Coliban Heights Pty Ltd v Citisolar Vic Pty Ltd
[2017] VSC 751
•14 DECEMBER 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2017 00836
| COLIBAN HEIGHTS PTY LTD | Plaintiff |
| v | |
| CITISOLAR VIC PTY LTD | Defendant |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 7 SEPTEMBER 2017 |
DATE OF JUDGMENT: | 14 DECEMBER 2017 |
CASE MAY BE CITED AS: | Coliban Heights Pty Ltd v Citisolar Vic Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2017] VSC 751 |
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JUDICIAL REVIEW AND APPEALS – Appeal from Victorian Civil and Administrative Tribunal – Whether Tribunal’s reasons insufficient – Whether Tribunal erred in finding material fact where no evidence to support that finding – Whether Tribunal erred in failing to grant relief sought where material fact precondition to grant of relief found – Appeal dismissed – Victorian Civil and Administrative Tribunal Act 1998 ss 117, 148 – Australian Consumer Law and Fair Trading Act 2012 ss 6, 7, 8 – Australian Consumer Law (Victoria) ss 60, 61, 62, 267, 268, 269, 270.
STATUTES – Statutory rights and remedies – Whether Tribunal erred in failing to grant relief sought where material fact precondition to grant of relief found – Australian Consumer Law and Fair Trading Act 2012 ss 6, 7, 8 – Australian Consumer Law (Victoria) ss 60, 61, 62, 267, 268, 269, 270.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr K Hanscombe QC with Ms F Batten | Marshalls & Dent |
| For the Defendant | Mr S Buchanan | Anderssen Lawyers |
HIS HONOUR:
Introduction
This proceeding arises out of commercial dealings between the plaintiff (‘Coliban’) and the defendant (‘Citisolar’) for the supply and installation of photovoltaic systems that included solar panels and inverters at four different properties. Each of four contracts was dated 10 June 2011. Initially the disputes between the parties came before the Victorian Civil and Administrative Tribunal, Civil Division (‘VCAT’ or ‘the Tribunal’).
In VCAT, Citisolar claimed $65,340 as the balance owing under the four contracts. Coliban counterclaimed for $68,500 in damages for breach of contracts. Coliban alleged that Citisolar failed to provide to the relevant authorities by a deadline of 30 September 2011 the paperwork that would have allowed Coliban to qualify for a premium C-IM tariff and, further, that the systems installed were incomplete and/or defective.
On 19 July 2013, Coliban purported to terminate the contracts pursuant to s 267(3)(a) of the Australian Consumer Law (Victoria),[1] notice of which was given by its amended defence and counter-claim filed in VCAT.
[1]Australian Consumer Law and Fair Trading Act 2012 s 8(b) (‘Australian Consumer Law’ or ‘ACL’).
On 18 October 2013, following a compulsory conference, the parties entered into terms of settlement. Each proceeding was struck out with a right to apply for reinstatement and with no order as to costs.
In July 2015, each party applied for reinstatement of the proceedings.
In a reserved judgment, the Tribunal concluded that the terms of settlement were unworkable and incapable of enforcement.[2] It ordered that each proceeding be reinstated notwithstanding that there had been some performance by each party of obligations created by the terms of settlement (‘the 2015 Decision’).
[2]Coliban Heights Pty Ltd v Citisolar Vic Pty Ltd (Civil Claims) [2015] VCAT 1579.
On 23 and 24 January 2017, the two proceedings came on for trial in VCAT. Neither party was legally represented.
On 9 February 2017, VCAT ordered that Coliban pay Citisolar $44,465 and that the parties bear their own costs with no reimbursement of fees. VCAT published reasons for this decision (‘the 2017 Decision’).[3]
[3][2017] VCAT 137 (‘Reasons’).
Coliban seeks leave pursuant to s 148(7) of the Victorian Civil and Administrative Tribunal Act 1998 (‘VCAT Act’) to appeal the orders of VCAT by the 2017 Decision. There is no longer any appeal in respect of the 2015 Decision to reinstate the two claims. The application for leave to appeal was heard together with the substantive appeal.
Coliban invited final resolution of the dispute rather than a remittal back to VCAT in the event that leave was granted and the appeal succeeded. It sought orders:
(a) setting aside the 2017 decision;
(b) declaring that the applicant has –
(i) a statutory right to terminate the contract;
(ii)a statutory entitlement to a refund and damages by reason of the respondent’s failure to comply with the statutory guarantee incorporated into the contract; and
(c)orders for the payment of such amounts as are necessary to give effect to the declaration sought.
The following facts were common ground or findings made by VCAT that were not challenged.
(a) On 10 June 2011, Coliban entered into four service agreements with Citisolar for the provision and installation of four grid-connected photovoltaic systems.
(b) Coliban acquired the services from Citisolar as a ‘consumer’ within the meaning of the Australian Consumer Law, as the amount payable for the services under each contract was less than $40,000.
(c) The services were supplied in August 2011. The work was inspected by an independent inspector between 20 August 2011 and 9 September 2011 and certified as compliant.
(d) The systems could have qualified for a premium feed-in tariff that had a deadline of eligibility of 30 September 2011. The time constraints became critical after the contracts were entered. Citisolar submitted the documents necessary for the submission to attract the tariff on 6 September 2011. Coliban did not sign and return the documents so no submission for the tariff was made. It disagreed that the installations were to an acceptable standard. Citisolar attempted to obtain the tariff through October and November 2011.
(e) Citisolar was entitled to rely on the certification of the independent inspector in respect of the quality of the services, at least until the same was contradicted by a later inspection and report.
(f) Coliban stated its intention to terminate the contracts when it learned that the premium feed-in tariff would not be allowed. Citisolar accepted that Coliban, on discovering that the tariff was not available for one installation refused to pay the balance of the account, requested that the systems be removed and the property made good, and that all moneys paid under the contracts be returned with interest.[4]
[4]Reasons [25].
(g) Citisolar did not accept this termination and pressed for payment.
(h) VCAT found that when difficulties arose with the lodgment of the paperwork, Coliban considered that the application could not be processed in the time available and it was Citisolar’s obligation to ascertain the details and it should just give Coliban its money back. Coliban’s attitude was indicative of a decision that it was ‘all too hard’ and accordingly it did not want the product any more.[5]
[5]Reasons [53].
(i) The failure of Citisolar to lodge the paperwork for the tariff was caused by the default of Coliban, which caused the non-completion of the contracts. At the time of Coliban’s refusal there was still time for tariff applications to be considered and accepted. At the time the works were completed, Citisolar was entitled to the balance of the contract price and at this point in time Coliban had no grounds to withhold the payment of the contract price.
(j) The systems are not receiving the premium feed-in tariff rate.
(k) VCAT found that Citisolar was entitled to recover the full contract price at this time. The outstanding balance of the contract price claimed was $65,340. It was implicit in VCAT’s finding that termination for failure to obtain the tariff was the basis of Coliban’s statement of intention to terminate in November 2011 and that termination on that basis was not open to Coliban.
(l) Citisolar commenced a proceeding in VCAT on 13 June 2012. The proceeding prompted Coliban, about one year after its initial statement of intention to terminate, to commission a report from IT Power Pty Ltd (‘IT Power’). That report was based on an inspection on 7 November 2012.
(m)Coliban again stated its intention to terminate the contracts with Citisolar on 19 July 2013 by a statement to that effect in its amended defence and counterclaim filed in VCAT. This statement was grounded on the major failures of Citisolar in complying with the consumer guarantees. At that time, the reports of IT Power and Global Sustainable Energy Solutions (‘GSES’) had been obtained that evidenced that a ‘major failure’ to comply with the consumer guarantee had occurred. Under the Australian Consumer Law, an effective termination of the contracts would take effect from this date.[6]
[6]Australian Consumer Law, s 269(2)(a).
(n) Since Coliban acquired the services as a consumer, it was entitled to rely on consumer guarantees arising under the Australian Consumer Law. Those guarantees were that Citisolar services would be rendered with due care and skill,[7] reasonably fit for purposes made known to Citisolar,[8] of such a nature, and quality, state or condition, that they might reasonably be expected to achieve any result that Coliban made known to Citisolar,[9] and supplied to Coliban within a reasonable time.[10]
[7]Australian Consumer Law, s 60.
[8]Australian Consumer Law, s 61(1).
[9]Australian Consumer Law, s 61(2).
[10]Australian Consumer Law, s 62.
(o) Coliban alleged that Citisolar did not comply with the consumer guarantee and the Tribunal later found that there were defects in Citisolar’s services that, broadly, made good that allegation.[11] The installations provided to Coliban were of a low standard and, being so, were potentially unsafe and susceptible to damage or causing damage.
[11]Reasons [9], [73], [84]-[88].
(p) Under the Australian Consumer Law, a ‘major failure’ to comply with the consumer guarantee occurs if the supply of the services creates an unsafe situation.[12]
[12]Australian Consumer Law, s 268(e).
(q) The defects were ‘major defects’ and Coliban knew or had reason to know that the installations were faulty and substandard on 16 November 2012 when the IT Power report was provided to it.
(r) Coliban and Citisolar compromised the issues in the proceedings on the basis discussed later in these reasons and the proceedings were each dismissed. In summary, under and pursuant to the terms of settlement, Coliban agreed to accept further performance of the contracts by Citisolar completing rectification work to a standard of satisfaction to be assessed, and on certain conditions to pay moneys to Citisolar which agreed to accept a further payment in two tranches of the price due under the contracts.
(s) Coliban paid Citisolar a further sum of $14,000.
(t) Citisolar substantially, although not fully, completed further works by way of rectification of its original works pursuant to a work schedule prepared by an independent assessor.
(u) The uncompleted rectification works were minor in nature, but Coliban did not obtain any certification about the rectification works as it was obliged to do under the terms of settlement.
(v) In July 2015, each party applied to reinstate the proceeding in which it was applicant.
(w) On 8 October 2015, the proceedings were reinstated on the basis that there had never been any terms of settlement.
(x)
There were further delays before the proceeding came on for trial on
23 January 2017.
(y) After the rectification works done by Citisolar under the terms of settlement, significant changes were made to the applicable Australian Standards.
(z) Following an inspection on 5 November 2016 pursuant to orders of the Tribunal, Mr Muscat (an expert) estimated the cost of further rectification and completion work to bring the installations to the Australian Standard that applied when the defects were detected in 2013 was $849.00. Another expert, Mr Riddiford condemned the standard of the installations and was insistent that any rectification should be to current Australian Standards, estimating that it may cost up to $22,000 to bring the installations to acceptable operational level.
(aa) The status of the systems in January 2017 was that one system was operational and connected to the electricity grid and generating some benefits. A second system was working and Coliban could have the benefit of it by making arrangements with the energy provider. The other two systems were decommissioned by an inspector when dangerous faults were detected. Coliban had not engaged or instructed anyone to fix these faults and have the systems made operational in the three years since they were detected.
(bb) As at January 2017, the outstanding debt owed by Coliban to Citisolar under the contracts was $51,340.
(cc)All of the remaining faults and defects were capable of rectification. Citisolar offered to pay the costs of rectifying the work to the applicable standards at the time of the contracts. VCAT found that its duty to rectify arose in November 2012 when the IT Power report contradicted the independent certification on which it was previously relying.
(dd) The Tribunal assessed the value of that work at $2,200.
(ee) The Tribunal found that the certification standards had not changed within a reasonable period after November 2012 for all defects to have been rectified. Coliban was responsible for the delays that resulted in rectifications works not being completed before the change in the Standards. The cost of work to bring the installations to the current certification standards, which accounted for much of the estimate of $22,000 relied on by Coliban was not the responsibility of Citisolar.
(ff) The Tribunal assessed the compensation to which Coliban was entitled for the poor quality installation of the four systems and failure to rectify within a reasonable time after November 2002 at $2,000. This assessment was not challenged.
(gg) The Tribunal made further assessments in respect of costs and expenses that were not challenged on the appeal totalling $2,475 in Coliban’s favour and $275 in Citisolar’s favour.
The Tribunal concluded that the sum due to Citisolar was $44,465. No issue was taken on the appeal by Citisolar about the Tribunal’s arithmetic.[13]
[13]I note the following. Outstanding contract price $65,340, plus costs allowed to Citisolar $275, less payment pursuant to terms of settlement $14,000, less assessed value of rectification work $2,200, less compensation $2,000, less costs allowed to Coliban, $2,475, totals $44,940.
Relevant legislation
Subdivision B of Part 5.4 of the Australian Consumer Law sets out the available remedies relating to guarantees. The relevant provisions state -
267 Action against suppliers of services
(1) A consumer may take action under this section if:
(a)a person (the supplier ) supplies, in trade or commerce, services to the consumer; and
(b)a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3-2 is not complied with; and
(c)unless the guarantee is the guarantee under section 60 the failure to comply with the guarantee did not occur only because of:
(i)an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or
(ii)a cause independent of human control that occurred after the services were supplied.
(2)If the failure to comply with the guarantee can be remedied and is not a major failure:
(a)the consumer may require the supplier to remedy the failure within a reasonable time; or
(b)if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time the consumer may:
(i)otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii)terminate the contract for the supply of the services.
(3)If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) terminate the contract for the supply of the services; or
(b)by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
(4)The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
(5)To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).
268 When a failure to comply with a guarantee is a major failure
A failure to comply with a guarantee referred to in section 267(1)(b) that applies to a supply of services is a major failure if:
(a)the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b)the services are substantially unfit for a purpose for which services of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(c) both of the following apply:
(i)the services, and any product resulting from the services, are unfit for a particular purpose for which the services were acquired by the consumer that was made known to the supplier of the services;
(ii)the services, and any of those products, cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(d) both of the following apply:
(i)the services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was made known to the supplier;
(ii)the services, and any of those products, cannot, easily and within a reasonable time, be remedied to achieve such a result; or
(e) the supply of the services creates an unsafe situation.
269 Termination of contracts for the supply of services
(1)This section applies if, under section 267, a consumer terminates a contract for the supply of services.
(2) The termination takes effect:
(a)at the time the termination is made known to the supplier of the services (whether by words or by conduct indicating the consumer's intention to terminate the contract); or
(b)if it is not reasonably practicable to communicate with the supplier of the services at the time the consumer indicates, by means which are reasonable in the circumstances, his or her intention to terminate the contract.
(3)The consumer is entitled to recover, by action against the supplier of the services, a refund of:
(a) any money paid by the consumer for the services; and
(b)an amount that is equal to the value of any other consideration provided by the consumer for the services;
to the extent that the consumer has not already consumed the services at the time the termination takes effect.
270Termination of contracts for the supply of goods that are connected with terminated services
(1) If:
(a)under section 267, a consumer terminates a contract for the supply of services; and
(b)a person (the supplier ) has supplied, in trade or commerce, goods to the consumer that are connected with the services;
then:
(c)the consumer is taken to have rejected the goods at the time the termination of the contract takes effect; and
(d)the consumer must return the goods to the supplier of the goods unless:
(i)the goods have already been returned to, or retrieved by, the supplier; or
(ii)the goods cannot be returned, removed or transported without significant cost to the consumer because of the nature of the failure to comply with the guarantee to which the rejection relates, or because of the size or height, or method of attachment, of the goods; and
(e) the supplier must refund:
(i)any money paid by the consumer for the goods; and
(ii)an amount that is equal to the value of any other consideration provided by the consumer for the goods.
(2)If subsection (1)(d)(ii) applies, the supplier must collect the goods at the supplier's expense.
The parties’ submissions
Coliban
Coliban contended that three specific errors of law were evident in the 2017 Decision.
(a) The Tribunal failed to fulfill the statutory obligation imposed by s 117 of the VCAT Act (Ground 1).
(b) The Tribunal erred in law in finding a material fact where there was no evidence to support that finding (Ground 2).
(c) The Tribunal erred in law in failing to grant the relief sought by Coliban, despite having found as a material fact the statutory precondition to the grant of such relief (Ground 3).
In essence, Coliban claimed that it sought to exercise its statutory right to terminate the contracts and claim a refund, but the Tribunal did not award it its statutory rights and entitlements, despite finding the facts giving rise to those statutory rights and entitlements.
Coliban put the claim in this way. First, it submitted that the 2017 Decision disclosed the ‘necessary inference’ that Citisolar’s supply of the disputed services created an unsafe situation for it within the meaning of s 268(e) of the ACL. Accordingly, although not expressed in these exact terms, the Tribunal found that there was a ‘major failure’ within the meaning of the ACL.
Coliban submitted it was entitled as of right to the relief it sought, being termination, damages, and a refund to the extent the services had not been consumed by it prior to termination. However, what the Tribunal in fact ordered was that Coliban pay Citisolar the remainder owing under the four contracts minus $6,675, made up of the following amounts:
(a) $2,200 being the cost of rectification works allowed by the Tribunal;
(b) $2,000 in compensation for the poor quality of Citisolar’s services; and
(c) $2,475 being the apportioned cost of an expert report.
Leave to appeal
The Court of Appeal in Secretary to the Department of Premier and Cabinet v Hulls,[14] stated that when seeking leave to appeal pursuant to s 148 of the VCAT Act:
[14][1993] 3 VR 331, 337 [16] (Phillips JA).
(a) the applicant must identify a question of law;
(b) the applicant should demonstrate its importance either to the applicant personally or more generally;
(c) the applicant must show that there is at least enough doubt about the question of law to justify the grant of leave; and
(d) to allow the error to go uncorrected would lead to substantial injustice.
Coliban submitted that three identified errors would impose substantial injustice if they were to go uncorrected, as the practical result of the 2017 decision was to force it to accept unsafe electrical works for the payment of a grossly insufficient sum to render them safe, and to do so in the face of a statutory right to reject the supply of those unsafe services.
Ground 1
Coliban submitted that the Tribunal’s reasons did not fulfil the statutory obligation imposed by s 117 of the VCAT Act. The Tribunal must give reasons for any order it makes in a proceeding, and written reasons must include its findings on material questions of fact. The reasons given, it submitted, did not disclose an actual path of reasoning in sufficient detail to enable a court to identify whether the decision involved any error of law in addition to that identified in ground 2. It was not apparent from the Tribunal’s reasons why, upon finding there was a ‘major failure’, the Tribunal did not award Coliban its statutory entitlement to termination of the contracts. The reasons did not disclose any path of reasoning from the finding of major failure in the supply of services by Citisolar to the orders made in resolution of the proceeding.[15] Further, ‘over-zealous scrutiny of the reasons’,[16] was not required to justify this conclusion.
[15]Citing Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480 (‘Wingfoot’).
[16]Citing Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, 272.
Beyond an absent path of reasoning, the Tribunal’s order that Coliban pay Citisolar $44,465 contradicted its finding of major failure by Citisolar in the supply of services. Such a contradiction also enlivened the application of the principles in Wingfoot.[17]
[17]Referring to Slade v John Patrick Pty Ltd [2014] VSC 563.
Ground 2
The second error alleged was that there was no evidence to support a material finding of fact. Coliban disputed the Tribunal’s finding that the cost of rectification works could be valued at $2,200. It contended there was error as there was no evidence to support the finding that the proper valuation of that rectification work was $2,200. The evidence about the cost of rectification varied from Coliban’s assessment of $22,000 to Citisolar’s assessment of $849.
Alternatively, Coliban submitted that the Tribunal’s failure to explain the evidentiary basis for this finding constituted an additional failure to provide adequate reasons, as required by Wingfoot.[18]
[18]Also referring to Secretary to the Department of Justice v YEE [2012] VSC 447 [93].
Ground 3
The third error alleged was that the Tribunal failed to grant the relief sought despite finding as material facts the statutory preconditions to the granting of that relief. This ground was closely related to ground 1, and essentially relied on the same contention - once the Tribunal found there had been a ‘major failure’ in the supply of the services by Citisolar, Coliban was entitled to the relief it sought. Relief was not discretionary. Coliban submitted that having found the statutory preconditions to the granting of that relief, the failure to do so constituted an error of law.
Citisolar
Citisolar disputed that Coliban validly terminated the four contracts and disputed that it was entitled to a declaration from the Tribunal to that effect with consequential relief. It pointed to:
(a) the terms of settlement executed on 18 October 2013, which were inconsistent with termination; as was
(b) the rectification work performed by Citisolar pursuant to the terms of settlement.
Citisolar submitted that by agreeing to leave the systems in situ and allowing it the opportunity to rectify defects, Coliban, in effect, consumed the services. Citisolar added, in oral submissions, that Coliban’s conduct at VCAT by submitting that it retain the goods – that Citisolar ‘abandon what’s there’ – was conduct inconsistent with termination. Citisolar contended that under the ACL a consumer cannot both terminate a contract and retain the goods supplied. Rather, having terminated the contract, it was incumbent on the consumer to return the goods or make them available for delivery. Given that the Tribunal found that all faults were capable of rectification, a failure to return the goods or make them available for delivery without paying for them could lead to a double benefit for Coliban.
Further, Citisolar submitted that Coliban did not raise termination before the Tribunal as an issue to be determined. The Tribunal could not fall into error in failing to consider termination because it was not a live matter before it.
Citisolar submitted that s 269(3) of the ACL did not apply and Coliban was not entitled to a full refund from it because it consumed the services Citisolar supplied. This conclusion followed as all four systems were in operation and generating power at various times.
Grounds 1 and 3
Citisolar submitted that reasons that apprise the parties of the broad outline and constituent facts of the reasoning on which the body has acted will usually be sufficient.[19] The Tribunal was required to provide a basic explanation of the fundamental reasons which led to its conclusions, and was not required to give an extended intellectual dissertation upon its chain of reasoning.[20] The Tribunal was not required to refer to evidence in detail in circumstances where it is clear that the relevant evidence has been considered.[21]
[19]Citing Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247.
[20]Citing Strbak v Newton (Unreported, NSW Court of Appeal, Gleeson CJ, Samuels and Priestly JJA, 18 July 1989).
[21]Citing Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430.
Citisolar submitted that the Tribunal’s reasoning that supported its determination not to give Coliban a full refund was clearly set out in the reasons. It submitted that it was ‘obvious’ that Coliban benefitted from the services provided by Citisolar, and accordingly it was apparent that Coliban had consumed the services supplied. The Tribunal correctly recognised that, due to the operation of the proviso in s 269(3), Coliban was not entitled to a full refund of the moneys paid.
In oral submissions, Citisolar also disputed that the Tribunal found there was a ‘major failure’ for the purposes of s 268 and that it had not erred in law in not so finding.
Ground 2
Citisolar submitted that the Tribunal’s reasoning in reaching the finding impugned under this ground was clear and unambiguous and based on the following matters:
(a) there was a vast discrepancy between the parties’ estimates of rectification costs;
(b) the Tribunal concluded the estimate relied on by the applicant was too high, because it was based on Coliban’s contention, which it rejected, that the systems should be brought to compliance with current Australian Standards;
(c) the Tribunal concluded Citisolar’s estimate was conservative, and did not account for all likely costs, such as safety certification and its estimate was supplemented by a further amount to address that deficiency.
Citisolar submitted that it was open to the Tribunal to make an assessment for itself, where it found that neither quote tendered at the hearing was satisfactory.
Conclusions
Preliminary issue – the terms of settlement and the 2015 decision
Coliban, in its written and oral submissions, narrowed its application by abandoning its appeal against the 2015 Decision that reinstated for determination the issues raised in the original VCAT proceedings, despite attempted, if unsuccessful, efforts of the parties to perform the terms of settlement.
Coliban submitted that a necessary consequence of this determination was that its claim, by its amended defence and counterclaim, to have validly terminated the contracts on 19 July 2013 was reinstated as an issue in the proceedings between the parties on the basis that there had never been any terms of settlement. In the 2015 Decision the Tribunal concluded:[22]
Even though the particular rights of reinstatement under paragraphs 11 and 12 do not exist, the Terms of Settlement are unworkable and presently cannot be enforced. So both proceedings ought to be reinstated. The unhappy consequence is that the parties may resume the two proceedings as if there had never been any Terms of Settlement.
[22]2015 Decision [21] (emphasis added).
Although it is strictly unnecessary to consider the issue, my tentative view – tentative because the issue was not argued before me – is that this finding was plainly wrong and was not supported by the reasoning given. VCAT did not consider, as it ought to have done, declaring that the terms of settlement were discharged in respect of their future performance, or performance on and from an identified date. However, the error does not favour Coliban and it is unsurprising that it abandoned its challenge to the 2015 Decision.
By the terms of settlement, Coliban agreed to pay Citisolar a further sum of $37,500 in two tranches, the first of which, $14,000, was paid by 1 November 2013. Citisolar agreed to perform, by 6 December 2013, rectification works as set out in experts reports. Citisolar was obliged to notify Coliban that the rectification works were complete and within 14 days of that notification Coliban was obliged to engage IT Power, at its own expense, to inspect the rectification works and provide a certificate confirming that the rectification works have been satisfactorily completed. The second tranche of Coliban’s payment, $23,500, was payable after Citisolar had provided written confirmation to Coliban that all paperwork necessary to obtain the applicable feed-in-tariff has been submitted and received by the relevant electricity provider.
The Tribunal found that Citisolar had substantially, but not fully, completed the rectification works and gave notice of that fact to Coliban. It followed that the next obligation then lay with Coliban. The more significant or major non-performance of the terms of settlement was that IT Power did not inspect the rectification works and so did not provide any certificate.
The parties disputed why IT Power did not inspect and the Tribunal found that despite Coliban’s request, IT Power declined to become involved again in the project. Coliban had the primary obligation to achieve a certificate and the Tribunal found it to be in breach of an implied obligation to do all things that it necessarily could have done to enable the other party to have the benefit of the terms of settlement.
The Tribunal concluded that non-provision by Coliban of the certificate had a cascading effect that rendered the terms of settlement unworkable. Citisolar could not provide written confirmation to Coliban that the paperwork had been submitted and received by the relevant electricity provider. Consequently, Citisolar could not become entitled under the terms of settlement to the second tranche of the payment to be made to it. However, Citisolar was not found to be in breach of any of the obligations that fell on it between its receipt of the certificate and its obligation to provide that confirmation because the time for those obligation to be discharged had not run.
The terms of settlement contained narrowly drafted rights of reinstatement of the proceedings which had, under the terms, been struck out with a right of reinstatement. The Tribunal held that the contractual rights to reinstatement had not been engaged. Yet it ordered reinstatement.
The Tribunal appears to have erred in concluding that both proceedings ought to be reinstated. The flaw in the Tribunal’s reasoning appeared to be its conclusion that the terms of settlement were unworkable and unenforceable. The original proceedings had been dismissed and the contractual right of reinstatement was found to be inapplicable. Its findings were that Coliban’s breach of the terms caused that state of affairs. The Tribunal did not reason, as it might have, that the unworkable agreement flowed from the proved breach by Coliban of the implied obligation. On the Tribunal’s findings, the conclusion that was open was that Citisolar had lost the benefit of the terms of settlement.
The Tribunal’s findings in 2015 may have supported a claim by Citisolar for damages for breach of the terms of settlement. The Tribunal’s reasons did not identify any basis that would properly permit a declaration that the terms of settlement never existed. That inquiry would be directed to the circumstances when the terms of settlement came into effect, rather than to the circumstances of performance. Reinstatement of the original proceedings ought to have been refused as there was no basis demonstrated for that outcome. The parties had by agreement substituted mutual obligations and benefits under the terms of settlement and it was in the proper enforcement of the rights created by that agreement that the final solution to their dispute lay.
The accepted consequence of the 2015 Decision appeared to be that Citisolar could not enforce any rights under the terms of settlement, which no longer existed. If the further works and services that were provided could not have been provided under the terms of settlement because there had never been any such agreement, the legal consequences of the parties’ conduct after October 2013 necessarily flowed from the original contracts. The parties did not amend their pleadings to raise and identify more precisely the further issues that necessarily arose from the 2015 Decision.
However, the absence of reasoning in the 2017 Decision about the consequences of the 2015 Decision does not demonstrate any error in the Tribunal’s order.
The Tribunal in its 2017 Decision took the subsequent conduct of the parties into account although its reasons were silent not only as to the effectiveness of Coliban’s purported termination of the contracts but also as to the legal consequences of the parties’ conduct after October 2013 as it affected termination. Given the Tribunal’s unchallenged finding in 2015 that the proceedings must continue as if there had never been terms of settlement and the manner in which the proceeding was conducted in 2017, I cannot accept Citisolar’s submission that the terms of settlement displaced Coliban’s purported termination of the contracts, but Citisolar’s alternative submission that its rectification work and the payment it received from Coliban after the terms of settlement denied Coliban the opportunity to rely on the statement of intention to terminate the contracts for major failure should be accepted.
Counsel for Coliban acknowledged in the course of the hearing that the way the case proceeded in the Tribunal wasn’t ‘orthodox’. On the one hand, it was unrealistic to ignore the substantial performance of the obligations substituted by the terms of settlement for the original contractual obligations and the Tribunal did not do so. Coliban submitted that the ‘rational’ way to approach the terms of settlement in light of the 2015 Decision was as a factual context in which the original contracts were varied to provide for the payment by Coliban of $14,000 and the attendance by Citisolar to perform rectification works. Coliban’s rational approach was that the terms of settlement are ignored as if they never came into effect, but ‘the conduct that had occurred by the parties in partial discharge of the terms of settlement needed to be brought into account’. I understood this submission to mean that the positions of the parties needed to be adjusted back to where they were immediately prior to the terms of settlement by crediting to Coliban the payment it made to Citisolar and crediting to Citisolar the value of the work it performed after the terms of settlement.
Coliban contended that I ought to regard any future conduct as not affirming the contracts because it was not further performance of the contracts, but performance of substituted varied contracts. So construed, that conduct did not evidence any intention to affirm the continuing enforceability of the contracts. Thus, Coliban submitted that the legal effect of subsequent conduct pursuant the terms of settlement as an election between inconsistent and competing rights was by implication necessarily rendered ineffectual by the 2015 Decision. The consequence of that approach for present purposes is that it cannot now be contended that Coliban by its conduct subsequent to 18 July 2013 lost any right to terminate the contracts but financial adjustment is necessary to restore the parties to the position that they were in vis a vis each other on 18 July 2013.
I do not accept Coliban’s contentions. This approach assumes away, at least in part, the basis for Citisolar’s submission in this proceeding, set out above at [26], that retention of the goods and consumption of the services was conduct inconsistent with termination. That conclusion, as I will show, is central to understanding the parties’ rights under the ACL and cannot be assumed away.
As a matter of law an innocent party who agrees, after purporting to terminate a contract for a breach that carries that right, to accept further performance of the contract from the defaulting party, may be taken to have elected not to terminate the contract for that breach but to have affirmed its continuing enforceability when that party later accepts further performance of the contract by the wrongdoer.[23] That act of accepting further performance may have extinguished the prior competing and inconsistent right to terminate for the earlier breach.
[23]Sargent v ASL Developments Ltd (1974) 131 CLR 634, 646 (Stephen J), 655 (Mason J); Immer (No. 145) Pty Ltd v The Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26, 38 (Deane, Toohey, Gaudron and McHugh JJ).
To conclude that Coliban had by its conduct after October 2013 elected to abandon its entitlement to a declaration of termination of the contracts by conduct that affirmed their continued enforceability was not inconsistent with the Tribunal’s 2015 declaration that the parties had never entered into terms of settlement. I am satisfied that if the subsequent conduct cannot be attributed to performance of the terms of settlement because the parties accepted the 2015 Decision that they must proceed as if there were no terms of settlement, that subsequent conduct was by necessary implication, conduct in further performance of the obligations under the original contracts. Having regard to the way in which the dispute was conducted below, it was in that context that the legal consequences of that conduct must now be analysed.
Conclusions on Ground 3
It is convenient to first deal with Coliban’s third ground of appeal by which it contended that despite finding the material facts that supported the statutory preconditions to granting termination remedies, the Tribunal erred in law when it failed to grant relief on the basis of termination of the contracts as sought by Coliban. Coliban submitted that it was entitled, as of right, to an order for termination and consequential relief.
I cannot accept this submission.
The relevant provisions of the ACL are set out above. In considering grounds 1 and 3 of the appeal, it is convenient to weave a summary of the operation of the provisions into the narrative.
The contracts were dated 10 June 2011 and included the provision of both goods (the solar energy system hardware) and services (installation and access to the premium feed-in tariff). The goods were supplied and installed in August 2011. No issue was raised about the quality of the goods supplied, the complaints about non-compliance with the guarantees related to the services. The works were independently inspected between 20 August and 9 September 2011 and certified as compliant. Coliban disagreed that the installation was to an acceptable standard. It refused to sign the paperwork or provide information in early September 2011. Notwithstanding this, Citisolar continued to seek the tariff for Coliban.[24]
[24]Reasons, [20]–[24], [36]–[39].
There is no dispute that Coliban received the goods and the installation services provided by Citisolar as a consumer. The services supplied attracted the consumer guarantees set out in Division 1 of Part 3-2 of the ACL. Sub division B sets out the guarantees relating to the supply of services. Part 5-4 of the ACL governs remedies when guarantees are not complied with. Division 1 subdivision B relates to action against suppliers of services.
However Coliban sought to terminate the contract on discovering the tariff was not made available for three of the four installations. Citisolar accepted that Coliban, on discovering that the tariff was not available for one installation refused to pay the balance of the account, requested that the systems be removed and the property made good, and that all moneys paid under the contracts be returned with interest.[25] Citisolar understood Coliban to be notifying an intention to terminate. There was no evidence that there was understood or alleged, in November 2011, to be a failure to comply with the consumer guarantees that could not be remedied or was a major failure. A basis for a finding that Coliban was entitled under s 267(3) of the ACL to terminate at that time for major failure was later established by independent inspection of the systems.
[25]Reasons, [25].
Relevantly, if a guarantee that applies to the supply is not complied with (s 267(1)(b) applies), s 267(1) permits a consumer to take action under that section. The Tribunal’s findings supported the conclusion that s 267(1) was satisfied, and in particular that a guarantee that applied to the supply of services was not complied with. These findings were no longer in contest. What was in contest was whether that failure to comply with the guarantee was, or was not, a ‘major failure’, or whether the failure determined the remedy available to a consumer.
If Coliban was entitled to terminate the contracts in November 2011, s 269(2)(a) provides that a termination takes effect when the termination is made known to Citisolar (whether by words or by conduct indicating the consumer's intention to terminate the contract). The Tribunal’s findings supported the conclusion that an intention to terminate was communicated in November 2011 when Coliban learned that the tariff was not available for all four installations and for that reason. Although the dominant motivation expressed for termination was that the tariff was not available, Coliban’s complaint that the standard of the installation was unacceptable was later proved.
Section 268 provides that a failure to comply with a guarantee referred to in s 267(1)(b) that applies to a supply of services is a major failure in five alternative situations. Most relevant are sub-ss (a), (b), and (e).
The Tribunal concluded there was a major failure in compliance with the consumer guarantees and this finding was justified by the evidence. The Tribunal also found that all faults could be rectified. The reasons used the term ‘fault’ that, properly understood in context, was a reference to the statutory term ‘failure’.
If services do not meet a consumer guarantee the consumer has the right to a remedy. The remedy available depends on whether the failure is considered to be a “major” fault. “Major” has a particular meaning in this context.
A purchased service has a “major” problem when it:
·has a problem that would have stopped someone from purchasing the service if they had known about it
·is substantially unfit for its common purpose, and can’t easily be fixed within a reasonable time
·does not meet the specific purpose the consumer asked for and can’t easily be fixed within a reasonable time
· creates an unsafe situation.[26]
[26]Reasons [18]-[19].
Later in its reasons, the Tribunal concluded the failures (‘faults’ or ‘defects’) were major:
The dangerous faults which render the installation unsafe are “major” faults. They are
a. undersized DC isolators
b. cables not secure or protected from damage
c. water ingress into isolators.
All of the faults and defects were capable of rectification. Many have been rectified.[27]
From the reference to the installation being unsafe as ‘major’ faults, the Tribunal identified the relevant major failures as falling within s 268(e).
[27]Reasons [72].
Because the Tribunal concluded that the failure was major, the remedies under s 267(2) were not applicable, even though the Tribunal found the failures to be remediable, because the statutory text uses the conjunctive ‘and’.
Coliban could seek relief under s 267(3) which provides alternative remedies. The consumer may:
(a) terminate the contract for the supply of the services; or
(b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
In addition to relief under s 267(3), a consumer may also, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure (s 267(4) and (5)).
It is pertinent to note the use of the words ‘by action’ in these sections. This phrase refers to legal proceedings in a court or tribunal. The statute contemplates that some remedial actions occur directly between the parties. It is not relief that can only be obtained from a court or tribunal. In other cases, relief may be obtained by action.
Coliban sought relief by action, by way of termination under s 267(3)(a), compensation under s 267(3)(b) and damages under s 267(4) by its amended counterclaim.
Section 269 governs termination of contracts for the supply of services. Section 270 governs termination of contracts where the supply of goods is connected with terminated services, which was the case here. Termination takes effect at the time the termination is made known to the supplier of the services (s 269(2)(a)). The termination may be made known by words or conduct indicating the consumer’s intention to terminate. Where goods are connected with the services, the contract for which has been terminated, the consumer is taken to have rejected those goods at the time that termination takes effect (s 270(1)(a)-(c)).
The evidence revealed two occasions when there was an expressed intention to terminate the contracts, being the statement made in November 2011 after Coliban learned that the tariff would not be available as it had expected and the statement in its counterclaim. However, a statement of intention cannot, of itself, be termination of the contracts pursuant to the ACL.
Obligations are placed on the consumer to return the goods that it has rejected, subject to exceptions (s 270(1)(d)). If the goods cannot be returned, removed or transported without significant cost to the consumer for a proscribed reason, the supplier must collect the goods at the supplier’s expense (s 270(2)). The supplier is also obligated to refund to the consumer any money paid by the consumer for the goods (s 270(1)(e)(i)).
The flaw in Coliban’s submission is exposed by analysis of the right of termination under the ACL. The right to terminate, in distinction to the right to recover compensation for a major failure under s 267(3)(b), is not exercised ‘by action against the supplier’. As s 269 makes clear, termination takes effect by ‘being made known to the supplier’ as the consumer’s intention. The Tribunal’s findings required that the time of termination was July 2013 when Coliban stated in its pleading that it terminated the contracts for major failures. That was so because the earlier statement of intention to terminate was not for major failure but for non-fulfilment of the term for the tariff, which the Tribunal concluded had not entitled Coliban to terminate the contracts. Citisolar was entitled to, as it did, reject that statement of intention and press for payment.
In any event, in neither case was termination effected as prescribed by s 270 of the ACL because the contracts included the supply of goods that were connected with the services. If Coliban had terminated contracts for the supply of services, it is taken by s 270(1)(c) to have rejected the goods at that time, and consequently the consumer must also return the goods (s 270(1)(d)). That did not occur. Coliban neither rejected the goods nor returned them to Citisolar. The systems remain installed at Coliban’s premises. Although the section provides for circumstances where the supplier must collect the goods at its expense, the evidence before the Tribunal did not permit any finding that the goods could not be returned, removed or transported without significant cost to the consumer because of the nature of the failure to comply with the guarantee to which the rejection relates, or because of the size or height, or method of attachment, of the goods. This issue was not explored in evidence by either Coliban or Citisolar, save that Coliban contended before the Tribunal that it ought now be permitted to retain the installed systems. That contention itself was inconsistent with termination.
Further, the right to terminate cannot, having regard to the context and purposes of the ACL, subsist over the lifetime of the relevant goods. The right must be exercised within a reasonable time of its accrual on discovery of a major failure in compliance with the guarantee. The systems had been installed for almost 2 years. Coliban could have discovered major failure in compliance with the guarantees when it first stated its intention to terminate in November 2011. Had it then rejected the systems installed and returned the goods to Citisolar at that time it might have been found to have acted reasonably and to have terminated the contracts, but that did not happen.
The evident purpose of the right to terminate a consumer contract is to permit the supplier and the consumer to be restored to the positions they were in before the contract was entered into. So much is clear from the consumer’s entitlement on termination to a refund under s 269(3) to the extent that the consumer has not already consumed the services when termination takes effect and the supplier’s entitlement to the return of the goods connected with the services under s 270. The supplier is entitled to the return of the goods at the time of rejection, not at some later time.
Also inconsistent with termination by the July 2013 statement in the pleading was the fact that not having returned the goods between July and November 2013, Coliban accepted performance of further rectification work on certain terms.
By failing to return the rejected goods at the time of rejection, and by accepting further rectification work, Coliban must be taken to have elected to keep the goods and seek compensation under s 267(3)(b).
It must follow that of the alternate claims contended for by Coliban as arising from the major failure, only the recovery of compensation under s 267(3)(b) and the claim for damages under s 267(4) remained open to it at trial.
For these reasons ground 3 must fail.
Ground 2
I was not persuaded that the plaintiff identified any error in the Tribunal’s approach to finding as a fact that the value of the rectification work remaining was $2,200. It is clear from the reasons that the Tribunal found the evidence tendered by both parties unsatisfactory, but it sufficiently reasoned to its assessment of the value of the proper rectification costs doing its best with the evidence presented. It is well established that where a party has established some loss the court must do its best to place a value on that loss despite a paucity of evidence or even an absence of evidence, subject to recognition that an onus rests on the party alleging loss to prove it.[28]
[28]Fink v Fink (1946) 74 CLR 127, 143; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 83 (Mason CJ, Dawson J), 102 (Brennan J), 125 (Deane J), 153 (Gaudron J); Russell v J Hargreaves & Sons Pty Ltd (1956) 30 ALJR 533, 534-535.
On the one hand, Coliban’s evidence, that of Mr Riddiford, was premised on assumptions that the Tribunal did not accept, namely that it was necessary to rectify the installations to compliance with the current standard. On the other hand, the estimate of Mr Muscat, on which Citisolar relied, did not account for all likely costs, such as safety certification and the Tribunal supplemented his estimate by a further amount to address that deficiency
There was no error in that reasoning, which was sufficiently transparent, and this ground also fails.
Ground 1
The duty of the Tribunal to give reasons for its decision on claims made to it is no more and no less than the statutory duty imposed by s 117 of the VCAT Act. The content of that statutory duty defines the statutory standard that a written statement of reasons must meet to fulfil it. The section requires that the Tribunal must give reasons for any order it makes in a proceeding, other than an interim order, and if it gives written reasons, it must include in those reasons its findings on material questions of fact.
Osborn J (as he then was) observed in Berbers v Transport Accident Commission:[29]
The obvious purpose of s 117 of the Act is to require the Tribunal to state reasons with findings on material questions of fact so that the parties and in turn this Court can understand the essential basis on which the Tribunal reached its decision. This purpose has been elaborated by Woodward J in the context of the Administrative Decisions (Judicial Review) Act 1977 in terms which I believe are equally apposite to s 117:
... s 13(1) of the Judicial Review Act requires the decision-maker to explain his decision in a way which will enable a person aggrieved to say, in effect: ‘Even though I may not agree with it, I now understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law which is worth challenging’. This requires that the decision-maker should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute) and the reasoning processes which led him to those conclusions.
[29](2002) 19 VAR 201 [25] (citation omitted).
In Wingfoot, the High Court construed the obligation on an Medical Panel to give reasons under s 68 of the Accident Compensation Act1985 (Vic), and although the context is different, the oft-cited observations of the plurality are apposite:[30]
The standard required of a written statement of reasons given by a Medical Panel under s 68(2) of the Act can therefore be stated as follows. The statement of reasons must explain the actual path of reasoning by which the Medical Panel in fact arrived at the opinion the Medical Panel in fact formed on the medical question referred to it. The statement of reasons must explain that actual path of reasoning in sufficient detail to enable a court to see whether the opinion does or does not involve any error of law. If a statement of reasons meeting that standard discloses an error of law in the way the Medical Panel formed its opinion, the legal effect of the opinion can be removed by an order in the nature of certiorari for that error of law on the face of the record of the opinion. If a statement of reasons fails to meet that standard, that failure is itself an error of law on the face of the record of the opinion, on the basis of which an order in the nature of certiorari can be made removing the legal effect of the opinion.
[30]Wingfoot (2013) 252 CLR 480, 501 [55].
The Tribunal’s statement of reasons must explain the actual path of reasoning in sufficient detail to enable me to see whether its final order in the proceedings did or did not involve any error of law. I am satisfied that the Tribunal’s reasons do disclose a path or reasoning from the finding of major failure in the supply of services by Citisolar to the orders that it made as final relief in the proceedings. There was no contradiction between the finding of major failure and the order that Coliban pay Citisolar $44,465.
Although it was desirable that it do so, it was not necessary for the Tribunal to explain its reasons for refusing to conclude that the contracts were terminated. It is evident from the Tribunal’s findings there was no error of law in that conclusion.
The Tribunal reasoned that as the four systems were installed and independently certified, the full contract price was payable by Coliban. However, the works did not comply with the contractual specification and required rectification. The full contract price, reduced by payments made by Coliban and the costs of rectification to bring the works to contractual specifications, was recoverable from Coliban. These were findings on Citisolar’s claim for payment of the outstanding balance of the contract(s) price.[31]
[31]Reasons [55]-[56].
I am satisfied that, despite Citisolar’s assertions to the contrary, Coliban sought the remedy of termination before the Tribunal. This is evident from:
(a) the pleadings before the Tribunal;
(b) the transcript of oral submissions that shows the way in which Mr Koadlow, Coliban’s director, ran its case before the Tribunal; and
(c) statements made in the Tribunal’s reasons.
The Tribunal identified the relief sought by each party as follows:[32]
The respondent seeks by way of defence and counterclaim to be released from any obligation to pay for the goods and services provided and be refunded all monies paid to date. Legal costs and other costs in relation to his defence of the application and counterclaim are also claimed.
The applicant seeks orders for payment of the balance owing under the account being $51,340.00, less the cost to complete rectification work of $847.80 being a total of $50,492.20.
[32]Reasons [10]-[11].
Later in its reasons, the Tribunal described the relief being sought by Coliban:[33]
[Coliban] has since obtained the report required by the settlement agreement and another report. On the basis of those reports the respondent believes that the costs of pursuing this claim – being legal costs of $125,000.00, costs of reports totalling $16,500.00, and the proposed cost of rectification cost of $22,000.00 together should excuse him from paying any further amounts under the contract, and that he should be put in the position he was in before the contract was entered into – and be refunded the $21,260.00 he has paid.
Although not clearly put the respondent’s position is that the goods and services provided were not provided with due care and skill and not fit for the purpose.
[33]Reasons [43]-[44] (emphasis added).
I have noted above that the Tribunal correctly found that the ‘faults’ constituted a major failure to comply with the consumer guarantees. The Tribunal then identified the relief available as:[34]
Given that there are “major” defects it is open to [Coliban] to seek both rectification and compensation.
[34]Reasons [73].
This statement appears not to reflect the relief available to consumers for failures under the ACL - major or otherwise (see s 267(2)–(4)), but I do not accept Coliban’s contention that by allowing for rectification and compensation, the Tribunal merged the relief available for major and non-major failures.
Section 267(2) provides that rectification is an available remedy where the failure to comply with the guarantee can be remedied and is not a major failure. That was not this case. Section 267(3) applied. Where s 267(3)(b) provides that the consumer may recover compensation for any reduction in the value of the services below the price paid or payable for those services, one method of calculating the reduction in the value of the services is to identify the costs of rectifying the supply of the services to the contractual standard for which the consumer agreed to pay the price. It is clear from the reasons that the Tribunal was not entertaining granting relief by requiring the supplier to complete further rectification works, particularly in light of the changed standards then applicable. Rather, it assessed the compensation that it would order by reference to the cost of rectification. This conclusion was properly reached.
Coliban sought relief in the alternative, which encompassed both options available under the statute where the failure was major (s 267(3)(a)&(b)) and the Tribunal’s reference, properly understood, is to relief under s 267(3)(b).
The Tribunal commented on the effect of Coliban’s conduct on the relief that would be granted:[35]
Many of the delays in resolving this matter have been due to the actions of [Coliban]. It is not appropriate to place a burden on [Citisolar] for [Coliban]’s failure to minimise his loss. Any work required to bring the installations to current operational standards which is not related to the defects should fall on [Coliban].
…
[Coliban] is not entitled to benefit from compensation for any period that he delayed or was in breach of the Tribunal orders.
[35]Reasons [82], [91].
Section 267(4) also permits the consumer may also recover damages for any reasonably foreseeable loss and damage suffered by it because of the failure to comply with the guarantee.
As Coliban demonstrated its claim of major failure to comply with the statutory consumer guarantee in the services provided to it by Citisolar, Coliban was entitled to compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services. That compensation was assessed by reference to rectification costs which identified the poor quality of the services provided and compensation for the failure to rectify within a reasonable time. The latter compensation was either compensation for a reduction in the value of the services provided or reasonably foreseeable loss or damage suffered by the consumer as may be recovered under s 267(4).
Once it is appreciated that Coliban was not entitled to, and had not, terminated the contracts, its contentions that the Tribunal’s reasons failed to comply with s 117 of the VCAT Act fall away.
I am satisfied that the Tribunal understood that Coliban sought termination and that the Tribunal’s findings of material facts do explain why that relief was not granted. As Coliban submitted, the Tribunal found the failure to be major but it made no finding that there had been termination of the contracts. For the reasons I have stated, it was important to distinguish a right to termination from the fact of termination. Coliban may have enjoyed a right to termination in November 2011 (of which it was unaware) and in July 2013 (when it was aware of that right), but notwithstanding that the Tribunal did not expressly say so, it never exercised that right in the manner required by s 270 of the ACL. It was necessary for it to do so in order to be entitled to the relief specified in s 269 of the ACL. The Tribunal’s reasoned findings of fact do not permit the conclusion that Coliban terminated the contract when that right accrued to it or within a reasonable time thereafter. Coliban’s submissions, by emphasising that the Tribunal found major failure which entitled it to then terminate the contracts do not address the critical issue of whether there was in fact termination.
The reasoning explained what led the Tribunal from a finding of a major failure to comply with a consumer guarantee to the relief that it ordered. There is not an unexplained contradiction in the Tribunal’s reasoning. The Tribunal reasoned that Coliban’s initial notice of intention to terminate the contracts was based on Coliban’s dissatisfaction with not having the desired tariff. It further reasoned that the failure to obtain the tariff was caused by Coliban’s conduct. There was no finding of termination by Coliban at any later time.
Wingfoot requires that a statement of reasons must explain the actual process of reasoning by which a material conclusion is formed, and must do so in sufficient detail to enable a court to see whether the conclusion does or does not involve any error of law.[36]
[36]Ibid 505.
The Tribunal’s reasons met this standard.
As I stated above, the Tribunal’s reasons also failed to explain the manner in which the 2015 Decision was implemented, having regard to the claim for termination, and the fact of entry into the terms of settlement and further performance of contractual obligations after purported termination. Because that claimed relief was not ordered, the Tribunal, by implication, must have concluded that Coliban was not entitled to termination of the contracts. It is clear that this conclusion did not involve any error of law.
Ground 1 is not made out.
Conclusion
Leave to appeal will be refused and the proceeding will be dismissed.
Subject to any further submission from the parties, I propose to order that the plaintiff pay the defendant’s costs of the proceeding.
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