Judgment date: 29 September 2010
Kostas v HIA Insurance Services Pty Limited  HCA 32 High Court of Australia1
- A Tribunal that makes a finding based on a question of fact without supporting evidence makes an appellable error of law.
- An appeal from a Tribunal finding, unsupported by evidence, is classified as an appeal "with respect to a matter of law" under s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW).
Peter and Christine Kostas (appellants) commenced proceedings in September 2000 in what was then the Fair Trading Tribunal, a statutory predecessor of the Consumer Trader and Tenancy Tribunal (Tribunal).
The proceedings arose out of a dispute between the appellants, Sydney Construction Company Pty Limited (builder) and its statutory insurer, HIA Insurance Services Pty Limited (respondents), concerned a $330,000 building contract.
The appellants' claim in the Tribunal was for indemnity under a Home Owners Warranty policy with the respondents. The claim related to loss and damage suffered because of the alleged failure by their builder to complete contracted building works at their residence.
The appellants said they had validly terminated the contract on account of the builder's failure to meet its contractual obligations. The respondent denied liability.
The appellants and respondents agreed, in relation to the claim against HIA, that the Tribunal should determine, as a preliminary question, whether appellants had lawfully terminated the building contract.
Central to the debate on the preliminary question were letters alleging breaches of the building contract, sent by the solicitors for the appellants on 4 May 2000 and 12 May 2000 and addressed respectively to the builder and its solicitors. The breaches alleged were inability Page 2 of 3 and unwillingness to complete the work, suspension of work without reasonable cause and failure to proceed diligently with the work.
The first letter gave notice, pursuant to cl 24 of the contract, that if the alleged breaches were not rectified within 10 working days the contract would be terminated. The second letter referred to the notice given on 4 May and also gave notice to the builder that it had failed to rectify defective work. It repeated that unless the breaches of contract were remedied by the builder within 10 working days the contract would be terminated in accordance with cl 24.
The critical point was the Tribunal's finding that the builder had properly given two valid notices for extensions of time which extended the date for completion. The Tribunal viewed that the notices gave the contract more time to run and therefore, the builder an extension to complete its contractual obligations.
The appellants purported to terminate the contract on the basis that the builder failed to meet its contractual obligations within the construction time frame. On 4 July 2000, the builder's solicitors replied denying any entitlement to terminate and treating the purported termination as a repudiation.
On 25 May 2005, the Tribunal found that appellants had not validly terminated the disputed contract and made an order that they had repudiated the contract.
Supreme Court proceedings
On 22 June 2005, an appeal was instituted against the decision of the Tribunal in the Supreme Court under s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (the Act). The section creates a right of appeal against a decision by the Tribunal of a "question with respect to a matter of law".
The appellants submitted that there was no evidence supporting that the builder had served the two claims for extension of time.
His Honour accepted the appellants' submission and held that the Tribunal's findings contained errors of law. The errors, amongst other things, included conclusions unsupported by evidence, that the builder had served a valid notice for extension. Accordingly, the Tribunal had made an erroneous decision with respect to a question of law. His Honour quashed the orders of the Tribunal made on 25 May 2005. He declared that the termination of the building contract by the appellants was lawful and effective.
New South Wales Court of Appeal
On 16 September 2009, the Court of Appeal unanimously allowed the appeal against the decision of the primary judge. It did so substantially on the basis that the primary judge did not have jurisdiction of the Supreme Court under s 67 of the Act as there was no "question with respect to a matter of law" put before him.
His Honour referred to the errors of law found by the Primary Judge and held that those matters had not been identified by the Tribunal as a question for decision with respect to matters of law. It was further held the words "with respect to" in s 67, to be words of limitation intended to make it clear that no appeal would lie with respect to a matter of fact. The subject matter of an appeal was the "matters of law" and not other matters connected to it. It was the Tribunal's responsibility as the finder of facts and the maker of any evaluative judgement.
The Court of Appeal referred to the unsupported evidence finding made by the Primary Judge and preferred the view that while a "no evidence" ground may support judicial review, it does not form a basis for a statutory appeal under s 67(1).
High Court of Australia
Special leave to appeal to the High Court was granted. The central issue brought before the High Court concerned the nature of an appeal from the Tribunal to the Supreme Court and what kind of issues can be raised in relation to a "question with respect to matter of law".
The appellants submitted that the expression "with respect to" permitted the Supreme Court to deal with a wide range of circumstances connected to matters of law and that once a question of law was identified, the Supreme Court was entitled to determine any other question of fact or law or mixed fact and law as would enable it to make appropriate orders including orders that the Tribunal should have made.
Conversely, the respondent submitted that an appeal under s 67 does not give the Supreme Court the capacity to find facts differently from the Tribunal or to find facts not found by the Tribunal. The respondents further submitted that such an appeal under s 67 gave the Supreme Court the task of determining only the questions with respect to a matter of law that founded its jurisdiction and could not make a decision or order to any other questions in the Tribunal.
The High Court found that the ground usually described as "no evidence" raises a question of law and whether there was no evidence to support a factual finding is a question of law, not a question of fact. In effect, the Tribunal's factual finding, that the builder had served the notices for extension of time, depends upon it first accepting there was evidence to support the finding. In this respect, the High Court referred to Dixon CJ in Gurnett v The Macquarie Stevedores Co Pty Limited [No.2]:
The High Court found that a tribunal that decides a question of fact when there is no evidence in support of the finding makes an error of law. The High Court preferred the reason given by the primary judge and reiterated that material that could support a factual finding is ultimately a question for judicial decision and is a question of law.
A Tribunal may determine its own procedure in a manner that affords procedural fairness subject to the Act. It is not bound by rules of evidence.
However, the High Court's decision provides clarification that a Tribunal which makes a factual finding based on unsupported evidence is subject to appeal under s 67 of the Act. The decision serves as reminder that Tribunals must ensure that all material is considered in order for each party to be given a reasonable opportunity to present its case in accordance with the principles of procedural fairness.
1 French CJ, Hayne J, Heydon J, Crennan J, Kiefel J
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