Goh v Kabadanis (Civil Dispute) - [2023] ACAT 80

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

GOH v KABADANIS (Civil Dispute) [2023] ACAT 80

XD 1179/2021

Catchwords: CIVIL DISPUTES – contract for converting existing pergola to a sunroom – claim for breach of two essential terms – timeliness unlikely to be an essential term – adherence to “Australian standards” capable of being an essential term or an important intermediate term – evidence does not establish breach of terms – claim for repudiation by conduct – claim for breach of the guarantee of due care and skill in Australian consumer law – whether respondent inflated charges for materials and labour
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 16, 17, 18, 22, 79
Australian Consumer Law ss 18, 60, 101, 236, 237, 267
Competition and Consumer Act 2010 (Cth) s 139G, Schedule 2
Fair Trading (Australian Consumer Law) Act 1992 s 11

Cases cited:BP Refinery (Westernport) v Hastings Shire Council (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61
Lym International Pty Ltd v Marcolongo [2011] NSWCA 303
Pacific Carriers Ltd v BNPParibas [2004] HCA 35
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632

List of

Texts/Papers cited: Jeannie Paterson, Andrew Robertson and Arlen Duke, Principles of Contract Law (Thomson Reuters, 6^th ed, 2020)

Tribunal:Senior Member M Hyman

Date of Orders:  6 October 2023
Date of Reasons for Decision:      11 December 2023
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 1179/2021

BETWEEN:

MICHAEL GOH
First Applicant

AND:

PETER KABADANIS
Respondent

TRIBUNAL:Senior Member M Hyman
DATE:6 October 2023

ORDER

The Tribunal orders that:

The application is dismissed.

The Tribunal notes:

(a)that, pursuant to orders made by the Tribunal on 5 July 2022, the respondent paid $1,145 to the applicant and no further order is made; and
(b)the Tribunal requests the Registrar to consider matters relating to the payment by the applicant of the fee for lodging an appeal.
……………(Signed)………

Senior Member M Hyman

REASONS FOR DECISION

Introduction

This decision is about whether the applicant, Mr Michael Goh, should be compensated for breach of contract and breach of consumer law, breaches he says were made by the respondent, Mr Peter Kabadanis.
The applicant and his wife, Ms Anna Cao, engaged the respondent, who operates under his own name as a sole trader, to convert an existing deck and pergola at their home into a sunroom with a roof, walls, windows, and a door. Mr Goh makes four claims against the respondent. In the first place, he claims that the respondent failed to meet two essential terms in the contract. Second, he claims that the respondent made a material breach of the contract by failing to perform the work to an acceptable level. Third, he claims that he is entitled to damages because the respondent repudiated the contract by evincing no intention to continue performance, with the work incomplete and unusable. Fourth, he claims that Mr Kabadanis failed to exercise due care and skill in the work that he did for him, and he is entitled to the remedies provided under the Australian Consumer Law for such failures.
The matter came to be heard by a long and somewhat tortuous route. The applicant made his initial application on 17 December 2021. The matter was heard on 20 July 2022, and orders were made directing the respondent to make a payment to the applicant, reflecting a quantum meruit assessment of how the matter should be disposed of.[1] The applicant lodged an appeal on 2 August 2022. The Tribunal heard the matter on 25 July 2023 and upheld the appeal, remitting it to be reheard. The matter then came before me on 6 September 2023, and the present decision is the outcome of that rehearing. As a rehearing, it was a fresh start, in which the evidence was presented anew, and the Tribunal heard the matter and came to a new decision. That decision was delivered orally to the parties on 6 October 2023. On 11 October 2023, Mr Goh asked for written reasons. These are those reasons.
[1] A quantum meruit order reflects a conclusion that the contract cannot or does not remain on foot, but that a party that has undertaken work under the contract should be recompensed for the work done, but no more
In the original application Mr Goh was the only applicant. Both he and Ms Cao appealed against the outcome. But under section 79 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) the right to appeal a Tribunal decision is granted to a party to the decision appealed against. Therefore only Mr Goh had the right to appeal; no decision has been made adding Ms Cao as a party. Accordingly, the applicant in these reasons is Mr Goh.
Both applicant and respondent appeared in person at the hearing on 6 September 2023, and Mr Goh and Mr Kabadanis both gave evidence. Neither party called any other witnesses in support. There was a significant body of documentary evidence, all of which had been filed in the context of the earlier hearings – either that at first instance or the appeal. The documentary evidence for the first instance hearing I took directly into evidence. The material filed in the context of the appeal is focused, at least in part, on questions relating to whether there were errors of fact or law in the decision at first instance. I have taken that material into evidence on the basis that I would rely on it only to the extent that it bears on the matters ventilated in this new hearing, disregarding evidence that goes only to the matters agitated at the appeal but not relevant to the matter as advanced at this rehearing.
The collection of material comprises the bundles of material that Mr Goh filed with his original application or his amended application, including, in particular, the exchange of text messages with the respondent that occurred as they entered into a contract and Mr Kabadanis began work; assessments of the incomplete sunroom; material assembled by Mr Goh to demonstrate that the amounts charged by Mr Kabadanis were inflated; receipts filed by Mr Kabadanis for some of the outlay on materials; and submissions from the parties made at various times, sometimes in concert with the filing of evidence. All these materials were assigned exhibit numbers and reference is made to them in these reasons.

Issues

The applicant began by asserting a range of breaches of the Australian Consumer Law (the ACL: the basis for the ACL is explained below). There were three provisions in the ACL that the applicant relied on initially: breach of section 18 (misleading and deceptive conduct); of section 60 (a guarantee of due care and skill in the provision of services in trade and commerce); and of section 101 (requirement to provide an itemised invoice of materials and labour on request by the consumer). In the course of the hearing, the first and third of these claims were not pressed or were overtaken by alternatives under contract law. I explore these points later.
The applicant has advanced three claims under contract law that seem to me to overlap with one another. These are that Mr Kabadanis failed to meet two essential terms of the contract; that he failed materially to perform the contract or to show an intention to do so; and that a few days into the work, he showed that he was unwilling or unable to do the work or to be bound by the contract. These seem to me to be essentially two claims: that Mr Kabadanis failed to meet essential (or important intermediate) terms of the contract, or that he repudiated the contract by conduct. I have treated the claims accordingly.
Once the arguments had been clarified in that way, it is possible to set out the issues to be decided in this matter as:
(a)whether the respondent breached essential or centrally important intermediate terms of the contract with the applicant by failing to deliver the services in accordance with Australian standards and within the two weeks stipulated in the contract;
(b)whether the respondent repudiated the contract by conduct during the period when the applicant was attempting to have corrections made to the work done to that point;
(c)whether the respondent failed to meet the guarantee under Australian Consumer Law to provide the services to the applicant with due care and skill;
(d)if the respondent has committed any of the breaches in (a), (b) or (c) above, what remedies or compensation should be ordered; and
(e)otherwise, how should the parties bear the costs of the incomplete project.

The legal framework

Under the ACAT Act, a person may make an application to the tribunal in respect of a matter relating to one or more of various kinds of civil disputes, including a contract dispute, a negligence dispute, a debt dispute and a dispute under Australian Consumer Law,[2] provided the amount in dispute is not more than $25,000.[3] The applicant is seeking remedies under contract law and under Australian Consumer Law. These are civil dispute matters under the ACAT Act, and the ACAT has jurisdiction to hear and decide them. The ACAT has jurisdiction to award damages up to a limit of $25,000 unless the parties agree to a higher figure. The applicant claims that his losses amount to $39,515 but has limited his claim to $14,999 (plus filing fee plus interest), which is within the ACAT’s jurisdiction.
[2] ACT Civil and Administrative Tribunal Act 2008 sections 16, 17
[3] ACT Civil and Administrative Tribunal Act 2008 section 18
The applicant’s claims for breach of contract fall under the common law of contract. The remaining claim is under Australian Consumer Law, a body of Commonwealth, State and Territory statute law, covering, among other things, the supply of goods and services in trade or commerce to a consumer. The Australian Consumer Law arises from Commonwealth law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the Commonwealth Act). The Commonwealth Act applies the Australian Consumer Law (Schedule 2 and regulations made under section 139G of the Commonwealth Act) to corporations and some other entities, reflecting the Commonwealth’s constitutional powers. But the protection of consumers is a shared area of regulatory supervision among the Commonwealth and the States and Territories. Part XIAA of the Commonwealth Act provides for participating States and Territories to extend the Australian Consumer Law within their jurisdictions. In the ACT, the Fair Trading (Australian Consumer Law) Act 1992 (the ACT Act) applies the Australian Consumer Law in the Territory. Section 11 of the ACT Act applies the ACL as if it were an ACT law called the Australian Consumer Law (ACT) to people carrying on business in the Territory, to bodies incorporated or registered in the Territory, and to persons resident in or otherwise associated with the Territory.
The applicants alleged that the respondent breached the following sections of the ACL:
(a)section 18, which prohibits conduct in trade or commerce that is misleading or deceptive, or is likely to mislead or deceive;
(b)section 60, which provides that, when services are supplied on a commercial basis to a consumer, there is a guarantee that they are delivered with due care and skill; and
(c)section 101, which requires that a commercial supplier of services provide, on request by the consumer, an itemised account detailing the costs of materials and labour.
The remedies for breach of sections 18 and 60 of the ACL are found in Chapter 5. A court may award damages or compensation for loss sustained by a consumer through contravention of parts of the ACL, including sections 18 and 60.[4] If a person – the claimant – suffers loss or damage because another person has breached the guarantee set out in section 60 of the ACL, the claimant can recover the loss or damage, or have other remedial action taken.[5]

The relevant facts

[4] Australian Consumer Law (ACT) ss 236, 237; under section 22 of the ACAT Act the ACAT has the same powers as the Magistrates Court in civil disputes, subject to the $25,000 upper limit of damages that may be awarded
[5] Australian Consumer Law (ACT) s 267

The applicant and his wife live in a town house. At the outset of the events giving rise to these proceedings, their townhouse had a deck and pergola, and they wished to convert that structure to a sunroom, which would be an enclosed structure with a roof, walls, a window, and a door. They made use of a website to identify someone who would be able to undertake this work and found Mr Kabadanis. He gave assurances that he had done work of this kind before and had many years of experience as a carpenter.
The parties entered into a contract for the work on 11 January 2021. The contract was entered into by text message.[6] The text message from the respondent comprised 17 lines of text, detailing the work to be done, and setting a contract price of $14,000. Of that, $7,000 was to be paid before work started, and a further amount of $3,500 was to be paid “after the pergola and timber frames are up”, with the final $3,500 on completion.[7] The undertakings about quality and timeliness were that the space would be watertight and sealed; that the work would be completed in “up to 2 weeks”; and that the work would be “done to Australian standards”.[8] According to Mr Goh, Mr Kabadanis said that he had other details about the project “in his head”.[9]
[6] See exhibit A2 – ‘Bundle of documents supporting amended application’ filed 6 April 2022 (unpaginated); and exhibit A1 – ‘Original bundle of material supporting application’ dated 17 December 2021, pages 11-12
[7] Exhibit A1, pages 11-12
[8] Exhibit A1, pages 11-12
[9] Exhibit A1, pages 11-12
On the basis of this text message, Mr Goh paid Mr Kabadanis $7,000 on 11 January 2021. Work began on 27 January 2021. The applicant made the progress payment of $3,500 on that same day.
A few days later, the applicant had a closer look at the state of the work, which at this time had proceeded for a period of two or two and a half days. The applicant was not satisfied that the work was adequately done, and an exchange of text messages followed, in which Mr Goh complained about the work and the standard to which it had been done, and Mr Kabadanis defended what had been done, or explained why things looked as they did, or promised that the problems would be resolved by the time the framework of the sunroom was complete.
From the text messages Mr Goh has filed, this exchange appears to have begun on 3 February 2021. Mr Goh sent a text message at 11:00am relating to the supports needed for the flooring of the sunroom, and especially for the flooring that extended beyond the existing metal deck frame. Mr Goh’s concern was that he believed Mr Kabadanis had undertaken to provide a supporting framework for the extended part of the sunroom floor, like that for the existing deck, including metal stumps into the ground and a metal joist (and presumably supported by suitable footings). He foresaw a problem with the adequacy of the existing frame to support the weight it would have to bear. Mr Kabadanis responded at 3:57pm, asking that Mr Goh and Ms Cao wait until the Friday of that week (5 February 2021), at which time the roof, walls, windows, and cladding would all be complete: “Then you will see how it will all be installed.”[10]
[10] Exhibit A1, page 15
Mr Goh was not happy with this response. He sent a message at 6:00pm that evening, saying that he and Ms Cao wanted the timber supports for the extended flooring to be replaced by metal. He noted that “[t]he extended part sounds hollow when you walk on it” and stated that they would not proceed further “till you resolve the extended part”.[11] Mr Goh expressed a general disappointment with the work and said that he and Ms Cao would supervise the work more closely from that point. The next morning (4 February 2021) at 8:51am Mr Kabadanis sent a text saying that he was on his way to a hardware store to order the metal joist.
[11] Exhibit A1, page 15
Mr Goh replied immediately, and, in the course of an extended exchange, he asked that the structural flooring be taken out to allow the metal support and the stumps to be installed. Mr Kabadanis responded that the applicants had called a halt to the project and that he would continue once the metal beam arrived. Mr Goh asked whether the flooring should be removed immediately, so that there was no delay once the metal beam arrived. He also asked if there was any other preparatory work that could be done while awaiting the arrival of the beam. He asked for “a rundown” of what was next to be done, saying that “[w]e are not in a hurry” and expressing concern about materials being exposed to rain.[12] And he insisted once again that metal supports for the deck would be needed rather than the wooden supports that Mr Kabadanis had installed. For his part, Mr Kabadanis insisted that there was no reason why he could not use the timber supports, and that the work he had done to this point was to Australian standards. He said he did not want to argue by text message, and that he would see Mr Goh and Ms Cao on Monday (I assume 8 February 2021) at which point the work would continue. He would write a “point to point” outline of the installation.[13] Mr Goh said that all he and Ms Cao wanted was that the work should be to Australian standards, as promised.
[12] Exhibit A1, pages 16-17
[13] Exhibit A1, page 17
The last text message in evidence in this exchange is from Mr Goh on 5 February, asking for the step-by-step outline “for our review and amendment if required”.[14]
[14] Exhibit A1, page 18
The applicant itemised the work that had been done as comprising installation of the rafters; use of the existing posts from the old pergola, with the header beam; attachment of four Colorbond sheets on the roof, with two more to be added; installation of structural flooring on the existing metal frame of the deck; and frames for the window and door, erected but not permanently fixed in place. The applicants took a number of photographs of the work that had been done, including of a timber header that was to support the roof, where an additional piece of timber had been laid on top of the header, but not structurally secured to it; large rafters held apparently insecurely by single screws; the underfloor area, showing the existing supports deriving from the previous deck; and various others.
Subsequently, the applicant sought and obtained additional material to support his case, including:
(a)A building report by Canberra Building Inspections ACT, dated 24 June 2022.[15] In that report, the inspector, Mr Nick Broadhurst, stated that, for a sunroom of the kind in question, a Development Approval and a Building Approval would be needed. The work would need to be done by a licensed builder, and subsequently approved by a Building Certifier. The report noted that the existing footings for the deck were unknown, and therefore could not be relied on for a habitable structure like a sunroom: larger footings would likely be required for a sunroom than for a deck. The report noted the incomplete nature of the work; stated that the extra header timber is “not standard”; and commented that the joist under the floor was too small for a habitable room.[16] The report also noted that the pitch of the roof was insufficient, and that no sarking had been installed in the roof space.
(b)A compilation of comments from a range of expert people to whom the applicant evidently sent photographs and perhaps descriptions.[17] The compilation notes that many expert people were unwilling to provide written comment. The gathered opinions included, from Mr Jarod Johnson, a comment that the extra timber piece on the header was “highly suspect”;[18] from Mr Mal Wilson, that the sunroom potentially would need to be braced against lateral forces from wind, that the rafters needed blocking pieces, and that the roof should have a 5-degree pitch rather than the pitch of 2-3-degrees it had currently;[19] from Mr Richard Waring, that insulation was needed in the ceiling space;[20] and from Mr Javi Kiviniemi, that the roof needed a pitch of 5-degrees.[21]
(c)A compilation of material found from online sources giving comparative costs for obtaining the materials that the respondent had sourced for the sunroom project.[22]
[15] Exhibit A3 – ‘Special building inspection report’ dated 24 June 2022
[16] Exhibit A3, page 8
[17] Exhibit A4 – ‘Bundle of documents regarding discussions about sunroom construction’ filed 29 June 2022
[18] Exhibit A4, Appendix A
[19] Exhibit A4, Appendix B
[20] Exhibit A4, Appendix C
[21] Exhibit A4, Appendix D
[22] Exhibit A5 – ‘Pricing of various materials’ filed 29 June 2022

For his part, the respondent, apparently in preparation for the appeal hearing, filed a collection of receipts and invoices relating to the project (Exhibits R1, R3). There are five documents, all apparently tax invoices, from two different suppliers: dated 13 January 2021 for $709.15; dated 27 January, for $1,733.07; dated 28 January for $2,222.35; dated 28 January for $586.23; and dated 1 February 2021 for $135.58. These are all for materials; there are no documents detailing payments for labour.
The sunroom was not advanced beyond the point reached on 31 January 2021. Even now, two and a half years later, it remains in the same state. Mr Goh said that various tradespeople had come to look at it and had said that the project was not capable of completion from the point reached; the only solution was to demolish it and start again – but they would not, he said, commit those comments to writing.

The arguments of the parties

The applicant made a series of assertions, and some of these have different consequences in terms of the remedies that would apply if he were to succeed:
(a)That the respondent engaged in misleading and deceptive conduct under section 18 of the ACL, by promising to complete the work within two weeks and to Australian standards and then failing to do so;
(b)That the respondent breached two essential terms of the contract by not completing the work within two weeks and to Australian standards;
(c)That the respondent repudiated the contract by conduct, showing an unwillingness or inability to complete the work;
(d)That the respondent failed to meet the guarantee of the exercise of due care and skill in section 60 of the ACL;
(e)That the respondent breached section 101 of the ACL by failing to provide receipts and invoices to justify the charges on which he had based his contract price; and
(f)That the charges he had levied on Mr Goh and Ms Cao or had used to justify the charges made to them, were inflated and without a proper basis.
The applicant did not pursue all of the above with equal vigour. It is my understanding that the claims under sections 18 and 101 of the ACL were not pursued, the first because the claim is being pursued as a breach of contract rather than a breach of that part of the ACL – a point I explore further later in this decision – and the second because the respondent eventually made receipts and invoices available, once the appeal had been lodged. The claim of inflated charges is most readily considered in the context of how orders should be made once liability has been determined – that is, it relates more to quantum than to liability.
The respondent’s defence is, essentially, that the work had commenced but was nowhere near complete when the applicant raised objections. He attempted to explain that the work should not be judged in its present state, because the materials had been secured only temporarily (“tacked”, in Mr Kabadanis’s words), and they would be permanently secured once all the relevant elements were properly positioned.[23] He had not been allowed to undertake the additional work required, and the applicant had told him he did not want him to do anything further.

Consideration

[23] Exhibit R2 – ‘Timelines of events from respondent’ dated 20 June 2022 (unpaginated)

The applicant initially put forward his claim under sections 18 and 101 of the ACL. In respect of section 18, the contention was that the respondent had promised to do various things under the contract, but had not done so, and it was misleading and deceptive to induce him to enter into the contract when the respondent was not proposing to meet its terms. In the hearing, it seemed to me that the applicant did not put his case in those terms, and in my judgment, it is far more straightforward to understand the case as breach of contract – a failure to keep a binding promise – than as misleading and deceptive conduct, and far simpler for him to make out his case on that basis. I am therefore treating the claim against section 18 of the ACL as an aspect of the contract law claims. I do not see any disadvantage to the applicant in proceeding in that way.
With regard to section 101, in my understanding, the applicant abandoned this aspect of the case once the respondent had tendered receipts, which he did in the context of the appeal. In any case, the remedy under section 101 of the ACL is the imposition of a pecuniary penalty by the court. A pecuniary penalty is a criminal sanction. This Tribunal lacks criminal jurisdiction and would be unable to impose a sanction of that kind (and the fine would go to the Government, not to the aggrieved party).
Leaving those considerations to one side, most of the applicant’s claims are in contract law, and an essential step in determining those claims is an examination of the contract, its nature, formation, and how and when it ended.

The contract

It was accepted by the parties that they had entered into a contract on 11 January 2021 when Mr Kabadanis sent an outline of a contract by text message and the applicant accepted it by paying $7,000, half the contract price. That created a binding contract between the parties, and that contract governed how the matter proceeded from that point.
In what follows, an important consideration is the position, well and truly settled in the law of contract, that the meaning of the terms of a contract and of the contract taken as a whole is to be decided objectively, that is, not by what the parties think the term or contract means, or what they thought they meant at the time of entry into the contract, but what the contract or its terms mean objectively.[24] By “objectively” it is intended that the meaning of each term, and of the contract as a whole, is what a reasonable person in the circumstances of the parties would take the term or the contract to mean.[25]
[24] See Jeannie Paterson and Andrew Robertson, Principles of Contract Law (Thomson Reuters, 6^th ed, 2020) (Principles of Contract Law), page 341; see also, Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12 at [73]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [40]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [22]
[25] Principles of Contract Law, page 341
But the text message cannot be regarded as the entirety of the contract. It does not identify the parties; it does not say what the work will deliver (it does not say that the work will produce a sunroom). Nor is it signed. This incompleteness in the written contract has consequences. The parol evidence rule says that, where the contract is entirely in writing, extrinsic evidence cannot be used, either to vary the meaning of the contract or to help in its interpretation.[26] As the entire contract in the present matter is not in written form, the parol evidence rule does not apply. Mr Goh has added a footnote to the text message conveying the contract to the effect that Mr Kabadanis said he had other ideas about the sunroom and how to build it, but these ideas were in his head. I am not aware that any of these ideas have been identified in such a way that they can be taken to be a term or terms of the contract. But the incompleteness of the contract means that the exchange of messages after the contract was entered into can be used to work out what the contract, and its terms, mean.[27]
[26] Principles of Contract Law, pages 317-318
[27] See Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [143]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [19]-[25]
Mr Goh said that other terms might be implied into the contract. That is certainly possible, but the case law imposes strict constraints on the extent to which that can be done. An implied term must be necessary to make the contract work, and it must meet other tests – for example, it must be capable of enforcement and be expressed with sufficient precision and clarity to serve as a contract term.[28] In fact, I am not aware of any additional conditions that Mr Goh put forward as terms that I should regard as having been implied into the contract, although it is arguable that the undertaking by Mr Kabadanis to replace the wooden joist for the extended sunroom with a metal joist could be regarded as a binding promise, and therefore an additional term. More generally, while additional or implied terms might be identified in this matter, none have been put to me by the parties.
[28] BP Refinery (Westernport) v Hastings Shire Council (1977) 180 CLR 266, 283
One of the issues on which the evidence is unsatisfactory is how the contract ended. At the exchange of text messages between 3 and 5 February 2021, it was clear that both sides were treating the contract as remaining on foot: Mr Goh was talking about the remedial work to be done, and the need for him and Ms Cao to supervise it more closely; and Mr Kabadanis was foreshadowing restarting work on Monday 8 February, and the preparation of a step-by-step outline of how the work would proceed. The next evidence available to me is of the text exchange apparently starting on 12 February 2021 and continuing to 15 February 2021. This appears to begin with a discussion of costs and how the various amounts for the work were calculated, and proceeds to an offer of settlement by Mr Kabadanis on 15 February 2021. In my view, this conversation clearly assumes that the contract is at an end, and the remaining issues are about who has spent what money and whether value has been obtained for it, as the parties work out how they can each walk away from the contract. Mr Kabadanis’s message of 15 February 2021 consists of an offer of settlement, implying that the contract was regarded by him as no longer on foot. Mr Goh’s messages, complaining about the absence of proper accounting for moneys purportedly spent, seem to bear the same implication. In my opinion, the long exchange along those lines is only consistent with the contract having ended.
What happened in the week between 5 and 12 February 2021? It cannot be, I think, that there was total silence between the parties, but no evidence has come forward to explain how things in fact transitioned from a contract on foot to a contract at an end. But there has to have been an exchange which led the parties to conclude that they could not or would not go on. There are some leading possibilities: the first is that the parties agreed to bring the contract to an end, and it therefore ended by mutual agreement; another, which Mr Goh is contending for, is that the ball was in Mr Kabadanis’s court by virtue of the promise to bring forward a step-by-step plan – a promise, Mr Goh says, that was never fulfilled. Mr Goh says that this, and Mr Kabadanis’s unwillingness to undertake remedial work while he waited for the arrival of the metal joist and the sliding door, showed an unwillingness to continue with the contract, and is therefore repudiation by conduct. A third possibility is that it was the applicant who, being completely dissatisfied with the work, chose to repudiate the contract, perhaps by a text message or other communication to that effect. A fourth possibility is that the parties reached the point where they could see that matters were not going to proceed satisfactorily, and they each abandoned the contract, without there being any explicit communication that it was at an end. These distinctions are important, because they may determine whether damages are to be paid and influence the quantum of those damages.
Clearly any text messages or other communication between 5 and 12 February 2021 is likely to shed some light on this question. But none have come forward from either party. In their absence, and the absence of any other reliable evidence, it is hard for me to reach the conclusion that Mr Kabadanis repudiated the contract. Mr Goh had called a halt to the project; and was waiting on Mr Kabadanis’s promised plan before proceeding. He asked, in a text message of 4 February 2021, that Mr Kabadanis undertake preparatory and remedial work while waiting for the metal joist to arrive. Mr Kabadanis responded by saying that he would continue the work once the joist arrived. In oral evidence Mr Goh said he had three times, repeatedly, asked for work to be done to address defects while waiting for materials to arrive; but the transcribed text messages I have do not show him asking this repeatedly. Additionally, the tone of his message on 4 February is not demanding or peremptory, but more in the nature of a question whether remedial or preparatory work might be appropriately done.
Nor is Mr Kabadanis’s promise to produce a plan for the work easily construed as a term of the contract. It was not part of the original contract, and I see nothing in the subsequent exchange to suggest that it was to be regarded as an additional term. It has the appearance of a concessional step by a contractor to reassure a client, rather than a binding promise that should be regarded as part of the contract. No further consideration was offered for it, for example, and there is no language, so far as I can see, that would have the effect of making it a term by variation of the contract. Nor do I think it fits into the scenario as an implied term, as it fails to meet the criteria for implied terms set in the case law.[29] So, when Mr Kabadanis failed to produce the plan, he was not breaching the contract, and the applicants did not accrue the right to terminate the contract for breach or for repudiation. What is more, the absence of any record of text message exchanges after 5 February and before 12 February 2021 leaves me completely uninformed about what might have been said or done about the plan during that period.
[29] See BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266, 283
Further, the oral evidence seems to include an admission by Mr Goh that he brought the contract to an end once he could see that it was not going to proceed.[30] But if there was a message conveying that, it is a message I do not have among the evidence that has been provided. Mr Goh’s admission could be understood as a repudiation of the contract, but taking his evidence more generally, I think he is saying that he ended the contract because he was convinced that Mr Kabadanis was not going to do any more work.
[30] Transcript of proceedings dated 5 September 2023, page 87, lines 11-43
I do not have the evidence to conclude that the contract ended in a way that puts either party clearly in the wrong, or that conferred a significant advantage to either party, or, in particular, that Mr Kabadanis repudiated the contract. I therefore proceed on the basis that it ended by mutual agreement or abandonment – that is, on a basis in which neither party is at fault.

The claim for breach of an essential term

The applicant claims that the two essential terms in the contract are that the work would be finished in two weeks and that it would be done to Australian standards. It is recognised in contract law that some terms of a contract are so central to the benefit to be derived by a party that any departure from them is grounds for terminating the contract.[31] These terms are sometimes called “conditions” but it is more common for them to be described as “essential terms”.[32] Mr Goh says that the completion of the work in two weeks and to Australian standards were both essential terms.
[31] See Principles of Contract Law, page 468
[32] See Principles of Contract Law, pages 472-474
Whether a term is essential is to be determined objectively. Sometimes the parties will specify that a term is essential, for example, it is usual for time to be of the essence in the sale of real property – no leeway is allowed in the period between exchange of contracts and settlement. If a purchaser fails to produce the funds at the date for settlement, the vendor can end the contract and keep the deposit. Where essentiality is not specified, it must be derived from other factors. Mr Goh quoted Jordan CJ in Tramways Advertising Pty Ltd v Luna Park(NSW) Ltd:
The test of essentiality is whether it appears from the general nature of the contract, considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise … and this ought to have been apparent to the promisor.[33]
[33] (1938) 38 SR (NSW) 632, 641-642
What this means is that the essential nature of the two terms should have been common ground between the parties and should also be objectively apparent.
I do not think that test is met for the timeliness term. As I said at the hearing, it is not industry practice that outdoor work of the kind contemplated here is done according to a strict timetable. The weather, worker sickness and injury, and shortage of materials are among the things that can go wrong and make strict performance difficult or impossible. So it is unlikely to have been obvious to Mr Kabadanis that time was of the essence unless it was specified in the contract. Nor is it clear to me that the injury that would be done to the applicant if the work were to have taken, say, three weeks rather than two, is of such moment that a strict requirement would be reasonable. I also note that in a text message of 4 February 2021 Mr Goh said “[w]e are not in a hurry”. That is inconsistent with timeliness being an essential term.
On the other hand, adherence to Australian standards would lend itself to being identified as an essential term, as it provides the guarantee to the consumer of the quality of the work to be done. At the very least, it would perhaps be reasonable to regard the term as the kind of intermediate term a major breach of which would allow the applicants to terminate the contract.[34] That means that a minor departure from Australian standards would not be grounds for termination, but a major breach would be. If I am to conclude that this was an essential or important intermediate term, I would need to see evidence that persuades me that this was given attention by the parties at the start of the contract, or that the respondent was conscious of the central importance of this requirement to the contract. There is some evidence of that. When there was some discussion between the parties of the use of a piece of timber left over from the pergola as a joist in the sunroom, Mr Kabadanis justified that action as being in accordance with Australian standards. In a text message in that same exchange, Mr Goh referred to the need for the work to be in accordance with Australian standards, and noted that Mr Kabadanis had offered repeated assurances along those lines. That suggests to me that both sides saw that term as centrally important, at the very least.
[34] See Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61 at [49]-[52]
But even if I were to accept both terms as essential, it does not seem to me that I can conclude that there was a breach of either. In the first place, the elapsed time for work on the sunroom before the project was brought to a halt was of the order of two to three days, which is plainly well within the 14 days in the contract. The halt was called by the applicant, and then there was the exchange about the metal joist and whether any other work should be done to fix defects while waiting for the joist to arrive. At some point the project was brought to an end. I cannot see that it would be reasonable to say that Mr Kabadanis simply failed to complete the work in the allotted time frame.
As for the Australian standards, a question arises as to what the promise in the contract that the work would be “done to Australian standards” might mean, and how that might be tested.[35] The word “standard” has a great many meanings: the Macquarie Dictionary gives 28 meanings, including (as a noun) “anything taken by general consent as a basis of comparison; an approved model”; “a grade or level of excellence, achievement or advancement”; “a level of quality which is regarded as normal, adequate, or acceptable”; and as an adjective “serving as a basis of weight, measure, value, comparison or judgment”; and “normal, adequate, acceptable or average”.[36] What then is the meaning of the term in the contract? I can think of two likely meanings: first, that the work would be done in accordance with the documents that are published by Standards Australia that are relevant to the construction of a sunroom; or in the alternative that the work would be done in accordance with what are understood and accepted in the construction industry as good Australian practice, method, and quality.
[35] Exhibit A1, pages 11-12
[36] Macquarie Dictionary (online) ‘standard’

I do not think that, objectively, I can have any certainty about which of those two meanings should apply. If the word “standards” had been capitalised, I would think that the first meaning is to be preferred. During the hearing I asked Mr Goh what Australian Standards he was referring to. He was unable to identify which Australian Standards he claimed had been breached, let alone tender those Standards and point to the ways in which the project had failed to meet them.
Australian Standards are standards for a wide variety of different kinds of work, published by Standards Australia, each identified with an “SA” prefix and a number. Each standard is for a particular area of work or activity, and they are usually quite prescriptive in their requirements. Neither party has referred to one or more particular such standards that would be applicable in the context of the sunroom project. Is there an Australian Standard for sunrooms? Or are there Standards for elements in the sunroom’s construction, such as the footings, the floors, walls, roof, and so on? I have absolutely nothing by way of evidence to answer those questions.
In the alternative, what am I to understand is the accepted industry practice in Australia with regard to a sunroom? Neither party has advanced any persuasive evidence to help me answer that question, nor has a witness come forward who can speak with authority on that point. It seems that the applicant proposes that I should take note of the comments he has made himself, and that I should also pay heed to the comments in the building report by Mr Broadhurst and the comments by the various experts assembled at Exhibit A4. It should be clear that I can place little reliance on the comments of the applicant himself; he is not an expert on construction of sunrooms. The comments by Mr Broadhurst come from a person who gives some details of his qualifications, and his report is on a letterhead and is professionally done. But in respect of a failure to meet Australian standards, his only clear comment is that the additional piece of timber on top of the header is “not standard”.[37] That seems to me to mean not that the header fails to meet an industry standard, but rather that what Mr Kabadanis has done is not usual or common or normal. I do not think I can take that comment as a basis for concluding that Mr Kabadanis breached the contract in the way the applicant has pressed.
[37] Exhibit A3, page 8
I place little reliance on the other comments that Mr Goh has obtained from experts. None of them saw the sunroom – rather they were sent photographs of it; none appeared as witnesses or provided written reports – at most they sent a few lines of comment by email; Mr Goh listed their positions and experience, but I do not have a curriculum vitae for any of them; and one comes from outside Australia and may have limited knowledge of standards in this country. In any case, in my view, the comments they made mostly reflect the incompleteness of the work rather than point to a failure to meet the term of the contract.
To be satisfied that the work was not “done to Australian standards”, I would need to know what standards it was claimed had not been met; the content of those standards; and the way in which the work had failed to meet them. Preferably, that should come from someone who could demonstrate expertise in the building of structures like the sunroom.
All of these considerations co-exist with the incompleteness of Mr Kabadanis’ work. It would surely have been difficult to establish whether or not any Australian standard had been met when the work that had been done was preparatory rather than final. If the work is unfinished, who can be sure whether the finished work would be in accordance with the standard? The only certainty would relate to parts of the project that could not subsequently be changed, such as, perhaps, the foundations and base.
This part of the applicant’s claim, then, fails for the following reasons:
(a)It is not clear that the identified terms of the contract were essential terms. The two-week timeline is highly unlikely to have been of the essence, but there is evidence to suggest that the term relating to Australian standards was essential or an important intermediate term.
(b)Even if they are regarded as essential, the evidence would not allow me to conclude that there was a breach of either term, in that the elapsed time was within the two weeks set by the contract, no particular Australian standards were identified as applicable or tested against the work done and in any case the work was incomplete.

Termination for repudiation

For the reasons set out earlier, I do not have evidence to conclude that the contract ended because Mr Kabadanis repudiated it by conduct. The applicant’s claim on this basis therefore fails.

Failure to provide the service with due care and skill

Section 60 of the ACL provides a guarantee that a commercial provider of services will provide those services with due care and skill, and the applicant asserts that the respondent failed to meet that guarantee. He points to what he says are particular failures in that regard, namely:
(a)an additional piece of timber was put on top of the existing header so that it would match the rafters in height, creating a structural integrity problem due to the possibility of the two timber pieces shearing away from one another;
(b)the pitch of the roof was below the 5-degrees needed to allow good drainage of rainwater and prevent a build-up of moisture within the ceiling space (the slope at the time work stopped was between two and three degrees);
(c)two further posts were needed to support the rafters, as two of the existing pergola posts had been cut to provide space for the door and window;
(d)the metal stumps and joist needed to support the extended part of the floor had not been installed; and
(e)no insulation (sarking) had been installed in the ceiling space.
Mr Kabadanis’s defences to these assertions were that in the first place, the additional piece of timber on the header was there to bring the dimensions of all the rafters in the sunroom to the same level; its purpose was little more than cosmetic, and at a later stage the additional piece would have been securely fastened to the piece underneath, so that the two pieces could not shear away from each other. In all the other cases, the explanation was that the work was incomplete – the slope of the roof would have been amended by adjusting the heights of the relevant uprights, sarking would have been added at a later stage, the project came to a halt to allow for the metal joist to be ordered, and so on.
So far as I can see, Mr Kabadanis’s defences are not unreasonable, and in respect of the sarking and the metal joist, I think he has answered the argument brought against him – although a separate question about the metal joist remains. Mr Goh advanced an argument that it would not be reasonable to adjust the pitch of the roof in the way proposed, as the angle at which the rafters then abutted the timbers to which they were attached would necessarily change, leaving a gap. I do not think Mr Kabadanis gave an answer to that charge, which seems to imply a need to take the rafters down and recut them, if I have understood the issue properly. But given that the project was interrupted at a point that clearly left the work incomplete, I do not think I can conclude that there was some failure of skill and care here, for the same reasons I have been unable to do so with respect to the other inadequacies that have been pointed out.
Nevertheless, there are wider questions that perhaps need to be answered about the care and skill that Mr Kabadanis brought to the sunroom:
(a)the first relates to how the parties dealt with the need for approval for the project;
(b)the second relates to the retrofitting of the stumps and metal joist to support the floor; and
(c)the third relates to the adequacy of the footings for the sunroom.
I think it would have been usual for someone building a structure as part of a house to offer advice on what approval or approvals would be needed. Mr Kabadanis did not do this. Was that a failure of due care and skill? This was an issue that, I gather, featured heavily when the matter was heard at first instance, although not with regard to the ACL. The problem, I think, is that the respondent was not engaged as a project manager, but simply to construct the sunroom. Any failure of care and skill under the ACL can only be made out, in my view, under the contract entered into, or in activities necessarily ancillary to it. That contract was to construct a sunroom, and, in my opinion, demonstrated failures under the ACL must lie within that contract or be closely related to it.
It is perhaps worth commenting that Mr Kabadanis may have drawn up the contract with this in mind. By limiting his responsibilities to purely the construction part of the project, he also limited his liability if problems or issues arose. That seems to be the gist of what he said in Exhibit R1: that he set out to undertake a project in which his responsibilities were limited to the construction process, without regard to such matters as approvals, footings and the like. In this he is reliant on contract law – that his obligations are limited to what was in the contract. But the effect of the ACL is to extend the protection of the consumer so that a supplier of services has limited options to contract their way out of liability.
Turning then to the metal joist and the stumps it was to sit on, I have some difficulty understanding how stumps and a joist could be retrofitted to support an existing floor. It seems to me that the only logical way to support a structure of this kind is to proceed with footings, then stumps, then joist, and then the floor structure and upper part of the sunroom, in that order. I cannot see how, logically, the stumps and joist would be fulfilling their intended function of supporting the structure unless the process ensures that they properly receive its weight – something which is surely difficult if the stumps and joist are inserted into the structure after the floor is already there. This seems to have also troubled Mr Goh, judging from the questions he asked at the hearing. Mr Kabadanis assured me at the hearing that there was no problem in proceeding the way he had proposed. He seemed to be offering an assurance that the floor would “settle” onto the new joist.[38]
[38] Transcript of proceedings dated 5 September 2023, page 56, line 41-page 57, line 20
I cannot see how the proposed procedure can be effective. But I am not an expert, and it is experts who can speak with authority on matters such as this. In the absence of any expert comment – and I have found none in the documentary material provided – I do not think I can make a finding that Mr Kabadanis failed to exercise due care and skill. That is especially the case because the stump and joists were yet to be included in the structure when the contract ended. The time for the exercise of care and skill was yet to arrive, and, judging from the text message exchanges of 4 and 5 February 2021, the order and detail of the tasks were still the subject of debate between the parties. It was still possible, at that time, that Mr Goh and Ms Cao would insist on the floor extension being dismantled before the stump and joists were installed, and then rebuilt. How could Mr Kabadanis have failed to exercise due care and skill in work he was yet to undertake?
Mr Broadhurst commented that the footings for the deck and pergola were not visible and could not be assumed to be adequate for the room of a house, which would require more substantial footings. These comments question whether the existing footings, originally done for a deck and pergola, were adequate for an enclosed and roofed sunroom. If this comment is taken as a well-founded expert opinion, it seems to me to call the entire project into question.
This is not a point that was pursued by the applicant, either in cross-examination or in submissions. I asked Mr Kabadanis about it during the hearing, and he was unable to make any informative response beyond saying that he assumed that, because the applicant regarded the deck and pergola to be secure, and he had obtained approval for it, he assumed that it would also be adequate for the sunroom with the additional support he was going to provide. I am once again faced with a challenge in arriving at a finding. In the first place, there is a question whether this fell within the terms of the contract, or was sufficiently closely related to it. But it seems to me there is a significant difference between ensuring the approvals had been obtained, which is separate from and, in a sense, incidental to the construction of the sunroom, and ensuring that the existing footings were adequate, which seems to me an essential starting point for the construction process.
More of an obstacle is that Mr Broadhurst’s comment is a few lines in his brief report; he has not been called as a witness; and his evidence has not been explored or tested in cross-examination. Additionally, the case has not been pleaded: even after I drew attention to the point by questioning the respondent, the applicant did not make a point of it or put argument to me. I cannot see how I can make a finding that this is a failure of due skill and care when no case at all has been put to me on that point, nor is there an implied case, so far as I can see, that can be derived from the submissions that have been made.

Conclusion on liability

The standard of proof in civil dispute matters is the balance of probability: where a fact is in contest, the question is, is it more likely than not that that fact is the case. But some caution needs to be exercised in applying that criterion. In Briginshaw v Briginshaw, Dixon J said:
[W]hen the law requires proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality … it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved.[39]
[39] (1938) 60 CLR 336, 362
Sometimes, a matter comes along where all the evidence points in one direction, and that might suggest that the balance of probabilities must be in that direction and inevitably lead to a finding in that direction. But, as the above quote makes clear, it is necessary that the evidence be sufficient to satisfy the decision-maker of the fact at issue. All the evidence here points to the sunroom being built to a less that adequate standard; but the applicant has not established what the standard was or ought to have been, or how it was not met. The evidence suggests a failure of due care and skill, but not sufficiently clearly and plainly that I can draw that conclusion, especially given the incomplete state of the work. Many other points in evidence support that general view: for example, Mr Kabadanis saying in a text message on 3 February, when Mr Goh complained about the absence of a supporting frame for the extension of the floor, that he should wait until the entire structure was up. Surely that is not a reasonable way to proceed when the challenge is to the foundations? But once again, I cannot know what Mr Kabadanis was going to do in practice and whether that might include remedial or corrective work. If no work is done, there is no test of skill and care.
A person cannot fail to exercise due care and skill in their text messages. And, on the evidence available, I cannot find that Mr Kabadanis failed in the ways that the applicant is urging me to.

Quantum

There are numerous bases on which contract disputes can be resolved, such as the payment of damages or compensation, or restitution. All of these are called on where the circumstances fall into a particular pattern, based, for example, on whether there has been part performance of the contract or none at all. Most of these do not apply to present circumstances. The quantum meruit approach is the only framework that seems to apply here, where I have not been able to find that one of the parties was at fault in bringing the contract to an end.
In getting to a resolution on this matter, the outcome is going to involve some level of costs thrown away. That is the inevitable outcome of a dispute such as this, where the parties’ relationship completely falls apart and they no longer retain any level of trust in each other. The challenge for me is to arrive at an outcome that does the least unfairness to the parties.
Some things need to be recognised. First, the contract was let at a total price, with a 50% deposit, a progress payment, and a payment on completion. It is not at all uncommon for the payment schedule in a project of this kind to be front-loaded, in recognition of the cost of material and the need to pay staff as they work. That much can be accepted. It is also the case that the applicant still has some of the materials, although I do not know what condition they are now in or if they can be put to any use. The applicant says that builders have told him that they would have to start again, but that does not touch on whether the materials remain of any use, and, in any case, is hearsay, without any supporting documentation.
The invoices or receipts that Mr Kabadanis has provided are evidence of his expenditures on materials. He has provided no documentary evidence of his labour costs. Mr Goh says that both the material and labour costs are inflated and suggested that some of the documentation is not to be trusted. Mr Kabadanis bridled at these comments.
Just because a scouring of the internet and of Canberra’s hardware stores can yield lower prices than those Mr Kabadanis paid does not mean that Mr Kabadanis was engaged in padding his costs. It is entirely normal for tradespeople to buy their materials from a handy supplier, or the person with whom they have a contract, and pay whatever the charge is. Generally, the tradesperson does not have an incentive to use their time finding a cheaper price. Where the invoices give every appearance of reflecting a normal transaction at a hardware supplier, I see no reason to treat them as suspicious, nor do I have evidence, on which I am happy to rely, that would lead me to a different conclusion.
Mr Kabadanis says that he paid out $4,810 for materials and $3,500 for labour. The total of the invoices for materials is $5,386.39, but two of the invoices seem to be for the same materials, namely the Colorbond roofing material. If the lesser of those invoices is deducted, the total comes to $4,800.16, which aligns closely with Mr Kabadanis’s total. I am prepared to accept that the cost of outlay on materials should be set at $4,810.
There was some discussion about an order for the sliding door, which had to be built specifically for the project. Mr Kabadanis said that he ordered the door and paid $1,000 as a deposit, but that he has no receipt. If a product has been ordered and a deposit paid, the supplier would surely be able to produce some record of the transaction; but no evidence has come forward. I am not prepared to take the door into account.
Mr Goh has suggested that the labour price advised by Mr Kabadanis is inflated and has produced evidence of labour costs in the building industry to back that up. He also has an account of how many workers were present at the house and for how long. I have looked at this, but I do not find the evidence compelling on either side. Mr Kabadanis is right when he says that the applicants had no right to demand the PAYE statements for the workers – these are private. But they did have a right, I think, under section 101 of the ACL, to see a detailed accounting of what each worker was being paid per hour and what hours each worked, even if the names were anonymised. Mr Kabadanis has not, to my knowledge, produced an accounting of that kind.

Nevertheless, the $3,500 that is reported as having been paid is not outrageously high, in my estimation. I note that $3,400 was used at first instance as the cost of labour, and I am happy to adopt that figure. On the basis of the evidence, Mr Kabadanis has provided, and without information that could help me arrive at an alternative that I would feel secure in relying on, I accept $3,400 as the labour cost of the work done.
Mr Kabadanis was paid $10,500 and he paid out $3,400 in labour and $4,810 in materials, coming to $8,210. That left him with $2,290. Each of the parties should receive half of that amount. Mr Kabadanis paid $1,145 to the applicants at first instance, which is exactly half that amount.
I will make orders to this effect, and note that, payment already having been made, no further payment is needed. I will make no order for filing fee, interest, or the recovery of the cost of the transcript.
………………………………..

Senior Member M Hyman

Date(s) of hearing:	5 September 2023
First Applicant:	Self-represented
Respondent:	Self-represented