Macaskill v Lomas[2024] QCATA 82

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   On 28 February 2018 the respondent entered into a partly oral and partly written contract to purchase a Nissan Civilian Bus (“the vehicle”) from the applicant for $24,500.00. The passenger section of the vehicle was fitted out as a self-contained living space with the usual amenities, kitchen, living space, bathroom/toilet and a sleeping area. It was advertised on Gumtree and negotiation between the parties was mainly by text message (the writing).
2. [2]
   The applicant represented the vehicle as being in very good condition and roadworthy. On the basis of the representations, it was ideally suited to the respondent’s needs as a mature single lady to live and travel in, on a generally full time basis. The applicant did not inspect the vehicle before delivery but relied on photos posted on Gumtree.
3. [3]
   However, after taking delivery of the vehicle, it soon became apparent it had many defects. These included, in summary:

   1. unserviceable tyres;
   2. mould within the living space;
   3. cabinetry was buckled and worn, and misaligned;
   4. 12 volt power system was inoperative;
   5. engine of the bus was badly worn and non-functional;
   6. external areas had been painted to mask rust;
   7. the vehicle was not roadworthy.
4. [4]
   Of all the issues with the vehicle, the most important was that the applicant had failed to obtain a written safety certificate when selling the bus as required by s 23 of  Transport Operations (Road Use Management – Vehicle Standards and Safety) Regulation 2010.^[1] The regulation required a seller to ensure that there was a current safety certificate for the vehicle, and that the certificate “is attached to, or displayed on, a conspicuous part of the vehicle. Also it contains all necessary information about the vehicle.
5. [5]
   It is conceded by the applicant that he did not have a safety certificate at the time the vehicle was sold, or disposed of, to the respondent. He does say that the vehicle was inspected, and passed, some time before the sale, but he did not want to get the hard copy because the time for which it is valid, 2 months might run out. The respondent contends that when she took delivery of the vehicle, the safety certificate was not with it and she queried the applicant. He told her, and there really is no dispute about this, that he would get it too her, which he did some days later. The vehicle was purchased and paid for on 28 February 2018 and the safety certificate was dated 1 March 2018. Clearly there was non-compliance with the Regulation.
6. [6]
   The respondent preserved with the vehicle trying to undertake repairs and upgrades over the following years. She sought recompense from the applicant but to no avail. She then commenced a proceeding in the minor civil disputes jurisdiction of the Tribunal on 6 June 2021 claiming $25,000, being the purchase price of the vehicle. Although not articulated as such, the claim is for damages for breach of contract, or a total failure of consideration. The annexure to the application sets out in detail the particulars of the claim. The claim as filed is supported by invoices and quotes from various business that have looked at the vehicle.
7. [7]
   In a detail handwritten response filed on 12 March 2021, the applicant challenged all of the assertions made by the respondent about the condition of the vehicle. He claimed there was nothing wrong with the vehicle when it was sold to the respondent. He contended that the mechanics were in excellent condition, it did not blow smoke and everything functioned as it should have in the living area. Further any defects were the sole the responsibility of the respondent.
8. [8]
   The application came on for hearing on 24 August 2021. The learned adjudicator heard submissions from the parties and raised the issue of the safety certificate. The applicant, whose responsibility it was to obtain and display the safety certificate pursuant to Regulation 23 conceded that firstly, he did not have the certificate when the vehicle was sold and secondly, did not get the hard copy until 1 March 2018. This then became the main focus of the dispute between the parties. The applicant was unaware of the strict requirements of the regulation but unfortunately for him that is irrelevant to its application.
9. [9]
   After hearing the parties, the learned adjudicator gave comprehensive oral reasons^[2] addressing the question of the safety certificate. She accepted that the applicant was not a licenced motor dealer and therefore the provisions of the Australia Consumer Law did not apply. She found the Tribunal had jurisdiction as the respondent was seeking to recover a debt or liquidated demand.
10. [10]
    She then went onto consider Reg 23 and found as a fact, consistent with the evidence, that the safety certificate was not produced until the day after the sale. She then concluded the contract between the applicant and the respondent was voidable, although later in the reasons she said it was void for illegality.

1. [11]
   The applicant then filed an application for leave to appeal or appeal in respect of the learned adjudicators decision. An appeal from the minor civil dispute jurisdiction is not an appeal as of right. Section 142(3)(a)(i) of the Queensland Civil & Administrative Tribunal Act 2009 (“QCAT Act”) provides that in respect of a decision in a proceeding for a minor civil dispute an appeal may be made only if the party has obtained the appeal Tribunal’s leave to appeal. Leave to appeal will usually only be granted when there is a reasonable argument that the decision was attended by error, or an appeal is necessary to correct a substantial injustice caused by the error.^[3] Although not specifically raised there is a fundamental jurisdictional error with respect to the primary application which is discussed below. There is also the question of illegality of contract which may give rise to a valid ground of appeal. For the reasons stated below leave to appeal is granted and the appeal is allowed.

11. [12]
    I will first deal with the question of illegality. The consequences of not getting a safety certificate before sale were considered in some detail by Acting Senior Member Paratz in Hall v Freeman.^[4] In that case the seller of a vehicle did not have a safety certificate at the point of sale. Although the appeal was in respect of an extension of time, he also considered the merits of the case in determining the exercise of discretion to extend time. This led to a consideration of the legality of the contract and the application of Reg 23. Importantly, and in addition to Reg 23 the learned Member referred to Reg 24 which specifically prohibits the “disposal” of a vehicle unless a safety certificate has been obtained. Penalties  to the seller/disposer applied to a breach of both regulations. On the basis of this prohibition he found that the contract was illegal and therefore he found the application for the extension of time lacked merit.^[5]
12. [13]
    In more recent cases a wider consideration has been given to illegality, particularly as it might impact and innocent party to the illegality. In Nichols v Earth Spirit Home Pty Ltd^[6] the Court of Appeal discussed illegality in the context of a building contract between the parties which was not reduced to writing as required by s 67G of the Queensland Building and Construction Commission Act 1991. The Court referred to Miller v Miller^[7] where the High Court said:

It has long been established that a contract whose making or performance is illegal will not be enforced. Often enough, however, the statute in question does not expressly prohibit the making of the relevant contract and does not expressly prohibit its performance. Whether such a statute ‘prohibits contracts is always a question of construction turning on the particular provisions, the scope and purpose of the statute’. Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd identifies considerations of the kind that are engaged in the task of statutory construction.

But in addition to, and distinct from, cases where a statute expressly or impliedly prohibits the making or performance of a contract, are cases ‘where the policy of the law renders contractual arrangements ineffective or void even in the absence of breach of a norm of conduct or other requirement expressed or necessarily implicit in the statutory text’. In cases of the latter kind the refusal to enforce the contract has been held to stem ‘not from express or implied legislative prohibition but from the policy of the law, commonly called public policy. Regard is to be had primarily to the scope and purpose of the statute to consider whether the legislative purpose will be fulfilled without regarding the contract as void and unenforceable’.

The same kinds of question have been identified as arising in relation to allegations of illegality in the constitution or performance of a trust. In Nelson v Nelson, Deane and Gummow JJ said that authorities in contract law (including Yango) suggest drawing distinctions between three cases:

‘(i) an express statutory provision against the making of a contract or creation or implication of a trust by fastening upon some act which is essential to its formation, whether or not the prohibition be absolute or subject to some qualification such as the issue of a licence; (ii) an express statutory prohibition, not of the formation of a contract or creation or implication of a trust, but of the doing of a particular act; an agreement that the act be done is treated as impliedly prohibited by the statute and illegal; and (iii) contracts and trusts not directly contrary to the provisions of the statute by reason of any express or implied prohibition in the statute but which are “associated with or in furtherance of illegal purposes”. The phrase is that of Jacobs J in Yango’.

Deane and Gummow JJ said that, in the last of these three kinds of cases, ‘the courts act not in response to a direct legislative prohibition but, as it is said, from “the policy of the law”’. (Citations omitted)

13. [14]
    In the present case, it is open to find that the contract for the sale of the vehicle, was an illegal contract particularly when adopting the statement in Yango that there was an express statutory prohibition, Reg 24, on the disposal of the vehicle without a safety certificate. In those circumstances the contract is unenforceable. The contract is not voidable at the option of the affected party, here the respondent, as the learned adjudicator found, rather it is unenforceable by either party.^[8] The loss falls where it lies. This can be hash on the innocent party therefore the need to carefully construe the statue to determine if there is a legislative prohibition in making the contract. Here, there are penalties for breaches of Regs 23 and 24 but does that make the contract illegal?
14. [15]
    It is unnecessary for me to make a final decision on illegality because the respondent has a more fundamental problem with what I will refer to as her cause of action in the Tribunal. There was no real contest about the jurisdiction of the Tribunal at the hearing. The learned adjudicator found that the claim was for a “debt” or “liquidated demand” and fell within s 1(a) of the definition of minor civil dispute in Schedule 3 to the QCAT Act. This conclusion seems to have come about because she concluded the contract was voidable and the respondent was entitled to a return of money paid for the vehicle, which was a sum certain. That might be correct if that remedy is available for an illegal contract, but it is not. As discussed below even if restitution is available in the circumstances, that remedy is not a debt or liquidated demand.
15. [16]
    The distinction between a debt and liquidated demand and unliquidated damages can sometimes be a vexed question. This was addressed by the then President of the Tribunal in Hill v Berghofer^[9]:

A ‘debt or liquidated demand’ is, as the Deputy President explained in Ziegeler t/a Ziegco Pty Ltd v Recochem Incorporated, one where the amount is determined and, in effect, beyond dispute as to how it is calculated. If the amount depends upon assessment by the court or tribunal, it is not liquidated.^[10]

16. [17]
    In Walsh Accountants Pty Ltd v Tonge,^[11] Adjudicator Scott-Mackenzie also provided a detailed history of the phrase’s application in a legal context, starting with what the High Court said in Spain v The Union Steamship Co of New Zealand Ltd.^[12] I respectfully adopt those comments.  
17. [18]
    Assuming there is a legally enforceable contract for the sale of the vehicle between the applicant and the respondent. It is undisputed that the respondent had the use of the vehicle from 28 February 2018 until June 2021 when she commenced proceedings for recovery of the purchase price. The evidence filed by the respondent demonstrates she has spent considerable funds in effecting repairs to the vehicle and by reason of its condition has not been able to fully use it.
18. [19]
    On the basis of the contract entered into between the parties, the respondent’s cause of action is based on a misrepresentation as to the true condition of the vehicle. On her case the representation was misleading and, at worse false. Her remedy for the misrepresentation (or fraud) is damages to be assessed by the Tribunal. That would include some offset for her use of the vehicle in the intervening period. She would also claim recovery of expenses incurred. These expenses would have to be assessed by the Tribunal as being reasonable and incurred as a consequence of the alleged breach.
19. [20]
    This is not a claim for a debt of liquidated demand, despite the learned adjudicator’s conclusions that the contract was “voidable” for illegality.
20. [21]
    Even if, the claim was made in restitution for the total failure of consideration, this still does not mean that the claim could be characterised as a debt or liquidated demand.
21. [22]
    Because the claim is in truth one for damages, the Tribunal did not have jurisdiction or power to hear and determine the respondent’s application because it did not fall within the definition of a minor civil dispute under schedule 3 of the QCAT Act.
22. [23]
    This is an unfortunate outcome for the respondent. Given these perceived difficulties, the parties had agreed, at the hearing of the appeal, to have further discussions to try and resolve their dispute. I agreed to wait in delivering a decision in the appeal until those discussions could be undertaken. The parties were to advise the Tribunal of the outcome of any further negotiation. Not having heard from the parties since the hearing, the Registry recently contacted the parties to ascertain if the matter had been resolved. The Registry was advised that despite some form of agreement being reached and promises made, the matter remains unresolved.
23. [24]
    I can appreciate that the respondent, as a layperson, may have some difficulty in comprehending the distinction between a debt or liquidated claim and damages to be assessed. That is not surprising because that very question has been litigated many times in many different courts over the years. It is a concept that is sometimes difficult for legal practitioners to grasp, even harder for those not legally trained. Of course, this does not mean the respondent does not have a remedy, it is just that it is not available in QCAT but given the amount claimed, it is one that could be determined by the Magistrates Court.
24. [25]
    The conclusion here is that because the Tribunal lacked jurisdiction there has been an error of law. Therefore the Tribunal makes the following orders:

    1. Leave to appeal is granted.
    2. The appeal is allowed.
    3. The decision of the Tribunal dated 24 August 2021 is set aside.
    4. The application filed on 21 March 2021 is dismissed.