Larsen as trustee for the Larsen Superannuation Fund v Tastec Pty Ltd (formerly Wonders Building Company Pty Ltd)

[2025] NSWCA 145

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Larsen as trustee for the Larsen Superannuation Fund v Tastec Pty Ltd (formerly Wonders Building Company Pty Ltd) [2025] NSWCA 145

Hearing dates:

29 May 2025

Decision date:

04 July 2025

Before:

Adamson JA at [1]
Stern JA at [127]
Price AJA at [128]

Decision:

(1)   Allow the appeal.

(2) Set aside the order of Cole DCJ made on 7 November 2024 dismissing the plaintiffs’ claim for relief under the Australian Consumer Law.

(3)   Set aside the costs orders made by Cole DCJ on 19 February 2025.

(4)   Direct the appellants to file and serve within 7 days an amended notice of appeal deleting, other than in the alternative, their claim for remitter, and inserting a prayer for an order that this Court determine the relief, including quantum, to which the appellants are entitled.

(5) Note that the intent of this Court is, pursuant to s 75A of the Supreme Court Act 1970 (NSW), to quantify the relief to which the appellants are entitled on the basis of submissions made to Cole DCJ and evidence referred to in those submissions, together with any further documents and submissions filed by the parties as provided for in the orders that follow and, if necessary or desirable, at a further short oral hearing.

(6)   Direct the respondents to provide a schedule of any further documents beyond those identified in the appellants’ schedule provided to this Court on 5 June 2025 (the appellants’ schedule) on which the respondents relied in the Court below in support of any submission made to the Court below on quantification of damages, together with the Black Book reference to the submission referring to the additional document or documents within 7 days.

(7)   Subject to (8) below, direct the appellants to prepare a supplementary appeal book in accordance with the appellants’ schedule, together with any further documents identified by the respondents in their schedule prepared in accordance with (6) above within 14 days.

(8)   If the respondents seek that more than 100 pages of further documents be provided to this Court, they are to prepare a separate supplementary appeal book containing all further documents on which they seek to rely and provide it to the Court within 14 days.

(9)   Direct the appellants to file and serve within 14 days hereof any further submissions on:

(a)   the quantum of relief, having regard to this Court’s reasons, beyond those relied upon in the Court below; and

(b)   whether a further short oral hearing for submissions is sought.

(10)   Direct the respondents to file and serve within 28 days hereof any further submissions on:

(a)   the quantum of relief, having regard to this Court’s reasons, beyond those relied upon in the Court below; and

(b)   whether a further short oral hearing for submissions is sought.

(11)   Direct the appellants to file and serve any submissions in reply within 35 days hereof.

(12)   Reserve the costs of the appeal pending determination of quantum by this Court.

Catchwords:

APPEALS — orders on appeal — whether proceedings should be remitted to Court below — where Court ought determine quantum finally

CONSUMER LAW — misleading or deceptive conduct — supply and assembly of prefabricated home — reliance on misleading conduct caused the appellants to agree to a contractual variation — measure of loss or damage suffered as a result of variation

CONSUMER LAW — enforcement and remedies — action for damages — measure of damages — loss of bargain — whether cost of rectification is unreasonable — Australian Consumer Law, ss 236, 237

CONTRACTS — breach of contract — breach of express terms — contractual variation based on misleading or deceptive conduct

Legislation Cited:

Supreme Court Act 1970 (NSW), s 75A

Australian Consumer Law, ss 236, 237

Cases Cited:

Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; [1990] FCA 57

Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36

Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27

Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494; [2008] FCAFC 38

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; [1986] HCA 3

Henville v Walker (2001) 206 CLR 459; [2001] HCA 52

HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Larsen vTastec Pty Ltd [2023] NSWCA 39

Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69

Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559; [1997] HCA 22

Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3

Owners SP 92450 v JKN Para 1 Pty Ltd [2023] NSWCA 114

Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344

Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8

Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174; (2005) 224 ALR 134

Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253

Williams v Fraser [2022] NSWCA 200

Category:

Principal judgment

Parties:

Derek Larsen as trustee for the Larsen Superannuation Fund (First Appellant)
Floyd Larsen as trustee for the Larsen Superannuation Fund (Second Appellant)
Tastec Pty Ltd (formerly Wonders Building Company Pty Ltd) (First Respondent)
Stephen Sainsbury (Second Respondent)

Representation:

Counsel:
I G Roberts / D S Allen (Appellants)
M R Gracie / B Dziubinski (Respondents)

Solicitors:
Mills Oakley (Appellants)
Ad Valorem Law (Respondents)

File Number(s):

2024/448106

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Citation:

Derek Larsen as Trustee for the Larsen Superannuation Fund & Anor v Tastec Pty Ltd ACN 051516682 [2024] NSWDC 518

Date of Decision:

7 November 2024

Before:

Cole DCJ

File Number(s):

2020/83478

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2018, the appellants, Floyd and Derek Larsen, as trustees for the Larsen Superannuation Fund (the Larsens), entered into a fixed price contract with the first respondent Tastec Pty Ltd (Tastec) for the supply and assembly of a prefabricated house in Glen Alice, NSW. The second respondent, Stephen Sainsbury is a registered architect and a director of Tastec.

The contract specified that the roof and walls would be clad with Maxline 340 sheeting. Ultimately, as a result of Tastec’s misleading or deceptive conduct, the Larsens agreed to vary the contract.

Subsequently, the Larsens commenced proceedings against the respondents in the District Court which included claims for damages for breach of contract and for misleading or deceptive conduct under the Australian Consumer Law (the Law). Gibb DCJ dismissed the claims.

On appeal, the Court of Appeal (Mitchelmore JA, Ward P and Kirk JA agreeing) allowed the appeal in part. The Court held that Gibb DCJ erred in finding there was no contractual relationship between the Larsens and Tastec. The Court found that the Larsens had agreed to the variation of the contract in reliance upon the respondents’ misleading or deceptive conduct and remitted the question of relief to the District Court.

On remitter, Cole DCJ (the primary judge) refused to grant relief on the basis that the Larsens had not proven that the value of their residence would have been any greater had the Maxline 340 cladding been installed.

The Court held (Adamson JA, Stern JA and Price AJA agreeing) allowing the appeal:

The counterfactual

1. But for Tastec’s contravening conduct, the Larsens would not have abandoned their entitlement to Maxline 340 under the contract and agreed to the Bondor 580 variation. This inference is based on the Larsens’ direct evidence and from the fact that Tastec repeatedly attempted to induce the Larsens to accept the variation, which only succeeded through misleading or deceptive conduct: [60] (Adamson JA).

2. Consequently, had the Larsens not agreed to the variation, they would still have had an enforceable contractual right to require Tastec to install Maxline 340 on their roof and walls: [61] (Adamson JA).

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389; Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, applied.

Quantification of damages

1. The prima facie measure of the Larsens’ loss is the cost of achieving that which Tastec bound itself by contract to do: namely, to install the Maxline 340 cladding. Further, Tastec was unable to demonstrate that the cost of rectification was unreasonable: [83]-[89] (Adamson JA).

2. The Larsens are entitled under the Law to the cost of rectification to return them to the position they would have been in, but for Tastec’s contravening conduct. Specifically, the position they would have been in had the contract been performed. Thus, the Larsens are entitled to the cost of the Maxline 340 cladding and its installation on the roof and walls of their residence by way of damages: [91]-[101] (Adamson JA).

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; [1986] HCA 3; Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27; Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3, cited.

Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36; Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344; Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494; [2008] FCAFC 38; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8; Owners SP 92450 v JKN Para 1 Pty Ltd [2023] NSWCA 114; Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559; [1997] HCA 22, applied.

Whether the matter ought be remitted to the Court below

1. The advantage that the primary judge had in seeing and hearing witnesses has been considerably diluted by the passage of time. Further, it was not suggested that there were issues of credibility relating to the experts. In so far as Mrs Larsen and Mr Sainsbury gave evidence before the primary judge, their evidence arises for assessment in this Court in any event. Therefore, this Court ought determine the question of quantum finally and not remit that matter to the primary judge for determination: [123] (Adamson JA).

JUDGMENT

1. ADAMSON JA: The appellants, Derek and Floyd Larsen as trustees for the Larsen Superannuation Fund (the Larsens), appeal against orders made on 7 November 2024 by Cole DCJ (the primary judge) in the District Court (the Court below), dismissing their claim for relief under ss 236 or 237 of the Australian Consumer Law (the Law) against the first respondent, Tastec Pty Ltd (Tastec), and the second respondent, Stephen Sainsbury, for the respondents’ misleading or deceptive conduct.

2. The procedural history is lengthy but can be shortly summarised. Tastec supplied and erected a house on the Larsens’ land under a fixed price building contract which specified that the roof and walls be clad with Standard Insulated Panels (SIP) covered by Maxline 340 sheeting. The respondents proposed a variation (Variation 6) which specified different materials for that purpose, to which the Larsens agreed. The Larsens commenced proceedings against the respondents in the Court below. Their claims were dismissed on 17 December 2021 by Gibb DCJ. The Larsens’ appeal to this Court was allowed on the basis that the Larsens had agreed to Variation 6 in reliance on various false or misleading representations made by the respondents to the Larsens regarding the substitute materials: Larsen vTastec Pty Ltd [2023] NSWCA 39 (CA 1) at [102], [108], [113]-[116], [118] and [125] (Mitchelmore JA, Ward P and Kirk JA agreeing).

3. As Gibb DCJ had not determined what the Larsens would have done but for the respondents’ misleading or deceptive conduct, this Court remitted the question of relief under the Law to the Court below for determination.

4. On remitter, the Larsens claimed the cost of rectifying their residence to bring it into compliance with their contract with Tastec. That is, they claimed the cost of installing the Maxline 340 to the residence.

5. The primary judge on remitter was not satisfied that the Larsens had established an entitlement to damages or compensation under ss 236 or 237 of the Law as the Larsens had not shown that the value of their residence with Maxline 340 would be worth more than it would be without it. Accordingly, her Honour dismissed the claim for relief without making any findings as to the cost of rectification (which was the subject of expert evidence). The Larsens appealed to this Court.

6. The Larsens have identified the following issues for determination on this appeal, the short answers to which follow in italics:

1. is the cost of the work to return the Larsens substantially to the position they would have been in but for the contravening conduct a kind of loss or damage for which an amount may be recovered in an action for damages under the Law? (Grounds 1, 4(a) and 4(b)) Yes.

2. is loss of a bargain (expectation loss) a kind of loss or damage for which the Larsens may be compensated in an action for damages under the Law? (Grounds 1(a), 1(b), 1(d) and 4(a)) Yes.

3. is the measurement of loss or damage in the present case confined to the difference between the contract price and value? (Grounds 1(b), 1(c), 1(d) and 4(b)) No.

4. is the loss of the right to receive cladding materials specified in the contract and the costs of rectification to obtain the specified cladding a form of economic loss? (Grounds 1(c), 1(d) and 4(b)) Yes.

5. is the loss of the specified use of a product a form of loss or damage within the meaning of ss 236 and 237? (Grounds 2, 3(b) and 4(a)) Yes.

6. was there a real (not negligible) possibility the Larsens would have agreed to vary the materials in any case if the misleading or deceptive conduct had not occurred? (Ground 3(a)) No.

7. would the Larsens have received the benefit of the cladding specified in the original contract if the misleading or deceptive conduct had not occurred? (Grounds 3(b) and 3(c)) Yes, if Tastec had performed its contract.

8. have the respondents demonstrated that installing the specified cladding was not a reasonable course to adopt? (Grounds 4(c) and 4(d)) No.

7. The answers to these questions depend on the evidence adduced in the Court below as well as the findings of this Court. Accordingly, it will be necessary to summarise these matters before turning to the questions.

The reasons of this Court for remitter

8. In CA 1, Mitchelmore JA set out the history of the matter and made findings before remitting the matter to the Court below. Rather than paraphrase her Honour’s reasons, I propose to extract them for ease of reference:

2   Floyd and Derek Larsen are the trustees of the Larsen Superannuation Fund (“the Fund”). The Fund is the owner of a property in Glen Alice, NSW (“the Property”). On 15 November 2018, the Larsens entered into a project management contract (“the Contract”) with the corporate predecessor of the first respondent, Tastec Pty Ltd, for the supply and assembly of a house comprising prefabricated components on the Property. The second respondent, Stephen Sainsbury, is a registered architect and a director of Tastec. …

3 In their capacity as trustees of the Fund, the Larsens brought proceedings in the District Court alleging … that both respondents made misleading or deceptive representations about cladding material which caused the defective roof and wall cladding to be used, in contravention of ss 18 and 29 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (“ACL”). They sought … damages and/or compensation under ss 236 and 237 of the ACL. The Larsens separately sought orders against Mr Sainsbury, on the basis that he engaged in the same contravening conduct as the first respondent, or was otherwise involved in the first respondent’s contraventions.

4   The primary judge, S J Gibb DCJ, dismissed the Larsens’ claims. Her Honour found that there was no contractual relationship between the Larsens and the respondents in respect of which they could bring a claim. Alternatively, her Honour held that their claim failed on various other bases, including that the Larsens had failed to establish either damage and/or causation in respect of their various contractual claims related to defects in cladding, windows and doors, and had also failed to establish that the respondents had made false or misleading representations on which they had relied to their detriment.

5   By their Amended Notice of Appeal, the Larsens have advanced six grounds of appeal. The focus of the appeal was the cladding of the house, with the Larsens contending that her Honour erred in dismissing their allegations that the respondents had made false or misleading representations about the cladding which they had relied on to their detriment (Ground 1A) …

…

8   For the reasons I set out below, I consider that Ground 1A should be upheld. The first respondent engaged in conduct that was misleading or deceptive or was likely to mislead or deceive, which the Larsens relied on in deciding to proceed with the cladding solution ultimately installed. In circumstances where the primary judge did not consider the correct comparative task in assessing the issue of damages, the appropriate course is to remit the matter to consider that issue.

…

Background to the proceedings

…

12   Tastec is the licensed fabricator of the proprietary Ecoshelta prefabricated modular building system. According to Mr Sainsbury, the Ecoshelta system is a flat pack frame and panel system, which uses factory welded, prefabricated aluminium alloy, post and beam frame parts, together with composite panel floor panels, wall panels and roof panels, door and window systems. The components are shipped to site as a flat pack, for manual assembly.

13   The Contract identified the parties as Wonders Building Company Pty Ltd, which later became Tastec, and “Floyd and Derek Larsen”, who were specified as “the Owner”. Pursuant to the Contract, Tastec undertook to provide Project Management Services to the Larsens for an “Ecoshelta system three Pavilion, four pod with end extensions, Accommodation Cabin at [the Property]”.

14   The pods and extensions were specified in the Contract to be “with custom Maxline 340 ‘Monument’ Colorbond finish cladding system in 3 pavilions”. In his affidavit, Mr Sainsbury explained that the Maxline 340 product is a steel sheet with 340mm spacing between the ribs at the sheet junctions. As a sheet product, the Maxline 340 needs to sit on top of a structural base panel system. These structural panels were referred to in the proceedings as structural insulated panels, or SIPs. Tastec contracted to use products manufactured by Bondor as the SIP for the walls and the roof, to which the Maxline 340 would be affixed.

15   Central to the proceedings below, and the appeal, was the execution by the parties of a variation to the Contract known as Variation 6, on 23 May 2019. I will address the course of correspondence leading up to its execution below, but sufficiently for present purposes, under the heading “Cladding and Roofing Face Option”, Variation 6 provided:

“Exchange Maxline 340 cladding and roofing to Custom BONDOR SHADEMASTER EXTRALINE 294 composite SIPS panels aluminium faced in colourbonded/Monument’ compatible finish with BONDOR extended 15 year rural area Warranty. And Codemark certification. And covered by Ecoshelta Statutory Warranty provisions for fit for purpose building systems.”

16   It was common ground that Bondor did not manufacture a product called “Extraline 294”. Instead, Tastec used a Bondor SIP product called the Bondor Shademaster 580 (“Bondor 580”), which it customised by affixing a t-strip to the centre of each panel with an industrial adhesive in an upside-down position, so as to create the appearance of the panel having an extra seam running down its length. This was the purpose of affixing the t-strip, with a view to accommodating the Larsens’ aesthetic preference for a narrower panel. In the Amended Statement of Claim (“ASOC”), the Larsens described this modified product as the “Modified Bondor 580” and that is how I will refer to it below.

17   Tastec had previously shown the Larsens the Bondor 580 panel and they had rejected it, consistently with their wish for narrower spacing between the panel seams (or ribs). The Larsens first became aware that Tastec had used the Modified Bondor 580 when panels were delivered to the Property on 18 June 2019. On delivery, some of the panels had the t-strips glued on and some did not.

18   After inspecting the Modified Bondor 580 at Tastec’s warehouse the next day, the Larsens instructed Tastec to proceed using unmodified Bondor 580 panels (that is, without affixing the t-strip). Both of the Larsens gave evidence that if they had known that the Modified Bondor 580 product comprised the Bondor 580 and a glued-on t-strip, they would not have agreed to the variation to that product.

…

The Contract

69 … In clause 1.1 [of the Contract], the works were described as “a new accommodation cabin using four Ecoshelta e.pods and end extensions with custom Maxline 340 ‘Monument’ Colorbond finish cladding system in 3 pavilions constructed from Ecoshelta e.pod ‘N’ Series prefabricated construction system to Lock Up stage only and associated works as listed in, or otherwise set out in the Schedules attached to this contract”. Schedule 2, which set out the line-item works costs, specified the Base Unit, noting “custom Maxline 340 colorbond roofing and cladding – Monument”. Schedule 3, which was titled “Illustrated Fitout Schedule”, included a photograph described as the “ROOFING SHEET PROFILE – ‘Maxline 340’ Colorbond – ‘Monument’” for “All Exposed cladding and roofing panels”.

70   The requirement in the Contract for the Maxline 340 reflected the Larsens’ desire for a particular cladding profile for their house, which they made clear from their first meeting with Mr Sainsbury on 26 August 2018. The Larsens took a brochure to that meeting, which included a photograph of a house with the ribs of the roof and wall cladding spaced at a distance that the Larsens liked, and in a colour they liked, being Monument. Mr Sainsbury’s notes of the meeting referred to the particular cladding as “Longline 305 in colorbond ‘Monument’ roofing and wall cladding system (Possibility for BONDOR? Kingspan?)”. Longline 305 was a product produced by Lysaght, and was referred to in a series of quotes that Tastec issued to the Larsens from September 2018 onwards. A copy of the Contract dated 15 November 2018 was the first to refer to the Maxline 340 as the proposed cladding material.

71 … [I]t is apparent from the Fitout Schedule that the Maxline 340 was a sheet product, and from Schedule 2 of the Contract that it was to be cladded over the Base Unit. …

72   The Payment Schedule for the works, in Schedule 1 of the Contract, indicated that most of the $422,028.71 contract value was attributable to what was described as “Parts Supply”, totalling $390,029.54. The structure of the payments also indicated that most of the “Parts Supply” amount was to be paid before delivery of the prefabricated product to the Property.

9. In CA 1, Mitchelmore JA outlined Tastec’s three attempts to get the Larsens to agree to use a different cladding product than Maxline 340. The first two were unsuccessful; the third achieved its aim but only because the Larsens relied on Tastec’s misleading or deceptive conduct. The first attempt was as follows:

73   By email dated 14 December 2018, Mr Sainsbury emailed the Larsens about a different cladding product. He wrote that there was “a very promising new product which may suite (sic) the [house] very well”. The product was an aluminium alloy clad integrated panel which had a 580mm panel width. Mr Sainsbury subsequently showed the Larsens this product during a meeting in February 2019; he accepted in his evidence that they told him they wanted to stay with the Maxline 340.

74   In subsequent email correspondence with the Larsens in early March 2019, Mr Sainsbury confirmed that the insulated panels (being the SIPs onto which the Maxline 340 sheets would be fixed) were the Bondor Shademaster 90mm panels for the roof, and the Bondor Luxepanel 75mm panels for the walls. This information was included in the Structural Notes for drawings that Tastec prepared for the construction certificate, dated 5 March 2019.

10. The second attempt was as follows:

75   Also on 5 March 2019, Mr Sainsbury made another approach to the Larsens about the product he had showed them in February. He emailed them a photograph which he described as showing “the new aluminium faced colour bonded roofing material”. When the Larsens asked by return email how wide the profile was, Mr Sainsbury replied that the product was “the 580mm Aluminium BONDOR upstand seam profile we saw in the workshop”. In their response of 12 March 2019, the Larsens reiterated their commitment “to our original specs of Maxline 340 and/or Lysaght Imperial Standing Seam with a maximum of c320mm between ribs in Monument colour”.

76   Following receipt of the Larsens’ email, Tastec confirmed on the same day that it would procure the cladding panels. As the Maxline 340 was not a material that was available within the structural system of the Ecoshelta pods, the subroof and subwall structure would be “a base ecoshelta standard composite structural panel with maxline 340 cladding over”. The following day, an internal Tastec email prepared by Mr Sainsbury identified the need to investigate options for optimum cost-effective roofing panels, and to set up an order for the Maxline 340.

11. The panel structure prior to Variation 6 was confirmed in an internal Tastec email dated 12 April 2019 (which resulted from a request from Lithgow City Council of Mr Larsen regarding his application for a construction certificate) which was sent on to the Larsens, referred to in CA 1 at [79]:

The Bondor elements ordered for the project are

Roofing – Bondor ‘SolarSpan’ – (100mm)

Walling – Bondor ‘Bondor Panel’ – (75mm)

These are both to be clad externally in the Maxline 340 product in a ‘Monument’ colour on the battens.

12. Tastec continued to look for other solutions because of the cost and difficulties of construction which they considered would arise if the panel structure for which they had contracted were installed. Mr Sainsbury’s proposal is evident from his email to Mr McAuley (also of Tastec) which is included in [86]-[87] of CA 1:

86   On 9 May 2019, Mr McAuley sent construction certificate drawings to the Larsens and stated that “SS and the workshop crew are currently refining the roofing and cladding detail and will meet with you soon to discuss”. This reference to refining the cladding again suggests that the parties were aware of the need to make changes. Later the same day, Mr Sainsbury sent an email to Mr McAuley and others within Tastec, referring in the subject line to “[Property] cladding option” and writing in the body of the email, “I suggest we put this to the [Property] clients”. The suggested material was as follows:

“First image shows the profile they have specified for comparison of rib spacings and height.

This is an excellent technical solution – it is Custom Made, One Off, Standing Seam, Alloy Face profiled composite panel system – using a specially custom modified ShadowMaster aluminium panel with a centre seal (sic seam) added – specifically developed for their project…

The alloy T can be bonded on with the same glue system as the panel – we still have that here. Wont (sic) need any visible fixings as it will have them top behind the track sill and bottom fixings will be the standard base screws we always use. Roof fixings go through the pan and will go through the T flange to fix it off – we can get this T in 6m lengths so no joints needed…

If we use this we get a simple one piece 125mm angled edge shallow profile roof edge flashing (not the 185mm (min) with all the extra battens and clips and layers needed for the other systems) and the wall panels fit in the 76mm slots so the doors can fully slide past – as intended. Far superior technical and installation option if they approve the aesthetics no need for all the fussy flashings everywhere – and it all works with the Ecoshelta system got the 15 year alloy ShadowMaster guarantee from BONDOR.” (Emphasis in CA 1.)

87    Although the Larsens placed emphasis on the description of the product as “ShadowMaster” (Mr Sainsbury’s evidence was that this was a misspelling of “ShadeMaster”, which was a Bondor product) this was an internal email and there is no suggestion that it was ever sent to the Larsens. Of more significance is the express description in the email of the “excellent technical solution” involving adding a “centre sea[m]” to a composite panel system, by “bond[ing]” an “alloy T” on to an aluminium panel “with the same glue system as the panel”. Noting that the purpose of the email was to inform Mr McAuley of what should be “put” to the Larsens, the emphasised passages highlight an awareness on the part of Mr Sainsbury of the importance to the Larsens of the aesthetics of the cladding.

13. Tastec’s third attempt to get the Larsens to abandon the Maxline 340 cladding commenced with an email sent to the Larsens on 10 May 2019 in which Tastec represented that the proposal would be a “high end alloy faced composite panel with a customised extra fin in Monument finish”. Instead, the proposed panel was in fact the Bondor 580 panel (which the Larsens had already rejected twice) and the so-called “customised extra fin” was a separate piece which had to be glued onto the composite panel (CA 1 [88]).

14. On 14 May 2019, Tastec issued an invoice to the Larsens for half of the cost of the parts production for the project (CA 1 [92]). It also sent an email setting out the cladding option proposed, together with an image, and sought the Larsens’ approval to that option (CA 1 [91]-[92]). On 20 May 2019, the Larsens made various enquiries including whether the cladding proposed was the same as the one they had rejected and expressed considerable concerns about it (CA 1 [92]). Mr McAuley’s email response did not expressly address the question whether the cladding was the same as the one they had rejected. Rather, he represented that the tray width was 294mm high and the ribs were 23mm high (CA 1 [95]).

15. On 24 May 2019, Tastec sent to the Larsens a document, entitled “Construction RFI [request for information] Response” dated 23 May 2019. In relation to cladding, Tastec said (as set out in CA 1 [99]):

The mock-up issued is of the proposed customised extraline 294 mm spaced standing seam – all in aluminium alloy. The rib spacings are at 294mm centres double the typical product and about the same spacing as the proposed 304mm NailStrip product. This is not the same as the option you were shown in Sydney. It was refined by the manufacturer to double the amount of ribs to gain a 294mm spacing, thereby meeting the Owners ‘about 300mm’ requirement. It is a customised option, covered by the Bondor manufacturer’s warranty, and worth the higher base product cost we believe, which can be offset against site costs and time and materials costs to batten and overclad all elements.

We are having a full sized sample prototype prepared to demonstrate flashing systems.

The product will allow for the usual Ecoshelta 75mm wall thickness which allows the main glass doors to slide past full opening as intended. The Maxline 340 and other high profiles with clip systems and hidden fixings will project some 74mm past the wall and column lines and will stop the doors sliding past – or we can reset the wall panels to allow the deep profile to sit flush with internal linings projecting in from column alignments on the front facades only, which would be minimally noticeable.

(Italicised emphasis added in CA 1; bold added to indicate contemporaneous Tastec’s view of the feasibility of the Maxline 340 cladding.)

16. Tastec also set out in this document, under the heading, “Cladding Options”, a proposed solution described as “BONDOR Special Order – Customised ExtraLine 294mm spacing Standing Seam Aluminium Full Composite Panel – Joint venture special customised system developed by Ecoshelta and Bondor – for this project only”. It set out various attributes of the “solution”. In the following passage from the document, Tastec represented that its solution was better than the Larsens original contractual specification but represented that it could still do what they had contracted to do, if required. They said:

We are proposing the customised Bondor system as an optimal solution following the Owners request to explore fully bonded imperial standing seam options and can still do the owner’s suggested cladding systems if preferred. Using the Nail Line (58mm ribs) on Ply (19mm) on Timber Battens (45mm) on a base structural roof and wall panel (100mm-138mm) giving a roof thickness of 222mm (or possibly 260mm if extra longways battens are needed). We can taper the roof flashings but they will still be visually broad. It is estimated that the flashings in the image you have sent through [are] approximately 80-90mm thick. The ones we would need to use would be around 250mm thick, nearly three times the width – a bit less than the width of the ridge spacings in the image.

…

We can make the wall panelling work within the frame line if this is required to be the 58mm profiled material – and offset the wall panels at the main sliding doors – these can then be direct fixed plasterboard to align with the other battened plasterboard walls.

We are simply trying to offer what we see as a better solution all around.

(Emphasis added to indicate contemporaneous Tastec’s view of the feasibility of the Maxline 340 cladding.)

The findings of this Court that the representations were misleading or deceptive

17. As Gibb DCJ had not made findings about representations or whether they were misleading or deceptive, that task fell to this Court under s 75A of the Supreme Court Act 1970 (NSW). Mitchelmore JA said in CA 1:

102   …    Having regard to the content of the course of correspondence that culminated in the RFI Response, I consider that Tastec made each of the representations that the Larsens alleged in the ASOC, namely:

(1)   The solution Tastec was offering did not involve use of the Bondor 580 that the Larsens had seen (and rejected) in Sydney.

(2)   The “Extraline 294” was a customised option which Bondor had refined and which had rib spacing at 294mm.

(3)   The Extraline 294 was covered by Bondor’s manufacturer’s warranty.

(4)   The Extraline 294 was an equivalent or superior product to the Maxline 340 in terms of aesthetics and functionality (“better, stronger [and] longer lasting” than the Maxline 340, was “the best choice both aesthetically and functionally for [the Project]”, featured benefits which outweighed the functional use of the Maxline 340,), and carried “all installation warranties to Statutory warranty provisions as per Maxline 340”.

18. Each of the first three representations was found to be misleading or deceptive: (1) at CA 1 [108]; (2) at CA 1 [109]-[113]; (3) at CA 1 [114]-[115]. Representation (4) was found only to be misleading or deceptive in respect of the alleged superior aesthetics, which overlapped with representation (1) ([116]-[117]), having regard to the unchallenged findings of Gibb DCJ.

Whether the Larsens had established reliance

19. This Court dealt in the following paragraphs with the respondents’ submission that the Larsens had not established reliance:

120   Senior Counsel for the Larsens submitted that in concluding that reliance had not been established because of their direction to Tastec to proceed with the unmodified Bondor panels, her Honour failed to consider reliance at the relevant time, namely, at the time of entry into Variation 6. By the time the panels were delivered to the site on 18 June 2019, the whole of the contract price, save for some $4,000, had been paid. At that time, he submitted, the Larsens “found themselves realising that despite what they’ve been told, what they’ve been given was what they had expressly said they didn’t want at a time when they handed over all the money, and assembly of the panels was about to commence”. Putting the t-strip back on did not put the Larsens back in the position they would have been in but for the representations. Rather, the position they would have been in but for the representations was with the Maxline 340 roof that they had contracted for. That her Honour found to the contrary was submitted to be related to her initial misconception of what Tastec had promised to provide in the Contract, which was a non-composite panel comprised of a SIP and the Maxline 340 sheeting.

121   Tastec, on the other hand, submitted that the Larsens had not established reliance in circumstances where they had a choice as to whether or not to use the panels that arrived on site. In deciding to reject the product with the t-strip and proceed with the Bondor 580 panel alone, the Larsens could not establish that the loss was caused by the defendant’s conduct: Sellars at 367-368. Alternatively, Tastec relied on the same authority as the primary judge, to the effect that where a party becomes aware of the truth about a misrepresentation and proceeds with a course of conduct, it is not entitled later to claim damages for being misled: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653 at [607]-[610]; [2008] NSWCA 206.

122   There is no requirement that the contravening conduct be the sole cause of the loss or damage: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 at [33] per Gleeson CJ, [57] per Gaudron, Gummow and Hayne JJ, [210] and [216] per Callinan J (“I & L Securities”). As Brereton JA stated in Zong v Wang [2022] NSWCA 80 at [27] by reference to I & L Securities and other authorities, it suffices that the conduct “make some non-trivial, material, or substantial, contribution to the decision of a claimant to act in a particular way”.

123   The primary judge’s conclusion in relation to reliance emphasised the Larsens’ decision not to accept the Modified Bondor 580 when it was delivered to the site, and to proceed instead with the Bondor 580 panels. Her Honour considered that this decision told against their having relied on Tastec’s representations about the Modified Bondor 580 product. The Larsens’ case, however, was that they relied on the false or misleading representations that Tastec made in entering into Variation 6. I accept the Larsens’ submission that her Honour should have, but did not, consider whether they relied on the representations at the point of executing that variation.

124 Tastec’s Counsel emphasised the Larsens’ email that preceded the RFI Response to which I have referred at [96]-[97] above, in which they said that they understood the need to move to an alternative product, and that they were “happy to proceed” with the alternative solution subject to the warranty and paperwork being sorted. Counsel submitted that at the point of entering Variation 6, the Larsens thus understood that the alternative solution, though not optimal, would alleviate the difficulties with the build that the Maxline 340 presented. Viewed in this context, the RFI Response presented a choice: the Larsens could proceed with the Maxline 340, albeit at the expense of resetting some of the walls and additional thickness on the roof. Alternatively, they could opt for what Tastec had presented as an alternative solution. The Larsens opted for the alternative solution.

20. This Court found that the Larsens had relied on Tastec’s representations to enter into Variation 6. At CA 1 [125], Mitchelmore JA found:

Tastec is correct as to what the Larsens said in the email preceding the RFI Response. However, the RFI Response inaccurately answered the outstanding query of whether the proposed panel was the same as the one the Larsens had seen in Sydney, and it otherwise confirmed the representations that had previously been made in relation to the customised nature of the panel and its refinement in consultation with Bondor to create a 294mm panel seam. In putting the choice between the alternatives in the way that was done, the representations in the RFI Response were a cause of the Larsens’ decision to enter into Variation 6. The primary judge erred in concluding to the contrary.

Loss and damage

21. Mitchelmore JA summarised the Larsens’ claim for relief as follows:

129 The loss and damage that the Larsens relied on in support of their ACL claim was the same as the loss and damage pleaded in the breach of contract claim. Consistently with the nature of the contractual claim, the loss and damage was framed on the basis of putting the Larsens back in the position that they would have been in had the Contract been performed, so far as money can do so: Robinson v Harman (1848) 1 Exch 850 at 855; 154 ER 363 at 365 (Parke B); Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [13] (French CJ, Gummow, Heydon, Crennan and Kiefel JJ). Thus, the focus of the loss and damage was the expert costs of investigating and identifying the cause of the Cracking Damage (ASOC [24(a)]), the cost of rectification of the Cladding Deficiencies (ASOC [24(b)]), and the cost of rectification of the Cracking Damage (ASOC [24(c)]).

130 The express claim for over-cladding the Bondor 580 with the Maxline 340 in the pleading was put as part of the rectification claim in respect of the Cladding Deficiencies in [24(b)]. However, it is apparent from the Larsens’ submissions before the primary judge on the ACL claim that they raised the point they are running on the appeal, albeit in the context of a broader claim for damages. In their closing written submissions, the Larsens submitted that in reliance on the pleaded representations, they had entered into Variation 6 “and suffered loss or damage, which they are entitled to recover” (at [112]). They submitted that they were entitled to be put in the position they would have been in absent Variation 6, being the cost of over-cladding the Bondor 580 with the Maxline 340 (at [113]). In reply to Tastec’s submission that this would be neither reasonable or necessary, the Larsens submitted, as they submit now, that neither proposition was correct and that they were entitled to be put back in the position that they were in before they relied on the misleading or deceptive conduct (at [50]).

22. Gibb DCJ did not assess loss and damage arising from reliance. Accordingly, this Court remitted the question of relief to the primary judge. In CA 1, Mitchelmore said as follows:

134   The primary judge did not consider the question of prejudice or disadvantage from the perspective of the choice that the Larsens were offered in the RFI Response and earlier correspondence, when considering whether to enter into Variation 6. At that time, the Contract entitled them to the Maxline 340, cladded over a Bondor SIP. The evidence of both Mr and Mrs Larsen was that they would never have agreed to Variation 6 if they had been told that the panel for which the Maxline 340 and Bondor SIP was exchanged was the Bondor 580 with a glued-on t-strip down the middle of each panel. Her Honour proceeded on the basis of that evidence, but did not consider the issue of loss or damage with the relevant comparison in mind. The questions of feasibility or reasonableness on which Tastec sought to rely may come into play in quantifying the loss, but their submission that the house cannot be cladded over with the Maxline 340 proceeds on the basis of the wrong counterfactual.

135 It follows from what I have set out above that the matter will need to be remitted to the District Court, but limited to the assessment of relief under s 236 and/or s 237 of the ACL. It will be for that Court to determine on remitter whether, and if so to what extent, to allow any further evidence on the issue: note Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3 at [75]-[76].

(Emphasis added.)

The proceedings in the Court below

The pleadings

23. The Larsens commenced the proceedings in the Court below by filing a statement of claim on 16 March 2020. In paragraphs 24-30 of their pleading, they alleged, inter alia, that the respondents had engaged in misleading or deceptive conduct (by making the “Cladding Compatibility Representations”), on which the Larsens relied and, as a consequence, had suffered loss and damage.

24. The Larsens claimed by way of damages for misleading or deceptive conduct the “cost of rectification of the Cladding Deficiencies including but not limited to the installation of battens and outer aluminium panel in Maxline 340 or equivalent” (paragraphs 24b and 40 of the amended statement of claim filed on 24 July 2020). Both these paragraphs were the subject of a bare denial by Tastec and Mr Sainsbury in their defences. In the course of the appeal, Mr Gracie, who appeared for the respondents, insinuated in his submissions that the claim for the cost of rectification on the basis of misleading or deceptive conduct was a recent invention. I reject this submission, having regard to the fact that it was expressly pleaded from the outset.

25. Further, the way in which the Larsens had put their claim for damages for Tastec’s contravention of the Law was expressly, precisely and concisely articulated by this Court in CA 1 [129]-[130]. This was what was remitted to the Court below and therefore what was required to be determined by the primary judge, as confirmed in CA 1 [130].

The evidence on remitter

26. On remitter, the parties tendered all the documents which had been before Gibb DCJ and the transcript of the 13-day hearing before her Honour (none of which was referred to in the parties’ submissions in the Court below as to the relief to be granted). They also adduced further evidence, including expert evidence and joint expert reports following a conclave, all of which, apart from the contract, were contained within the appeal books in this Court (except the building contract dated 15 November 2018 between Tastec and the Larsens, which was provided to this Court during the course of the appeal). Mrs Larsen and Mr Sainsbury gave evidence at the remitter hearing. Two sets of two experts prepared joint reports and gave concurrent evidence: Mr Moisidis (instructed by the Larsens) and Mr Karsai (instructed by the respondents), both engineers, gave evidence within their expertise and two quantity surveyors, Mr Bolt (instructed by the Larsens) and Mr O’Donnell (instructed by the respondents) also gave evidence. Some of the documentary evidence which was before the Court below is not in the appeal books (see further below).

The contract

27. Clause 3 of the contract provided that the cost of the works set out in the Schedules “will be fixed for the duration of the project” subject only to adjustments such as design changes beyond the control of Tastec or a variation requested by the Larsens. The contract otherwise required Tastec to complete the project to “lock up” for a fixed price.

28. The Works under the contract comprised five schedules. Schedule 3, an illustrated fit-out schedule, specified the project finishes. It, relevantly, specified:

ROOFING SHEET PROFILE – ‘Maxline 340’ Colorbond – ‘Monument’. All exposed cladding and roofing panels.

29. Schedule 4 set out a list of works to be included in the project and, relevantly, included:

14   Install Composite Panel Roofing System to specification.

30. It was common ground that the contract did not specify the SIP which was to be used under the Maxline 340 cladding beyond specifying that it was to be made of steel.

31. If the contract had been performed according to its terms (and without Variation 6), the Larsens would have received a house clad with Maxline 340 for the contract price.

Mrs Larsen’s evidence

Whether the Larsens elected not to insist on Maxline 340 or waived their contractual right to Maxline 340

32. Of relevance to the questions in this Court regarding election and alleged failure on the part of the Larsens to mitigate their loss, Mrs Larsen was cross-examined about what she and her husband had done when they found out that the T-strips had been applied to the Bondor 580. In response, Mrs Larsen recalled that they had driven to Sydney to the factory where Tastec was spray-painting “the T-strips”. At the factory she was told by a member of Tastec’s staff that there would be T-strips glued in the middle of every single panel “to give us the look at a … 30ml panel.” She confirmed that they rejected that solution “[a]bsolutely.”. The following exchange ensued:

Q. And did you, at that point, stop work?

A. No, because a SIP panel needed to go into the building. The building was a frame, it was a shell, so a - a - a SIP panel of some sort needed to be put into the building.

Q. And are you saying then that MaxLine was to be overclad with it.

A. At this stage we - we were a bit in shock, but we knew the building had to be completed, as in to lockup.

Q. But by allowing the 580 to go on you didn’t say, “But I still require the MaxLine over it”, did you?

A. We didn’t say anything at that stage.

Q. Well, you allowed the installation to continue.

A. Well, it was an insulation panel. It was a wall panel and roof panels.

…

Q. Do you know the first time that you raised the issue of the need for the MaxLine to be overclad on the Bondor 580?

A. I can’t remember.

Q. It was after, though, I’ll put to you, the completion of all of the Tastec work, wasn’t it?

A. To be fair, we were a very remote site. We had trades lined up. We needed to complete that piece of work externally and internally. Then we - we, remember too, we paid hundreds of thousands of dollars upfront. So, we wanted the job completed. And then we - we thought we decided to then raise the issues with Mr Sainsbury.

…

Q. And when I just said to you that the first time that you raised the suggestion about the MaxLine being overclad to the Bondor 580, I just put to you that that was after the completion of the work by Tastec.

A. To lockup, yes.

Intention to rectify

33. Mrs Larsen was cross-examined about whether she would have the Maxline 340 installed in the following passage:

Q. And can I suggest to you that having lived in the premises for now some, what, four years, four and a half years, that the proposed scope of rectification, that requires a great deal of destruction of the existing home, will not be done by you, will it?

ROBERTS: I object.

WITNESS: Absolutely, we will be doing it. Absolutely.

HER HONOUR: Asked and answered.

34. Mrs Larsen gave evidence that, in November 2023, she contacted Ben Pirie (a builder), to obtain “scope input and a quotation for the supply and installation of Maxline 340”. She provided him by email dated 7 November 2023 with a detailed document, to which she attached quotations (including from Revolution Roofing, the supplier of Maxline 340) and referred to an onsite meeting with him the following day “to step through the attached Request For Proposal information”.

35. The document reproduced one of Mr Sainsbury’s drawings which depicted a Bondor Shademaster SIP panel being attached to Maxline 340 with what were described as “timber support battens” (strips of solid material used, typically, to provide a fixing point for roofing or cladding materials).

36. The document said of the reason for the request, the drawing and the scope of works requested as follows:

A dispute arose over the variation that was executed and which has been the subject of Court proceedings. As a consequence of those proceedings, we are entitled to proceed as though the variation had not been signed. We are therefore seeking proposal submissions for the works that are reasonable and necessary for the affixing of ‘Maxline 340’ to the existing SIP panels on the walls and roof via timber battens.

Scope of Works

The following is a diagram that was prepared by the director of Tastec to show the way the ‘Maxline 340’ was to be attached over the Bondor roof system.

[The diagram referred to above was extracted here.]

There were two ‘workability’ issues that were identified by the director of Tastec with this installation being:

1.    the sub-structure required to support it, the sheet profile standing seam height (58mm) and the tall fixing system under the sheet, which meant that a very thick roof and wall profile would result (Thick Profile and Structural Support Issues); and

2.    the external sliding doors would not work by being able to slide right back out of the way over the wall panels (Door Operability Issues).

We require a scope of work that is consistent with the diagram above and that addresses the two ‘workability’ issues identified above and which does so in the most efficient and economical manner.

37. This document, together with the engineering report referred to below, were also sent to two other builders, Matt Cover and Heath Dyer, who also attended the site inspection on 8 November 2023. Mr Pirie’s tender price provided on 30 November 2023 was $455,617.92. Mr Dyer’s tender price (which was valid for 90 days from 30 November 2023) was $472,025.97.

Engineering report

38. The Larsens, through their solicitors, also obtained an engineering report dated 29 November 2023 from Richard Noonan, registered civil and structural engineer, entitled “Roof and Wall Re-Cladding – Structural Engineering Assessment”. Mr Noonan also attended the site inspection on 8 November 2023.

Mr Sainsbury’s evidence

39. In cross-examination, Mr Sainsbury agreed that after the Development Application (DA) drawings had been prepared and lodged, he started to work on drawings for a construction certificate, which were required to be more detailed than for the DA. He agreed that he had to perform extensive detailing to incorporate into the Ecoshelta system the Maxline 340 cladding on the roof and walls of the Larsens’ dwelling. The following exchange ensued in his cross-examination:

Q. And that extensive detailing allowed you to incorporate the two building elements [the Ecoshelta system and the Maxline 340 cladding] so that you could prepare a CC [construction certificate] design, which you did in early March 2019, correct?

A. Yes.

Q. And you [billed] the Larsens for the CC drawings as an additional cost to the works over and above the usual eco shelter price that had been agreed to in the contract.

A. And that was [billed] by the architect.

Q. Right, so your [practice] bills them separately.

A. Yes.

Q. And following that invoice being sent, they complained that they thought it was excessive, didn’t they?

A. Yes.

Q. And in response to that, you responded justifying what you had done in order to prepare the CC drawings, and why the cost was higher than what they had apparently understood would be the case, correct?

A. Yes.

40. The response which Mr Sainsbury sent to the Larsens to justify what he was charging for the construction certificate drawings said in part:

Our standard Ecoshelta system documentation would not have described the required customised building. Council acting as the principal certifying authority required a set of documentation to meet their specific requirements. The project, as approved, required extensive customisation of the system. The required detailing has thus also been extensive and has been produced for the CC compliance specifications, which required extra documentation for … the unique Maxline [340] … cladding and roofing facing requirements.

41. Mr Sainsbury accepted in cross-examination that his response expressed “the reasons for the additional costs being the additional required time for the detailing and the extra documentation to deal with that very thing, the incorporation of the Maxline cladding and roofing into the Ecoshelta system”. He also agreed that he had represented to the Larsens that he had actually spent “a lot more time” than he had charged them because the creation of the construction certificate design set required an extensive amount of work and documentation.

42. When he was taken through the construction certificate “design set” dated March 2019 in cross-examination, Mr Sainsbury agreed that his structural notes specified as SIP panels the 100mm Bondor Shademaster panel for the roof and the 75mm Bondor LuxeWall composite structural wall panel for the walls with “Monument [a colour] COLOURBOND clad over the top”. He accepted that the cladding was identified as Maxline 340. It was common ground that the Bondor 580 has a thickness of 100mm.

43. At the remitter hearing, the engineers gave evidence that it was feasible to clad the panels on the walls and roof of the house with Maxline 340 although it would be necessary to make adjustments to the doors and windows to allow for the increased thickness of the walls. At the conclusion of their oral evidence, Mr Bolt’s costing for the cladding was $526,728.80 (as at December 2023) and Mr O’Donnell’s costing for the cladding was $277,021.21.

The parties’ submissions in the Court below

44. The Larsens put their claim for damages on the basis of the cost of rectification. They submitted that, on one view, they were entitled to have the Bondor 580 removed from their dwelling and have it replaced with a steel SIP, as specified in the contract. However, they submitted that, in accordance with their duty to mitigate their loss, they accepted that the Maxline 340 ought be installed as cladding over the Bondor 580 which had already been installed.

45. The Larsens also pointed to the respondents’ “shopping list of reasons, most of which have never been raised before, why cladding over the existing panels will be problematic, difficult or requiring additional work.” They submitted further:

91.    To the extent that there are buildability issues to deal with when combining Maxline 340 with the particular Bondor SIP that Mr Sainsbury chose, the cost of dealing with those would be part of the Larsens’ loss and damage. The engineering experts agreed that having regard to the requirements of the Contract in this case:

(a)    the designer would be required to identify the most appropriate SIP;

(b)    the designer would have to design and detail how the Maxline 340 was to be clad over and integrated with that SIP as part of the holistic design of the house; and

(c)    … that design and detail would ordinarily be prepared as part of design development.

92.    Mr Sainsbury claimed he did undertake extensive detailing and additional documentation due to the unique Maxline 340. He even invoiced the Larsens for that additional work. The drawings that Tastec issued following that identify his choice of the SIP (100mm Shademaster 580 Aluminium panels on the roof and 75mm Luxewall panel on the walls) but neither Mr Sainsbury nor Tastec has ever identified any details showing how the Maxline was to be integrated with the chosen SIP. That was the Contract requirement and detailing how Tastec was to satisfy that obligation was its responsibility. Mr Karsai also accepted that this was the responsibility of the architect. Mr Sainsbury, as architect, was well placed to discharge this obligation at the time.

93.    It is no answer for Mr Sainsbury and Tastec to rely on their own failure to perform the design development that the Contract required to avoid having to return the Larsens to their contractually entitled position. To do so would permit Mr Sainsbury and Tastec to take advantage of his own wrong. [Citing Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 441.]

46. Of present relevance, the respondents submitted that rectification cost was not an appropriate measure of damages:

50.   First, as is mentioned above, there is no issue now that what was ultimately constructed for the Larsens is safe, compliant, and entirely free from defects.

51.   Secondly, the Larsens do not put their case on the basis that there has been any diminution in the value of their home and there is no evidence of this in any event.

52.   Thirdly, the scope of works proposed by the Larsens has been costed by quantity surveying experts called by both the plaintiffs and the defendants. In their joint QS report dated 6 May 2024 (QSJR), the QS experts have agreed that the cost of the Larsens’ proposed scope of works will be in the range of$277,021.21 (in the opinion of the defendants’ QS) to $526,728.80 (in the opinion of the plaintiffs’ QS). The scope of works is extensive, and includes cladding work, roofing work (including demolition), removal and reinstatement of awnings, the requirement to engage an architect and structural engineer, and (on the plaintiffs’ case) the need for the Larsens to secure temporary accommodation while the works are carried out.

53.   Fourthly, this Court cannot be satisfied (despite Mrs Larsens evidence) that the Larsens intend to carry out the rectification works at such a cost - especially in light of the fact that the only benefit to the Larsens is aesthetic.

54.   Fifthly and finally, whilst the quantity surveyors disagree on the costs of the individual integers that make up the cost of the rectification works, what is certainly clear in the defendants’ submission is that the anticipated costs of the remedial scope of works proposed by the Larsens is out of all proportion with the purely aesthetic interest that the Larsens seek to vindicate with an award of compensation or damages under ss 236 or 237 of the ACL. To cast the submission in the language of Bellgrove, it is entirely unreasonable and unnecessary to award damages in a sum of either $277,021.21 to $526,728.80 on the basis that the Larsens would partially demolish and rebuild their perfectly sound home some 4 and a half years after completion, having had full use of it, for purely for aesthetic reasons.

(Emphasis added to indicate the reference in Mr Gracie’s submissions to diminution in value, which may have been what inclined the primary judge to decide the whole issue of remitter on that basis and dismiss the Larsens’ claim for relief.)

The primary judge’s reasons

47. The primary judge characterised the Larsens’ claim for damages as follows:

57 As I have said, the plaintiffs seek damages under s 236 of the ACL or compensation under s 237 of the ACL, equal to the cost of installing Maxline 340 cladding on top of the existing Bondor Shademaster SIP which has been installed on the walls and roof of the house.

58    The plaintiffs seek damages or compensation calculated in this way to bring them into the position that they were entitled to be in under the contract prior to their agreement to Variation 6.

48. The primary judge then rejected that claim on the basis that expectation loss could not be awarded for contravention of the Law. Her Honour said:

59 The plaintiffs have based their claims for damages and compensation upon an entitlement to damages applicable in an action for a breach of contract which, as I have set out in detail above at [21] - [37] is not the basis for a claim under the ACL. As the High Court said in Gates, the objective of damages in an action for breach of contract is to place the plaintiffs in the position they would have been in had the contract been performed. To that end, damages may be awarded for loss of bargain (expectation loss) and damage suffered, including expenditure incurred in reliance on the contract. In contrast, based upon but not identical to an action for damages caused by the commission of the tort of deceit, damages or compensation for a breach of s 18(1) of the ACL are awarded to place the plaintiffs in the position they would have been in had the breach not occurred. It is clear from the High Court authorities set out above, which are binding on the District Court, that expectation loss is not a basis for an award of damages or compensation under the ACL. The ACL is not concerned with the enforcement of contracts. It is concerned with the promotion of competition and fair trading and provision for consumer protection (see s 2 of the Competition and Consumer Act 2010 (Cth)).

49. The primary judge said further:

60 In order to obtain an award of damages under s 236 of the ACL, the plaintiffs must show that they have suffered loss or damage because of the contravention of s 18(1) of the ACL. The quantum of damages will be calculated by reference to the amount of the loss or damage suffered by the plaintiffs.

61    The comparison to be made is the comparison between the position of the plaintiffs at the end of the construction of the house, after their agreement to Variation 6 on the one hand, and the position that they would have been in at the end of the construction of the house had they not been influenced by the misleading or deceptive conduct of the defendants to agree to Variation 6.

…

63   Had the plaintiffs not been influenced by the misleading or deceptive conduct, they may have renewed their insistence upon the use of Maxline 340 panels. This would have necessitated a further change to the plans and specifications on account of the extra bulk which would have arisen from the use of the Lux Wall SIPs [sic] in the roof and walls. The Maxline 340 panels need to be affixed to a Structural Insulated Panel System, and the contract provided for that (see the first instance decision at [41]-[42]).

64   Alternatively, the scenario argued for by the defendants might have come to pass and the plaintiffs might have agreed to Variation 6 even had the misleading or deceptive conduct not occurred or not influenced them.

65    In either case, the house would have been built and would have been either very similar to the house they presently have or the same as that house. There is no suggestion that the plaintiffs would have sought to repudiate the contract.

66 There is no evidence before me that the plaintiffs have suffered economic loss or damage of the kind which may be the subject of an award of damages under s 236 of the ACL or an award of compensation under s 237 of the ACL. There is no evidence that the house which has been built is worth less than the contract price. There is no evidence that the house which has been built would be worth less than the house they may have had under either of the two alternative hypothetical scenarios set out in [63]-[64] or any other hypothetical counterfactual.

67 There is no allegation that the plaintiffs have suffered an injury compensable under s 237 of the ACL. It is clear that the plaintiffs are very upset that they did not get a house with the appearance that they wished for, however, the ACL does not provide for an award of damages or compensation for expectation loss. The plaintiffs are in an analogous situation to the situations discussed in Marks at [50]-[51] (see [31] above) (see also Bartlett v Weatherill [2017] NSWSC 31).

68 The plaintiffs have not established an entitlement to an award of damages or compensation under s 236 or s 237 of the ACL.

Consideration

General principles

50. The measure of damages for breach of the Law usually equates to damages in tort: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; [1986] HCA 3 (Gates). Thus, broadly speaking, it is said that the victim of misleading or deceptive conduct is entitled to an award of damages sufficient to put that person in the position they would have been in had the misleading or deceptive conduct not occurred. However, it is plain from Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69 that Gates is not to be construed as requiring courts to disregard expectation losses, which are commonly associated with damages for breach of contract.

51. Expectation losses may still be relevant in circumstances, such as Gates itself, where a victim of a contravention alleges that, but for the contravening conduct, they would have entered into a different contact. In that event, if all integers can be proved, the victim is entitled to damages to put them in the position they would have been in had they entered into the different contract. This process is akin to the process of assessing damages in tort because of the relevant comparison, but it involves an assessment of loss on an expectation basis, which is generally apposite for damages for breach of contract. This application of methods from different areas of the common law is useful for assessing damages. Indeed, the High Court in HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 said at [62] (Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ):

In any event, whatever anomalies in relation to damages may be revealed by comparing liability for negligently supplied information with liability for breach of warranty, no error in assessment is demonstrated by comparing the contractual measure of damages with the ACL measure of damages. The wide language of s 82 is compatible with a legislative desire to broaden the scope of recovery, not to keep it within the bounds of some comparison with the common law.

(Footnote omitted.)

52. The principle is illustrated by Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27 (Berry) in which Mr Berry was induced to sign a document terminating an agency agreement. He and his company sued for damages under the Law for the amount of the commission they would have received under the agency agreement had it not been terminated. The plurality (Bell, Keane and Nettle JJ) said, at [26], that the loss and damage by reason of being tricked into signing the termination letter, “was and is properly cognisable as the loss of [the applicants’] legal rights” under the agreement.

53. It said further at [33]:

… [I]f the state of the evidence were that, although it did not establish on the balance of probabilities that, but for Securency’s misleading or deceptive conduct, the Agency Agreement would have continued beyond 30 June 2008, it nevertheless established that there was a more than negligible chance that, but for Securency’s misleading or deceptive conduct, the Agency Agreement would have continued beyond that date, Dr Berry and GSC would have been entitled to claim that the measure of their damages fell to be determined by reference to the hypothetical possibility that, but for Securency’s misleading or deceptive conduct, Securency would have waited a substantial time after 24 February 2008 before terminating the Agency Agreement. In that event, and subject to questions of the way in which the matter was conducted below, it would have been necessary to undertake an assessment of the likelihood of the various hypothetical possibilities and to compute an award based on that assessment. But, as will be explained, in fact the state of the evidence was and is that it establishes on the balance of probabilities that, but for Securency’s misleading or deceptive conduct, the Agency Agreement would have continued until 30 June 2010; and so, therefore, the assessment of damages is properly to be undertaken on the basis of the commissions which would have been payable under the Agency Agreement up to that point.

(Emphasis added.)

54. Berry concerned the value of a commercial opportunity which the injured party had lost because of the wrongful conduct of the other contracting party (the opportunity to earn commissions pursuant to the Agency Agreement). Thus it is not factually similar to the present case where the contractual right lost was the right to have the house constructed in accordance with the contract. In the present case, there was no element of chance or opportunity such as arose in, for example, Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20, Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 or Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4.

55. In order to ascertain damages on the basis outlined in Gates, it is important to identify the relevant counterfactual. That is, it is necessary to posit the question: what would have been the victim’s position but for the contravening conduct? Thus the effect of the contravening conduct and the circumstances in which it occurred are relevant to the assessment of loss.

56. Where a victim of contravening conduct purchases property, whether real or personal, in reliance on misleading or deceptive conduct, the question of the value of the property is relevant to the assessment of loss. As long as the price paid is at least equivalent to the value of the property, the victim will have suffered no loss. Thus, for example, in Argy v Blunts and Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; [1990] FCA 57 (Argy), the applicant couple recovered no damages for the respondent real estate agent’s contravening conduct in representing that property was “waterfront” when it was not, since the value of the property equated to what they paid for it.

57. However, although this way of measuring loss is apposite in circumstances such as arose in Argy, it does not follow that this is the only measure of damages for contravening conduct under the Law: Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3 at [31] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ). In that case the High Court held that the undertaking of additional financial obligations in reliance on misleading or deceptive conduct constituted recoverable loss, which did not depend on there being a difference between the price paid under a lease agreement and the value of the property at the date of the agreement. The Court said at [46] that in each case it is necessary to “identify the detriment which is said to be the loss or damage which has occurred”.

58. The principles of election and waiver, or their analogues in the context of the Law, are also relevant. The respondents submitted that, by permitting them to install the Bondor 580 panels, the Larsens had elected not to insist on the installation of the Maxline 340 cladding or had waived their right to require it to be installed.

59. The significance of election and waiver is different where an injured party has suffered as a result of conduct that contravenes the Law. In Warwick Entertainment Centre Pty Ltd v Alpine Holdings Pty Ltd [2005] WASCA 174; (2005) 224 ALR 134 (Warwick), the Western Australian Court of Appeal said at [71]:

There is also authority for the proposition that, in the context of ss 52, 82 and 87 of the Act, an election to affirm a contract which was induced by misleading conduct does not necessarily disentitle the person so induced from recovering damage occasioned by the performance of the contract if, at least, the decision to affirm was reasonably made: TN Lucas Pty Ltd v Centrepoint Freeholds Pty Ltd (1984) 1 FCR 110 at 118, Tiplady, above, at 464, per Fitzgerald J; and  per Jenkinson J. There is, in this respect, a distinction between an election in respect of contractual rights and one to waive any entitlement to relief under ss 82 and 87.

The counterfactual in the present case

60. In the present case, but for the contravening conduct, the Larsens would not have agreed to Variation 6 (CA 1 [134]). This is a compelling inference based not only on the Larsens’ direct evidence to that effect. It also arises from the circumstance that Tastec had tried twice before to induce the Larsens to abandon their entitlement under the contract for Maxline 340 and that it required misleading or deceptive conduct on the part of Tastec to induce the Larsens to relinquish this right.

61. Had the Larsens not agreed to Variation 6, they would still have had an enforceable contractual right to require Tastec to install Maxline 340 on the roof and walls. In those circumstances, the purpose of the award of damages is the amount required to install Maxline 340 on the roof and walls of the Larsens residence, subject to questions of proportionality. This is the value of the right they surrendered as a result of Tastec’s contravening conduct: it is an identified and quantifiable economic loss resulting from the loss of a legal right and of what, on the evidence, would actually have been received upon performance of the contract.

62. The respondents submitted that the Larsens were not entitled to the cost of rectification because they had engaged another builder to construct their carport with Bondor 580 without Maxline 340 and also used panels with the same profile as Bondor 580 made from Corten (a steel alloy which develops a rust-like patina when exposed to the elements) for other parts of the exterior of their home. The respondents submitted that these acts indicated that aesthetics were not important to them and that, if awarded damages for the cost of rectification, they would not use the damages to have the Maxline 340 cladding installed. Mr Gracie submitted orally:

[W]e’re now in May 2025 and in addition to their conduct during 2019 we’d submit that it would be highly improbabl[e] to effectively destroy the perfectly compliant, safe, and utilised dwelling with no defects all these years later for a look which we submit the Larsens knowingly accepted.

63. I reject this submission. The Larsens’ conduct referred to above has established how significant aesthetic considerations were for their residence and the importance of Maxline 340 to provide their desired effect. While Mr Gracie deprecated the Larsens’ concerns by describing them as “purely aesthetic”, this description does not assist the respondents since that is precisely why the Larsens insisted on Maxline 340 to clad their house.

64. Mr Gracie submitted that it was noteworthy that the Larsens had not adduced any architectural evidence on the remitter and therefore they could not prove that the design was feasible. I reject this submission for the reasons given by the Larsens in paragraphs 91-93 of their written submissions in the Court below (extracted above). It is telling that Mr Sainsbury was prepared to have Tastec enter into a contract whereby Maxline 340 would be clad over SIP panels and that he charged for design and construction work as to how the panels and the Maxline 340 could be installed. In these circumstances, if the construction for which the contract provided was not feasible, impractical or unworkable, then it is to the respondents’ account. It ill-behoves them to denigrate, for their own forensic purposes, the very specification which Tastec contractually bound itself to build.

65. Mr Gracie relied on Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 (Ferrcom) at 418-419 in support of his submission that an adverse inference ought be drawn against the Larsens because they did not call an expert architect to give evidence. Ferrcom has no application in the present case since it applies to the failure by a party to ask a witness (that is, someone who has been called to give evidence) questions in chief. In those circumstances, if the most natural inference from the failure is that the party feared to do so, the inference is available that the witness’ testimony on that topic would not have assisted the party calling the witness. In Jones v Dunkel (1959) 101 CLR 298 at 320-321; [1959] HCA 8, the High Court held that, if a party fails to call as a witness someone in their “camp”, the inference is available that the witness’ evidence would not have assisted the party’s case. Mr Gracie did not submit that the inference ought be drawn because of the Larsens’ alleged failure to call a particular architect but rather their alleged failure not to call any expert evidence from an architect at all. Accordingly, I reject Mr Gracie’s submission that either a Ferrcom or Jones v Dunkel inference is available against the Larsens.

The grounds of appeal

66. Before turning to the grounds by reference to the list of issues set out above, I propose to address particular errors in the primary judge’s reasons.

67. It is evident from J [59] that the primary judge treated the Larsens as having put their claim for damages (which was helpfully summarised by Mitchelmore JA at [129]-[130], extracted above) as a claim for damages for expectation loss. Her Honour rejected the claim on the basis that expectation losses were only recoverable in a claim for damages for breach of contract (J [59] and [67]). In this respect, her Honour appears to have led herself into error. This is also evident from the primary judge’s correct, but inapposite, comment at J [41] when referring to the Larsens’ submission, by reference to Bellgrove v Eldridge (1954) 90 CLR 613; [1954] HCA 36 (Bellgrove), that Bellgrove “is a decision of the High Court concerning damages for breach of contract.”

68. Further it appears that the primary judge was also misled by the respondents’ submission that it was material that the Larsens’ house was worth no more with Maxline 340 than it would be without. As is evident from the authorities referred to above, the comparison of price with value is relevant when the contravening conduct has induced the victim to buy property but is not determinative in a case such as the present. People, including victims of contravening conduct, are entitled to overcapitalise their residences. The circumstance that the contracted-for Maxline 340 did not add monetary value to the residence was not something that had to be taken into account for the benefit of the wrongdoer, although it is relevant to the question of reasonableness (discussed below). Thus the primary judge was in error to require a differential in value to be proved before damages could be awarded to the Larsens (J [66]).

1. Is the loss of the right to receive cladding materials specified in the contract and the costs of rectification to obtain the specified cladding a form of economic loss? (Grounds 1(c), 1(d) and 4(b)).

95. The answer to this question is yes, since the Larsens are entitled to the amount required to put them in the position they would have been in had the contract been performed, since this corresponds with the position they would have been in but for the contravening conduct of the respondents.

1. Is the loss of the specified use of a product a form of loss or damage within the meaning of ss 236 and 237? (Grounds 2, 3(b) and 4(a)).

96. The answer to this question is yes. The Larsens had contracted with Tastec to have Maxline 340 cladding on the roof and walls of their residence. They lost that contractual right as a consequence of the respondents’ misleading and deceptive conduct. They are entitled to have the cost of the cladding and its installation by way of damages.

1. Was there a real (not negligible) possibility the Larsens would have agreed to vary the materials in any case if the misleading or deceptive conduct had not occurred? (Ground 3(a)).

97. The answer to this question is no. It has been said, many times, that the best guide to the future is the past. The High Court (Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ) put it thus in Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 575-576; [1997] HCA 22:

Determining whether there is a real chance that something will occur requires an estimation of the likelihood that one or more events will give rise to the occurrence of that thing. In many, if not most cases, determining what is likely to occur in the future will require findings as to what has occurred in the past because what has occurred in the past is likely to be the most reliable guide as to what will happen in the future. It is therefore ordinarily an integral part of the process of making a determination concerning the chance of something occurring in the future that conclusions are formed concerning past events.

98. The reason the choice of cladding was important to the Larsens was that they liked and insisted on a particular aesthetic, which the Maxline 340 could provide. The respondents’ first two unsuccessful attempts to get them to shift from this position were unsuccessful which led the respondents to engage in misleading or deceptive conduct to get the Larsens’ agreement to forego Maxline 340, which was successful. It can be inferred that the respondents endeavoured to mimic Maxline 340 by sticking a strip in the middle of each flat surface on Bondor 580 because they appreciated the importance to the Larsens of that particular aesthetic. In these circumstances, the only reasonable inference is that this was important to the Larsens and they were not to be deflected. Their conduct in obtaining detailed tenders from builders to perform the work provides some support for this inference although it was done in the context of legal proceedings.

1. Would the Larsens have received the benefit of the cladding specified in the original contract if the misleading or deceptive conduct had not occurred? (Grounds 3(b) and 3(c))

99. Having regard to the previous answer, the answer to this question is also yes. If the misleading and deceptive conduct had not occurred, the Larsens would not have agreed to Variation 6 and they would have retained their rights under the contract. If Tastec had not performed the contract according to its terms, the Larsens could have sued them for breach of contract. The damages for which they would have been entitled would have been the cost of rectification, which equates to the damages to which they are entitled in the present case.

1. Have the respondents demonstrated that installing the specified cladding was not a reasonable course to adopt? (Grounds 4(c) and 4(d))

100. The answer to this question is no, for the reasons given above.

101. Accordingly, all of the grounds of appeal have been made out. It is necessary to address the notice of contention.

The notice of contention

102. The respondents filed a notice of contention and set out three bases which they contended were sufficient to upholding the judgment.

The first ground: the Larsens did not prove that rectification was reasonable and necessary

103. The first ground of the notice of contention alleges, in substance, that the Larsens did not prove that their “proposed method and scope of rectification” was reasonable and necessary.

104. The answer to this contention is that, as the authorities outlined above establish, it is not for the injured party to prove that the cost of rectification is reasonable, but rather for the wrongful party to show that it is unreasonable. However, even if (contrary to the authorities referred to above), it were for the Larsens to prove it, they have done so for the reasons given above. Of most significance is the fact that Tastec contractually agreed to apply Maxline 340 cladding to unspecified SIPs and that Mr Sainsbury took the time to prepare (for which he charged the Larsens) drawings for the construction certificate which set out how the Maxline 340 could be attached with wooden battens to a SIP.

105. Accordingly the first ground of contention has not been made out.

The second ground: that the loss claimed for breach of contract (which was rejected before Gibb DCJ) was identical to the loss claimed for contraventions of the law

106. This matter was addressed by this Court in CA 1 [129]-[130]. For the reasons given above, the claims in contract and for contraventions of the Law were separate and distinct. The way in which the loss was claimed was the same. There is nothing unusual about this since, as discussed in the authorities referred to above, where what has been lost as a result of misleading or deceptive conduct is a contractual right, the damages for the contravention in the law resembles damages for breach of contract (otherwise referred to as expectation loss). The dismissal of their claim to damages for breach of contract did not disentitle the Larsens to damages measured on the same basis for conduct which contravened the Law.

107. Accordingly the second ground of contention has not been made out.

The third ground: that the Larsens made a unilateral and fully informed decision to proceed with the installation of Bondor Shademaster SIP without the Maxline cladding after becoming aware of the respondents’ misleading or deceptive conduct because they wanted to complete the works as soon as possible and the Council had imposed a stop work order on the site

108. If this ground amounts to a reiteration of the respondents’ submission that the Larsens had not relied on the contravening conduct, it is answered by CA 1 [121]-[125] above. If it amounts to a different submission – that the Larsens would not have agreed to delay the project by insisting on Maxline 340 being attached to Bondor 580 before the Bondor 580 was installed and ought thereby be taken to have elected to forego the Maxline 340 – different considerations arise. The primary judge did not address the question of election in her reasons. The evidence which Mrs Larsen gave in cross-examination, which is relied on by the respondents as amounting to an election, is set out above.

109. The doctrine of election, which applies to contracts, does not apply to victims of conduct which contravenes the law: see the discussion of Warwick above. When the Bondor 580 panels were delivered to the site, the Larsens saw for the first time that a strip had been stuck down the middle of some of the panels. They rejected this “solution” and said that it ought be removed. However, they had paid the whole of the contract price except $4,000 and had been left with a site which was far from complete. They had other tradespeople coming to do the inside work on the site, which was relatively remote. Had they refused the installation of the panels, they would not have been able to live in the dwelling because it would have been no more than a shell. There would also have been substantial delay. Whether or not the Larsens insisted on their contractual rights to have Maxline 340 as cladding at the time the Bondor 580 panels were installed is beside the point. Furthermore, the contract contemplated that the cladding would be applied to SIP panels, which is what the Bondor 580 panels (which Tastec had selected and, by its misleading and deceptive conduct, foisted on the Larsens) were. Thus, in accepting the installation of the panels, they cannot, in my view, be taken to have elected to forego the Maxline 340 cladding.

110. While the conduct of the Larsens in allowing the Bondor 580 to be installed could not reasonably be regarded as negligent or careless, it is important to recall that the protection of the Law is not readily to be withdrawn, including on such a ground. As Gleeson CJ said in Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [13]:

It will commonly be the case that a person who is induced by a misleading or deceptive representation to undertake a course of action will have acted carelessly, or will have been otherwise at fault, in responding to the inducement. The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim of a contravention is not a bar to an action under s 82 unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage. The respondents knew the purpose for which their representations were being relied upon by the appellants. The Full Court accepted that the making of the representations amounted to engaging in misleading or deceptive conduct in trade or commerce. There was no warrant for a conclusion that the negligence of the appellants in relation to the feasibility study was the sole cause of the decision to undertake the project.

111. In those circumstances, I am not persuaded that there was any relevant election or waiver which has the effect of preventing the Larsens from relying on their right to damages under the Law.

112. Accordingly the third ground of contention has not been made out.

Conclusion

113. It follows that the appeal ought be allowed and the respondents ordered to pay the appellants’ costs of the appeal.

Whether the matter ought be remitted to the Court below or concluded in this Court

114. The further question arises as to whether the matter ought be remitted to the primary judge for re-hearing or whether this Court could undertake the task itself.

115. The parties’ positions changed in the course of the hearing of the appeal. The Larsens’ original position, as expressed in their notice of appeal and amended notice of appeal, was that the matter needed to be remitted, in part because the appeal books did not contain all of the relevant documents which had been referred to in submissions in the Court below. However prior to the conclusion of the oral hearing, Mr Roberts SC, who appeared with Mr Allen for the Larsens, informed the Court that the Larsens would prefer the Court of Appeal to deal with the matter finally. However, he submitted that this could not be done “on the current materials”. Mr Roberts estimated that the further documents might comprise a further appeal book.

116. Mr Gracie indicated in the course of the hearing that his preference would be for the additional material to be brought to the Court and dealt with by this Court rather than by a remitter. However, he said that it would be necessary for this Court to have the ten volumes which were before the Court below which comprised the material (I gather evidence and transcript) before Gibb DCJ.

117. At the conclusion of the hearing, the Court directed the parties to provide either a joint position or their respective positions within 7 days.

The Larsens’ position

118. The Larsens’ position, as expressed in their position paper, is that the amended notice of appeal was broad enough to put the respondents on notice that all matters were in issue in this Court. While Mr Roberts accepted that they had sought remitter on the question of damages, he also pointed to the fact that they had also sought “such further or other orders as the Court determines to be appropriate”.

119. The Larsens submitted that, in the event that the appellants are successful in having the primary judge’s orders set aside, it would be appropriate for this Court to assess damages in the exercise of the power under s 75A of the Supreme Court Act to bring the dispute to an end. They submitted that a determination without a further hearing would save time and costs. Further, they submitted that the assessment of damages would require the Court to weigh the evidence of expert quantity surveyors, who have prepared a joint report and who provided concurrent evidence and were cross-examined. They also submitted that there was no suggestion of any credibility or reliability issues affecting any of the expert witnesses and that the Court is in as good a position as the primary judge to analyse the expert evidence, both documentary and oral: Williams v Fraser [2022] NSWCA 200 at [64] (Simpson AJA, Macfarlan and Gleeson JJA agreeing).

120. Mr Roberts also relied on a schedule which had been prepared in support of the submission which listed the documents referred to in the parties’ written closing submissions and in the transcript of the remitter hearing in the Court below. He submitted, including by reference to the schedule that:

1. the appeal books contain all affidavits read and all expert reports tendered into evidence before the District Court on the remitter;

2. there are certain documents, amounting to 375 pages, which are not contained in the appeal books in this Court, but which were referred to in the parties’ submissions in the Court below which are listed in the schedule and can be included in a supplementary blue book;

3. the only document referred to by the respondents on the remitter in relation to the assessment of damages, that is not in the appeal books, is an extract from a report of Dr Leon Jacob, the effect of which was described to the expert quantity surveyors in concurrent evidence (and is recorded on the transcript) although the document itself was not tendered;

4. the only further additional document is the Project Management Contract (marked MFI 3 in this Court) which was handed up at the hearing and was the subject of submissions by the parties at the hearing in this Court; and

5. the parties addressed quantum in their closing written submissions on the remitter.

The respondents’ position

121. Contrary to the position which Mr Gracie took in the oral hearing in this Court (that this Court could and should deal with the matter finally), the respondents’ position in its position paper was that this Court should not exercise its discretion under s 75A of the Supreme Court Act and should, instead, remit the matter to the Court below. They submitted that:

1. the Court below was in the best position to determine the matter finally, having heard and observed the expert witnesses give evidence and summarised it (although her Honour made no determination in respect of it) in her reasons;

2. the Court below was also in the best position to assess the evidence of Mrs Larsen and Mr Sainsbury;

3. it would be inefficient for this Court to determine damages because this would require “select items of that extensive evidence [before the Court below to be] belatedly put before this Court, after submissions have closed and when the written and oral submissions have only dealt with the limited material that was originally before this Court”;

4. a remitter should be determined on the papers with no party being permitted to adduce further evidence and submissions limited to the specific issues identified by this Court to be remitted; and

5. if the Court does not accept the respondents’ position that the matter ought be remitted to the Court below, all of the evidence before the primary judge should be placed before this Court. 

122. The respondents attached to their position paper two indices of evidence: the first being the bundle on remitter and the second being the exhibits which were tendered in the hearing before Gibb DCJ.

Consideration

123. I consider that this Court ought determine the question of quantum finally and not remit that matter to the primary judge for determination. The powers of this Court under s 75A of the Supreme Court Act are sufficient for this purpose. Had the appellant not sought a remitter, this question would have fallen for determination by this Court on the appeal in any event. Further, to the extent to which the primary judge might be thought to have had an advantage in seeing and hearing witnesses, that advantage has been considerably diluted by the passage of time since the evidence was heard over two days on 7 and 8 May 2024, as well as the circumstance that the primary judge made no findings about the evidence and therefore can be taken not to have weighed the evidence at the time it was fresh in her memory. Further, there was no suggestion that there were issues of credibility relating to the experts and, in so far as Mrs Larsen and Mr Sainsbury gave evidence before the primary judge, their evidence arises for assessment in this Court in any event.

124. In these circumstances, I consider the preferable course to be to afford the parties an opportunity to provide documents and submissions to the Court with a view to all outstanding issues being dealt with either exclusively on the papers or, if thought necessary or desirable, with a short oral hearing at which submissions can be made. By this means, the parties will have the same opportunity they would have had, had the appellants not sought remitter but rather sought an order that this Court determine quantum pursuant to s 75A of the Supreme Court Act.

125. There is, as is evident from the parties’ position papers, a dispute as to identification of documents germane to this Court’s task of quantification of damages. As referred to above, the Larsens have identified the documents referred to in the submissions of both parties which are not in the appeal books and which can be included in a supplementary appeal book of 375 pages. The respondents have not had an opportunity (since the position papers were provided simultaneously) to check the schedule or to identify any other documents which they contend are relevant to the assessment of quantum, beyond their ambit submission that this Court ought have the ten volumes of material which were before Gibb DCJ (an ambitious submission when the vast majority of such documents were not referred to at all in the remitter hearing, much less in the parties’ submissions in the Court below on quantification of damages). I propose directions (set out below) to afford the respondents the opportunity to identify any further documents beyond those on the appellants’ schedule on which they propose to rely on the question of quantification and which were referred to in their submissions on the remitter in the Court below.

Orders and directions

126. For the reasons given above, I propose the following orders and directions:

1. Allow the appeal.

2. Set aside the order of Cole DCJ made on 7 November 2024 dismissing the plaintiffs’ claim for relief under the Australian Consumer Law.

3. Set aside the costs orders made by Cole DCJ on 19 February 2025.

4. Direct the appellants to file and serve within 7 days an amended notice of appeal deleting, other than in the alternative, their claim for remitter, and inserting a prayer for an order that this Court determine the relief, including quantum, to which the appellants are entitled.

5. Note that the intent of this Court is, pursuant to s 75A of the Supreme Court Act 1970 (NSW), to quantify the relief to which the appellants are entitled on the basis of submissions made to Cole DCJ and evidence referred to in those submissions, together with any further documents and submissions filed by the parties as provided for in the orders that follow and, if necessary or desirable, at a further short oral hearing.

1. Direct the respondents to provide a schedule of any further documents beyond those identified in the appellants’ schedule provided to this Court on 5 June 2025 (the appellants’ schedule) on which the respondents relied in the Court below in support of any submission made to the Court below on quantification of damages, together with the Black Book reference to the submission referring to the additional document or documents within 7 days.

2. Subject to (8) below, direct the appellants to prepare a supplementary appeal book in accordance with the appellants’ schedule, together with any further documents identified by the respondents in their schedule prepared in accordance with (6) above within 14 days.

3. If the respondents seek that more than 100 pages of further documents be provided to this Court, they are to prepare a separate supplementary appeal book containing all further documents on which they seek to rely and provide it to the Court within 14 days.

4. Direct the appellants to file and serve within 14 days hereof any further submissions on:

1. the quantum of relief, having regard to this Court’s reasons, beyond those relied upon in the Court below; and

2. whether a further short oral hearing for submissions is sought.

10. Direct the respondents to file and serve within 28 days hereof any further submissions on:

1. the quantum of relief, having regard to this Court’s reasons, beyond those relied upon in the Court below; and

2. whether a further short oral hearing for submissions is sought.

11. Direct the appellants to file and serve any submissions in reply within 35 days hereof.

12. Reserve the costs of the appeal pending determination of quantum by this Court.

127. STERN JA: I agree with Adamson JA.

128. PRICE AJA: I agree with Adamson JA.

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Decision last updated: 04 July 2025