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- Unreported Judgment
Pierce v Financial Advisers Australia QCATA 193
Pierce v Financial Advisers Australia  QCATA 193
Financial Advisers Australia
On the papers
30 November 2016
IT IS THE DECISION OF THE APPEAL TRIBUNAL THAT:
APPEAL AND NEW TRIAL – APPEAL GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – where the respondent provided financial services to the applicant – where the applicant seeks leave to appeal a decision ordering her to pay the respondent an amount owing – where the applicant asserted that some fees were waived – where the tribunal accepted the respondent’s evidence and not the applicant’s – whether the original claim was for a debt or liquidated demand – whether the respondent is a ‘relevant person’ able to bring a minor civil dispute claim – whether substantial injustice would be suffered without intervention on appeal
Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 8, 11, 12, Schedule 3
Alexander v Ajax Insurance Co Ltd  VLR 236
Spain v Union Steamship Co of New Zealand Ltd (1923) 33 CLR 555
State Advances Recovery Office of the Republic of South Africa v Fine  1 NSWR 702
APPEARANCES and REPRESENTATION:
This matter was heard and determined on the papers without the attendance of either party in accordance with s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
- The applicant wants leave to appeal a monetary order that she pay $21,602.45 held to be owing under an investment services contract on the grounds that errors made by the tribunal have had unjust legal consequences for her.
- The respondent (FAA) markets a money management scheme called the ‘Excelsior Program’, “designed and structured to repay (a client’s) mortgages and allow adequate amounts for everyday living expenses” as well as securing their financial futures. It is likened to a ‘roadmap’ for achieving viable financial goals.
- The program is a financial management system or so-called individualised mortgage equity plan based on a bank finance facility (or investment debt) set up and managed by an FAA consultant to facilitate the implementation of the program in future years for an agreed all-up fee.
- The applicant ‘brought the plan on’ on 10 January 2013 by signing an Implementation Authority (Exhibit 1). She agreed to pay the five year management and service fee and, at the same time, authorised her lender or solicitor to pay FAA $28,280 “from the proceeds of (her) finance facility on loan settlement”.
- In the event the program did not formally proceed for any reason and where full payment was made within 12 months of signing the implementation authority, the applicant became “responsible for the retail cost” of any “completed” “specific services” that had not already been paid for, including those detailed in section 7.11.
- The schedule of services FAA agreed to provide clients “whilst ever there are funds drawn from the finance facility” are specified in section 7.10 and include what are described as “achievement, person expenditure and salary packaging reviews” conducted by an FAA consultant quarterly on an ongoing basis for the term of the program.
- The schedule of fees in section 7.11 covers:
- a non-refundable one-off program plan production fee of $3,415 for the mortgage equity program plan;
- ‘fully inclusive’ Excelsior Program management fees of $10,943 for one year, $14,140 for two and up to $28,280 for five; and
- annual ongoing management fees payable yearly in advance of $5,892 from the sixth and any subsequent years.
- According to FAA, the schedule of fees in 7.11 of Exhibit 1 are global or wholesale figures for completed programs and incorporate a range of retail administrative fees to implement them. When a client agrees to take on a five year program, FAA “takes the gamble of how many (section 7.10) services they will use”. On average over five years, there will be about “550-560” file interactions compared with the applicant’s 784 in 19 months; or 50% more in less than two years than most people do in five.
- By 17 November 2014 (less than two years into the five year program) the applicant had terminated the agreement due to a loss of confidence in the provision of services and trust in any future advice.
- On 10 December 2014, FAA informed her by email that she will be invoiced for “all of the time and services we have provided you” that had not been paid for to date.
- The applicant received a tax invoice (Exhibit 2) on 11 March 2015 for “financial and administrative services” (Exhibit 3) provided between 21 November 2012 and 10 December 2014 in the sum of $21,221 made up of:
- Emails x 194 = $10,670
- Phone calls x 95 = $5,225
- Appointments x 15 = $4,950
- Mail x 1 = $20
- Novated lease set up x 1 = $356
- FAA applied to the tribunal to decide a minor civil dispute claim in circumstances where:
“Client didn’t wish to go ahead with program the fee we are chasing is for the services we have given the client up until she pulled out of the program she signed for and didn’t pay the fee.”
- The tribunal has jurisdiction to hear and determine a ‘minor civil dispute’. That phrase is defined in Schedule 3 QCAT Act to relevantly mean a claim to recover “a debt or liquidated demand” of money, with or without interest, of up to $25,000.
- The tribunal may exercise its minor civil dispute jurisdiction if a ‘relevant person’ has applied for it to do so. A ‘relevant person’ for a debt or liquidated claim is a creditor or person to whom the money is payable. A debt arises out of a simple oral or written contract. Other money demands are liquidated when the sum is ascertained or, at least, quantifiable by calculation by reference to an agreed method or formula.
- As characterised by Sholl J in Alexander v Ajax Insurance Co Ltd, debts are a species of action “for a specific amount, not involving (a) calculation dependent … (on) … opinion”.
- A liquidated demand is a certain amount and either fixed in dollar terms or calculable in a specified way under the contract from which it originates. It may include a quantum meruit count even though the only implied agreement is for the payment at a reasonable rate. So-called ‘liquidated damages’ can also qualify where the contract actually provides for the payment of a stipulated or objectively ascertainable sum (e.g. any deficiency between an agreed price and actual market value).
- By contrast, a claim of damages or compensation for an evidence-based loss assessment by the court, rather than the terms of a contract or agreed standard, is an unliquidated claim.
- FAA concedes that it did not provide and is not ‘chasing’ the applicant for section 7.11 or other financial services. Nor is it relying on the fees specified in section 7.10. What it claims is the retail cost of the administration assistance as listed in Exhibits 2-3 on the basis that by signing Exhibit 1 the applicant agreed to be responsible for them if she terminated it early.
- The applicant seeks full or partial relief from liability on the grounds that:
- the Excelsior Program was really a financial product sold to her by unlicensed FAA agents contrary to the Australian Consumer Law and therefore the fee agreement was unenforceable;
- alternatively, if FAA and its agents were actually licensed to sell financial products, they breached the mandatory statutory obligation to provide her with a Financial Services Guide and Statement of Advice; and
- the first two years’ fees were waived by her FAA consultants because the promised services were not satisfactorily provided; or
- alternatively, if 2014 was not waived, her indebtedness was no more than $5,892 based on the standard annual management fee rate.
- The tribunal rejected the applicant’s evidence that any fees had been waived on the basis of an affidavit that she did not have a copy of, sworn by a deponent unavailable for cross-examination (or at least, not offered). It also expressly found – on the basis of FAA’s say-so, rather than any detailed legal analysis – that the Excelsior Program was not a dealing in a financial product within the ACL. Neither of these findings of fact are contested.
- The only remaining issue is whether FAA has a valid claim for a ‘debt or liquidated demand’ or not. This depends on the proper interpretation of the poorly-worded last paragraph of Exhibit 1 and more specifically on whether the claim relates to the “specific services…completed for” the applicant before the termination date or whether the “specific services” contemplated by Exhibit 1 are limited to “those detailed in section 7.11” which FAA admittedly has not provided.
- FAA is not a ‘relevant person’ entitled to apply to QCAT to deal with the matter as a minor civil dispute unless the items of work and rates in Exhibits 2 and 3 are due under Exhibit 1 as the cost of “a specific service” completed for the applicant. A claim based on an implied agreement to pay reasonable compensation in a sum assessed by the tribunal for time and effort expended in servicing a demanding but unprofitable client is outside the tribunal’s limited minor civil dispute jurisdiction.
- Both parties appear to believe Exhibits 2 and 3 are calculated on the charge-out rates recorded in a document identified in the material as attachment L and headed “Administration Assistance – Schedule of Fees”; but it does not ostensibly seem to have actually played any such role. It was not expressly referred to or apparently relied on and the applicant denies ever having seen it (or one like it) on or before 10 January 2013. In fact, attachment L looks to have been produced by a different FAA consultant for other clients in 2016 and has no apparent connection with the parties’ contract.
- The legal nature of FAA’s claim and the relevance if any, of attachment L to the applicant’s liability need to be more fully investigated and clarified for jurisdictional and adjudication purposes. There is scant evidence about what the Excelsior Program actually entails and whether “all the necessary arrangements for implementation of the program” were made by the FAA consultants for the applicant between the beginning of 2013 and the end of 2014 in keeping with the promise in Exhibit 1.
- As justice might not have been done here, leave is granted and the appeal is allowed. The matter is remitted for reconsideration of the jurisdiction issue before any hearing of the merits is conducted.
- If it is found to be within the tribunal’s minor civil dispute jurisdiction, a specific finding is to be made as to whether the fees charged for the items in Exhibits 2 and 3 are those the applicant agreed to be responsible under Exhibit 1 in the event that the Excelsior Program ended prematurely and if calculated by FAA according to attachment L a further finding is required about whether the terms of attachment L were known and impliedly agreed to by the applicant when she signed the Implementation Authority on 10 January 2013.
 Transcript at 1-16:20.
 Transcript at 1-18:10.
 QCAT Act s 11(1).
 QCAT Act s 12(1).
 Ibid s 12(4)(a).
 Spain v Union Steamship Co of New Zealand Ltd (1923) 33 CLR 555.
  VLR 236. See too State Advances Recovery Office of the Republic of South Africa v Fine  1 NSWR 702.
 See QCAT Practice Direction No 9 of 2010.
 Transcript at 1-18:15.
 QCAT Act s 12(1), (4)(a).
 Ibid ss 8, 11(1)(a), 12(1)(a); Sch 3.
The parties’ apparent mistake may have arisen because the applicant appeared at the hearing by phone (and did not see the exhibits as tendered) and FAA did not have resort to the record of proceedings before responding to the leave application.
- Published Case Name:
Pierce v Financial Advisers Australia
- Shortened Case Name:
Pierce v Financial Advisers Australia
 QCATA 193
30 Nov 2016