Marskell & Anor v Davis & Ors t/as TV Local Bloke Removals [2015] NSWCATCD 34
Texts Cited: The Australian Law Dictionary , University Press 2010
Halsbury's Laws of Australia Vol 9
Judgment (8 paragraphs)
[1]
Solicitors:
JS Molnar 32 Harold Street
Middle Park 3206 for the builder
File Number(s): AP 15/37675
Decision under appeal Court or tribunal: NSW Civil and Administrative TribunalConsumer and Commercial Division
Jurisdiction: Proceedings under Home Building Act 1989
Citation: Unreported 26 May 2015
Date of Decision: 26 May 2015
Before: D Goldstein Senior Member
File Number(s): HB 14/61536
[2]
Introduction
For easier understanding, in these reasons the appellant owners will be referred to as "the owners" and the respondent builder will be referred to as "the builder'.
The Builder contracted with the owners to construct a polished concrete veneer floor for $12,500.00, which was paid by the owners. The floor was to be laid over an existing tile floor.
The floor was constructed and the owners claim that it was defective and its removal and replacement was required, they claimed either refund of the $12,500.00 or a sum of $19,428.00 for the removal of the floor and replacement by a floor that is not defective.
The Owners brought their application in the Consumer and Commercial Division as a claim under the Home Building Act 1989. It was filed on 28 December 2014. There has been a 5 page Standing Procedural Direction in the Division given to parties in Home Building Disputes since 1 January 2014. In paragraph 6 it tells the parties that before the first directions hearing "if you are the applicant clearly identify in the application (or in correspondence with the other parties)
The exact orders you seek e.g. work order, money order;
The precise claims you intend to make against the Builder;
The issues the Tribunal must decide;
The names of your witnesses (expert and non expert).
N.B: If the Application does not clearly identify the claims to be made and the issues in dispute, you will need to apply to the Tribunal to amend the application at the first Directions Hearing.
In the Application where the document required "dispute details" the owners stated:
Matters involving unlicensed contractors in NSW
Polished concrete floor (Ecofloor) - poor quality surface, defects in flooring with cracks according to Guide to Standard and Tolerances 2007, cockroach imbedded in flooring, areas of flooring lifting"
There was no mention there of an issue about the thickness of the floor installed. The only mention of that was in a section of the Application headed "Reasons for Orders" and there it stated "concerns with the thickness of the product (was told it would be 8mm applied, but all measurable areas are less than 4mm)." The owners did not subsequently file any amended application, or otherwise amend the application, to include a claim in respect of the thickness of the flooring laid.
In their Amended Points of Claim the owners relied upon the implied warranties contained in section 18B of the Home Building Act 1989. They listed the "Defects" to which their claim related. The thickness of the floor was not listed.
The proceedings were defended and were heard on 30 April 2015. The parties had no legal representation. The Tribunal Member who heard the application determined that the Home Building Regulation 2004, which was in force at the time of the contract and when the work was carried out and completed, provided in regulation 9(1)(i) that;
any work involved in installation of any material that forms an upper layer or wearing surface of the floor (even if installed as a fixture) that does not include any structural changes to the floor
was excluded from the definition of "residential building work" in the Home Building Act 1989. Accordingly, the member held that section 18B of that Act had no application because it applied only to residential building work.
In addition, the Member found that the owners' claim was not a "building claim" as referred to in section 48I of the Home Building Act because it was not residential building work. The conclusion was that the Tribunal did not have jurisdiction under the Home Building Act 1989 to entertain the owners' claim.
But the Tribunal Member decided to treat the application as a claim under the Consumer Claims Act 1998 and pursuant to section 53 of the Civil and Administrative Tribunal Act 2013 and in the interests of justice amended the application so that it was expressed to be an application for determination of a claim under section 6 of the Consumer Claims Act 1998.
The owners sent an email to the builder on 3 September 2014 in which they stated that they understood that the flooring to be installed would be at least 8mm thick. The invoice from the builder sent to the owners on 23 October 2014 and paid before the work commenced, specified that the floor would be "5 to 10 mm … polished and sealed". There was no reference there, nor in the other contract documents, to a thickness of 8mm. The Member rejected the proposition that there was any agreement that the flooring to be laid would be at least 8mm thick. The Member found that the builder told Mrs Baak that the Builder would need to pour at 8 mm, but after grinding it would be thinner than 8 mm, The Member held that in accordance with the documentation, the agreement was that whether or not there was grinding, the thickness of the finished floor was to be 5mm to 10mm.
[3]
The right of appeal
The jurisdiction of the Tribunal in respect of the decision appealed from arises from sections 6 and 7 of the Consumer Claims Act 1998. Section 32(1) of the Civil Administrative Tribunal Act 2013 ("the Act") gives the Tribunal jurisdiction for internal appeals in respect of a "general decision" of the Tribunal and section 29(3) of the Act defines "general decision" as a decision by the Tribunal of a matter over which it has "general jurisdiction. Section 29(1) defines "general jurisdiction" and the proceedings decided by the Member come within that definition. Accordingly this appeal, subject to section 80 of the Act, is an exercise of the internal appeal jurisdiction of the Tribunal.
Section 80(2) of the Act provides that an internal appeal may be made in the case of a decision other than interlocutory decision, as of right on a question of law, or with leave to the Appeal Panel on any other grounds.
[4]
Grounds of appeal
The Notice of Appeal filed in the Tribunal on 10 June 2015 indicated that the owners were appealing only the decision to order the builder to pay nominal damages of $1,000.00 to the Owners.
The owners lodged amended grounds of appeal on 11 August 2015. The amended grounds of appeal are as follows:
Depth of Floor
1. The Tribunal was in breach of the requirements of procedural fairness in:
a. not responding to a substantial, clearly articulated argument relying upon established facts, being that Concrete Services Groups Pty Ltd had, in breach of contract, installed a floor significantly shallower than contracted for, and
b. not bringing to Baaks' attention the critical issue - the failure to plead the issue of depth, or have it the subject of a specific heading in their expert's report - which would likely form the basis for the Tribunal's decision not to resolve the issues of whether there had been a breach and if so, what damages should flow.
Award of nominal damages only for cracks to walls.
1. The Tribunal made an error of principle in holding (at [l00]) that, because they had not proved the quantum of their loss, the Baaks' were entitled to nominal damages only for the cracking along their walls sustained as a result of Concrete Service Group Pty Ltd's breach of contract: the Baaks' had proved quantifiable loss and should not have been restricted to a nominal sum.
2. Further and in the alternative to ground 2, the Tribunal was in breach of the requirements of procedural fairness in:
a. making the finding referred to in ground 2 without bringing to the Baaks' attention the critical issue A the lack of specific evidence as to quantum of a more limited method of rectification -- on which the decision as to substantive damages was likely to turn and giving them an opportunity to respond; and
b. deciding the issue referred to in ground 2 on a basis not in issue or argued before the Tribunal.
The grounds of appeal are questions of law and the appeal therefore does not require leave.
Ground 1 - Thickness of the floor - alleged breach of the requirements of procedural fairness
At a directions hearing on 9 July 2015 the appeal was set down for hearing on 8 September 2015 and the owners were directed to file and serve by 7 August 2015 a written 'Outline of Arguments' and list of material to be relied upon by 24 August 2015. The owners did not file any list of material they relied upon. At the start of the hearing the Presiding Member informed the parties of the material before the panel and both sides agreed that that was the material relied upon. But the owners' document titled "Appellant's Outline of Written Argument" at pages 2 and 3 referred in footnotes to evidence that was before the Member and should have been included in a list of materials the owners relied upon. Because of that omission those documents were not in the materials provided to the Panel Members for the appeal hearing.
[5]
Ground 2 Alleged error of principle in finding that, because they had not proved the quantum of their loss in relation to the cracking between the floor and wall surfaces, the Baaks were entitled to nominal damages only for that breach
At common law the general rule is that if a party suffers loss by reason of breach of contract that party
is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed (per Parke B in Robinson v Harman [1848] EngR 135; (1848) 1 Ex 850 at 855; 154 ER 363 at 365; see also Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54 per Mason CJ and Dawson J (with whom Toohey J agreed) at [23], per Brennan J at [2], Dean J at [2], Gaudron J at [4] and McHugh J at [6] ).
A party raising a claim for damages for breach of warranty or breach of contract may prove the breach, but quantification of the loss or damage may be incapable of proof. One such situation is where, because evidence necessary to prove or quantify the loss or damage no longer exists (such as where a witness has died or records have been destroyed), the loss or damage is incapable of assessment. In such situations the Courts have found for the claimant on that claim and awarded "nominal damages".
Thus nominal damages were awarded in the High Court decision in Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286. Both the extent of the breach and of the damage were incapable of proof, and nominal damages of 1 shilling were awarded. There Latham CJ said:
It is admitted by the plaintiff that if the defendant's construction of the clause is adopted the contract has been broken by the plaintiff. Therefore, as a matter of course, the defendant is entitled to nominal damages. This right does not in any way depend upon whether the defendant was entitled for any reason to determine the contract. Thus, according to the construction of the clause which I regard as correct, there is no doubt whatever as to the defendant's right of action for damages for breach of contract in respect of the first two seasons. But the extent of the breach is quite uncertain.
It is true that there are many authorities which establish that substantial damages can be awarded where a breach of contract is established, even though the calculation of the damages is "not only difficult but incapable of being carried out with certainty or precision" (Chaplin v. Hicks[2]): See also other cases dealing with damages for loss of publicity, Marbe v. George Edwardes (Daly's Theatre) Ltd. [4]; Herbert Clayton and Jack Waller Ltd. v. Oliver[5]; Withers v. General Theatre Corporation Ltd. [b]. In all these cases, however, the extent of the breach was established. There was a complete failure on one side to perform the contract. In the present case, however, there has not been a complete, but only a partial, failure to perform the contract. The extent of the failure is unascertained. Thus the evidence which the defendant was content to put before the court does not make it possible to reach any estimate of damage suffered. I can see no reason why the defendant should be allowed to fight the matter over again. If a party chooses to go to trial with incomplete evidence he must abide the consequences. The fact that his evidence might have been strengthened affords no reason for ordering a new trial. Thus the defendant must be content, so far as the first and second seasons are concerned with nominal damages.
[6]
What should the Member have done?
On the evidence the task that confronted the Member was to estimate as best he could with the evidence available, the estimated cost of rectification of "more than 5" cracked sections of the flooring adjacent to the walls by removal of each of the cracked sections, insertion in each section of an expansion joint adjacent to the wall and laying for each matching replacement flooring in the gap between the expansion joint and the remaining flooring.
In accordance with the decided cases, the damages should not be more than the rectification costs. Also the Member should have taken into account, in terms of ensuring a fair decision on this aspect that the Owners had the onus to prove the rectification cost and they were responsible for the absence of better evidence as to the rectification cost. Both these factors support a conservative approach to arriving at a figure for the damages.
Should the amount for this defect be set aside?
Subsection 13(1) of the Consumer Claims Act 1998 requires that the order for payment made by the Tribunal
be fair and equitable to all of the parties to the claim.
Whilst the owners say that the damages should not be nominal, they have not addressed the issue of what the amount of damages should have been. They have not addressed the issue of whether the amount of $1,000.00 was fair and reasonable to all the parties.
The finding that the builder is liable on this claim for its breach of the contract is not contested. On the issue of the amount of the damages, given the limited extent of the defect, the evidence as to what should be done by way of rectification, the absence of any evidence as to the specific cost of rectification, and the other evidence as to costs, the Appeal Panel is satisfied that the award of $1,000.00 to the owners on this claim is a fair and equitable estimate of rectification costs for both the owners and the builder. Accordingly, that decision should not be disturbed.
[7]
Orders
Accordingly the order is:
1. The appeal of Linda Baak and Stuart Baak is dismissed.
[8]
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: 17 February 2016
Pursuant to a usual direction made, the owners filed a document (called "Points of Claim") and later provided an 'Amended Points of Claim'. The first document is not before the Panel and presumably did not include the thickness of the floor as a point of claim, or the owners would have relied upon it before us. The 'Amended Points of Claim' did not include any claim in respect of the thickness of the floor.
In addition, Mr Matley, the expert for the owners, prepared a report and gave evidence at the hearing. His report described the defects the subject of his report as: -
1. Cracking; and
2. Ripples, roughness, marks and dullness in the floor.
Mr Matley at para 7 on page 4 of his report said, "The instructions received from the owners, request that I identify the defects and report as per NCAT orders dated January 23, 2015. His report did not identify thickness of the flooring laid as being one of the defects the subject of his report, although photograph 6 attached to his report identifies a small strip beside a wall which he says is "only 4mm in depth".
Because the thickness of the floor was not one of the Points of Claim raised by the owners in their Application, or their Amended Points of Claim and it was not included as a defect in the report of Mr Matley, the Tribunal Member proceeded on the basis that there was no claim to be determined in respect of the thickness of the floor.
The Member dealt with other issues of "cracking", "ripples, roughness and dullness in the floor". He gave extensive considerations to the evidence in relation to those matters and also in relation to the contract between the parties for the work to be carried out "in a proper and workmanlike manner". It limited the damages that could be obtained by the Owners to no more than the price of the work ($12, 500.00). It provided that while "every precaution" is taken to prevent cracking, the builder did not guaranteed the contract that concrete would not crack, "as some may occur due to circumstances beyond the builder's control".
Another document forming part of the contract titled "Ecoflor" included ,on page 2, information regarding the floor and "Finished Surface Effects". It stated that certain imperfections were to be expected.
The Member found:
It also dealt with defects and stated that if the substrate to which the floor is bonded moved, movement in the substrate may cause cracking in the floor and such cracking is deemed not to be a defect.
The owners acknowledged that in a conversation the builder told them;
that pre-existing tiling as a substrate was acceptable, but there might be hairline cracks.
The representative of the builder also confirmed that he told the owners there was going to be cracking along the edges of walls. He said the reason for this, and what caused him to raise it with owners, was that when the skirting was being removed from the walls. It was revealed that the floor tiles were not laid flush against the wall and there was a gap between the edge of the tiles and the wall that had been concealed by the skirting. The representatives of the builder advised the owners that this gap would be a cause of cracking but he would fill the gap with epoxy in an attempt to avoid cracking. He said that notwithstanding this, cracking was a real possibility. He also said that there may be only hairline cracks and it may be concealed once the skirting was replaced.
The Tribunal Member found that these post contractual discussions did not have an effect on the terms and conditions upon which the parties contracted.
The Tribunal Member found that contrary to advice given previously by the builder, upon completion of the work the owners had steam cleaned the floor. The builder's 'Terms and Conditions' at 14.23 said that the concrete cures in a maximum of 28 days and that care must be taken in that period. There was evidence in the builder's case, which was accepted by the Tribunal, that the owners were advised on behalf of the builder that when the work was completed, the floor could be walked on, but the appellant should not do anything to the floor for 7 days while it was curing.
The expert for the builder gave evidence that the action of the owners, including steam cleaning the floor, had contributed to cracking and the failure to refix the skirting to the walls had contributed to the cracking. But the Member did not accept that evidence. He said that "it was speculative at best" as the builder's expert had not inspected the floor and had;
no real appreciation of a degree of steam cleaning or other cleaning of the floor by the owners.
The Tribunal Member concluded that the builder breached the contract by not carrying out the work in a proper workmanlike manner in that he failed to provide foam expansion joints to allow for expansion between the floor and wall surfaces. The Tribunal Member determined that the provision in clause 4.17 of the terms and conditions that the builder did not guarantee that the concrete would not crack as some cracking may occur due to circumstances beyond builder's control was subject to the provision of clause 10.2 that the work would be carried out in a proper and workmanlike manner.
In relation to the claim in respect of "ripples, roughness, marks and dullness in the floor" the Tribunal Member referred to the contract between the parties , particularly the document titled "Ecoflor" and found that there was a term of the contract that:
1. Differences in colour and structure are to be expected;
2. A slight pigment variation on the surface is part of a character of the floors;
3. Trail marks and other imperfections including slight colour variations an unevenness may be visible;
4. Undulations may be visible; and
5. The owners accept these imperfections as standard and acceptable work.
The Tribunal Member found that the owners' complaints regarding the "ripples, roughness, marks and dullness" in the floor were matters that were contemplated by the terms of the contract and did not constitute a breach of the contract on the part of the builder. He found to the contrary, they were matters that the contract contemplated "may or would occur." He therefore dismissed this aspect of the owners claim.
Accordingly, the only part of the owners' claim that succeeded was the issue of cracking along the wall edges.
The Tribunal Member, in determining the issue of damages for defective work, referred to the evidence from the experts. The expert for the owners provided an estimate of the cost to remove and replace the floor of $19,428.00 and the cost to cover it at $12,428.00. The Member found that there was no evidence of the cost of repairing the cracking along the wall edges. He referred to the evidence of the owners' expert as to remedial work necessary to "remove edge material where cracks had appeared and install new material to blend with existing material". There was no evidence of the likely cost of this work.
The Member acknowledged the fact that the Home Building Regulation 2004 had been amended to repeal Regulation 9(1)(i) as of 15 January 2015, so the flooring work is now in the definition of residential building work. The member found that the builder is not licensed under the Home Building Act 1989 to carry out rectification work to properties in NSW. He found he was not able to make an order to require an unlicensed builder to carry out residential building work in NSW.
In his conclusions the Member found that the builder was in breach of the contract between the parties by failing to carry out the work in a proper and workmanlike manner by not providing 5mm foam expansion joints to allow for expansion between the floor and wall surfaces. He found that remedial work, as identified, is "possible and also necessary". He rejected the assertion by the owners that the floor was so defective that was of no value.
The Member said that there was no evidence before the Tribunal of the cost of remedial work to be carried out and he did not accept that Clause 4.5 of the Terms and Conditions referred to earlier automatically entitled the owners to damages of $12,500.00. He said
the clause does no more then set the uppermost level or cap of the damage that the owners may recover in appropriate circumstances.
The Tribunal Member held at [100]:
where a litigant has established a breach of contract, but has not established the loss sustained, the party proving the breach would be entitled to the nominal damages.
The Tribunal Member concluded than that there should be an order that the builder pay the appellant nominal damages in an amount of $1,000.00 and so ordered.
Clearly the Builder was on notice from those submissions that the owners were relying upon that material. The panel has in all the circumstances included those documents in the evidence in the appeal. They comprise the following:
1. Pages 27 - 32 and 33 - 34 of Annexures 2 & 3 to the affidavit of Mr Aurnia; and
2. Annexures pages LB 1.1, LB 2.1, LB 2.2, & LB 3.2, lb 3.5, LB3.13, LB 3.14, LB 3.20, and LB 3.24 of annexures to the statement of Mrs Baak.
It is relevant to consider what evidence was before the Member of thickness of the floor being less than the agreed minimum of 5mm.
Page 8 of a document prepared by Ms Baak, which was Exhibit C before the Member, includes 3 photographs of thickness of the floor laid being 4 mm at lounge room entry, 3mm at garage entry and 1-2 mm at the front entry.
In his report, Mt Matley, includes Photo 6 of a narrow section of the floor adjacent to the wall that is cracked and described: "As above photo: this piece is only 4mm in depth and will not be covered by the skirting". His report says the skirting is only 12 mm in width. That does not appear to be the same area as any of the 3 in the photographs in the Exhibit C.
Mr Matley in paras 10 and 15 of his report repeats allegations by the owners of inadequate thickness but this is hearsay and not his own observations.
At LB3.2 Ms Baak alleges that the thickness of a small section of the floor where it meets the original tile floor is "as little as 2mm". At LB 3.13 there is a photograph of an edge showing the installed floor at a particular location to be only 3mm thick. The location is not identified and may be one of those in the Exhibit C referred to earlier. At LB 14 there are 2 photographs under the description
I have included multiple photographs to show that the 4mm and under.
The location of the 2 images are not stated and it may be that one or both are locations shown in the 3 photos in Exhibit C.
The transcript of the hearing on 30 April 2015 was before the panel. It reveals that the issue of the thickness of the work done by the builder was not raised until after the evidence had concluded. Mr Baak completed his submissions and Ms Baak raised the question of the thickness of the work at lines 10 to 37 on page 40 of the transcript. She said,
The size of the - or the thickness of the flooring was agreed, was understood to be 8 mm, and multiple areas that we have demonstrated through Mr Maley's report , as well as through the emails, correspondence , photos and exhibit - sorry, I don't have exhibit numbers - Exhibit C…… " and then "have all demonstrated that the size of these areas of the thickness of these areas are all down below 4 mm.
And then at line 15 on page 41 Mr Aurnia said :
Firstly, since it's been raised, I believed it was a mistake on Ms Baak's behalf that she was going to get a floor that was 8 mm.
There were also some later discussions on page 43 of the transcript in relation to the sample that was produced to the parties before the agreement that was 4mm thick and in some places less than that. But the Member found that the agreement between the parties was the thickness would be 5-10mm.
Ms Baak again raised the issue of thickness. When, after the submissions for the builder had concluded and submissions in reply were being provided by Mr Baak, Ms Baak raised the issue on page 50 lines 35 to 49. But the issue was not discussed any further before the Tribunal concluded the hearing and reserved the decision.
It is important to note that the raising of the issue after the evidence closed, was not by way of evidence, but by submission only.
At no stage of the hearing did the owners seek to amend their points of claim document to include a claim about the thickness of the work. Nor was there any application for an adjournment in order to make such a claim and provide any further evidence supporting it.
There was no evidence before the Member as to what extent the installed floor was less than 5mm thick other than the evidence of 4 relatively small edge sections in photographs. There was no evidence of the thickness of other areas of the floor.
There was no evidence as to what adverse consequences, if any, flowed from any failure to achieve a thickness of at least 5mm (eg. strength or susceptibility to cracking). There was evidence as to the cost of replacing the whole floor (not the subfloor) and of covering the whole floor, but not as to whether any alternative rectification method(s) could be adopted in respect of thickness, or what rectification method is preferable, or the likely cost.
The written submissions by the owners in this appeal are dated 11 August 2015. It is argued that the thickness of the floor
was squarely raised in closing submissions that the thickness of the floor was an issue in the proceedings.
That submission is incorrect if it implies that the owners disclosed that they sought damages in respect of the thickness; that it was a claim. The owners did not at any time make a claim in respect of thickness, nor tell the Tribunal or the Builder that they were making or wished to make, such a claim. By their documentation and at the hearing they clearly failed to do so. Nor did they inform the Member or the Builder of the relevance of the thickness to the claims they did make.
The submissions for the owners rely upon ss 13(1) of the Consumer Claims Act which requires,
When making an order or orders under this Part, the Tribunal must make such orders as, in its opinion, will be fair and equitable to all the parties to the claim.
It should be noted first that there was no "claim" by the owners about the thickness.
Procedural fairness and fairness under the subsection is not just about what is, or is not, the impact on a single party to the proceedings. The interests of all parties to the litigation must be taken into account. Often a procedure adopted is contrary to the interests of one party but favours those of another. It is a question of the justice of what is done. That takes into account the effects on all the parties.
On that basis one has to take into account that it would have been unfair to the builder for the Tribunal to assist the owners by advising them at, or at the end of, the hearing to amend or to seek an adjournment to do so, or to provide additional evidence in support of their case. It would also be relevant to take into account, in considering what was fair to the owners, the fact that the owners were the authors of their own predicament. Their failure to raise such a claim previously was their own doing and had persisted from the lodgement of their application on 28 December 2014 for 4 months till conclusion of the hearing on 30 April 2015. The builder in no way contributed to their difficulty.
Even if what the owners said in closing submissions about thickness had amounted to them seeking to raise such a claim, because it was not raised until after the evidence for both parties had closed and without any prior application to amend or adjourn, it would have been extremely unfair and prejudicial to the builder for the Member to have then allowed that claim to be included.
Counsel for the owners submitted that
to fail to respond to a substantial, clearly articulated argument, relying upon an established fact is to denial a party procedural fairness.
For that proposition counsel for the owners relied upon Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 at [24] per Gummow and Callinan JJ. They relied upon no other authority.
Counsel for the owners also submitted:
14. First, it was squarely raised in closing submissions before the Tribunal that the thickness of the floor was an issue in the proceedings.
15. Secondly, as indicated by Ms Baak in those closing submissions, the documentary evidence tendered by the Baaks indicated that this was a live issue and provided a basis for the submission that the flooring, as installed, was so shallow as to be in breach of contract;
a. the emails between the Baaks and the builder post-installation show that the depth of the flooring was at the forefront of the disagreement (indeed, Ms Baak described it in the final email in evidence as by far the biggest issue we have");
b. the pre-contractual emails contain references to the depth/height of the floor;
c. Exhibit C (a bundle of photographs and comments prepared by the Baaks for the hearing) sets out on page 8 a series of photographs demonstrating the shallowness of the floor; and
d. the expert report obtained by the Baaks from Geoffrey Matley for these proceedings refers three times to the inadequate depth of the flooring."
16. Thirdly, there can be no other reason for the Tribunal having spent nine paragraphs of its reasons, under a separate heading ("Thickness of cover") resolving the question of what the contract provided in relation to this issue, if there was truly no dispute between the parties about it.
17. The Tribunal's decision. not to resolve whether there had been a breach in relation to the depth of the flooring and if so, what damages should flow, was based upon the fact that the Baaks made no specific claim regarding the depth of the flooring in their points of claim and their expert made no reference to the insufficient depth under the heading "Defects" in his report. To so decide the matter was a further breach of the requirement of procedural fairness. At no point did the Tribunal draw to the Baaks' attention that this critical issue - the failure to plead shallowness as a specific defect, or have it the subject of a specific heading in their expert's report - would likely form the basis for refusing to consider what was, as a practical matter, a major part of their case.
18. It is well-established that the rules of procedural fairness require a decision-maker to bring to a person's attention the critical issue or factor on which the decision is likely to turn so that he may have an opportunity of dealing with it." And in this case, had the Tribunal brought the matter to the Baaks' attention, they no doubt could have responded in a way that would have made a difference to the outcome. In relation to the pleadings, they could have indicated to the Tribunal that the Tribunal is not a court of strict pleading, that none of the breaches or defects are specifically "pleaded" in their points of claim but are rather left to emerge from the evidence, and that it is clear from the evidence (as outlined above in paragraph 15) that the depth of floor was understood by both parties to be an issue in dispute under the contract and on the facts, and that it is also clear that the floor is less than 5 millimetres in depth. In relation to the expert, they could have pointed out that they had briefed their expert without the assistance of solicitors and so had not necessarily known what precisely had to be brought to his attention, and had not thought that something as seemingly obvious as whether a floor was a particular height or not was something on which they needed to pay for an expert opinion.
19. If the Tribunal had properly and fairly considered this issue, it would have found that there was a breach of the term of the contract that the floor would be 5-10 millimetres in depth. That was the only conclusion open on the evidence. And that would have led to the conclusion that the only reasonable method of rectification was the removal and replacement of the Baaks' floor, in accordance with the principles stated in Bellgrove v Eldridge," and recently reaffirmed, with vigour, in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd."
In the owners' submissions of 7 August 2015, it is alleged that the floor installed was "significantly shallower than that contracted for." However, the description "significantly" appears to be based on the owners' argument that it was agreed that the thickness of the work was 8mm. But the Member found that the agreement between the parties was that the thickness would be 5-10 mm.
In the submissions by counsel for the owners filed 11 August 2015, it is said the error was
not responding to a clearly articulated argument relying upon established facts" and also "not bringing to Baaks' attention the critical issue.
The "clearly articulated argument "was not a claim the owners had notified the builder or the Tribunal that would be pursued at the hearing. It cannot be said in the context of the owners having identified their claims to the builder and the Tribunal and not included thickness, that it was during the hearing a "clearly articulated argument". When the submissions closed the owners had not sought to amend their amended application or their points of claim. They had not identified thickness as a claim they were making.
It is noted that Ms Baak, when she did refer to thickness, alleged the parties contracted that the minimum thickness would be 8mm, whereas the Member found that the agreed minimum thickness was 5mm.
Also, as to "established facts" as to thickness less than 5mm, the evidence was of 4 edges only and not of extensive areas.
If after the hearing the Tribunal's decision included a finding in favour of owners on the basis that the work done was not as thick as was agreed, it appears that would have denied the builder procedural fairness because the issue was not raised as a claim in the Application or the Points of Claim of the owners before the hearing. The builder would then have been denied procedural fairness by being denied the opportunity to prepare before the hearing in respect of that issue and participate in the hearing with that knowledge.
The owners' reliance upon Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 at [24] (per Gummow and Callinan JJ, Hayne J agreeing) for the proposition that "to fail to respond to a substantial, clearly articulated argument, relying upon an established fact is to denial a party procedural fairness" was misconceived. In that case the High Court found that the Delegate for the Minister for Immigration, the Refugee Review Tribunal, the Federal Court and the Full Court of the Federal Court had erred in refusing a protection visa to an entrepreneur from Russia. He established he was in fear of persecution in Russia and claimed it was because of being a member of a particular social group. The Delegate found the relevant social group was "businessmen in Russia" and that his fear was subjective and not convention related and therefore refused the visa application. That decision was upheld by the Tribunal, the federal Court and the Full Court of the Federal Court.
In the High court, their Honours held that on the evidence the correct relevant social group was the more limited social group he belonged to of "businessmen in Russia who posed a threat to organised crime". Their honours found that the evidence established he was a member of that group and had complained about and exposed organised crime, that that gave rise to persecution and his fear, that this was convention related and the appeal should be allowed and the visa granted.
The case is not authority that where on hearing of an application made seeking rectification or compensation in respect of specified claims, there is evidence of some other possible claim and the owner in closing submissions complains of that but does not seeks a remedy in respect of that, it would be a denial of procedural fairness for the Tribunal to conclude the proceedings by determining only the specified claims.
Clearly fairness has to be measured by consideration of the interests of all parties to the proceedings, and it cannot be fair to the builder for the Tribunal to add another claim for determination on the evidence after the evidence has closed and closing submissions are made. If the owner has identified in closing submissions a possible claim that has not been identified in his application his points of claim or his amended points of claim he has relied upon at the hearing, it is no denial of procedural fairness to that party if the Tribunal does not make findings about that possible claim and he is the author of his predicament.
The owners have not established any denial of procedural fairness by the member in relation to thickness of the work. The Panel finds Ground 1 is not established.
Another example is the Court of Appeal decision in EW Blanch Pty. Ltd v Cooper & Anor [2005] NSWCA 217. See also the Court of Appeal decision in Rockscote Enterprises Pty Ltd v FS Architects Pty Ltd: Carellis v FS Architects Pty Ltd [2008] NSWCA 39.
Nominal damages are just that. The usual meaning of "nominal" is;
"being such in name only, a price or consideration, etc nominated as a mere matter of form, being trifling in comparison with the actual value" ( Maquarie Concise Dictionary 4th Ed), "existing in name only; not real or actual, (of a sum of money, rent, etc ) virtually nothing; much below the actual value of a thing" (Australian Concise Oxford Dictionary second Edition 1992).
In The Australian Law Dictionary, University Press 2010, "nominal" is described as:
in name only. Thus nominal damages are small and as a token of the legitimacy of the plaintiff's claim rather than being compensatory in nature.
They are:
awarded as a demonstrable mark or vindication of the plaintiff's rights in a situation in which the plaintiff cannot establish substantial loss. They are awardable only in torts actionable per se and in breaches of contract.
…However, if the plaintiff fails to satisfy the court that substantial damages have been suffered, the plaintiff run the risk of an award of a nominal award of damages or of no damages.
(See Halsbury's Laws of Australia Vol 9 pp 260286-260287, par [135-590])
Another category of decisions is where the breach is proved and there is some evidence relevant to deciding the amount of the damage but insufficient evidence to prove precise quantification of the damage or loss. In Chaplin v Hicks [1911] 2 K.B. 786, the submission of the appellant was that because the amount of the loss that would be suffered was subject to contingencies, only nominal damages of 1 shilling should be awarded. That was rejected and the jury verdict of 100 pounds was upheld. Farwell LJ said (at p 799):
In my opinion the existence of a contingency, which is dependent on the volition of a third person, is not enough to justify us in saying that the damages are incapable of assessment.
Vaughan Williams LJ said (at 792)
Sometimes however, there is no market for the particular class of goods but no one has ever suggested that, because there is no market, there are no damages. In such a case the jury must do the best they can, and it may be that the amount of their verdict will really be a matter of guess work. But the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages for his breach of contract.
That decision was followed by the Full Bench of the NSW Supreme Court in Howe v Teefy (1927) NSWSR 301 and there Street CJ said (at 306):
There may be cases where it would be impossible to say that any assessable loss had resulted from a breach of contract, but short of that, if a plaintiff has been deprived of something that has a monetary value, a jury is not relieved from the duty of assessing the loss merely because the calculation is a difficult one or because the circumstances do not admit of the damages being assessed with certainty.
This line of authorities was continued in the High Court decision of Fink v Fink [1946] HCA 54(1946) 74 CLR 127. There Dixon and McTiernan JJ (with whom Latham CJ and Williams J agreed) held (at p143):
Where there has been an actual loss of some sort, the Common Law does not permit difficulties of estimating the loss in money to defeat the only remedy provided for breach of contract, and award of damages
Similarly in Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54, Mason CJ and Dawson J said (at [31]:
The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can: Fink v. Fink [1946] HCA 54; (1946) 74 CLR 127, at p 143; McRae v. Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377, at pp 411-412:, Chaplin v. Hicks (1911) 2 KB 786, at p 792. Indeed, in Jones v. Schiffmann [1971] FICA 52; (1971) 124 CLR 303, Menzies J went so far as to say that the 'assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation': at p 308. Where precise evidence is not available the court must do the best it can: Biggin and Co. Ltd. v. Permanite Ltd. (1951) 1 KB 422, per Devlin J. at p 438. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages: see McGregor on Damages, 15th ed. (1988), pars 357-359.
Deane J said (at [4] of his reasons) :
One such subsidiary rule is that, even in an action for repudiation or breach of contract where damage is not an element of the cause of action, a plaintiff bears the onus of establishing the extent of her loss or injury on the balance of probabilities. To satisfy the requirements of that rule, a plaintiff must, if she is to recover more than a nominal amount in such an action, affirmatively establish assessable damage, that is to say, loss or injury which is capable of being measured in monetary terms (see e.g. Luna Park (NSW) Ltd. V Tramways Advertising Pty Ltd [1938] HAC 66; (1938) 61 CLR 286 at pp 301, 307, 311, 312).
Toohey J (at [11] of his reasons) said:
However, to say as a general proposition that it is for the plaintiff to prove his damages is not to say that, in some instances, damage may be not be inferred or presumed: see Mc Gregor on Damages, par 1785 in relation to damages in tort. Nor is it to fail to recognise that the quantification of damages is 'in many cases no more than approximation lacking in mathematical or economic accuracy or sufficiency' (Pennant Hills Restaurants, at p636) or even that the assessment of damages 'does sometimes, of necessity, involve what is guesswork rather than estimation': Jones v Schiffman [1971] HCA 52; (1971) 124 CLR 303, at p 308.
In the Victorian decision of JLW (Vic) Pty. Ltd v. Tsiloglau and Anor [1994] (Vic) Rp 16: [1994] 1VR 237, a decision of the Appeal Division of the Supreme Court of Victoria, Brooking J, who wrote the leading judgment said (at [9] of his reasons):
A plaintiff cannot recover substantial as opposed to nominal damages unless he proves both the fact and the amount of damage: The Commonwealth v Amann Aviation Pty Ltd 11991] HCA 54; (1991) 174 CLR 54; (1991)174 CLR 64; 104 ALR 1, at CLR at 80, per Mason CJ and Dawson J, at CLR at 99, per Brennan J., at CLR at 118, per Deane J. and at CLR at 137-8, per Toohey J. If he proves the fact of the loss but does not call the necessary evidence as to its amount he cannot be awarded substantial damages (McGregor on Damages, 14th ed., at 190 and 222): he must put the tribunal in the position of being able to quantify in money the damage he has suffered: Watts v Rake [1960] HCA 58; (1960)108 CLR 158, at 159, per Dixon CJ. So juries in personal injuries cases are often directed that the plaintiff must prove to their satisfaction what he has suffered and will suffer and what is fair and reasonable compensation in respect of that. It is often said that the amount of the damage must be proved with certainty, but this only means as much "certainty" as is reasonable in the circumstances: Ratcliffe v Evans [1892] 2 QB 524, at 532-3. Where precise evidence is obtainable, the court naturally expects to have it; where it is not, the court must do the best it can: Biggin and Co Ltd v Permanite Ltd [1951] 1 KB 422, at 438; The Commonwealth v Arnann Aviation Pty Ltd, at CLR at 83, per Mason CJ and Dawson J. The nature of the damage may be such that the assessment of damages will really be a matter of guesswork, as in the well-known case of Chaplin v Hicks [1911] 2 KB 786, where the plaintiff had lost a chance of winning an engagement as an actress as a prize. So damages will be assessed for the wrongful detention of a racehorse even though it may be necessary to guess at the amount: Wilson v Matthews [1913] VicLawRp 54;119131 VLR 224; compare Howe v Teefy [1927] NSWStRp 41; (1927) 27 SR (NSW) 301. Claims for damages for loss of publicity are another example of cases of inherent difficulty in assessing the plaintiff's loss with any approach to certainty: see the decisions cited in Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, at 301. An interesting decision is Aerial Advertising Co v Batchelors Peas Ltd (Manchester) (1938) 2 All ER 788, where the loss suffered could not have been proved with precision. Atkinson J. awarded three hundred pounds as all he could allow on an absolutely safe basis, saying that it was undoubtedly too little, but that the plaintiff could have called better evidence if it had wanted a larger figure. But while in some cases guesswork may be permissible in assessing damages, in others it is not. Guesswork was not good enough in Williams v Stephenson (1903) 33 SCR 323 (breach of contract by preventing plaintiff from continuing to conduct hotel; trial judge wrong in assessing damages by guessing); Wood v Grand Valley R Co 16 DLR 361; affirmed 22 DLR 614; 51 SCR 283 (breach of contract to construct railway line; any estimate of loss practically guesswork); Toronto Transit Commission v Aqua Taxi Ltd 6 DLR (2d) 721 (violation of exclusive right of ferry; no intelligent conclusion possible as to amount of loss); Sunley (B) and Co Ltd v Cunard White Star Ltd [1940] 1 KB 740 and Woodman v Rasmussen [1953] St R Qd 202 (breach of contract to carry machinery; in Sunley trial judge wrong to assess damages while admitting that any attempt at analytical analysis of award must fail); Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 (breach of advertising contract; impossible to reach any estimate of damage suffered); Noske v McGinnis [1932] HCA 32; (1932) 47 CLR 563, at 599 (breach of contract for sale of hotel; Evatt J, dissenting as to sufficiency of evidence, holds that it will not found a fair estimate of damages); and Ashcroft v Curtin [1971] 1 WLR 1731 (diminution of profitability of business as result of plaintiffs injuries; quantification quite impossible). It all depends on the circumstances. Where a vessel was damaged by negligence and there was evidence that it was impossible to make a reasonably accurate estimate of the cost of repairs, the Full Court of Queensland upheld a direction that in estimating the cost of repair the jury must do its best on what seems to have been the exiguous material before it: Wheeler v Riverside Coal Transport Co Pty Ltd [1964] QdR 113. The plaintiff may have been fortunate in the briefly noted case of Bovet v Walker (1917) 62 Sol Jo 104, where no evidence to enable the diminution in value to be quantified seems to have been led; I should have thought that expert evidence would have been available and should have been called.
His Honour said later in the judgment (at [11]):
There is no rigid dividing line between cases in which guess work is permissible in assessing damages and cases in which it is not. The borderline between guess work and rational assessment is itself indistinct, as it the line between evidence that is "precise" (The Perminite Case Dictum) and evidence that is not.
His Honour also stated (at [27]):
We were asked by Mr McInnes, if we were not prepared to order a retrial on damages, to substitute for the award of damages below an award of nominal damages. But this we cannot do. ""Nominal damages" is a technical phrased which means that you have negatived anything like real damage, but that you are affirming by your nominal damages that there is an infraction of a legal right, which, though it gives you no right to any real damages at all, yet gives you a right to the verdict or judgement because your legal right has been infringed. ("The Mediana" v "TC, Cint"" [1900] AC 113 at 116 Lord Halsbury LC, cited by Griffiths CJ in Baune v The Commonwealth [1906] HCA 92: (1906) 4 CLR 97 at 116
In Yan Tun Wwu; Dong Fang Chen; Feng Wei L; Lei Wang: Wei Kang Jiang; Hong Lian Zhu; Zhi Fen Adele Dai; Shao Hua Chen v Great Wall Travel Service Pty. Ltd [2014] NSWCA CD 50. The Tribunal member determined (at [64]):
There is uncertainty as to the applicant's loss and damage, but nevertheless the Tribunal must do the best it can: Biggin and Co Limited v Permanite Limited (1951) 1KB 422 at pp 438-439 per Develin J (as he was): by forming what was described in Callaghan v William C Lynch Pty Limited (1962) NSWR 871 at p877 as 'conclusions on matters, on slender material; to make allowance for contingencies, even to the extent of guess work or speculation…. many cases illustrate that uncertainty in the quanification of damage, either in cases of contract or Tort, does not prevent an assessment: provided that some broad estimate can be made'".
The Tribunal member (at [65]) relied upon the approval of these principles in NZ Enzed Ltd v Wynthea Pty. Ltd [1984] SCA 373: FCR 450 at [68] where it was held:
The principle is clear. If the court finds damage has occurred it must do its best to quantify the loss, even they agree that speculation and guess work is involved. Furthermore, if actual damage is suffered, the award must be for more than nominal damages. We should add that we can see no reason why this principle should not apply in cases under the Trade Practices Act as well as in cases of Common Law. We emphasise, however, that the principle applies only when the Court finds that loss or damage has occurred. It is not enough plaintiff merely to show wrongful conduct by the defendant.
Another decision where these principles were applied is Marskell & Anor v Davis & Ors t/as TV Local Bloke Removals [2015] NSWCATCD 34.
The evidence in the proceedings was insufficient to precisely quantify the cost of rectifying the cracking of the floor along the walls sustained as a result of the poor workmanship by the builder in breach of the contract and implied warranties.
It was not a case where there could not have been evidence establishing the extent of the breach, available methods of rectification and the likely cost of each. There could have been evidence by an expert as to the preferable method of rectification and evidence as to the cost of rectification. Neither the extent of this breach nor the damage was incapable of proof. It was not a situation where, according to the authorities, the damages should be nominal.
But the damages of $1,000.00, despite the Member describing them as nominal, were not nominal damages. In the context of these proceedings $1,000.00 was not a token amount. The member erred in describing the amount as "nominal damages". He was not making an order for nominal damages.
What was the evidence in relation to damage or loss?
The evidence about the cracks to the floor where it reached the walls was as follows:
1. Mr Matley described this defect in paras 1 to 5 of his report and his photographs, annexure G. Those photographs show:
Fig 3.1 and 3.2 only 2 small sections with cracking, but not adjacent to walls and apparently relating to other issues.
Fig 6: a section of about 1 to 2 feet of cracking but the report notes such has occurred in more than 5 areas.
1. Mr Matley attached photographs by the owners. The owners' photographs 3, 5 and 6 show such cracking, each of about 12 inches in length. The owners' photographs 8, 10, 13, 14, 15, and 16 each show a section where the installed floor meets a wall but there is no cracking.
2. Mr Matley at para 9 of his report says:
Remedial work is necessary to remove the edge material where cracks have appeared and install new materials to blend in with the existing material if possible.
He says that if this cannot be achieved then the whole of the floor installed by the respondent should be removed and replaced. He says that the cracking has occurred because the builder did not install a small 5mm expansion joint between the flooring the respondent laid and the walls. Presumably such a joint should be installed where cracks have appeared and the cracked section is being removed and replaced.
The evidence before the Member was that to remove and replace the whole of the floor laid with "Pangea PVC" (similar polished concrete) would be $19,428.00 and the cost to remove the floor laid and replace it with tiling would be $12,428.00. Also the charge by the respondent to lay the flooring it laid was $12,500.00. There was evidence that the area of flooring laid was 50 square metres.