This is an appeal against a decision made on 18 August 2022 (Decision) in the Consumer and Commercial Division of the Tribunal (Tribunal).
The Tribunal ordered the appellant to pay the respondent $5,879.50 in respect of the removal and replacement of a kitchen cook top and a splash back, which amount has already been paid.
For the following reasons, we have decided to allow the appeal, and to vary the order made by the Tribunal so as to provide that the appellant pay the respondent $2,935.02. As a consequence, the respondent must repay to the appellant $2,944.48.
[2]
The Decision
To understand the grounds of appeal and submissions, it is appropriate to briefly summarise the Decision.
In the Decision, the Tribunal:
1. noted at [2] that the application was from a homeowner and consumer, seeking full replacement costs for a cooktop and splashback installed by the appellant. The respondent claimed that there had been a breach of the Home Building Act 1989 (NSW) (HB Act) and Australian Consumer Law, and that the respondent had relied on the appellant's expertise and due diligence, and that the cooktop installed was not fit for purpose;
2. stated [3] that:
1. the cooktop was installed in a new build, details of which were set out in the document titled Tender, signed and dated by the parties on 17 October 2020;
2. the Tribunal also considered the document titled Tender Amendment No 1, dated and signed on the 17 October 2022, and a third document titled Kitchen Selections, dated 15 January 2021. These documents set out the scope of the work;
3. the overall amount of the contract was $204,800;
1. stated at [4] that:
There was no dispute raised in relation to the applicant's submission that the respondent was responsible for choosing and installing the cooktop and splashback, and the tribunal finds the respondent responsible for the choice and installation of both items. There was no dispute regarding payment or completion of work, the issues were limited to the choice and installation of the cooktop and splashback.
1. the appellant disputes that finding;
2. noted that both parties submitted a document titled 'Use and Care', sub-titled 'For correct use of the hub'. The document stated:
For lower gas consumption and better efficiency, use only flat-bottom pans of dimension suitable for the burners, as shown in the table below.
1. the relevant table then set out that a large (rapid) burner has a minimum flat-bottom pan diameter of 180 mm and a maximum diameter of 220 mm, and a medium (semi-rapid) burner has a minimum diameter of 120 mm and a maximum diameter of 200 mm;
2. noted at [6] that respondent's submissions were that:
1. the work had not been completed in a manner that was fit for purpose, and that they had relied heavily on the builders' expertise in due diligence, but had been left with a stove shop that could not be used;
2. the positioning and/or incorrect choice of cooktop meant that the respondent could not use the minimum sized flat-bottom pan as set out in the Use and Care document;
3. the entire width of the burner #2 (being the rapid burner) was approximately 100 mm, or 10 cm, and the distance between the glass splashback and the start of the burnout was approximately 85 mm, or 8.5 cm;
4. the distance between the centre of the burner and the glass splashback was approximately 135 mm, or 13.5 cm;
5. as a result, the evidence showed that the minimum diameter recommended by the provider, being a flat bottom pan diameter of 180 mm could not be used without the pan and related flames touching or damaging the splashback;
1. noted at [7] that:
1. the respondent submitted that the incorrect positioning of the cooktop, and/or the incorrect cooktop being installed, meant that they cannot fully utilise all elements on the cooktop, and that there had been damage to the glass splashback due to the element being too close to the sense flashback;
2. both parties agreed that the splashback had been damaged, and that the appellant wrote to the respondent stating that this was due to the respondent using the incorrect pot size for the relevant burners;
1. noted at [8] that the appellant submitted that:
1. it had complied with the requirements of "the Act"; [1]
2. there had been no breach of that Act;
3. the information set out in the 'Use and Care' documents were minimum requirements for lower gas consumption and efficiency, as opposed to "general minimum requirements";
4. a smaller pot could be used without damaging the cooktop or splashback;
5. if one of the elements may not be able to be used to its full potential, a full replacement cost should not be awarded.
At [9] and [10], the Tribunal then set out its principal findings, namely:
9. Having considered the evidence before it, the tribunal finds that the gas cooktop installed by the respondent does not meet the minimum diameter requirements set out in the Use and Care documents published by the cooktop supplier. The tribunal finds that the cooktop was installed in or about 2021, and it was installed on a new build, and that the respondent was responsible for choosing and installing this cooktop. The tribunal also finds that the respondent is a home builder and carries the requirements under the Home Building Act and Australian Consumer Law.
10. Having considered the evidence overall, the tribunal finds the cooktop and installation was done in such a way that it is not fit for purpose. The tribunal finds that the applicant would have a reasonable expectation that all five burners could be used, and could be used in a way that meets the Use and Care requirements, and does not damage the splashback, that this expectation has not been met.
As the parties agree that the cooktop was chosen and installed by the respondent, and the tribunal finds that it is not the person to not meeting the minimum diameter measurements set out in the Use and Care document without damaging the splashback, and the tribunal finds the respondents are responsible for any repair and/or rectification.
At [11] and [12] the Tribunal then considered, and rejected, the appellant's submission that it was unreasonable to replace the whole cooktop, where at least three of the burners could be used. The Tribunal stated:
11. The tribunal considered the submissions made by the respondent, being that should be proportionate to a finding that at least three of the five burners can be used and it would be unreasonable to replace before cooktop. In considering this submission the tribunal took into account that the property is a new build, that a cooktop would be expected to have a long life, and that it is an integral part to any property. The tribunal also considered evidence that the splashback has already been damaged, and that the respondent blamed the damage on improper use by the applicant, (the evidence of the respondent's response to the applicant was confirmed by both parties at hearing).
12. In these circumstances the tribunal finds it appropriate that a full replacement of the stone top and damaged splashback be carried out with full costs meet by the respondent. In setting the cost, the tribunal has relied on the quote provided by the applicant, dated 10 August 2022, for removal of the existing glass board, preparation of wall for inspection of new glass board, supply of glass(s) board, removal of existing cook top, supply and installation of Fisher and Paykel cooktop, and disposal of glass board for an overall price of $5,879.50. This was the only quote provided to the tribunal at hearing, and has been relied upon to make an award for payment by the respondent to the applicant.
[3]
Notice of Appeal
The appellant's grounds of appeal may be summarised as follows.
First, the Decision was against the weight of the evidence.
Secondly, and alternatively, the Tribunal failed to apply the established principle in Bellgrove v Eldridge (1954) 90 CLR 613 in concluding that the respondent was entitled to the full costs of the replacement of the cooktop and splashback and the associated labour and material costs.
We will refer to these two grounds respectively as Ground One and Ground Two.
[4]
Reply to Appeal
In the Reply to Appeal, the respondent states that he supports the original orders of the Tribunal for the reasons stated by the Tribunal.
[5]
Preliminary issue
The respondent sought to rely on evidence at the appeal hearing which was not before the Tribunal. The appellant correctly relies on the following passage of the Appeal Panel in Chapman v McLaughin [2016] NSWCATAP 212:
37. … The point of limiting fresh evidence to that which was not reasonably available at the first hearing is to ensure finality of proceedings. This means that it is in the interests of justice for parties to put forward all of their evidence as best they can at the hearing, as otherwise, if they were free to add fresh evidence after a case was decided, the proceedings would run the risk of not being finalised until after many hearings. This principle is of particular importance in the Tribunal because of the provisions of s 36 of the Act. That section requires the Tribunal to proceed to decide cases justly, quickly and cheaply.
We do not accept that the materials sought to be relied on were not reasonably available at the time of the Tribunal hearing: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111.
Therefore, we have had no regard to those additional materials.
[6]
Nature of an appeal
Section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) sets out the basis upon which appeals from decisions of the Tribunal may be brought. That section states that an appeal may be made as of right on any question of law or with leave of the Appeal Panel on any other grounds (s 80(2)(b)).
[7]
A question of law
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, without listing exhaustively possible questions of law, the Appeal Panel considered the requirements for establishing a question of law giving rise to an appeal as of right. One of those requirements is whether a wrong principle of law had been applied: Prendergast at 12; Chapman v Taylor [2004] NSWCA 456 at [33].
We consider that that requirement includes the failure to apply a correct principle of law, namely the Bellgrove principle relied on by the appellant.
Accordingly, the appellant does not require a grant of leave to agitate his second ground of appeal.
As to the first ground, the appellant does require leave.
[8]
Leave to appeal
Clause 12 of Sch 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal, an Appeal Panel may grant leave to appeal only if satisfied that the appellant may have suffered a substantial miscarriage of justice because:
1. the decision of the Tribunal under appeal was not fair and equitable; or
2. the decision of the Tribunal under appeal was against the weight of evidence; or
3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
The principles to be applied by an Appeal Panel in determining whether leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel conducted a review of the relevant cases at [65]-[79] and concluded at 84 that:
Ordinarily it is appropriate to grant leave to appeal only in matters that involve:
(a) Issues of principle;
(b) questions of public importance or matters of administration or policy which might have general application; or
(c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;
(d) a factual error that was unreasonably arrived at and clearly mistaken; or
(e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the NCAT Act. An appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32].
[9]
Ground One
Written submissions were filed by the appellant on 23 November 2022 in support of its grounds of appeal. Those submissions are detailed and thorough, and exhaustively summarise the appellant's evidence and the Tribunal's consideration of that evidence. Those submissions were further amplified by Mr Vardas' oral submissions.
The principal points made by the appellant are that that the Tribunal erred in finding that:
1. the cooktop was installed in a manner that was not fit for purpose, that finding being based solely on the erroneous calculations of the radius of the pot;
2. the cooktop was incapable of supporting a pot with a minimum width of 180mm; and
3. one of the five elements of the cooktop (being the rapid burner) could not be used at all.
We do not agree that the Tribunal erred in the manner claimed and consider that these findings were available to the Tribunal on the evidence before it.
The submission that the cooktop was installed in a manner that was not fit for purpose, "that finding being based solely on the erroneous calculations of the radius of the pot" mischaracterises the Tribunal's reasoning.
The submission that the cooktop (in fact this is a reference to the rapid burner) was incapable of supporting a pot with a minimum width of 180 mm was amply available to the Tribunal, and the submission that the rapid burner could not be used at all was not made by the Tribunal. What the Tribunal found in relation to the rapid burner was that the minimum diameter recommended by the provider, being a flat bottom pan diameter of 180 mm, could not be used without the pan and related flames touching or damaging the splashback.
In the circumstances, we would not grant leave to appeal Ground One.
[10]
Ground Two
We have set out above the sections of the Decision in which the Tribunal considered the damages to be awarded (see [7] above).
In its written submissions, the appellant submitted, in summary, that:
1. Bellgrove is authority for the proposition that a builder in breach of contract would have to pay damages necessary for the other party to achieve conformity with the contract, but that this rule is subject to the important qualification that not only must the work undertaken be necessary to produce conformity, but it must be a reasonable course to adopt;
2. as to what remedial work is both necessary and reasonable in any particular case is a question of fact;
3. the test of unreasonableness is only satisfied in "fairly exceptional circumstances": Tabcorp Holdings Ltd v Bowen Pty Ltd [2009] HCA 8;
4. Bellgrove was considered in the decision of the Full Court of the South Australian Supreme Court in Stone v Chappel (2017) 128 SASR 165 in which Kourakis CJ at [55] listed eight considerations which are relevant in determining whether the exception to the rule in Bellgrove applies where the award of rectification damages would be manifestly disproportionate. Those considerations are:
1. the degree of departure from the contractual stipulation;
2. the adverse effect of the departure on the functional utility, amenity and aesthetic appearance of the building;
3. the reasons, objectively ascertained and commonly known, for which the innocent party made the stipulation which was breached;
4. the practical feasibility of rectifying the work, including the effects on third parties of attempting to do so; whether or not the innocent party intends to carry out the rectification work;
5. the absolute cost of the rectification work and the disproportion between that cost and the value of the building and contract price;
6. the diminution in commercial value of the building,
7. and the effect of the departure on the functional utility, amenity and aesthetic appearance of the building.
In conclusion, the appellant submits that the award of almost $6,000.00 for the replacement of an entire cooktop and splashback because of a finding that one of the five burners could not be used was not a reasonable course of action to take having regard to the totality of the evidence adduced to establish that the cooktop as supplied and installed was defective.
We consider that there is substance in these submissions. We were not persuaded by the respondent's submissions that the Tribunal's award of damages should stand. The Tribunal found that one of the five burners of the cooktop could not be used in the way recommended for efficient gas consumption by the manufacturer. In those circumstances, compensation reflecting the complete replacement of the cooktop is, in our view, unreasonable, if not excessive.
Therefore, we allow the appeal in relation to Ground Two.
[11]
Reconsideration
Section 81 of the NCAT Act provides:
81 Determination of internal appeals
(1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following -
(a) the appeal to be allowed or dismissed,
(b) the decision under appeal to be confirmed, affirmed or varied,
(c) the decision under appeal to be quashed or set aside,
(d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it,
(e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel.
(2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
We asked the parties whether, if the appeal was allowed, we should re-exercise the powers of the Tribunal based on the evidence provided to us by the parties, or whether the matter should be remitted to the Tribunal for redetermination.
Both parties agreed with the Appeal Panel making a decision in substitution of for the decision of the Tribunal if the appeal was allowed, thereby avoiding the time and cost that would result if the application was remitted for rehearing.
The Tribunal's calculation of damages was based on a quotation of Network Plumbing Co Pty Ltd dated 31 August 2022. The quotation consisted of the following components:
1. Mobilisation cost included.
2. Protection of area. $200
3. Removal of existing glass board. $320
4. Preparation of wall for installation of new glass board. $100
5. Silicone. Included
6. Supply of new Glass board. $779 70.
7. Removal of existing cook top. $250
8. Preparation of bench for new cook top. Included
9. Supply and install of new Fisher & Paykel Cook top CG905DWNGFCX3 (compliant in area). $3,346
10. Test & commission Cook top. Included
11. Disposal of glass board. $350
This is a total of $5,345.00, to which GST of $534.50 was added, giving a total amount of $5,879.50 (being the amount awarded by the Tribunal).
We consider that the respondent is entitled to all the amounts, save for the amount allowed for the new cook top; this is a total of $1,999). As for any allowance the cooktop, we accept the appellant's submission that 20% of the cost be allowed (and here we note that no alternative submission was made by the respondent) representing the loss of effective use of the rapid burner (being one of five burners), which is $669.20. This gives a total of $2,668.20 ($1,999 plus $669.20), to which GST of $266.82 must be added, giving a total amount of $2,935.02.
As the respondent has received $5,879.50, he must repay the difference of $2,944.48.
[12]
Orders
The Appeal Panel orders that:
1. The appeal is allowed.
2. The order of the Tribunal of 12 September 2022 in matter GEN 22/31157 is set aside and in lieu thereof amended to read:
CHAMPION HOMES SALES PTY LTD Suite 1 600 Hoxton Park Road HOXTON PARK NSW 2171 Australia is to pay MORGAN CALLEN FAWZI [REDACTED] BOX HILL NSW 2765 Australia the sum of $2,935.02 immediately.
1. The respondent is to pay the appellant the sum of $2,944.48 on or before 18 January 2023.
[13]
Endnote
Presumably a reference to the HB Act.
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: 22 December 2022