Your Local Plumbing Group Pty Ltd ACN 605 979 235 v Hirsch (Appeal)
[2022] ACAT 83
•10 October 2022
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
YOUR LOCAL PLUMBING GROUP PTY LTD ACN 605 979 235 v HIRSCH (Appeal) [2022] ACAT 83
AA 65/2021 (XD 461/2021)
Catchwords: APPEAL – small claim civil dispute – consideration of the principles governing the exercise of the Tribunal’s functions – consideration of the obligation to observe procedural fairness – failure to accord procedural fairness – failure to apply the law of contract – consideration of quantum meruit –- appeal allowed – consideration of appropriate resolution of the dispute –
re-calculation of amount owing under the contract
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 7
Cases cited:Australian Coal and Shale Employees’ Federation v Commonwealth (1953) 96 CLR 621
Boucaut Bay Co Ltd v The Commonwealth (1927) 40 CLR 98
Chetty & Anor v Automotive Computer Diagnostic Centre (ACDC) Pty Ltd [2016] ACAT 38
Clements v Independent Indigenous Advisory Committee [2008] FCFCA 143
Coutts v Close [2014] FCA 19
Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4
Harada v Barnes [2012] ACAT 66
Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 222 ALR 306
Russo v Russo [1953] VLR 57
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
Wittman v Dennis & Anor [2022] ACAT 4
List of
Texts/Papers cited: Colbran and Spender, Civil Procedure Commentary and Materials (8th edition, 2022)
Tribunal:Presidential Member G McCarthy
Date of Orders: 10 October 2022
Date of Reasons for Decision: 10 October 2022
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 65/2021
BETWEEN:
YOUR LOCAL PLUMBING GROUP PTY LTD
ACN 605 979 235
Appellant
AND:
ANNETTE HIRSCH
Respondent
APPEAL TRIBUNAL: Presidential Member G McCarthy
DATE:10 October 2022
ORDER
The Tribunal orders that:
The orders of the Tribunal made on 26 November 2021 in proceeding XD 461/2021 are set aside.
The appellant pay the respondent the sum of $1,254.28 comprised of:
(a) $1,173.77 by way of reimbursement of monies paid; and
(b) $80.51 by way of interest.
………………………………..
Presidential Member G McCarthy
REASONS FOR DECISION
Although arising from comparatively simple facts, this appeal raised issues fundamental to the way the Tribunal must operate.
Section 7 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) mandates the principles that the Tribunal must apply when exercising its functions. Section 7 states:
7 Tribunal principles
In exercising its functions under this Act, the tribunal must—
(a)seek to ensure the procedures of the tribunal—
(i)are as simple, quick, inexpensive and informal as is consistent with achieving justice; and
(ii)are implemented in a way that facilitates the resolution of the issues between the parties so that the cost to the parties and the tribunal is proportionate to the importance and complexity of the subject matter of the proceeding; and
(b)observe natural justice and procedural fairness.
Section 7(a)(i) mandates that the Tribunal’s obligations regarding simplicity, speed, cost and informality be tempered by the need to achieve justice. Section 7(b) mandates that in exercising its functions the Tribunal “must … observe natural justice and procedural fairness.”
The appellant’s grounds of appeal, most of which I have allowed, illustrate the importance of the Tribunal determining disputes in accordance with these principles and the injustices that result when it does not.
In applying the requirements of section 7 of the ACAT Act to the facts in this case, I acknowledge that the Tribunal is not a court. It needs to be flexible and it must accommodate the needs and circumstances of participants in proceedings before the Tribunal. Different cases, different litigants, different types of representation, or none at all, and different issues can require different approaches by tribunal members. But flexibility does not mean the Tribunal is free to conduct cases as it chooses, or to decide disputes only by what it thinks is ‘fair’. The Tribunal is a subordinate body created under statute. It must hear and determine cases according to law and within the powers that it has authority to exercise.
The appeal also raised for consideration the need for the Appeal Tribunal to comply with the principles in section 7(a)(ii) namely to resolve the issues between the parties “so that the cost to the parties and the tribunal is proportionate to the importance and complexity of the subject matter of the proceeding”. The issue between the parties was their respective liabilities arising from simple plumbing work to clear a blocked drain. Upon finding the appeal should be allowed, remittal of the matter for further consideration would have involved time and cost for the parties and the tribunal entirely disproportionate to the importance and complexity of the dispute.
Factual background
The appellant carries on a plumbing business, trading under the name Canberra Blocked Drains. The respondent is a private citizen who engaged the appellant to clear a blocked sewerage drain at her home.
On 2 February 2021, the respondent asked the appellant to quote for work necessary to clear the drain. On 3 February 2021, a plumber on behalf of the appellant (Mr Shane Carlson) attended the respondent’s home and provided a written quote, citing job number JN 34786, to clear the blockage. The quote offered three options:
(a)Option 1 was to use a “high-pressure water jetter in an attempt to clear the blockage”[1] for a quoted price of $515 plus GST ($566.50).
(b)Option 2 was to use a CCTV camera to identify the location of the blockage and the depth of the pipe for a quoted price of $486 plus GST ($534.60).
(c)Option 3 was to make a DVD/USB recording of the CCTV footage, if option 2 was selected, for an additional cost of $89 plus GST ($97.90).
[1] Quote, job number 34786, page 1
The quote included a $50 ‘seniors discount’, which reduced the quoted price for options 1 and 2 from $1,001 plus GST to $996 plus GST.
The appellant’s tax invoice, invoice number 17158, referenced to quote JN 34786, restates options 1, 2 and 3 and contains the words “client has $50 off seniors discount and would like to go with options 1/2”. I adopt the appellant’s description of this contract as Contract 1.
The respondent paid $534.60 to the appellant, being the amount quoted to carry out the CCTV work described as option 2.
On 3 February 2021, following acceptance of the quote, Mr Carlson attempted to clear the drain using a high-pressure water jetter per option 1. The attempt to clear the drain using the jetter was unsuccessful. Mr Carlson then used a CCTV camera to locate the blockage per option 2. The plumber explained to the respondent’s husband that the gully trap was “completely full of rocks”.[2] The respondent’s husband acknowledged that to be so, explaining that his children had previously thrown rocks into the gully trap.
[2] Quote, job number 34859, page 1
In order to rectify the blockage, the respondent provided a quote dated 3 February 2021, citing job number JN 34859. The quote involved marking out the area to be excavated; machine excavation work to access the blockage using a 1.7 tonne hired excavator; replacement of the blocked pipe with 100mm diameter PVC pipe; reconnection to the existing sewer line; and installation of a new overflow relief gully to pick up the existing kitchen line. The quoted price for the works was $3,539 plus GST ($3,892.90). The quote included the following statement:
While all due care is taken throughout the excavation, accidental damage can occur whilst trying to gain access to the location of the excavation or whilst moving our machinery around the property. If any damage occurs, any and all costs associated with the repairs of any potential damage will be the customer’s sole responsibility.
The quote for JN 34859 included the following statement attributed to Mr Carlson immediately below the quoted price:
I would waive the high-pressure jetting is he puts down a deposit in approved works today [sic]
The quote for JN 34859 records that the respondent’s husband accepted the quote on 3 February 2021 at 11:28am. This is reflected in tax invoice number 17159, relating to the quote, which records that the respondent’s husband paid a requested 50% deposit ($1,947). I adopt the appellant’s description of this contract as Contract 2.
On 12 February 2021, the appellant’s plumbers commenced excavation work to reach the blocked sewer pipe. In the course of their work, the plumbers struck and broke a stormwater pipe. On the same day, aware that a rainstorm had been forecast, the plumbers replaced the broken stormwater pipe with new PVC pipe.
On the morning of 13 February 2021, plumbers on behalf of the appellant – who were different from those that came to the appellant’s premises on 12 February 2021 – arrived at the respondent’s premises to continue work under Contract 2. On arrival, someone on behalf of the appellant provided a written quote with job number JN 35255, and tax invoice 17286, for the work that had been done to repair the broken stormwater pipe and associated works for a quoted and invoiced price of $4,000 plus GST ($4,400).
The respondent says she was told by the plumbers who arrived on site that work would not proceed under Contract 2 unless she accepted the quote for repair of the stormwater pipe and paid a 50% deposit ($2,200) towards the quoted cost. The appellant’s operations manager in Victoria, Ms Heather Buffey, said in her witness statement that she “does not believe” the site plumber would have given such an “ultimatum” and believes there was a misunderstanding.
The respondent did not accept the quote and did not pay the deposit. She asked the plumbers to leave her premises, which they did.
It is fair to say that from the respondent’s viewpoint, the work had not proceeded as she had expected. For her, work began on 3 February 2021 with a hope that the blocked sewerage pipe would be cleared for approximately $500. By 13 February 2021, the respondent was faced with a hole in her back garden approximately four times the size of that which had been indicated prior to commencement of the excavation work; a sewerage pipe that was still blocked; a replaced stormwater pipe for which she had been invoiced $4,400 and total invoiced repair costs totalling nearly $9,000.
On 15 February 2021, the respondent asked the appellant to remove its excavator and all its other equipment from her premises. The respondent’s plumbers did so the following day.
On 15 February 2021, at the request of the respondent, a plumber (Mr Finley) from a different business (Spencer & Sons Plumbing) attended the respondent’s property to inspect the work that had occurred up to that point. Mr Finley quoted $736.09 plus GST ($809.70) for the further work that he considered necessary to rectify the blockage. The respondent accepted the quote.
Mr Finley returned on 23 February 2021 and carried out the quoted work. He provided a tax invoice dated 23 February 2021 in which he described the work done. In summary, the description states that Mr Finley removed the broken clay sewerage pipe and vent pipe, reconnected the sewer vent pipe, replaced the old sewer pipe where necessary with 100mm PVC pipe and installed a new gully trap for the kitchen. He then backfilled the hole by hand, cleaned the site and left it with a raked level finish. The respondent paid for Mr Finley’s work.
The original proceeding
On 11 May 2021, the respondent filed her original application with the Tribunal. On 26 August 2021, the respondent filed an amended application for an order that the appellant pay her $2,880.50[3] comprising:
(a)$534.60, by way of a refund of the fee paid for the CCTV under Contract 1.
(b) $1,945.90, by way of a refund of the 50% deposit paid under Contract 2.[4]
(c)$400, by way of a contribution towards the cost of Mr Finley’s work.[5]
[3] The respondent originally claimed $2,912.40. This was amended to $2,880.50 consequent upon the respondent realising she had paid the appellant $534.60, rather than $566.50, towards Contract 1.
[4] The claimed amount appears to be incorrect. The applicant’s tax invoice shows the deposit to be $1,947 and the amount owing to be $1,945.90
[5] In addition to the sum claimed, the respondent sought payment of the Tribunal filing fee, a company search fee and interest.
On 2 July 2021, the appellant filed a counterclaim for an order that that the respondent pay it an unspecified sum of money comprising:
(a)$561 (it said), by way of the balance owing on Contract 1.
(b)Retention of the deposit paid ($1,947) under Contract 2 as liquidated damages pursuant to clause 25.1 of the contract.
(c)Payment of a sum on a quantum meruit basis for work done under Contract 2, estimated at 70% of the contract value.
(d)Payment of a sum for repair of the stormwater pipe.
(e)Interest and expenses.
On 26 November 2021, the tribunal heard the respondent’s application. Mr Lloyd, solicitor, appeared for the respondent. Mr Chen appeared for the appellant. At the end of the hearing, the tribunal ordered the appellant pay the respondent $2,160.58 comprised of $1,914 referenced to the claimed amount, reimbursement of the respondent’s filing fee ($162.50), reimbursement of the ASIC company search fee ($22.16) and statutory interest ($61.92). It dismissed the appellant’s counterclaim. In its oral reasons for decision given at the end of the hearing, the tribunal said:
Now, with respect to the $1,945 deposit paid by Ms Hirsch, she got no value for that work whatsoever other than one particular bit of value, namely that when she got another plumber, … Mr Finley, didn’t have to dig any holes because they’d already effectively been dug by the excavator.
…
It’s impossible to assess the pros and cons with respect to the excavation and refilling works done by [Mr Finley] versus the size of the excavation in this respect.
On the one hand, the excavation done by the respondent plumbers meant that Mr Finley had an excellent work area in which to work and he didn’t have to dig holes. On the other hand. He had a lot more replacement soil to put back into the hole and there’s no doubt that the amount of concrete path that was lifted by the respondent company, given the actual work that was done, was unnecessarily long. In other words, Ms Hirsch and her partner will have incurred unnecessary costs in the replacement of parts of the path that did not need to be disturbed.
Given the lack of evidence about the countervailing costs of this, the only thing that can be done is to ignore it. The net result of that is to say that such work as the respondent company did at Ms Hirsch’s premises with respect to excavation is countervailed by the unknown costs which were either taken in or avoided as a result of that work by Mr Finley. And so that leaves me at a net sum zero gain with respect to that.
…
The result of this is that the $1,945.90 paid by Ms Hirsch to the respondent must be refunded. However, from that sum is to be deducted what she owes for the jetter which is $31.90. You deduct $31.90 from $1,945.90 and the amount that the respondent is to refund to the applicant, Ms Hirsch, is $1,914 precisely.
With respect to the counterclaim, given what I’ve had to say about the unnecessary excavation works and the unnecessary damage which was done to the stormwater pipe, the counterclaim is dismissed.[6]
The appeal
[6] Transcript of original proceeding, 26 November 2021, page 65, line 36 – page 66, line 38
On 9 December 2021, the appellant appealed from the tribunal’s orders. Many of the grounds of appeal were opaque.
For example, the first ground of appeal was that the decision was “wrong as it was based on an erroneous understanding of the facts”, but it did not state any fact that was misunderstood or how the alleged error of fact caused the tribunal to err in the orders it made.
The second ground of appeal was that the tribunal “failed to take into account and give any weight to any of the evidence” filed by the appellant or to the “submissions made” by the appellant, but it did not state what evidence or submission it should have taken into account or how that failure caused the tribunal to err in the result. Most of the other grounds of appeal similarly lacked specificity.
The generality of the application for appeal made it difficult for the respondent to know the case she had to meet. However, in an effort to assist, Mr Lloyd addressed 10 “criticisms” of the tribunal’s decision as alleged in the appellant’s outline of submissions dated 17 February 2022, two of which were later abandoned. At the hearing of the appeal, the parties proceeded on the basis that the remaining eight criticisms be treated as the grounds of appeal. With the agreement of the parties, I dealt with the appeal accordingly.
For the purposes of the appeal, the appellant sought leave to rely upon a witness statement dated 17 February 2022 from Mr Carlson in which he commented on the work done by the appellant’s plumbers. Mr Lloyd said he had no objection to the tender of the statement and did not wish to cross-examine Mr Carlson.[7] Accordingly, I admitted the witness statement as further evidence on the appeal.
[7] Transcript of appeal proceeding, 30 March 2022, page 2, lines 28-45
I turn to the eight grounds of appeal.
Ground 1: the admission of Mr Finley’s report into evidence
On 25 November 2021, the day before the original hearing, the appellant filed and served a report from Mr Finley dated 6 July 2021 in which Mr Finley described what he saw when he inspected the property on 15 February 2021 and the work he did on 23 February 2021. Mr Finley completed his report with the following statement of opinion:
I believe this job could have been successfully completed if other options were considered. At first a Gully Grabber could have been used to remove the rocks in the bottom of the kitchen gully. If this was not possible then the kitchen gully could have been hand excavated, as the drainage was not deep approximately 5-600 mm. If the job was completed in this manner the stormwater drainage would not have been smashed out or damaged at all. Also the cost involved completing the job like this are a lot cheaper [sic].
Mr Chen submitted that the tribunal erred by accepting Mr Finley’s report into evidence. He relied on four grounds, each of which was an alleged denial of procedural fairness:
(a)The tribunal’s receipt of the report into evidence before giving the appellant an opportunity to state its objections to the receipt.
(b)The late service of the report.
(c)The denial of an opportunity for the appellant to lead evidence in reply.
(d)Mr Finley not being made available for cross-examination.
Referring to the first ground, the transcript of the original hearing records that when Mr Lloyd mentioned Mr Finley’s report as a document that would form part of the respondent’s case, Mr Chen stated “we will object to the tendering of [it]”[8] to which the tribunal responded: “You may certainly object to it later on; for the moment, I’m just marking it as an attachment. … You can make the objection later. Okay?”[9] Mr Chen agreed with that course.
[8] Transcript of original proceeding, 26 November 2021, page 7, line 24
[9] Transcript of original proceeding, 26 November 2021, page 7, lines 28-34
The appellant submitted that, notwithstanding the tribunal’s statement that it could object “later”, it was not given that opportunity. The appellant contended (in summary) that its objections would have been the other grounds for why it was procedurally unfair to accept Mr Finley’s report into evidence.
Mr Lloyd submitted in reply that the appellant did not set out the basis of its objections to the tender of the report, other than its late filing, and that there was no error in the tribunal accepting the report into evidence despite its late filing. He submitted that even if that were wrong, “the issue” had been addressed by the appellant having the opportunity, on the appeal, to apply to have further evidence admitted which had occurred.
To consider the first ground, it is necessary to identify the point at which Mr Finley’s report was in evidence and the circumstances in which the tribunal admitted it.
It is clear from the transcript that the tribunal had, at an early stage, formed a view that the work carried out by the appellant was unnecessary. After obtaining Mr Chen’s agreement to the uncontroversial fact that the appellant had used the jetter and the CCTV, the following exchange occurred:
MEMBER: .. you have a problem and the problem you have is, where is the evidence that that work was ever necessary?
MR CHEN: Well, it’s not about the work was necessary …
MEMBER: Mr Chen, Mr Chen
MR CHEN: Yes?
MEMBER: This case will be run quite simply on the facts. You cannot hide behind something in a piece of paper if a representative of your firm has either deliberately or inadvertently misled the customer. Do you understand that?
MR CHEN: Well - - -
MEMBER: Do you understand it, sir?
MR CHEN: I do. I do understand that.
MEMBER: Thank you.[10]
[10] Transcript of original proceeding, 26 November 2021, page 21, line 40- page 22, line 14
Heated debate then occurred between Mr Chen and the tribunal, with Mr Chen endeavouring to explain the work done and why it was necessary and the tribunal arguing to the contrary. Mr Lloyd took no part in the debate.
The tribunal quoted from the description of Mr Finley’s work done as stated in his tax invoice, and from Mr Finley’s opinion of the appellant’s work as stated in his report, in support of its view that the appellant’s work was unnecessary.[11] The tribunal did so at a point in time when neither the tax invoice nor the report was in evidence and Mr Chen had not articulated his objections to the tender.
[11] Transcript of original proceeding, 26 November 2021, page 31, lines 29-42
Understandably, when the tribunal quoted passages from Mr Finley’s report when it was not in evidence, Mr Chen said “we object to this report being tendered”.[12] Mr Chen sought to comment on why there was a different viewpoint to that expressed by Mr Finley. At this point the tribunal said: “you can stop there.” [13]
[12] Transcript of original proceeding, 26 November 2021, page 31, lines 42-43
[13] Transcript of original proceeding, 26 November 2021, page 32, line 24
The tribunal then asked Mr Lloyd if the respondent was “available to give evidence this morning?” to which Mr Lloyd said “I’m sure she can be”[14] The tribunal then said:
The reason why is that there is a document dated 6 July 2021 which is presently attachment 5, which is the Spencer and Sons Plumbing report. And I want to ask her some questions about her receipt of this letter and her payment of the account.[15]
[14] Transcript of original proceeding, 26 November 2021, page 32, lines 30-33
[15] Transcript of original proceeding, 26 November 2021, page 32, lines 35 - 43
Noting that the tribunal was about to ask the respondent questions about Mr Finley’s report, the following exchange then occurred:
MR CHEN: Well, yes, senior member, that is all fine, but I object to the report and without the author of the report being made available to cross examine as well.
MEMBER: Your objection is noted.[16]
[16] Transcript of original proceeding, 26 November 2021, page 33, lines 17-22
The tribunal adjourned the hearing for “10 minutes” to allow for the respondent to be made available to give evidence.
Twelve minutes later, the tribunal resumed the hearing. Mr Lloyd had arranged for the respondent to be available to give evidence by telephone. Upon the respondent stating “Hello, Annette Hirsch speaking”,[17] the tribunal conducted an examination in chief of the respondent but in the form of leading questions[18] to which the respondent answered only “yes” or “no”. In particular, the respondent acknowledged she had a copy of Mr Finley’s report and that she was present when Mr Finley did the work described in his report. The following exchange then occurred between the tribunal and the respondent:
Right. Okay. And based on the fact that you were there when he did [the work], are you able to tell us whether the report to you dated 6 July meets your recollections of what was done? ---- Yes.[19]
[17] Transcript of original proceeding, 26 November 2021, page 34, line 19
[18] For some examples, see paragraph 95 of these Reasons
[19] Transcript of original proceeding, 26 November 2021, page 36, lines 26-28
The tribunal asked Mr Lloyd and Mr Chen if they had any “extra questions”.[20] Mr Lloyd said “No, I’m content”.[21] I note that Mr Lloyd did not ask his client a question in the course of her giving evidence. His only involvement was to make the respondent available at the tribunal’s request.
[20] Transcript of original proceeding, 26 November 2021, page 36, line 31
[21] Transcript of original proceeding, 26 November 2021, page 36, line 33
The following exchange then occurred between the tribunal and Mr Chen:
MEMBER: Mr Chen, do you have any questions to put to Ms Hirsch?
MR CHEN: I do. I do have some. Just not particularly in relation – I’m not sure whether I’m restricted to only ask questions in relation to report, mind you that I’ve objected to tendering of that particular report. I do have questions that I’ve prepared to ask about her case.
MEMBER: Well, okay, with respect to the report, so that you’re quite clear, that report is now in evidence as Exhibit 1, and you have no valid objection because Ms Hirsch has given first-hand evidence as to how it was created, as to the accuracy of its contents and as to the payment of the account. So it is properly in evidence.
MR CHEN: Well, no, with greatest respect, there has been - - -
MEMBER: I have made my ruling, Mr Chen. Move on.[22]
[22] Transcript of original proceeding, 26 November 2021, page 36, line 35 – page 37, line 4
It was at this point that Mr Finley’s report became evidence in the case, marked as Exhibit 1. Of note is that Mr Lloyd did not tender it or seek to tender it: the tribunal took it into evidence on its own initiative.
Having reviewed the transcript, I am satisfied that at no point prior to the above exchange (or later) did the tribunal give Mr Chen an opportunity to state his objections to the receipt of Mr Finley’s report into evidence. It was procedurally unfair not to do so, especially where Mr Chen had stated from the outset his intention to object to the tender.
The next and more important question is whether any injustice arose from the tribunal not giving the appellant the opportunity to be heard regarding its objections to the tender. Put another way, if that opportunity had been given, would or should the outcome have been different?
In Coutts v Close, the Federal Court of Australia, per Griffiths J, said:
It is also now settled that procedural fairness is not an abstract issue; rather, attention needs to be focused on the question whether conduct which is said to be procedurally unfair produced some practical injustice. As Gleeson CJ observed in Lam (2003) 214 CLR 1 at 14:
Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice. [Emphasis added].[23]
[23] Coutts v Close [2014] FCA 19 at [120]
Whether there was any practical injustice requires consideration of the three other grounds of alleged procedural unfairness.
Referring to the late service of Mr Finley’s report, I first note that to file and serve Mr Finley’s report on 25 November 2021, the day before the hearing, was in breach of the procedural orders made on 12 August 2021 pursuant to which the respondent was directed to file a written statement of every witness she intended to call or any other material on which she intended to rely by 26 August 2021 (approximately two months prior to the hearing then listed for 19 October 2021). The purpose of the direction was to give the appellant time to consider the documents received and prepare its response before filing its own documents by 13 September 2021 (per the procedural orders) in advance of the hearing.
To file Mr Finley’s report on the day before the hearing denied the appellant any realistic opportunity to prepare its response to Mr Finley’s claim that the work could have been done in a different manner and at a significantly less cost. The late filing was particularly unfair where, it would seem, the respondent had been in possession of Mr Finley’s report since 6 July 2021 (or soon after and well prior to the directed date for filing) but did not file it until the day before the hearing. No explanation for the delay was given. The tribunal made no enquiry of the respondent regarding the delay, or the reason for it, and so the need for an explanation did not arise.
It is clear that Mr Finley’s report had a determinative effect on the outcome. The tribunal clearly relied on it for the purpose of concluding that all the appellant’s work done pursuant to Contract 2 was unnecessary, save for the excavation work, without giving the appellant any opportunity to lead evidence to the contrary. For the tribunal to accept the report provided on the day before the hearing, and to use it in that way, was procedurally unfair to the appellant.
On the appeal, Mr Lloyd sought more to explain than defend the procedural unfairness.
Regarding the late filing of Mr Finley’s report, Mr Lloyd agreed that the appellant had “no real opportunity to meet what was being said.”[24] He submitted it was filed late because it was filed to address concerns that had arisen in response to the material filed by the appellant. He submitted that the tribunal had a discretion to exclude it on that basis but chose a different course. However, he agreed that it fell to me to decide whether any procedural unfairness arose arising from the late service.[25]
[24] Transcript of appeal proceeding, 30 March 2022, page 34, lines 30-34
[25] Transcript of appeal proceeding, 30 March 2022, page 35, lines 20-21
In my view, arising from the late service, it was procedurally unfair to accept Mr Finley’s report into evidence in circumstances where the appellant was not given an opportunity to make submissions about why it should not be admitted. In issue was not some small factual point that the appellant could have reasonably addressed. Mr Finley’s report made a broad claim that “other options” would have enabled the blockage in the respondent’s sewer line to be cleared or repaired in a much simpler manner and at much less cost. It would have been procedurally unfair to expect the appellant to address that claim by leading contrary opinion evidence ‘on the run’.
As for the respondent’s reason for the late filing, the issue did not arise because the tribunal never asked for or heard the reason before accepting the report into evidence. The tribunal did not refer to the procedural orders or the effect on the appellant’s case of accepting the report, contrary to the orders.
Referring to the third ground of procedural unfairness, notwithstanding the limited time available, Mr Chen endeavoured to deal with Mr Finley’s report by asking to call Mr Carlson to give evidence in reply. Mr Chen’s request led to the following exchange:
MEMBER: why isn’t there a witness statement from him?
MR CHEN: I was not anticipating that he will be required.[26]
[26] Transcript of original proceeding, 26 November 2021, page 53, lines 30-34
Mr Chen’s answer is understandable. As at the date when the appellant was required to file its evidence (13 September 2021), the respondent had not filed any evidence about the appropriateness of the work done.
Mr Lloyd did not object to the appellant calling Mr Carlson, but the tribunal still did not permit it. At this point, the practical injustice might have been overcome, but was not. The tribunal instead asked Mr Chen a series of questions about the appellant’s quotes and work and noted that Mr Chen had not cross-examined the respondent about those issues. The tribunal then said:
I will not give you further leave to call Mr Carlson, and in particular, even if I were minded to give you leave, which I’m not because there is nothing he can add, I would not permit you to ask him questions about the use of the CCTV because you had the opportunity to ask Ms Hirsch about that and you failed to do so and the applicant has closed their case.[27]
[27] Transcript of original proceeding, 26 November 2021, page 56, lines 9-14
The tribunal’s approach was misconceived. The obvious person to give evidence about the appropriateness of the work done, particularly the use of the CCTV, was the person who did it, namely Mr Carlson. For the tribunal to state that there was nothing Mr Carlson could “add” about the appropriateness of his own work was, in my view, illogical.
Also, that Mr Chen had the opportunity to ask the respondent about Mr Carlson’s work, and did not take it, is irrelevant. She was not a plumber. The best she could have done was to give evidence about what she saw, but there was no issue about what was done: in issue was the appropriateness of the work. Any question seeking her opinion about the appropriateness of the appellant’s work would, in my view, have been objectionable on the grounds that her opinion as someone without any stated skill or knowledge of plumbing would have been irrelevant. Alternatively, it was evidence to which the tribunal could give little weight. Either way, it is therefore unsurprising that Mr Chen did not ask the respondent any questions about the appropriateness of the appellant’s work.
It was also inconsistent for the tribunal to take evidence from the respondent without a witness statement but not permit Mr Carlson to give oral evidence by reason of the appellant not having previously filed a witness statement.
Referring to the fourth ground of procedural unfairness, namely the denial of the opportunity to cross-examine Mr Finley, the following exchange occurred:
MR CHEN: Well, I do not have any question for Mrs Hirsch in relation to this particular report. I do wish to cross-examine the author of that particular report, Spencer and Sons.
MEMBER: Well, that’s not going to happen, because it has come in as Exhibit 1 through her, which is quite proper. So if you wish to ask some questions, I suggest that you put them to Ms Hirsch, because she was there when the work was being done. That’s what she told us on affirmation.
MR CHEN: No, I do not have questions for her, your Senior Member.[28]
[28] Transcript of original proceeding, 26 November 2021, page 45, lines 38-47
The tribunal’s approach at that stage was procedurally unfair in many respects.
First, I struggle to understand how it could be thought “quite proper” to accept a report containing opinion evidence through a witness who is not the author of the report or the giver of the opinion and has no relevant expertise in the area.
Second, it is difficult to discern the basis for the suggestion that Mr Chen should put questions to Ms Hirsch about Mr Finley’s opinions. That Ms Hirsch might agree with Mr Finley’s opinion is irrelevant, especially where she had no demonstrated knowledge about plumbing.
Third, I appreciate that Ms Hirsch “was there when the work was being done”, and so could comment on what she saw and whether it was consistent with what Mr Finley claims he saw, but that is of little relevance to the issue of what work was necessary. What mattered was Mr Finley’s observations, and the extent to which what he saw underpinned his opinion (as expressed in his report) about the appellant’s work and “other options” that could have been considered.
Fourth, and perhaps most importantly, where the Tribunal had earlier signalled its view that the appellant’s work was unnecessary based (it seems) on Mr Finley’s opinion evidence, the appellant had a basic right to test that opinion (in cross-examination) in defence of the appropriateness of its work. For the Tribunal to say “that’s not going to happen” and not permit cross-examination of Mr Finley caused a fundamental denial of procedural fairness.
Mr Lloyd did not defend the tribunal’s decision not to permit cross-examination of Mr Finley. Mr Lloyd said: “I’m not sure I can argue for the benefit of the Tribunal. That’s a matter for [sic] – I think that’s a matter for you ….”[29]
[29] Transcript of appeal proceeding, 30 March 2022, page 38, lines 45-46
For these reasons, all four grounds upon which the appellant claims it was denied procedural fairness are made out. The unfairness constituted an error of law.[30]
[30] Clements v Independent Indigenous Advisory Committee [2008] FCFCA 143 at [8], cited in Wittman v Dennis & Anor [2022] ACAT 4 at [83]
That is not, by itself, enough to allow the appeal. It must also be shown that the error affected the result.[31] On the evidence, it clearly did so. With reliance on Mr Finley’s opinion, the tribunal found that the respondent “got no value … whatsoever” from the appellant’s work, save for digging a hole, and therefore found that the deposit paid under Contract 2 must be refunded.
[31] Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4 at [46] – [55]; Harada v Barnes [2012] ACAT 66 at [5]-[10]
I allow ground 1.
Ground 2: acceptance of Mr Finley’s report into evidence through the respondent
The appellant alleges that the tribunal erred by accepting Mr Finley’s report into evidence by asking the respondent to adopt it.
In substance, this ground repeats a component of the procedural unfairness alleged in ground 1. As I am satisfied that it was procedurally unfair to admit Mr Finley’s report through the respondent, I allow ground 2.
Ground 3: bias
The appellant submitted, by reference to several statements made by the tribunal at early stages of the hearing about evidence that was yet to be given, that the tribunal did not approach the matter with an open mind.
Claims of this kind are difficult to establish. It is not uncommon for decision-makers to express viewpoints about the strengths or weaknesses of a party’s case at an early stage of a proceeding in the interests of testing a party’s case and obtaining a response to matters of concern to the decision-maker. To do so does not, by itself, establish bias. Preparation invariably causes a decision-maker to form preliminary opinions about the strengths and weaknesses of a party’s case, but there is an important difference between an informed mind and a closed mind.
In this case, I agree that the tribunal could and should have been more circumspect when expressing views about the evidence and displayed a greater willingness to consider other views. However, on balance, I am not satisfied that the comments demonstrate prejudgement of the appellant’s case. Ground 3 fails.
Ground 4: misleading the customer
The appellant submitted that the tribunal accused it of deliberately or inadvertently misleading the customer. The appellant’s claim is based on the following comment made by the tribunal:
This case will be run quite simply on the facts. You cannot hide behind something in a piece of paper if a representative of your firm has either deliberately or inadvertently misled the customer. Do you understand that?[32]
[32] Transcript of original proceeding, 26 November 2021, page 22, lines 2–6
The appellant submitted that it was not being asked to answer a charge of misleading the respondent and that there was no need for the tribunal to have made the accusation.
There are two difficulties with the appellant’s complaint. First, the tribunal did not make the accusation. The tribunal’s comment was made in the context of asking the appellant to identify the evidence showing that the work done was necessary. As best I can ascertain, the tribunal was seeking to say that work is not shown to be necessary simply because it is written on a piece of paper, meaning the written quote for Contract 2.
Along the same lines, as best I can ascertain, the Tribunal was saying that if someone on behalf of the appellant made statements that misled the respondent into thinking that the work was necessary, the proposed work quoted on “a piece of paper” is no answer to the misleading statements.
I accept that the tribunal’s comments were not appropriately expressed, especially where the respondent never alleged that the appellant misled her into thinking work was necessary when it was not, but that does not equate to error.
Also, there is no mention in the tribunal’s oral reasons given at the conclusion of the hearing about anyone misleading the respondent. The reasons turned on its opinion that most of the appellant’s work was of no value. Ground 4 fails.
Ground 5: repair of the gully trap
The appellant referred to the tribunal’s expressed view that the appellant’s excavation work was unnecessary because a plumber needed only to dig down and around the gully trap to rectify the blockage.[33] The appellant submitted that the tribunal erred, when making these comments, because the member was not a plumber and had “no authority to express that view”.[34]
[33] Transcript of original proceeding, 26 November 2021, page 25, lines 8-9 and page 30, lines 8-9
[34] Appellant’s outline of submissions on appeal dated 17 February 2022, paragraph 5
It is not correct to say that the tribunal had no basis to express its opinion. It is clear from the transcript[35] that the member expressed its opinion with reliance on Mr Finley’s opinion. That, however, does not dispose of ground 5. The real difficulty is that the tribunal adopted Mr Finley’s opinion in circumstances where the appellant was denied the opportunity to lead evidence in reply or to cross-examine Mr Finley. In substance, ground 5 confirms the injustice that resulted from the admission of Mr Finley’s report. I allow ground 5.
Ground 6: rocks in the drain
[35] Transcript of original proceeding, 26 November 2021, page 31, lines 36-42
The applicant submitted that the tribunal misunderstood the evidence regarding the need for the CCTV and refused to allow its misunderstanding to be corrected.
In summary, the tribunal member expressed its view that once the plumber tried to clear the blockage using the jetter and found this not possible because the drain was full of rocks, “there is clearly no need for CCTV”.[36] Meanwhile, Mr Chen was contending that the failed use of the jetter established that the blockage existed, but it was not until the CCTV was used that the plumber identified the cause of the blockage (i.e. the rocks) and the location of the blockage in order to know where to excavate.
[36] Transcript of original proceeding, 26 November 2021, page 26, lines 31-39
It may be that the tribunal misunderstood the evidence, but the issue was not determinative of anything because the tribunal disallowed the appellant’s claim for use of the CCTV, not because it was unnecessary, but because – the tribunal found – the respondent did not authorise it. That the respondent (in my view) did authorise it is a different matter. Ground 6 fails.
Ground 7: inconsistency between the original claim and the amended claim
On 11 May 2021, the respondent filed its initiating application. The respondent attached a document setting out what the dispute was about. The respondent wrote the document in the first person, setting out the facts and circumstances of her case and why she claimed the amounts stated in her application.
On 26 August 2021, the respondent filed her amended application in which she reduced the amount claimed[37] and to which she attached an amended version of the document. The respondent used ‘track change’ to identify the changes, many of which involved material differences of fact.
[37] The revised claim was to seek $534.60 paid under Contract 1, rather than $566.50. It is apparent that the respondent recognised she had confused the payments for options 1 and 2 under Contract 1
When the respondent was called to give evidence at the tribunal’s initiative, the following exchange occurred between the tribunal member and the respondent:
MEMBER: And in preparation for this hearing with your solicitor Mr Lloyd, you prepared a statement. In fact, you’ve done it twice, because it has been changed, but it’s headed up What is the Dispute About – a typed statement. Hello, can you hear me?---Yes.
Yes. Okay. And this was – this had changes made to it, alterations, after you did it the first time. You did it another time?---Yes.
All right. And you tell us that everything that you have put in that document headed What is the Dispute About is to the best of your recollection a truthful account of your view of what happened?---Yes.[38]
[38] Transcript of original proceeding, 26 November 2021, page 35, line 1 – page 36, line 3
It is apparent that the tribunal was, from this point, treating the document as the respondent’s witness statement. In its oral reasons, when ruling upon whether the CCTV was authorised, the tribunal said:
… the only sworn evidence before me is Ms Hirsch’s evidence that the CCTV work was not authorised.[39]
[39] Transcript of original proceeding, 26 November 2021, page 65, lines 14-15
The respondent did not give that evidence orally. It was given by means of her answering “Yes” when asked by the tribunal whether the document was to the best of her recollection “a truthful account of your view of what happened”. In the original document, the respondent did not suggest that the CCTV was not authorised. That claim was made in paragraph 4 of the amended document, varying paragraph 4 in the original document.
Mr Chen sought to ask the respondent questions about the inconsistencies between the original and amended versions of the document. The appellant submitted that the tribunal erred by not permitting him to do so.
It is clear from the transcript that the tribunal did not permit cross-examination on topics in the document that Mr Chen wished to test. I give some examples.
When seeking to ask the respondent questions about the quote for Contract 1 and the words “I received by email a quotation with an invoice embedded” appearing in the amended document, the tribunal said: “Mr Chen, this is not helpful, and it’s not relevant. Move on” [40]
[40] Transcript of original proceeding, 26 November 2021, page 39, lines 44-45
When seeking to test the respondent’s original claim that she had paid $566.50 rather than $534.60, in an effort to test her credibility, the tribunal interjected to say the question was not relevant and directed Mr Chen to “move on”. When the respondent offered to “say something” about the amount paid, the tribunal said: “You don’t need to, Ms Hirsch. You really don’t need to. Move on, Mr Chen.”[41]
[41] Transcript of original proceeding, 26 November 2021, page 41, lines 26-27
Mr Lloyd did not object to any question Mr Chen sought to ask.
In issue is whether the Tribunal erred by not permitting the cross-examination.
A tribunal must manage the orderly conduct of a hearing. It must try to ensure the efficient use of hearing time, and that evidence sought to be led is at least arguably relevant to the matters to be decided. It may, of its own initiative, not permit a question or line of questions that it considers objectionable, irrelevant or asked for an improper purpose.
When eliciting evidence, whether in chief or by cross-examination, some questions are clearly permissible or objectionable, but often the tribunal is obliged to exercise a discretion whether to permit or disallow the question.
On appeal against a discretionary decision, the appeal tribunal should interfere only if the tribunal was clearly wrong, for example because it acted on a wrong principle or incorrect facts or allowed extraneous or irrelevant matters to guide the exercise of discretion. In Russo v Russo, the Victorian Supreme Court, per Sholl J, commented that a discretionary determination “involves a considerable latitude of individual choice of a conclusion”.[42] In Australian Coal and Shale Employees’ Federation v Commonwealth, with reliance on earlier principles in House v The Queen,[43] the High Court commented on principles to be applied where appellant jurisdiction is exercised in respect of decisions involving discretionary judgement. The Court said:
[T]here is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the Court of Appeal is satisfied that it is clearly wrong.[44]
[42] Russo v Russo [1953] VLR 57 at [62], cited in Colbran and Spender, Civil Procedure Commentary and Materials (8th edition, 2022)
[43] House v The Queen (1936) 55 CLR 499
[44] Australian Coal and Shale Employees’ Federation v Commonwealth (1953) 96 CLR 621 at 627
In relation to this ground of appeal, the question is whether the tribunal was “clearly wrong” not to permit Mr Chen’s cross-examination of the respondent for the purpose of testing her credibility. In this respect, the following exchange occurred in the course of Mr Chen’s cross-examination of the respondent:
MR CHEN: Okay. Now [Ms Hirsch] I want to take you to the fourth paragraph of your original which you filed back in May. The question is - - -
MEMBER: No, Mr Chen. Take her to the amended one, please, attachment 1. I’m not going to go backwards and forwards to documents that have been altered.
MR CHEN: Senior member, with due respect, we - - -
MEMBER: Mr Chen
MR CHEN: Yes.
MEMBER: The witness will be taken to the document it was agreed this morning was what summarised what the dispute is about, and that is the amended one. Kindly get it out and if you’re going to take her to something in it, take her to that and only to that.
MR CHEN: So I’m not allowed to ask questions in relation to credibility at all?
MEMBER: You have not got even close to the threshold for raising credibility issues at the moment.
MR CHEN: Because if I was allowed to ask - - -
MEMBER: Mr Chen, hearings are not an occasion for an advocate to do what he or she thinks they would like to do. What do you wish to do with respect to the amended What is the Dispute About?
MR CHEN: Well, in that case, your Senior Member, I do not have – I do not wish to cross-examine any further.[45]
[45] Transcript of original proceeding, 26 November 2021, page 44, line 37 – page 45, line 21
The fourth paragraph of the amended document, about which Mr Chen wished to ask a question but was not permitted, was the paragraph in which the respondent asserted that the CCTV was not authorised. In the absence of any corroborative evidence, the respondent’s credibility was clearly in issue. The absence of any suggestion in the original document that the CCTV was not authorised was an obvious line of questioning, even if only for clarification. Questions should have been permitted to suggest, at least, that the respondent was confused about use of the jetter, use of the CCTV, what was waived or authorised and the cost of each. In my view, the tribunal was clearly wrong not to permit the cross-examination on what was the central issue regarding Contract 1.
The remaining question is whether the refusal to permit the cross-examination affected the result. Plainly it did. Having shut down the cross-examination, the tribunal then relied on the respondent’s evidence as the “only sworn evidence” to deny the appellant’s claim for payment for the CCTV. I allow ground 7.
Ground 8: the CCTV was not authorised
The appellant contended that the tribunal erred by not allowing the appellant’s claim for its use of the CCTV on the grounds that the work was not authorised. The appellant referred to the tribunal’s reasons:
… we then turn to the second issue which is, was the CCTV use actually authorised? Now, Ms Hirsch says in her statement that she didn’t authorise it. I have no written statement from Mr Carlson as to it. And I note in particular that when Mr Chen was cross-examining Ms Hirsch, who gave her evidence over the phone this morning, he did not ask her any questions with respect to the CCTV work being authorised or not authorised. And I am therefore in a position where I should accept the evidence before me, and the only sworn evidence before me is Ms Hirsch’s evidence that the CCTV work was not authorised. It follows that the respondent company was never in a position where it could charge for the CCTV work.
Mr Chen pointed to the improbability of the appellant’s plumbers doing work that was not authorised. He referred to the evidence that Mr Carlson would have given that the respondent’s husband authorised the work because she was at work, as later stated in his witness statement.
Mr Lloyd submitted in reply that there was no error on the part of the tribunal, or that would have been shown had Mr Carlson’s evidence been admitted, because there was (and there is still) no evidence that the respondent authorised her husband to accept the quote.
The tribunal’s findings and reasoning are contrary to the evidence. For example, the quote for Contract 1 contained the contemporaneous record that the respondent “would like to go with options 1/2”.
Also, the respondent’s evidence was not the only evidence from a witness on the topic. Ms Buffey’s statement, giving evidence to the contrary, was accepted into evidence as exhibit R1 without objection. Mr Lloyd did not seek to ask Ms Buffey any questions about it.[46] Paragraph 9 of Ms Buffey’s statement states:
Our record shows that Mrs Hirsch accepted both Option 1and Option 2, but we ended up waiving the cost of high-pressure water jetting because she and her husband authorised the excavation.
[46] Transcript of original proceeding, 26 November 2021, page 51, lines 27-36
Paragraph 9 quoted from Contract 1 which notes that the respondent “would like to go with options 1/2” and quoted the price: “$1001 plus gst 50” to reflect the $50 seniors discount.
On appeal, Mr Lloyd agreed that Ms Buffey’s evidence was not considered “at all”.[47] He agreed that for the tribunal to find that the only evidence on the topic was that of the respondent was “a proper basis for concern”.[48]
[47] Transcript of appeal proceeding, 30 March 2022, page 33, line 38
[48] Transcript of appeal proceeding, 30 March 2022, page 34, line 12
Mr Lloyd’s submission that the work was not authorised because the respondent did not authorise her husband to accept the quote was not persuasive. The respondent’s claim in the original proceeding was that the CCTV was not authorised at all. She did not suggest she did not authorise her husband to authorise the work. Nor do I think she would sensibly do so.
The remaining question is whether the error affected the result. In my view it did. The contemporaneous documented evidence recorded in the quote and in the invoice for Contract 1 should have been preferred to the respondent’s oral evidence, unsupported by anything. The tribunal failed to acknowledge Ms Buffey’s evidence on the topic, or at all. I allow ground 8.
Remedy
Where an appeal is allowed, it is necessary either to remit the matter to the tribunal (even if sometimes differently constituted) to determine according to law or for the Appeal Tribunal to rehear the matter entirely or to the extent necessary. Applying the principles set out in section 7 of the ACAT Act, what course to take should be guided by questions of fairness, efficiency and a cost to the parties and the tribunal that is proportionate to the issues in dispute.
The appellant, in its application, sought orders that the appeal be allowed and that the matter be reheard afresh by a differently constituted tribunal. At hearing, I queried the appropriateness of that pathway having regard to the small quantum involved and the amount of time, effort and (I presume) money that had already been expended. I asked, if the appeal were allowed, whether I should do my best to quantify the outcome to bring the matter to conclusion. Both parties asked me to do so.[49]
[49] Transcript of appeal proceeding, 30 March 2022, page 42, lines 20 - 46
I first acknowledge that the respondent’s engagement of the appellant and the costs that then unfolded must have been extremely stressful for her. Mr Finley’s report about the work necessary to repair the blocked drain and the cost for doing so must have compounded her stress. Mr Finley’s report well illustrates the importance of the old adage: obtain three quotes before proceeding.
That, however, is not an answer to the respondent’s liability to the appellant. Wisely or otherwise, the respondent and/or the respondent’s husband on her behalf contracted with the appellant for it to carry out the work described in Contracts 1 and 2 for the prices quoted. The fact that a different plumber might have rectified or attempted to rectify the problem in a different way for a lesser price is irrelevant.
Looking first at Contract 1, I am satisfied on the evidence (per the note in JN 34859) that the appellant agreed to waive its fee for using the jetter if the respondent agreed to Contract 2 and paid the deposit ($1,947). The respondent’s husband accepted that offer and paid the deposit. The respondent paid the fee for the CCTV ($534.60), but not the contracted fee for the jetter ($566.50). I considered what should be made of the $50 ‘seniors discount’ offered under Contract 1, consequent upon the waiver. The best evidence was that it fell away as part of the waiver, hence the tax invoice showing nothing owing under Contract 1. I am satisfied that the respondent owes nothing under Contract 1. Where the contract was valid, the appellant is entitled to retain the money paid under the contract for the CCTV.
The tribunal’s reasoning that the respondent owed the appellant $31.90 arising from the appellant’s use of the jetter where she had had paid only $534.60 (being the cost of the CCTV), to make up the shortfall, was misconceived.
Referring to Contract 2, the tribunal found that the appellant must refund the deposit because, in its view, the work was of “no value” save for digging the hole.
I first note that the tribunal, when making its calculations, confused the deposit paid ($1,947) with the amount owing ($1,945.90). However, more importantly, the tribunal’s reasoning for why the deposit should be refunded was, in my view, legally flawed.
The tribunal did not refer to any principle of contract law in support of the proposition that a person is not liable to pay for services provided under contract on the grounds that the services provided are not necessary. Nor am I aware of any such principle. The appellant stated in its quote, and in detail, the work it intended to do and its quoted price for the work. The respondent accepted the quote. The contract was valid and enforceable. That another plumber might have rectified the blockage in a different way and/or for a different price is irrelevant. The purpose of a contract would collapse if a person could avoid its obligation to pay for services provided for such a reason.
Mr Lloyd did not seek to defend the tribunal’s reasoning. Rather, he drew on principles of equity (or fairness) to submit that the appellant should refund the deposit. He relied on two factors. First, he relied on the plumber’s alleged statement to the respondent that they would not proceed with the work under Contract 2 unless she agreed to the quote for repair to the stormwater drain and paid a 50% deposit. Second, he said that the work “clearly went wrong”[50] – referring to the substantial excavation work and then the stormwater damage that caused the respondent to doubt the competence of the plumbers and to lose trust in them.
[50] Transcript of appeal proceeding, 30 March 2022, page 40, line 46
I understand why these factors caused the respondent to terminate Contract 2 and order the plumbers from her premises, but I am not persuaded that these factors absolve the respondent from her contractual obligations arising from her termination of the contract.
Referring to the tribunal’s decision to order a refund of the deposit because the work done was of “no value” save for digging the hole, I considered whether that decision was defensible for reasons of fairness or equity. There are difficult questions about whether the Tribunal has power to do so, but they did not need to be considered because the proposition that the appellant’s work was unnecessary does not withstand scrutiny.
If the tribunal had conducted the hearing in a procedurally fair manner, Mr Finley would have been cross-examined about his opinion and the appellant would have been given the opportunity to lead evidence in reply, namely the evidence of Mr Carlson. Their reports were before me. In summary, the reports are different opinions from different plumbers about how to clear the blockage.
I do not have the benefit of evidence that Mr Finley or Mr Carlson would have given, had they been cross-examined on their reports, but I envisage that each would have maintained their respective views about how they would have rectified the blockage but would have acknowledged that there are different approaches and that opinions can reasonably differ. In particular, Mr Finley does not state that the work done by the appellant’s plumbers was “unnecessary”: that was the tribunal’s opinion. Mr Finley simply expressed his opinion that there were other options by which the work could have been done for a cheaper price. I reject the proposition that a contract should be set aside on such grounds.
Where Contract 2 was valid and enforceable, but the appellant did not perform all the work required under the contract upon being asked to leave the respondent’s premises, the question is how much should the respondent pay.
On appeal, the appellant sought an order that the respondent pay the appellant 70% of the contract price on a quantum meruit basis.
The quote for Contract 2 included a hyperlink to “Terms and Conditions” and a hyperlink to a website address where the terms and conditions could be found. For the sake of resolving this dispute, I am prepared to accept that the hyperlink, or the reference to where the terms and conditions could be found, was sufficient to include those terms and conditions within the contract. Among them is clause 25, termination of contract, which governed the parties’ respective obligations if the contract was terminated prior to completion of the work.
Clause 25.1 provided for the buyer’s termination of the agreement “before initiation of the work”. It concludes with the following sentence:
Any and all deposits that have been paid by the BUYER prior to cancellation shall be forfeited as liquidated damages.
At the original hearing, the appellant relied on clause 25.1 to contend that it was entitled to retain the deposit paid ($1,947) as liquidated damages, in addition to any further payment ordered to be paid on a quantum meruit basis. On appeal, no reference was made to clause 25.1 although (perhaps) that was thought unnecessary where the appellant sought an order that the respondent pay it 70% of the contract price.
I am not persuaded that clause 25.1 causes the forfeiture of the deposit paid.
Clause 25.1 is directed to termination of the agreement “before initiation of the work”. It permits the buyer to terminate, but causes the buyer to become liable to a “standard call-out/assessment fee” if the booking for the work is not cancelled “prior to 24 hours before the technician’s arrival time”. Forfeiture of any deposit paid under clause 25.1 is in the context of termination prior to any work occurring. That is not this case. The respondent terminated the contract after work had commenced.[51]
[51] If termination had occurred before work commenced, I would still regard the clause as unenforceable. To retain 50% of a contract price to conduct plumbing repairs where no work has been done should, in my view, be characterised as a penalty, not liquidated damages, irrespective of its description in the contract with the result that it is unenforceable. The amount payable would, instead, be calculated in accordance with common law rules of damages. See generally Boucaut Bay Co Ltd v The Commonwealth (1927) 40 CLR 98, 107 and Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 222 ALR 306, 313
A construction that clause 25.1 does not apply where work has commenced is consistent with subsequent clauses 25.2 and 25.3 which apply where the buyer instructs the company “to cease work before work is completed”.
Clause 25.2 requires the buyer to “pay for all necessary inspections, all work carried out and material and equipment used up to the time [the company] ceases work” and to pay any deposit forfeited. Clause 25.2 provides “If the amount due exceeds the amount of the deposit” the buyer must pay the balance to the company.
Clause 25.3 provides:
If the amount due is less than the deposit the COMPANY must refund to the BUYER, the surplus balance within seven (7) days of the COMPANY calculating the amount due and owing to it.
When clauses 25.2 and 25.3 are read together, it becomes clear that a deposit is not automatically forfeited under clause 25.2. Forfeiture, wholly or in part, is calculated by reference to the value of work done.
In this case, the appellant has not calculated the amount due and owing to it. The only evidence, as best I can ascertain, is Ms Buffey’s statement that it is “safe to say” that the appellant’s plumbers “had finished approximately 60-70% of the quoted works”[52] at the time they were ordered to leave the site. I disagree.
[52] Witness statement of Heather Buffey, 13 September 2021, paragraph 25
The work described to be done under Contract 2 had 14 components: (1) organise materials pick up and have delivered to site; (2) organise plumbers shovels, picks, jackhammers, tools and equipment to site; (3) mark out area to be excavated; (4) cut concrete 1m x 1m to gain access to the ground; (5) excavate down and expose overflow relief; (6) cut existing overflow relief gully and layout new 100mm PVC drain and connect to existing sewer main line and installed a new overflow relief gully picking up existing kitchen line; (7) concrete under the overflow relief gully for support; (8) install crushed rock to support new 100mm sewer line; (9) book a plumbing inspection and hand in a certificate of compliance; (10) once inspection is approved, backfill; (11) photograph work carried out and upload to job profiles; (12) remove rubbish; (13) supply compliance form; (14) fence off any trenches for safety reasons.
The quote also involved hiring a 1.7 tonne excavator, but there was no evidence about the cost of the hire. The quote also involved locating and tracing gas mains and electricity lines, but there was none.
Doing the best I can, I think the work under Contract 2 can be broken down into five essential steps: (1) accessing the blocked sewerage pipe; (2) replacing the blocked part of the sewerage pipe with 100mm PVC pipe and reconnecting to the sewer line; (3) securing the integrity of the new pipe with supporting crushed rock and concreting under the overflow relief gully for support; (4) filling in and cleaning up; and (5) preparing necessary compliance documentation.
Step 2, replacing the blocked pipe, would seem to be the primary task. I accept that views could reasonably differ, but in an effort to quantify the work done I apportioned the work under Contract 2 by reference to the five steps as follows. Step (1): 25%, Step (2): 35%, Step (3): 20%, Step (4): 10%, and Step (5): 10%.
Mr Chen submitted that, whatever the apportionment between work done and not done, the appellant should be paid the whole of the amount payable under Contract 2 “less the $809.60 that Ms Hirsch has forked out to get somebody else to complete the work”.[53] I disagree. That approach is to mix improperly the quoted work and quoted price under one contract with the quoted work and quoted price under another. The correct approach, in my view, is to determine what portion of the work had been done under Contract 2 and require the respondent to pay for that portion as a portion of the total contract price.
[53] Transcript of appeal proceeding, 30 March 2022, page 29, lines 24-26
Ms Buffey acknowledges that when the plumbers were asked to leave, they “had not repaired/replaced the ORG or the sewer”, that being the primary task under the contract. That is confirmed by a photograph in Mr Carlson’s report immediately preceding paragraph 15 which shows the replaced stormwater line and that work under Contract 2 had progressed only to the point of exposing the blocked sewerage line.
In other words, applying the five steps described above, the appellant’s plumbers had completed only the first step when ordered to leave the site.
A settled principle of modern contract law is that parties did not intend the terms of their contract to operate unreasonably.[54] Applying that principle, a calculation of the amount due and owing for work done needs to be reasonable.
[54] See, for example, TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, 146
Applying that principle, clause 25.3 requires the respondent to pay a reasonable amount for the work done calculated by reference to the value of Contract 2 as a whole. Where I estimate the appellant had completed 25% of the work to be done under the contract at the time work ceased, so I determine that the respondent is liable for 25% of the amount payable under Contract 2: $884.75 plus GST, being a total of $973.23.
The appellant’s claim that the Tribunal should determine an amount payable on a quantum meruit basis is misconceived. A quantum meruit claim arises where there is not an enforceable contract or where the parties have a contract that is silent as to price. Principles of quantum meruit involve a court or tribunal implying a term that the purchaser pay a reasonable price and then quantifying that price as best it can to avoid a circumstance of unjust enrichment.[55] That is not this case. Indeed, were I to apply principles of quantum meruit, the evidence in Mr Finley’s report suggests that a reasonable amount payable to the appellant for work done would be minimal.
[55] See generally Chetty & Anor v Automotive Computer Diagnostic Centre (ACDC) Pty Ltd [2016] ACAT 38 at [12]-[17]
At the original hearing, the appellant sought payment for repair of the stormwater line that its plumbers damaged in the course of their excavation work to reach the sewerage line. Sensibly, at the appeal hearing, Mr Chen abandoned any claim for the cost of repairing the stormwater line.[56]
[56] Transcript of appeal proceeding, 30 March 2022, page 42, line 20
At the appeal hearing, Mr Lloyd contended that the respondent should be compensated for the additional remediation works arising from the appellant’s plumbers excavating a hole to access the blocked sewerage line that was substantially larger than the excavation Mr Carlson had indicated as necessary. That claim is borne out by the photographs immediately above paragraphs 12 and 15 of his statement, which show the eventual excavation was substantially greater than that intended consequent upon the need to repair the stormwater line.
On the appeal, Mr Chen accepted that the extra digging would not have been necessary had the plumbers not broken the stormwater pipe.[57] He accepted that the respondent therefore needed to re-concrete a much larger area than would have been necessary had the damage not occurred. Mr Chen offered $200 by way of compensation to cover that cost.[58] There was no evidence about the cost of the repairs, and no resistance to the offer from Mr Lloyd. I am prepared to accept the offer as reasonable in the interests of resolving a small issue.
[57] Transcript of appeal proceeding, 30 March 2022, page 27, lines 9-44
[58] Transcript of appeal proceeding, 30 March 2022, page 29, lines 26-28
On the appeal, the respondent did not press any claim that the appellant should reimburse her for any part of Mr Finley’s costs. I agree with that approach. Mr Finley, in effect, ‘picked up’ where the appellant left off. Where the respondent is not liable to pay for any work not done, so the appellant is not liable for the cost of any subsequent work. That Mr Finley needed to fill a larger hole is, in my view, immaterial.
The last task is to quantify the parties’ respective claims. Neither party owes the other anything under Contract 1. The respondent owes the appellant $973.23 under Contract 2. The appellant should pay the respondent $200 to compensate for the additional concrete work. The respondent’s net debt is therefore $773.23. The respondent has already paid the appellant $1,947, with the result that the appellant must reimburse the respondent the difference: $1,173.77.
In her claim, the respondent sought interest calculated from 12 February 2021 being the last day the plumbers performed work at her property. In my view, interest should be calculated by reference to when the appellant became liable under clause 25.3 to refund the “surplus balance”. If the appellant had acted in good faith, I estimate a calculation of the amount owing could have been done within seven days with the result that the surplus balance would have been due and owing to the respondent within a further seven days. I will therefore order that the appellant pay statutory interest on that amount ($1,173.77) calculated from 26 February 2021 to the determination of the appeal: $80.51.
The more difficult issue is the Tribunal’s filing fees that the respondent paid for the purposes of her original claim ($162.50) and that the appellant paid for the purposes of its appeal ($1,186).
In the result, the appellant is successful in principle, but not in quantum. The respondent’s original application should not have succeeded. The appellant therefore should not pay the respondent’s filing fee of that application or her other costs.
The appeal filing fee raises different issues. Although I have found the appeal should be allowed, in my view the respondent should not be ordered to pay the filing fee. The appeal succeeds primarily because of the tribunal’s failure to provide procedural fairness, but this did not arise from the conduct of the respondent. Mr Lloyd did not seek to call the respondent to give evidence in the absence of a witness statement. He had no part in Mr Finley’s report being accepted into evidence without Mr Chen having an opportunity to object. He did not suggest that the appellant not have an opportunity to cross-examine Mr Finley. He did not oppose the appellant calling Mr Carlson to give evidence in reply. All of these actions and decisions, and their attendant errors, were the initiative of the tribunal.
In my view, the respondent should not be ordered to pay the appeal filing fee in circumstances where she had no role in the errors that occurred. However, where the appeal was successful, the appellant is entitled to its filing fee. In the exceptional circumstances of this case, I will therefore recommend to the tribunal registrar that the tribunal repay the appeal filing fee to the appellant.
………………………………..
Presidential Member G McCarthy
| Date(s) of hearing: | 18 March 2022 |
| Applicant: | Mr D Chen, authorised representative |
| Respondent: | Mr T Lloyd, solicitor |
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