Gail Savage v Rabea Hatem Fairs
[2018] ACTMC 17
•24 August 2018
MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Gail SAVAGE v Rabea Hatem FAIRS |
Citation: | [2018] ACTMC 17 |
Hearing Dates: | 21 – 22 August 2017 |
DecisionDate: | 24 August 2018 |
Before: | Magistrate Fryar |
Decision: | See [67] – [68] |
Catchwords: | CONSUMER RIGHTS – breach of statutory guarantee – due care and skill – acceptable standard of work – damages – demolition and reconstruction – necessary and reasonable – damages. NEGLIGENCE – breach of duty of care – damages. CONTRACTS – oral contract - breach of contract – termination – damages. |
Legislation Cited: | Competition and Consumer Act 2012 (Cth) schedule 2 (‘Australian Consumer Law’), ss 3, 60, 61, 62, 267 Building Act 2004 (ACT) Fair Trading (Australian Consumer Law) Act 1992 (ACT), s 7 Civil Law (Wrongs) Act 2002 (ACT), s 40 |
Cases Cited: | Bellgrove v Eldridge (1954) 90 CLR 613 Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188 |
Parties: | Gail SAVAGE (Plaintiff) Rabea Hatem FARIS (Defendant) |
Representation: | Ms P Bindon of Counsel (Plaintiff) Mr Ford (Defendant) |
| Solicitors Aulich Civil Law (Plaintiff) Hugh Ford & Associates (Defendant) | |
File Numbers: | CS 91/2016 |
MAGISTRATE FRYAR:
Introduction
The plaintiff is the owner of a property located in Theodore. In about April 2015 the plaintiff and the defendant entered into a contract for the provision of, amongst other things, landscaping and renovation work by the defendant at the plaintiff’s property.
The plaintiff in this matter is seeking damages for loss and damage she claims was suffered as a result of works performed by the defendant in April 2015. The claim is framed on 3 bases: (a) the first and primary claim is based on the statutory guarantees in the Competition and Consumer Act 2012 (Cth) schedule 2 (‘Australian Consumer Law’) at sections 60-62; (b) the plaintiff’s second alternative claim is that the defendant owed her a duty of care, and in breach of that duty he performed work negligently and as a result the plaintiff claims she suffered loss and damage; and (c) thirdly the plaintiff’s claim is in relation to breach of contract.
The defendant contests the whole of the plaintiff’s claim and alleges in particular that the contract had been continually varied by the parties and the agreed work was completed in a reasonable time and skilfully. The defendant says that receipt documents tendered by the plaintiff are fraudulent documents, and that he received no payment from her and accordingly never signed receipt. Further the defendant counterclaims that the plaintiff owes him $44,500 for work and materials that was not paid in accordance with the oral contract between the parties.
Facts
The plaintiff owned a house in Theodore ACT. Several years ago she had engaged the defendant to paint the inside of her house, and she was not unhappy with the end result. At that time the defendant mentioned he could also do landscaping jobs.
The plaintiff wanted to renovate the front garden and facade of her house. She wanted to render the front of the house and close in the garage. The defendant showed her photos of work he said he had done in the past. After getting several quotes the plaintiff settled on the defendant to do the job. The defendant had initially quoted $25,000, the plaintiff said she would pay $20,000, and finally they agreed on a contract price of $22,000. The defendant estimated the work would take 4 weeks.
The plaintiff gave evidence that she made three payments to the defendant during the course of the works. She paid $8,000 up front, he then asked for another $8,000 and then $4,000. On each occasion she paid in cash, wrote out a receipt in his presence and asked him to sign it, which he did in her presence.
The plaintiff said that she asked for a rock wall at the bottom of the front garden which the defendant said he would get a qualified person in to build, and stencilled concrete on the driveway. He quoted an extra $5,000 for that work.
The defendant started work on 27 April 2015 and came every day for the first couple of weeks. The plaintiff said that she was at work most of the time but did come home some lunchtimes. She denied she gave instructions to the defendant about how to do the work, although of course they had conversations about what work was to be done. The defendant also occasionally brought with him an unqualified friend, Riad, to assist him as a labourer.
The plaintiff gave evidence of several mishaps that occurred during the time the defendant was working at her residence. Several times a water pipe was broken and a plumber was required to fix the problem; the defendant accidentally dug through the internet and telephone cable and Telstra were called out to rectify the issue; and at one stage the defendant lost control as he was reversing his van and a wheel went over the edge of the garden. As the van was at risk of falling further and into the front of the house, the fire brigade were called to stabilise it. The following week a gas pipe was broken and the police, the fire brigade and ActewAGL workers were called out to fix the pipe.
The defendant told the plaintiff he had not heard of the ‘Dial Before you Dig’ phone number. Although the defendant met the cost of resolving these accidents, in my view, the evidence of these accidents demonstrated a certain lack of professional competence by the defendant.
The plaintiff was taken by her counsel through the items that she says she contracted the defendant to do and was referred to Tab 1 of the tender bundle. Under the heading Garage and House, item 1: “fill gap on the slab…” the plaintiff gave evidence that that was not done. With respect to item 2: “closing garage wall with cement sheeting…” and item 3: “replace side entrance door to match…” the plaintiff said that some cement sheeting had been applied but she was not happy as it did not reach the bottom of the wall and a gap had been left. She was also referred to photo 8 and said that was a photo of the poor quality of the cement rendering done by the defendant. She told the defendant she was not happy with his work and he said he would get a qualified renderer in to finish it. The side door was of unsatisfactory quality and remained unpainted.
In relation to item 4: “Rendering the front and short side of the house up to the study window and painting…” the plaintiff gave evidence that the rendering was done but with the same poor quality as the garage. The plaintiff also gave evidence that item 5 - “paint remaining house walls, timber work, roof and guttering to match” - was not done.
Under the heading “Front Garden”, item 1: “Removing existing entryway steps, resizing entry way from driveway and building a tiered design steps and timber decking to the front door…” the plaintiff gave evidence that the existing steps were removed with the bobcat, and she then referred to photo 10 to explain how the remaining parts of that item were not completed. The state the front entry was left in was apparently quite dangerous for anyone entering or leaving the premises. The plaintiff said that item 2: “Brick and rendering of retaining walls around the garden beds on either side of the tiered entrance, install sensor lights” and item 3: “plant rear plants and shrubs” were also not done.
As for the back garden and central courtyard area, the plaintiff said that nothing was done in those areas. There were two additional items, the rock wall and stencilled concrete, which are also contentious. The plaintiff’s evidence was that she originally wanted the sleeper garden bed walls replaced with new sleepers, but that the defendant suggested that a higher rock wall at the bottom of the garden would look appealing and that he would get someone to do it. However the quote he received was too expensive so he suggested that he would do a sleeper wall, cover it with blue board and render it to match the front of the house. The plaintiff agreed with that option. However even though the blueboard was attached to the sleeper wall, the rendering was not done and after it rained the blueboard swelled and was ruined.
The defendant also suggested he would pour concrete next to the house and stencil it instead of laying pavers. Photograph 7 showed that the concrete was poured unevenly and the plaintiff says it was finished up against the house and over the dampcourse. No stencilling had been done. Following that the defendant started missing days and so the plaintiff contacted him to ask when he was coming to finish the work. He would often reply with a particular day but the plaintiff did not see the defendant again.
The plaintiff continued to contact him asking him when he was coming and ultimately the defendant’s last message to her was “Stop harassing me”. The plaintiff then contacted Fair Trading and on their advice sent the defendant an email which was tendered at Tab 7. She did not hear back from the defendant and so sent him a message asking him to respond, he messaged back “see you in court”.
The plaintiff then gave evidence of the steps she took to try and have the work that had been commenced by the defendant rectified. The plaintiff (a) roped off her driveway to stop people from entering through a construction site; (b) had someone come to jackhammer the concrete up and take it to the tip; (c) arranged for the steeper retaining wall to be built; (d) organised for the timber walkway to the front door to be completed; (e) had the front of the house re-rendered; and (f) the garage has been filled in and rendered. The plaintiff also gave evidence that the concrete truck engaged by the defendant had cracked her existing driveway.
Under cross-examination the plaintiff agreed that the defendant had never told her that he was a licensed builder. The plaintiff was shown two signatures purported to be those of the defendant and then an allegation was put to her by Mr Ford on behalf of the defendant that she had fraudulently faked the defendant’s signatures on the receipts that had been tendered. The plaintiff denied that allegation.
The plaintiff’s income is $106,000 pa. It was then put to her that she could not afford the work she engaged the defendant to do and so she made up the problems with the work performed. The plaintiff denied that, and also denied the suggestion that she kept telling the defendant to stop work on one job and start something else. She said that in her email to the defendant she told him there was no requirement for him to return after he had sent her a message “see you in court”. She denied that she ever said to the defendant “fuck off, don’t call back or I’ll call the police”.
The plaintiff also denied that the stencilling of the concrete did not happen because she could not make up her mind and said it was always supposed to match the existing driveway.
Expert Evidence
The plaintiff called evidence from Mr Paul Fathers of Barker Harle Consulting Engineers, a building consultant, who had prepared two expert reports in this matter dated 3 December 2015 and 24 March 2017. It is to be noted that Mr Fathers was the only expert called in the case. The defence called no expert witness.
The expert reports start at tab 8 of the tender bundle, and the first report is from page 14 to page 88. Mr Fathers made a correction to his report in paragraph 41 on page 30 that the “southern wall” should instead be the “northern wall, “and also on the next occasion it is mentioned thereafter. Further, the references in paragraphs 45 and 48 to “paragraph 47 above” should in fact be “paragraph 44”.
Mr Fathers has worked in building or building related services since 1974, and has worked in building inspections or investigations for the last 8 to 10 years. He conducted an inspection of the plaintiff’s home before writing his report. He gave evidence that in his report he attended to each item as outlined in his instructions, observed the way it had been constructed and then formed an opinion.
The mention of the Building Code of Australia (“BCA”), related to the minimum standards applicable if the Building Act 2004 (ACT) does not apply. If it does then that sets the standards. Mr Fathers commented on all aspects of the agreed work and ultimately concluded that what had been done by the defendant could not be completed as it was defective, and needed to be removed and re-done. It was not possible to repair the work because it had in fact not been completed. It was certainly his opinion that removing defective works can be just as, or more expensive than the cost of doing the works in the first place.
Under cross-examination Mr Fathers stipulated that the BCA is not a code directing how things are meant to be built, but rather it specifies minimum requirements of building works. He did confirm that if the BCA was relevant but not complied with, the minimum standard was not reached, and therefore that would ordinarily mean that it was not done in a proper and skilful way unless there was some justification for doing it in another way.
In relation to the rendering of the garage he opined that it was not done in a skilful and proper manner as the render was put onto a base that was not proper. He further went on to say the reasons he came to the conclusion that the retaining wall was not built in a proper and skilful way was: “that wall wasn’t waterproofed. There was no drainage behind the wall. The material that the wall was built out of was the wrong type of timber as far as durability was concerned. Further, the wall was more than a meter high and accordingly it needed to be designed by a structural engineer if it is to act as a retaining wall” (T56, line 12).
When asked about the crack in the driveway Mr Fathers could only say that the pattern and magnitude of the damage was consistent with damage that would be caused by heavily loaded vehicles, although he was unable to confirm whether a concrete truck caused the cracking.
Finally Mr Fathers disagreed with the defendant’s solicitor, Mr Ford’s suggestion that some of the problems could have been caused by the effluxion of time between when the defendant did the work and when Mr Fathers inspected it. He said that the problem lay with using materials that were not fit for purpose.
As previously mentioned, Mr Fathers was the only expert called in the case. I accept his expertise to give the evidence he did, and I accept his opinions in relation to the defendant’s work.
Defendant’s evidence
The defendant gave evidence that he told the plaintiff he builds decks, pergolas and other small renovations and he emphasized that he was not a licensed builder. He had been working as a painter and handyman in Australia for 15 years. The plaintiff asked him to do some work in the form of landscaping and renovating, and they came to an agreement.
He then gave evidence that after he started working on the property, he advised the plaintiff that of a morning, he would not start work until after he dropped his children at school. The defendant further said that the Plaintiff used to come home from work at lunchtime because she liked to know what he was doing and to give instructions on how to do the work. He said that she did not give him a detailed plan because her budget was only “20, 22, maximum 25”. He said that she changed her mind every day and sometimes she wanted him to wait until she came home before doing things or she told him to do different jobs every day. The defendant said the plaintiff had asked him to paint and render the face of the house, and with the garage, to box it with blue board and render it and paint it.
He said that the plaintiff gave him instructions on how to lay the concrete slab. He also claimed that she did not ask for stencilling on the concrete slab until after it was laid and it was too late to make such changes. The defendant said he had worked there for six weeks and then he was fired by the plaintiff. He then claimed that it was because he asked her for more money to do the stencilling of the concrete that she told the defendant to leave and not come back or she would call the police. In fact he insisted that she said “fuck off” to him. He said he even left some of his tools at her house in her garage.
The defendant insisted that the plaintiff paid him nothing for the work he did. He denied it was his signature on any of the receipts the plaintiff tendered. He gave evidence that any deposits in his bank account were from different clients. He did say that if a client gave him cash sometimes he would buy materials with it and sometimes he put it in the bank.
The defendant told a long story about how he broke the gas pipes and said he paid to have the pipes fixed. It was only through the fire brigade that he learnt about the ‘Dial before you Dig’ number. Throughout his evidence the defendant was at pains to tell the Court how long he had been doing this work for, and yet he claimed to have never heard of the ‘Dial before you Dig’ number before the day of the incident.
Under cross-examination the defendant agreed that the plaintiff asked him to do some landscaping, and when she mentioned her plans to render the garage he offered to do that job too. He did insist that she knew he did not have a Builder’s Licence. He agreed there were no architectural plans (although he did agree that the plaintiff had sent him an email setting out the scope of the works) but he said that the plaintiff used to come home every lunchtime and tell him what to do. In fact he said she often would ring him and tell him to stop work until she could get there and tell him what to do, and that was allegedly the reason for the delay in the work being finished.
The defendant agreed he had quoted $25,000 for the job which was inclusive of all materials and labour and he said it would take four to six weeks. He agreed the intent of the works was to make her house look nicer. He also agreed that during the period he was working at the plaintiff’s house he sometimes did work for other clients, and he often had an unqualified labourer, Riad Hattim, and somebody called Bob, an unqualified electrician, do work on the project. Every day he did not arrive at work until around 9:30am or 10:00am at which time the plaintiff was not present as she was at work.
It was difficult to understand whether the defendant agreed that when he said the plaintiff would change her mind all the time in fact what he meant was that when she came home and the defendant had not completed the work in the way the plaintiff had asked it to be done, at that stage she would again describe how she wanted things done, or whether alternatively, he was in fact asserting that the plaintiff changed her mind all the time and that he never knew what she wanted. If that latter was what he intended by his evidence then I find that totally improbable, and accordingly I find that the former scenario is the more likely.
The defendant was cross-examined about the various accidents that occurred on the job. He agreed that he hit the water pipes twice, the internet cable and the gas pipes once, and backed his van over the plaintiff’s retaining wall. Although the defendant did not remember where the cement truck parked, he said he did not agree that the truck parked on the driveway and thereby denied the truck caused the crack in the driveway, as alleged by the plaintiff.
The defendant insisted that it was not until the concrete slab had been poured and after it dried that the plaintiff then asked for it to be stencilled. The defendant said that is when he told the plaintiff it would cost more money and she said to him that she would not pay “any more money”. The defendant did not agree he had made a mistake. The reality is it is inconceivable that the plaintiff would not have asked for the concrete to be stencilled from the very beginning when she agreed to the concrete, especially given her existing driveway was already stencilled concrete, and her original plans to have pavers installed.
Again the defendant insisted in his evidence and repeated on many occasions that it was at the time of the discussions about stencilling the concrete that the plaintiff told the defendant to “f... off” and not come back to her property. Of course the evidence also is that the plaintiff sent a number of text messages to the defendant asking him when he was coming back to finish the work. That simply does not sit with the version of events the defendant purports, namely that the plaintiff told him not to come back or she would call the police.
The defendant was cross-examined on his practices regarding being paid and he disagreed that he said he sometimes uses cash to buy materials. He insisted that he always deposited the cash he was paid into the bank to enable his wife to properly do his accounts and pay GST. Ultimately he had to agree that he had made mistakes in his evidence-in-chief when noting items on his bank accounts that he insisted were for materials he bought for the plaintiff’s job. A number of those entries were before he had started the plaintiff’s job. For some of the deposit entries during the period of his work at the plaintiff’s house, the defendant said they were for different jobs. When questioned about his apparent access to cash he said that he had cash in his house that he had inherited this cash from his parents and brought it to Australia. That was the first mention of such a cash source, and it was inconsistent with the defendant stating he did not have money to pay his subcontractors because he had not received any money from the plaintiff.
During his evidence the defendant seemed to complain of his lack of English skills, but when he took time to listen, and he wanted to have his say, he seemed perfectly capable. It was clear that English is the defendant’s second language but I found that he was rather disingenuous about not understanding only when asked a question that appeared to place him in some position of compromise. When answering later questions it was obvious he understood the terms used precisely.
The plaintiff was not moved in her evidence by cross-examination. She seemed forthright and did not appear to exaggerate. On the other hand much of the defendant’s evidence was internally inconsistent and improbable. During cross-examination he often prevaricated, and it is clear that the evidence of the expert together with the objective evidence of the photographs was often totally at odds with the version the defendant put forward. I find the plaintiff a witness of truth and I accept her version of events. Where it is at odds with the plaintiff’s version, I reject the defendant’s evidence. In particular I reject the totally unsubstantiated allegation by the defendant that the plaintiff had not paid the defendant any money for the work done, and had forged the receipts said to be signed by the defendant. It is clear the defendant was simply being dishonest regarding at least that aspect of his evidence.
Statutory guarantees under the Australian Consumer Law
The plaintiff puts her case on three bases, in the alternative. The first is under the Competition and Consumer Act 2012 (Cth) schedule 2 (‘Australian Consumer Law’). Section 7 of the Fair Trading (Australian Consumer Law) Act 1992 (ACT) applies the Australian Consumer Law to the ACT. The statutory consumer guarantees are set out in Part 3(2) of Chapter 3 of the Australian Consumer Law. They replace conditions and warranties that were previously implied into contracts by both the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1992 (ACT). The applicable remedies are also detailed in the Australian Consumer Law.
For the guarantees to be applicable the plaintiff must have been a consumer who was supplied services in trade or commerce. Relevantly “consumer” is defined in section 3 of the Australian Consumer Law as, inter alia, -
(3) A person is taken to have acquired particular services as a consumer if, and only if:
(a) the amount paid or payable for the services, as worked out under subsections (4) to (9), did not exceed:
(i) $40,000; or
(ii) if a greater amount is prescribed for the purposes of subsection (1)(a)—that greater amount; or
(b) the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.
It was submitted by Ms Bindon, counsel for the plaintiff, that the plaintiff was a consumer of services from the defendant. The plaintiff’s evidence was that she agreed to pay $30,000 to the defendant for the agreed work, the defendant says the agreed amount was $25,000 but the additional work would be for an agreed further $5,000. The plaintiff said that she in fact paid $20,000 for what work was performed. In any event it would appear that the plaintiff comes within the definition of a consumer on both the basis that the amount paid or payable for the services did not exceed $40,000, and the services, being landscaping, were of the kind “ordinarily acquired for personal, domestic or household use.”
It is very clear that the defendant carried on the business of Robee’s Painting Services for profit and it was on that basis that the transaction between the plaintiff and the defendant occurred.
The first statutory guarantee that the plaintiff relies on is under section 60 of the Australian Consumer Law, “that the services will be rendered with due care and skill.” Although “due care and skill” is not defined in the statute I agree that it is appropriate to assess it on a similar basis as negligence under the common law. As Ms Bindon referred to in her submissions the explanatory memorandum of the Act says that two things are required; (1) the provider of the service must have an acceptable level of skill in the area or activity covered by the service, and (2) the provider must exercise due care in supplying the service. In assessing whether the defendant carried out the work for the plaintiff with due care and skill it is pertinent to not only apply common sense to the facts of the matter, but also to have regard to the expert opinion of Mr Fathers which I have already indicated that I have accepted. Whether there was due care and skill exercised by the defendant is a question of fact.
In relation to the expert report of Mr Fathers, although the defendant took issue with the fact that Mr Fathers often referred to the Building Code (and the defendant was at pains to point out he was not a builder) in my view Mr Fathers fairly and appropriately used references to the Building Code as the minimum standard benchmark by which to assess the defendant’s work, and it is irrelevant in this case that the defendant is not a licensed builder. I accept that the evidence of Mr Fathers established on the balance of probabilities that there were a number of ways where the work done by the defendant fell below the acceptable standard.
The defendant insisted that the relevant standard by which his work is to be judged is that of a painter or home handyman. I do not accept that is the correct standard. However that contention does not take into account the fact that even a home handyman who holds himself out as capable of doing such works, and runs a business for profit doing such works, still has a minimum standard of professionalism and quality to meet and that he must exercise due care and skill when doing the work he is engaged to perform. The fact that the defendant’s quote for doing the work was cheaper than that obtained from other contractors does not mean he should not meet the acceptable standard. Mr Ford’s submission that the required standard cannot be breached unless the work is completed is nonsense.
Ms Bindon on behalf of the plaintiff very helpfully handed up a schedule that she had prepared, titled “Map of Evidence of Defective and Incomplete Work” which summarised the works identified in the plaintiff’s evidence and the report of Mr Fathers. I accept that it correctly identifies the work in question that was not undertaken to a reasonable standard of skill and professionalism by the defendant.
The second statutory guarantee relied on by the plaintiff is found in section 61 of the Australian Consumer Law. Pursuant to this section, in situations where the consumer makes known to the provider of the service of a particular result they require, there is a guarantee that the services will be of such a nature and quality, or state or condition that they might be reasonable expected to achieve that result. A number of items fall within that category, in particular the brick and render retaining walls around the garden beds and the stencilled concrete. There is no doubt that in such cases the plaintiff had made known to the defendant the result that she required, and there was certainly no doubt that the finish did not meet that required standard. Accordingly I am satisfied that the guarantee under section 61 of the Australian Consumer Law was also breached.
The final statutory guarantee relied on by the plaintiff is under section 62 where the services are to be supplied within a reasonable time frame. The agreement between the plaintiff and the defendant as established by the evidence was, that the works would be completed within 4 to 6 weeks. In essence none of the work that was commenced by the defendant was completed within that time frame, and that establishes a breach of the section 62 guarantee.
I am satisfied on the balance of probabilities that the defendant breached several of the statutory guarantees pleaded in this matter and accordingly I find for the plaintiff.
Negligence and Contract
Given the plaintiff’s case is primarily based on the breaches of the statutory guarantees in the Australian Consumer Law and I have found that case proved, I do not need to make findings on the alternative bases pleaded. However I will make the following comments. In essence I adopt the submissions made by Ms Bindon on both of these counts. Negligence under section 40 of the Civil Law (Wrongs) Act 2002 (ACT) requires a duty of care, a breach of that duty and damages as a consequence of that breach.
The defendant held himself out to the plaintiff as a person who could competently do the work she required. Accordingly there is no doubt that he owed her a duty of care. The breach of that duty relates to the defendant’s failure to meet the standard of skill and care required as I have previously outlined above. The damage suffered by the plaintiff clearly flowed directly from the defendant’s breaches.
In relation to the breach of contract claim, the defendant admitted the elements of the contract in his evidence. For the reasons above I can also be satisfied that there was a breach of a number of the terms of the contract.
Remedies
The Australian Consumer Law sets out a number of remedies applicable when the statutory guarantees are not met. In particular section 267 states:
(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).
The plaintiff has submitted that the failure by the defendant to comply with the guarantees outlined above was a ‘major failure’, which is defined in section 268 as where, inter alia
(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 …
(e) the supply of the services creates an unsafe situation.
In my opinion, had a reasonable consumer been aware of the nature and extent of the failure of the defendant to comply with the relevant statutory guarantees, they would never have engaged him. On that basis alone, even though there could also be some argument that the second and third legs may also apply, I am satisfied that there has been a ‘major failure’ pursuant to the Australian Consumer Law, and accordingly the remedies under sections 267(3) and 267(4) apply.
I agree that the plaintiff subsequently terminated the contract with the defendant on 17 June 2015, was entitled to do so under section 267(3), and is therefore entitled to receive damages for the loss or damage she has suffered as a consequence. The question then arises as to how to quantify such damages.
The expert in this case, Mr Fathers, assessed the faulty and incomplete work as not being capable of remedy, instead requiring complete removal and replacement. His opinion was that the only practical and appropriate outcome was demolition and reconstruction. He assessed the cost of removing the defective work as $60,780.17, and the cost of completing the rectification work as $57,039.07. As pointed out in submissions this would only cover the work that the defendant had done or started to do and did not include the remainder of the contracted work that had not been commenced.
I was referred to a number of relevant cases by counsel for the plaintiff, and in this regard the High Court case of Bellgrove v Eldridge (1954) 90 CLR 613 (followed by Burns J in Adapt Constructions Pty Ltd v Whittaker and Luff [2015] ACTSC 188) is applicable. The High Court held that the test in relation to assessing damages is based on what is both “necessary” and “reasonable”. At paragraphs 617-618 the Court (Dixon CJ, Well and Taylor JJ) said:
“In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract. … But the work necessary to remedy defects in a building and so produce conformity with the plans and specifications may, and frequently will, require the removal or demolition of some part of the structure. And it is obvious that the necessary remedial work may call for the removal or demolition of a more or less substantial part of the building. … The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt. … As to what remedial work is both “necessary” and “reasonable” in any particular case is a question of fact.”
Accordingly, in accordance with the expert opinion in this case, I am satisfied that the necessary and reasonable course to remedy the defects that arose as a result of the defendant’s failure to perform the work with appropriate skill and care, is the removal or demolition of the work that was performed and (re)construction of that work to an appropriate standard. The only assessment before me of what that might cost, is that provided by Mr Fathers, that is:
Removal of defective work $60, 780.17
Rectification work $57,039.07
________________
TOTAL : $117,819.24
In relation to the defendant’s counterclaim I have previously said that I reject totally the evidence of the defendant in relation to having received no money from the plaintiff, the allegations of fraudulent receipts and the amount he says was the contractual amount. Accordingly I find that the plaintiff had in fact paid the defendant the sum of $20,000 in cash.
Given the contracted price was in fact $30,000, it is appropriate to deduct $10,000 from the abovementioned sum.
Orders
There will be judgment for the Plaintiff in the sum of $107, 819.24.
Pre-judgment interest is to run from 17 June 2015.
The Counterclaim is dismissed.
Absent any Application from either party to the contrary within 7 days, Costs will follow the event.
| I certify that the preceding sixty eight [68] numbered paragraphs are a true copy of the Reasons for Decision of her Honour Magistrate Fryar. Associate: Emma Bayliss Date: 24 August 2018 |
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