Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Cui v CLSA Premium Pty Ltd [2021] NSWCATAP 176 Hearing dates: 24 March 2020 Date of orders: 17 June 2021 Decision date: 17 June 2021 Jurisdiction: Appeal Panel Before: S Thode, Senior Member A Boxall, Senior Member Decision: (1) The appeal is dismissed. (2) The order made on 11 December 2020 in GEN 20/31783 is set aside. (3) Application GEN 20/31783 is dismissed for want of jurisdiction. Catchwords: APPEAL – Consumer Claim – appeal against findings made by Financial Ombudsman in Australian Financial Complaints Authority proceedings - whether jurisdiction to make orders - question of law - no jurisdiction Legislation Cited: Civil and Administrative Tribunal Act 2013 Fair Trading Act 1987 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Italiano v Carbone (2005) NSWCA 177 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Texts Cited: None cited Category: Principal judgment Parties: Pei-Yu George Cui (Appellant) CLSA Premium Pty Ltd (Respondent) Representation: Appellant (Self Represented) A Lin (Respondent) File Number(s): 2021/00056035 (AP 21/01304) Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 5 January 2021 Before: J Ringrose, Senior Member File Number(s): GEN 20/31783 reasons for decision Introduction 1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 11 December 2021. 2. The internal appeal was brought by Mr Pei-Yu George Cui, the consumer, against the financial service provider CLSA Premium Pty Ltd. The consumer appeals against the decision of the Tribunal to award US$692.10. It was the appellant's submission below and on appeal that the Tribunal should have awarded $16,511 for losses and damages incurred by reason of the respondent's failure to fully disclose terms and conditions in its Margin Trading Product Disclosure Statement (PDS). For the reasons set out below we have decided that the Tribunal has no jurisdiction to hear and determine any issue between the parties and to dismiss the appeal. 3. For convenience we shall refer to the parties as the appellant and the respondent. Background 1. The following facts are uncontroversial. The appellant opened a margin trading account with the financial firm on 6 October 2016. In relation to his foreign exchange trading the appellant says that the financial firm did not disclose that they could charge daily swap fees on open contracts and would cancell stop loss orders at the end of each day without his permission. The appellant seeks to be reimbursed for fees charged and claims losses on the contracts where stop loss orders were removed without his knowledge or consent. 2. It is the respondent's position that based on his online account opening records retrieved from the respondent's system the appellant had confirmed that he had read and understood the terms and conditions of the Client Services Agreement (CSA) including the Product Disclosure Statement (PDS), risk statement and privacy statement. The appellant was advised to read the PDS carefully on the first page of the account opening process and it is submitted the system would not have allowed the appellant to proceed to open a trading account without agreement and confirmation that the appellant had read and understood all terms and conditions and the PDS. 3. On or about 1 November 2016 the appellant complained that the respondent had failed to disclose the existence of swap fees and that the respondent did not have a right to charge the appellant those fees. Relevantly the appellant continued to trade overnight incurring further losses. 4. It is the appellant's case that he lost in the order of US$15,000. 5. The appellant ultimately complained to the Australian Financial Complaints Authority (AFCA). On or about 22 November 2019 AFCA's case manager issued written reasons to the appellant informing him that the financial firm had acted appropriately and was not responsible for the losses claimed by the appellant. In accordance with the AFCA guidelines the appellant rejected the finding of the Case Manager and the case was reviewed by the Financial Ombudsman. 6. The amended determination was issued to the appellant on 1 April 2020. 7. Under issues and key findings the Ombudsman found as follows: 1. The respondent provided a Product Disclosure Statement (PDS) to the appellant when he opened the trading account. The PDS disclosed an account would incur costs (swap fees) when positions are kept open overnight. 2. The respondent should have done more to bring its special terms about stop loss orders on USD CHN to the appellant's attention. 3. The respondent is responsible for the appellant's losses on USD CHN positions open before 1 November 2016. It is fair the respondent pay USD $692.10 compensation to the appellant. 1. The Ombudsman ordered that the respondent within 14 days of the appellant's acceptance of the determination pay the appellant USD 692.10 with interest. The respondent was also ordered to pay $250 compensation for the appellant's non-financial loss. 2. In another critical finding the Ombudsman found that the appellant did not mitigate his loss. The Ombudsman found that because the appellant complained to the respondent about the expiry of the stop loss orders on 1 November 2016 the appellant was aware there was a problem with the stop loss orders. However, the appellant continued to trade USD CHN pairs after 1 November 2016 even though he was aware of the stop loss problem. The Ombudsman further found that that the respondent was therefore not responsible for losses on USD CHN positions opened after 1 November 2016. It was found that the appellant was responsible for any losses he incurred after 1 November 2016. Tribunal proceedings and decision 1. The appellant commenced proceedings in the Tribunal on 25 July 2020. In the original application form the appellant alleged that the respondent invalidly removed his stop loss orders without disclosing the practice to him. The applicant submitted that other margin trade providers would never remove or invalidate stop loss orders and that the respondent is responsible for any losses incurred by failing to bring the special conditions to his attention. 2. The Tribunal proceedings were initially listed for a Group List and Conciliation hearing. The parties were unable to resolve the matter and the application was adjourned to a final hearing on 11 December 2020. The member delivered oral reasons for decision and made critical findings during the hearing. A transcript was provided to the Appeal Panel after the appeal hearing. 3. During the hearing the Member made critical findings that the Tribunal had no jurisdiction to hear and determine a consumer claim in cases where an application was filed more than three years after the cause of action arose. 4. The Member accepted the Ombudsman's findings as 'expert opinion', and found that the respondent was not responsible for any losses that occurred after 1 November 2016 when the appellant complained that the respondent had failed to disclose the existence of swap fees and that the respondent did not have a right to charge the appellant those fees. The Member 'adopted' the Ombudsman's finding that no liability arose after 1 November 2016 as the Ombudsman was an expert in the field and as the appellant had not tendered any other expert evidence. 5. As the proceedings were commenced on 25 July 2020, the Member concluded it had no jurisdiction in respect of losses incurred at or before 1 November 2016. However rather than dismissing the application for want of jurisdiction the Member determined that he could enter a money order in the sum of USD 692.10. Scope and nature of internal appeals 1. Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, with the "leave") of the Appeal Panel: s 80(2) of the NCAT Act. 2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. Submissions and evidence 1. In deciding the appeal, we have had regard to the following: * The Notice of Appeal lodged on 8 January 2021 and the appellant's written submissions in support of the appeal filed on 19 March 2021. * The Reply to Appeal lodged 3 February 2021 with attachments and the respondent's written submissions dated 11 March 2021. Grounds of Appeal 1. In the Notice of Appeal filed on 8 January 2021 the appellant states [the member] has expressed orally for the reasons of his decision that NCAT member (sic) usually follow the specialist opinion so he made his order that followed the determination of Financial Ombudsman completely. But the part of the determination of Ombudsman which blamed I did not me (sic) to get my loss so I put the responsibility of major amount of loss on me, (sic) it was turned the responsibility from the regulation breaching financial firm to the customer who suffer huge loss that cause by the firm. 1. In the section 'are you asking leave to appeal' the appellant answered 'yes'. The appellant states that the decision was not fair and equitable because "The member has expressed his power is only can back up (sic) for three years, so his jurisdiction could not back up to year 2016 which the trading was happened. Actually, my application to NCAT wants to challenge the unfair point in the determination of Financial Ombudsman that blamed I have not mitigate my loss (sic) so I should take the consequence for the major loss that I suffered, which determination has made in April 2020. So the NCAT member expressed that he has not power over this case but to follow the determination was incorrect." 1. We consider that the appellant is not challenging the critical finding that a cause of action accrued more than three years before proceedings commenced. The appellant appeals against the finding of the financial ombudsman that he has failed to mitigate his loss. Reply to Appeal 1. The Reply to Appeal identified that the respondent supported the reasons and orders of the Tribunal. The appellant's submissions 1. During oral submissions the tenant submitted that the member copied the Ombudsman's decision, and as the member did not himself arrive at any findings, the Member failed to exercise the jurisdiction of the Tribunal. 2. The appellant submitted that the Tribunal should have analysed the facts and come to its own conclusions particularly in respect of the appellant's alleged failure to mitigate his losses after 1 November 2016. The appellant submitted that the Tribunal erred in not 'correcting' the AFCA Ombudsman's determination but to 'follow the determination completely'. 3. It is further submitted the Tribunal erred in concluding that it did not have jurisdiction in respect of any cause of action that arose more than three years before commencement of proceedings. It is the appellant's position that the cause of action arose when the determination of the AFCA Ombudsman was brought to his attention on 27 February 2020 (and amended on 1 April 2020) this being the date the cause of action accrued. 4. It was the critical finding of the Ombudsman that the appellant had failed to mitigate his loss which the appellant submits gives rise to the cause of action and not the original transaction in 2016. 5. It is the applicant's submission that the Tribunal Member had jurisdiction to determine whether the AFCA Ombudsman's decision was correct and that the Member should have "corrected" the critical findings of the Ombudsman's determination, and, having arrived at his own independent findings, to make an award of $11,511. The respondent's submissions 1. It is the respondent's submission that the member was correct in following the guidance of the AFCA Ombudsman, as AFCA is the authorised body for financial services complaints having conducted a thorough investigation into the case. 2. The respondent submits that the decision was not against the weight of evidence. The respondent provided evidence that as early as 27 October 2016 the appellant knew how the stop loss orders had to be replaced the next day and that the appellant had been able to utilise stop loss orders to result in trading profits. It is submitted by the respondent that even after the applicant first complained to the financial firm on 1 November 2016 that his stop loss orders were deleted, the appellant opened another 100 new trades with several being held open overnight. The appellant cherrypicked a number of trades that lost money while he also made a number of profitable trades with the stop loss order. 3. The respondent rejects that it was responsible for losses where the applicant knew or ought to have known as early as 27 October 2016 that the stop loss instructions would not roll forward to subsequent trading days and instead the appellant knowingly decided or chose to roll the positions forward, regardless, without adding any new stop loss instructions that he desired. 4. It is the respondent's position that the appellant requires leave to appeal and opposes such leave being granted. It is the respondent's submission that the Tribunal's decision was correct and that the Appeal Panel should dismiss the appeal. Determination 1. The issues for determination for the Appeal Panel are whether the submissions identify any grounds of appeal; if such grounds raise an error of law, or if the grounds of appeal do not raise errors of law, whether leave to appeal should be granted. 2. Applying the principles set out in Prendergast, above, it is incumbent upon the Appeal Panel to identify whether the appellant has raised an error of law. When did the cause of action accrue? 1. Principal to our consideration is the issue of time. For the reasons that follow we are not of the view that the Tribunal had any jurisdiction to hear and determine a cause of action that accrued more than three years before proceedings were commenced. The Tribunal Member was correct in determining that the cause of action accrued in 2016 and was correct in determining that the Member had no jurisdiction in respect of causes of action that accrued more than three years before the NCAT proceedings were commenced. Having arrived at these findings it was not open to the Member to consider the application further and the proceedings should have been dismissed. 2. Part 6A of the Fair Trading Act (FTA) concerns the jurisdiction of the Tribunal in relation to consumer claims. Section 79L of the Act provides, among other things, that the Tribunal does not have jurisdiction to hear and determine a consumer claim if the cause of action giving rise to the claim first accrued more than 3 years before the date on which the claim is lodged. 3. There is an imprecision in the meaning of the term "cause of action", which is sometimes used to mean the facts which support a right to judgment; sometimes to mean a right which has been infringed; and sometimes to mean the substance of an action as distinct from its form: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 610. In the context of section 79L of the FTA, "cause of action giving rise to the claim" refers to the set of facts which support a right to an order by the Tribunal. 4. In this case the appellant is a consumer and the respondent is a supplier of financial services. The appellant claims he suffered loss and damage by reason of the respondent's failure to disclose in its PDS contract documents the stop loss option. Although not specifically pleaded or particularised by the appellant either before the Member or on appeal, we consider the cause of action the appellant relies upon arises from a breach of contract, being the failure to disclose a stop loss option. 5. The appellant's claim for the recovery of the trading losses was lodged in the Tribunal on 25 July 2020. 6. It is clear that no cause of action of the appellant's relating to the alleged losses first accrued after 25 July 2017, being the date three years prior to the date of lodgement of the claims. All transactions relied upon by the appellant occurred between 24 October 2016 and 5 December 2016. 7. The Member was therefore correct in concluding that the Tribunal had no jurisdiction to hear and determine the issues in dispute between the parties. Having made the requisite finding it was not open to the Member to hear and determine the application and the Member should have dismissed the application for want of jurisdiction on the basis that it had not been lodged within the time period specified in s79L of the FTA. Appeal against the Ombudsman's decision 1. The appellant, now aware of the three year time limit, changed his position at the hearing, and raises a further ground of appeal. The appellant submitted the cause of action accrued when the first AFCA decision was published in February 2020, and that it was the Ombudsman's adverse finding that the appellant failed to mitigate his losses that gives rise to a consumer claim. 2. We are of the view that there is no force in this submission. We are not satisfied that a decision of AFCA's gives rise to a "consumer claim" within the meaning of the FT Act or that adverse findings or orders by the AFCA Ombudsman can give rise to a cause of action pursuant of S 79L of the FTA. First, AFCA and/or the Ombudsman are not named respondents to the application or the appeal. Second, the Tribunal has no jurisdiction to revisit findings or orders made by AFCA or its Ombudsmen. Any assumption that the Tribunal could revisit critical findings of AFCA in the absence of jurisdiction is misconceived. 3. In conclusion, the appeal must be dismissed. We are satisfied that the Member was correct when he considered that the appellant's cause of action accrued more than three years before he commenced proceedings and on that basis the appeal and the application must be dismissed. Conclusion 1. We conclude the Tribunal had no jurisdiction to hear and determine the issues between the parties. It was explained to the appellant that in the absence of any jurisdiction it was not open to the Member to make the orders for payment of money. The result is that the appeal must be dismissed. The Appeal Panel considers it appropriate pursuant to section 81(1)(b) of the CAT Act that the decision under appeal be set aside and for another decision to be substituted for it. We consider that application GEN 20/31783 must be dismissed for want of jurisdiction and we make the order accordingly. Orders 1. The orders of the Appeal Panel are: 1. The appeal is dismissed. 2. The order made on 11 December 2020 in GEN 20/31783 is set aside. 3. Application GEN 20/31783 is dismissed for want of jurisdiction. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 June 2021