MLK Building Group Pty Ltd v Jones (Civil Dispute)
[2017] ACAT 5
•2 February 2017
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
MLK BUILDING GROUP PTY LTD v JONES (Civil Dispute) [2017] ACAT 5
XD 831/2016
Catchwords:CIVIL DISPUTE – building dispute – guarantees under the Australian Consumer Law – whether builder engaged in misleading and deceptive conduct under the Australian Consumer Law – whether work undertaken by builder rendered with due care and skill – damages for delay and rectification of defective work – whether respondent was entitled to withhold payment – whether withholding payment was repudiation of the contract – damages for breach of contract – damages for inconvenience – whether ACAT has jurisdiction in relation to builders insurance and statutory warranties under the Building Act
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 8, 10, 15, 16, 26, 48, 117
Act Interpretation Act 1901 (Cth) s 2C
Australian Consumer Law ss 18, 60, 61, 62, 64, 232, 236, 237, 243, 267, 259 268
Building Act 2004 ss 86, 87, 88, 89ACivil Law (Wrongs) Act 2002 s 35
Construction Occupations (Licensing) Act 2004 ss 47, 54,55, 56, 104
Competition and Consumer Law Act 2010 (Cth) s 139
Fair Trading (Australian Consumer Law) Act1992 ss 9
Legislation Act 2001 s 254
Subordinate
Legislation cited: Building (General) Regulation 2008 s 37
Court Procedural Rules 2006
Construction Occupations (Licensing) Regulation 2004 s 15
Cases citedBaltic Shipping Co v Dillon (1993) 176 CLR 344
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1994) 180 CLR 266
Breen v Williams (1996) 186 CLR 71
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Hadley v Baxendale (1854) 156 ER 145
Hawkins v Clayton (1988) 164 CLR 539
Hearn v O’Rourke [2003] FCAFC 78
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989)166 CLR 623
Maple Flock Co Ltd v Universal Furniture Products (Wembly) Co. Ltd [1934] 1 KB 148
Robinson v Harman (1848) 1 Ex 850
Wakelin v London and South Western Railway (1887) 12 App Cas
Williams Love & Nichol Lawyers Pty Ltd v Wearne [2016] ACAT 18
Tribunal: Senior Member E Ferguson
Date of Orders: 2 February 2017
Date of Reasons for Decision: 2 February 2017
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 831/2016
BETWEEN:
MLK BUILDING GROUP PTY LTD
Applicant
AND:
JENNINE JONES
Respondent
TRIBUNAL:Senior Member E Ferguson
DATE:2 February 2017
ORDER
The Tribunal orders:
- Judgment for the applicant on the application in the sum of $965.74, being $924 for the claim plus pre judgment interest of $32.74 calculated in accordance with the Court Procedures Rules 2006 from 22 June 2016 to the date of judgment and a search fee of $9.
2.Judgment for the respondent on the counterclaim in the sum of $1107.96 for damages.
3.The applicant is to take all reasonable steps to obtain and provide to the respondent the glazing certificates and warranties for the windows and sliding door supplied by Trend windows within 14 days of the date of the order.
4.The applicant is to pay $142.22 being the amount it is ordered to pay in Order 2 less the amount the respondent is ordered to pay in Order 1.
………………………………..
Senior Member E Ferguson
REASONS FOR DECISION
1. The hearing took place on 7 December 2016 and after hearing the parties’ submissions the Tribunal reserved its decision. This is the Tribunal’s decision.
2. In this decision a reference to the ‘tribunal’ or ‘ACAT’ refers to the ACT Civil and Administrative Tribunal generally and a reference to the ‘Tribunal’ or the first person refers to the member who heard the matter.
3. All prices include GST unless otherwise indicated.
The Hearing
4. At the hearing the applicant was represented by its authorised representative, Mitchell McShane. The respondent, Jennine Jones, represented herself.
5. Mr McShane and Ms Jones both gave evidence under oath and were cross-examined.
6. Ms Jones called evidence from Remy Arranz, the principal of Phoenix Carpentry, who attended by phone and was cross-examined by Mr McShane.
7. In reaching my decision I relied on the parties’ submissions, the oral evidence at the hearing, and the following documents provided by the parties:
(a)respondent’s complaint to Fair Trading dated 19 July 2016;
(b)email correspondence between the parties;
(c)Trend quote dated 31 March 2016;
(d)applicant’s invoice numbered 68 dated 14 April 2016;
(e)applicant’s invoices numbered 84 dated 7 June 2016 (original and amended);
(f)applicant’s invoice numbered 86 dated 15 June 2016;
(g)letter of demand from the applicant to the respondent dated 28 April 2016;
(h)applicant’s statement of account dated 28 April 2016;
(i)photos of sliding door and dado rail;
(j)invoice from Phoenix Carpentry dated 22 November 2016 for removal of existing sliding door and installation of new window; and
(k)invoice from Phoenix Carpentry dated 22 November 2016 for installation of blue board to fix protruding exterior sliding door.
The Factual Background
8. The following facts were either undisputed or established to my satisfaction by the documentary evidence.
9. In March 2016 Ms Jones engaged the applicant, MLK Building Group Limited (MLK), to do carpentry work at her home.
10. Mitchell McShane is the sole director of MLK.
11. In an email to Ms Jones on Wednesday 9 March 2016 Mr Mc Shane proposed that the work be charged on the basis of cost +20% ‘builders margin’ (later referred to in the applicant’s invoices as a ‘management fee’).
12. Ms Jones accepted the proposal by an email of same date.
13. The following scope of the work was agreed by the parties verbally either before the work commenced or possibly as the work progressed:
(a)remove part of a non- structural internal wall to create an opening;
(b)replace existing ceiling with a new ceiling;
(c)hang internal French doors to be supplied by the owner;
(d)install a wall lining and a dado rail to the foyer and staircase walls;
(e)remove the existing double hung windows and sliding doors in the family room;
(f)supply, deliver and install new aluminium sliding doors and windows to the family room.
14. In early March 2016 Mr McShane attended Ms Jones’ home and measured up for the new windows and sliding doors (the windows).
15. On 4 April 2016 Ms Jones accepted a quote for $4,886.89 dated 31 March 2016 which MLK had obtained from Trend Windows (Trend) for the supply of the windows, fittings, delivery and a post installation service call.
16. On 7 April 2016 MLK sent Ms Jones invoices 66 for carpentry (not for window installation) and 67 for skip hire.
17. On 14 April 2016 Mr McShane sent Ms Jones an email as follows saying he had ordered and paid for the windows from Trend when he had done neither.
…I have attached the invoice for the windows. I have already paid this in advance to lock our spot in for delivery, if you could kindly fix up as soon as possible, would be appreciated.
18. Attached to the email was MLK’s invoice 68 for $5,864.27 for the total cost of supply and delivery of the windows plus its 20% management fee.
19. Ms Jones objected to paying the full cost of the windows before they were delivered and the parties agreed that she need only pay a 50% deposit at that stage.
20. On 28 April 2016 MLK sent Ms Jones a letter of demand for outstanding monies, with an attached statement of account for $1,704.48. The statement showed invoices 66 and 67, dated 7 and 12 April 2016 respectively, as unpaid and invoice 68 as reversed.
21. On 29 April MLK sent Ms Jones a revised invoice 68. Although the revised invoice was not produced the parties agreed it was reduced by half as agreed, which would make it for $2,932.14.
22. On 29 April 2016 Ms Jones paid the revised invoice 68. On the same date she also paid the outstanding amounts owing under invoices 66 and 67.
23. On 30 April 2016 Mr McShane ordered the windows from Trend and paid a 50% deposit.
24. On 7 June 2016 the applicant issued invoice 84 for $488.69 for the remaining 50% balance for window supply and delivery due to Trend and its management fee on that amount.
25. On the same day Ms Jones, with Mr McShane’s agreement, paid Trend directly, for the 50% balance of Trend’s costs for supply and delivery.
26. Later on 7 June 2016 MLK issued Ms Jones with an amended invoice 84 with the cost of the windows reversed and a notation “Client paid Trend Windows direct.” The amended invoice just claimed a 20% management fee calculated on the half the total cost of the windows.
27. On 14 and 15 June 2016 Mr McShane and an employee of MLK, Brad, installed the sliding door and all the windows except the double hung windows, which were not yet available, and attempted to install the dado rail.
28. On 15 June 2016 MLK issued invoice 86 for labour done on the 14 and 15 June. Labour for the dado rail is included in the invoice, even though it is not specified.
29. On 10 July 2016 Ms Jones sent Mr McShane an email in which she refused to pay invoices 84 and 86 until:
(a)the remaining double hung windows were installed;
(b)she had an opportunity to reconcile the labour claimed in invoice 86 against her records; and
(c)the old sliding door replaced by the applicant was removed from the site and disposed of.
30. On 11 July 2016 Mr McShane responded to Ms Jones email by suspending further work indefinitely and directing Trend not to deliver the remaining double hung windows.
31. The delivery of the double hung windows scheduled for 18 July 2016 did not happen.
32. On 19 July 2016 Ms Jones lodged a complaint against Mr McShane and MLK with Fair Trading, the investigation of which is ongoing.
33. On 2 August 2016 the applicant commenced these proceedings.
34. Through the intercession of the Office of Fair Trading on Ms Jones’ behalf, Trend delivered the double hung windows on 20 October 2016 and she had them installed by Mr Arranz in late November 2016.
35. By the date of the hearing on 7 December 2016 Trend had delivered everything and made a post installation service call to adjust the windows and door. There remained an outstanding issue with the double hung windows, which Ms Jones says do not slide properly, which she is following up with Trend.
36. The only things still not supplied by Trend are the glazing certificates and the warranties.
37. MLK issued Ms Jones with at least nine invoices between March and June 2016 as the work progressed.
38. Ms Jones has paid all the invoices except for invoice 84 of 7 June 2016, as amended, and invoice 86 issued 15 June 2016, both of which she refuses to pay.
The Claim
39. The applicant claims:
(a)$488.69 for payment due under invoice 84 for a management fee on the 50% balance of the cost of the windows supplied by Trend;
(b)$1,701.35 for payment due under invoice 86 for labour and a management fee for installing the windows (apart from the double hung windows) and sliding door and attempting to install the dado rail;
(c)ASIC search fee, interest, filing fee; and
(d)another amount of $1,697 for preparing the application and attendance at ACAT, including 16 hours labour at $95 per hour.
The Response and Counter Claim
40. In her original response filed 1 September 2016 Ms Jones described her grounds for disputing the applicant’s claim by reference to the complaint and materials she previously submitted to Fair Trading. She provided a copy of those materials to the tribunal and the applicant at the preliminary conference.
41. I found it difficult to form a clear view of the legal basis of Ms Jones’ response from the material she submitted to Fair Trading.
42. In exercising its functions under this Act, the tribunal must ensure its procedures are as simple, quick, inexpensive and informal as is consistent with achieving justice; and observe natural justice and procedural fairness.[1]
[1] Section 7(a) and (b) of the ACT Civil and Administrative Tribunal Act 2008
43. It is not necessary for a party to submit formal pleadings. As then General President Crebbin observed in Williams Love and Nichol Lawyers Pty Ltd v. Wearne[2] on appeal:
[33] Parties are not required to set out their case in ‘pleadings’ that identify with technical legal precision the cause of action and each element relied on in bringing or defending a claim. It is not required that parties use the language of the law when describing their case. What is required is that an application and the response to it, together with other material before the tribunal, set out the details of the claim made and the response raised with sufficient particularity to allow each party (and the tribunal) to know what is asserted, so that they are able to address the assertions.
[2] Williams Love & Nichol Lawyers Pty Ltd v Wearne [2016] ACAT 18
44. Ms Jones filed a counter claim on 25 November 2016, which included a list of 14 ‘orders sought’.
45. I am satisfied that Ms Jones intended to sum up both her response and counter claim in that list of draft orders.
46. I have re-ordered, paraphrased and categorised the respondent’s draft orders as follows to better fit the relevant legal framework whilst preserving their substance:
(a)Response: The respondent sought an order “that MLK revoke and waive any payment under Invoice 84 issued on 7 June 2016 (noting the customer has paid for these goods in full).” As it is the applicant who has initiated these proceedings I have treated this statement as a response to the first limb of the applicant’s claim.
(b)Response: She also sought an order “That MLK revoke and waive any payment under Invoice 86 issued on 15 June 2016” on the grounds that:
(i) the applicant overstated the hours worked;
(ii) “I have had to engage carpenters to rectify and repair the works carried out by MLK on 15 June”; and
(iii) “as a goodwill gesture for the inconvenience caused to me and the delay in completion of work by some 5 months.”
47. For the reasons above I have treated this as a response to the second limb of the applicant’s claim.
48. Counter claims: the other orders the respondent seeks can be best described as counter claims as follows:
(a)Trend is to supply to Ms Jones all items due to her but not received. I note that by the date of the hearing the only such items not provided to Ms Jones were the glazing certificates and warranties for the windows.
(b)The applicant is to refund monies paid by Ms Jones to applicant under previous invoices being:
(i) refund of $940 of the $1,704.48 she paid the under all previously paid invoices, other than invoice 68; and
(ii) refund of the $444.25 for the management fee paid under invoice 68, as amended. I have treated the amount of this claim as $488.67 as the respondent’s failure to add the GST charged by the applicant is an obvious error.
(c)The applicant is to pay the respondent compensation/damages for defective work and delay being:
(i) $507.40 for the cost of hiring a shipping container for an additional five months at $101.48 per month due to delays caused by the applicant.
(ii) $110 for the extra cost of installing the double hung windows, caused by the applicant’s failure to measure the opening correctly. I have treated the amount of this claim as $121.00 as the respondent’s failure to add GST is an obvious error.
(iii) $479.56 for the cost of engaging another contractor to install extra cladding to the exterior wall to rectify protruding sliding doors.
(iv) $150 for disposal of the old sliding doors replaced by MLK.
(v) $300 for rectification of the wall lining to the staircase and installation of a dado rail.
(d)The applicant is to produce the following documents to the respondent:
(i) documentation evidencing its builders insurance; and
(ii) written warranty for work done by it.
49. At the hearing Ms Jones requested the filing fee on the counter claim and, without seeking leave to amend her counter claim, asked the Tribunal to make an unspecified punitive or disciplinary order against applicant in relation to Mr McShane’s incorrect statement of 14 April 2016. As she did not specify the grounds for such an order I am treating her claim as being founded on a contravention of the prohibition on misleading and deceptive conduct found in section 18 of the Australian Consumer Law (the ACL).[3]
[3] as applied by the ACT by the Fair Trading (Australian Consumer Law) Act1992
50. However, later in my reasons I will also briefly consider whether the Tribunal has jurisdiction to determine a claim based on the false or misleading information under the Construction Occupations (Licensing) Act 2004 (COLA); and whether the incorrect statement gives rises to a cause of action for damages in either tort or contract.
51. The applicant failed to respond to the counterclaim or to submit any additional evidence as directed by the tribunal on 10 October 2016.
Jurisdiction in general
52. ACAT is a creature of statute and only has the jurisdiction and powers conferred upon it by the legislature.
53. Section 9 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) provides that a person may apply to the tribunal if an authorising law provides that the application may be made.
54. Section 17 of the ACAT Act provides that a person may make a civil dispute application to the Tribunal.
55. Section 16 defines a ‘civil dispute’ as a dispute in relation to which a civil dispute application may be made and a ‘civil dispute application’ means an application that consists of one or more of the types of applications listed in that section.
56. The relevant types of application in this case are:
(a)a contract application[4] defined as an application in relation to a contract, and includes an application for damages for breach of contract;[5]
(b)a damages application[6] defined an application for damages for negligence or for any other tort except nuisance or trespass;[7]
(c)a debt application[8] defined as an application for the recovery of a debt;[9]
(d)an application for an order under the ACL;[10] and
(e)an application stated to be a civil dispute application in an authorising law.[11]
[4] Section 16(a) of the ACAT Act
[5] Section 15 of the ACAT Act
[6] Section16(b) of the ACAT Act
[7] Section 15 of the ACAT Act
[8] Section16(c) of the ACAT Act
[9] Section 15 of the ACAT Act
[10] Section16(i) of the ACAT Act
[11] Section16(j) of the ACAT Act
57. The applicant’s claim is a debt application.
58. The respondent’s counter claims are comprised of one or more of the following types of application:
(a)a contract application for damages for breaches of express or implied terms of the contract;
(b)a damages application for damages for the tort of deceit;
(c)an application for orders under the ACL for damages or other remedies for breaches of mandatory consumer guarantees.
59. I am satisfied that the applicant’s and the respondent’s claims referred to above are within the jurisdiction of the Tribunal to determine.
60. However the respondent’s request for a disciplinary order arising from misleading or deceptive conduct; and her counter claim for an order that MLK provide her with evidence of building insurance and a written warranty raise jurisdictional issues which I must address before going further.
Jurisdiction in relation to builder’s insurance and written warranty; and false and misleading information under the Building Act and the COLA
61. To decide whether I have power to determine the Ms Jones’ claim for a written warranty and evidence of building insurance I must first consider the following questions:
(a)What are the possible legal grounds for the respondent’s claim that the applicant is required to provide her with a written warranty and evidence of building insurance?
(b)Does the Tribunal have jurisdiction to determine an application on such grounds?
(c)If the Tribunal does not have jurisdiction to determine these particular claims, are these provisions relevant to any other part of the respondent’s claim that is within its jurisdiction?
62. Part 6 of the Building Act 2004 (the Building Act) applies to residential building work in the ACT if the cost of the work is over $12,000[12] and is not otherwise exempt.[13]
[12] The amount currently prescribed by section 37 of the Building (General) Regulation 2008
[13] Section 87(1)(c) of the Building Act
63. If part 6 applies to work then:
(a)the builder is required to have complying building work insurance, or a Fidelity Fund certificate from an approved Fidelity Fund Scheme;
(b)any contract for such work is taken to contain the statutory warranties set out in section 88 of the Building Act; and
(c)a regulation may prescribe documents, presumably including a written warranty, that must be attached to the building contract.[14] I note that no such regulations have been made.
[14] Sections 86 and 89A of the Building Act; and section 37 of the Building Regulation exclude contracts where the cost of the work is less than $12,000 from the operation of Section 89D; Section 89D provides that regulation may prescribe documents
64. There is no requirement under the Building Act that that a builder supply the customer with a written warranty or evidence of its insurance.
65. However part 6 of the Building Act is relevant to another part of the respondent’s claim that is within the jurisdiction of the Tribunal, namely for damages for faulty or incomplete work because if part 6 applies then the respondent is entitled to the protection of statutory warranties set out at section 88, in addition to any other rights. I will return to the question of whether part 6 applies when I consider that part of the counter claim.
66. A licensed builder is required by section 47 of the COLA to give evidence to a client of what insurance it holds in relation to the service it is to provide.
67. The COLA and other complementary Acts, Rules and Regulations create a licensing and disciplinary regime for construction industry professionals in the ACT, including builders.
68. The COLA creates the position of Construction Occupations Registrar (the Registrar) to administer and enforce the provisions of the Act.
69. The Registrar can investigate complaints and take disciplinary action, including making an application to ACAT[15] for occupational discipline orders if appropriate.[16]
[15] Section 56 of the COLA
[16] Section 104 (1)(d)(i)) of the COLA
70. The Registrar can only take disciplinary action on one or more of the grounds listed in section 55 which include:
(a)the licensee, or a director, partner, nominee or employee of the licensee, contravened, or is contravening, this Act or an operational Act (including a direction given to the licensee under an operational Act);[17] and
(b)the licensee, knowingly or recklessly, gave someone information in relation to a construction service provided, or to be provided, by the licensee that was false or misleading in a material particular.[18]
[17] Section 55(a)
[18] Section 55(b)
71. For the purposes of section 55 ‘licensee’ means a licensee or a former licensee.[19]
[19] Section 54
72. A corporation is eligible to hold a builder’s license if it has a licensed nominee.[20]
[20] Section 15 of the Construction Occupations (Licensing) Regulation 2004
73. As the COLA does not provide for applications to be made by consumers to the ACAT on disciplinary grounds the Tribunal does not have jurisdiction to determine Ms Jones’ application for an order that the applicant provide her with a copy of its insurance.
74. Ms Jones may complain to the Registrar that the applicant has failed to provide her with evidence of its insurance in contravention of section 47 of the COLA, or has given her false and misleading information as described in section 55; but it is up to the Registrar to investigate and take further action.
Jurisdiction under the ACL - misleading and deceptive conduct
75. The Competition and Consumer Act 2010 (Cth) effectively enacted the former Trade Practices Act consumer protections as its Schedule 2: The Australian Consumer Law (ACL), which came into effect on 1 January 2011.
76. The ACL is a national consumer law and is applied at the Commonwealth level and in each state and territory.
77. The ACT government enacted Fair Trading (Australian Consumer Law) Act1992 (FT (ACL) Act) to include the ACL as part of its own law.
78. The ACCC enforces the ACL at the national level; Fair Trading is responsible for enforcing the ACL in the ACT.
79. ACAT has the power to make orders under the ACL by virtue of section 9 of the ACAT Act because the FT (ACL) Act allows individuals, or Fair Trading, to apply to the Court for specified orders in certain circumstances.
80. Section 9 of the FT (ACL) Act defines ‘Court’ for the purpose of the Act to include ACAT.
81. ACAT’s jurisdiction is reflected in section 16(i) of the ACAT Act, which provides that an application for orders under the ACL is a type of civil dispute allowed under section 17.
82. The ACL provides a comprehensive framework of consumer protections, which includes prohibitions on certain business conduct, and mandatory statutory guarantees for all goods and services bought by consumers.
83. There is a general prohibition on misleading and deceptive conduct in section 18(1) of the ACL which provides that:
A person[21] must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
[21] Section 2C Acts Interpretation Act 1901 (Cth) a ‘person’ includes a corporation as well as an individual
84. There is no requirement that the conduct be intended to mislead or deceive, only that it was likely to do so.
85. In her complaint to Fair Trading Ms Jones complained of “intimidation, harassment, and deceptive and unconscionable conduct of Mitch McShane.”
86. During the hearing I asked Ms Jones the relevance of Mr McShane’s statement on 14 April 2016 that he had paid for and ordered the windows when he had not. She said his conduct was both relevant to the issue of delay and that it “required disciplinary action.”
87. I understood her to mean that the Tribunal should make disciplinary orders against the applicant in these proceedings, although she may have simply meant that Fair Trading or another regulatory authority should discipline either the applicant or Mr McShane.
88. Ms Jones did not seek disciplinary orders against the applicant in her counter claim and first raised the issue at the hearing. She did not seek leave to amend her counter claim.
89. I am satisfied the statement referred to above cannot be treated as amending the counter claim as it does not substantially comply[22], with the requirements of an application (which includes a counterclaim) as it is neither in writing nor in the prescribed form.[23] I also consider that it would be unfair to the applicant to allow an extra counter claim against it at the hearing without notice and an adequate opportunity to respond.
[22] Section 117 of the ACAT Act provides that, “if a form is approved under section 117 for an application, the form must be used.” Section 254(4) of the Legislation Act 2001 gives the tribunal discretion to find a form valid even if it is not in the prescribed form if it substantially complies with the prescribed form. The prescribed form for a response in a civil dispute includes a counter claim
[23] Section 10 of the ACAT Act
90. Furthermore the Tribunal has no jurisdiction to consider an application for disciplinary orders under the ACL for the reasons set out below.
91. Under the ACL an individual can only apply to ACAT for the following orders in relation to a contravention of section 18:
(a)Injunction: an injunction to stop or prevent a contravention, or to require a business to do certain things.[24]
(b)Damages: If the contravention causes loss or damage to a person that person can apply to recover damages in that amount.[25]
(c)Compensatory orders: a person who suffered, or is likely to suffer, loss or damage because of the conduct of another person engaged in the contravention (or a consumer agency on behalf of that person) can seek compensatory orders. The tribunal may make any order it considers appropriate[26] including orders to vary contracts, refund money, return property or pay compensation.[27]
[24] Section 232 of the ACL
[25] Section 236 of the ACL
[26] Section 237 of the ACL
[27] Section 243 of the ACL
92. None of the orders described above could be described as disciplinary action as they are designed to compensate for loss; or to prevent future loss, not to punish.
93. Due to their role as a regulator in the public interest Fair Trading has additional powers to enforce the ACL not available to a member of the public.
94. Ms Jones has not applied for an injunction. In any event I would not grant one because it would have no utility in this case where Ms Jones has not submitted that the conduct is ongoing or likely to be repeated, even though section 232 expressly permits an injunction in such circumstances.
95. I will consider the other available ACL remedies in the context of Ms Jones claims based on delay; and the management fee paid under invoice 68.
The Legal framework
Liability of a company for the acts of its director
96. Ms Jones dealt with MLK through its sole director Mr McShane.
97. MLK brought an application to recover a debt arising under a contract with Ms Jones.
98. Ms Jones has responded to that claim and made certain counter claims against MLK, but not against not Mr McShane.
99. As Mr McShane is not a party to these proceedings I need not consider any claims by or against him.
100. However I do need to consider whether MLK is a proper applicant in the original application, and a proper respondent to the counter claim.
101. A company is bound by a contract made on its behalf by a sole director either orally or in writing. Therefore MLK was bound by the terms of the contract agreed between Ms Jones and Mr McShane. MLK can take legal action against Ms Jones to enforce its rights under the contract just as she can take legal action against it.
102. In certain circumstances the knowledge and actions of a director may be attributed to the company making it vicariously liable for them under another area of law such as tort.
103. The knowledge and actions of a director are sometimes expressly attributed to a company by legislation. Relevantly, section 139 of the Competition and Consumer Act 2010 (Cth) (CCA), in so far as it relates to directors of companies and the ACL, provides:
(a)Where it is necessary under the ACL to establish the state of mind of a company it is sufficient to establish that director, acting with the actual or apparent authority of the company, had that state of mind. [28]
(b)Any conduct engaged in by a director within the actual or apparent authority of the company, is also taken to have been engaged in by the company.[29]
[28] Section 139B(1) of the CCA
[29] Section 139B(2) of the CCA
104. Therefore MLK can be liable under the ACL for contraventions of a consumer guarantee or for the misleading and deceptive conduct of Mr McShane.
Contract
105. The terms of a building contracts in the ACT can include:
(a)Express oral or written terms.
(b)Terms implied under the common law.
(c)Statutory warranties implied under the Building Act 2004 if the cost of the works as defined by that Act are more than $12,000.
106. On 9 March 2016 Mr McShane emailed Ms Jones:
If you are happy to go ahead, the easiest and cleanest way to go about this is cost + 20% builders margin (is standard fee industry charges) this enable you to save money where possible and you only pay for work actually completed on site.
107. On the same date Ms Jones responded by email:
Thanks, I’m happy to proceed on this basis as outlined below.
108. The parties do not dispute that the scope of the work was agreed verbally.
109. I am satisfied that the applicant and the respondent entered into a binding legal contract the terms of which were in writing as to the mechanism to determine price, and oral as to the scope of the work. I will consider any additional implied terms later in my decision.
The ACL Guarantees
110. The respondent is entitled to the protection of the ACL guarantees, which are mandatory and cannot be excluded, restricted or modified by contract.[30]
[30] ACL section 64
111. The respondent is a consumer within the meaning of the ACL because:
(a)she normally resides in the ACT;
(b)the contract price was less than $40,000; and
(c)the services were of a kind ordinarily acquired for personal domestic or household use or consumption.
112. The ACL provides consumer guarantees that services:
(a)will be rendered with due care and skill;[31] and
(b)any product resulting from the services, will be fit for a purpose that the consumer made known to the trader;[32] and
(c)will be supplied within a reasonable time.[33]
Do the statutory warranties in part 6 of Building Act apply?
[31] ACL section 60
[32] Section 61 of the ACL
[33] Section 62 of the ACL
113. The statutory warranties under the section 88 of part 6 of the Building Act only apply if the cost of the building work is more than $12,000.
114. The cost of building work is calculated for the purposes of part 6 under section 86(1) as follows:
(a)if a contract has been entered into for carrying out of the building work – the cost of the work as fixed by the contract; or
(b)in any other case:
(i)an amount agreed between the construction occupations registrar and the builder; or
(ii)if an amount is not agreed – an amount worked out by the registrar.
115. In this case the contract was not for a fixed cost but based on labour and materials plus a builder’s margin therefore section 86(1)(a) does not apply.
116. Section 86(1)(b) also does not apply because an amount has not been agreed by the applicant and the registrar, nor worked out by the registrar.
117. As no cost can be calculated under section 86 I conclude that the section 88 warranties are not included in the contract, even though the total amount paid by the respondent to the applicant over the course of work seems to have been slightly more than $12,000.
Analysis of the issues
Glazing certificates and warranties
118. The issues relevant to this counter claim are:
(a)Is Ms Jones entitled to the glazing certificate and warranties for the windows?
(b)If so, who is required to provide these to her?
(c)If Trend is required to provide these documents, should it be joined as a party to the proceedings?
119. It is not disputed that:
(a)Ms Jones did not receive the glazing certificates and warranties for the windows and sliding doors supplied by Trend and paid for by her; and
(b)Trend would only release these documents to, or at the direction of, MLK who had the contract for supply.
120. At the hearing Mr McShane gave evidence that he did not have these documents in his in his possession but was able to obtain them from Trend.
121. Neither party sought to have Trend joined as a party nor did the Tribunal consider it necessary to do so.
122. I am satisfied that the glazing certificates and warranties remain in the possession of Trend; that Ms Jones is entitled to them having paid for the windows in full and that the applicant is able to obtain them.
123. Accordingly the Tribunal orders that the applicant is to take all reasonable steps to obtain and provide the glazing certificates to the respondent within 14 days of the date of the order.
Invoice 84
124. In relation to the applicant’s claim for payment of invoice 84 the issue is whether it is entitled under the terms of the contract to a management fee on materials where it ordered the materials but the respondent paid the supplier directly?
125. On 7 June 2016 the applicant issued invoice 84 for $2,932.14 for the remaining 50% balance due to Trend for window supply and delivery; and a management fee on that amount.
126. On 7 June 2016 Ms Jones sent Mr McShane an email which said in part:
Mitch - you don’t need to worry about the payment side- please cancel Invoice #84- just need to turn up for the installation. I have worked it out with Trend - Rick understands where I am coming from re payment and receipt of goods - so I will pay them direct based on the agreement we have reached.
127. It is not disputed that the parties agreed before delivery of the windows that Ms Jones would pay Trend directly for the outstanding 50% balance for the cost of the windows. It was also not disputed that the applicant was not present when the windows were delivered.
128. In its invoices MLK charged a ‘management fee’. However, in his email of 9 March regarding the basis for MLK’s charges 2016 Mr McShane only refers to a ‘builder’s margin’.
129. Mr McShane told the Tribunal that the terms ‘management fee’ and ‘builder’s margin’ were inter-changeable. Ms Jones also referred to the charge as a management fee in her counter claim. Both parties accepted that the charge included payment for management tasks.
130. For the reasons above I am satisfied that the terms ‘builder’s margin’ and ‘management fee’ are inter-changeable and will use the term ‘management fee’ throughout this decision for consistency.
131. There was no express term in the contract as to what the management fee was for in relation to the supply and delivery of the windows but at the hearing the parties agreed that it was to provide the applicant with a profit and covered the following management tasks:
(a)Measuring up.
(b)Obtaining quote.
(c)Ordering materials from supplier.
(d)Paying for materials from the builder’s account with the supplier.
(e)Managing the order including liaising with the supplier and supervising delivery.
132. Ms Jones also asserted that the management fee was to secure the benefit of any discounted price MLK received as a builder.
133. I prefer the applicant’s argument that Ms Jones accepted the quoted price from Trend, and there was no express or implied term that the she was entitled, by reason of the management fee or otherwise, to a lesser price.
134. Mr McShane also told the Tribunal he did not receive a discount and, as Ms Jones offered no contradictory evidence, I accept his assertion.
135. Based on the evidence I am satisfied that:
(a)the respondent with applicant’s consent, took over responsibility for the final payment for the windows and arranging delivery; and
(b)the applicant did not perform any significant management tasks in relation to the supply and delivery of the windows after it placed the order on 30 April 2016 and that all management up to that point was covered by the management fee charged in invoice 68.
136. The Tribunal disallows the applicant’s entire claim for invoice 84 because it has not performed the work charged for.
Invoice 86
137. In relation to the applicant’s claim for payment of invoice 86 the issues are:
(a)How many hours is the applicant entitled to charge for labour?
(b)Was the work done by the applicant on 15 June 2016 defective, and if so what remedy, if any, is appropriate?
(c)Is Ms Jones entitled to a waiver of the debt on the basis of a ‘good will gesture’ by the applicant?
Labour hours
138. Ms Jones alleges that the applicant has overstated the hours worked by Mr McShane and his employee ‘Brad’ in invoice 86.
139. Neither party provided any contemporaneous record of the hours worked by Mr McShane or Brad, although both claim to have kept one.
140. Mr McShane told the Tribunal that he kept a record of labour hours on his phone, which he deleted after issuing the invoice.
141. Ms Jones claims she kept a record on some bits of paper which she retained but did not file in the proceedings.
142. Both parties were able to provide details of how many hours they say were worked on each day and by whom those hours were worked, which favours their credibility equally.
143. The applicant issued the invoice on the same or following day that the work was completed and claimed a combined total of twenty-four hours for both workers on 14 and 15 June 2016. Seven and a half hours each on 14 June 2016; and four hours for Brad and five hours for Mr McShane on 15 June, including an unspecified number of hours for “material pickup.”
144. Ms Jones provided a statement of specific hours worked onsite on 14 and 15 June 2016 in her complaint to Fair Trading.
145. She claimed the total hours worked by both workers onsite for both days was sixteen hours; that is eleven hours (i.e. five and a half hours each) on 14 June 2016; and a total of five hours on 15 June.
146. The applicant’s claim for hours relies on it establishing the hours claimed were worked.
147. The Tribunal is not bound by the rules of evidence[34] and may inform itself in any way it considers appropriate in the circumstances.[35]
[34] Section 8 of the ACAT Act
[35] Section 26 of the ACAT Act
148. The value of both parties evidence is diminished by the paucity of corroborating evidence, in particular the absence of contemporaneous records.
149. The onus is on a party making an assertion to prove it,[36] and as this is applicant’s claim it is required to satisfy the Tribunal on the balance of probabilities, that is that it is more probable than not, that the hours claimed were worked.
[36] Wakelin v London and South Western Railway (1887) 12 App Cas
150. I prefer Ms Jones’ statement of hours to that of the applicant in its invoice, because she referred to specific hours whereas the applicant just reported the total hours labour for each worker on each day.
151. The applicant has not established to my satisfaction that all the hours it claimed in invoice 86 were worked.
152. For the reasons above the Tribunal finds in relation to invoice 86 that sixteen hours were worked rather than the twenty-four hours claimed.
Defective work
153. On the 14 and 15 June 2016 Mr McShane and Brad fitted all the windows and sliding doors, except for the double hung windows, which had not been delivered yet and Mr McShane made an incomplete attempt to fit a dado rail to an interior wall near the stairs.
154. Ms Jones alleged that the work performed was defective as follows:
(a)the sliding doors frames were not flush with the exterior wall;
(b)the opening for the double hung windows was incorrectly measured, resulting in the windows supplied being too big for the opening; and
(c)the dado rail was unable to be completed and had to be entirely redone by another contractor.
155. Ms Jones asserts that these defects mean she should not have to pay the invoice.
156. She also claims damages for each of the alleged defects in her counter claim.
157. Ms Jones is not entitled to receive both release from the obligation of paying for the work as well as damages for the cost of rectification, as the resulting effect would be that she received all the work described in that invoice for free.
158. The parties agree that Mr McShane was at first unable to install the dado rail to Ms Jones’ satisfaction. He also said he spent considerable time explaining the difficulties to her.
159. The parties disagree how long Mr McShane worked on the dado rail. Mr McShane says about two hours; Ms Jones says four hours.
160. The invoice does not assist as no hours were attributed to the dado rail, although both parties agreed that the invoice included this labour.
161. Mr McShane told the Tribunal that the unusual angles of the stairs created problems which took him some time to address but that he worked out a solution and was prepared to finish the job when the Ms Jones stopped him.
162. At the hearing Ms Jones said:
I told him there and then to forget it, “You’ve wasted enough of my time and materials. I’ll get somebody who knows how to do it”.
163. I am satisfied on the evidence that by the time Ms Jones told Mr McShane to stop work at least two, and up to four, hours labour had been invested in the dado rail with no discernible progress.
164. I also find that Ms Jones gave Mr McShane adequate time to at least progress the job and acted reasonably in calling a halt to the work when she did.
165. I accept Ms Jones’ evidence that the job had to be redone and that she derived no benefit from the Mr McShane’s labour.
166. I find the respondent not liable under the contract to pay for that part of invoice 86 attributable to labour on the dado rail because:
(a)such work formed a discrete part of the contract; and
(b)the respondent received no benefit from the work.
167. There is insufficient evidence to establish precisely how long Mr McShane spent on the dado rail but since the parties agree it was at least two hours I find that a further two hours should be deducted from the hours claimed in invoice 86, which comes to a total of fourteen hours allowed.
168. I have treated the claim for the dado rail as a partial defence to payment of invoice 86 rather than as a counter claim for damages for the cost of rectification because the respondent produced no evidence of the cost of rectification from the carpenter who she says rectified the work and installed a new dado rail.
169. I will deal with the allegedly wrongly sized window and incorrectly installed sliding door as part of the counter claim.
170. For the reasons set out above the Tribunal only allows an amount of $924.00 for invoice 86 calculated as follows: 14 hours labour at $50 an hour = $700 plus 10% GST = $70 plus 20 % builder’s margin on $770= $154.
Goodwill gesture
171. Ms Jones sought orders that the applicant “revoke and waive payment” of the entire amount due under invoice 86 on three grounds, the first two I have dealt with above, the third was:
as a goodwill gesture for the inconvenience caused to me and delay in completion of work by some 5 months.
172. I find that the above ground does not entitle Ms Jones to release from liability for the invoice for the following reasons:
(a)The Tribunal cannot order the applicant to perform an act out of goodwill, which by definition must be voluntary and motivated by generosity; and
(b)Ms Jones has also claimed for damages for financial loss caused by delay in her counter claim and is not entitled to recover for the same loss twice.
173. I will consider whether Ms Jones is entitled to damages for inconvenience when I get to the counter claims.
Applicant’s claim for costs
174. Although at the hearing the applicant did not mention its claim for $1,697.00 for the costs of preparation and attendance at the tribunal I will consider it because the application was not amended to remove it.
175. I have disallowed this claim because section 48 of the ACAT Act provides that the parties shall bear their own costs of the proceedings subject to some limited exceptions, none of which apply in this case.
Refund of money paid under invoices
176. In relation all those invoices paid by Ms Jones, which contained a component for labour she claims that:
(a)the applicant overstated the hours for labour; and
(b)where that labour was Mr McShane’s, the applicant wrongly charged a management fee on the cost of his labour.
177. Ms Jones seeks a refund of the amount she claims were overcharged.
178. The issue in relation to this claim is whether, in circumstances where the respondent has unconditionally paid these invoices, she is entitled to a refund or other remedy on the grounds that:
(a)the applicant company is not entitled to charge a management fee on the labour of the company owner; or
(b)the applicant overstated the hours worked.
Labour hours
179. Ms Jones seeks a “Refund 14 labour hours ($700) charged and already paid for work not actually performed (lunch breaks etc.) including the management fee on this charge of $140.00- the total being $940 (sic).”
180. Ms Jones has a possible cause of action for compensatory orders under section 237 of the ACL on the basis that:
(a)the applicant has claimed for hours that were not worked;
(b)such conduct constitutes misleading or deceptive conduct under section 18 of the ACL; and
(c)she suffered, or is likely to suffer, loss or damage because of applicant’s conduct while engaged in the contravention.
181. The types of orders which may be made under section 237 are listed in a non exhaustive way at section 243 of the ACL and include an order for a refund.[37]
[37] Section 243(d) of the ACL
182. Unlike the applicant’s claim for hours under invoice 86 this is a claim by the respondent therefore the onus is on her to prove both that MLK has claimed for hours that were not worked; and that she suffered, or is likely to suffer, loss or damage because of MLK’s conduct.
183. I am not satisfied on the evidence that Ms Jones was overcharged for hours on previously paid invoices because:
(a)she paid the invoices without raising the issue of hours despite her assertion that she kept a record of hours worked;
(b)the only issue of overcharging for hours she raised prior to these proceedings was in relation to invoice 86, which she raised in her complaint to Fair Trading;
(c)as she produced none of the relevant invoices there is no evidence of the hours claimed by the applicant;
(d)Ms Jones did not produce her own contemporaneous record of the hours worked; and
(e)unlike invoice 86 Ms Jones did not provide any details of the hours she claims were worked.
184. For the above reasons the Tribunal disallows Ms Jones’ claim for a refund in relation to the hours, and corresponding management fee, claimed under invoices already paid.
Management fee on owner’s labour
185. Ms Jones did not state the amount of refund she claimed for this item, and it is not possible for me to calculate the amount because the relevant invoices were not produced.
186. Ms Jones asserted that MLK was not permitted to charge a management fee on the cost of Mr McShane’s labour because he is the owner of the company.
187. It was not disputed that MLK could charge a management fee for supervising the labour of an employee or sub contractor.
188. Mr McShane argued that MLK paid him as it would an employee or a sub contractor and it was a normal industry practice to charge a management fee on his hours.
189. Ms Jones told the Tribunal that she paid the fee because she was not aware, until receiving advice from Fair Trading upon lodging her complaint, that such a charge was prohibited.
190. Ms Jones was unable to point to any legal authority prohibiting the charging of a management fee on the labour of the owner of a building company and the Tribunal knows of none.
191. For the above reasons the Tribunal is not satisfied that Ms Jones is entitled to a refund of the management fee on Mr McShane’s labour.
Invoice 68 – management fee on supply of windows where misrepresentation
192. It is not disputed that the applicant issued invoice 68 for the supply and delivery of the windows together with the management fee before it ordered or paid for them, despite Mr McShane telling Ms Jones he had done so.
193. Mr McShane admitted to the Tribunal that he deliberately misled Ms Jones in order to receive payment of 50% of the cost of the windows from her up front so that he could use her money, rather than his account, to pay the deposit needed to order the windows.
194. He sought to justify his conduct on the basis that he ordered the windows the following day using the money she paid as a deposit and that her payment history was such as to cause him to doubt whether MLK would be reimbursed for the windows.
195. Ms Jones paid the applicant’s invoice 68 in reliance on Mr McShane’s statement, as he intended.
196. At the hearing Ms Jones said Mr McShane’s conduct was:
(a)false and misleading;
(b)constituted mismanagement;
(c)at time the invoice was issued work had not been performed – he had charged her for something that hadn’t done; and
(d)he double charged GST on windows – and on the management fee.
197. Ms Jones sought a refund of the management fee charged in invoice 68.
198. I find that the evidence of past payments does not support Mr McShane’s assertion that he had good reason to suspect Ms Jones might not pay him, and even if it did that would not justify him misleading her.
199. Section 18 of the ACL requires that the misleading and deceptive conduct be “in trade or commerce.” Dowsett J in Hearn v O’Rourke[38] when considering the meaning of this term in the context of an equivalent provision in the Trade Practices Act 1974 (Cth) provides the following guidance:
The correct approach is to determine whether or not the relevant conduct, can in ordinary usage, be described as having occurred in the course of dealings ‘…which, of their nature, bear a trading or commercial character.’
[38] [2003] FCAFC 78 per Dowsett J at [28]-[29]
200. I find that that the statement was made in trade or commerce, and it is not disputed that the relevant statement misled Ms Jones.
201. I am satisfied that the applicant through its director, Mr McShane engaged in conduct that was misleading and deceptive in trade or commerce within the meaning of section 18.
202. To qualify for damages under section 236 Ms Jones must show that she suffered loss or damage because of the relevant conduct. If she succeeds the Tribunal can make an order for damages in that amount.
203. To apply for a compensation order under section 237 Ms Jones must establish that she has suffered, or is likely to suffer, loss or damage because of the relevant conduct of the applicant.
204. On the balance of evidence I can find no loss or damage, or likely loss or damage, suffered Ms Jones because of the false statement.
205. Ms Jones received substantially what she contracted for as the applicant performed the management tasks covered by the management fee even though it ordered the windows after issuing the invoice.
206. I also find that the applicant did not double charge for GST on invoice 68.
207. By comparing invoice 68 and Trend’s quote of 31 March 2016 I conclude that the applicant used the following method to calculate the total amount payable:
(a)$2,221.32 being 50% of the quoted cost (pre GST) of the windows supplied by Trend, plus $444.26 management fee being 20% of $2,221.32 making a pre GST total for the windows and the fee of $2,665.58.
(b)the applicant then charged an additional $266.56 for GST being 10% of the pre GST total above bringing the total invoice to $2,932.14.
208. For the reasons set out above the Tribunal finds that the respondent is not entitled to a refund or other compensatory order under section 237 ACL in relation to invoice 68.
Other cause of actions for damages in relation to invoice 68
209. If Ms Jones is not entitled to a refund under the ACL can she recover damages for the applicant’s false statement on another legal basis?
210. Regardless of whether such a claim is based on tort of deceit, a breach of contract; or a contravention of section 18 ACL the claimant must prove, amongst other things, that she suffered loss or damage as a result of the impugned conduct.
211. As Ms Jones has not established that she suffered loss or damages as a result of the applicant’s statement she is not entitled to damages in relation to it.
Damages for delay and rectification of defective work
212. The next cluster of claims relies on the express or implied terms of the contract as well as the statutory guaranties found in the ACL.
Delay - cost of shipping container
213. The applicant reacted to the respondent’s refusal to pay invoices 84 and 86 by suspending further work and directing Trend not to deliver the remaining double hung windows.
214. Ms Jones claims that the applicant breached the contract by suspending work and stopping delivery of the windows and seeks damages to compensate her for the loss she says she suffered as a result.
215. At first neither party sought to terminate the contract over the dispute about payment of the invoices.
216. Ms Jones sought to hold the applicant to its obligation to complete the installation whilst refusing to pay until it had done so and she had satisfied herself as to the accuracy of the labour charges in invoice 86.
217. The applicant did not try to terminate the contract on the basis that Ms Jones refused to pay, but instead suspended further work pending payment and cancelled the delivery of the double hung windows from Trend.
218. However I am satisfied that either by time Ms Jones lodged her complaint with Fair Trading on 19 July 2016; or at the latest when the applicant initiated these proceedings on 2 August 2016 the parties both felt their contractual relationship was over.
Was the respondent entitled to withhold payment?
219. On 10 July 2016 Ms Jones refused to pay invoices 84 and 86 because she believed that:
(a)she was not obliged to pay for work performed until the installation was complete; and
(b)she was not obliged to pay until she had an opportunity to satisfy herself that the amount charged for labour was correct and she would not be able to do so until she returned from an interstate work trip on 18 July 2016; and
(c)the applicant disposed of original sliding door it removed.
220. The issues are was Ms Jones liability to pay the invoice conditional on the applicant completing the scope of the works as agreed; and was she entitled to defer payment until after she had an opportunity to check the labour hours claimed?
221. There is no evidence of any express term about when payment was due in the contract.
222. I must therefore consider whether to imply a term in the contract regarding when payment was due, and if so what term?
223. Australian Courts usually apply the test established in the decision of the Privy Council in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council[39] in deciding whether to imply a term into a contract.
[39] (1994) 180 CLR 266
224. The BP Refinery test states that for a term to be implied it must be:
(a)reasonable and equitable;
(b)necessary to give business efficacy to the contract;
(c)obvious;
(d)capable of clear expression; and
(e)not inconsistent with any express term of the contract.
225. If the contract is informal like this one, the Courts usually adopt a flexible approach and do not require that all the criteria in the BP Refinery test be met.
226. The following statement of Deane J in Hawkins v Clayton has been adopted by the High Court in later cases:
In a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, the court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case.[40]
[40] Hawkins v Clayton (1988) 164 CLR 539, 573. Approved in Byrne v Australian Airlines Ltd (1995) 185 CLR 410; Breen v Williams (1996) 186 CLR 71
227. I am satisfied that it was an implied term of the contract that the applicant was entitled to charge for work as and when it was done for the following reasons:
(a)such a term was reasonable and equitable because the applicant needed as a business to maintain cash flow; and paying for the work as it progressed did not unfairly disadvantage Ms Jones;
(b)such a term was consistent with the express terms of the contract, which were based on payment for labour and materials rather than payment for final completion, or completion of a defined stage of the works; and
(c)the evidence suggests a pattern of conduct accepted by the parties where work was charged and paid for as performed.
228. I also find that there was no express or implied term in the contract that Ms Jones was entitled to withhold payment of both invoices until she had returned home and established to her satisfaction that the labour component in invoice 86 was accurate. An intention to create such a term could not reasonably be imputed to the parties.
229. Although it may have been fair and commercially sensible for the applicant to extend time to pay for the labour component in invoice 86 until Ms Jones returned home on 18 July 2016 and had an opportunity to check her own records it was not contractually bound to do so.
230. For the reasons above I find that Ms Jones was liable to pay the invoices even though the installation of the windows and the removal of the door was not complete, and she had not had an opportunity to check the accuracy of the labour component claimed.
231. However I am satisfied that Ms Jones refusal to pay was based on a genuine and honest misunderstanding of her contractual obligations.
232. Was Ms Jones a refusal to pay a repudiation of the contract?
233. A party will be taken to have repudiated a contract where there is evidence that they are either not willing or not able to perform their obligations. In these circumstances the other party to the contract may choose to terminate the contract (or suspend performance).
234. Did Ms Jones’ conditional refusal to pay give the applicant the right to suspend further work (or terminate the contract) on the grounds that she had repudiated the contract?
The test is whether or not the words or conduct of the party would lead a reasonable person to conclude that the party did not intend or was unable to perform the contract.[41]
[41] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989)166 CLR 623, 647, 657-8
235. Although this contract was not divided into distinct stages for performance, its pattern of part performance followed by part payment resembles an instalment contract. Therefore the case law on repudiation of instalment contracts is relevant by analogy.
236. The courts have held that a breach of one or more instalments does not necessarily amount to a repudiation of a contract.
237. The English Court of Appeal in Maple Flock Co Ltd v Universal Furniture Products (Wembly) Co. Ltd[42] identified two relevant considerations:
(a)the proportion the failure bears to the whole contract; and
(b)the probability that the breach will be repeated.
[42] [1934] 1 KB 148
238. In this case MLK had issued Ms Jones with at least nine invoices between March and June 2016. She had paid all of these before she refused to pay invoices 84 and 86.
239. The Tribunal is not satisfied that a reasonable person would conclude from Ms Jones conduct that she did not intend to pay the applicant because:
(a)she had paid the bulk of the previous invoices, both in value and number;
(b)her refusal to pay was based on an honest misinterpretation of her obligations under the contract;
(c)she had indicated that she intended to pay for all the work, except labour, once the last window was installed and the old sliding door removed; and
(d)she had indicated that she would pay for the labour for installation, subject to confirming that the amount was correct.
240. Accordingly I find that the applicant was in breach of the contract in suspending work in circumstances where Ms Jones had not repudiated the contract.
Measure of damages for the applicant’s breach
241. The purpose of an award of damages for breach of contract is as follows:
Where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed.[43]
[43] Robinson v Harman (1848) 1 Ex 850, 855
242. Damages are limited to losses that are not too remote from the breach that is, that arise naturally from the breach or are actually contemplated as a probable result of the breach.[44]
[44] Hadley v Baxendale (1854) 156 ER 145
243. Ms Jones gave evidence, which I accept, that the double hung windows were ready to be delivered on 18 July 2016, and that it was only after the intervention of Fair Trading on Ms Jones behalf that Trend finally delivered them on 20 October 2016.
244. I am satisfied on the evidence that, had the applicant not suspended work and stopped delivery of the final windows they would have been installed on, or shortly after, 18 July 2016.
245. Mr McShane told the Tribunal that a container was onsite when he started the work and did not dispute Ms Jones assertion that it remained there for the duration of the works.
246. Ms Jones says she used the container to store furniture from the living room as she planned to have the floor resurfaced by another contractor after the windows were in. She also wanted to protect the furniture from damage during the applicant’s work.
247. She says that Mr McShane advised her that the windows should be installed before the floor work but he denies this and says the order of the work was her idea.
248. Mr McShane also told the Tribunal that the rooms appeared to be fully furnished throughout the work and that the furniture in the shipping container was new furniture purchased by Ms Jones.
249. I prefer Ms Jones evidence as she had direct knowledge of what she put in the container. However for the purposes of Ms Jones claim it does not matter whether the furniture in the container was new or existing only that the container was hired to store it pending completion of the works when it could be placed in the family room.
250. Ms Jones told the Tribunal that she hired the container in March 2016 at the commencement of the work and paid for it on a month to month basis in advance on the first day of each month.
251. Ms Jones says that the delay in completion meant that she had to extend the hire of a shipping container until 1 December 2016 after the last window was installed in late November. The date of the window installation is supported by Mr Arranz’s invoice of 22 November 2016.
252. I am satisfied that it was reasonable for Ms Jones to hire the container to store the furniture and note that when she did so in March she could not have anticipated that the windows would not be installed until late November.
253. I am also satisfied that once Ms Jones had moved the furniture into the container it was reasonable for her to keep it there until the last window was installed in November.
254. If the work had been completed on 18 July 2016 then Ms Jones need only have kept the container until 1 August 2016.
255. Although Ms Jones did not produce an invoice showing the cost and basis of hire Ms Jones evidence on these matters is credible and I accept it on that basis.
256. I am satisfied that Mr McShane understood that Ms Jones had hired the shipping container to store furniture to be moved into the family room once the installation of the windows was complete. It was therefore a natural and foreseeable consequence that a delay in the installation of the double hung windows would result in additional hire costs.
257. As Ms Jones was unable to have the job completed until late November she had to keep the container until 1 December. I note this is a difference of four months rather than five months as claimed by Ms Jones. Therefore the Tribunal finds that an appropriate measure of damages is an amount of $405.92 being four months hire of the container at a rate of $101.48 per month to compensate Ms Jones for the extra cost caused by the applicant’s breach.
Delay caused by applicant’s failure to order windows
258. I am satisfied that the reason for the delay in ordering the windows was the applicant’s reluctance to use its own money or credit to pay for the windows.
259. At the hearing Mr McShane admitted that it was “more than likely” that he would have ordered and paid a deposit for the windows shortly after measuring up on 9 March 2016 if he had not been concerned that Ms Jones would not pay him.
260. One of management tasks the applicant was obliged to provide under the contract was to pay for and order materials.
261. It is not disputed that the applicant failed to pay Trend for any of the windows.
262. I am satisfied that the reason for the delay between Ms Jones approving the quote on 4 April 2016 and the applicant placing the order on 30 April 2016 was that it wanted to avoid paying for the materials and that this conduct is a breach of the terms of the contract.
263. I find that the breach is likely to have set in motion the following natural and foreseeable course of events.
264. The delay in ordering of about 26 days is likely to have delayed delivery by an equivalent time.
265. The delay in the delivery of the window is likely to have flowed on to delay the entire schedule including installation, which as previously found caused Ms Jones to incur extra fees for the hire of the container.
266. For the above reasons the Tribunal has awarded an amount of $101.48 in damages to compensate Ms Jones for the cost of hiring the container for an extra month, being the minimum period of hire.
Rectification- incorrect measurement for windows
267. Ms Jones says that the applicant incorrectly measured the opening for the double hung windows and as a result the windows supplied were 10mm too big for the opening.
268. She engaged Mr Arranz to remove the existing window and replace it with the new double hung windows from Trend.
269. Mr Arranz issued an invoice for $550 in relation to the window. He attributed $121 of that amount to extra work needed to fit the new, incorrectly sized, window to the opening.
270. Mr Arranz gave evidence that the likely cause of the problem was that the opening had been incorrectly measured.
271. Mr McShane cross examined Mr Arranz but did not ask him about the double hung windows.
272. I am satisfied on the evidence of Ms Jones, supported by that of Mr Arranz, that the applicant did not measure the opening for the double hung windows correctly and that as a result Ms Jones incurred an additional cost of $121.
273. I find that the applicant has failed to measure for the windows with due care and skill as required by section 60 of the ACL.
274. I am also satisfied that this failure is a major failure within the meaning of section 268 of the ACL because the applicant’s services would not have been acquired by a reasonable consumer knowing of the defect.[45] Further, even if it was not a major defect, given the breakdown in the parties’ relationship it is unrealistic to expect Ms Jones to have given the applicant an opportunity to rectify.
[45] Section 268(a) of the ACL
275. A consumer may recover damages for loss for a contravention of a guarantee if it was reasonably foreseeable that loss would result.[46]
[46] Sections 259(4), 267(4)
276. It was reasonable foreseeable that Ms Jones would incur extra cost to have the window fitted in an opening that was the wrong size.
277. For the above reasons the Tribunal awards the respondent an amount of $121 in damages to compensate her for the cost of rectifying the applicant’s error.
Rectification- protruding sliding doors
278. Ms Jones says that the applicant incorrectly installed the sliding doors and that as a result the metal door reveals protruded 45mm past the surface of the blue board cladding the exterior wall.
279. Mr Arranz told the Tribunal that the door reveals should have been flush with the surface of the blue board and the problem was caused by an error in measuring the reveal.
280. He described how he rectified the problem by installing another layer of blue board with packing behind it to make the surface of the exterior cladding flush with the reveal.
281. Ms Jones also submitted photos, which supported her description of the applicant’s work.
282. I am satisfied by the oral evidence of Ms Jones and Mr Arranz, together with the photographs that the reveals on the sliding doors protruded past the external wall to an obvious and aesthetically unacceptable extent and that the defect was caused by the applicant failure to render its services with due care and skill as required by section 62 of the ACL.
283. I am also satisfied that this failure is a major failure within the meaning of section 268 of the ACL because the applicant’s services would not have been acquired by a reasonable consumer knowing of the defect.[47] And for the reasons referred to above rectification by the applicant was not a realistic option.
[47] Section 268(a) of the ACL
284. Like the double hung windows, it was reasonable foreseeable that Ms Jones would incur extra cost to have the defect rectified.
285. The Tribunal awards Ms Jones damages in an amount of $479.56, being the amount she paid Mr Arranz to rectify the sliding door, to compensate her for her loss.
Damages for inconvenience
286. In response to the applicant’s claim for payment of invoice 86 Ms Jones asked the Tribunal to make an order that the applicant waive and revoke the invoice on grounds including “as a goodwill gesture for the inconvenience caused to me and delay in completion of work by some 5 months.”
287. I have already dealt with damages for financial loss caused by the applicant’s delay.
288. It is clear that Ms Jones is seeking financial redress for the inconvenience she says the applicant caused her. She is not entitled to have to invoice waived and revoked as requested but the Tribunal will deal with her request as a claim for damages for inconvenience caused by the applicant’s breach of contract or negligence.
289. Generally damages for disappointment, frustration or distress flowing from a breach of contract will not be awarded.
290. The High Court in Baltic Shipping Co v Dillon[48] followed the established proposition that damages for disappointment and distress can only be recovered if they result from physical inconvenience or injury caused by the breach or if the object of the contract is to provide enjoyment or relaxation or to prevent ‘molestation’.
[48] Baltic Shipping Co v Dillon (1993) 176 CLR 344
291. The ACT[49] has enacted legislation to limit claims in tort for damages for personal injury, including inconvenience.
[49] Other states and territories have enacted similar legislation in relation to contract and or tort
292. In the ACT the Civil Law (Wrongs) Act 2002 section 35 provides that:
Damages must not be awarded for pure mental harm to a person resulting from negligence unless the harm consists of a recognised psychiatric illness.
Damages must not be awarded for economic loss for consequential mental harm to a person resulting from negligence unless the harm consists of a recognised psychiatric illness.
293. The effect of section 35 is to exclude a claim for damages for inconvenience based on negligence. Which leaves the question does Ms Jones have such a claim based on contract?
294. Ms Jones explained to the Tribunal that as well as her financial loss she was seeking redress for the inconvenience of organising tradespeople to rectify the applicant’s defective work, including having to take time off work. She also referred to the work still not being fully finished and painted, and delay in general.
295. The only claims of defective work I have found established are the incorrect measurement of opening for the double hung window and the incorrect installation of the sliding door. I am satisfied that both defects were effectively remedied by Mr Arranz at Ms Jones expense.
296. I am not satisfied that the effort involved in organising Mr Arranz to rectify the applicant’s work amounted to real physical inconvenience as required by the test in Baltic Shipping.
297. I have already found that the delay in the delivery of the double hung windows was caused by the applicant’s breaches of contract. While this delay must have been frustrating for Ms Jones during this period she still had a functional window and the Tribunal is not satisfied she suffered physical inconvenience.
298. For the reasons above the Tribunal has not awarded damages to compensate Ms Jones for inconvenience.
Removal of old sliding doors
299. Ms Jones has claimed $150 for the cost of having another contractor dispose of the sliding door removed by the applicant. I prefer the applicant’s argument on the basis of logical appeal that Ms Jones could not establish any loss as a result of the applicant not disposing of the door because if it had done so it would have charged Ms Jones an amount for labour and tip fees similar to that she paid the other contractor. Accordingly the Tribunal has disallowed this part of Ms Jones counter claim.
Conclusion
300. The applicant’s claim for invoice 84 is dismissed.
301. The applicant’s claim for $1,701.35 under invoice 86 is allowed in the reduced amount of $924 as I only allowed 14 hours of the 24 hours claimed and reduced the labour charge and associated management fee accordingly.
302. The applicant is allowed its search fee of $9 and pre judgment interest calculated on $924 in accordance with the Court Procedures Rules 2006 from 22 June 2016 to the date of judgment.
303. The respondent’s counter claims are allowed for $1107.96, being damages assessed for:
(a)$121.00 for incorrectly measured opening for double hung window;
(b)$479.56 for incorrectly installed sliding door;
(c)$101.48 for delay caused by applicant’s delay in ordering the windows; and
(d)$405.92 for the applicant’s delay caused by suspending delivery of double hung window.
304. The Tribunal has a discretion under section 48 of the ACAT Act to order the parties to pay each other’s filing fees because each of them has at least partially succeeded in their applications (which includes counter claims). I have decided not to exercise my discretion to award either party an amount for the filing fee as the majority of the amount claimed by each of them was disallowed.
………………………………..
Senior Member E Ferguson
HEARING DETAILS
FILE NUMBER:
XD 831/2016
PARTIES, APPLICANT:
MLK Building Group
PARTIES, RESPONDENT:
Jennine Jones
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
N/A
TRIBUNAL MEMBERS:
Senior Member E Ferguson
DATES OF HEARING:
7 December 2016
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