NDISP Pty Ltd v Bowieberghs Pty Ltd
[2024] QCATA 99
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- Unreported Judgment
- NDISP Pty Ltd v Bowieberghs Pty Ltd[2024] QCATA 99
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NDISP Pty Ltd v Bowieberghs Pty Ltd[2024] QCATA 99
NDISP Pty Ltd v Bowieberghs Pty Ltd[2024] QCATA 99
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | NDISP Pty Ltd v Bowieberghs Pty Ltd [2024] QCATA 99 |
PARTIES: | NDisp pty ltd (applicant/appellant) v bowiebergs pty ltd (respondent) |
APPLICATION NO/S: | APL012-23 |
ORIGINATING APPLICATION NO/S: | Q428-22 Southport |
MATTER TYPE: | Appeals |
DELIVERED ON: | 13 November 2024 |
HEARING DATE: | 1 October 2024 |
HEARD AT: | Brisbane |
DECISION OF: | Judicial Member D J McGill SC |
ORDERS: |
|
CATCHWORDS: | ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – Default decision – application to set aside – relevant considerations – whether prima facie defence on the merits shown Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 51. Cook v D A Manufacturing Co Pty Ltd [2004] QCA 52 Embrey v Smart [2014] QCA 75 Evans v Bartlam [1937] AC 473 HL v HR [2024] QDC 176 National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441 Varsity Electrical Pty Ltd v SEQ Electronics and Entrance Systems Pty Ltd [2020] QCATA 136 |
APPEARANCES & REPRESENTATION: | |
Applicant: | D Richards, director of the appellant |
Respondent: | C Bowie and P Bowie, directors of the respondent |
REASONS FOR DECISION
- [1]On 8 August 2022 the respondent filed in the Tribunal at Southport an Application for Minor Civil Dispute – Consumer/trader dispute, claiming payment of $24,324.06 from the appellant, together with the filing fee.[1] On the same day, the respondent posted a copy of the application to the postal address of the appellant. On 5 September 2022 a mediation was held by telephone, but the dispute was not resolved. The proceeding was then set down for hearing on 4 October 2022, and a hearing notice for a hearing by telephone on that date was posted to the appellant on 6 September 2022. On the same day, a copy was sent by email to a particular address.[2]
- [2]On 14 September 2022 the respondent filed an application for a hearing in person, and on 23 September 2022 an adjudicator ordered that the parties have leave to attend the hearing in person. This permitted, but did not require, each party to attend in person. In the event, on 4 October the two directors of the respondent attended in person, and the director of the appellant attended by telephone, although apparently it took some time for him to come on the line. Since the notice of hearing had been sent to the appellant, he ought to have been available earlier, but he did appear by telephone.
- [3]At the hearing the adjudicator said that the respondent’s claim was properly categorised as a minor debt claim, that is, a claim for a debt or liquidated demand not exceeding the monetary limit of the Tribunal. Such a claim differs from other minor civil dispute claims, in that for a minor debt claim the respondent is required by the Rules to file and serve a Response to the claim.[3] The use of the incorrect form of application does not affect the validity of the proceeding, and the adjudicator appropriately decided that the matter proceed as a minor debt claim. It followed that the appellant ought to have filed a Response to the claim, but the appellant had not until then been warned that that was required. If he had been served with the form appropriate for a Minor Debt Claim, Form 4, that form includes a notice explaining the need for a response to a minor debt claim, and a warning of the consequences of not doing so.[4] This was not on the form used in this matter, Form 1.
- [4]At the hearing the adjudicator discussed with the director of the appellant whether he was willing to give an oral response, but he asked for the opportunity to put in one in writing, and the adjudicator allowed him fourteen days from that date. This is half the usual time for filing and serving a response, but the director agreed to that period, and to the date. A direction that the appellant file and serve a Response to the claim by 18 October 2022 was made, but the adjudicator did not warn the director that, if the response was not filed and served by that date, a default decision might be made against him without further notice to him.[5]
- [5]The appellant did not file and serve the Response within the time fixed by the direction. The director said that he was waiting for a copy of the direction to see when the date was, but it is clear from the transcript of the hearing that he was clearly informed of the date, twice during the conversation, and he agreed to it twice.[6] If he lost track of the actual date, he could have telephoned or emailed the Tribunal, or indeed asked the respondent. In the event, by the time he saw a copy of the direction the date had passed, and a default decision had been made, on the application of the respondent, on 20 October 2022.
- [6]The appellant filed an application to set aside the default decision on 7 November 2022, which came before an adjudicator and was dismissed on 18 November 2022. On 16 January 2023 the appellant filed an application for leave to appeal against the refusal to set aside the default decision. The proceeding at first instance was a type of minor civil dispute, so the appellant requires leave to appeal to the Appeal Tribunal, whatever the ground.[7] Leave is usually only granted where there is a reasonable argument that there is an error which should be corrected and an appeal is necessary to correct a substantial injustice to the applicant,[8] although it may also be granted when the application raises an issue of general importance on which the decision of the Appeal Tribunal would be useful.[9] The requirement for leave to appeal reflects a legislative intention that ordinarily parties to a minor civil dispute will be confined to one Tribunal determination of the dispute.
Reasons of the adjudicator
- [7]I do not have a transcript of the reasons of the adjudicator for refusing the application, but I was told that it was because the adjudicator had decided that it was the appellant’s fault that a Response had not been filed, as the director had been told the date and had agreed to it during the earlier telephone hearing. That was certainly true, as far as it went; the date allowed for filing the response was stated by the adjudicator, and the director agreed to it, on two occasions during the hearing.[10] That however is not the only consideration on an application to set aside a decision by default.
- [8]An application to set aside a default decision is similar to an application to a court to set aside a default judgment. In that context, it is well established that the relevant considerations are wider than whether the applicant was responsible for the default. One leading case is National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd [1983] 2 Qd R 441, where McPherson J said at 449:
The principal question remaining is whether the judgments obtained in default of appearance in actions 5053/1982 and 5054/1982 should be set aside. In Aboyne Pty. Ltd. v. Dixon Homes Pty. Ltd [1980] Qd R 142, Kelly J. regarded an application to set aside such a judgment, when regularly entered, as requiring the court to consider whether the defendant had given a satisfactory explanation of its failure to appear, any delay in making the application, and whether the applicant defendant had a prima facie defence on the merits. Speaking generally, it may be said that it is the last of these considerations that it is the most cogent. It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had elapsed, provided that no irreparable prejudice is thereby done to the plaintiff: Attwood v. Chichester (1878) 3 Q.B.D. 722; Rosing v. Ben Shemesh [1960] V.R. 173.
- [9]That passage has frequently been followed or referred to with approval subsequently.[11] For example, it was expressly approved by the Court of Appeal in Cook v D A Manufacturing Co Pty Ltd [2004] QCA 52 at [19]. That Court also cited with approval at [16] a passage from Evans v Bartlam [1937] AC 473 at 480 per Lord Atkin:
The discretion is in terms unconditional. The Courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that where the judgment was obtained regularly there must be an affidavit of merits, meaning that the applicant must produce to the Court evidence that he has a prima facie defence. It was suggested in argument that there is another rule that the applicant must satisfy the Court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the Court will have regard in exercising its discretion. If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the two rules would be deprived of most of their efficacy. . . . But in any case in my opinion the Court does not, and I doubt whether it can, lay down rigid rules which deprive it of jurisdiction. Even the first rule as to affidavit of merits could, in no doubt rare but appropriate cases, be departed from. The supposed second rule does not in my opinion exist.
- [10]Two things follow from this. First, that the most important consideration in deciding such an application is whether the defendant has shown an apparently good ground of defence.[12] Second, that the inability of the defendant to show that there is a reasonable excuse for its default is not fatal to such an application. On the material available to me, it appears that the adjudicator who rejected the appellant’s application to set aside the default decision proceeded on the basis that it was fatal to the application, and did not consider if an apparently good ground of defence had been shown. If so, that shows that the adjudicator adopted the wrong approach in deciding the application.
- [11]The other matter apparently not considered by the adjudicator was that the default decision had been made without the appellant’s having been given the usual warning that that could happen, without notice to the appellant, unless the Response was filed as required. The usual notice to that effect, which is on the form for an application for a Minor Debt Claim, was not on the form of application served on the appellant, and although the adjudicator on 4 October 2022 made a direction to that effect, the appellant was not warned of this consequence orally during the hearing, and did not see the direction until after the default decision had been made. This can be seen as a breach of the rules of natural justice, and is itself a sufficient reason to set aside the default decision, although I gather the adjudicator did not have the benefit of a transcript of the earlier hearing, and would not have realised this.[13]
- [12]The application to set aside the default decision was filed on 7 November 2022, so there was really no delay in making that application. As to the existence of the apparent defence on the merits, the material before the adjudicator was not in the form of an affidavit, but in submissions the question of the existence of a defence on the merits was raised.[14] The respondent in submissions in response to the application also addressed this issue. In these circumstances, if the question of the existence of a defence on the merits was not addressed by the adjudicator, that is surprising, and inappropriate. I do not have access to a transcript of his reasons, which makes it difficult for me to assess whether this issue received proper attention from the adjudicator. From what I was told during the hearing, have seen in submissions in writing, and have seen in the affidavit of merits filed by the appellant,[15] however, my impression is that there may well be a defence on the merits.
Leave to appeal
- [13]Given the matters already addressed, I consider that there are sufficient grounds to grant leave to appeal, and to receive further evidence. Indeed, at the hearing I received evidence in the form of the transcript of the hearing on 4 October 2022, without objection from the appellant. I also directed the appellant to file and serve an affidavit of merits, and gave some indication of the sort of thing required. On 22 October 2024 the appellant emailed to the associate to the Deputy President, Dann DCJ, such an affidavit of merits. The respondent took issue with some of the factual matters stated in the affidavit,[16] and complained about the form in which some of the information was presented, but for present purposes it has the effect of evidencing a sufficient factual basis that there are significant issues in dispute to justify this matter going to a proper hearing. The fact that some of the contents of such an affidavit are contested by the other party does not really matter. An application to set aside a default decision is not a hearing of the merits of the claim. It is a hearing to decide if there will be a hearing of the merits of the claim.
Background
- [14]The parties entered into a lease in 2020 by which the respondent leased to the appellant a property which was suitable for specialised disability accommodation, rooms in which were then sub-leased by the appellant to individuals who had funding for such accommodation under the Commonwealth NDIS scheme. Any necessary care for them was provided by others. The property was managed by the appellant. I was told that the appellant also manages some hundreds of other such properties. By the lease clause 3.1 the appellant was to pay the respondent the base rent, the SDA rent, the tenant’s share of outgoings and any other money owed. The base rent was nominal, $12 per annum, and the substantial payment was the SDA rent, defined in the Schedule to the lease as the “property income”, less certain amounts.
- [15]The “property income” was itself defined in clause 1.1 as:
- Any income received by the tenant from or on behalf of any participant who sub-leases all or part of the premises from the tenant; and includes
- The Reasonable Rent Contribution, and
- Any SDA payments.
…..
- [16]The Reasonable Rent Contribution was itself defined as 25% of a participant’s disability support pension, plus all of his or her Commonwealth rental assistance. An SDA payment was also defined as a payment received by the tenant from a participant or from an authority under the Housing Providers National Law in consideration of the sub-lease to the participant.[17]
- [17]The deductions which were allowed by Item 7 were two fees explained in more detail in clause 5, and “any SDA expenses incurred by the tenant in respect to this lease or associated with any sub-lease … .” (sic). The term SDA expenses is not helpfully defined in clause 1.1, but it appears that the term is explained by clause 17.1 of the lease, which provides that the appellant must repair and maintain the premises at the cost of the respondent. In particular, subclause (c) said that the cost of the various repairs undertaken by the tenant “shall be considered an SDA expense for the purpose of calculating the SDA rent …” Further, subclause (d) provided that:
Where any of the expenses in this clause 17 are able to be funded by the NDIS as a reasonable and necessary support for a participant residing in the premises, the tenant will use its best endeavours to have the relevant participant(s) seek the funding, and reimburse the landlord for any expenses paid by the landlord which are subsequently covered by the NDIS.”
Consideration
- [18]The respondent’s case, as appears from the material attached to the original application, and other submissions, including what was said at the hearing, falls into two parts. The first is that there was property income which had not been paid but should have been, and the second, that the appellant had made unauthorised deductions from the property income, supposedly in respect of SDA expenses, such as repair costs. The respondent claimed that from July 2020 to June 2022 the amount which should have been received as property income, after deducting the appellant’s fees and a payment to the participants which the respondent had agreed to out of the income,[18] was $132,084.39, whereas it had received only $107,973.80, leaving a difference of $24,110.59. This figure was then subject to minor adjustment, including deducting a number of expenses which the respondent allowed, apparently as SDA expenses, to arrive at the amount claimed of $24,324.06.
- [19]The respondent also alleged that the appellant had been making unauthorised deductions from the income, and four specific matters were mentioned. First was gardening expenses, where the complaint was that the charges were excessive, and that the respondent had been told that this would be recoverable from the NDIS, but had not been. I note that under clause 8.2(e) the respondent is responsible for gardening, landscaping and waste removal from the estate, although on its face this applies only to amounts incurred by the respondent. There may be room for argument about whether the appellant is entitled to recover from the respondent charges it has incurred in respect of gardening; I note that all of the items listed in clause 17.1 relate to the building rather than to the land. But that depends on the true interpretation of the lease, and is a matter for a hearing.
- [20]The second was that the cost of internet services (including telephone) were being charged to them. The respondent relied on clause 9.1(a) which makes the appellant responsible for “all charges for separately metered services supplied to the premises, including water above reasonable usage, electricity and gas.” The term “services” was defined in clause 1.1 to include “communication (voice and data)” which should cover internet costs. On the other hand, Clause 8.1 provides that the respondent is responsible for the payment of all outgoings, and clause 8.2 defines outgoings as amounts incurred by the respondent in respect of various things, including “(d) maintaining and servicing the services.” There may be other provisions which touch on the construction of the relevant parts of the lease, and I have not received full submissions on the question of interpretation, or given full consideration to it. For the present, it is sufficient to say that it appears that the question of whether the appellant is entitled to deduct internet costs is one which depends on the correct interpretation of the lease, a matter for a hearing as different conclusions appear to me to be possible.
- [21]The third complaint related to various deductions said to have been made for installing additional fittings, and for various repairs. These seem to be covered by clause 17, which I have already discussed, although some of the installation of fittings may have been to maintain the approval of the premises for use in the way contemplated.[19] As to whether amounts should have been recovered from the NDIA, I have mentioned the provision about this already. The provision is a promise to use the appellant’s best endeavours to have the relevant participant claim the money from the NDIA, and the effect of such a provision is that the ability of the appellant to deduct a sum from the income payment is not dependent on the success of the process of extracting the amount spent from the NDIA. Rather, it provides that if such money is forthcoming, when it is received there is an obligation to pass it on to the respondent.
- [22]There is a further complication, in that, if the respondent could prove a breach of clause 17.1(d), it would sound in damages, which cannot be claimed by an application for a minor debt claim.[20] The Tribunal has no jurisdiction to entertain a claim for damages for breach of a commercial lease, so reliance on clause 17.1(d) cannot help the respondent in this proceeding. Apart from this, any reimbursement is dependent on payment being received from the NDIA, and the position of the appellant was that no such payments have been received and not passed on.
- [23]The fourth contentious deduction was that additional support contributions had been deducted in respect of participants other than from income received for such participants in respect of the relevant period. Clause 5.4 of the lease does refer to such payments being deducted from payments from the appellant to the respondent. It is a question of whether the lease authorises such deduction only from payments of SDA rent[21] in respect of that particular participant and that particular period. That is a matter to be resolved at a hearing.
- [24]The position is similar in the case of the claim for property income. The appellant’s obligation to pay is based on payment having been received by it.[22] I was told during the hearing that the explanation for at least some non-payment was that the appellant has not itself received payments from the NDIA, because of that agency’s administrative problems. Whatever the rights and wrongs of the position as between the NDIA and the appellant, the effect of the relevant provisions in the lease appears to be that there is no obligation on the appellant to pay any SDA rent except out of payments actually received by it. If such payments have not been received, the obligation the respondent is seeking to enforce will not have arisen.
- [25]That there has been a failure to pay the appellant on time gains some credence from something said in the submissions of the respondent in opposition to the appellant’s application to set aside the default decision. In Part 6 of the submissions it was said that, after 5 September 2022, the respondent contacted the Minister responsible for the NDIS, and soon after that thousands of dollars of unpaid rent was received (I take it by the appellant) and passed on to the respondent.[23] The submissions went on to say that “clearly payments that were missing had not been collected or chased up by the” appellant. If payments had not been made because of some breach of obligation under the lease by the appellant, again that would sound in damages, rather than support a liquidated claim for unpaid rent. As I have said, any damages claim is not within the jurisdiction of the Tribunal.
- [26]Apart from that, part of the amount claimed as owing in the application had been paid prior to the application for the default decision. That application acknowledged the payment of two amounts, on 5 August and 8 October 2022, which totalled $11,702.19, which explains why the amount of the decision was less than the amount of the claim, being $14,444.38, including interest of $1,451.51. The appellant alleges that after the claim was filed there were additional payments made to the respondent of $9,962.25 on 4 August 2022, $6,794.65 on 7 September 2022 and $18,352.06 on 6 October 2022.[24] It may be that more has been paid since then. The resolution of such issues is a matter for a hearing.
Conclusion
- [27]Overall it appears that the respondent’s claim raises issues of interpretation of the lease which are of some difficulty, and also raises factual issues where the respondent faces the complication that, in order to prove parts, if not all, of the claim, it is necessary to prove facts which are for practical purposes within the exclusive knowledge of the appellant.
- [28]I cannot claim to be completely on top of the terms of the lease, but what I have seen of it has left me with two impressions: first, that it is not well drafted, and second, that it is an atypical lease, in that it appears to have been drawn to favour the lessee rather than to favour the lessor, the usual situation with commercial leases. These factors are likely to make the determination of the correct interpretation of the relevant parts of the lease more complicated. At this stage of the proceeding however I do not need to decide finally any questions of liability of the appellant. What matters is whether the appellant has shown a sufficient prospect that it has a good defence on the merits to justify setting aside a default decision against it. The adjudicator had a copy of the lease, and I think sufficient material about the situation to conclude that the appellant had shown a good prima facie defence to the claim on the basis of its material, and the additional material now before me only serves to strengthen that conclusion. That does not mean that, if there is a hearing, the appellant will win, but just that there ought to be a hearing to determine whether the respondent is entitled to recover anything, and what, from the appellant.
- [29]Accordingly the appeal should be allowed, the decision of the adjudicator on 18 November 2022, to dismiss the appellant’s application to set aside the default decision, should be set aside, and in lieu, an order made that the default decision made on 20 October 2022 against the appellant be set aside. I consider that the recent affidavit of merits adequately fulfils the function of a Response to the claim, and direct that it stand as the appellant’s response to the claim. The proceeding should be listed for a directions hearing to get the matter back on track, and perhaps to consider whether the appellant should be required to produce any, and if so, what documents at or before the hearing relevant to the question of payments made to it in respect of matters where there is an obligation to pay the respondent as a result of the payment. Other matters may arise for consideration.
- [30]In a situation like this, where the party seeking to set aside a default judgment or decision is at fault, it is not uncommon, at least in a court, for that party still to be required to pay the costs of the other party, even if the default judgment or decision is set aside. It does not appear however that the respondent has incurred any legal costs in relation to the application before the adjudicator, or indeed the appeal. I will therefore make no order as to costs.
Footnotes
[1]For my convenience I shall refer to NDISP Pty Ltd as the appellant, and Bowiebergs Pty Ltd as the respondent.
[2]The address from which Mr D Richards, the director of the appellant, had sent an email to the Southport registry on 5 September 2022.
[3]Queensland Civil and Administrative Tribunal Rules 2009 (“the Rules”) r 43(1), r 45.
[4]“WARNING TO RESPONDENTS
You must respond to this application by completing and lodging Form 7 – Response to minor civil dispute – minor debt within twenty-eight (28) days after you are given a copy of the application. Otherwise, the applicant may apply to the Tribunal for a decision by default against you.”
[5]A direction to that effect was included in the written decision that issued, but according to the transcript it was not mentioned during the hearing, the adjudicator speaking mainly about an adjourned hearing date. The appellant would not have received the warning until he received the copy of the directions.
[6]Transcript p 5, p 6.
[7]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“the QCAT Act”) s 142(3)(a)(i).
[8]Berry v Commissioner of Police [2015] 1 Qd R 388 at [4]; Crime and Corruption Commission v Lee [2019] QCATA 38 at [12], citing appellate authority. See also Campbell v Queensland Building and Construction Commission [2021] QCATA 34 at [17].
[9]Allen v Queensland Building and Construction Commission [2024] QCA 24 at [21]. I am also conscious of the qualification to that general statement at [22], adopting the discussion of an analogous provision in Commissioner of Police v Antoniolli [2021] QCA 237 at [105]–[115].
[10]As to the need for a party to act to protect its interests, see The Pot Man Pty Ltd v Reaoch [2011] QCATA 318 at [9]-[10].
[11]For example, see HL v HR [2024] QDC 176 at [57], [58]; Embrey v Smart [2014] QCA 75 at [67]–[68]. These principles have previously been applied by the Appeal Tribunal: Varsity Electrical Pty Ltd v SEQ Electronics and Entrance Systems Pty Ltd [2020] QCATA 136 at [15], [18].
[12]It is possible for this to be shown other than by an affidavit, such as by a detailed draft defence, or even, in principle, by showing that the claim on its face is bad in law.
[13]This was not a matter addressed during the hearing, so I will decide the appeal on the basis of the matter argued, the prospect of a good defence.
[14]In the Tribunal, which is less formal than a court, the absence of an affidavit is of less significance.
[15]Affidavit of D W Richards affirmed 22 October 2024.
[16]By an affidavit sworn 6 November 2024. Parts of this affidavit appear to go beyond the scope of the claim which has been filed.
[17]It appears that the relevant authority is the National Disability Insurance Agency (“NDIA”).
[18]See lease clause 5.4. Called an Additional Support Contribution.
[19]See Clause 5.2(a) of the lease.
[20]See the QCAT Act Schedule 3, “minor civil dispute” para (a). This is so at least in the case of unliquidated damages.
[21]“SDA rent” is defined in Item 7(b) of the Schedule to the lease
[22]See clause 5.1, which provides for payment no later than 30 days after receipt, not until 30 days, as stated in the appellant’s affidavit paragraph 16.
[23]Given the timing I suspect that this was a coincidence, unless the office was unusually efficient.
[24]Affidavit of Richards para 35.