Alliance Property Consultancy Pty Ltd v Vietheer [2021] QCAT 415

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Alliance Property Consultancy Pty Ltd v Vietheer [2021] QCAT 415 PARTIES: ALLIANCE PROPERTY CONSULTANCY PTY LTD (applicant) v KATE VIETHEER (respondent) APPLICATION NO/S: MCDO624-20 MATTER TYPE: Other minor civil dispute matters DELIVERED ON: 1 December 2021 HEARING DATE: 15 June 2021 HEARD AT: Brisbane DECISION OF: Adjudicator Stroud ORDERS: The Respondent is to pay to the Applicant the sum of $8,949.22. CATCHWORDS: ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – minor civil dispute – claim for minor debt – whether contract lawfully terminated – whether clause relied upon for payment a penalty and unenforceable. Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 11, s 32 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC. Legione v Hateley [1983]152 CLR 406 at 445 Paciocco v Australia and New Zealand Banking Group Ltd [2016] 258 CLR 525 Ziegler t/as Ziegco Pty Ltd v Recochem Incorporated [2010] QCATA 78. APPEARANCES & REPRESENTATION: Applicant: Self-represented – Adam Killacky Respondent: McGuiness Wilson Lawyers This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (the Act). -- 1 of 7 -- 2 REASONS FOR DECISION What this matter is about? The Respondent contracted with the Applicant to negotiate an insurance claim with her insurer (QBE) for hail damage to her roof. QBE approved the claim but only on the basis one of its panel builders (and not the Applicant’s) be engaged to carry out the rectification work. The Respondent terminated the contract with the Applicant. The Applicant is seeking payment from the Respondent pursuant to the contract. The Respondent denies she is indebted to the Applicant as she lawfully terminated the contract and the payment clause relied upon by the Applicant is unenforceable on the basis it is a penalty. Issues to be determined The issues to be determined are: (a) Does the Tribunal have jurisdiction to determine the application? (b) What were the terms of the contract? (c) Did the Respondent lawfully terminate the contract? (d) Is the clause relied upon by the Applicant a penalty clause? (e) Is the Applicant entitled to payment? Jurisdiction Pursuant to section 11 of the Act the Tribunal has jurisdiction to determine a ‘minor civil dispute’. A ‘minor civil dispute’ includes a claim for a minor debt. A minor debt claim is a claim to recover a debt or liquidated demand of money up to the prescribed amount of $25,000.1 A ‘debt’ or liquidated demand is, one where the amount is determined and, in effect, beyond dispute as to how it is calculated. If the amount depends upon assessment by the court or tribunal, it is not liquidated.2 Generally, a claim is liquidated when the monetary sum representing the claim is ascertained or capable of being ascertained by calculation by the use of a formula. As this is a claim for payment pursuant to the terms of a contract the amount of which is able to be ascertained pursuant to the contract terms, I am satisfied it is a minor debt and that I have jurisdiction to determine the matter. What were the terms of the contract? The Applicant provides insurance claim services which includes (amongst other things) identifying claimable damage to property, preparing a scope of works, lodging a claim with the insurer and negotiating settlement. Upon approval of a claim, it assigns a licensed builder from its panel of builders to carry out the repair work for the insurance settlement amount. 1 QCAT Act Schedule 3 definition “prescribed amount”. 2 As the Deputy President explained in Ziegler t/as Ziegco Pty Ltd v Recochem Incorporated [2010] QCATA 78. -- 2 of 7 -- 3 The Respondent, a schoolteacher, owns an investment property in Veteran. In August 2019, a representative of the Applicant contacted the Respondent regarding potential storm damage to the property and offered ‘a free, no obligation inspection’. The Respondent accepted the offer, and an inspection was carried out of the property on 12 August 2019. The inspection identified hail damage to multiple roofs on the property. Following the inspection, the Respondent agreed to engage the services of the Applicant on the terms set out in a Letter of Engagement signed by both parties on 12 September 2019 (the Contract). The Contract, in summary, provided that the Applicant would represent the Respondent to all relevant parties throughout the insurance claim process and upon approval assign a licensed builder from its panel of builders to complete the rectification work for the amount approved by the insurance provider. If a settlement is accepted by the Owner in lieu of repairs a fee would be applicable. The Applicant also agreed to contribute up to $500 towards the insurance claim excess. The Contract also provided that: (a) In the event a repairer not assigned by Alliance is agreed to by you to complete the work, or Alliance is not given the opportunity to continue pursuit of the claim, a payment of 20% of the value of the claim is to be paid to Alliance, by the property owner/s for services rendered; and (b) 20% of any settlement amount not allocated to an Alliance assigned builder is to be paid to Alliance by the property owner/s for services rendered is to be paid by the property owner/s for services rendered. The Applicant organised an assessor and obtained a scope of works for rectification. It submitted this and a quote from one of its panel builders to carry out the rectification as part of the claim to QBE. QBE rejected the quote by the Applicant, it appears, on the basis that it was too expensive. In an email dated 8 November 2019 from QBE to the Applicant, QBE state “Please see attached SOW for the above matter. Ben Campbell Building Groups quotation amount is $44,746.12 inclusive of GST. This is our final position”. On 17 November 2019, the Applicant received a quotation from its panel builder Lifetime Builders to carry out rectification work for the amount approved by QBE, being $44,746.12. By email to QBE on 10 December 2019, the Applicant submitted the quote from Lifetime Builders and confirmed that it could do the repairs for the allocated amount. The Applicant requested that QBE provide the Respondent with one of the following options: • A cheque in Lifetime Builders name; • An EFT from for the Respondent to fill out so that she can receive the funds to pay the repairer directly; or • Have the repairer be paid by QBE directly. No response from QBE to this email was submitted by either party at the hearing. -- 3 of 7 -- 4 On 7 February 2020, the Applicant received an email from the Respondent informing the Applicant he was no longer authorised to act on her behalf in in relation to the insurance claim. Did the Applicant lawfully terminate the contract? It is not in dispute that the decision to withdraw the Applicant’s authority to act on the behalf of the Respondent amounted to a termination of the Contract by the Respondent. In the Response filed in the Tribunal,3 the Respondent stated that she terminated the agreement with the Applicant on the basis that the Applicant was not acting in her best interests in attempting to seek a cash settlement rather than just arranging to have the roof repaired as had been promised. In submissions filed by the Respondent’s legal representatives on 15 June 2021, further grounds of termination were submitted including: (a) Following the engagement of the Applicant the Respondent received minimal contact with respect to the status of the claim; (b) The Respondent was advised by the Applicant on numerous occasions by telephone that repairs were going to be commenced shortly but given no further information; (c) The Respondent requested that the Applicant contact her in writing (rather by phone) which did not occur for approximately 10 weeks; and (d) Due to lack of communication the Respondent contacted QBE who informed the Respondent that the Applicant was seeking a cash settlement, which the Respondent submits was never authorised or requested by her. The Applicant denies the Contract was lawfully terminated by the Respondent . Mr Killackey on behalf of the Applicant gave evidence at the hearing that after QBE denied their initial quote the Respondent became difficult to contact and did not return any of their phone calls. The Respondent then contacted the Applicant company by email and requested to cancel the agreement but would not answer their calls to discuss the claim or the Contract. Mr Killackey said they continued with the claim process until such time as their authority was removed by the Respondent. I am not satisfied on the evidence that the Respondent had grounds to terminate the Contract with the Applicant. At the hearing, the Respondent admitted that she did not answer the telephone calls by the Applicant, as she only wanted communication with the Applicant to be in writing by email. In relation to the cash settlement, the evidence does not support that this was the sole intention of the Applicant. The email by the Applicant to QBE on 10 December 2019 provides three (3) options for settlement of the claim, only one (1) of which was a cash settlement and the decision of which option being left to QBE. Whether or not QBE, under the policy of insurance, could deny the Respondent’s claim unless one of its own panel builders carried out the works was not fully traversed at hearing. The Applicant stated that, had it still been authorised to act for the 3 Dated 14 July 2020. -- 4 of 7 -- 5 Respondent it could have negotiated this issue with QBE, and if necessary, appealed the decision to the insurance ombudsman. However, it was denied such opportunity due to the actions of the Respondent. I agree with the submissions of the Applicant. The withdrawal of the Applicant’s authority prevented the Applicant for fulfilling or attempting to fulfill its obligations under the Contract. It was a repudiation of the Contract by the Respondent, as it showed an intention by the Respondent to no longer be bound by the terms of the Contract. The Applicant accepted the repudiation by seeking payment pursuant to the terms of the Contract. Is the clause relied upon by the Applicant a penalty clause? The Respondent submits the Applicant is not entitled to payment under the Contract as the clause relied upon by the Applicant for payment is a penalty clause. Whether a clause is a right to liquidated damages or a penalty is a question of fact which must be judged at the time of making the contract. The Respondent’s legal representative argued at the hearing that the Applicant is seeking payment for work performed by it that could have been performed at no cost to the Respondent had she submitted the claim herself. The services provided by the Applicant are in the most part services that would have been performed by QBE once a claim by the insured had been submitted. In the circumstances, legal representatives of the Respondent submit there was no need for the Applicant to be engaged. The fact that the Respondent could have submitted the claim herself and QBE could have performed the work carried out by the Applicant does not in my view, support the contention that payment sought by the Applicant under the contract is a penalty or that the Applicant is not entitled to be paid for services performed. The Respondent gave oral evidence at the hearing that she fully understood the terms of the Contract with the Applicant, and that there was no misrepresentation or misleading conduct by the Applicant in relation to its services. I am satisfied on the evidence that the Respondent, who is an educated schoolteacher, was aware that she could have submitted the claim herself but rather, chose to enter into the Contract with the Applicant so that it could be done on her behalf. It is an individual choice whether a person decides to deal directly with an insurer in submitting their claim or engaging the services such as those offered by the Applicant. The fact that a person can do it themselves does not render the services of the Applicant worthless. A perceived benefit in engaging the Applicant is that it relieves the insured from what can sometimes be a time-consuming task in preparing and lodging a claim, negotiating with the insurer, or organising a builder to carry out the repair work. Under the Contract with the Applicant, the whole process could occur with little involvement by, and at no cost to the Applicant. At the hearing, the legal representative for the Respondent informed the Tribunal that the works remained unrectified at the time of hearing as the Respondent did not have the financial capacity to pay the excess amount of $1,000. Given under the Contract, the Applicant was willing to contribute $500 towards the excess amount the obvious question arose as to why the Respondent, when she appeared to have the means to engage legal representation, could not afford to pay the excess. -- 5 of 7 -- 6 When I sought an answer to this question, I was informed by the legal representative that they were engaged by QBE to represent the Respondent at the hearing. Generally legal representation is not granted in the Minor Civil Dispute jurisdiction unless exceptional circumstances exist for the granting of leave. Upon reviewing the application for legal representation, I noted there was no mention was made that the legal representative was in fact engaged by the insurer. During the hearing I found the legal representative acting for the Respondent to be evasive on this issue and it was only upon asking the direct question of whether she was engaged by the insurer was this fact revealed. My concern with respect to this issue, is that it was not clear in certain aspects of the hearing whose interests the legal representative was representing. I say this, as it was somewhat perplexing as to why the matter required court intervention in circumstances where, QBE had approved the scope of works submitted by the Applicant, approved an amount for rectification which was accepted by the Applicant, and then refused to pay the amount if one of the Applicant’s licensed builders carried out the works. No clear explanation was provided by the legal representative at the hearing as to why QBE would not consent to the Applicant’s builder to complete the works. On the evidence before me at the hearing, it seemed that despite the submissions from the Respondent regarding termination, had QBE allowed the Applicant’s builder to carry out the repair work for the approved amount, the Contract would likely not have been terminated by the Respondent. In relation to the claim for payment by the Applicant, the Respondent argued that the clause relied upon by the Applicant for payment is a penalty clause and therefore unenforceable. The Respondent cited the various propositions of whether a clause is to be interpreted as a penalty set out in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd 4 (Dunlop) and the four step “test” to assist in the task of construction to whether a clause is a penalty clause. Reference was also had to the decision of Mason and Dean JJ in Legione v Hateley5 in which they define a penalty clause as follows: “A penalty, as its name suggests, is in the nature of a punishment for non-observance of a contractual stipulation; it consists of the imposition of an additional or different liability upon breach of the contractual stipulation”. The Respondent is correct in their submission that the effect of a clause construed as a penalty will be that it is void and unenforceable by the party seeking to rely upon it. The decision in Dunlop was considered at length in the High Court decision Paciocco v Australia and New Zealand Banking Group Ltd (Paciocco)6. In Paciocco the central issue to be determined by the court was whether late payment credit card fees charged by the bank were penalties. In finding they were not, the court found that the purpose of ANZ’s late payment fee was not to punish customers but to protect ANZ’s legitimate commercial interests. 4 [1915] AC 79 at 87. 5 [1983]152 CLR 406 at 445. 6 [2016] 258 CLR 525. -- 6 of 7 -- 7 In reaching this decision the court considered the distinction drawn between liquidated damages clauses and penalty clauses in Dunlop and found, whilst it is ‘useful’ it ‘should not be understood as a limiting rule’. The court held that a contractual term will not be a penalty if it protects the legitimate commercial interests of the non- defaulting party. The essential inquiry is whether the amount alleged to be a penalty is ‘out of all proportion to the interests of the party which it is the purpose of the provision to protect’. In the current matter I am not satisfied that the clause relied upon for payment by the Applicant is a penalty clause. The consideration under the Contract was that the Applicant would receive as payment for services rendered 20% of the settlement amount awarded by QBE. This amount was to be paid by the Applicant’s builder to the Applicant. This was, the Applicant’s payment for services rendered under the Contract. It only became payable by the Respondent in the event: (a) the Respondent accepted a settlement amount from the insurer and did not engage the Applicant to carry out repair work; (b) the Respondent engaged a repairer not assigned by the Applicant; or (c) if the Applicant was not given the opportunity to continue pursuit of the claim. In my view the clause is not a penalty as it protected the legitimate commercial interests of the Respondent under the Contract in the event of default by the Applicant. It does not impose any additional obligations on the Respondent, nor stipulate a compensation sum that is unconscionable as it represents an amount that is not disproportionate to the possible damages suffered by the Applicant as it represents a sum equal to (and not greater) than what the Applicant would have received had the Contract been performed. Accordingly, as I have found that the Respondent unlawfully terminated the Contract with the Applicant, the Applicant is entitled to payment pursuant to the terms of the Contract in the amount of $8,949.22. Orders The Respondent is to pay to the Applicant the sum of $8,949.22. -- 7 of 7 --