Carrick v Relief Co Pty Ltd ATF Rebuild Relief Trust t/as Rebuild Relief [2023] QCATA 38

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Carrick v Relief Co Pty Ltd ATF Rebuild Relief Trust t/as Rebuild Relief [2023] QCATA 38 PARTIES: JULIE CARRICK (applicant) v RELIEF CO PTY LTD ATF REBUILD RELIEF TRUST T/AS REBUILD RELIEF (respondent) APPLICATION NO/S: APL055-22 ORIGINATING APPLICATION NO/S: Q471/21 MATTER TYPE: Appeals DELIVERED ON: 4 April 2023 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Lumb ORDERS: 1. Leave to appeal is refused. CATCHWORDS: APPEAL – GENERAL PRINCIPLES – leave to appeal – minor civil dispute – where refusal to grant adjournment – whether denial of procedural fairness by refusal to adjourn – where claim for debt owing under agreement – whether clause of agreement sued upon was unenforceable as a penalty – whether leave to appeal should be granted Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 28, s 142 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 Attorney-General v University of Tasmania [2020] TASFC 12 Berry v Treasure & Anor [2021] QCATA 61 House v R (1936) 55 CLR 499 Love v Brien [2012] WASC 457 Metro-Golden-Mayer Pty Ltd v Greenham [1966] 2 717 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 -- 1 of 15 -- 2 QNI Resources Pty Ltd & Anor v North Queensland Pipeline No 1 Pty Ltd & Anor (2022) 406 ALR 125 Saxer v Hume [2022] QCATA 25 Superannuation & Corporate Services Pty Ltd v Turner [2020] NSWCA 246 Thoo v Professional Services Committee No 446 (2008) 169 FCR 470 REPRESENTATION: Applicant: McInnes Wilson Lawyers Respondent: Self-represented REASONS FOR DECISION Introduction [1] By an Application for leave to appeal or appeal filed on 9 March 2022 (the Appeal Application), the Applicant (Ms Carrick) seeks leave to appeal, and to appeal, a decision made by the Queensland Civil and Administrative Tribunal (the Tribunal) on 27 January 2022 (the Decision).1 [2] The Decision was made in a proceeding commenced by the Respondent to the Appeal Application (Rebuild Relief) by an Application for minor civil dispute – minor debt filed on 16 July 2021 (the MCD Application). [3] The hearing of the MCD Application proceeded on 27 January 2022 in the absence of Ms Carrick. By the Decision, the Tribunal (constituted by an Adjudicator) allowed the full amount of the claim of $10,636.42 (together with interest and the filing fee) and ordered that Ms Carrick pay Rebuild Relief the sum of $11,344.42 within 21 days. The Reasons [4] The Adjudicator’s Reasons, as recorded in the Transcript of the hearing, relevantly stated:2 … In Q471-21, there is a contract between the applicant and the respondent. The Tribunal has, therefore, been asked to determine whether a debt has arisen as a result of a term of the contract not being - or being activated. The principal claim is for an amount of $10,636.42, plus interest, plus filing fee, being a total sum of $11,344.42. The Tribunal notes that the agreement was for, effectively, an agency agreement between the applicant and the respondent. The respondent was to act on behalf - the applicant was to act on behalf of the respondent in dealing with a third-party insurer to have the carriage of and execute or proceed with a claim against - or for insurance over damage to the respondent's premises. The claim was successful, although the day price [sic] of a payment being made by the third-party insurer. The respondent sought to terminate dealings with the applicant and thereby terminate the contract. Within the contract, there is a clause stipulating that - and I'll read directly from the contract between the parties that has been signed and dated the 20th of 1 The Appeal Application states, and there has been no contest, that the Decision was received by Ms Carrick on 10 February 2022. 2 T1-6 line 5 – T1-7 line 30. -- 2 of 15 -- 3 November 2020 by a representative for the applicant and the 6th of December 2020 representative of the respondent. It states that, at clause number 6: In the event a builder not allocated by the company is agreed by the owner to complete the work and the company is not given a fair opportunity to continue to pursue the claim of payment of 17.5 per cent of the value of the claim that is to be paid to the company paid by the owner for the services rendered – Clause 7: 17.5 per cent of any settlement amount not allocated to a builder assigned by the company is to be paid by the company and owner for the services rendered. The benefit, of course - that is, what is the consideration? What is the benefit that moves from the offeree back to the offeror or the party that accepts back to the party that made the offer - the offeree back to the offeror. The question for a contract to be binding then - a contract must be supported by consideration. Here, the consideration is the value. The benefit that will be received or derived from works being done by a builder for which a percentage amount or a fee will be paid to the applicant. In the event of that a builder is not engaged or that the money is retained and no building works are commenced, there is no benefit to the applicant. So I'm satisfied that in circumstances where a party, pursuant to clause 6 or 7, does not engage a builder allocated by the company to perform the works, it is not a penalty clause but, rather, in the circumstances, an amount commensurate with (1) what would have been paid, potentially, by the builder as a fee to the applicant or commensurate with and the Tribunal heard evidence in this regard, the value of the work performed in relation to the applicant dealing with the insurance company obtaining building inspection reports and engaging builders to perform that work. The amount of administration and paperwork involved in submitting a claim, dealing with the insurance company and liaising with the owner of the property. The amount 17.5 per cent is not, in the circumstances, whilst it is a significant amount, depending upon the extent of the claim - and of course, the larger the claim, the larger the amount of substantiating work is required in relation to any such claim that is, the larger the amount of documentary paperwork and proof to validate and substantiate the claim, and therefore more work is involved. Whilst the amount is a large amount, it is noted that in excess of $60,000 settlement has been received and the fee of - slightly in excess of $10,000, in the circumstances, does not appear as a penalty clause, as has been submitted in the paperwork by the respondent or on behalf of the respondent. I'm not satisfied it is a penalty clause and, therefore, in the circumstances, in the absence of any further evidence from the respondent and any further submission - and I note the matter has proceeded in the absence of the respondent in circumstances where the respondent has provided a medical certificate, sought an adjournment, but an adjournment has not been granted on the basis that the circumstances are unlikely to change and there has been no detailed explanation as to the inability of the respondent to seek non-legal representation rather than legal representation or, otherwise, to provide further detail as to why an adjournment should be granted in the circumstances. The Tribunal does note that there has been a rejection of the - by the Tribunal, a refusal to allow legal representation but there has not been any order made in -- 3 of 15 -- 4 regards to non-legal representation. In any event, the order - the Tribunal is satisfied, having regard to the matters put to the Tribunal, that the following orders should be made. (1) That the respondent pay to the applicant the sum of $11,344.42 within 21 days from today's date. The Grounds of Appeal [5] The Grounds of Appeal set out in the Appeal Application are stated as follows: The Applicant received the reasons for decision on 10 February 2022. The Applicant has suffered a substantial injustice as a result of the Adjudicator's decision to proceed with the hearing on 27 January 2022 with her absence due to suffering from a medical condition (breast cancer) and refusing to grant an adjournment. The decision of the Adjudicator that the Applicant was required to pay the Respondent the sum of $11,344.42 because the relevant term of the Letter of Agreement (term 6) is not a penalty clause is wrong as a matter of law because the term is a common law penalty clause. The Applicant has set out detailed submissions in support of the orders sought in the document attached titled “Attachment A”. [6] Attached to the Appeal Application are written submissions headed ‘Applicant’s Submissions’. These submissions raise two grounds of appeal which can be summarised as follows: (a) first, that a ‘substantial injustice’ arose out of the decision of the Adjudicator to refuse to adjourn the hearing of the MCD Application and to proceed in the absence of Ms Carrick with the effect that Ms Carrick was not afforded an opportunity to provide submissions for the hearing or to advocate her position at the hearing thereby ‘significantly prejudicing her position’ (Ground 1); (b) second, that the Decision was incorrect as a matter of law on the basis that ‘terms 6 and 7’ of the agreement between the parties, headed ‘Letter of Agreement’ (the Agreement), were penalty clauses (Ground 2). The Orders sought [7] The Orders sought in the Appeal Application are stated as follows: 1. That the Applicant, Mrs Julie Carrick, be given leave to appeal. 2. That the decision dated 27 January 2022 be set aside. 3. That clause [sic] 6 and 7 in the Rebuild Relief Letter of Engagement is a penalty clause and therefore unenforceable. 4. That the Applicant, Mrs Julie Carrick, is not required to pay the Rebuild Relief invoice dated 3 March 2021. -- 4 of 15 -- 5 Leave to appeal is required [8] An appeal against a decision by the Tribunal in a proceeding for a minor civil dispute may be made only if the party has obtained the Appeal Tribunal’s leave to appeal.3 [9] As to the Tribunal’s approach to an application for such leave, I respectfully adopt the following observations of Judicial Member DJ McGill SC:4 … As a general proposition, when leave to appeal to the Appeal Tribunal is required, it will be granted only where there is a reasonable argument that the decision was attended by error and an appeal is necessary to correct a substantial injustice caused by that error, or where the appeal raises a question of general importance upon which further argument and a decision of the Appeal Tribunal would be to the public advantage. In deciding whether grounds for leave to appeal have been shown, it is relevant to consider that the proceeding was a minor civil dispute, and the obligation on the Tribunal was to make orders it considered to be fair and equitable to the parties to the proceeding in order to resolve the dispute: the QCAT Act s 13(1). The Tribunal was also required to comply with the QCAT Act s 28 and s 29. (citation omitted) [10] Further, as was said by Justice Daubney, President, in Berry v Treasure & Anor:5 There is no automatic right of appeal against minor civil dispute decisions. I respectfully adopt and endorse the following observations by the former President, Justice Alan Wilson, in Durrand v Karaolis: The Queensland Parliament has made it clear, in the QCAT Act, that so far as possible minor civil disputes of this kind are to be resolved by a simple procedure which is speedy, inexpensive and final. That conclusion is reinforced by the fact that before a party can appeal a decision in this jurisdiction it must obtain leave from the Appeal Tribunal … In other words, there is not an automatic right to appeal these decisions; rather, an applicant must first establish that it has a right to a grant of leave. (citation omitted) Ground 1 Relevant principles [11] In relation to the refusal of an application for an adjournment, I respectfully adopt the following observations of Lindgren J in Thoo v Professional Services Committee No 446:6 The refusal of an adjournment may amount to a denial of procedural fairness if it is likely to deny a party a reasonable opportunity to present his or her case (Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at [40] per Gaudron and Gummow JJ (Bhardwaj); Touma v Saparas [2000] NSWCA 11 at [27]). The procedure that will satisfy the demands of 3 Subsection 142(3)(a)(i) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). For completeness, given the Grounds of Appeal, leave to appeal would have been required in any event pursuant to s 142(3)(b) of the QCAT Act. 4 See Saxer v Hume [2022] QCATA 25, [2]. 5 [2021] QCATA 61, [14]. 6 (2008) 169 FCR 470, [52]. See also Attorney-General v University of Tasmania [2020] TASFC 12, [48]. -- 5 of 15 -- 6 procedural fairness may differ in order “to meet the particular exigencies of the case” (Kioa v West (1985) 159 CLR 550 at 615 per Brennan J). As I stated in Ali v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 41 AAR 410 at [27]: Ultimately, each complaint of a failure to accord procedural fairness by reason of the refusal of an adjournment turns on its own facts. Whether an adjournment should be granted is a matter within the discretion of the trial Judge (or Tribunal), to be resolved according to the overall requirements of justice in the particular circumstances. [citation omitted] [12] Under the QCAT Act, the Tribunal must observe the rules of natural justice in conducting a proceeding.7 However, relevantly to the present proceeding, the Tribunal must also ‘act with as little formality and technicality and with as much speed as the requirements of this Act, an enabling Act or the rules and a proper consideration of the matters before the tribunal permit’.8 [13] In considering an appeal from a discretionary decision in the Tribunal, I consider the following principle is applicable:9 Thus it is not enough that the appellate court would have exercised the discretion differently from the trial judge. The trial judge must be shown to have acted on a wrong principle or mistaken the facts, or to have made an error of a kind vitiating the exercise of discretion, such as failing to take into account a material consideration or taking into account an immaterial consideration, or reaching a decision that is unreasonable or plainly unjust. M s Carrick’s submissions [14] In support of Ground 1, Ms Carrick made the following submissions as to the relevant facts that are said to demonstrate the asserted ‘substantial injustice’10 (I have adopted Ms Carrick’s paragraph numbering and I have incorporated footnote 1 into the extracts): 12. A mediation in the proceeding was scheduled to take place on 8 November 2021 at 1:30pm. The Applicant submitted a Form 56 Application for Leave to be Represented by a legal representative on 2 November 2021 which the Applicant was advised would only be considered at the outset of the mediation.1 [Footnote 1: However, it was not but QCAT subsequently advised the Applicant's legal representative on 27 November 2021 that the Applicant's application for legal representation filed on 2 November 2021 had been rejected.] The Application ultimately was not considered because the mediation did not take place because: (a) the Applicant was experiencing telephone reception issues and was unable to receive and make calls to the QCAT Registry at the time that the mediation was scheduled; and (b) the Respondent did not attend the mediation at all. 7 Subsection 28(3)(a). 8 Subsection 28(3)(d). 9 Superannuation & Corporate Services Pty Ltd v Turner [2020] NSWCA 246, [129] citing House v R (1936) 55 CLR 499, 504-505. 10 Ms Carrick appears to assert, in effect, that the decision to proceed was ‘unreasonable or plainly unjust’ in the language of House v R. -- 6 of 15 -- 7 13. On or about 15 November 2021 the Applicant received a Notice of Hearing from QCAT notifying that a hearing had been scheduled for 1 December 2021 at 2:00pm at the Southport Courthouse. No further mediation was offered. 14. On 25 November 2021 the Applicant filed a Form 40 seeking an adjournment of the hearing scheduled for 1 December 2021 on the basis that: (a) the Applicant was suffering from breast cancer which rendered her unable to work or study and therefore by extension to endure the stress and rigours of participating in a QCAT hearing on her own; (b) the Applicant resided in Rockhampton and, on advice from her treating doctors had not received COVID-19 vaccinations due to her having a compromised immune system, such that she was unable.to travel from Rockhampton to Southport. 15. In support of that application the Applicant provided a medical certificate from her treating GP, Dr Brad Lorraway at City Heart Medical dated 2 November 2021 which confirmed that: (a) the Applicant was diagnosed with breast cancer on 2 August 2021; (b) it was estimated that her symptoms from that condition would affect her ability to work or study for 13-24 months; (c) she was to undergo breast cancer surgery; and (d) at that stage, she had no capacity for work or study from 2 November 2021 to 2 February 2022. 16. The Applicant requested that the hearing not be rescheduled before 1 April 2022. 17. On 30 November 2021 QCAT granted the Applicant's adjournment application. 18. On or about 5 January 2022 the Applicant's legal representative was advised by QCAT that the hearing had been re-scheduled for 27 January 2022. 19. On 7 January 2022 the Applicant submitted a Form 56 Application for leave to be represented for the rescheduled hearing on 27 January 2022. The Applicant was prepared to proceed with the hearing if she was able to be legally represented as that would not require her to advocate on her own behalf with her breast cancer condition. The Applicant's defence was also a legal argument. 20. On 20 January 2022 the Applicant's legal representative was advised by the QCAT Southport Registry that the Applicant's Application for leave to be represented would be considered on 25 January 2022 (1 business day prior to the hearing). 21. Late in the afternoon of 25 January 2022 the Applicant's legal representative was advised by the Registry that the Applicant's Application for leave to be represented had been refused. Immediately following that, the Applicant's legal representative began preparing a further application for adjournment for the Applicant to submit prior to the hearing. -- 7 of 15 -- 8 22. 26 January 2022 was a public holiday for the Australia Day holiday. 23. The Applicant's legal representative was unable to raise the Applicant via email or telephone on the afternoon of 25 January 2022 or on 27 January 2022 prior to the hearing. That meant that the Applicant's legal representative was unable to have the Applicant sign the QCAT Application for adjournment form (Form 40). 24. The Applicant's legal representative therefore emailed the QCAT Southport Registry (cc'ing in the Respondent) at 10:10am on 27 January 2022 advising that: (a) the legal representative had not been able to make contact with the Applicant since being informed on 25 January 2022 that the Applicant's application for legal representation for the hearing had been denied; (b) as the Applicant was suffering from breast cancer, the legal representative apprehended that she may have been suffering symptoms from that condition or undergoing treatment which prevented her being able to be contacted; (c) in reliance upon a further medical certificate from Dr Brad Lorraway at City Heart Medical dated 13 January 2022, the Applicant still did not have the capacity to endure the stress and rigours of participating in a QCAT hearing on her own; 25. The Applicant's legal representative requested that the hearing be adjourned again in the circumstances. A copy of that email and medical certificate is attached to these submissions (marked "1"); 26. The Applicant's legal representative received an email from the Deputy Registrar at 11:27am on 27 January 2022 advising that the email from the Applicant's legal representative had been forwarded to the presiding Adjudicator for consideration. 27. The Applicant did not attend the hearing on 27 January 2022. Conclusion in relation to Ground 1 [15] In my view, whilst the material presented to the Adjudicator in relation to the requested adjournment raised an arguable basis for the grant of an adjournment, there were also some countervailing factors. First, the original hearing of the matter (which involved a claim within the minor civil dispute jurisdiction of the Tribunal) had been previously adjourned, albeit by reason of the ill-health of Ms Carrick. Second, Ms Carrick was aware of the (rescheduled) hearing date of 27 January 2022, and although Ms Carrick had filed an application to be legally represented at the rescheduled hearing,11 I consider that she could have had no reasonable expectation that such leave would likely be granted given that a previous application to be legally represented at an earlier mediation (which had not proceeded) had been refused by the Tribunal. Third, there was an absence of explanation as to why Ms Carrick’s legal representative was unable to ‘raise’ Ms Carrick on the afternoon of 25 January 2022 or prior to the hearing on 27 January 2022, and I infer from paragraphs 22 and 23 of the Applicant’s Submissions that no attempt was made by Ms Carrick’s legal representative to contact her on 26 January 2022, even though it was a public holiday. Fourth, the penalties 11 There is no suggestion that Ms Carrick was unaware that the Application to be legally represented was to be considered by the Tribunal on 25 January 2022. -- 8 of 15 -- 9 argument was considered by the Adjudicator and, given the refusal of leave to be legally represented, even if an adjournment had been granted, the penalties argument (described as a ‘legal argument’) would have been presented by Ms Carrick or a non- legally qualified representative on her behalf. [16] Consistently with House v R, the question is not whether the Appeal Tribunal would have exercised the discretion differently from the Adjudicator. The question is whether Ms Carrick could establish that the Adjudicator’s refusal to grant the adjournment was unreasonable or plainly unjust. In my view, having regard to all of the circumstances, Ms Carrick has failed to establish that there is a reasonable argument that the refusal to grant the adjournment was unreasonable or plainly unjust such that the (discretionary) Decision was attended by error as asserted by Ground 1. I refuse leave to appeal on relation to Ground 1. Ground 2 The Agreement [17] The Agreement was in the following terms (omitting the address of the Property): This letter and the accompanying Scope of Work (''Scope'') sets out the basis on which the services will be provided by Rebuild Relief Trust T/A ReBuild Relief (the Company). Property Owner(s) Name: Julie Carrick (Owner) Address of property: …(Property) Engagement: The Company will represent the Owner to relevant parties through the insurance claim process (the Claim). Once the Claim is approved, the Company will assign a qualified and certified builder to complete the work approved for the amount allocated by the insurance provider. If a settlement is accepted in lieu of repairs, a fee will be applicable. The Owner agrees to: 1. Provide all documentation relating to the Claim to the Company. 2. Provide the Company with authority to be the representative of the Owner to assist with the scheduling and liaising between insurance assessors, builders, loss adjusters, trades people, claim managers and/or any other relevant parties throughout the Claim for as long as required. 3. Prior to signing any paperwork, permitting any work to commence, or making any payment of any excess relating to the Claim, confirm the actions with the Company. 4. Upon work being approved, the Company will assign a QBCC licensed and insured builder to enter into a QBCC building contract with the Owner to complete all work. 5. All work to be completed is to be for the insurance provider. 6. In the event a builder not allocated by the Company is agreed by the Owner to com plete work and the Company is not given a fair opportunity to continue pursuit of the Claim, a payment of 17.5% of the value of the Claim is to be paid to the Company, by the Owner for services rendered. -- 9 of 15 -- 10 7. 17.5% of any settlement amount not allocated to a builder assigned by the Company is to be paid to the Company by the Owner for services rendered. Ms Carrick’s contentions [18] The substance of Ms Carrick’s contentions is that clauses 6 and 7 are penalty clauses because:12 (a) the sum of $10,636.42 that [Rebuild Relief] seeks to recover is extravagant and unconscionable in comparison to what could conceivably be considered a reasonable cost of [Rebuild Relief’s] services; (b) that amount is much greater than the sum that [Ms Carrick] could reasonably be expected to pay for the administrative service that [Ms Carrick] sought to provide for her, nothing that [Rebuild Relief] does not actually conduct repairs but rather communicates with the insurer, the insured and [Rebuild Relief’s] preferred builder(s) to arrange for works to be carried out; (c) the amount is a significant single lump sum payable upon the outcome of two very probably events - one being the insurer’s panel builder being preferred (it is common that insurers will offer guarantees over the work of their panel builders but not other builders); the other being a cash settlement being authorised (common if there is a mix of damage that is not considered insurable (ie. pre-existing damage/faulty workmanship)); (d) both terms 6 and 7 lacked precision- there was no ‘dollar figure’ incorporated into the Letter of Agreement which made pre-estimation of what the sum would be almost an impossibility for [Ms Carrick] at the time that she executed the Letter of Agreement, particularly give that [Ms Carrick] is a layperson with no knowledge of experience in construction and could not have had any insight as to what the cost of repairs would cost; (e) the intent of the term is clearly to impose a significant burden on the property owner to remain with [Rebuild Relief] regardless of the relationship and/or outcome or else suffer the significant consequences of a hefty monetary penalty for failing to do so; and (f) the term was not comprehensively drawn to [Ms Carrick’s] attention at all. Rebuild Relief’s contentions [19] By the ‘Respondent’s Submissions’, Rebuild Relief appears to raise two primary arguments: (a) that neither clause 6 nor clause 7 constitutes a penalty clause because it is ‘an obligation to make payment as the price of a right or benefit of the exercise of a right (such as deciding to receive a cash settlement from [the] insurer)’ and those clauses are to be treated as ‘stipulation of payment clauses’ which are enforceable;13 12 Applicant’s Submissions, paragraph 36. 13 Respondent's Submissions, paragraphs 33, 34 and 40. -- 10 of 15 -- 11 (b) Ms Carrick has not established that the amount claimed was extravagant and unconscionable in comparison to what could conceivably be considered a reasonable cost of the services provided.14 Relevant principles re the doctrine of penalties [20] During the last 11 years, the High Court has closely examined the doctrine of penalties on two occasions, in Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 (Andrews) and in Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 (Paciocco). [21] In QNI Resources Pty Ltd & Anor v North Queensland Pipeline No 1 Pty Ltd & Anor (2022) 406 ALR 125, [2022] QCA 169 (QNI), the Queensland Court of Appeal identified various relevant principles to be drawn from the authorities including Andrews and Paciocco. [22] The relevant principles set out in the above authorities which are relevant to the present case include the following: (a) the party alleging that the clause in question is a penalty bears the evidentiary and persuasive onus of establishing that this is the case, and these onuses are significant and not lightly discharged;15 (b) in general terms, a stipulation prima facie imposes a penalty on a party (the first party) if, as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and this collateral stipulation, upon the failure of the primary stipulation, imposes upon the first party an additional detriment, the penalty, to the benefit of the second party;16 (c) there is no reason in principle why the primary stipulation to which a penalty is collateral cannot consist of the occurrence or non-occurrence of an event which is neither a breach of contract nor another event which it is the responsibility or obligation of the party subjected to the penalty to avoid;17 (d) a penalty must be ‘plainly excessive in nature’ in comparison with the interest sought to be protected and the criterion of ‘exorbitant’ and ‘unconscionable’ should prevent the enforcement of ‘only egregious contractual provisions’;18 (e) the inquiry is directed to ascertaining whether the amount payable ‘is out of all proportion’ to the interests said to be damaged or which are sought to be protected;19 (f) a clause ought not be struck down as a penalty merely because, at the time of the contract, there had been no pre-estimate of the likely damage to be suffered.20 14 Respondent's Submissions, paragraphs 36-39 and 42-46. 15 QNI, [96]. 16 Andrews, [10]. See also Love v Brien [2012] WASC 457, [62]. 17 Paciocco [119] (Gageler J). 18 QNI, [100]. 19 QNI, [102]. 20 QNI, [110]. -- 11 of 15 -- 12 Proper construction of the Agreement [23] In my view, the starting point for determining the penalties issue is to address the proper construction of the Agreement. [24] The Agreement is relatively brief and, with respect, not clearly drafted. [25] I consider that, on its proper construction, the Agreement operated as follows: (a) it was agreed that Rebuild Relief would represent Ms Carrick throughout the insurance claim process; (b) the Agreement is predicated on the insurance claim being approved by the insurer; it makes no provision for payment by Ms Carrick in circumstances where the insurance claim is refused; (c) the two paragraphs of the section of the Agreement that appear under the heading ‘Engagement’ provide, in substance, that if the insurance claim is approved, one of two things may happen, first, that Rebuild Relief will assign a qualified and certified builder to complete the work approved for the amount allowed under the claim or, second, a settlement amount may be accepted by Ms Carrick from the insurer in lieu of funding repair works; (d) however, notwithstanding (c) above, clause 6 contemplates a third option, namely, that the insurance claim is allowed and Ms Carrick engages (or agrees to the engagement of) a builder that is not one ‘allocated’ or ‘assigned’ by Rebuild Relief (in which event a payment of 17.5% of the value of the claim is to be paid to Rebuild Relief); (e) if the claim for insurance is allowed and Rebuild Relief assigns a qualified and certified builder to complete the work approved for the amount allowed, no fee is payable by Ms Carrick for services rendered by Rebuild Relief;21 (f) however, if Ms Carrick accepts a settlement (of the claim) in lieu of repairs (and that money is not allocated to a builder assigned by Rebuild Relief), the Agreement provides that ‘a fee will be applicable’. In my view, it is sufficiently clear from the terms of the Agreement that the applicable fee is that provided for by clause 7, being 17.5% of any settlement amount not allocated to a relevant builder. [26] While the Adjudicator referenced both clause 6 and clause 7, I consider that, in circumstances where Ms Carrick accepted a cash settlement from the insurer, clause 7 was the clause relevant to the liability of Ms Carrick. [27] The first argument raised by Rebuild Relief is that the penalty principles have no application to clause 7 which Rebuild Relief characterises as a ‘stipulation of payment clause’. [28] In my view, having regard to Andrews, the critical question is whether clause 7 is a stipulation which is collateral (or accessory) to a primary stipulation and imposes 21 Although the Agreement makes no mention of Rebuild Relief receiving a fee from the builder ‘assigned’ by Rebuild Relief to perform the repair works, at the hearing, Mr Wood (who was the representative of Rebuild Relief) informed the Adjudicator that a referral fee would be paid by the builder in those circumstances. -- 12 of 15 -- 13 upon Ms Carrick an additional detriment (the 17.5% fee), to the benefit of Rebuild Relief, upon the failure of the primary stipulation. Is clause 7 a stipulation collateral to a primary stipulation? [29] On what I consider to be the proper construction of the Agreement, Ms Carrick was provided with three options, the first, to apply (or agree to apply) the amount of the indemnity under the insurance policy in repair of works performed by the preferred builder of Rebuild Relief; the second, to agree an amount of the claim with the insurer and take that as a cash settlement; the third, to apply (or agree to apply) the amount of the indemnity under the insurance policy in the repair of works by a builder other than one preferred by Rebuild Relief. If Ms Carrick adopted the first option, no fee was payable to Rebuild Relief. If either of the second or third options was adopted, Ms Carrick agreed to pay 17.5% of the cash settlement or the value of the claim respectively. Ms Carrick adopted the second option. [30] In my view, there was no stipulation (or obligation) under the Agreement that Ms Carrick adopt the first option. The fact that no fee was payable if the first option was adopted and a 17.5% fee payable if the second (or third) option was adopted plainly provided strong encouragement for Ms Carrick to adopt the first option. However, in circumstances where Ms Carrick was not obliged to adopt the first option and could elect to adopt any of the three options, I consider that the nature of the agreement is such that the doctrine of penalties is not engaged in relation to the operation of clause 7. [31] I consider that the case has some parallels with, although not on all fours with, one of the cases relied upon by Rebuild Relief, Metro-Golden-Mayer Pty Ltd v Greenham (MGM).22 MGM was cited with apparent approval in Andrews at [80] and [82]. As appears from the headnote of MGM, the facts were as follows: G entered into contracts with M-G-M in the form prescribed by the Theatres and Films Commission, whereby G was given the right to screen a film once only. On certain occasions G screened the film more than once. The prescribed form of contract, as used in this case, provided that should G screen the film without the consent of M-G-M., he would pay M-G-M a sum equivalent to four times the hiring fee for each such screening. M-G-M sued for the sums payable by reason of the additional screenings and was met with the defence that the sum was irrecoverable as a penalty. The District Court judge upheld this defence and M-G-M appealed to the Court of Appeal on the ground that the judge was in error on this point and was also in error when he held that the Commission exceed its powers in prescribing an ultra vires clause in the prescribed form. [32] The New South Wales Court of Appeal held, by a 2-1 majority, that on its true construction, the relevant clause (clause 56) amounted merely to giving the hirer the option of rescreening the film provided he paid an additional hiring fee and this was not in the nature of a penalty. I consider following observations of Jacobs JA (who with Holmes JA formed the majority)23 to be of particular relevance here: Upon such an approach it seems to me that cl. 56 is properly regarded as one providing for an additional hiring fee in the event of an additional showing of a film. It may well be intended by the agreement that such an 22 [1966] 2 NSWR 717. 23 At 723. -- 13 of 15 -- 14 additional showing should be strongly discouraged. For this reason a very large hiring fee compared with the original hiring fee is provided. However, that does not make the clause a penalty clause: cf. Bridge v. Campbell Discount Co. Ltd., [1962] 1 All E.R. 385; [1962] A.C. 600. First it would be necessary to determine that cl. 56 (a) truly dealt with damages and not with hire of the film for a further occasion or occasions. In the light of the interpretation which I have given to the agreement I do not see how, despite the language of cl. 9, the clause in question can be regarded as a clause dealing with damages. There is no right in the exhibitor to use the film otherwise than on an authorized occasion. If he does so then he must be taken to have exercised an option so to do under the agreement, if the agreement so provides. The agreement provides that he may exercise such an option in one event only, namely, that he pay a hiring fee of four times the usual hiring fee. In my view this is not a clause dealing with damages but is dealing with the price of such an option. … [33] By analogy, Ms Carrick’s obligation to pay the 17.5% fee was the ‘price’ of electing to exercise the second option under the Agreement, rather than the first option. [34] In Andrews, the High Court also referred, at [81], to Pomeroy, A Treatise on Equity Jurisprudence, 5th ed (1941), vol 2, §437, which Rebuild Relief seeks to rely upon. The section cited by the High Court was extracted in the first instance decision in Paciocco24 as follows: Such being the general test by which to determine the nature of a penalty, there are certain kinds of stipulations not unfrequently inserted in agreements which have been judicially interpreted and held not to be penalties, and therefore not subject to be relieved against by courts of equity. The nature and effect of these stipulations I shall briefly explain. The first instance is that of a contract by the terms of which the contracting party so binds himself that he is entitled to perform either one or two alternative stipulations, at his option; and if he elects to perform one of those alternatives, he promises to pay a certain sum of money, but if he elects to perform the other alternative, then he binds himself to pay a larger sum of money. To state the substance of the agreement in briefer terms, the contracting party may do either of two things, but is to pay higher for one alternative than for the other. In such a case equity regards the stipulation for a larger payment, not as a penalty, but as liquidated damages agreed upon by the parties. It will not relieve the contracting party from the payment of the larger sum, upon his performance of the latter alternative to which such payment is annexed; nor, on the other hand, will it deprive him of his election by compelling him to abstain from performing whichever alternative he may choose to adopt. [Citations omitted and emphasis in original.] [35] To adapt the language of Pomeroy, Ms Carrick could ‘elect’ to adopt one of the options identified above but, if she elected to take the second option, Ms Carrick was required to pay a higher amount for that option (in fact, no payment was required if the first option was adopted). [36] In short, I am of the view that, as a matter of substance, the first option cannot be characterised as a ‘primary stipulation’ and the second option as a ‘collateral 24 Paciocco v Australia and New Zealand Banking Group Ltd (2014) 309 ALR 249, [2014] FCA 35, [37]. -- 14 of 15 -- 15 stipulation’ which operates upon the ‘failure’ of the first option. I consider that the doctrine of penalties has no application to the Agreement. [37] In any event, even if Ms Carrick could have overcome this hurdle, I am not satisfied that she has discharged the (significant) onus of establishing that the amount payable was ‘plainly excessive in nature’ and ‘out of all proportion’ in comparison with the interest sought to be protected, which interest I consider to be the remuneration for the services provided by Rebuild Relief, which remuneration was to be received either by way of the referral fee provided by the selected builder who carried out the repair works or, alternatively, by payment of the 17.5% fee. In particular, I find that Ms Carrick’s submission that the services rendered by Rebuild Relief could not have taken longer than 3.5 to 5.5 hours has not been substantiated; it appears to be nothing more than an assertion.25 [38] For the above reasons, I consider that the Adjudicator correctly concluded that clause 7 was not a penalty clause and that the appeal should be dismissed. Conclusion in relation to Ground 2 [39] For the above reasons, I consider that the Applicant has not established that there is a reasonable argument that the Decision was attended by error and an appeal is necessary to correct a substantial injustice caused by that error, or that Ground 2 raises a question of general importance upon which further argument and a decision of the Appeal Tribunal would be to the public advantage. I refuse leave to appeal in relation to Ground 2. Orders [40] In accordance with the above reasons, leave to appeal is refused. 25 I note that this submission is contested by Rebuild Relief: Respondent's Submissions, paragraphs 38, 39, 42 and 43. -- 15 of 15 --