Ryan v Cheqrouni (No 2)
[2024] ACTSC 230
•18 July 2024
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Ryan v Cheqrouni (No 2) |
Citation: | [2024] ACTSC 230 |
Hearing Date: | 15 July 2024 |
Decision Date: | 18 July 2024 |
Before: | Elkaim AJ |
Decision: | (1) Judgment for the plaintiffs against the defendant in the sum of $237,876.09. (2) The defendant is to pay the disbursements incurred by the plaintiffs in bringing and pursuing the proceedings. |
Catchwords: | CONTRACTS – DAMAGES – Implied terms – term of standard of work – claim for rectification and destroyed goods – claim for personal injury (mental distress) arising from breach of contract – whether damages for distress recoverable – assessment of losses caused by breach of contract – replacement value based on new or used value – pragmatic approach to assessment |
Legislation Cited: | Building Act 2004 (ACT) s 88 |
Cases Cited: | Baltic Shipping Co v Dillon (1993) 176 CLR 344 |
Texts Cited: | Nicholas C Seddon and Rick A Bigwood, Cheshire and Fifoot Law of Contract, (LexisNexis, 12th ed, 2023) |
Parties: | Mark Ryan ( First Plaintiff) Mary Southorn ( Second Plaintiff) Mostafa Cheqrouni t/as A and Z Floor Sanding and Cleaning ( Defendant) |
Representation: | Counsel Self-represented ( First Plaintiff) Self-represented ( Second Plaintiff) No appearance ( Defendant) |
| Solicitors Self-represented ( First Plaintiff) Self-represented ( Second Plaintiff) No appearance (Defendant) | |
File Number: | SC 365 of 2023 |
ELKAIM AJ:
The plaintiffs have sued the defendant for damages arising from breach of contract. The most recent pleading is a fourth amended statement of claim filed on 15 April 2024. The defendant has never taken any part in the proceedings, but I am satisfied has been served with all relevant documents and material and had been made aware of the hearing date. The defendant did not appear at the hearing.
The plaintiffs were self-represented. They did not wish to make any submissions on the law. It would not be an understatement to summarise their approach to any legal issues as: “we have no idea”.
Background
The evidence before the court was mostly contained in affidavits of the plaintiffs. In addition, there is a medical report from a Mr Sutton (Exhibit D) and an expert report from a Mr Martin (Exhibit E). The first plaintiff gave oral evidence that the allegations of fact in the above pleading are correct. The underlying ‘story’ is also contained in his affidavit sworn on 9 November 2020 (included in Exhibit A).
The plaintiffs were in a de facto relationship. In 2014 they owned a number of properties between them including a residence in the ACT suburb of Griffiths (the first premises). The first plaintiff was the registered owner of the first premises.
The contents of the first premises were regarded by both plaintiffs as their joint assets.
The floorcoverings included carpet and cork tiles. The plaintiffs decided to remove the carpet and tiles and to have the underlying floorboards sanded and polished.
The defendant, as suggested by his trading name, carried on a business which included sanding and polishing wooden floors.
First contact was made with the defendant on 15 October 2014. The defendant came to the first premises to provide a quote. The work to be done extended through four bedrooms, a hallway (upstairs), and five rooms and a hallway on the ground floor.
A quote of $6,000 was given to be paid in three equal lots: $2,000 at the start, $2,000 in the middle, and $2,000 at the end. The whole of the amount was ultimately paid.
10. The defendant informed the plaintiffs that it would be necessary to remove the furniture from the premises. He suggested the furniture be stored either in a container or “outside under cover”.
11. The plaintiffs took up the defendant’s suggestion and moved most of the contents of the first premises outside of the residence and covered them with a tarpaulin or placed them in a shipping container.
12. The first plaintiff was then practising as a chiropractor from the premises. He told this to the defendant and asked for an estimate of the time the work would take. This was an important element because he needed to continue his practice. He said he could spare no more than two weeks. The defendant said this was sufficient.
13. Prior to moving the contents outdoors, the plaintiffs checked the weather forecast to make sure no rain was predicted during the expected duration of the work.
14. Based then on the price ($6,000) and the time estimate, the plaintiffs accepted the quote. The defendant commenced the work.
15. The second plaintiff was the registered owner of a residence in the ACT suburb of Spence (the second premises). At the same time as the agreement in relation to the first premises was made, the plaintiffs agreed with the defendant that he would carry out floor sanding and polishing at the second premises. The agreed price for this work was $2,800.
16. The work at both premises involved the application of a polyurethane product which was applied by the defendant and then subject to polishing. The work on both properties was ostensibly completed by about mid-November 2014.
17. On about 5 November 2014, the plaintiffs looked at the work that had been done at the first premises and noticed that the floor surfaces were in two different colours. This was reported to the defendant who responded:
I ran out of my usual stock of polyurethane and had to source alternative product in Canberra.
18. On about 10 November 2014, the plaintiffs observed that the sanding of the wooden floors in the first premises had left undulations and burn marks across the surface. Again, a complaint was made to the defendant who responded:
My sanding machine was faulty. It’s now in for repairs and a service and awaiting new parts.
19. Attempts were then made to contact the defendant on a number of occasions in order for him to rectify the failings as to colour and the undulations. The defendant did not respond to the attempts and has never returned to rectify the faults.
20. The work at the second premises contained the same deficiencies as at the first premises and again, despite numerous requests, the defendant never rectified the defects. The claim for damages does not seem to include any damages relating to the second premises.
21. The plaintiffs engaged another contractor to rectify the poorly performed work. This contractor was originally the second defendant but the case against him has been discontinued. His efforts apparently failed.
22. Because the work at the first premises had not been properly completed and the plaintiffs were awaiting either its proper completion or its rectification, the contents that had been moved out of the first premises remained outside, either under tarpaulins or in a shipping container.
23. On 24 and 25 November 2014, and then in the first week of December and on 16 December 2014, there was a good deal of rain in the area of the first premises. The rain caused extensive damage to the contents which were under the tarpaulins and possibly some damage to a few items in the container.
The plaintiffs’ claims
24. The plaintiffs assert that they had an agreement with the defendant to carry out the work at the two premises and that it was implied in that agreement that the work would be carried out in a workmanlike fashion.
25. The plaintiffs allege that the damage to the contents of the first premises was caused by the breach of the agreement by the defendant.
26. The plaintiffs want the following from the case:
(i)The replacement cost of the goods damaged by the rain.
(ii)The cost of new timber required to replace the damaged floors.
(iii)The cost of accommodation while the plaintiffs are unable to live at the first premises during future remediation work.
(iv)Personal injury damages (specifically non-economic loss) suffered by the first plaintiff as a result of depression flowing from the breach of contract. This might be categorised as distress arising from the breach of contract. The second plaintiff abandoned her claim for personal injury damages.
Some legal principles
27. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-3, the Privy Council stated:
Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
28. In this case there can be little doubt that the contract to perform the flooring work contained an implied term that the work would be carried out in a workmanlike manner. Although not advanced by the plaintiffs, it is also likely that the defendant was bound to carry out the work in a “proper and skilful way” pursuant to s 88 of the Building Act 2004 (ACT).
29. Damages for breach of contract are designed to put the plaintiff “in the position in which he or she would have been had the contract been performed”: McCrohin v Harith [2010] NSWCA 67 (McCrohin) at [52].
30. However, “[a]n injured plaintiff is not entitled to make a profit in an action in tort or contract; in other words, to be awarded damages for a loss never suffered…. or, in the case of contract, to be placed in a superior position to that which he or she would have been had the contract been performed”: McCrohin at [53].
31. At the same time, as stated in Fink v Fink (1946) 74 CLR 127 (Fink) at 143:
Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat the only remedy it provided for breach of contract, an award of damages.
32. The point made in Fink was stated in this way in Nicholas C Seddon and Rick A Bigwood, Cheshire and Fifoot Law of Contract, (LexisNexis, 12th ed, 2023) (Cheshire and Fifoot) at [23.24]:
It is trite law that the plaintiff has the onus of establishing both the fact and the amount of the loss. However, calculating damages for breach of contract necessarily involves a degree of hypothesis and pragmatism. Difficulty in determining damages because evidence is lacking, or more than one method of assessment is available, will not deter the court from making an award.
33. The general rule is that damages are assessed at the time of breach. But, again as stated in Cheshire and Fifoot:
Assessment as at the time of breach does not exclude loss that will be incurred in the future. On the contrary, the principle on which contract damages are awarded - to put the injured party in the position as if the contract had been performed - clearly requires consideration of the future as well as present impact of the breach.
34. The damages must have been caused by the breach of contract. The High Court (Barwick CJ, McTiernan and Menzies JJ) in Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516 (Reg Glass) at 523, put the test in this way:
First that the loss suffered resulted from the breach, and secondly that the loss suffered was, when the contract was made, reasonably foreseeable as likely to result from such a breach.
35. In Reg Glass, a failure to install a burglar-proof door, contrary to an agreement, led to the theft of a number of items. The defendant was found liable for the loss.
36. Damages are not recoverable where there has been a failure to mitigate. It might be thought, in this case, that the placing of the valuable and ‘susceptible to damage’ contents of the house under tarpaulins was a failure to mitigate. I will not, however, reach that conclusion here because the contents were placed outside at the suggestion of the defendant, they were to be there for a limited period and, overall, the onus is on the defendant to prove the failure to mitigate. The absence of the defendant from the proceedings precludes such proof. Any suggestion of contributory negligence would suffer from the same deficit, namely that the onus would be on the defendant to establish the contributory negligence.
37. In respect of personal injury, and in particular mental distress, the general rule is that such damages cannot be recovered for breach of contract. There are exceptions, as set out by the High Court in Baltic Shipping Co v Dillon (1993) 176 CLR 344, but the qualifications to obtain damages have not been met here. I would add at this stage that the evidence relied upon by the first plaintiff, namely the report of Mr Sutton dated 10 May 2022 (Exhibit D), does not allow for any identification of a specific line of causation between the breach of contract and the distress allegedly suffered by the first plaintiff. Therefore, even if otherwise allowable, I would not have awarded the plaintiff damages for his distress.
Quality of the work
38. There are a number of photographs in Exhibit A which show differences in colour and generally shoddy workmanship. More importantly, the first premises were inspected by Mr Eric Martin, an architect with significant experience in building work. The inspection was carried out on 9 November 2021. His report (Exhibit E) is dated 16 November 2021. Mr Martin reaches two important conclusions:
The end result is that the sanding undertaken does not meet the requirements of standards specification requirements or the Australian Standards and is not considered an acceptable finish.
Furthermore, a re-sanding of the floor is not possible without the loss of structural integrity of the flooring and a replacement of the floor is required.
39. Based on the evidence of the plaintiffs (including the photographs), and the report of Mr Martin, I am satisfied that the work performed by the defendant at the first premises was of such a standard that it breached the agreement between the plaintiffs and the defendant.
Causation
40. The defendant told the plaintiffs to put the goods outdoors for a limited time pending the completion of the work. The work was not properly completed so that the goods could not be brought back into the house and were then exposed to the possibility of rain. This led to the damage. This was a reasonably foreseeable consequence of breaching the contract by the sub-standard performance of the contract work.
Damages
41. Exhibit B contains the monetary claims being made for the damaged goods. I will deal with them in separate categories. There are photographs of some of the goods in Exhibit A. Photograph 262 suggests there was local flooding.
42. Remediation work: I am satisfied that the new timber required will cost $38,658.84, and that the cost of the new work will be $29,850. I am not satisfied that the plaintiffs are entitled to recover the cost of removing, supplying and installing a new kitchen.
43. Relocation during remediation: As I understood the plaintiffs, their de facto relationship has ceased but they both continue to live in the first premises; the first plaintiff downstairs and the second plaintiff upstairs. In addition, there are a number of tenants also living on the premises. My understanding of the removal charges from Kent Removals & Storage, and the accommodation quote from Abode Hotels Reservations relates to both the plaintiffs and all the tenants. I can see no basis upon which the costs of the tenants being accommodated should be included. I do not know the formal tenancy arrangements and cannot reach any conclusions about the obligations owed by the plaintiffs to the tenants.
44. The claim is for five rooms. Bearing in mind the separation of the plaintiffs, I think two rooms should be allowed. The whole quote is for $31,558.50. Assuming this to be for five equal rooms, the cost per room is $6,311.70. Two rooms is $12,623.40. This is the amount I will allow. The total costs associated with moving charges is $16,859.64. Adopting the same approach as for accommodation I reduce this amount to $6,743.85.
45. The second plaintiff’s affidavit of 8 September 2023 (Exhibit B) lists a number of items under the general description of “[q]uotes and receipts for content items that required to be replaced due to weather, water damage and pilfering.” In my view, the claim should be restricted to obvious water damage. Another issue is the replacement claim is sometimes calculated at prices for new goods when the items damaged are of an uncertain age.
46. An example of ‘new for old’ is a Yamaha keyboard where the new price is claimed for a used product. There are larger claims ($37,998) for a piano and organ. Although the quote from DW Music refers to two “preowned” items, I do not know the age and condition of the original items.
47. Another example of a claim for new items is the claim for lined curtains totalling $25,408.24. I assume the curtains needed to be removed in order for the floor work to be performed. However, there is no evidence as to the age or condition of the curtains that were present before the work commenced.
48. There are some items where there is a specific evaluation of the damaged goods. For example, there are some water damaged rugs that have been assessed by Cadrys which has provided a Certificate of Origin and Valuation. The certificate is useful because it not only gives a value of the rugs but also states “[t]he examined pieces display colour run consistent with water damage, and the damage is such that it will not respond satisfactory to any cleaning/repair process.”
49. There are a number of items where there is simply a handwritten note of the expenses, accompanied by an invoice from a relevant supplier. However, some of the invoices include matters such as service charges which are hard to find consistent with the claims.
50. It would appear that the plaintiffs had a house and contents insurance policy with AAMI. According to the first plaintiff, the loss investigator told him that he was underinsured by $200,000. AAMI paid only $20,000 for the water damaged goods because “the contents were outside of the premises”. Presumably the policy required the insured contents to be in the house.
51. There are some items where there is only a reference note, for example “paintings numerous” and “various clinic posters”.
52. According to the fourth amended statement of claim the total amount claimed for destroyed goods is $354,246.14.
53. I have decided to allow $150,000 for the damaged goods. This assessment, which I accept is to some extent arbitrary, is based on the following factors:
(a)There are a limited amount of items, such as the ruined carpets assessed by Cadrys, where a specific cost due to water damage can be ascertained.
(b)There are many items where it is simply impossible to know whether the replacement cost is a reflection of the damaged article. Evidence of age and condition are not present.
(c)I have to try and be pragmatic in my approach, not necessarily rejecting claims simply because there are deficiencies in proof. At the same time the plaintiffs should not be allowed to “make a profit” from their losses.
(d)Some of the losses may be due to factors besides water damage. I have mentioned that pilfering is included. The pilfering could have occurred at any time including during the first few days after the work commenced.
(e)I have taken into account the $20,000 received from AAMI.
54. The total claim I will allow is shown in this table:
Replacement timber
$38,658.84
Remedial work
$29,850.00
Accommodation during remedial work
$12,623.40
Moving expenses
$6,743.85
Damaged goods
$150,000.00
Total
$237,876.09
55. The plaintiffs are self-represented and have no legal costs. They do have some disbursements such as the expert report from Mr Martin. His total costs are $4,290. There are probably other disbursements, such as filing fees, all of which I will include under a general order that the defendant pay the plaintiffs’ disbursements related to the proceedings.
Orders
56. I make the following orders:
(1)Judgment for the plaintiffs against the defendant in the sum of $237,876.09.
(2)The defendant is to pay the disbursements incurred by the plaintiffs in bringing and pursuing the proceedings.
| I certify that the preceding fifty-six [56] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim. Associate: Date: 18 July 2024 |
0
5
1