Vu v Tschernez[2025] QCATA 45

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   This is an application for leave to appeal a decision by an adjudicator in the minor civil dispute jurisdiction.
2. [2]
   The appellant entered into an agreement with the respondent to undertake online guitar lessons. The appellant claimed that he was entitled to a refund of monies paid by him for lessons he did not undertake. The adjudicator dismissed the claim. The appellant seeks leave to appeal and, if leave is granted, to appeal the decision.

Appeals – the statutory framework

3. [3]
   Leave to appeal^[1] is required from a decision in the minor civil disputes jurisdiction.  In deciding whether to grant leave to appeal the following considerations are relevant:

   1. Is there a reasonably arguable case of error in the primary decision?^[2]
   2. Is there a reasonable prospect that the applicant will obtain substantive relief?^[3]
   3. Is leave necessary to correct a substantial injustice to the applicant caused by some error?^[4]
   4. Is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?^[5]
4. [4]
   If leave to appeal is granted, in deciding the appeal on a question of law the Appeal Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision or set aside the decision and remit the matter to the tribunal for reconsideration.^[6] The Appeal Tribunal may set aside the decision and substitute its own decision only if this results in the disposition of the appeal entirely in the appellant’s favour.^[7] An appeal on a question of fact or mixed law and fact must be conducted by way of rehearing.^[8] The Appeal Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision or set aside the decision and remit the matter to the tribunal for reconsideration.^[9]

The decision by the adjudicator

5. [5]
   The adjudicator made the following findings:

   1. The parties entered into a contract for the provision by the respondent to the appellant of guitar lessons;
   2. A monthly charge for the lessons was payable by the appellant by way of a direct debit in a fixed amount;
   3. The appellant would attend lessons in accordance with an agreed scheduling process;
   4. There were a significant number of occasions on which the appellant cancelled lessons principally as a result of a medical condition suffered by the appellant;
   5. On a number of occasions the appellant, either personally or by family members, informed the respondent that he wished to continue with the lessons;
   6. In circumstances where a student was unable to attend a lesson, the student was able to schedule a ‘catch up’ lesson at no cost to the student on the basis that the student would be credited for the cost of the lesson the student could not attend;
   7. The contract was neither difficult to understand nor misleading;
   8. The contract was not unfair simply because it permitted the respondent to unilaterally change the terms;
   9. The contract was sufficiently clear and open that it could not be said to offend the Australian Consumer Law (‘ACL’);
   10. During the term of the agreement the respondent had acknowledged that makeup sessions were readily available to the appellant;
   11. The agreement was not unreasonable and did not offend the ACL and not agreeing to a cash repayment for unused lessons was a result the contract allowed for nor would the Tribunal impose such a result;
   12. The term of the contract providing that the applicant was not entitled to a refund for the value of unused lessons was not unreasonable in circumstances where the appellant had clearly indicated that he could not afford the program or continue with the lessons for reasons peculiar to the appellant and not the respondent;
   13. The adjudicator was not satisfied the contract terms were unfair or unconscionable or capable of being set aside.
6. [6]
   The adjudicator dismissed the proceeding.

The grounds of appeal

7. [7]
   The grounds of appeal identified in the application for leave to appeal or appeal are:

   1. The adjudicator failed to give adequate reasons for his decision;
   2. The adjudicator erred in placing weight on the parties’ conduct in finding that the contract terms were not unfair.
8. [8]
   At the hearing of the appeal, the appellant expanded somewhat on these grounds although it must be said not in a particularly cogent way.

Consideration

9. [9]
   As a preliminary observation it should be noted that some doubt attends whether a music teacher is a trader.^[10] The issue was raised in the proceeding below. The Tribunal determined as a preliminary issue that the Tribunal had jurisdiction to decide the application. The decision was not appealed. The issue need not be further considered in this appeal.
10. [10]
    The parties entered into a written contract, titled ‘Training Agreement’, by which the respondent agreed to provide online guitar lessons to the appellant. Of relevance in this appeal, the contract provided:

    1. Clause 1: all memberships are exclusive and non-transferable. No refunds or makeup lessons will be given for any reason;
    2. Clause 2: lessons will not be provided without prepayment by the student. These payments are to be made by direct debit on a monthly basis;
    3. Clause 4: in order to withdraw from lessons and cancel the direct debit arrangement, the student is required to schedule a 15 minute withdrawal consultation before the 20^th of the month, at which time the student is required to complete a withdrawal form. Withdrawals by email text message or phone will not be accepted. The teacher reserves the right to discontinue lessons at any time for any reason. No refunds will be given for any reason;
    4. Clause 6: a failed payment by a student will result in suspension from classes until the non-payment is rectified;
    5. Clause 8: the student is responsible for scheduling training sessions using the ‘Full Slate’ software. Rescheduling is subject to available spaces and unused class credits expire upon withdrawal or suspension of the student’s account;
    6. Clause 15: the respondent reserves the right to modify ‘these policies’ at any time and the student agrees to be bound by such modifications upon notice being emailed to the student.
11. [11]
    It may be fairly observed that the contract is less than a model of drafting clarity. For example, the contract makes no mention of the term or the monthly fee payable by the student. Presumably the parties intended that the contract continue indefinitely until ended in one of the ways provided for in the agreement. 
12. [12]
    There is an apparent tension between clause 1 which provides that no makeup lessons will be given and clause 8 which permits the student to reschedule lessons. It is difficult to apprehend the difference between a makeup lesson and a rescheduled lesson. Both may be understood as lessons not taken at an originally scheduled time and taken at some subsequent time. At the hearing below the respondent clarified matters somewhat, explaining that ‘no makeup lessons’ meant that lessons would not be scheduled outside the class timetable. If this was intended greater care should have been taken in drafting the provision. Regardless, the intent of the contractual provisions is clear. If a lesson was scheduled and not taken, the student would accumulate a credit for the lesson entitling the student to take the lesson at a later time at no additional cost. This is referred to in clause 8 of the contract as a ‘class credit’.
13. [13]
    The contract could come to an end in one of two ways. By clause 4, the student could withdraw, or the respondent could discontinue lessons at any time. The consequences of the respondent discontinuing lessons are not entirely clear. The contract is silent on whether discontinuance may be temporary or permanent. If the latter the contract fails to provide any clarity as to whether a permanent discontinuance of lessons operated to terminate the contract although this was, presumably, the effect. What is clear is that the respondent could discontinue lessons at any time without reason. In the event of withdrawal or discontinuance no refunds would be payable to the appellant. Clause 8 provided that in the event of withdrawal unused class credits would expire. Clause 8 made no reference to the discontinuance of lessons by the respondent. 
14. [14]
    Despite the drafting issues, when clauses 4 and 8 are read together, the meaning is clear. In circumstances where a student withdrew from the agreement, the student was not entitled to a refund of monies equivalent to the value of any unused class credits. Similarly, if the respondent discontinued the lessons the student was not entitled to a refund for the value of unused class credits. 
15. [15]
    Before the learned adjudicator was a letter from the appellant’s solicitors to the respondent dated 15 May 2023 setting out a detailed chronology of the events surrounding the formation of the agreement and what transpired thereafter. As to the contents of the letter, the following matters are relevant:

    1. On 9 February 2022 the appellant’s brother emailed the respondent advising that the appellant wished to utilise accrued unused class credits to continue the lessons however could no longer afford the monthly lesson payments;
    2. On 19 February 2022 the respondent emailed the appellant advising that as he had been unable to contact the appellant he had commenced processing the appellant’s withdrawal;
    3. There does not appear to have been further contact between the parties until 6 June 2022 when the appellant emailed the respondent about resuming lessons. Communications between the parties ensued on a sporadic basis;
    4. On 20 March 2023 the appellant’s brother emailed the respondent advising that the appellant’s health was such that he would be unable to resume lessons ‘for the foreseeable future’ and that the appellant ‘… hope(d) to recover the funds paid for the many lessons not yet conducted…’ and asking for the respondent to ‘(p)lease advise the best method for this’;
    5. On 20 March 2023 the respondent replied to the appellant referring to the relevant provisions of the agreement relating to refunds, makeup lessons and unused class credits. Thereafter, email communications ensued between the parties which were ultimately unproductive in resolving the issues between the parties. 
16. [16]
    The evidence of the appellant below was that he did not withdraw from lessons in the manner provided for in clause 4 of the agreement. It does not appear contentious that there was neither a withdrawal consultation nor did the appellant complete a withdrawal form as contemplated by the contract. The respondent said that after receiving the email from the appellant on 9 February 2022 he proceeded to withdraw the appellant.^[11] It may be accepted therefore that the appellant did not withdraw from lessons in accordance with clause 4.
17. [17]
    The parties appear to have reached a stand-off in March 2023 at which point the respondent was not prepared to provide a refund to the appellant for the value of unused class credits. In June 2023 the appellant commenced the proceeding below.
18. [18]
    In the application for minor civil dispute filed below the appellant said that the respondent had engaged in misleading or deceptive conduct on the basis that the respondent refused to provide a refund for the value of unused class credits. The appellant also asserted that the terms of the agreement were unfair.
19. [19]
    The appellant’s contentions are clarified in the letter from his solicitors to the respondent to which I have earlier referred. Reliance was placed by the appellant on an email from the respondent to the appellant dated 30 July 2019 sent after the appellant informed the respondent that he was unable to attend a scheduled lesson. In the email the respondent stated that the appellant could ‘catch these sessions up at another time’. It was asserted that the appellant had relied upon that representation and subsequently sought to undertake makeup lessons. It was said by the appellant that the respondent’s 30 July 2019 email was misleading and deceptive, and that makeup lessons were not made available and that the respondent had refused to refund any monies to the appellant. As to the assertion that the terms of the contract were unfair, the solicitors’ letter referred to various clauses of the agreement and stated that the terms were unfair and void.  
20. [20]
    In Sanctuary Cove Golf and Country Club Pty Ltd v Machon^[12] the QCAT Appeal Tribunal stated (footnotes omitted):

[34] The FTA does not, in our view, provide relevantly for an application to be made to the Tribunal in relation to the matter. Section 51 of the FTA confers the power to make declarations relating to consumer contracts on the District Court. Once a declaration has been made that a term is unfair, other remedies may be applied for. The right to apply for a declaration and the remedies which can be applied for once an unfair term declaration is made, is the relief provided by the FTA in relation to an unfair term. There is no jurisdiction conferred on the Tribunal to grant relief under the unfair term provisions of the ACL (Qld) by the FTA. In our view, the use of the word “application” means that jurisdiction is not conferred on the Tribunal where the defendant relies upon unfair term provisions as a defence.

21. [21]
    The Tribunal did not have jurisdiction to determine the appellant’s claim based upon the unfair term provisions of the ACL (Qld). It follows that the appellant’s claim relying upon those provisions could not succeed. 
22. [22]
    As to the appellant’s claim that the respondent engaged in misleading and deceptive conduct in breach of s 18 of the ACL, and as has been referred to earlier in these reasons, the contract provided that the appellant could reschedule lessons and would have the benefit of unused class credits in respect of such lessons. As the contract made clear, this was subject to the agreement remaining on foot. This in turn required the appellant to continue to make the monthly lesson payments.
23. [23]
    Whether conduct is misleading is required to be determined by reference to the relationship between the parties, the context in which the conduct took place, the reasonably known characteristics of the person to whom the conduct was directed and the effect on a reasonable person in the position of the person.^[13] There must also be a sufficient nexus between the conduct and the claimed misconception or deception.
24. [24]
    The learned adjudicator found that the respondent acknowledged makeup lessons were readily available to the appellant. In making this finding, and while not specifically referring to the respondent’s email of 30 July 2019, it is apparent that the adjudicator did not accept that the respondent had engaged in misleading or deceptive conduct in offering the availability of makeup lessons.
25. [25]
    The adjudicator gave the appellant the opportunity during the hearing below to clarify the basis upon which he sought recovery of the value of the unused class credits. The appellant stated that the terms of the contract were unfair and said ‘We just said that, you know, we couldn’t afford it anymore and, you know, he could’ve said, “If you can’t afford it, then I will withdraw you or...”’.^[14] The appellant did not refer to the July 2019 email nor did he assert that the content of the email was deceptive and misleading or that he had been induced by the email not to withdraw from the agreement at an earlier point in time. Indeed, it was a central pillar of the appellant’s claim that he had accumulated unused class credits. The appellant’s assertion that the respondent’s email of 30 July 2019 was misleading and deceptive was fundamentally inconsistent with the case he was advancing.
26. [26]
    There was no error by the adjudicator in finding that the respondent had acknowledged the availability of makeup lessons. The contract clearly provided for this. The contract also clearly provided that a student could not ‘bank’ credits for unused lessons to utilise at a later time in lieu of paying the monthly lesson fee. Nor could the student withdraw from the agreement and ‘cash out’ the value of unused lessons. 
27. [27]
    It is unclear from the evidence below what transpired after 19 February 2022 when the respondent emailed the appellant advising that he had commenced processing the appellant’s withdrawal. As has been referred to earlier in these reasons, given the failure by the parties to engage in the process stipulated by the contract in relation to withdrawal it appears that that there was no effective withdrawal from the agreement as provided for in clause 4. The evidence suggests that after a period of some four months the appellant once again contacted the respondent with a view to resuming lessons. Whether the parties considered the agreement to be at an end and a new agreement would be entered into is not apparent from the evidence. Curiously, the appellant did not make mention of the February 2022 email in the ensuing communications with the respondent. If he considered the respondent to have been in breach of the agreement by taking unilateral steps to withdraw him from the agreement there was no assertion by the appellant to this effect nor did he take steps to enforce what he considered to be his rights under the contract. Indeed, the appellant appears to have approached matters with a degree of passivity. It was not until over one year after receiving the February email that the appellant communicated his inability to return to lessons and sought recovery of the value of the lessons the appellant had not taken. 
28. [28]
    Other than the communications to which reference has been made regarding withdrawal neither party purported to terminate the agreement either pursuant to the terms of the contract or at common law. Nor did either party argue that they had such an entitlement. The appellant’s case was limited to the assertion that the terms of the contract were unfair and that the respondent engaged in misleading or deceptive conduct. For the reasons articulated neither case had any prospect of success.  
29. [29]
    The appellant says that the adjudicator failed to give adequate reasons for his decision. The failure to give adequate reasons is an error of law. Reference has been made earlier in these reasons to the findings made by the adjudicator. The adjudicator set out his findings and the reasons for the findings and his conclusions based upon such findings. The reasons for the decision were adequate.
30. [30]
    It may be accepted that the adjudicator based his decision principally upon his conclusion that the contract terms were not unfair. If there was error by the adjudicator in determining the matter by reference to relief sought by the appellant which was beyond the power of the Tribunal to grant, this did not result in injustice to the appellant. The appellant’s claim for relief based on the assertion that the contract terms were unfair could not succeed. Similarly, if there was error by the adjudicator in not determining the claim based on misleading and deceptive conduct, this did not result in injustice to the appellant. That claim was without prospect of success.
31. [31]
    For the reasons set out the dismissal of the proceeding below has not resulted in substantial injustice to the appellant. There is no question of general importance upon which further argument, and a decision of the Appeal Tribunal, would be to the public advantage.
32. [32]
    Leave to appeal is refused.