| | | NCAT Legal Bulletin Issue 8 of 2020
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| The NCAT Legal Bulletin provides a summary of relevant and interesting case law of significance to the work of the NSW Civil and Administrative Tribunal.
This issue features case summaries of recent decisions from the Supreme Court of New South Wales and New South Wales Court of Appeal, including: - The Owners Corporation – Strata Plan 64807 v BCS Strata Management Pty Ltd [2020] NSWSC 1040 - in which the Supreme Court found that it did not have jurisdiction to determine part of an application which raised similar issues to those raised for determination in proceedings already commenced in NCAT, and transferred the remaining part of that application to NCAT.
- The Owners – Strata Plan No 70871 v Turek [2020] NSWSC 1027 - in which the Supreme Court allowed an appeal from an NCAT Appeal Panel, which in turn was an appeal from the Consumer and Commercial Division. In doing so, Adamson J discussed the Tribunal's power to adjourn, rather than dismiss proceedings in circumstances where a precondition to the exercise of its power to make the orders requested has not been fulfilled (in this case, this was the requirement in s 131(2)(b) of the Strata Schemes Management Act 2015 that a licence to use common property must have been refused by the owners corporation before the Tribunal can order that the licence be granted).
- Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141 - in which the Supreme Court discussed the role of the Court, and to a lesser extent the Tribunal, in dealing with disputes between commercial landlords and tenants under the Retail and Other Commercial Leases (COVID-19) Regulation 2020, particularly arising from failed renegotiations of rent.
- Michael Kuehn & Jennifer Kuehn v Masterton Homes (NSW) Pty Ltd t/as Masterton Homes (NSW) Pty Ltd [2020] NSWSC 1049 - in which the Supreme Court held that the parties to proceedings in the Consumer and Commercial Division below did not settle the proceedings, despite the respondent telling the Senior Member at the hearing that they had "reached agreement". In coming to this conclusion, Hammerschlag J set out the general principles governing the formation of binding agreements, including in relation to the settlement of court proceedings.
- Council of the Law Society of New South Wales v Zhukovska [2020] NSWCA 163 - in which the Court of Appeal allowed an appeal from a decision in the Occupational Division, holding that the Tribunal (a) was not required to order that the respondent lawyer be removed from the roll, but (b) erred in failing to impose conditions (rather than non-binding recommendations) on the issue of a new practising licence that would give the respondent a real chance of establishing that she was fit to practise in the future.
This issue also provides links to a number of summaries published separately by the NSW Court of Appeal Decisions of Interest Bulletin. |
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Supreme Court of New South Wales
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| The Owners Corporation – Strata Plan 64807 v BCS Strata Management Pty Ltd [2020] NSWSC 10407 August 2020 - Williams J
In sum: The Supreme Court dismissed part of the plaintiff’s application, and transferred the remaining part to NCAT, on the basis that (a) the issues arising under the first part were the same as issues raised for determination in NCAT proceedings commenced the day before the Supreme Court proceedings (despite those proceedings involving a different respondent), and (b) the issues arising under the remaining part were not the same as those before NCAT, but related to that matter, and NCAT had jurisdiction to determine them. In doing so, the Supreme Court considered the application of cl 5(3) in Sch 4 to the NCAT Act to interim applications.
Facts: The owners corporation commenced proceedings in the Supreme Court on 4 August 2020 against the strata managing agent, previously appointed by the owners corporation under Part 4 of the Strata Schemes Management Act 2015 (NSW) (the SSMA) ([3]-[5]).
In the Supreme Court proceedings, the owners corporation sought:
(a) a declaration that its AGM scheduled on 8 August was validly cancelled (prayer 2), or an order that the AGM be cancelled (prayer 3);
(b) an order that the agent notify the lot owners of the cancellation (prayer 4);
(c) an order that the agent pay the owners corporation’s costs of calling the meeting (prayer 5); and
(d) an order that the agent deliver to the chairman of the strata committee a list of the lot owners and their contact details (prayer 6) ([6]).
At the outset of the hearing, the Court raised with the parties the question of whether it had jurisdiction to hear some or all of the owners corporation’s claims, having regard to proceedings commenced in NCAT on 3 August, and whether any claims in respect of which the Court did have jurisdiction should be transferred to NCAT ([8]).
The applicants in the NCAT proceedings were three lot owners and members of the strata committee, and the respondents were the owners corporation and three other strata committee members ([16]).
The interim orders sought in the NCAT proceedings included:
(a) an order under ss 24 and 232 of the SSMA that a strata committee meeting held on 31 July and the resolutions purportedly passed at that meeting (including a resolution to cancel the AGM) was invalid; and
(b) an order that the AGM be instructed to proceed ([25]).
Substantive orders were also sought under ss 237 and 238 of the SSMA that certain officers be removed from the strata committee, and that the defendant be appointed as compulsory managing agent ([26]).
Held (finding that the Supreme Court did not have jurisdiction to determine certain matters in the proceedings, and transferring the balance of the proceedings to NCAT):
(i) Clause 5(3) of Schedule 4 to the NCAT Act provides ([30]):
“If, at the time when an application was made to the Tribunal for the exercise of a Division function, no issue arising under the application was the subject of a dispute in proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue.”
(ii) This clause applies to the Supreme Court: see cl 5(1) and (2) of Sch 4 and Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Ltd [2015] NSWSC 289 at [93] ([31]).
(iii) As the Supreme Court proceedings were commenced one day after the NCAT proceedings, it followed that, if or to the extent that the issues to be determined in the Supreme Court proceedings were the same as the issues shown in the applicants’ claim in NCAT, or recorded in the record made by NCAT, are the same, the Supreme Court had no jurisdiction to determine those issues in this proceeding ([33]).
(iv) It would be inconsistent with the purpose of cl 5(3) if there could be concurrent proceedings in NCAT and the Court in respect of the same substantive issues, and a consequent risk of inconsistent findings, merely because the issues arose under a form of application to NCAT that was styled as an interim application ([45]).
(v) Clause 5(3) should not be construed as excluding interim applications (and this is not the effect of Parker J’s decision in Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Ltd [2015] NSWSC 289) ([41]-[42], [45]).
(vi) The substance of the factual and legal issues arising under the interim application in the NCAT proceedings were the same as the issues raised for determination by the prayers for relief in prayers 2-5 of the Summons filed in the Supreme Court proceedings. That is to say, both proceedings raised the issues of whether the defendant had authority to issue the notice of AGM in the first place and, if so, whether the strata committee had validly resolved to cancel that meeting ([46]-[47]).
(vii) This was not affected by the fact that the defendant strata managing agent was not a party to the NCAT proceedings, as the application of cl 5(3) of Sch 4 to the NCAT Act is governed by the substance of the issues rather than the identity of the parties ([48]).
(viii) Accordingly, Williams J found that the Supreme Court did not have jurisdiction to determine the issues raised by prayers 2-5 of the summons, and those claims for relief were dismissed ([50]).
(ix) As the issue raised by prayer 6 did not arise in the NCAT proceedings, the Supreme Court did have jurisdiction to determine that claim for relief. However, as that claim related to the matters that were the subject of the NCAT proceedings, and NCAT also had power under ss 181 and 188 of the SSMA to grant relief of the kind sought in prayer 6, the balance of the proceedings (i.e. the claim for relief in prayer 6) was transferred to NCAT pursuant to cl 6(2) of Sch 4 to the NCAT Act ([51]).
Read the decision on the NSW Caselaw website. |
| The Owners – Strata Plan No 70871 v Turek [2020] NSWSC 1027
5 August 2020 - Adamson J
In sum: The Supreme Court granted leave to appeal and allowed an appeal from a decision of an NCAT Appeal Panel, which in turn was an appeal from a decision in the Consumer and Commercial Division regarding the grant of a licence for use of common property under s 131 of the SSMA. Adamson J held that the Tribunal at first instance did not err in adjourning the proceedings, rather than dismissing them, in circumstances where the owners corporation had not yet refused to grant the licence as required by s 131(2)(b). However, the Tribunal did err by making conflicting statements that costs should be awarded “in the cause” and that the issue of costs was reserved, and the Appeal Panel should have corrected this discrepancy.
Facts: The defendants, Mr and Ms Turek (the Tureks), are lot-owners in a mixed residential/retail strata plan operated by the plaintiff owners corporation ([1]).
The Tureks operate a mini-supermarket/convenience store from their unit, and wanted to be allowed to store commercial waste in two bins in the bin area within the common property where the residential rubbish bins were stored ([6]).
In April 2019, the Tureks commenced proceedings in NCAT seeking an order pursuant to s 131 of the SSMA that they be granted a licence to store the rubbish bins on common property ([7]).
At the hearing, the solicitor for the owners corporation submitted that NCAT had no power to make an order under s 131 in circumstances where the owners corporation had not yet refused to grant the Tureks a licence, as required by s 131(2)(b). The Tribunal ordered that the proceedings be adjourned, that the owners corporation arrange an EGM to consider the proposed licence (the EGM order), and that the costs of that day’s proceedings be “costs in the cause” ([9], [14]).
The owners corporation sought reasons for these orders, which were initially refused on the basis that the orders were made “by consent”. However, after reviewing the recording and transcript of the hearing, the Tribunal determined that it would provide reasons ([16]-[17]).
In those reasons, the Tribunal said that it would leave the determination of costs “for determination on the next occasion or at the completion of the proceedings” ([19]).
The owners corporation applied for leave to appeal to the Appeal Panel, which was refused. Amongst other comments, the Appeal Panel stated that the owners corporation had consented to the EGM order. The Appeal Panel acknowledged the contrast between the Tribunal’s order for “costs in the cause”, and its later statement in its reasons that costs were reserved, but did not amend the original costs order ([24]-[33]).
The Appeal Panel ordered that the owners corporation pay the costs of the appeal proceedings, on the basis that special circumstances existed because the notice of appeal failed to specify grounds, and no grounds of appeal were made out ([34]).
The owners corporation sought leave to appeal to the Supreme Court.
Held (granting leave to appeal on some grounds but not others, allowing the appeal in part, and setting aside and substituting the Appeal Panel’s orders):
(i) Leave to appeal was granted because the application raised questions including ([55]):
(a) whether the Tribunal can adjourn proceedings on the ground that a precondition for the exercise of its power to make the order sought has not yet been fulfilled; and
(b) the approach to be taken where there is a disparity between the form of an order and the reasons given for the order.
Whether the Tribunal had power to adjourn the proceedings pending a decision by the owners corporation to refuse the Tureks’ application for a licence – YES
(ii) Had the Tribunal purported to grant a licence, notwithstanding that the owners corporation had not yet refused to grant a licence, the Tribunal would have been guilty of jurisdictional error because it would have mistaken the limits of its powers: SSMA, s 131 (2)(b); Colbert v MacDonald [2016] NSWSC 1291 at [86]; Craig v South Australia (1995) 184 CLR 163 at 179 ([56]).
(iii) However, s 131(2)(b) of the SSMA does not prevent the Tribunal from doing anything other than making an order granting a licence under s 131(1). While it was open to the Tribunal under s 55 of the NCAT Act to dismiss the proceedings, this was not the only course open – the Tribunal also had the choice to adjourn the proceedings ([59], [63]).
(iv) There is no express prohibition in s 131 on the commencement of proceedings in NCAT before the owners corporation has refused an application for a licence. Nor was Adamson J persuaded that there is any basis to imply one ([62]).
(v) Section 131 does not create a jurisdictional fact – the Tribunal had jurisdiction to entertain the Tureks’ claim but it did not have the power to make an order under s 131 until the owners corporation had refused to grant them a licence ([59]-[60]).
(vi) Section 36 of the NCAT Act provides that the Tribunal is to facilitate the “just, quick and cheap resolution of the real issues in the proceedings”. It would seem to be inconsistent with this principle for the Tribunal to dismiss the proceedings, if the result were simply to defer the filing of another application until the owners corporation refused to grant the Tureks a licence ([63]).
(vii) This analysis is consistent with Eadie v Harvey [2017] NSWCATAP 201, which held, in accordance with the terms of s 131, that the Tribunal had no power to order a licence if the owners corporation had not first refused to grant it, and that any such order was ultra vires ([64]).
(viii) Adamson J was not satisfied that the Tribunal’s decision to adjourn the proceedings was legally erroneous ([67]).
Whether the Tribunal had power to make the EGM order – unnecessary to decide, but “questionable”
(ix) To the extent that the Appeal Panel refused to consider the owners corporation’s challenge to the EGM order on the misapprehension that the owners corporation had consented to it, the Appeal Panel was in error. Because of its erroneous conclusion that the owners corporation had consented to the EGM error, the Appeal Panel did not address the owners corporation’s substantive submission that NCAT did not have power to make the EGM order. The Appeal Panel’s discretion to refuse leave in respect of this ground miscarried, giving rise to a question of law ([71]).
(x) Adamson J also said it was “questionable” whether the Tribunal had power to make the EGM order, since the Tribunal did not identify any source of power for the EGM order and the Appeal Panel did not address the substantive question of power at all. However, since the owners corporation had already convened an EGM to consider the licence, the point was moot, and Adamson J was not persuaded that leave should be granted in respect of this ground ([75]).
Whether the Appeal Panel ought to have set aside the Tribunal’s costs order – YES
(xi) A disparity between the form of an order and the reasons for the order gives rise to a question of law. The Appeal Panel’s discretion to refuse leave miscarried because it was based on the erroneous proposition that the Tribunal’s reasons could provide a sufficient gloss on the costs order to alter its terms ([80]).
(xii) Accordingly, Adamson J said that leave should be granted in respect of this ground to correct the error made by the Tribunal (which the Appeal Panel accepted had been made, but did not itself correct) ([80]).
Whether the Appeal Panel’s own order for costs should be varied – YES
(xiii) Adamson J found that the Appeal Panel’s discretion miscarried in deciding to order costs, because ([82]):
(a) contrary to the Appeal Panel’s finding, the owners corporation’s solicitor’s submissions were sufficiently clear for their purpose; and (b) the Appeal Panel acted on an erroneous basis that the owners corporation had consented to the EGM order which it was appealing; and (c) both these matters significantly influenced the Appeal Panel’s finding of special circumstances.
(xiv) Accordingly, Adamson J held that the Appeal Panel’s costs order should be set aside, and that no costs of the proceedings in the Appeal Panel should be ordered ([83]).
Read the decision on the NSW Caselaw website.
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| Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 114126 August 2020 - Robb J
In sum: The Supreme Court, having previously granted relief to the appellant against forfeiture of leased commercial premises, made additional orders requiring the parties (amongst other things) to meet within 7 days to attempt to renegotiate their lease agreement in accordance with the COVID-19 regulatory regime. In doing so, Robb J discussed the role of the Court (and to a lesser extent the Tribunal) in dealing with disputes between landlords and tenants under that regime, particularly in relation to failed negotiations as to rent.
Facts: The plaintiff (Sneakerboy) and defendant (the Lessors) were parties to a commercial lease agreement in respect of retail premises in the Sydney CBD. Over the term of the lease, Sneakerboy faced ongoing cash flow difficulties, and was frequently behind on rent payments. In February 2020, Sneakerboy experienced a sudden decline in revenue, which it attributed to the escalation of the COVID-19 pandemic. In March 2020, Sneakerboy decided to cease trading and began to remove its products from the store, the Lessors treated Sneakerboy as having vacated and abandoned the premises, and served Sneakerboy with a notice of termination.
On 25 March 2020, the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (NSW) came into force. Relevantly, it amended the Retail Leases Act 1994 (NSW) by inserting a new s 87 into that Act, to provide for the making of regulations. On 7 April 2020, the National Cabinet adopted the National Cabinet Mandatory Code of Conduct: SME Commercial Leasing Principles during COVID-19 (the Code).
The principles in the Code apply to negotiating amendments in good faith to existing leasing arrangements to aid the management of cash flow for “SME tenants” (being tenants that are suffering financial stress or hardship as a result of the COVID-19 pandemic as defined by their eligibility to participate in the JobKeeper programme, with an annual turnover of up to $50 million).
On 24 April 2020, the New South Wales Government promulgated the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (the COVID-19 Regulation), which gave legal effect to the Code. This was amended by the Retail and Other Commercial Leases (COVID-19) Amendment Regulation 2020, which was published on 3 July 2020 ([59]).
Robb J previously published reasons for a decision in which his Honour found that Sneakerboy was entitled to an order against the Lessors relieving it from forfeiture of the lease ([1]).
There were a number of outstanding issues, including whether the Court should make any orders concerning the parties’ compliance with the COVID-19 regime, and if so what those orders should be ([5]). The contest between the parties required the Court to consider its role in the COVID-19 regime and whether, in the case of disputes between landlords and tenants subject to the COVID-19 regime, it has jurisdiction to determine the variations that ought to be made to the lease ([10]). This summary outlines the Court’s comments only in relation to that issue.
Held (ordering that the parties meet within 7 days to attempt to renegotiate the Lease, and making additional orders about reinstatement of a bank guarantee):
(i) Clause 7 of the COVID-19 Regulation imposes an obligation on the parties to commercial leases, if one party so requests, to renegotiate rent and other terms “in good faith” before taking a prescribed action (as defined in cl 3) such as terminating the lease ([69]).
(ii) Both parties are required to engage in the renegotiation in good faith. In doing so, the parties must have regard to the economic impacts of the COVID-19 pandemic and the leasing principles set out in the Code. The requirement in cl 7(4)(a) that the parties must have regard in good faith to the economic impacts of the COVID-19 pandemic is quite general, and may extend beyond even the very liberal requirements of the Code ([72]).
(iii) Leasing principle 3 in the Code would require the lessors to offer Sneakerboy a proportionate reduction in rent payable in the form of waivers and deferrals, based on "the reduction in the tenant's trade during the COVID-19 pandemic period and a subsequent reasonable recovery period" ([73], [103]).
(iv) The Code defines the "COVID-19 pandemic period" as “the period during which the JobKeeper program is operational" ([104]).
(v) In calculating the "tenant's trade" during this period, for the purposes of leasing principle 3, it is appropriate to take into account the whole of Sneakerboy's turnover from its retail premises and internet business. Similarly, the phrase “business conducted by the lessee” in cl 4(1)(b)(iii) of the COVID-19 Regulation (which defines an “impacted lessee”) is more likely to refer to the whole of the lessee’s business than the business conducted at the particular premises the subject of the lease ([113], [119]).
(vi) Robb J noted that, while the process of renegotiation may not be problematic in cases where the turnover of a tenant’s business is usually consistent, it is likely to present more difficulties where a business’s turnover has tended to fluctuate in the past (e.g. for seasonal businesses, like clothing stores). This may require analysis other than a direct comparison between the turnover in the months immediately before and after the onset of the COVID-19 pandemic ([122]).
(vii) The COVID-19 regime does not contemplate that the rent payable under retail leases will be proportionately reduced on the basis of separate monthly calculations comparing turnover with the equivalent month in the preceding year. Rather, it contemplates a single renegotiation for the COVID-19 pandemic period and a subsequent reasonable recovery period. However, the COVID-19 regime does not prevent the parties to a commercial lease from agreeing some other formula for reduced rent, or from initiating more than one renegotiation ([143]).
(viii) It is not entirely clear what is to happen if the parties do not succeed in renegotiating the lease, or a party refuses to enter into the renegotiation, or does not do so in good faith. Clause 8(1) of the COVID-19 Regulation clearly states that Part 8 (Dispute resolution) of the Retail Leases Act extends to an impacted commercial lease dispute, as if it were a retail tenancy dispute within the meaning of that part. However, the effect of cl 8 is not entirely clear ([87], [79]).
(ix) It seems to at least be clear that, if the renegotiation required by cl 7 fails, a party has a right to refer the dispute to mediation by the Registrar under the Retail Leases Act, and proceedings cannot be commenced in a court until the Registrar has certified that the mediation has failed, or the court is otherwise satisfied that the mediation it is unlikely to resolve the dispute ([89]).
(x) According to Robb J, it is doubtful that the Tribunal has the necessary powers to resolve a dispute arising out of a failed renegotiation, even though it is possible that the drafters of cl 8 of the COVID-19 Regulation intended that disputes could be resolved in the Tribunal ([89]).
(xi) The Code, under the heading “Binding Mediation”, provides:
“Where landlords and tenants cannot reach agreement on leasing arrangements (as a direct result of the COVID-19 pandemic), the matter should be referred and subjected (by either party) to applicable state or territory retail/commercial leasing dispute resolution processes for binding mediation…”
However, the COVID-19 regime in New South Wales does not provide for binding mediation. Generally, it is not clear how failures in the required renegotiation process are to be resolved ([91]).
(xii) It was not necessary for Robb J in this case to decide the circumstances in which it or any other court might have jurisdiction to resolve a dispute arising from a failed renegotiation under cl 7 of the COVID-19 Regulation ([90]).
(xiii) The Court does not have jurisdiction to make orders varying the terms of commercial leases that are subject to the COVID-19 regime. It is for the parties to renegotiate the terms, and in the absence of agreement, a dissatisfied party must refer the dispute to mediation by the Registrar. Thereafter, it may be that the Tribunal or the Court has some jurisdiction to resolve the dispute, although that question was not in issue in these proceedings ([158]).
(xiv) Accordingly, Robb J declined to make the form of order requested by Sneakerboy, which “would have the effect that the COVID-19 regime would actually be implemented by order of the Court”, and would change the terms of the Lease for the relevant period in accordance with what Robb J found the parties “notionally would have agreed” as a rent reduction ([156]).
(xv) Instead, Robb J restricted himself to making the order requested by the Lessors, that within 7 days of its decision, the parties meet for the purpose of attempting to renegotiate in good faith the terms of the Lease pursuant to the COVID-19 Regulation. That was the only type of order the Court could make in the circumstances ([159]).
(xvi) If the parties do not successfully renegotiate the Lease, the Lessors will not be able to terminate the reinstated Lease for non-payment of rent as long as cl 6 of the COVID-19 Regulation is in force. If the renegotiation fails, that may lead to mediation by the Registrar and possibly to proceedings in the Tribunal or some court ([160], [163]).
(xvii) If the parties do successfully renegotiate the Lease, Robb J noted that this may be on a different basis than the notional renegotiation that Robb J determined in its reasons would have been required by the COVID-19 regime had the Lease not been terminated (for the purpose of determining what orders to make regarding the reinstatement of a bank guarantee, see [7], [132]-[155]) ([168]).
Read the decision on the NSW Caselaw website.
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| Michael Kuehn & Jennifer Kuehn v Masterton Homes (NSW) Pty Ltd t/as Masterton Homes (NSW) Pty Ltd [2020] NSWSC 104911 August 2020 - Hammerschlag J
In sum: In addressing a question transferred to it by the Tribunal under cl 6(1) of Sch 4 to the NCAT Act, the Supreme Court held that the parties had not settled the proceedings between them, despite the respondent telling the Senior Member at the Tribunal hearing that they had “reached agreement”. In coming to this conclusion, Hammerschlag J set out the general principles governing the formation of binding agreements, including in relation to the settlement of court proceedings.
Facts: In 2015, Michael and Jennifer Kuehn (the Kuehns) contracted with the first defendant (Masterton) to build a house for them in Nowra. The Kuehns say that Masterton did not build according to the contract and breached various statutory warranties under the Home Building Act 1989 (NSW) ([3]).
Michael Kuehn brought proceedings against Masterton in NCAT, where both parties were legally represented ([4]-[5]).
At the hearing, an exchange occurred in which Mr Kuehn’s solicitor informed the Senior Member that the parties had “reached agreement”, which “[had] to be reduced to a Deed but [was] intended to take effect, as far as the principal elements, immediately” ([18]).
Masterton subsequently said, and the Kuehns denied, that they had reached a binding compromise at the hearing ([6]). NCAT made orders transferring the matter to the Supreme Court pursuant to cl 6(1) of Sch 4 to the NCAT Act, and granting leave for Jennifer Kuehn to be added as a party ([10]).
The Kuehns said that if they compromised their claims, this occurred as a result of breaches of duty by their legal advisers, whom they joined as defendants in the Supreme Court ([13]).
The question for the Supreme Court was whether the Kuehns had compromised, in binding fashion, their claim against Masterton that it built them a defective house thereby causing them to suffer loss and damage ([2]).
Held (finding that there was no settlement of the proceedings between the parties, and dismissing the Kuehns’ claims against their lawyers):
(i) It was common ground that, if no binding compromise was made between the parties, the proceedings against the lawyers should be dismissed ([15]).
(ii) On reviewing the transcript of the Tribunal proceedings, some of the things said could be viewed as consistent with an intention immediately to be bound. However, there were a significant number of contra-indications, including other utterances and the parties’ subsequent conduct (especially Masterton’s), which undermined a conclusion that the parties had an intention to be bound without there having to be a formal instrument between both of the Kuehns and Masterton ([33]).
(iii) No binding compromise or settlement of the claims against Masterton was made by the parties. First, Jennifer Kuehn was not party to whatever arrangement was made at the hearing, and her agreement was to be achieved by execution of a deed. Second, and in any event, the objectively ascertainable intention of the alleged contracting parties was that there would not be a binding settlement unless all the terms of their agreement were embodied in a formal deed ([14]).
(iv) More extensively, Hammerschlag J summarised the following factors as pointing against an immediately binding agreement between the parties and heavily outweighing those pointing in the opposite direction ([86]):
(a) omission of Jennifer Kuehn from the arrangement;
(b) absence of any articulation of agreement as to how Jennifer Kuehn would become a party to the alleged settlement;
(c) express contemplation that a deed would be signed;
(d) contemplation that further terms had to be agreed and embodied in the deed;
(e) omission from the terms articulated of matters of importance, including procedures for review of the certification of the slab and Jennifer Kuehn’s position in relation to the proceedings;
(f) articulation of obligations, especially Masterton’s payment obligations, performance of which was dependant on the execution of the deed;
(g) lack of precision in the articulation of the terms of the agreement, including the nature of additional terms that were to be included and the entitlement on the part of the Kuehns to use material relied upon with respect to the slab;
(h) statements made by the Senior Member inconsistent with immediate bindingness to which no one present demurred;
(i) adjournment of the proceedings for a further hearing on the merits if the matter did not resolve;
(j) subsequent conduct, in particular the proffering of the draft deed containing terms inconsistent with immediate bindingness of what was articulated on 29 July 2019.
(v) In coming to this conclusion, Hammerschlag J noted a series of well-established principles, not disputed by the parties, which govern the formation of “binding agreements” (including settlement of proceedings between parties) (citations excluded):
(a) There are three categories of cases where parties may agree on contractual terms and also agree that the matter will be dealt with by a formal contract (Masters v Cameron (1954) 91 CLR 353) ([26]):
i. Where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.
ii. Where the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document.
iii. Where the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
(b) Subsequent cases have spoken of a fourth category, namely, where parties enter into an immediately binding agreement on certain specified terms and on such other terms as are either subsequently agreed by the parties or able to be determined by the Court ([28]).
(c) Whether an agreement has been entered into is to be objectively assessed. The objective intention of the parties is fact-based, found in all the circumstances, including by drawing inferences from their words and their conduct in their making of the agreement ([29(1)]).
(d) In ascertaining the intention of the parties, whether from a series of communications or from a single document, regard can be had to the commercial circumstances in which the parties exchanged their communications and to the subject matter of the supposed contract ([29(2)]).
(e) The Court will not write a contract for parties who have failed to reach agreement. Failure to reach agreement includes where there is obscurity or incompleteness in the agreement ([29(3)]).
(f) The existence of important matters on which the parties have not reached consensus in their informal agreement will render it less likely that they intended immediately to be bound before the execution of a formal document. That the terms have not been fully or well stated is material to whether a contract has been made. The more important the term, the less likely it is that the parties will have left it over for future decision, but there is no legal obstacle which prevents the parties agreeing to be bound now while deferring important matters ([29(4)]).
(g) Regard may be had to the parties’ subsequent communications to assess whether it was in their contemplation that they were not to be bound until all the essential preliminaries had been agreed to or until the formal contract had been drawn up embodying all the matters incidental to the transaction ([29(5)]).
(h) An agreement may contain an implied term requiring the parties to do all cooperative acts necessary to bring about the contractual result. A duty to cooperate may require parties to execute a formal instrument but does not apply to the negotiation of varied or additional terms ([29(6)]).
Read the decision on the NSW Caselaw website.
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| New South Wales Court of Appeal
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| Council of the Law Society of New South Wales v Zhukovska [2020] NSWCA 1634 August 2020 - Macfarlan JA, Leeming JA, McCallum JA
In sum: The Court of Appeal allowed an appeal from a decision in the Occupational Division of NCAT, in which the Tribunal made non-binding recommendations to the Law Society instead of imposing conditions on the issue of a new practising licence to the respondent. In circumstances where the Tribunal had found that the respondent was not presently fit to practise, but was not satisfied that she was permanently or indefinitely unfit to practise, the Court of Appeal held that the Tribunal had erred in failing to impose conditions on the issue of a new practising licence that would give the respondent a real chance of establishing that she was fit to practise in the future.
Facts: The Law Society brought disciplinary proceedings in the Occupational Division of NCAT against the respondent, a lawyer, in respect of conduct occurring in 2013 and 2014 ([2]).
The conduct involved overcharging and making unsecured loans from the proceeds of sale of an elderly client’s home ([12]-[34]).
The Tribunal found that the respondent had engaged in professional misconduct and unsatisfactory professional conduct, and ordered that the respondent’s practising certificate be cancelled, that she be reprimanded, fined and precluded from receiving any new practising certificate for 12 months.
The Tribunal made no orders imposing conditions on the issue of a new practising certificate, instead making non-binding recommendations that the respondent should undergo a period of supervision and complete further professional training.
The Law Society appealed to the Court of Appeal, on the grounds that the Tribunal erred in failing to order that the respondent be removed from the roll of lawyers maintained by the Supreme Court of New South Wales, and failing to impose conditions on the issue of a new practising certificate to the respondent ([3], [51]).
Held (directing the parties to make submissions as to what conditions should be imposed on the issue of a practising certificate):
Applicability of previous legislative regime
(i) Leeming JA emphasised the importance of “bear[ing] steadily in mind the difference between (a) the removal of a practitioner’s name from the roll, (b) the cancellation of a practising certificate, (c) the suspension of a practising certificate for a specified period, and (d) an order that a practising certificate not issue before the end of a specified period” ([53]).
(ii) Express provision is currently made in s 302 of the Legal Profession Uniform Law (NSW) for the power to make all four of those orders (with the difference that the power is not to remove a name from the roll, but to recommend the removal of a name) ([55]).
(iii) Because the respondent’s conduct took place in 2013 and 2014, aspects of the previous regime were applicable – being the Legal Profession Act 2004 (NSW). Under s 562 of that Act, the power to make the four orders above was largely the same, except that NCAT could order directly that a name be removed from the roll ([56]-[57]).
Whether it was necessary to establish House v King error on the part of the Tribunal
(iv) Section 562 of the Legal Profession Act conferred power on NCAT to make a range of discretionary orders to protect the public from misconduct by lawyers. The question for the Tribunal was which of those orders were appropriate in order to serve the predominantly protective jurisdiction being exercised. None were mandated; all were discretionary. Accordingly, it was necessary for the Law Society to establish House v The King error on appeal (Leeming JA at [95]-[97], with Macfarlan JA and McCallum JA not deciding on this issue).
Whether the Tribunal erred in failing to make an order removing the respondent’s name from the roll – NO
(v) If the Tribunal were satisfied that the respondent was presently unfit to practise, and likely to be unfit for the indefinite future, then it would be appropriate to order that her name be removed from the roll. If the Tribunal were not so satisfied, then such an order should not be made ([99]).
(vi) The distinction between suspension and cancellation of a practising certificate is not technical, and the principles applicable to the power to suspend a practising certificate do not extend to the power to cancel ([109]).
(vii) The Law Society’s submission that once it was found that the respondent was not presently fit to practise, the Tribunal was required to determine when and subject to what conditions she would become fit to practise, rested on a false dichotomy ([110]).
(viii) The onus was on the Law Society to show probable indefinite unfitness to practise if an order removing the respondent’s name from the roll was to be made ([100], [115]).
(ix) In a case where the Tribunal is satisfied that a lawyer is not presently fit to practise, but also not satisfied that he or she is probably permanently or indefinitely unfit to practise, neither removal from the roll nor suspension for a specified period of time is appropriate in order to protect the public interest. Rather, in cases where there is an “appreciable likelihood” that there will come a time the lawyer will be fit to practise, a cancellation order is appropriate, coupled with an order preventing application for a practising certificate for at least such time as the Tribunal considers that the lawyer will not be fit to practise ([111]-[115], [130]).
Whether the Tribunal erred in failing to impose conditions on the issue of a new practising certificate to the respondent – YES
(x) The Tribunal made no findings to justify the 12 month period during which the respondent could not practise. There was an implied finding that there was at least a reasonable prospect that the respondent would become fit to practise at a time after the expiration of the 12 month period, but there was no basis for that inference. It was impossible to reconcile the Tribunal’s finding that the respondent was presently unfit to practise with its finding that that would change after a 12 month period, when what would happen during that period was unknown ([125]-[128]).
(xi) The Tribunal itself appreciated that conditions were necessary in order to protect the public. Those conditions included steps which the respondent must undertake before applying for a practising certificate, and conditions upon her practice. Yet the Tribunal did not specify those conditions. Rather it made incomplete and non-binding recommendations. There was material error in this aspect of the Tribunal’s decision ([128]).
(xii) Discharge of the Tribunal’s task required imposition of conditions which, if satisfied, would give the respondent a real chance to establish that she was fit to practise, rather than merely making incomplete and non-binding recommendations to the Law Society ([128]-[131]).
What orders the Court of Appeal should make in the re-exercise of discretion
(xiii) The Court agreed with the Tribunal that the respondent was not presently fit to practise as a solicitor, and was similarly not satisfied that she would probably be unfit to practise for the indefinite future ([149]-[150]).
(xiv) The Court proposed orders to the effect that, if the respondent attends and satisfactorily completes appropriate courses, formally acknowledges the instances of professional misconduct and unsatisfactory professional conduct found by the Tribunal, and explains the steps she has taken and will continue to take in order to prevent such conduct recurring, it would be open to the Law Society in determining an application for a practising certificate to conclude that she is a fit and proper person ([151]-[154]).
(xv) The Court of Appeal invited submissions from the parties as to these, and any other conditions to which the respondent should be subject (together with any submissions as to costs) ([157]).
Read the decision on the NSW Caselaw website.
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| | | Decisions of Interest Bulletin |
| The New South Wales Court of Appeal Decisions of Interest Bulletin contains summaries of decisions of interest in Australia and internationally. Find below several such decisions from recent bulletins. Each case title is hyperlinked to the Court of Appeal's decision summary.
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| Macquarie International Health Clinic Pty Ltd v Sydney Local Health District [2020] NSWCA 161
CONTRACTS – construction – context – whether party was in default of its obligations under the agreement – whether party had certain powers under the agreement – whether a discretion provided under the agreement was subject to a good faith obligation
CONTRACTS – breach of contract – consequences of breach – right to termination – where Notices of Default and Notices of Termination issued – whether non-compliance with the Notice of Default gave the right to terminate the agreement – notices under s 129 Conveyancing Act 1919 (NSW) – reasonable time under the Notice to remedy default
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| Council of the Law Society of New South Wales v Zhukovska [2020] NSWCA 163
APPEALS - appeal from orders imposed by NCAT cancelling solicitor’s practising certificate and preventing issue of a new certificate for 12 months - Law Society appealed seeking order removing solicitor’s name from roll - nature of appeal - whether necessary to show House v The King error
LEGAL PRACTITIONERS - solicitors - appropriate orders following findings by NCAT of professional misconduct and unsatisfactory professional conduct - whether solicitor’s name should be removed from the roll - distinction between suspension of practising certificate, cancellation of practising certificate and removal from roll - significance of recommendations as opposed to conditions - whether NCAT failed to specify appropriate conditions to be satisfied before any new practising certificate issued
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| Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138
CORPORATIONS – legal capacity and relations with outsiders – extend litigation procedure – appearance in court by company and representation – application by company to be represented in proceedings by non-lawyer – matters which may be considered – no evidence of company’s financial circumstances – complex case too difficult for proposed lay representative – no explanation for delay in applying for leave
PRACTICE AND PROCEDURE – self-represented litigant – duty of court to assist – extent of court’s obligations – absence of detriment flowing from any alleged lack of instruction from trial judge
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| South Eastern Sydney Local Health District v Lazarus [2020] NSWCA 183
ADMINISTRATIVE LAW – Judicial review – jurisdictional error – whether primary judge erred in holding that District Court did not have jurisdiction to make directions for compensation pursuant to s 97(1) of the Victims Rights and Compensation Act 2013 (NSW) in circumstances where defendant originally convicted in Local Court – whether District Court had jurisdiction to make a compensation order when it was not the court which convicted the offender but which “confirmed” convictions on appeal.
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| Cumming v Minister for Planning [2020] VSCA 208
PLANNING AND ENVIRONMENT – Appeal – Judicial review – Wind farm –Environmental effects assessment – Ministerial call in of permit application – Panel report – Brolga habitat protection buffers – Wind turbines – Decision to grant permit on conditions – Whether Minister denied applicants procedural fairness by not disclosing letter received from respondent after panel hearing – Whether Minister failed to consider amended planning scheme – Whether permit missing mandatory conditions invalid – Whether slip rule could be used to correct permit to impose missing mandatory conditions – Whether Minister’s assessment under Environment Effects Act 1978 unreasonable, irrational or illogical having regard to Brolga habitat model – No denial of procedural fairness in granting permit after receipt of letter without giving objectors further opportunity to be heard – No failure to consider amended planning scheme provisions – Failure to include mandatory noise monitoring conditions did not render permit wholly invalid – Open to correct permit by substituting mandatory conditions pursuant to s 71 of the Planning and Environment Act 1987 – Minister’s assessment of EES open and not shown to be unreasonable – Planning and Environment Act 1987 ss 71, 72, 87, 97B, 97E, 97F, 97I, 97J; Environment Effects Act 1978 ss 8, 9 – Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24; South Australia v O’Shea (1987) 163 CLR 378 – Leave granted – Appeal dismissed.
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| | DISCLAIMER: This publication has been prepared for information purposes only. The NCAT Legal Bulletin should not be relied on as legal advice nor is it a substitute for reading the decisions in full. NCAT does not accept any liability to any person for the information (or the use of the information) which is provided in this publication.
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