRNZ 338 (HC) at [39].
12 See Canterbury Regional Council v Independent Fisheries [2012] NZCA 601, [2013] 2 NZLR 57 at [136], citing Raymond v Honey [1983] 1 AC 1 (HL); and Turners & Growers Ltd v Zespri Group (No 2) (2010) 9 HRNZ 365 (HC) at [93]–[94].
with a right of appeal to the District Court can be seen as an important manifestation of the right of access to justice. Interpreting the Act to give full effect to such rights is accordingly important.13
[29] It is also relevant to note that the provisions of the Act have more recently been amended to increase the jurisdiction of the Tribunal to $30,000. Those amendments are made subsequent to the present case, but nevertheless reiterate the importance of the Tribunal’s role in having a cost effective system available for the resolution of small claims.
[30] It follows from the above two factors that the Act should be interpreted in a manner that best secures the Tribunal’s ability to effectively deliver a system of civil justice in a manner that focuses on the substantial merits and justice of the case, and without undue legal formalism. The emphasis is on practical justice.
The division of claims under ss 14 and 15
[31] I deal first with Ms Clarisse’s arguments concerning ss 14 and 15. I will deal firstly with the question of the correct interpretation, and then with the application of that interpretation to the facts of this case.
Interpretation
[32] In my view it is important not to interpret s 15 separately from s 14. Both provisions together regulate how claims for more than the amount prescribed as the Tribunal’s jurisdictional limit are to be addressed. Section 14 provides that any amount over that jurisdictional limit needs to be abandoned, so that the balance of any claim is treated as being discharged. Much of the work required to secure the limits of the Tribunal’s jurisdiction is achieved through this provision. I accept Ms Clarisse’s submission that when ss 14 and 15 apply a second claim advanced before the Tribunal should be dismissed in its entirety.
13 See for example Secretary of State for the Home Department, ex parte Simms [2000] 2 AC 115 (HL) at 131, cited in Canterbury Regional Council v Independent Fisheries, above n 12, at [140].
[33] Section 15 applies not simply where a cause of action has been divided into two or more claims, but when that has occurred “for the purpose” of bringing a claim within the Tribunal’s jurisdiction. As Gendall J held in Waitoto Developments v Disputes Tribunal:14
[44] … But the real issue prohibited by the legislation is not simply division of a cause of action in the traditional sense, but also the division of a claim so as to manipulate it into the jurisdiction of the Tribunal. It is not the existence of more than one cause of action which may permit division, but rather the dividing of a claim so as to avoid a jurisdictional limitation that is prohibited.
[34] Part of the point being made, which is reflected by the word “purpose” is that the section contemplates an assessment of the reasons why a subsequent claim has been brought separately. It does not apply when claims have been separately advanced for legitimate reason, but only when claims have been divided as a means to avoid the jurisdictional limit.
[35] It is well established that further claims can be brought in separate proceedings before the Tribunal when there is a legitimate reason to do so. When that is the case s 14 will not deem the further claim determined by the Tribunal’s earlier decision. In Brown v Christchurch Disputes Tribunal two claims were held to be genuinely independent — one claim by a builder for work he had done at one premises, and the second by the same builder against the same defendant for work at different premises.15 They were different contracts several months apart. In Tower Insurance Ltd v Disputes Tribunal at Nelson two claims by the insured against the insurer were also held to be naturally separate — one for not meeting the insurance claim under the policy because repairs were inadequate, and a second claim for rent the insured had to meet because of the delays in meeting the first claim.16 The insurance company had later committed a separate wrong giving rise to a second claim for a different remedy. By contrast in Waitoto Developments the Court held that a claim by an electrician against a developer concerning a number of properties involved continuous dealings that “by reason of time, place and circumstance, can fairly be regarded as one
14 Waitoto Developments v Disputes Tribunal HC Whangarei CIV-2007-488-19, 15 August 2007.
15 Brown v Christchurch Disputes Tribunal (2000) 14 PRNZ 554 (HC).
16 Tower Insurance Ltd v Disputes Tribunal at Nelson, above n 11.
transaction”.17 In those circumstances the Court concluded that the Tribunal had erred in allowing the claims to be divided.
[36] Section 15 draws a distinction between a “cause of action”, and a “claim” by providing that a cause of action should not be divided into two or more claims. But I am not convinced that focusing on the difference between those two concepts is necessarily helpful. It is usually a claim that can have a number of causes of action rather than the other way around. It seems to me that s 15 is really directed to the artificial separation of what is essentially one claim. As Gendall J said in Waitoto Developments, a cause of action has a technical meaning, but what is really prohibited by s 15 is the division of claims to avoid the jurisdictional limit.18 This is also apparent from the use of the word “divided”, which carries the connotation of a single thing that has been separated.
[37] Other concepts may be more helpful in identifying what ss 14 and 15 are directed to. In Tower Insurance Ltd v Disputes Tribunal at Nelson Wild J referred to the principle that it can be an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.19 This concept is of assistance in identifying the effect of s 14, and also when claims have been divided for the impermissible purpose referred to in s 15. It may also be of assistance to focus on the damages or other remedies being sought by a claimant. If a second claim is directed to the same loss, or a remedy for the same wrong, then a permissible basis to separate it from the first claim may not exist. It may further assist to identify what the “dispute” between the parties is, as the Tribunal exists for the purposes of resolving disputes between the parties.20 Identification of the dispute may assist in ascertaining whether a second proceeding really involves the same claim.
Application to the present case
[38] In the present case Ms Clarisse accepted the Tribunal did not find that ELMZ had divided its claims for the purposes of coming within the Tribunal’s jurisdiction.
17 Waitoto Developments v Disputes Tribunal, above n 14, at [48].
18 Waitoto Developments v Disputes Tribunal, above n 14.
19 Tower Insurance Ltd v Disputes Tribunal at Nelson, above n 11, at 347.
20 Reflected in the fact that it does not exist to allow a claim for debt collection. See Disputes Tribunal Act, s 11(1)(a).
Neither is that suggested in the agreed statement of facts. Indeed the Tribunal found that ELMZ had brought separate claims for a different, and in my view, legitimate reasons. When advancing its first claim before the Tribunal ELMZ explained that it did not advance a claim for the final payment because that payment was not yet due under the contract. Indeed ELMZ had not even invoiced for that payment. On that basis it seems to me that s 15 had no application.
[39] But the position becomes a little more complicated because of the Tribunal’s findings in the first determination. All work on the pool had been brought to a close because of the dispute. The Tribunal went on to find that the contract was cancelled.21 It then dealt with the claim and counterclaim in relation to a cancelled contract under s 39 of the Consumer Guarantees Act. When doing so the Tribunal accepted that the work on the pool under the contract was “all but complete” so that ELMZ could largely recover what was owing, but it made deductions for Mr Trotman’s counterclaim.
[40] The reality was that, as a consequence of those findings, ELMZ’s unmade claim in relation to the last invoice became part of the dispute being addressed by the first Tribunal. In granting remedies under s 39 the Tribunal was seeking to achieve justice for a contract now treated to be at an end. But ELMZ had not brought any claim for the final invoice before the Tribunal for an understandable reason — it understood that the contract was still on foot, and under the contract the last payment was not yet payable and could not yet be claimed.
[41] In my view neither ss 14 or 15 applied. ELMZ did not divide its claims for the purpose of bringing them within the jurisdiction of the Tribunal. Neither did it abandon its remaining claim as part of the first determination. It transparently explained its position as it was entitled to do. To the extent that the challenged decision of the Tribunal proceeds on the basis that s 15 applied I do not agree with that view.
[42] In reality what had thereby emerged was a procedural issue. The second claim had effectively become a continuation of the first as a consequence of the Tribunal’s
21 First determination, above n 1, at [53]. I do not understand notice of cancellation under s 37 of the Consumer Guarantees Act 1993 was given prior to the hearing. No doubt any need to do so was treated as a technicality.
findings. The Tribunal’s focus on substantive justice is also reflected in its procedural rules. It seems to me that the Tribunal was obliged to address the position in a manner “best suited to the ends of justice” under s 44. Although the Tribunal did not expressly apply s 44 in order to deal with the further amount as part of one claim, that is effectively how the second Referee dealt with the position. As a matter of substance it seems to me that both Referees dealt fairly with the claims as a matter of procedure.
[43] For these reasons I reject Mr Trotman’s challenge based on the suggested misinterpretation or misapplication of ss 14 and 15.
Financial limit on “claims”
[44] Ms Clarisse’s further submission is based on the proper interpretation of s 10 of the Act. This seems to me to be Mr Trotman’s key argument.
[45] Ms Clarisse submitted that the jurisdictional limit in s 10 focuses on what a claimant alleges it is entitled to. It focuses on the claim that is made, not the order that is ultimately granted. She relied on the words “the total amount sought” in s 10(1A)(b). So a claimant who contends it is entitled to $50,000 can only advance a claim for $15,000, and must abandon the balance of that claim under s 14. If the Tribunal then recognises a defence to that claim this must be deducted from the
$15,000. This means that a person who has a $50,000 entitlement to which there is a
$5,000 defence only recovers $10,000 before the Tribunal. Here ELMZ had claimed
$13,500 in the first hearing, and was accordingly only entitled to claim a further $1,500 in the second hearing even though the Tribunal had only ordered Mr Trotman to pay
$8,460.65 after the first hearing.
[46] In response Mr Sansom argued that this approach was inconsistent with the overarching requirement to focus on the substantial merits and justice of cases without being bound by technicalities. He focused on the words indicating that a claim was within jurisdiction “if the total amount in respect of which an order of the Tribunal is sought” were $15,000 or less (s 10(3)). He argued that the provisions are directed to what a claimant ultimately seeks by way of orders from the Tribunal rather than what it initially says it is entitled to. On that basis the second Tribunal properly awarded a further $6,539.35 bringing the total claim up to the $15,000 limit.
[47] I accept that there is some ambiguity in these provisions, and that either approach is open on the literal wording. But as I have said the Act should be interpreted in light of its purpose, and in light of the access to civil justice rights. What then is the purpose of the Tribunal’s monetary limit? It seems to me that it exists to provide certainty for the parties in terms of what is at stake. It recognises that the Tribunal’s procedures should only be available for claims for smaller amounts, where the financial limit means that lawyers are not necessary. The participants need to know the maximum amount that they are fighting over. Anything more than that amount must be abandoned if a claimant seeks the benefit of the cost effective dispute resolution processes before the Tribunal. Another important purpose of the legislation is that disputes of this kind are to be resolved in accordance with their substantial merits, and by a procedure that best suits the ends of justice. These purposes are important if the access to justice rights are to be fulfilled by the Disputes Tribunal mechanism.
[48] Given those factors it seems to me the interpretation advanced by Mr Sansom is to be preferred. The word “claim” in s 10 refers to the amount the claimant seeks to have awarded rather than its assertion of what is due. So a claimant can say that it is owed $50,000, but seeks an award of no more than $15,000 before the Tribunal, and that it abandons any entitlement in excess of $15,000 under s 14. Such a claimant will be able to recover $15,000, even if there are defences of monetary significance (for example as to $5,000). The abandonment under s 14 can be expressed to apply insofar that a party’s entitlement exceeds the amount awarded by the Tribunal. That approach complies with the legislative provisions concerning jurisdiction.
[49] On that approach it seems to me that the orders made in the second determination were the appropriate ones. The Tribunal effectively treated the second claim as a continuation of the first claim, and allowed ELMZ to recover additional amounts up to the prescribed limit. On the basis of the findings of the two Referees ELMZ was actually entitled to recover more, but it was required to abandon its further entitlement as a cost of coming to the Tribunal.
[50] It is easier to see that this is the appropriate outcome in the present case given that in both decisions the Tribunal was making orders under s 39 of the Consumer
Guarantees Act in relation to a cancelled contract, and to recognise what each party had obtained under that contract, the remaining amounts owing, and compensation for deficiencies in the contractual performance. They all became wrapped into the assessments under s 39.
[51] The position might become more difficult in other cases where a respondent advances what is purely a counterclaim that does not amount to a defence or a right of set-off, or the application of a compensation provision of this kind. In Waitoto Developments Gendall J explained the difference between a right of set-off, and a counterclaim.22 Whilst I recognise that difference, my preliminary view is that the analysis I have engaged in applies whether or not the matters raised by a respondent amount to a defence/set-off, or involve a counterclaim. It seems to me that the Tribunal’s jurisdiction allows it to “net-off” claims through the application of s 18(6) and the orders contemplated by s 19 even when they do not involve rights of set-off. Because the matters raised by Mr Trotman here were not purely a counterclaim, and in fact a claim for compensation under s 39, the point does not directly arise. A degree of netting-off is part of the jurisdiction under s 39 of the Consumer Guarantees Act. But my initial view is that it is also part of s 19, and that this approach is most consistent with the focus on substantial merits and justice of cases without undue focus on strict legal rights and formalities. It also allows the Tribunal to exercise its jurisdiction in an effective way within the financial limits imposed.
[52] In any event, for the reasons outlined above I do not accept that the Tribunal erred in awarding ELMZ a further $6,539.35.
Availability of judicial review
[53] For ELMZ Mr Sansom raised a further point in defence, namely that the decision of the Tribunal was not properly subject to a claim for judicial review at all. He relied on the existence of the rights of appeal to the District Court, and the limited role of judicial review when such appeal rights exist as described by the Supreme Court in Tannadyce Investments Ltd v Commissioner of Inland Revenue.23 In response
22 Waitoto Developments v Disputes Tribunal, above n 14, at [31]–[32].
23 Tannadyce Investments Ltd v Commissioner of Inland Revenue [2011] NZSC 158, [2012] 2 NZLR 153.
Ms Clarisse referred to a number of previous occasions where the High Court had considered judicial review challenges of the Tribunal.24
[54] I accept Ms Clarisse’s submissions that decisions of the Tribunal are susceptible to judicial review, including on the basis that the Tribunal has exceeded its jurisdiction. I addressed the scope of such review in Patterson v District Court, Hutt Valley.25 But Mr Sansom’s arguments raise important points that warrant closer consideration. To properly address them I deal first with the scope of the role of the District Court on appeal, and then the appropriate role of the High Court on judicial review.
Jurisdiction of the District Court
[55] There is a limited right of appeal to the District Court. Section 50 of the Act provides:
50 Appeals
(1)Any party to proceedings before the Tribunal may appeal to the District Court against an order made by the Tribunal under section 18(8) or section 46(2) or section 47(3)(b), or against the approval by the Tribunal of an agreed settlement under section 18(3), or against the variation of a term of an agreed settlement under section 47(3)(a), on the grounds that—
(a)the proceedings were conducted by the Referee; or
(b)an inquiry was carried out by an Investigator—
in a manner that was unfair to the appellant and prejudicially affected the result of the proceedings.
(2)Without limiting the generality of subsection (1), a Referee shall be deemed to have conducted the proceedings in a manner that was unfair to the appellant and prejudicially affected the result if—
(a)the Referee fails to have regard to any provision of any enactment that is brought to the attention of the Referee at the hearing; and
(b)as a result of that failure, the result of the proceedings is unfair to the appellant.
24 Including NZI Insurance NZ Ltd v Auckland District Court, above n 9; Waitoto Developments Ltd v Disputes Tribunal, above n 14 and Auckland City Council v Henderson District Court [1998] 1 NZLR 253 (HC).
25 Patterson v District Court, Hutt Valley [2020] NZHC 259.
…
[56] There is authority for the proposition that the jurisdiction of the District Court does not extend to dealing with the Tribunal exceeding its jurisdiction other than in limited circumstances. In Mellow v Tsang Keane J held:26
[43] Whenever a decision-maker makes a decision beyond his or her power, the decision remains, on the face of it, valid, of course, until declared otherwise by a Court of competent jurisdiction: Burr v Blenheim Borough Council [1980] 2 NZLR 1 (CA). And, where a Disputes Tribunal referee exceeds his or her jurisdiction, there are, as I see it, under s 50, three possibilities.
[44] The first is where a referee exceeds jurisdiction unwittingly, because there was no protest at the hearing. Section 50 cannot then begin to apply. There is no sense in which the referee can be described as having failed to act fairly. The scope of s 50 itself precludes the District Court, or any Court, from intervening on appeal. Appellate jurisdiction is lacking. The only recourse, if the Tribunal’s want of jurisdiction is discovered afterwards, has to be by way of judicial review.
[45] The second is where a referee, faced with a protest to jurisdiction at the hearing, considers the protest conscientiously and impartially, but assumes jurisdiction wrongly. There too, the error cannot, I think, be corrected on appeal under s 50. The fact that the error goes to jurisdiction does not seem to me to signify. Section 50 itself precludes the Court from intervening. Appellate jurisdiction is lacking.
[46] There is a third possibility. A referee, faced with a protest to jurisdiction at the hearing, seemingly does not consider it, and says nothing about it in his or her decision or his or her report. That could, I think, amount to an error of process within the scope of s 50. And the fact that the error of law may go to jurisdiction ought not to be inhibiting. The referee has made two errors: one as to jurisdiction, which lies beyond s 50, and the other as to process.
[47] Where there is such an error of process, and unfairness and prejudice results, the District Court ought, I consider, to be able to intervene on appeal under s 50, despite the fact that the error also involves a question of jurisdiction. It would be ironic if it could not. The Act itself makes jurisdiction the first question that referees ought to ask themselves, even if there is no protest. Where there is a protest, the referee’s duty to consider whether he or she has jurisdiction is inescapable.
[48] Thus in this one category of case, I consider, a want of jurisdiction could be resolved collaterally, if only incidentally, on an appeal to the District Court under s 50. And, equally, if there were a right of appeal from the District Court to this Court under s 71A, limited as s 50 requires, this Court also could, I consider, resolve a question of jurisdiction incidentally, without the necessity for an application for review.
26 Mellow v Tsang (2004) 17 PRNZ 343 (HC).
[57] There is, however, an alternative interpretation of s 50 which is open. That is whenever the Tribunal engages in an inquiry beyond the limits of its jurisdiction the proceeding is being conducted in a manner that is unfair, and any orders in excess of the jurisdiction are prejudicial. When lay litigants appear before the Tribunal they can reasonably expect the Tribunal to proceed within the limits of its role set by the Act. If the Tribunal does not comply with the limits prescribed by the Act, then that is inherently unfair to a participant who is ordered to do something beyond those limits.
[58] I agree that there is a basis for the distinctions that Keane J drew as a matter of logic, and that the interpretation is open on the words of s 50. But the Act should be interpreted in light of its purpose. If a jurisdictional error is identified by the District Court, it makes little sense for the Court to say that it cannot do anything about it, and that one of the parties must now commence separate proceedings in the High Court to remedy the position. Apart from anything else this will add very significantly to the costs they must face. That approach is inconsistent with the purpose of the Act, which is to provide a procedure for the low cost, speedy and final resolution of the small disputes. This purpose extends to the interpretation of the scope of rights of appeal under s 50. Neither does it seem consistent with the purpose of the Act for the District Court’s ability to address jurisdiction to turn on whether the Tribunal addressed that issue in its decision. This seems to me to involve the kind of legal technicality that is to be avoided.
[59]For these reasons I interpret the words that “the proceedings were conducted
… in a manner that was unfair to the appellant and prejudicially affected the result” in s 50(1) to include the situation when the Tribunal has inquired into a claim beyond its jurisdiction and made ultra vires orders adverse to the appellant.
[60] Mr Sansom’s alternative argument was that jurisdiction arose under s 50(2)(a) as a failure to have regard to the jurisdictional limit within the Act involved a failure to have regard to a provision in the Act itself. Whilst I see that as a tenable interpretation, there would be limits if this were the applicable basis of an appeal, and it seems to me that the more straightforward path is to regard a determination by the Tribunal in excess of its jurisdiction involves a proceeding conducted in an unfair manner which prejudicially affects the result.
[61] It follows, in my view, that the District Court should be able to assess issues concerning jurisdiction in the appeal process when considering whether the proceedings before the Tribunal have been conducted fairly. If an award is made against a party when there was no jurisdiction to do so, that is both procedurally unfair and prejudicial.
Jurisdiction of the High Court
[62] Mr Sansom argued that, given the role of the District Court on appeal, the High Court should not entertain judicial review proceedings as to do so would undermine the purposes of the Act by adding a further layer of procedural complexity to the dispute resolution procedures. This was demonstrated by the present case which is a judicial review challenge concerning only $6,539.35. As I say, however, the High Court has regularly entertained judicial review challenges to decisions of the Tribunal, and the District Court on appeal. Here what was in issue was a question of jurisdiction, which is a matter previously addressed by way of judicial review. For that reason Mr Sansom’s arguments cannot be sustained.
[63] There is nevertheless considerable force in the point that entertaining judicial review adds a level of legal procedures that is not consistent with the low cost, speedy and final resolution of small disputes. Here there have been two hearings before the Tribunal, one appeal hearing the District Court, and now a judicial review proceeding in this Court. The judicial review proceeding concerns a very modest amount and were most unlikely to have been cost effective even if succeeded. This is not how disputes are supposed to be resolved under the Act.
[64] Notwithstanding those points it remains important for the High Court to exercise its supervisory jurisdiction in appropriate cases. This is necessary to ensure that the rule of law is observed. The cases that are appropriately bought to the High Court by way of judicial review are limited. In Patterson v District Court, Hutt Valley I addressed the various authorities that have considered the question of judicial review of decisions of the Disputes Tribunal, and of the District Court on appeal.27 I identified a number of cases where the Court observed that there were qualifications on the
27 Patterson v District Court, Hutt Valley, above n 25, at [21].
ability to seek review. I sought to explain those cases on the basis that they were all essentially identifying the same issue — that the Court’s role is limited to ensuring that decisions have been made lawfully.28 I suggested that that was demonstrated by the cases where judicial review had succeeded, which arose either when the Tribunal had exceeded its jurisdiction, or if there has been a breach of the statutory requirements for a fair hearing.29
[65] It may be that such cases could be corrected on appeal to the District Court, particularly given the interpretation of s 50 adopted above. But the High Court could still intervene when there has been a failure to observe the requirements of the legislative regime, and also when the District Court fails to correct such failures. It is a residual jurisdiction, and it should only be exercised in cases where the decision making is not lawful.
[66] The position in Tannadyce Investments Ltd v Commissioner of Inland Revenue relied upon by Mr Sansom is clearly distinguishable because in that case there was a statutory provision preventing the relevant decisions being challenged in any court outside the statutory appeal mechanism.30 Here there is no such ouster clause. The question of intervention when there is no such provision but a statutory right of appeal then turns on the Court’s discretion in relation to relief. The Judicial Review Procedure Act 2016 confirms that judicial review relief may be granted even where there is a right of appeal.31 In H v Refugee and Protection Officer the Supreme Court has nevertheless confirmed that the Court may decide not to entertain judicial review proceedings when it is satisfied that the appeal rights provide a more appropriate pathway.32
[67] Any judicial review challenge should not involve re-litigation of the underlying dispute, or seek to deal with matters that are more appropriately dealt with by the appeal procedure. But there will remain cases where judicial review will remain appropriate, and irrespective of any pursuit of an appeal. Here the point raised by
28 At [22].
29 At [23].
30 Tannadyce Investments Ltd v Commissioner of Inland Revenue, above n 23, at [9].
31 Judicial Review Procedure Act 2016, s 16(3)(a).
32 H v Refugee and Protection Officer [2019] NZSC 13, [2019] 1 NZLR 433 at [78].
Mr Trotman went to the question of the jurisdiction of the Tribunal. I have concluded that the District Court might have been able to deal with this issue on appeal, but given the decision of the Court in Mellow v Tsang it is understandable that the applicant brought the judicial review proceedings in this Court rather than raising the point on appeal to the District Court.33
[68] For these reasons I do not accept a basis to decline relief for discretionary reasons arises. Having said that I am concerned that judicial review proceedings have been brought in relation to such a comparatively small amount, and that the utility of the Disputes Tribunal procedure can be said to have been compromised. These factors will undoubtedly be relevant in future cases where the Court is invited to exercise the supervisory jurisdiction. Nevertheless for these reasons I do not accept Mr Sansom’s arguments, as I accept that the matters raised could properly be addressed by way of these judicial review proceeding.
Conclusion and costs
[69] Accordingly for the reasons identified above I accept that the matters raised by the applicant were properly addressed by way of judicial review, but I do not accept that the Tribunal erred in awarding the further amount in the determination challenged in this proceeding. The claim for judicial review should accordingly be dismissed.
[70] In relation to costs, the second respondent sought indemnity costs on the basis that the proceedings were an abuse of process given the small amount at stake, and the costs involved to the parties would exceed the amount at issue.
[71] I accept there is some force in that submission. But costs are awarded on an indemnity basis under r 14.6 of the High Court Rules 2016 only in cases where the party has acted improperly or very unreasonably in the conduct of the proceedings.34 The point that Mr Trotman advanced was clearly arguable. I accept that his proceedings were uneconomic. But I also take into account the number of deficiencies that were identified in the work that ELMZ did in installing his swimming pool.
33 Mellow v Tsang, above n 26.
34 See Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27]– [29].
Mr Trotman has obviously become aggrieved with the outcome of this project. Whilst he may have lost perspective in terms of the litigation that he has since pursued, it is difficult not to have some sympathy for him in light of the factors that have led him to do so. For those reasons I do not think it appropriate to entertain an award of indemnity costs. Costs should be awarded on a standard basis. That conclusion is reached on the basis that this this litigation is now concluded. Mr Trotman should now be made aware that any further litigation steps are unlikely to be treated with the same degree of sympathy.
[72] In the circumstances I dismiss the application for judicial review, and order the second respondent costs against the applicant on a 2B basis together with reasonable disbursements, to be fixed by the Registrar if not agreed.
Cooke J
Solicitors:
Pitt & Moore, Nelson for the Applicant
Crown Law, Wellington for the First Respondent Richmond Law, Nelson for the Second Respondent
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