Au v B & L Booth Pty Ltd trading as Creative by Design

NCAT Appeal Panel|2024-09-05

Introduction

Ms Au (the consumer) has appealed against a decision made by the Consumer and Commercial Division of the Tribunal (the CCD) in a consumer claim, when it ordered B & L Booth trading as Creative by Design (the supplier), the respondent to the appeal, to pay her $2,447.50. Ms Au says the Tribunal failed to properly deal with her claim with respect to a damaged cupboard door and that its assessment of the compensation to which she is entitled contains errors and is inadequate.
The consumer's claim related to an agreement between the parties for the design, fabrication and installation of three made to measure, built-in wardrobes at the consumer's home by the supplier. Ms Au alleged that the built-in robe installed by the supplier in the main bedroom was not in accordance with her stated requirements. She said it also had a defective door in which the defect had been hidden deceptively. In her application to the Tribunal, she sought the costs of replacing the interior of the built-in robe so that it complied with her requirements, replacement of the damaged door, the cleaning costs occasioned by that work, and confirmation that the supplier's demands for final a payment, due under the agreement, of $2,772.50 were "not valid".
The appeal came before us for hearing on 5 September 2024. For the reasons outlined below, we have decided to allow the appeal and have reconsidered those parts of the consumer's application which are in issue.

Material before the Appeal Panel.

In considering this appeal we had regard to the following material: 1. From the consumer: 1. The notice of appeal filed 19 June 2024 with attachments. 2. Bundle of documents, including submissions and evidence, filed on 31 July 2024 with pages numbered 1 to 156. This included some new evidence upon which the consumer sought to rely. 1. From the supplier: 1. The reply to the appeal filed 19 July 2024. 1. Orders and directions made by the Appeal Panel in preparing for the hearing on 10 July 2024 and 19 August 2024. 2. The decision under appeal made on 22 May 2024.
Despite being given an opportunity to do so in the Appeal Panel's orders of 10 July 2023, the supplier did not file written submissions or other material in support of its opposition to the appeal.
Both parties made oral submissions at the appeal hearing.

New Evidence.

The consumer sought to rely on new evidence. This consisted of: 1. Appendix 7 in her bundle - a quote from the supplier for the installation of the built-in robe dated 17 December 2021. 2. Appendix 9 in her bundle - 6 undated, photographs showing the built-in cupboard as delivered and as repaired, together with skirting boards said to have required removal during re-installation. 3. Appendix 11 in her bundle - four undated photographs of the central pillar to door post clearance on the built-in robe as installed by the supplier.
The quote dated 17 December 2021 is approaching three years old. No explanation has been given as to why it was not reasonably available at the time of the hearing. Leave to rely on the quote on appeal was therefore refused.
Similarly, no explanation was given by the consumer as to why the photographs in appendixes 9 and 11 were not available at the time of the initial hearing. They could clearly have been taken before then. Leave to rely on them on appeal was therefore refused.

The Tribunal's decision.

The Tribunal commenced its decision by noting that the application could be dealt with either as a home building claim or as a consumer claim under the Fair Trading Act 1987 (NSW) (the FTA). It later becomes evident that the Tribunal chose to deal with it as a consumer claim.
The Tribunal found that in late 2021 the consumer and the supplier entered into an agreement in for the supply and installation of three built in robes at the consumer's home for $27,725.00. That agreement included signed specifications. The consumer had emphasised to the supplier her requirements with respect to the layout of the internals of the wardrobe, with particular emphasis on (1) the length of shelves, (2) the width of shelves, and (3) the width of drawers. She had shown the supplier's designer her requirement and provided required measurements. The Tribunal noted that, "The consumer is attentive to detail and not only required but made known her requirement that there be attention to detail."
The Tribunal found that the work was performed in early 2022. The consumer was dissatisfied with the wardrobe in the main bedroom and complained to Fair Trading in March 2022, her principal concern being the narrow width of the drawers when compared with the specifications and the shelves not being as ordered. At that time one payment ($2,772.50) remained due to the supplier. The consumer commenced proceedings in January 2023.
Before the Tribunal the supplier maintained that the drawers were to specification, and that the consumer was reading the specifications incorrectly. The Tribunal, having reviewed the materials and evidence, found that the drawers were at least 10% less wide than specified (see page 3). The Tribunal then wrote: "But 10% is sufficient for current purposes, in this sense. The Tribunal accepts what the consumer has said about her expectations. As with her meeting with the designer in December 2021, she brought clothes and tape measures to the hearing. While the nature of the hearing - the supplier's principal and the lawyer being on the phone - did not lend itself to any demonstrations, the Tribunal is satisfied (a) that both a reasonable person in the position of the parties at the time of the agreement and in any event the parties themselves, would have been aware that the consumer was willing to pay good money for a high end product where "not too much" and "not too little" were demonstrably important to her; and (b) that 10% is too little. Accordingly if the consumer is correct - which is about to be considered - the Tribunal will be satisfied having regard to the pre-contract discussions and to the signed specifications that (a) as to the building claim, there is a failure to comply with the statutory warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract; and (b) as to the consumer claim, there is a failure to comply with two consumer guarantees in that there is a want of due care and skill and separately a want as to fitness for a disclosed purpose."
The Tribunal then went on to find that (p 4): "… eight drawers in the middle of this high end product are materially smaller than what was bargained for." "… the builder did not change anything but proceeded on a wrong view of the specifications."
With respect to compensation the Member wrote (p 5) : "… the consumer says that the replacement cost of the wardrobe with ancillary costs is reasonable. These are (a) $6,200 to supply and install a new interior; (b) $2,600 to make good the shell of the wardrobe, i.e. touching up the shell, and to recut and paint custom skirting; (c) $396 to clean after the work is done; and (d) $100 for dust sheets. Is the replacement cost reasonable? Is it reasonable to impose the cost of replacement of the whole of the interior in circumstances where the interior is largely without issue and it is only the drawers that have caused the problem. The Tribunal is satisfied that it is. The significant point is that at all times from pre-contract and negotiation the consumer has shown herself to be highly concerned with precision. No, she took the matter nowhere for some time after Fair Trading and may well have been prepared to live with the outcome had her debt not been pursued by the supplier from August 2023. But the fact that she was apparently prepared to live with her high concern does not mean there was no high concern. There was, and it was made clear from the outset. The supplier took on a high end job for a demanding customer and due to an error in the reading of the specifications there was a less than high end result which was material."
The Tribunal, having noted that the supplier took issue with the amounts claimed by the consumer, went on to consider each amount claimed.
The member considered the $6,200 claimed for replacing the interior of the wardrobe "reasonable but for one matter". He said that the plan for the new wardrobe interior involved additional joinery being, "some three or so more shelves, four or so more drawers, and two more vertical divides." He found that the supplier should not have to pay for additional joinery, and found that "$4,800 is reasonable". It is to be noted that the consumer, on appeal, says that the Tribunal misread the plan for the new wardrobe and that it is the same as that originally specified.
As to the $2,600 to make good the shell of the wardrobe and to recut, fit and paint custom skirting, the Tribunal wrote (p 5): "As to (b) the Tribunal is satisfied that touch up work on the shell is reasonable. As to the skirting which although not itemised must reasonably be the great bulk of the claim, the Tribunal is not satisfied that this flows. The evidence is that the consumer arranged for skirting to be installed upon the original installation. That was her choice. After the installation of any new wardrobe she may choose to do the same again. However the Tribunal is not satisfied that the cost reasonably falls on the supplier. The Tribunal will allow $250."
The Tribunal rejected the claim for cleaning costs and dust sheets, writing (p 5): "… The starting point is that the persons quoting may be taken as proposing to do work in a proper and workmanlike manner, including taking steps to protect during and to clean up after, their work. The consumer may well be prudent in wishing to do additional things to ensure that her premises are protected and restored, but the Tribunal is not satisfied that it is reasonable to put this on the supplier."
Mention also needs to be made of the consumer's claim for replacing the damaged cupboard door at the costs of $900.00. She alleged that the supplier had deliberately concealed the damage. The Tribunal wrote, p.2: Many months after the work the consumer observed damage on a door of one of the wardrobes. It is unrelated to the primary issue. She said in her claim that the supplier "knowingly and intentionally [patched and painted] over existing defects on the affected wardrobe door for the purpose of passing off the door as brand new". She asserted in hearing that she had not noticed the damage because the wardrobe was full of winter clothes and not regularly used. She also asserted that the area of the damage was soft. The underlying assertion is that the supplier put a flimsy overlay on the door in the hope that the damage would not be noticed. It is not a claim that the door was damaged prior to installation, that the damage was obvious, and that the supplier ought compensate her for the damage. Rather, it is a claim that the door was damaged prior to installation, that the supplier deceptively coated over the door so that this would not be noticed, and that the supplier ought compensate her for the deception. The supplier's principal gave evidence. The Tribunal is satisfied that the principal, and for that matter the consumer are patently honest. The Tribunal is satisfied that the supplier does not engage in this conduct as part of its business practice. That some damage has become apparent many months after installation is accepted. The Tribunal is not satisfied that the supplier acted in the manner alleged. The Tribunal is not satisfied that the supplier is liable to answer the case put.
While finding that the supplier had not acted deceptively, the Tribunal did not go on to consider the claim for the replacement of the damaged door on the basis that it was not of acceptable quality.
The Tribunal concluded that the consumer was entitled to compensation of "$4,800 + $250 or $5,250". The last figure is a mistake, likely due to a mathematical error. It should have read "$5,050".
The Tribunal then set-off the $2,772.50 owing to the supplier under the contract against the damages payable to consumer, resulting in an order for payment to her of $2,477.50 (which was $200 too much as a result of the mathematical error). The Tribunal had earlier in the decision decided that it had the power to order such a set-off if the claim were treated as a consumer claim under the FTA. The Member said (p 4): "The Tribunal indicated at hearing that the claim was a building claim and that if there was to be a counterclaim the usual practice was that a claim had to be filed and as there was none no allowance could be made. The Tribunal upon further consideration accepts that there is in the alternative from the consumer a consumer claim and that sections 79N and 79O and if the Tribunal is wrong, section 79U of the Fair Trading Act provide power to permit a set-off without requiring a separate claim to be made. The Tribunal is satisfied that in the ordinary course these facts justify an outcome to the effect "A task was done. The consumer is liable to pay for what was bargained to be done, here the balance of $2,772.50. But the supplier remains liable to compensate for what was done inadequately, here about to be considered." Such an outcome is fair and equitable within the meaning of section 79U of the Act."

Grounds of Appeal.

The consumer's appeal is against the Tribunal's failure to award compensation for the damaged door and its overall assessment of compensation. She supported and relied on the Tribunal's decision that the supplier was liable for the wardrobe not being built with due care and not being fit for its intended purpose.
The consumer's submissions regarding her grounds of appeal lay out a number of complaints which, on our analysis, go to the Tribunals' conduct of the proceedings, its reasons for decisions, and whether some of its decision were against the weight of the evidence or were not fair and equitable. The former raise what we consider to be questions of law, while the latter raise grounds of appeal associated with the Tribunal's factual conclusions for which leave to appeal is required.
In summary the questions of law are: 1. Whether the Tribunal denied the consumer procedural fairness by not giving her sufficient time to present her case? 2. Whether the Tribunal applied the correct law when assessing the damages recoverable by the consumer? 3. Whether the Tribunal erred by allowing the amount owed by the consumer to the supplier under the initial contract between them to be set-off against the damages claimed by the consumer? 4. Whether the Tribunal failed to determine an issue before it - namely the claim for compensation for a defective door - thereby constructively failing to exercise jurisdiction?
The leave grounds raised by the consumer concern whether she may have suffered a substantial miscarriage of justice because the Tribunal's assessment of damages was not fair and equitable and was against the weight of the evidence.
We will consider the appeal on questions of law first.

Whether the Tribunal denied the consumer procedural fairness by not giving her sufficient time to present her case?

In submissions the consumer argued that the hearing - for which three hours was allocated - was partly consumed by the supplier seeking legal representation and, when that was refused, then seeking an adjournment, which was also refused. She said that process consumed one and a quarter hours. As a consequence, the consumer says that: "Insufficient time was allocated for the hearing, and this has bearing resulting in inadequate consideration of my submissions and evidence , and a lack of questioning of [the supplier's] verbal assertions that were not supported by any evidence."
In its reasons for decision the Tribunal addressed each of the issues raised by the consumer in some detail, albeit she says it reached the wrong decision with respect to certain aspects of her claim as a result of "inadequate consideration". While the Tribunal may have erred in its decision making - as is discussed below - that does not mean that the Tribunal failed to give the consumer's case fair and adequate consideration. Having a limited time in which to present one's case is a feature of modern Tribunals such as the Consumer and Commercial Division of NCAT. Indeed, s 38(3)(c) of the NCAT Act specifically allows the Tribunal to limit the time available to a party in a hearing to that "it determines are reasonably necessary for the fair and adequate presentation of the case."
In Kirzner v Jetmaster Fireplaces Aust Pty Ltd [2021] NSWCATAP 255 the Appeal Panel said, at [64]: "Tribunals that hear high volumes of cases, such as occurs in the Commercial and Consumer Division of the Tribunal, have limited time in which to hear cases and frequently require parties to get to the point. The guiding principle of the Tribunal as set out in section 36 of the NCAT Act "is to facilitate the just, quick and cheap resolution of the real issues in the proceedings." Parties to proceedings before the Tribunal have an obligation to give effect to that guiding principle: see section 36(3)."
It is apparent from reviewing the materials before the Tribunal and the Member's decision that the Tribunal followed and considered of the consumer's case. While it did not accept everything that she said, that does not amount to a denial of procedural fairness. There is nothing in the material the consumer put to us that demonstrates she was denied procedural fairness by the time constraints confronting the Tribunal.

Whether the Tribunal applied the correct law when assessing the damages recoverable by the consumer?

The Tribunal found that the supplier had breached "two consumer guarantees", using the term used when referring to the implied guarantees found in Division 1, Part 3.2 of the Competition and Consumer Law Act 2010 (Cth) sch 2 ('Australian Consumer Law') (the ACL). That finding has not been challenged on appeal. The two warranties concerned are those in s 60 which implies a guarantee that services will be rendered with due care and skill, and s 61, which is concerned with services being fit for a particular purpose.
Section 267 of the ACL relevantly provides: 267 Action against suppliers of services (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and (b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3 - 2 is not complied with; and (c) unless the guarantee is the guarantee under section 60--the failure to comply with the guarantee did not occur only because of: (i) an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or (ii) a cause independent of human control that occurred after the services were supplied. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time--the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) terminate the contract for the supply of the services. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) terminate the contract for the supply of the services; or (b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. (5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).Whether the Tribunal erred by allowing the amount owed by the consumer to the supplier under the initial contract between them to be set-off against the damages claimed by the consumer?
The damages which a consumer is entitled to when a supplier of services breaches an implied guarantee, are the loss and damage that it was reasonably foreseeable that the consumer would suffer as a result (sub-s (4)) and all reasonable costs incurred by the consumer in having the failure remedied (sub-s 3(b)). This differs, in part, from the assessment of compensation made by the Tribunal which was based on what the Tribunal considered was reasonable, not what was reasonably foreseeable. The Tribunal did not discuss the applicable law when assessing damages. Beyond the assertion in the Tribunal's reasons that the various items of compensation it awarded were reasonable there was no discussion of the applicable law. With respect to a number of those items, there was no indication of why the Tribunal thought that its assessment was "reasonable".
Parties before the Tribunal are entitled to an adequate explanation of how the Tribunal decided the central issues in their case which were decided against them. In New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 discussed the standard of reasoning required in Tribunal decisions, at [70] -[72]: 70. As to the latter parameter identified by Basten JA in Resource Pacific, namely the quality of reasons, it is generally accepted that the sheer volume of work undertaken by tribunals is such that a perhaps more relaxed standard of review of reasons with corresponding compensation for linguistic infelicities is appropriate than may be the case when an appellate court is hearing an appeal from another court. 71. That having been said, even in the less formal setting of a tribunal which has significant powers the exercise of which is capable of affecting the lives of citizens in profound ways, there are certain minimum characteristics that a Tribunal's reasons must possess. These are really supplied, in relation to the Tribunal, by s 62(3) of the CAT Act which, as noted at [52] above, requires there to be set out in reasons (when requested by a party): (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, and (c) the reasoning processes that lead the Tribunal to the conclusions it made. 72. Whilst s 62(3) provides a useful starting point, it still leaves for consideration the question as to the quality and detail of the reasoning process that must be exposed.
In the present case the decision does not outline the Tribunal's understanding with respect to the applicable law. While Orr cautions against requiring exactitude in the use of language, the Tribunal's repeated recourse to the use of the word "reasonable" in a variety of contexts leads to uncertainty and confusion as to whether the Tribunal was discussing what is reasonably foreseeable or what is a reasonable assessment of a reasonably foreseeable loss. As already noted, the Tribunal did not explain its understanding of the relevant law. As a consequence, the Tribunal's reasons for decision are inadequate and the consumer's entitlement to damages will have to be reassessed.

Whether the Tribunal erred by allowing the amount owed by the consumer to the supplier under the initial contract between them to be set-off against the damages claimed by the consumer?

There is no dispute that the there was a final payment due to the supplier under the contract of $2,772.50. The Tribunal set this off against the damages it assessed as reasonably recoverable by the consumer. The consumer appeals against this aspect of the decision arguing that she is entitled to retain the unpaid amount on top of the damages arising from the supplier's breach of the consumer guarantees.
We do not agree. That would see the consumer receiving both damages for her loss from the supplier, and the benefit of not having to pay the supplier for the amount agreed. She would be receiving what she bargained for at a discount. The result would be that she would receive more than her reasonably foreseeable loss.
The Tribunal did not err when it determined to set-off the amount owing against the damages it awarded, given that the consumer was - and still is - seeking relief from payment.
Section 79N of the FTA provides that: In determining a consumer claim wholly or partly in favour of a claimant, the Tribunal may, subject to this Division, make any one or more of the following orders that it considers appropriate - (a) an order that requires a respondent to pay to the claimant a specified amount of money, (b) an order that requires a respondent to perform specified work in order to rectify a defect in goods or services to which the claim relates, (c) an order that requires a respondent to supply to the claimant specified services other than work, (d) in the case of a claim for relief from payment of money - an order declaring that a specified amount of money is not due or owing by the claimant to a respondent, (e) an order that requires a respondent to deliver to the claimant goods of a specified description, (f) an order that requires a respondent to return to the claimant specified goods which are in the possession or under the control of that respondent, whether the property in the goods has passed or not, (g) an order that requires a respondent to replace goods to which the claim relates, (h) an order that requires a respondent to refund all or part of the purchase price of specified goods that are in the possession (or under the control) of the claimant and the claimant to return all or part of those goods to the respondent (whether the property in the goods has passed or not).
The difficulty with the Tribunal's decision is that it did not make an order that $2,772.50 was not owed to the supplier under s 79(d), in circumstances where it found that money was no longer owing to the supplier, because it had been set-off against the cost of rectifying the supplier's faulty workmanship. In our view, this was an error on the Tribunal's part. It was required to make such in order to determine the issues properly and finally between the parties.
In order to make such an order the Tribunal also had to be satisfied that it was fair and equitable to do so having regard to the factors in s 79U of the FTA. Failure to have regard to a mandatory consideration is an error of law. The Tribunal did refer to the section in its reasons but made no finding that its decision was fair and equitable.

Whether the Tribunal failed to determine an issue before it - namely the claim for compensation for a defective door - thereby constructively failing the exercise jurisdiction?

This relates to the claim of $950 claim for the cost of replacing a defective door. The photographs of the door leave no doubt that it had suffered damage -significant triangular indentations and one split - that look to have been painted over. The consumer says the material under these obvious indentations is paper thin.
Before the Tribunal the consumer relied on an email dated 19 September 2023 from Tersol, who she thought might have been the supplier of the goods. Tersol denied this, but confirmed that the photos showed damage to the door and speculated as to its cause.
She also relied on a report from Simon Coleman a quantity surveyor from AT Cost Engineering - unsigned - who inspected the door. He wrote: Investigation revealed the following It can be seen that holes have been drilled in the rear of the door. These appear to have been patched either prior to installation or during installation. The resultant effect is that over time, the materials used to patch the hole and subsequent painting over has caused cracking in this area. It is apparent that there was either an error in the installation where holes were drilled in the incorrect position and that subsequent repairs were not sufficient enough to retain the door in what should be its intended aesthetic appearance. Whilst the door is functional, the repair job has not been sufficient to sustain the aesthetic appearance of the door. In what would be deemed an effective useful life of the door under normal operational conditions. Or, the door itself was delivered to site in a condition which resulted in repairs having to be made pre installation. That is, a defective door was used in the first instance. It is inconsequential whether it is either one of the above scenarios. Because it is quite apparent that at some stage during the manufacturing process or the installation process the door has required a repair. This repair has since resulted in cracking. Under reasonable use this would be unlikely to occur.
The estimated cost of replacing the doors was $950.00.
In considering this claim the Tribunal considered and rejected the allegation that the supplier had deceptively hidden the damage to the door (see quote at para. 30 above). The Tribunal did not go on to consider the claim for $950 for replacing the damaged door having rejected the consumer's theory of deliberate deception. The Tribunal also did not refer to the reports.
This was so despite the fact the claim for the costs of replacing the door was before it. Rejecting the claims of deceit and or misleading or deceptive conduct did not deal with the allegation that the door was not of acceptable quality, This still required consideration on the evidence before the Tribunal. The failure to do so is a constructive failure to exercise jurisdiction: see Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165.

What should we do with the appeal given the errors of law?

During the appeal hearing we sought the parties views as to whether we should (a) remit the matter to the Tribunal to be reheard, or (b) reconsider the matter ourselves on the basis of the evidence that was before the Tribunal, if the appeal were successful. The consumer asked that we remit the matter, while the supplier asked that we reconsider it.
We have decided to take the latter course, considering that it will best facilitate the just, quick and cheap resolution of the real issues in the proceedings. This accords with the Tribunal's guiding principle found in s 36 of the NCAT Act. It will avoid further costs being occasioned by the parties, so that their costs will be more in proportion with the issues at stake.

Leave to appeal.

Because we decided to have reconsider the issue of the damage door and the damages awarded to the consumer, it is unnecessary for us to consider whether or not grant leave to appeal, with one exception.
This concerns the consumer's claim that the Tribunal's conclusion that the plan for the replacement joinery, required additional joinery being, "some three or so more shelves, four or so more drawers, and two more vertical divides", was against the weight of the evidence. She relied on the replacement joinery plan which has, superimposed over the interior layout of the cupboard, the outline of its external doors. She argued that the Tribunal had mistaken the outline of the external doors on the plan as representing changes to the internal layout.
We are not persuaded that this is the case. The new plan for the cupboard shows new shelving on the left hand side of the cupboard (looking in from outside) and reduced, but longer, hanging space on that side of the cupboard. While we cannot precisely reconcile the Tribunal's description of the joinery changes with the plan, we are satisfied that the plan requires more shelves at the costs of less and differently configured hanging space, on the left had side of the cupboard looking in. The Tribunal's conclusion that there was additional joinery required in the new plan was open to it. That decision was not against the weight of the evidence.
Leave to appeal in that regard is therefore refused.

The claim for the damaged cupboard door

In submissions to us the supplier did not deny that the cupboard door was damaged. Mr Booth said that his company did not damage it, and that the doors came directly to his company from another supplier.
The damage to the door has obviously been painted over. We accept Mr Coleman's two theories of how this could occur, both of which involve the supplier providing the consumer with a damaged door. We think it highly improbable the consumer would be responsible for overpainted damage of this nature. We accept that the door supplied was not of acceptable quality in breach of the implied warranty under s 60 of the ACL. The consumer is entitled to the costs of replacing it with a door that does not have apparent damage.

Overview - Compensation

This assessment of compensation is based on the Tribunal's finding that the supplier breached the consumer guarantees under s 60 and s 61 of the ACL which imply (1) a guarantee that services will be rendered with due care and skill; and (2), that the services supplied were fit for a particular purpose. The supplier failed to supply a cupboard interior of acceptable quality and one fit for the purposes made known to the supplier by the seller before the works commenced. Those failures included the drawers and shelves not meeting the consumer's requirements.
We are satisfied that those services were supplied in trade or commerce to the consumer.
Those failures constitute a major failure for the purposes of the ACL . We are satisfied that the consumer would not have had the cupboard fabricated and installed by the supplier had she known of the extent of the failures. This satisfies the requirement for a major failure found in s 268(2) of the ACL: (2) A failure to comply with a guarantee referred to in section 267(1)(b) that applies to a supply of services is also a major failure if: (a) the failure is one of 2 or more failures to comply with a guarantee referred to in section 267(1)(b) that apply to the supply; and (b) the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of those failures, taken as a whole. Note: The multiple failures do not need to relate to the same guarantee.
The consumer has not sought to terminate the contract which was executed but seeks compensation under s 267(3) and (4) of the ACL. In Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715 Peram J explained that: [63] The primary species of damages for a breach of contract are often expressed as 'expectation damages' or as responding to an 'expectation loss'. These expressions were relied upon by both parties to this appeal in their explanations of the nature of damages for breach of the consumer guarantees in s 61(1) and (2) of the Australian Consumer Law and the operation of Pt 2 of the Civil Liability Act on those damages. However, the expressions are problematic. In particular, they can conceal a fundamental difference between two components of compensatory damages for breach of contract, both of which are necessary parts of the compensatory goal of restoring the injured party to the position they would have been in if the breach had not occurred. Those components are compensation directly for the performance interest and compensation for consequential losses. The two components are provided for separately in s 267(3) and s 267(4) of the Australian Consumer Law respectively. [64] Where contract damages provide compensation directly based on the performance interest, that component of the award is not concerned with loss in any real or factual sense. The compensation for the performance interest, 'by the value of the promised performance', appears 'as a "loss" only by reference to an unstated ought'. The aim of this component of the award is to provide the promisee with the difference between the value of what was promised and the value of what was received. The promisee had a primary right to performance of the contract so, upon termination, the law generally provides for a secondary right for the value of the performance that was not received or the difference in value due to the defect. [65] This component of compensation is contained in s 267(3) of the Australian Consumer Law, where a consumer may 'recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services'. … [66] A promisee might also suffer true, consequential, loss from a breach of contract. These consequential losses might include economic (financial) losses to the promisee to the extent that they go beyond the value of the promised performance and are within the boundaries of legal responsibility. They can also include some non-economic losses. [67] This component of consequential loss is contained in s 267(4) of the Australian Consumer Law, a head of damages additional to s 267(3), which allows for recovery of further loss or damage for a relevant failure to comply with a guarantee as provided in s 267(1) 'if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure'. …" See also Callinan v Power Equipment Pty Ltd [2023] QCA 246.

Compensation for replacing the cupboard interior.

The loss of value to the consumer under s 267(3) is best compensated for, in circumstances such as these, by arriving at a compensation figure which represents the cost to the consumer of providing herself with a built-in cupboard of acceptable quality that complies with the requirements she made known to the supplier.
In the present case the Tribunal was satisfied that this was best achieved by replacing the interior of the cupboard. We agree. If alterations were carried out to the original cupboard, we think it likely that the significant disassembly and reconfiguration required would be complex, expensive and unlikely to yield a satisfactory result.
The consumer relied on a quote of $6,200 to supply and instal a new interior for the cupboard. Of this the Tribunal allowed only $4,800 after making a deduction for additional joinery. The Tribunal considered this a reasonable deduction for the extra joinery work involved in the new interior.
The deduction represent over a 25% deduction for what is a relatively minor change in the amount of joinery required. On reconsideration, we are unable to agree that the changes in the amount of joinery required when replacing the cupboard, amount to anything near 25% of the work involved. In our view, 10% better reflects the additional joinery required. We will therefore deduct $620 from the $6,200 claimed, resulting in the consumer being compensated $5,580 for the cost of replacing the cupboard interior.

$2,600 to make good the shell of the wardrobe and to recut and paint custom skirting.

Touching up the paintwork around the shell of the wardrobe is necessary work following the removal and replacement of its interior. The Tribunal assessed this at $250 and was not satisfied that the balance, for the supply and fitting of new skirting boards, necessarily fell on the supplier. The fitting of the skirting boards was said to be the consumer's decision.
The skirting boards were installed by a different supplier after the cupboard was installed. They could not be installed beforehand as some of them were fitted inside the gaps left exposed by the cupboard interior, which butted up against the wall. The evidence was that this had always been planned and that the supplier knew that the skirting boards would be fitted when the cupboards were done. When it became necessary to replace the cupboard interior, the skirting boards had to be removed so that the new interior could be fitted, directly abutting the wall. Skirting boards that fit the new interior then had to be cut, painted and fitted.
We think that the need to remove and then cut, refit and paint the skirting boards was a reasonably foreseeable consequence of the supplier's failure to honour the consumer guarantees as to acceptable quality and fitness for a particular purpose. It was known that the skirting board would be fitted. It was reasonably foreseeable that they would have to be replaced if the interior of the cupboard had to be replaced.
On the evidence available to the Tribunal, $2,600 was the cost of having someone other than the supplier remove and refit the skirting board, paint them and touch up the cupboard shell. The consumer is entitled to recover $2,600 under s 267(4) of the ACL.

Compensation for the cost of replacing the cupboard door.

The evidence before the Tribunal as to costs of replacing the damaged door is Mr Coleman's estimate of $950. We note the supplier's evidence that it could supply a similar door at less cost, but think the consumer is entitled to recover the amount estimated by Mr Coleman.

Cleaning costs $396 and dust covers $100.

The Tribunal disallowed these claims on the basis that the claims while "prudent" were not "reasonable". The finding that they were prudent can be viewed as indicative of them being reasonably foreseeable.
With respect to the cleaning costs, we do not agree that these were unreasonable. We think it reasonably foreseeable that the work involved in removing and replacing the cupboard interior, and the skirting boards, is likely result in dirt and particularly dust affecting the whole unit, which will have to be cleaned. If the supplier had honoured the consumer guarantees this cleaning, and the cost of having it done, would not have been necessary. It is a reasonably foreseeable loss. There was no evidence that the quote for $396 was excessive, only assertions from the supplier that it was expensive. The consumer is entitled to recover $396 under s 267(4) of the ACL.
$100 is claimed for the cost for dust covers to cover the furniture in the main bedroom. We agree with the Tribunal that the contractor(s) doing the repair work should provide dust covers as part of their obligation to take due care.

Compensation Conclusion.

It follows that, on reconsideration, we find that the consumer is entitled to compensation totalling $ 9,526 comprised of: 1. Compensation for replacing the cupboard interior - $5,580. 2. Compensation to make good the shell of the wardrobe and to recut and paint custom skirting - $2,600. 3. Compensation for replacing damaged door - $950. 4. Compensation for cleaning costs $396.

Setting-off the amount owing to the supplier.

We have already indicated that we agree with the Tribunal's decision to set the amount owing to the supplier by the consumer ($2,772.50) off against the amount of compensation awarded to the consumer. We intend to do the same with our adjusted figures. If we did not do so, the consumer would not only gain compensation to put her back in the position she would have been in had the supplier not breached the consumer guarantees, but she would also be better off to the extent of $2,772.50. The purpose of a compensation order is to restore the consumer to the position she would have been in had the agreement with the supplier been properly fulfilled, not to punish the supplier or enrich the consumer.
As a result, will deduct from the $9,526.00 compensation payable to the consumer the sum of $2,772.50 that she now owes the supplier - but which we will declare is no longer due following the set-off- resulting in a net order in her favour of $6.753.50
We note that this is not a case in which any of the considerations in s 79U(2) of the FTA apply. We are satisfied that the orders we propose to make are fair and equitable.

Orders

The Appeal Panel makes the following orders: 1. Appeal allowed. 2. The order made by the Tribunal on 22 May 2024 is set aside and lieu thereof the Appeal Panel makes the following orders: 1. The Tribunal orders the respondent B & L Booth Pty Ltd trading as Creative By Design Sydney to pay Karen Au the sum of $6,753.50 immediately. 2. The Tribunal declares that the amount of $2,772.50 is not owed by Karen Au to B & L Booth Pty Ltd trading as Creative By Design Sydney.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 October 2024

Competition and Consumer Law Act 2010(Cth)sch 2

(2020) 103 NSWLR 479

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