These proceedings involve:
1. A claim by Ms Felicity Croll against Form and Colour Pty Ltd (Form and Colour) for the full repayment of monies paid to Form and Colour and for an order that Ms Croll does not owe Form and Colour the amount of two invoices issued by Form and Colour; and
2. A cross claim by Form and Colour for the payment of those two invoices.
Ms Croll's parents own a property in Chiswick, New South Wales. In March 2022 Ms Croll was seeking, on behalf of her parents, to refurbish the property to ready it for sale.
Form and Colour carries on business in Sydney as an interior, furniture and lighting designer. Ms Wende Reid is the director and principal of Form and Colour.
The proceedings arise out of dealings between Ms Croll and Ms Reid in March and April 2022 in relation to the proposed refurbishment of the Chiswick property.
The proceedings were originally heard and determined by Member Ringrose on 22 November 2022. The Member dismissed Ms Croll's application and ordered Ms Croll to pay Form and Colour $10,607.30, being $6,922.30 in respect of an invoice issued in April 2022 for "additional design work" and $3,685 in respect of a further invoice also issued in April 2022 for what was described as a "cancellation fee". The Tribunal also ordered Ms Croll to pay the costs of both matters.
Ms Croll appealed to the Appeal Panel and by a decision published on 25 July 2023 (Croll v Form and Colour Pty Ltd [2023] NSWCATAP 204) the Appeal Panel upheld the appeal, set aside all orders made in both matters and remitted both applications to the Consumer and Commercial Division of the Tribunal for rehearing by a differently constituted Tribunal.
In the course of its decision the Appeal Panel noted that, although the Tribunal had treated Ms Croll's claim as a claim for breach of consumer guarantee under the Australian Consumer Law (ACL), neither the parties nor the Tribunal had clearly identified which statutory guarantees had allegedly been breached.
The remitted proceedings were listed for before me for hearing on 13 October 2023.
The remitted proceedings had been listed for directions on 11 August 2023. On that occasion the Tribunal directed that the parties may not file any further evidence in chief in the proceedings. The Tribunal also directed the parties to file a list of documents filed in the original proceedings on which they relied in the remitted proceedings.
Each party had filed a bundle of documents before the first hearing. Although both parties filed lists of documents intended to be relied upon, which referred to other documents not in those bundles, at the hearing before me neither party sought to rely upon any document other than those in the bundles.
Both parties had been given leave for legal representation. Ms Croll was represented by Mr Gupta, solicitor. Form and Colour was represented by its director, Ms Wende Reid.
The bundles of documents filed by the parties before the first hearing were received as the parties' evidence in chief at the remittal hearing.
Form and Colour's bundle contained a statement by Ms Reid setting out her version of events and Form and Colour's case.
Despite directions made by the Tribunal before the first hearing that "all evidence from the parties' witnesses in support of that party must be in the form of a statement, statutory declaration, affidavit or expert report as appropriate", the bundle filed by Ms Croll did not contain a formal statement of evidence. The bundle did contain a general statement of Ms Croll's case and a document headed "Response to Statement of Wende Reid", which addressed some of the allegations in Ms Reid's statement.
Under the heading "Basis of my Evidence", Ms Croll stated:
"Although I could write my experience about Wende failed to our contract and her unethical business practices during many of our verbal conversations and face to face meetings, I decided not to, because they are not easily verifiable, they are easily disputable between Wende and I, and NCAT will not considered non verifiable encounters as evidence."
This self-imposed limitation upon Ms Croll's evidence substantially limited Ms Croll's case.
Each of Ms Croll and Ms Reid made an oath or affirmation and verified the truth of the statements in their respective bundles. Notwithstanding Ms Croll's failure to provide a statement of evidence, I permitted Mr Gupta to lead brief oral evidence from Ms Croll, on the proviso that the evidence led must be within the scope of the matters contained within the "Response to Statement of Wende Reid".
Each of Ms Croll and Ms Reid were cross-examined by, respectively, Ms Reid and Mr Gupta. Each also answered questions from the Tribunal.
The directions made on 11 August 2023 also required the parties to file an agreed statement of facts and outlines of submissions no less than seven days before the hearing. Ms Croll filed a statement of facts and an outline of submissions the day before the hearing. Form and Colour filed neither.
Ms Croll's submissions identified that she relied upon three causes of action:
1. Misleading and deceptive conduct in breach of s 18 of the ACL.
Although Ms Croll's submissions did not identify the alleged misleading and deceptive conduct with great particularity, the allegation, as I understand it, is that Form and Colour, through statements made by Ms Reid, represented that the refurbishment could be carried out within a budget of $200,000 (or that the cost of the refurbishment excluding the company's design fees would be $167,000 plus GST, that is $183,700 and that Form and Colour's fees for the design of the refurbishment would not exceed $22,100). Ms Croll submitted that these representations were representations as to future matters and that Form and Colour did not have reasonable grounds for making the representations.
1. Breach of the consumer guarantee in s 60 of the ACL that services provided by Form and Colour would be rendered with due care and skill.
2. Breach and/or repudiation of contract.
[2]
Jurisdiction
I am satisfied that the Tribunal has jurisdiction to determine the claims made by the parties.
The claims by Ms Croll for the repayment of monies paid to Form and Colour and for an order that Ms Croll does not owe Form and Colour the amount of the two invoices are clearly "consumer claims" within the meaning of s 79E of the Fair Trading Act 1987 (NSW) (FTA) in that: Ms Croll is a "consumer"; Form and Colour is a "supplier", that is "a person who, in the course of carrying on … a business, supplies goods or services"; Ms Croll's claims are for the payment of money and relief from the payment of money; and the claims arise from a supply of services by Form and Colour to Ms Croll.
Pursuant to s 79J of the FTA, the Tribunal has jurisdiction to hear and determine a consumer claim.
Section 79N provides that, in determining a consumer claim wholly or partly in favour of a claimant, the Tribunal may make orders for the payment of money and orders declaring that a specified amount of money is not due or owing by the claimant to a respondent.
Thus, the Tribunal has jurisdiction to determine Ms Croll's claims.
Although the cross-application by Form and Colour is not a consumer claim, s 79O of the FTA provides that:
"In determining a consumer claim wholly or partly in favour of a respondent to the claim, the Tribunal may make any one or more of the following orders that it considers appropriate -
(a) an order dismissing the claim or a part of the claim,
(b) an order that requires the claimant to pay to the respondent a specified amount of money,
…"
Pursuant to that provision, the Tribunal has jurisdiction to determine Form and Colour's claim against Ms Croll.
Neither party suggested that the Tribunal had jurisdiction over these proceedings pursuant to s 48K of the Home Building Act 1989 (NSW) (HBA) which confers jurisdiction on the Tribunal over "building claims". As I have determined that the Tribunal has jurisdiction pursuant to the FTA, it is not necessary to consider whether the work performed by Form and Colour constituted "services supplied for or in connection with the carrying out of residential building work" and therefore constituted "building goods or services" within the definition of that term in s 48A of the HBA, so that the parties' respective claims constitute "building claims" as defined in that section: cf Grygiel v Baine [2005] NSWCA 218 at [57] - [58].
[3]
Background
It is convenient by way of background to set out a chronology of significant events. Except where otherwise indicated, the following reflects the undisputed contents of correspondence between Ms Croll and Ms Reid. Because the parties were in dispute about the precise nature of their relationship, and in particular the terms of the contract which it appeared to be common ground had been entered into between the parties, I will set out the content of significant items of correspondence verbatim.
It appears that some form of interaction between Ms Croll and Ms Reid took place on or about 6 March 2022 in which the fact that Ms Croll was looking to refurbish the house in Chiswick was communicated to Ms Reid.
On 6 March 2022 at 10:24 pm Ms Reid emailed Ms Croll:
"Good to hear from you. Is there a particular time tomorrow that works best for us to have a chat?"
On 7 March 2022 at 9:47 am Ms Croll forwarded to Ms Reid the address of the property.
On 7 March 2022 at 1:39 pm Ms Reid emailed Ms Croll:
"I'm looking forward to meeting you on Wednesday at 10 am to understand the scope of design and the scope of work your house will need to maximise sales results for an off-market sale.
After we meet, I'll write a Scope of Design proposal for your approval.
As discussed, we can handle every aspect of what will be needed including research to analyse current buyers preferences in Chiswick as a strategic guide for our design and refurbishment project on your behalf."
On 7 March 2020 at 1:43 pm Ms Croll emailed Ms Reid:
"Would you like me to pay the invoice now or after the visit?"
On 7 March 2022 at 1:44 pm Ms Reid responded:
"In advance if you don't mind. And thank you!"
On 7 March 2022 at 8:21 pm Ms Reid emailed Ms Croll:
"Thanks for your payment confirming your site meeting at 10 AM Wednesday, 5/7/21. Please find your receipt attached."
Form and Colour's bundle included an invoice dated 7 March 2021 on Form and Colour's letterhead for "Initial Site Visit" in the amount of $319 inclusive of GST. The invoice is marked "PAID 7/3/21 - thanks". The scope of works involved is described as "Initial survey to establish brief."
On 9 March 2022 at 8:52 pm Ms Reid emailed Ms Croll:
"REFURBISHMENT AND STYLING FOR SALE - *** STREET, CHISWICK 2046
Thanks for your time today in Chiswick.
I'm very sure we can transform your parents' house. updating it and infusing it with sense of modern luxury to maximise its sales results.
Attached here is a photo to show you a version of one of many general style directions indicating simplified modern luxury achieved mostly by upgrading the fixed elements of the house with the addition of mostly inexpensive minimal furniture, a few quality accessories and borrowed artworks.
DESIGN DEPOSIT
We charge a deposit based on an estimate of hours to develop a comprehensive design, specifications, and firm quotations to supply and install.
The total list of design and specification work required to achieve quotations is called the Scope of Design.
To review with you, we present samples and images with prices of design elements as goods and services. Options are offered here for these where applicable.
When the Scope of Design is complete and priced, you will have accurate costs for the work to consider before implementing.
Our design fees figured per hour without documentation tend to be 12% of the total expenditure for most projects without construction.
Based on an estimate of time using the 12% metric we can work back to estimate a likely total expenditure.
Please also allow a 10 - 15% variation for unforeseen repairs or charges and for areas of the house we didn't review today. The garage and driveway would be examples.
Our Scope of Works proposal is attached here. The fee to complete design and specifications of refurbishment work = $ 20,100. + GST.
Using our estimate of hours required indicates the total expenditure to refurbish and style should roughly = $167,000. + GST
If this amount needs to be adjusted we will know after completing the design, specification and quotation process.
We also manage all ordering, trades scheduling, and supervision of installations for you to ensure design results. We charge hourly for site checks with a focus on efficiency.
If your parents prefer an estimate of the costs ahead of design development, we can start with a price focused exercise obtaining onsite trade estimates, general pricing for fittings, and a market survey for fixtures and furnishings x estimated numbers required, without developing exact design specifications.
After your parents review the results we can fill in exact design specifications and quotes.
The fee for this broader preliminary exercise to estimate costs for supply and installation = $ 9,280. + GST
Please note, estimates are often higher than quotes. If you prefer to start this way, a second design deposit fee will be charged to finalize designs, specs and quotes.
The total of these two charges will is likely to be slightly more than the first combined design deposit. Dividing the two exercises, price and details of designs, will require some duplication of hours with suppliers and possibly revisions to finalize quotes and the specifications and designs they refer to.
Please find Invoices for both variations attached, the photo discussed and the proposed Scope of Works.
Happy to talk you through the document. Your welcome to add or subtract from the list. Looking forward to hearing from you.
When you're ready to approve your signature and payment are approval of the scope of design or version 2."
Apparently attached to that email were two tax invoices. The invoice numbered "Tax Invoice 2022 - 2 Version 1" identified a scope of works as "Design Deposit - Scope of Design Works, proposed designs to quotation for review". The invoice was in the amount of $22,110 inclusive of GST. The invoice numbered Tax Invoice 2022 - 2 Version 2 identified a scope of works as "Deposit to estimate project cost for review without final design details." The amount of that invoice was $10,208 inclusive of GST. Each of Form and Colour's invoices, including the invoice for initial site visit dated 7 March 2021, included the following:
"Changes to the scope of work or to designs are subject to further charges for time and possibly for supply. On request, Form and Colour will indicate to you a best estimate of hourly charges required to address changes to the scope of work or to complete any further work which may be under consideration. Otherwise, your request for changes or further works indicates an approval to provide additional billable hours and for services and goods as required.
Deposits for goods or services are not refundable. Orders for custom made goods cannot be cancelled if you change your mind or circumstances. Form and Colour does give refunds or accept returned goods on that basis. Use of all company time to progress your order or that has been factored in as a component of the purchase price, will be deducted from any credit issued. Form and Colour cannot hold your products in storage.
Company charges per hour:
Principal Designer $290. p/h + GST. Associate Designer $ 120. + GST, Documentation $ 80. + GST
Your payment indicates your agreement to the terms and conditions contained in our terms and conditions, How We Work, supplied to you by Form and Colour. Form and Colour relies on representations made by its suppliers and/or sub-contractors in relation to goods and services supplied to you. Assertions are provided by vendors' and sub-contractors' information. Form and Colour, in its capacity as designers will take care in confirming at production and/or installation, the quality, standards and suitability of materials, products and techniques to produce our designs. Form and Colour does not to the extent permissible by law, take responsibility for loss, damage, or failure to perform caused by any misrepresentation made to Form and Colour by its suppliers or sub-contractors. Please ensure there is adequate access to your site to deliver the goods you have ordered. Form and Colour is not responsible for delivery access."
The version of the email of 9 March 2022 included in Ms Croll's bundle suggests that there were four attachments to that email, a photograph of an unidentified property labelled "BFC photo suggesting modern elegance with minimal styling"; a document titled "How We Work - terms and conditions"; and the two tax invoices.
Although the email suggested that the proposed Scope of Works was attached to that email, it is not clear that it was. An email from Ms Reid to Ms Croll dated 16 March 2022, referred to below, suggests the Scope of Works may not have been provided until then.
The "How We Work" document attached to the email was as follows:
"HOW WE WORK
INTRODUCTION
1 - All Form and Colour P/L design and coordination projects begin with design development of the agreed items listed in either the Scope of Design Work document or in invoices submitted in advance of work.
The approved scope of design work in either format forms the basis of our agreement with you to design and supply your project.
2 - Project design work is presented as scale drawings, samples, photographs, and in other visual formats to represent components of the total project.
- All design and supply of goods and drawings is planned and quoted within the context of the total project. In the process of planning and providing for the total project, itemized goods and services based on designs, specifications, quotations, and estimates may be presented for your review and approval either as a group with other project items or individually.
In either case all items requiring development, review and confirmation to supply in any form remain part of the total project you agree to undertake.
4 - Charges for design relate to time required for any or all of the following:
research, consultation, design development, sampling, specification, drawings, quotations and application of our intellectual property to achieve the total project, goods and services you requested.
5 - A Design Deposit fee, based on an estimate of hours for design development of the brief, is charged to commence design development, specification, quotations and estimates to implement. Your payment indicates the commencement of the Project.
6 - Design fees for some projects will be charged incrementally.
Additional hours required for further design development, documentation, sample making, site meetings held by Form and Colour with suppliers and trades or site coordination at installation beyond initial Design Deposits will charged.
All additions or changes to the agreed scope of work and resulting design requirements are subject to further charges for time and supply.
7 - When designs, specifications, quotations, and estimates are presented, confirmation of same to progress your project or elements of your project to supply on or off-site, is made by payment in advance for the approved work and items within the context of the total project agreement, including lead time estimates for supply and the Project timeline where applicable.
8 - Confirmed goods and services are then supplied and coordinated for installation in the context of the total approved Project.
9 - Form and Colour supervises offsite supply and production of your order on your behalf.
10 - To protect the integrity of the approved design, we work closely with preferred workrooms, trades contractors, and licensed building contractors to achieve supply, installation or construction of approved products, original designs and items procured, or supplied by Form and Colour P/L to fulfil your brief
11 - In the case of structural work, based on the builders' quotation to install and /or construct the approved Project scope, as required by law a contract will be provided separately between the building contractor and yourself.
12 - Thank you for providing your budget guidelines which forms the framework for design development and planning. Your confirmation of the scope of design, by first payment of the Design Deposit invoice. Your confirmation is the foundation for developing the scope of work and indicates your understanding of and your agreement with the policies as described in this document.
FEES AND CONDITIONS
1 - The process of Project design development is technical and considered regardless of the scale of the required scope. Substantial works typically occur before the project design process reaches the point of presentation to you.
We have separated this process into two parts for your approval and for budgetary considerations.
2 - The fee to develop designs set out in the Design Deposit invoice and Scope of Design Works document where applicable, is based on the quantity and complexity of design required to develop, document and obtain quotations and estimates for your Project brief.
3 - Project design development can include any or all of the following: research, inquiry, sourcing, design development, documentation, consultation with government bodies as required, communicating with specialist consultants as required, communicating with service providers including working closely with suppliers, workrooms, tradespeople and licensed building contractors who may also contract and review as required the work of other trades contractors for installations.
4 - CAD documentation is charged on an hourly basis at the rate of $ 80. p/h. + GST
5 - Pricing for additional building documentation if required will be quoted when design development for structural planning is confirmed.
6 - Coordination of work onsite and off-site planning of same is charged in addition to fees to design and supply.
7 - All courier fees; sampling fees, printing fees, all other design and documentation fees, and all incidental charges required to complete your order are billable with payment required before work is delivered and your project progresses.
PAYMENT OF ORDERED GOODS
1 - final payment for all goods and services is due to confirm in advance of production or preparation to supply.
2 - Project orders may be presented in tandem or separately for a variety of reasons including but not exclusively, estimated lead times, a project timeline, complexity of design or by an agreed / requested delivery date.
3 - Freight including between workrooms or from workroom to site, is charged separately and is due prior to or in some cases, at time of delivery.
4 - Whether they are listed or paid separately or as a single payment, all project goods remain the property of Form and Colour P/L until all Project fees and charges are paid in full.
CHANGES TO BRIEF
1 - Changes to the brief will require additional use of billable practice time and resources.
Additions or changes to the agreed scope of work requiring further use of Form and Colour P/L time or resources include:
Requests for revisions to designs or quotations or any aspects of the brief, changes to time frames due either to client requests, or to circumstances or due to new factors affecting design or design implementation.
Additional client meetings and site meetings beyond an estimated number of meetings and site attendance deemed necessary by Form and Colour P/L to progress and coordinate your work;
2 - The final charges for project development and services includes the number of changes, additions or delays that have been requested or which occur by unforeseen circumstances, whether or not any changes or additions are ultimately approved by you for production or for inclusion in the final implementation of the scope of work.
3 - For on-going project development,
DELAYED INSTRUCTIONS AND PAYMENTS, CANCELLED PROJECT WORK
1 - Please note, all invoices are net terms payable in advance for design services and ordered goods.
2- Timing changes to the project that result from delayed payment of invoices for goods and/or services may cause loss to Form and Colour P/L and its suppliers. Payment delays may incur a monthly interest charge of the outstanding balance total at Form and Colour's bank overdraft rate plus 2%.
3 - Delayed client instructions regarding proposed design works for approval could also result in loss to Form and Colour P/L and possibly its suppliers. Delays to project timing or cancellation of the project schedule may result in charges to compensate any loss to Form and Colour P/L or affected suppliers.
4 - For projects including Scope of Work documents requiring on-going design development, cancelled projects for any reason, incur a fee based on the average number of billable hours used per week to that date. An estimate of the cancellation fee will be made at the time of agreement to the Scope of Work and held in escrow. The fee held in escrow, if not required as compensation for a cancelled project, will be used as all or part of the last payment for the completed design development stage of the project.
RETURN AND HOLDING OF GOODS
1 - Form and Colour P/L does not give refunds or accept returned goods if you have changed your mind or circumstances.
2 - Form and Colour P/L does not hold your products in storage.
CONDITIONS OF IMPLEMENTATION
1 - Form and Colour P/L are principal and sole designers and suppliers on all Form and Colour design projects unless agreed in writing at the outset of the project.
2- Form and Colour supervises the offsite supply and production of your orders after your approval and payment to proceed including scheduling and coordinating delivery of goods to coincide with the installation of contactors works. All time used for coordination of works is billable. Practice time used for offsite supervision to produce goods is generally included in the purchase price of goods unless there is a change of brief for any reason. Time used for this purpose will be deducted from any applicable credit.
3 - Form and Colour works closely with the excellent contractors we recommend. Form and Colour provides coordination in the form of communication, order coordination and time onsite as required for accurate interpretation of design intent during contractor's works. All coordination fees are billable usually as estimates of blocks of time in advance related to the scope of work to be developed and installed.
We provide a separate agreement to act on your behalf as your agents for the day-to-day supply progress and communication to maintain faithful interpretation of the approved design, and to distribute your payments to the builder and other contractors when work is completed to your approval, onsite, Our agreement with you on this basis is charged at the company rate, $ 319 p/h gst included, based on an estimate of hours in advance in weekly or monthly increments depending estimated Project timing and scope.
4 - All additional design development, design variations and interface beyond the paid Design Deposit or Agent's Project coordination fee are subject to hourly charges at the company rate, $ 319. p/h gst included (290.+ GST).
TIMING
1 - In order for us to focus closely on developing the details of your work. a time frame for scheduling design development for your project is established when you approve the scope of work.
2 - Ordered goods based on approved design can take up to 12 weeks or longer depending on the complexity of the order, the supplier, and a variety of factors.
3- If a specific deadline to complete supply is requested, an agreement in writing will be provided by Form and Colour P/L at the outset of the project and confirmed as part of the initial scope of work agreement. Such an arrangement may incur additional charges for the use of extra resources, and will require a similar agreement in builder's or other trades' contracts if applicable.
4- In the event of requests for design changes or suppliers' delays or changes in supply or changed factors related to materials supplies or contractors' timing, a deadline agreement could be nullified at the discretion of Form and Colour P/L.
6 - Estimates for deliveries may also vary beyond our control.
ORDER CANCELLATION GOODS OR SERVICES
1 - Deposits for designs and payments for goods or services are not refundable if you change your mind or if circumstances change for any reason. Confirmed orders for custom made goods cannot be cancelled due to change of mind or changed circumstances.
2 - Form and Colour P/L uses time and resources to prepare your order for goods and services which may or may not be a component of prices quoted.
In the event of contract or order cancellation. postponement or revision due to change of mind, conditions or circumstances at any stage of development of the agreed scope of work e.g. research, design development, documentation, specification, quotation or preparation of submission; any previously unbilled time and use of practice resources will be due and payable.
If a credit is issued for any reason, the total amount of the credit will reflect all unbilled time usage related to preparation, design development, supervision and progression of your work from the outset.
QUALITY ASSURANCE AND LIABILITY
1 - Form and Colour P/L relies on representations made by specialist consultants and suppliers as required in relation to designs, concepts, building and all other documentation.
2 - All engineering and construction works are made under separate agreement.
3 - All building works and installations are made with licensed building contractors we recommend. In tum we provide a separate agreement to act on your behalf as your agents for the day-to-day supply progress and communication to maintain faithful interpretation of the approved design.
4 - Form and Colour P/L will take care in confirming the quality of design concepts developed. Form and Colour P/L does not to the extent permissible by law take responsibility for loss, failure to perform or damage caused by any misrepresentation made to Form and Colour P/L by contractors, consultants or suppliers.
5 - As a separate arrangement, Form and Colour P/L will organize consultants for or submissions to councils or other authorities. Form and Colour P/L does not take responsibility for the outcomes of government submissions for approval or the decisions of government or other authorities.
COPYRIGHT AND DESIGN OWNERSHIP
1 - All original designs, concepts, documentation. and intellectual property remain property of, subject to copyright, and where applicable, design registration and international trademarks by Wende Reid, Form and Form and Colour Pty Ltd.
2 - All documentation for government submissions are property of Form and Colour P/L until all fees and charges are paid in advance of delivery.
3 - Form and Colour P/L reserves the right to professionally photograph for our use and for publication at our discretion, all goods, design elements and applied concepts after installation. In doing so, we agree to protect your privacy at all times.
- Form and Colour P/L reserves the right to be the first to photograph all goods, design elements and applied concepts after installation.
4 - No photographs or written representation of our work can be made for publication or for any commercial purpose without our express written permission."
On 9 March 2022 at 10:26 pm Ms Croll responded to Ms Reid's email:
"Does the quote include painting and curtains?
Would be helpful if you could outline the items that you haven't included in the quote.
Trying to figure out the total project cost."
On 10 March 2022 Ms Reid responded:
"Yes, these items are listed in the proposed Scope of Design.
Painting will probably be the largest number. That's why there are two options offered.
Curtains and blinds also substantial.
There is electrical work required to reinstall so many lights.
Also you may want an update some fixed lights under cabinets and in wardrobes to appear as modern as possible including switch plates and power points.
Most luxury houses now have Dali or other integrated electrical systems. I think this is too invasive to suggest, but the appearance of modernity for all electrical connections and appliances will provide a sense of having a high technical standard.
I'm happy to discuss any of the options with you."
On 16 March 2022 Ms Reid emailed Ms Croll stating "Attached is the Scope of Design Works for *** Street Chiswick."
The proposed Scope of Design Works attached to Ms Reid's email was as follows:
"PROPOSED SCOPE OF DESIGN WORKS 9/3/21
To Prepare For Sale, Furnish and Style
*** Street Chiswick NSW 2046
EXTERIOR
PAINT
Option 1 - Updated colour schedule, paint bricks and trim including doors, garage door, lattice fence at pool
Option 2 - Updated colour schedule, paint only trim, doors, garage door, lattice fence.
TILES
1 - Update, respecify, replace, all tiles to face of front balcony,
Update, respecify replace all tiles to front path.
GLAZED BALUSTRADE
Option 1 Replace all balustrade to all balconies with frameless glazing and fixings
Option 2 - Replace only glazing to front balustraded with frameless glazing
LANDSCAPING
Option 1 - Redesign using new plantings to front and rear gardens, add potted trees strategically to front landing, balconies, rear area, pool area
Option 2 - Trim existing trees to front garden, new plantings to rear garden
EXTERIOR FURNITURE
Pool and rear/side balcony furniture with interior furniture schedule
INTERIOR
PAINTING, WALL FINISHES
1 Colour and finish schedule for all walls and trims including billiard room, kitchen cabinets, built-in wardrobes, bathrooms.
OPTION 1 Kitchen island replaced with updated reconfiguration and bench top, all cabinets refinished, new decorative hardware, new lighting, possible new sink tap.
OPTION 2 Kitchen bench and all cabinets repainted own, new decorative hardware, new lighting
FLOORS
All stone floors cleaned as required.
New broadloom carpet to all upper level rooms
Area rugs to lower level seating groups
BATHROOMS*-
OPTION 1 - New sinks, taps, shower screens where applicable, toilet to powder room, window treatments, colour schemes.
OPTION 2 - As above omitting replacement of toilet.
• Re-tiling changes bathrooms and powder rooms substantially. This can be installed over existing tile. As discussed, kitchens, bathrooms, laundry rooms, household appliances, electrical technology are big selling points for the Australian market.
WINDOW TREATMENTS
Option 1 - curtains fabric blinds or fitted shutters for all windows.
Option 2 - Roller blinds for upper-level, curtains to main lower level areas.
LIGHT FIXTURES
Replace all ceiling fixtures except for one brass bathroom fixture to retain and refurbish. Add decorative wall lights where required.
OPTION 1 - Large custom pendant lights and wall lights to lower level.
OPTION 2- All lights sourced.
DOOR FURNITURE AND DECORATIVE HARDWARE
New brass handles, pulls and door furniture to all doors, cabinets, wardrobes
FURNITURE SURVEY
Estimate for number of pieces to establish likely price to purchase and borrow for interior and exterior
This Scope of Works accurately lists the design work we agree to undertake.
We have initialled any additions, changes, or deletions we want to make to this list.
We acknowledge having received a copy of How We Work and agree to its terms."
The document concluded with space for the client's signature, but no signed copy was included in the evidence.
On 17 March 2022 Ms Croll arranged the payment of $22,110 to Form and Colour and at 10:17 am forwarded to Ms Reid a copy of the receipt. The description entered into the transfer record was "Chiswick Deposit".
It is apparent from text messages and emails included in Form and Colour's bundle of documents that, commencing on 17 March 2022, Ms Reid undertook work in relation to the refurbishment of the Chiswick property including meeting tradespeople and suppliers at the site and undertaking measurements and preparing drawings.
At 2:03 pm on 17 March 2022 Ms Reid emailed Ms Croll:
"Great you'll be working at home tomorrow.
I'll be meeting two tradespeople for quotes starting at 10 am.
Also I'll measure a few things to start drawings of changes we discussed.
On Monday we have two more trades booked starting at 10:30.
My associate designer will be with me for more measuring, should go until about 11:30 or so.
If you aren't going to be home, clients often provide a key so we can duck in and out.
In both cases we can handle what's needed without disturbing your work."
Ms Croll responded: "All those times work for me."
On 23 March 2022 Ms Reid emailed Ms Croll:
"I've made on-site appointments with 3 trades over the next 2 days. Please let me know if any of these conflict with your schedule. If you aren't going to be home, is there a place you can leave a key?
Also, if you plan to move out, please confirm your timing for this so I can discuss start dates with trades quoting. Most tradespeople are very busy now so this is important."
Ms Croll responded that evening:
"I can move out ASAP. This weekend if needed. I prefer all work to start asap together as they are doing different things independently and are not going to affect each other.
You let me know the earliest start date, I will book the accommodation.
I'm working at home most days. Just let me know when, I can accommodate your schedule."
On 27 March 2022 Ms Croll emailed Ms Reid asking "Do you have a rough idea when we should be moving out?"
Ms Reid responded that afternoon:
"We discussed meeting end of this coming week to review pricing and timing.
Start Time after that when you approve.
Then the whole house needs to be emptied plus deleted exterior objects.
The absolute soonest would be week of April 3.
We aren't at this stage yet where we've schedule preparing the site so there may be an extra week or so in there if you need it."
Ms Croll responded that she would book accommodation starting 10 April.
On 11 April 2022 Ms Reid emailed Ms Croll asking if Ms Croll minded if "another window treatment installer" attended to take measurements the following morning at 8:30 am. The email included the statement "We're nearly there - collecting samples now to help tell the story with drawings and prices."
On 13 April 2022 Ms Reid emailed Ms Croll stating:
"We have samples, quotes or estimates, some before and after photos, and the drawings we used to quote.
If you're around, not taking time off, let's review late tomorrow afternoon or Friday."
Ms Croll responded:
"Tomorrow after 4 is fine.
Is it possible to email me the information we are going to discuss which will make our meeting more efficient?"
Ms Reid replied: "Ok great, see you at 4:30. Will send beforehand."
At about 4 pm on 14 April 2022 Ms Reid texted Ms Croll:
"Lots of information to order clearly and transmit. Are you free later, say 6 or 7 PM … Or tomorrow about 10 AM?"
Ms Croll responded suggesting that night at 7:30 pm.
It is not clear whether Ms Croll and Ms Reid did meet on 14 April 2022. On Friday 15 April 2022 at 11 am Ms Croll texted Ms Reid:
"[J]ust letting you know that we are moving out this Sunday. We would really like the renovation to start ASAP. Let's talk more on Tuesday. So you think you could email me the price and project schedules please? I need some time to think about it and the budget has to stick to 200K. I know that's probably not ideal, but we just need to be clever and creative to achieve the best result. I hope you understand. Ideally I need to have the house ready by 1st August."
At 4 pm on 15 April 2022 Ms Reid emailed Ms Croll, indicating that folders of documents had been sent as compressed files via We Transfer, discussing real estate valuations, and commenting:
"I don't think the amount of furniture is key to presentation as much as the features and condition of the houses themselves.
Kitchens and bathrooms, flooring, wall finishes, and up-to-date fittings are what sells in this market.
The quoted and estimated are based on improving condition, and including features to the house that will appeal to the market to return the best sale price.
Seeing real samples of proposed work may be helpful. If you have time these can be brought over. In any event, thanks for confirming the scope of work required, we will schedule an action accordingly."
Attached to that email were:
1. A document headed "Agents agreement *** Street Chiswick Prepare For Sale"; and
2. A tax invoice numbered "Tax invoice 2022 - 3 To specify, organize", in the amount of $19,140 inclusive of GST.
It appears that another copy of the How We Work document was also attached.
The documents sent as compressed files via We Transfer included drawings and photographs and a document headed "Itemised quotations and estimates to prepare property for sale". That document set out a detailed list of items of work and fittings with quoted amounts or estimates in respect of:
1. Builder, painting, tiling, glazed exterior balustrade and window treatments - amounting to $265,559 plus GST; and
2. Floor tiles, sandstone pavers, light fixtures, door furniture, kitchen, laundry, bathrooms, and landscaping - amounting to $149,568 plus GST.
In respect of a number of items, including: glazing replacement, repairs, outdoor lights, doors, fencing and French windows no cost was recorded, rather they were described as "TBC", that is cost to be confirmed.
The Agents Agreement commenced:
"We have mutually agreed that Form and Colour P/L (Form and Colour) will act on your behalf as your sole agents to supervise the renovation of *** Street Chiswick NSW, based on renovation and design quotations and estimates you have approved and which are copyright of Wende Reid.
Please refer to the following folders of including a schedule of proposed works, drawings, images, to be undertaken (Work). Please sign each listed item you confirm for approval.
The work entails some removal of large fittings, restoration an architrave and removal of old materials, prior to replacement of same and making good.
To coordinate implementation this process to ensure faithful design interpretation, Form and Colour is appointed as sole agent for you to engage to supervise all works.
Form and Colour will continue in that capacity until completion of the agreed work."
The document then set out various terms and conditions, including Form and Colour's hourly project fee and provisions relating to payment.
As noted, Tax Invoice 2022 - 3 was in the amount of $19,140 inclusive of GST. That amount was said to be payable in respect of:
"Agents deposit to organise and commence approved works TBC
Charge is for 60 hours including finalising specifications, organising schedules, commencing on site coordination and administration. Use of additional hours is anticipated and will be billed as set out in the attached Agents Agreement."
At some point after receiving the documents from Ms Reid, Ms Croll texted:
"Hi Wende thanks for all the hard work! Let's talk on Tuesday 2 pm enjoy your beautiful weekend!".
Ms Reid responded:
"You're welcome. Hoping your move goes smoothly. Still on at 1:30 Tuesday?"
It is common ground between the parties that Ms Reid and Ms Croll met at the premises on Wednesday 20 April 2022. Ms Croll's and Ms Reid's versions of this meeting were quite different. I will address the competing versions of that meeting, to the extent necessary, in due course. The parties are agreed that Ms Croll expressed dissatisfaction about the cost of the work which Ms Reid was proposing. The parties also agreed that Ms Croll maintained that her budget was limited to $200,000. It was also common ground that an issue had emerged with the floor in one corner of the house, which would require rectification before the refurbishment could proceed.
On 22 April 2022 at 8:55 am Ms Croll emailed Ms Reid:
"Please forward me any documentations you've got on hand, including quotations and what's included, and any itemised costs.
Any emails from traders and builders would be appreciated.
Please don't spend time analysing or summarising. I don't want you to charge me with extra work, I would look through all of them myself and let you know what I think.
Just spend 5 mins of your time to forward me everything basically.
I hope you appreciate my style of crisis management. If I fail this, I will be screwed."
Later that day Ms Croll texted Ms Reid:
"[L]et me think about the project moving forward over the weekend. Please don't spend time to do anything yet. I'm afraid I don't have budget to pay you much more. Your fee alone costed me $36,000 so far. I don't know how much more I still need to pay you to finish the project. You know that I just don't have the budget to pay you. I know you have most amazing ideas and professionalism and I really appreciate your hard work. However, I need to think about how to finish the project with the rest of the fund I've got left. I will get back to you by Wednesday next week. I hope you understand. Have a lovely long weekend."
Ms Reid texted in response
"Our design and first visit combined with $20,390 plus GST. Not sure where you get the number you quoted. Your brief quickly changed to increase the value of the house by $3.5 M assuming the initial valuation you stated, $6.5 M. You also requested new French doors to at least two areas, window treatments including curtains, changes to fencing positions including deletions, plus a time consuming change to online presentation format and before and after images.
We advised consistently taking into account the size and condition of the house that the price for works required to achieve a significant increase in value would be greater than $200 K.
We were instructed to do the work by deadlines that changed more than once but the estimate we agreed was at least 2 months. Afterward we guessed it would be 5 weeks returning to your original budget that you were advised consistently was insufficient for the work although your collapsed floor and the general condition of the house makes it more than that and hard to predict. This … [The document in evidence omits a section of text] need help with the collapsed study floor, if you need a quote for insurance I will ask the builder who was going to delete and repair the house.
He specialises in water damage. The insurance claim will need to account for demolition, reconstruction, painting and flooring so an opportunity to work on that part with a legitimate insurance claim. In general I can't change pricing. We had 3 painters quotes almost identical. This is market value. Trades people are very busy, the price is the price. If you don't want to go forward, and I do understand this is more your parents decision not yours, then please pay the cancellation fee ASAP. I don't think your parents understand that I'm much more than a designer and trying hard to help you get the best result. In such a busy market I also don't think you'll get a worthwhile result trying to organize this on your own but that's entirely your decision and I understand you may think you need to do this. Sending the invoice now by email for actual extra hours."
Ms Reid forwarded to Ms Croll on 22 April 2022 a tax invoice headed "Tax invoice 2022 - 4 Cancellation fee" in the amount of $3,685 inclusive of GST. The narration was:
"Based on instructions, 2 months of company time scheduled for work coordination now cancelled. In accordance with Terms and Conditions, the charge below is calculated based on the average weekly fee time usage from 9/3/22 to 21/4/22."
Also on 22 April 2022 Ms Reid forwarded to Ms Croll a further tax invoice headed "Tax invoice 2022 - 5 Additional Hours To Date - Changes of brief". The amount of the invoice was $4,210.80 inclusive of GST. The narration was:
"In accordance with Terms and Conditions, audited additional charges related to changes of brief to increase property value from $6.5 M to $10 M, Presentation format online, timings"
On 23 April 2022 at 5.44 pm Ms Croll emailed Ms Reid:
"Hold the horses, I never said I'm cancelling the project.
Please email me all the documents for all the work you've gone done. I will go through them then we talk.
I trust you completely for your professionalism, I hope you are the same.
I let you do whatever you like within the budget. Your quote is not in the budget and hence force me to make all the changes to fit into the budget. I told you repeatedly to stick to the budget.
Anyway, this is crisis and I will manage it. Please do not time me yet, I will let you know what to do moving forward.
Please email me the timesheet for all your work. I need to find out how you've charge me."
At 10.57 pm that day, Ms Reid replied to Ms Croll noting that "all documents were already mailed to you at your request on 15/5/22" and that "Presenting to you on that date and by email was itself one of many additions and changes to the brief."
Ms Reid also stated:
"4 - I understand if your parents remain unconvinced or unable to spend more, and you need to stick to $200k.
- On the other hand if you're implying that I didn't follow the brief that is completely inaccurate. The choice of expenditure was and is yours.
- From the first day we met, you requested that we provide a way to increase the value of the house by more than 50% to achieve $3.5M more than a $6.5M valuation.
From that moment we discussed the budget would be above $200K, the question was by how much.
- As discussed, we provided a design strategy likely to achieve a substantial increase with estimates and quotations as agreed.
Quotes were provided in the form of a menu, for you to decide if you needed to edit down.
The Scope of Design Works agreement reflected this conversation by exploring options we offered to provide, eg for full exterior paint jobs vs partial to save money if it was possible and logical to achieve the selling price increase you discussed.
- You also made numerous additions to and changes of brief for features and timing:
Designs and quotes for window treatments including curtains,
New vanities x 4,
Moving the existing pool fence position requiring more lineal metres using new glazed fencing.
French doors to at least 2 positions etc.
Surely you knew these features would add to the price and would take additional time to design and quote.
- Likewise, all other design features for kitchen, laundry, etc designed and/or estimated and quoted were discussed at length with you while designs and pricing were being developed.
- I know you have a tough problem figuring out what to prioritize to prepare such a large and neglected house for sale with a budget that is so tight for the work required.
The structural issue of the collapsed study floor needs immediate attention if you're still planning to put the house on the market by August."
On 24 April 2022 at 11:07 am Ms Croll forwarded to Ms Reid a copy of Ms Reid's email to Ms Croll of 9 March 2022 at 8:52 pm. Ms Croll stated:
"The email below from you clearly indicated the project will be within the budget.
All changes are drastically made because you imposed everything that's not within the clearly stated budget of $200,000. As your client, I rely on your expertise to design and price within The budget, that was indicated and reminded every single time when you proposed anything.
Anyway, let's talk later."
Ms Reid responded at 1.04 pm that day:
"That proposal was based on a painting and styling job initially discussed.
All works are progressed based on our terms and conditions which include remuneration for all time required to achieve your brief.
After you accepted our initial proposal, the very next time we spoke you told me the agent's valuation you received from was $ 6.5 million and that your parents wanted to achieve a $ 10 million selling price.
That's a huge change of brief, a complete paradigm shift for strategy.
This change of brief required developing specific strategies to achieve the large increase.
Strategies and their likely increasing costs were discussed with you continually through the design development and quoting process after this change was added.
I don't understand your point. The prices are the prices. Sydney is experiencing a renovation boom as you could see just by the difficulty of just getting quotes from some suppliers.
Just getting suppliers to turn up at all in several instances became challenging and time consuming.
Prices of imported materials included in quotes are also recently affected by global inflation.
The house has rotted timbers, broken feature glass, mismatched bathroom taps and 27 windows many of which are extra wide.
Regrettably I don't have a magic wand to change the market value of renovation work or the timing requirement to work within an over-busy market.
Initially the brief also included your intention to remain in the house with your family during works and presentation and a very short timeline.
You later changed both of those conditions and deadlines twice, so that's another change of brief which affected the Scope of our work and our practice scheduling.
If you want
Obsolete exterior fixtures deleted,
Exterior and interior house painting including kitchen joinery
Repairs required to paint,
Upgrades to cabinet handles
Bathroom lights,
Upper level carpet cleaning.
Deep cleaning
Plus some rugs and styling to main areas,
that's likely to be more achievable.
The exact prices of all of these items unless already quoted are again beyond our control and will require further billable time to confirm.
Also further fairly extensive works are now likely to be required because of the study room floor collapsing.
Or you may choose to sell the house as-is which of course affect the selling price.
In any event we are not responsible in any way for the final price realized for the sale of the house.
Painting and repair work to the bulk head and the closet with the false back, initially discussed, seems inappropriate for that part of the house until the collapsed floor is addressed. An insurance claim for that area will should include painting and flooring after the structure is rebuilt.
Whether or not you want our continued participation, payment for the extra hours expended to address changes of and additions to the original brief are now overdue.
Also please be advise, to date, three and a half more hours have been expended communicating to clarify and advise the current state of the house, the work compiled and your likely options, via one long text and two detailed emails sent today, yesterday and the day before.
Any further time for communication required reviewing this topic will be charged at our company rate."
It appears that two email threads crossed at this time because, at 1:10 pm, that is 6 minutes after Ms Reid sent that email, Ms Croll responded to Ms Reid's email of 23 April at 10:57 pm inserting comments in blue into Ms Reid's email. In response to Ms Reid's suggestion that presenting the documents on 15 April and by email was "one of many additions and changes to the brief", Ms Croll stated:
"I don't understand, I pay you, you deliver the work. How is it an addition and change to the brief?"
Other relevant responses are best recorded by repeating the parts of Ms Reid's email extracted above with Ms Croll's comments interpolated:
"4 - I understand if your parents remain unconvinced or unable to spend more, and you need to stick to $200k.
(I'm glad you clearly understood this on the first day I engaged your service, your quote clearly is not within the budget. I asked for $200,000 budget, your quoted me $415,217+GST. How can you expect me to accept the quote" This is clearly unprofessional.)
- On the other hand if you're implying that I didn't follow the brief that is completely inaccurate. The choice of expenditure was and is yours.
(You didn't follow the brief, I clearly stated that I want to spend a total of $200,000 including all your fees.)
- From the first day we met, you requested that we provide a way to increase the value of the hours by mor than 50% to achieve $3.5M more than a $6.5M valuation.
(Correct, within the budget!)
From that moment we discussed the budget would be above $200K, the question was by how much.
(Again, I never agreed to increase the budget. So stick to the budget!)
- As discussed, we provided a design strategy likely to achieve a substantial increase with estimates and quotations as agreed.
(Again, I never agreed to increase the budget!)
Quotes were provided in the form of a menu, for you to decide if you needed to edit down.
(The quotes are not in the budget, so they are not applicable, the quality of your work is not satisfactory)
The Scope of Design Works agreement reflected this conversation by exploring options we offered to provide, eg for full exterior paint jobs vs partial to save money if it was possible and logical to achieve the selling price increase you discussed.
(I agreed to the scope of design with the initial quote for the whole project under $200,000 which covers everything listed in the document)
7 - You also made numerous additions to and changes of brief for features and timing:
Designs and quotes for window treatments including curtains,
New vanities x 4,
Moving the existing pool fence position requiring more lineal metres using new glazed fencing.
French doors to at least 2 positions etc.
(Wende, my budget is $200,000, you quoted me $415,127+GST. How could you force me to accept the quote? This is clearly unprofessional. I told and reminded you numerous times whenever you proposed anything you can do whatever you like according to the scope of work we agreed, and stick to the budget.)
Surely you knew these features would add to the price and would take additional time to design and quote.
(I hired you to do the professional work, I was not informed by you about the additional cost. The scope of work agreed on 200,000 and it's you job to deliver the result accordingly.)
- Likewise, all other design features for kitchen, laundry, etc designed and/or estimated and quoted were discussed at length with you while designs and pricing were being developed.
(I have no problem with your design/quotes as long as you stick to the budget.)
- I know you have a tough problem figuring out what to prioritize to prepare such a large and neglected house for sale with a budget that is so tight for the work required.
(I'm glad you know this. Let's be professional and deliver the work according to your scope of work as agreed on the budget of $200,000)
The structural issue of the collapsed study floor needs immediate attention if you're still planning to put the house on the market by August.
(I told you I will handle this with insurance, please do not time me to worry about it)"
Ms Reid responded to that email at 1:49 pm:
"This has all been discussed and explained in good faith over and over.
I can't see how repeating this again is productive.
If there was any point in re-stating what's already been written over the past 3 days, it would be billable time.
If you want us to send you the schedule of hours, it will be typed up and sent this week."
At 2:21 pm Ms Croll replied to Ms Reid's email sent at 1:04 pm:
"You are not allowed by law to bill whenever and however you like.
The discrepancies need to be resolved. I need to bill you the time I spend on rectifying your unprofessional and unsatisfactory work. You can not threaten your client by keep sending me the invoices. It's not helpful."
Ms Reid responded to that email at 5:05 pm. The email commenced: "That's funny, you were just complimenting my professionalism and hard work."
Ms Reid referred to the "How We Work" document as containing the terms and conditions of Form and Colour's engagement. Ms Reid stated that a log of dates and hours had been kept and would be typed up and provided together with an updated invoice, whereupon both invoices would be payable.
Ms Reid stated "for the record" that:
"1 - Your accusations are completely unfounded and don't relate directly to the issues at hand since no works have been approved so no budget has been exceeded.
…
Quotations and estimates have been presented to you as an itemised list, as is practice policy.
It's up to the client to decide what to approve.
Our terms and conditions allow for us to bill for time used for changes and additions to brief, administration and cancellation.
2 - After finalizing an agreement and a fee to spruce up and add some styling for a house sale, you then added a huge change:
That your house is currently worth $6.5M
Highly doubtful in its current very poor condition.
As published online, this is the top of a range from $4.5- 6.5
But that was before the floor collapsed.
That you wanted to increase the selling price by $3.5M
Your house is in far worse condition than initially discussed.
Your claim that I didn't discuss added costs involved to achieve such a large value increase is untrue and illogical.
We immediately discussed a change to strategy requiring inclusions perceived to more valuable and updated.
Addressing your change of brief, both of these requirements were also highlighted in the emailed presentation sent to you at your request.
During the process of developing estimates and quotes and a design proposal you were regularly informed of the growing total for quotations and estimates.
That your parents aren't budging on what they will spend has nothing to do with the design development work and cost transparency provided.
Their decision also has nothing to do with the time it took to achieve what was requested, not only additions of features, also timing changes which impact scheduling for trades, supply and for this practice."
Ms Reid also noted that she had offered to "pare back the scope and our projected charges for coordination, closer to the original brief." She also noted that, while Ms Croll claimed not to have discussed cancellation, she had done so in an email three days earlier, but that: "Having received this last email from you, cancellation is clearly a done deal."
On 25 April 2022 Ms Reid forwarded a further tax invoice headed "Tax invoice 2022 - 5 REVISED 25.4.22 Additional Hours To Date - Changes of brief" the amount of the invoice had increased to $6,922.30 inclusive of GST. The narration was similar to that in the original Tax Invoice 2022 - 5 but now also referred to "changes to windows, changes to fencing". The invoice suggested that the hours charged had now been "audited".
In the covering email, Ms Reid stated:
"On receipt of payment of the attached invoices, we will send the names and contact details for a builder, painter, tiler, landscaper who have each viewed [the property]."
The email also attached a further copy of Tax invoice 2022- 4 and a schedule listing (or purporting to list) work done and hours spent between 18 March and 25 April 2022. A total of 122 hours was recorded, of which 69.3 hours were said to have been paid for.
On 26 April 2022 at 10:18 pm Ms Croll emailed Ms Reid:
"I just want to confirm that in your professional opinion, my budget of $200,000 is only able to achieve, and best spent on the following:
Obsolete exterior fixtures deleted
Exterior and interior house painting including kitchen joinery
Repairs required to paint
Upgrades to cabinet handles
Bathroom lights
Upper level carpet cleaning
Deep cleaning
Plus some rugs and styling to main areas"
Ms Reid responded on 27 April 2022:
"Good to hear from you. If you want my opinion, you'll have to pay me the outstanding balance for hours used to date.
If you want me to go forward to help get your house more sorted, please tell me what you have in mind, I'll do an estimate of time to go forward and that will be due and payable before I can work on it.
If on the other hand you only want my opinion and are thinking of doing it yourself, then the hours up to date and the cancellation fee will be due and payable.
As promised, if you choose to cancel, on receipt of payment I'll provide the names of a the builder, a painter, the tiler and the landscaper. Both of those invoices are attached here again.
I'm happy to help you but we must stick to the agreed payment terms in advance."
On 29 April 2022 Ms Reid emailed Ms Croll:
"One of the three excellent painters who quoted at [the property] confirmed he will requote for a reduced figure to paint both interior and exterior without painting the bricks.
I still need to requote, coordinate and specify a reduce brief.
To go forward with his offer, please pay the outstanding invoice 2022 - 5 which is the current balance, with the understanding that, once we have discussed priorities, another reduced charge in advance for time will be required for me to confirm quotes related to both repair and styling, plus supervise implementation.
A builder will still need to be coordinated to repair damaged timbers and also now, the floor that fell in the study during the rain.
New flooring of some kind in that position looks like it will also be necessary. Please discuss if there's any further money available for this sudden damage or if these repairs also become part of the original budget.
Additional trades and repairs will also be needed: replacement to broken glass, damaged interior tiles, damaged exterior tiles, new front path, etc.
As discussed in How We Work, implementation for accept quotes will be payable in advance as a float held by us for timely incremental payment of trades, goods and services to progress and complete approved works on time.
If you want to proceed this way please confirm by making payment for Tax Invoice 2022 - 5 attached again here.
We can then discuss and prioritize the best way forward, organize quotes and a styling plan to implement in the time frame you discussed recently."
On 25 May 2022 Ms Croll forwarded a letter of complaint to Ms Reid, seeking a refund of monies paid to Form and Colour.
Ms Reid responded on 7 June 2022, indicating that Ms Croll's request for a refund was groundless and that a balance was owing to Form and Colour rather than to Ms Croll. Ms Reid repeated her assertion that Ms Croll had changed the brief in the course of the work.
Ms Reid attached to her response a chronology which alleged specifically that on 17 March 2022 Ms Croll had indicated that she and her parents wished to enhance the property sufficiently to achieve a selling price of $10 million. Ms Reid suggested that she had informed Ms Croll at that time that the expenditure on the refurbishment clearly had to be increased beyond the initial budget. The chronology stated:
"12 - This was discussed with you immediately on the afternoon of 17/3/22 with new strategies to renovate key parts of the house adding more features with updated, higher quality materials including new concrete kitchen benches, new cabinet fronts, new appliances, new intercom, a wall to divide the laundry to create a mud room, new laundry bench and fittings, new floor finishes, custom linen curtains and linen roman blinds to bedrooms, custom pendant lights, sandstone paving to the front path to replace 2 layers of old broken tile, and more,
- You specifically requested new pool fencing, and a changed position for same and French doors in two or three positions to replace sliding doors.
…
- After confirmation of the first COB [Changes to the Brief], the afternoon of Thursday, 17 March 2022, new strategies, considerations and works required were discussed and reconfirmed almost daily with you at your house in the presence of various trades people and on the first day, the Form and Colour design associate whose services were required and time payable by us to assist a dimensional survey only necessary for the COB, not for the initial superseded brief.
…
20 … The original brief was for painting and other superficial works to occur while your family remained in the house, no deadline was discussed as you advised you wanted the house to be sold off-market. As the brief grew you brought the project forward twice."
Ms Reid nevertheless provided a list of tradespersons and suppliers who had provided quotes or estimates for the purposes of Ms Reid's design work and indicated that she did not object to Ms Croll contacting those suppliers and tradespersons directly.
The letter concluded:
"Form and Colour Pty Ltd will not provide any further services or use of time beyond this list while the balance owed to us remains unpaid."
Ms Croll replied on 20 June 2022. Ms Croll denied that she had communicated any changes to the design brief or the scope of works. Ms Croll referred to the Australian Consumer Law and demanded a refund. On 22 June 2022 Ms Croll lodged her application with the Tribunal. Form and Colour lodged its cross application on 11 October 2022.
Against that background, which is not controversial, I turn to the evidence of the witnesses, Ms Croll and Ms Reid.
[4]
Ms Croll's evidence
As noted above Ms Croll did not include in her evidence bundle any detailed statement of evidence in chief and explicitly eschewed providing any evidence in chief of oral conversations. To the extent that she was permitted to give evidence in chief orally in the course of the hearing, Ms Croll's evidence in chief was that she had never agreed to any change in the budget for the work and that every time Ms Reid had asked to increase the budget Ms Croll had said no.
Ms Croll pointed out that she had reminded Ms Reid on the morning of 15 April 2022 (by text sent at 11 am) that the budget had to be under $200,000. Ms Croll maintained that she would not have entered into a contract with Form and Colour if she had known the refurbishment would cost more than $200,000.
In cross-examination Ms Croll acknowledged that she had read the "How We Work" document before sending the payment of $22,110 on 17 March 2022. She also stated that she had not accepted the alternative two stage option offered in the 9 March email because she understood the first option would be cheaper.
Ms Croll acknowledged that the sum of the figures included in the 9 March email (that is $183,700 and $22,110) was more than her budget. She maintained that she had expected to be able to negotiate that down. She stated, "everything is negotiable".
Ms Croll was cross-examined about her text of 22 April 2022 which referred to Ms Reid's professionalism and hard work. Ms Croll maintained that she needed to think about how to finish the project, by which I understand her to be saying that she was keeping her options open.
Ms Croll denied telling Ms Reid that she was looking to sell the house for $10 million, although she acknowledged that her mother wanted to sell the house for that much. Ms Croll stated that she had said that an agent had told her they could sell the house for $8 million. She agreed that she had said she hoped to achieve between $8 and $10 million. Ms Croll was firm that she had said that at her first meeting with Ms Reid on 9 March 2022. Ms Croll maintained that there was no discussion on 9 March 2022 about the condition of the house.
Ms Croll stated that, throughout the project Ms Reid had repeatedly asked her to increase her budget. She had maintained that she had not agreed to that.
[5]
Ms Reid's evidence
Form and Colour's bundle of documents included a detailed written statement by Ms Reid of 24 pages.
Ms Reid described her initial site visit on 9 March 2022. She stated that the house was very run-down and that she had not toured the entire property on that occasion, only the main rooms downstairs and, briefly, the bathrooms and bedrooms upstairs.
Ms Reid stated that she had explained to Ms Croll that some repair work would be necessary but the extent could not be determined until after relevant trades had undertaken inspections and provided quotes. She stated that she had said that because of the unknown factors she was not able to precisely determine the cost of the refurbishment works in advance, especially without fully inspecting the house with relevant trades people.
Ms Reid stated that, "Ms Croll continued to ask if we could achieve what was required with a budget of $200,000". Ms Reid's evidence was that she had stated that she couldn't confirm for sure but it might be possible. Ms Reid's evidence was that she had explained orally to Ms Croll in the meeting on 9 March much of the content of the "How We Work" document. Ms Reid stated that the email sent on 9 March 2022 "reiterated our discussion".
Ms Reid also provided her version of a meeting she alleged had taken place on 17 March 2022. Ms Reid stated that, on that date, Ms Croll had indicated that an agent had told her the house was currently worth $6.5 million, that the owners of the house next door (which had direct access to the harbour) were offered $20 million but had refused the offer, and that Ms Croll's mother wanted to know if Ms Reid could design the house to sell for $10 million. Ms Reid stated that she had been surprised by the suggestion that the house in its current condition was worth $6.5 million, but had suggested that, in order to compete with other houses at the top of the market, Ms Croll's parents would need to add luxury inclusions that purchasers in a higher price bracket expected and that it would constitute a significant change of brief to prepare the house on that basis.
Ms Reid stated at paragraph 7.6.5 of her statement that:
"On or about 11 PM 17/3/22 I discussed with Ms Croll in person at [the property] that this major Change of Brief request would require renovation, not just refurbishment to achieve immaculate condition, top-quality up-to-date finishes, updated luxury features including a new kitchen, new laundry, new appliances, added features like a mud room dividing the space in the unusually large out-dated laundry, new floor finishes, new boundary fencing, tiling and paving, a new front door, and more use of internal and external spaces. That as with the original Scope of Design it was impossible to determine by how much more renovation and inclusions would cost without quoting, but clearly it would be much more than Ms Croll had first said her mother wanted to spend."
Ms Reid stated that she had attended the property on 18 March 2022 and for the first time inspected the exterior of the house with a painting contractor. Ms Reid asserted that it was at this time that she observed that the state of the property was such that:
"[D]ilapidation to parts of the exterior was beyond a point where it could be camouflaged with normal surface preparation techniques. Replacement of some elements eg gates and builders work to replace rotted parts of eaves and buckling retaining walls was required.
Large areas that could be prepared using painter's techniques required additional time to achieve a base for a good result."
Ms Reid stated that she attended the property on 21 March 2022 with an associate to survey the internal dimensions in order to design and draw the additional works, including the suggested mud room and modern laundry and kitchen with new brand-name appliances. Ms Reid stated that Ms Croll was present and that they engaged in discussions during the time that Ms Reid and her associate were on site. Ms Reid asserted that Ms Croll was aware of what Ms Reid and her associate were doing and that it related to additional work beyond the original documented Scope of Design.
Ms Reid also stated that a glazing contractor attended on 21 March 2022 and that, during his presence, Ms Croll requested additional work, including French doors to replace the sliding doors and a re-siting of the pool fence.
Ms Reid stated that by early April she had spent more time on the project than she had allowed for with the original design deposit fee. She also stated that she had addressed each issue which might affect the final pricing with Ms Croll as it became known.
Ms Reid stated:
"7.52 Despite countless explanations I offered in face to face discussions, there seemed to be a disconnect regarding condition of the house resulting requirements to repair or replace items to prepare the house for sales with new finishes and decoration.
7.53 There was an ongoing discussion about whether Ms Croll's parents would invest more in the house to presumably make more at the point of sale as I had been told was their goal extra to the original approved narrow Scope of Design."
Ms Reid asserted that on 6 April 2022 she and Ms Croll had a discussion regarding two properties which Ms Reid had identified on-line as houses which would likely to sell for $10 million. Ms Reid stated that on that date she had mentioned to Ms Croll that a house in Chiswick with the same features was unlikely to achieve the same selling prices as a similar house in Woollahra or a waterfront house in Cronulla. Ms Reid stated that Ms Croll had disagreed.
Ms Reid stated that on April 18 April 2022 she let herself into the property and found that the floor of a large corner of the house raised above the ground had structurally collapsed. Ms Reid stated that it was obvious at that time that neither a refurbishment and styling project nor more extensive and renovation and upgrading works were possible until that collapsed floor was addressed.
Nevertheless, Ms Reid arranged to meet Ms Croll on site at 1:40 pm on 20 April 2022. Ms Reid stated that on that occasion Ms Croll said that she was angry about the total cost of the quotations and that her parents would not spend more than $200,000. Ms Reid stated that on that occasion she and Ms Croll walked around the house to discuss what could be done for the original budget but that Ms Croll stated that she still wanted all new appliances, which Ms Reid asserted was a change to the brief. Ms Reid stated that she had suggested that even another $50,000 would make a substantial difference regarding the inclusion of decorative items and new appliances. Ms Reid asserted that Ms Croll told her that even finding another $50,000 was impossible. Ms Reid maintained that there was no suggestion at that meeting that Ms Reid would not continue to carry out work in order to produce a scope of works which would be possible within Ms Croll's limited budget.
In cross-examination Ms Reid was asked about the basis for her estimate of $20,100 which equates to approximately 69 hours at her standard rate of $290 per hour. Ms Reid stated that the estimate of 69 hours was based upon her experience. Likewise, her estimate that her fees generally equated to 12% of the project cost was based on her experience.
Ms Reid maintained that the house was in incredibly poor condition. She had been told by the tradespeople that the eaves were so rotted that they would need to be replaced. Ms Reid stated that she had not undertaken a full inspection of the property at the first meeting. That was something she did with the relevant trades at a later time.
Ms Reid provided two options for her initial retainer because Ms Croll was preparing the property for sale and looking for a $10 million price. Ms Reid maintained that at the first meeting with Ms Croll on 9 March 2022 she stated that she would try to meet a budget of $200,000 but could not guarantee doing so. She asserted that the brief had subsequently changed remarkably.
Mr Gupta put to Ms Reid that the initial quotation in the email of 9 March 2022 was designed to mislead Ms Croll. Ms Reid denied that proposition. She pointed out that she had offered a two-stage option as an alternative. Ms Reid indicated that she did not think that the quote had been constructed to bring it to about $200,000, however she conceded that she could not specifically remember whether that was the case.
Ms Reid stated that she designed her work in an open-ended way because "that gives the client the power". She disputed that she had known on 9 March 2022 that the job couldn't be done for less than $200,000. She stated that she didn't know what the cost was likely to be. Ms Reid described her estimate that her fees were likely to amount to about 12% of the cost as an "anecdotal metric".
Ms Reid indicated that the brief had changed on 17 March 2022 as that was when she had been informed of the $10 million target price. Ms Reid asserted that there had been "constant oral conversations" concerning the change in the brief and the need to increase the budget.
[6]
Ms Croll's Response to Ms Reid's evidence
In her "Response to Statement of Wende Reid" (the Response), Ms Croll denied that any conversation such as Ms Reid had described in paragraph 7.6.5 of her statement had occurred on 17 March 2022. Ms Croll maintained that at 11 pm she had been in bed.
In the Response, Ms Croll declared Ms Reid's evidence concerning a discussion on 6 April concerning other properties was "fabrications of lies", asserting that this was an unverifiable conversation Ms Reid had fabricated. Ms Croll agreed that Ms Reid had emailed advertisements for other properties but insisted that the properties were not comparable. She did however acknowledge that Ms Reid was suggesting an increase in the budget by reference to those properties.
Ms Croll also maintained, in the Response, that the only problem with the floor was a water leak which was fixed for $5,665. Ms Croll produced an invoice in that amount for the removal of water damaged plywood and laundry cupboards and installing new plywood and plastic underlay.
[7]
Assessment of the evidence.
I observed each of Ms Reid and Ms Croll as they gave evidence. I am not persuaded that either was deliberately lying. Although I accept that both were seeking to tell the truth, there is no doubt that the evidence of both of was coloured by their convictions as to the rightness of their cause. In particular, I am satisfied that Ms Reid exaggerated, and Ms Croll understated, the extent to which they communicated regarding the expansion of the scope of works which Ms Reid understood Ms Croll was seeking to undertake during the period 17 March to 20 April 2022.
It was apparent to me that Ms Croll had an unrealistic and blinkered view of what could be achieved within her initial budget. This was demonstrated by her evidence that she wasn't concerned that, even from the start, the estimates produced by Form and Colour exceeded her budget, because "everything is negotiable".
Ms Croll did not deny that she engaged in discussions with Ms Reid while she was present with her associate on 21 March 2022 or that she had been aware that Ms Reid was taking measurements for the design of elements beyond the original Scope of Design.
I am satisfied that Ms Croll was generally aware of and approved the work which Ms Reid was undertaking and the fact that Ms Reid was preparing designs and proposals for work which went beyond even the more substantial options outlined in the Proposed Scope of Design Works forwarded to Ms Croll on 9 and/or 16 March 2022.
One substantial dispute between the parties is when the $10 million price was first mentioned. Ms Croll insisted that it was 9 March 2022. Ms Reid maintained that it was 17 March. However, Ms Reid stated in her own document (sent on 23 April 2022 at 10:57 pm - see [82] above) that the $10 million expectation had been raised "from the first day we met" and she stated in cross examination that one reason she had provided two options in her 9 March email was because Ms Croll was looking for a $10 million sale price.
I find that Ms Reid's evidence in her statement at paragraph 7.6.5 is not credible. The suggestion that Ms Reid was present at the property at 11 pm on 17 March 2022 is inherently unlikely and is moreover inconsistent with the contemporaneous records which indicate that Ms Reid and Ms Croll communicated by email between 2 and 3 pm on 17 March 2022 about Ms Reid attending the property on the following day. One possible explanation is that Ms Reid has mis-typed the time of the meeting. However, in the absence of evidence to that effect I cannot reach that conclusion. Ms Reid was not cross-examined about her evidence in paragraph 7.6.5. I do not find that Ms Reid's evidence in that paragraph was deliberately false, but I do not accept it.
Nevertheless, I find that, on or about 17 March 2022, Ms Croll and Ms Reid did discuss changes to the proposed scope of works. In her email to Ms Croll sent at 2:03 pm on 17 March, Ms Reid refers to "changes we discussed". Ms Croll's evidence in cross-examination was that the changes referred to related to the laundry and the kitchen bench. Both of those items were substantial changes to the proposed scope of works.
I am satisfied that a possible selling price of $10 million was mentioned at the first meeting on 9 March 2022. However, I do not accept that Ms Croll was maintaining throughout that the budget had to be $200,000. That proposition was not reflected in the communications between the parties: for example, in the extent to which the scope of works proposed by Ms Reid in the "Itemised quotations and estimates" document forwarded in April 2022 was substantially enlarged from the original Scope of Design document prepared in March 2022.
Ms Croll's initial response after receiving that document was that she needed to think about what to do next. She did not suggest that Ms Reid had fundamentally misunderstood the nature of the brief.
I do not accept the suggestion that, in preparing the April "Itemised quotations and estimates" document, Ms Reid was on a frolic of her own without regard to what Ms Croll had been saying to her during the project period. Nor do I accept that Ms Reid would have undertaken the extent of work that she did in circumstances where she did not understand that there were prospects that the budget could exceed $200,000 in order to produce the best possible presentation of the house for sale.
It is not necessary to determine exactly what Ms Croll was thinking or expecting during this time. I consider it likely that she had anticipated that she could persuade her parents to spend more money in order to achieve a better sale price but, ultimately was not able to do so. I consider it likely that Ms Croll's statement, in her text to Ms Reid of 15 April 2022 (the day that Ms Reid presented her proposals), that the "budget has to stick to 200K" reflected communications with her parents to that effect.
I accept that Ms Croll is now convinced of her case, but I do not accept that her recollections are reliable. I do not accept that Ms Reid is lying, as put to her by Mr Gupta.
I accept that there were a number of reasons why the scope of the proposal escalated. Those reasons include the poor condition of the property, which appears clearly from photographs included in Ms Reid's bundle of evidence. The reasons also include Ms Croll's requests for the inclusion of specific changes not contemplated in the original Scope of Works, including the re-siting of the pool fence and the installation of French doors. I also consider it likely that the scope and cost of the proposal presented by Ms Reid was increased by Ms Reid's desire to produce a very high standard of finish, which I accept was at least in part prompted by statements from Ms Croll that she (and/or her parents) hoped to achieve a very high selling price.
I do not consider that it is necessary to resolve the difference between the parties about the extent to which the floor had collapsed. The "Itemised quotations and estimates" document produced by Ms Reid in April 2022 did not include any allowance for the cost of repairing the floor. Ms Croll's complaint about the work carried out by Form and Colour is not related to the repair of the floor, but rather that the overall scale of refurbishment proposed did not meet Ms Croll's expectations (or directions) concerning the budget.
[8]
The Terms of the Contract between the parties
As noted, both parties accepted that they had entered into a contract. The first issue to be determined is: What were the terms of the contract?
The task for the Tribunal, in determining the terms and content of the contract between Ms Croll and Form and Colour is to determine the "objective intention" of the parties, as appears from their communications and conduct.
As McColl JA held in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193, at [149] - [150]:
"149 The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean: Toll (FGCT) Pty Limited v Alphapharm Pty Limited [[2004] HCA 52; (2004) 219 CLR 165].
150 Whether a contract has been formed, and the terms of contractual arrangements, requires objective determination: Equuscorp Pty Limited v Glengallan Investments Pty Limited [[2004] HCA 55; (2004) 218 CLR 471](at [34]) per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (at [25]) per Gaudron, McHugh, Hayne and Callinan JJ; Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451; Toll (at [40]). Objective determination requires consideration, not only of the text of the documents, but also the surrounding circumstances known to participants, and the purpose and object of the transaction, but not the participants' subjective beliefs: Pacific Carriers Limited [v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451] (at [22]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (at [40]); International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 82 ALJR 419 (at [8]) per Gleeson CJ."
See also the judgment of Spigelman CJ at [8] - [12].
There is no one document which contains the whole of the agreement between the parties. Each of: the email of 9 March 2022 sent at 8:52pm; the "How We Work" document; the tax invoice numbered "Tax Invoice 2022-2 Version 1"; and the "Proposed Scope of Design Works" contained wording which purported to affect the contractual relationship between the parties. It cannot be said that the contract was wholly in writing.
It is therefore necessary to consider the whole of the surrounding circumstances, including, to the extent that it indicates the parties' understanding of what they had agreed and therefore throws light on that agreement, the parties' subsequent conduct: Woodward v Warwick Green Building Pty Ltd [2021] NSWCATAP 210 at [53] and cases there cited.
I am satisfied that, by paying the amount of $22,110 (being the amount of Tax Invoice 2022 - 2 Version 1) to Form and Colour on 17 March 2020, Ms Croll confirmed acceptance of the terms offered by Form and Colour.
The tax invoice identified the work the subject of agreement as "proposed designs to quotation for review".
The tax invoice includes the statement "Your payment indicates your agreement to the terms and conditions contained in our terms and conditions, How We Work, supplied to you by Form and Colour."
The How We Work document states, in paragraph 5 of the Introduction, that "Your payment [of the Design Deposit Fee] indicates the commencement of the Project".
The How We Work document refers to "the Scope of Design Work document" and "invoices submitted in advance of work" as the "basis of our agreement with you to design and supply your project".
In my view the nature of the engagement of Form and Colour cannot be understood without reference to the email of 9 March 2022.
It is clear in my view that the Proposed Scope of Design Works (said to have been attached to the 9 March 2022 email but in any event forwarded by Ms Reid on 16 March 2022) constitutes part of the contract regardless that it does not appear that Ms Croll ever signed the Scope of Works document.
The obligations undertaken by Form and Colour are to be ascertained by reference to the documents which I have identified albeit that the parties may have agreed to vary those obligations orally, or by subsequent correspondence.
The email of 9 March 2022 outlined the works which Form and Colour agreed to undertake (if Ms Croll accepted the first option proposed) as:
"To develop a comprehensive design, specifications and firm quotations to supply and install. … To review with you, … present samples and images with prices of design elements as goods and services [with] options … offered where applicable"
The email stated that the outcome of the services to be provided by Form and Colour would be that:
"When the Scope of Design is complete and priced, you will have accurate costs for the work to consider before implementing."
The email also refers to Form and Colour "manag[ing] all ordering, trades scheduling, and supervision of installations … to ensure design results" but the email indicates that that work would be charged separately.
The email offered an alternative option limited to "a price focused exercise obtaining onsite trade estimates, general pricing for fittings and a market survey for fixtures and furnishings … without developing exact design specifications". Ms Croll clearly accepted the former more extensive option by paying the invoice for that alternative.
Although the tax invoice identified the How We Work document as containing the terms and conditions of the agreement between the parties, that document does not state in any clear way exactly what the payment by Ms Croll of the tax invoice committed the parties to. The How We Work document commences:
"1 - All Form and Colour P/L design and coordination projects begin with design development of the agreed items listed in either the Scope of Design Work document or in invoices submitted in advance of work.
The approved scope of design work in either format forms the basis of our agreement with you to design and supply your project.
2 - Project design work is presented as scale drawings, samples, photographs, and in other visual formats to represent components of the total project.
- All design and supply of goods and drawings is planned and quoted within the context of the total project. In the process of planning and providing for the total project, itemized goods and services based on designs, specifications, quotations, and estimates may be presented for your review and approval either as a group with other project items or individually.
In either case all items requiring development, review and confirmation to supply in any form remain part of the total project you agree to undertake.
4 - Charges for design relate to time required for any or all of the following:
research, consultation, design development, sampling, specification, drawings, quotations and application of our intellectual property to achieve the total project, goods and services you requested."
If any intelligible obligation emerges from the document, it is to develop a design of the "agreed items listed in … the Scope of Design Work document".
The Proposed Scope of Design Works (attached to the email of 16 March 2022) makes it clear that the extent of the work which Form and Colour was to scope or design and provide quotations for was not fixed. That document provided options for the work to be undertaken in almost all areas.
In my view, the parties' intention was that the development of a design for the refurbishment and styling of the property was to be undertaken in consultation with Ms Croll. That is borne out by the parties' subsequent conduct. As I have indicated above, I accept that Ms Croll and Ms Reid had regular discussions in the course of Ms Reid's preparation of her design proposals and discussed options for the refurbishment project and that Ms Croll was generally aware and approved of the work which Ms Reid was undertaking.
I turn to consider each of the bases upon which Ms Croll claims compensation from Form and Colour.
[9]
Misleading and deceptive conduct
Section 18 of the ACL prohibits conduct, in trade or commerce, that is misleading or deceptive or is likely to mislead or deceive.
As noted above, the allegation of misleading and deceptive conduct made by Ms Croll is that Form and Colour, through statements made by Ms Reid, represented that the refurbishment could be carried out within a budget of $200,000 or, alternatively, that the cost of the refurbishment excluding the company's design fees would be $167,000 plus GST, that is $183,700, and that Form and Colour's fees for the design of the refurbishment would not exceed $22,110.
In consequence of her decision not to lead any evidence of oral conversations, Ms Croll is not in a position to allege any oral representations which were misleading or deceptive. Ms Croll does not point to any part of Ms Reid's statement or her oral evidence as an admission of any representation which was misleading or deceptive. Any misleading or deceptive conduct must be found in the documents presented by Form and Colour to Ms Croll.
I do not accept that the documents presented by Form and Colour to Ms Croll before entry into the contract convey the representations alleged. The statements made in the email of 9 March 2022 about the cost of the proposed refurbishment are hedged with caveats. In particular, it is clear from the presentation of the second option, that is an initial general scoping to provide an estimate of the costs ahead of detailed design development, that Form and Colour was not representing that the cost estimates were solid and fixed.
I note in particular that the email of 9 March 2022:
1. Recorded that the initial invoice was "a deposit based on an estimate of hours";
2. Stated that options for design elements would be offered;
3. Stated that when the scope of design was completed and priced "you will have accurate costs for the work to consider before implementing";
4. Informed Ms Croll that she should allow a 10 - 15% variation for unforeseen repairs or charges;
5. Stated that design fees tended to be 12% of the total expenditure of the most projects; without construction
6. Indicated that the design fee was based on an estimate of time;
7. Indicated that the total expenditure was estimated using the "12% metric";
8. Stated that the total expenditure to refurbish and style "should roughly = $167,000 plus GST" (emphasis added); and
9. Stated "If this amount needs to be adjusted we will know after completing the design, specification and quotation process."
To the extent that the documents provided by Form and Colour made any representation concerning the cost of the refurbishment and the extent of design fees, that representation went no further than that the estimates provided by Form and Colour were based upon Ms Reid's experience.
Ms Croll has not established that the estimates were not genuinely based upon Ms Reid's experience. I have outlined above some reasons why the cost of the proposed refurbishment increased over the course of the project. The fact that the cost of the proposals incorporated into the "Itemised quotations and estimates" document substantially exceeded the original estimate does not establish that the estimate in the 9 March email was not a genuine estimate of the cost of the refurbishment which Ms Reid understood at that time she was being asked to scope and design, or that it was not based upon Ms Reid's experience.
I do not find that the documents provided by Form and Colour made any representation as to future matters. On no reading of the email of 9 March 2022 could it be said to contain any representation that the total cost of the refurbishment would not exceed $200,000, or $183,700 and $22,110.
Accordingly, I do not find that Form and Colour engaged in misleading and deceptive conduct in breach of s 18 of the ACL, either in estimating the cost of design services to be provided by Form and Colour as $20,100 plus GST or in estimating the cost of refurbishment and styling of the house at $167,000 plus GST.
[10]
The consumer guarantees - Section 60 of the Australian Consumer Law
Section 60 of the ACL provides
60 Guarantee as to due care and skill
If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill.
The services which Form and Colour agreed to provide were those I have outlined above, that is to develop comprehensive design specifications and firm quotations for the refurbishment and styling of Ms Croll's parents' property.
It is not self-evidently obvious, to the extent that I could properly reach the conclusion without evidence, that Ms Reid did not perform the services required of Form and Colour with due care and skill. Nor is there any evidence before the Tribunal which might establish that proposition.
No person with expertise, experience or knowledge of interior design, architecture, building or any related discipline has given evidence to establish that Ms Reid did not perform the services required of Form and Colour with due care and skill. The fact that Ms Croll is not satisfied with the services performed is not sufficient to establish that the services were not performed with due care and skill.
Accordingly, I find that Ms Croll has not established on the balance of probabilities that Form and Colour breached the consumer guarantee in s 60 of the ACL.
[11]
Breach of contract/termination
I do not find that Form and Colour repudiated the contract between it and Ms Croll.
Repudiation of a contract occurs:
"… if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way": Shevill v Builders Licensing Board (1982) 149 CLR 620, 625-626.
The documentary evidence of communications between Ms Croll and Ms Reid after 15 April 2022, which I have substantially extracted above, does not support any suggestion that Form and Colour acted in a way which indicated an intention no longer to be bound by the contract.
It is clear that in April 2022 Ms Reid was willing to continue working with Ms Croll on the refurbishment, but that she wanted her invoices paid before she was prepared to do so.
I will consider, when dealing with Form and Colour's cross application, whether the invoices were owing, but it is clear that Ms Croll did not ask Form and Colour to proceed with the refurbishment work. Rather, Ms Croll asked Ms Reid to provide the names of the contractors who had provided quotations. It is implicit in that request that Ms Croll intended to proceed with the refurbishment without the further involvement of Form and Colour.
The issue of an invoice for a cancellation fee on 22 April was a response to Ms Croll emailing Ms Reid, asking her to "just forward me any documentations you've got on hand including quotations and what's included and any itemised costs" and directing Ms Reid not to "spend time analysing or summarising" or do any extra work, and texting Ms Reid stating "I just don't have the budget to pay you." In other words, it was Ms Croll who intimated that she did not intend to proceed with the contract.
After receiving the invoice for the cancellation fee, Ms Croll informed Ms Reid that she hadn't said that she was cancelling the project, but reiterated her request for "all the documents for all the work you've gone done".
It appears that Form and Colour did provide the names of suppliers and contractors, but it is not clear that there was any contractual obligation on Form and Colour to do so. The failure of Form and Colour to provide those names when first asked cannot be said to be a breach by Form and Colour of the contract, much less could it be said to be a repudiation.
Mr Gupta's outline of submissions on behalf of Ms Croll also sought to maintain an alternative case of breach of contract founded upon "charging for hours that were not undertaken". However, it is clear from the submissions that the real complaint is that Ms Croll had paid the amount of the two disputed invoices following the original decision. As the original decision was set aside by the Appeal Panel, and Form and Colour was directed to repay the amount it had received pursuant to the original judgment, the basis of the alternative claim for breach of contract has fallen away.
Accordingly, I am not persuaded on the balance of probabilities that Ms Croll has made out any of the bases for compensation alleged against Form and Colour and Ms Croll's application for a money order will be dismissed.
Ms Croll's application for an order that she does not owe the amount of the two invoices raises the same issues as Form and Colour's cross application and I will consider those matters together.
[12]
Form and Colour's cross application
Form and Colour's cross application seeks orders for the payment by Ms Croll of the amount of two invoices, the cancellation fee in the amount of $3,685, and the invoice for extra work in the amount of $6,922.30.
[13]
Cancellation fee
I am not satisfied that Form and Colour is entitled to any cancellation fee.
Form and Colour relied in support of its claim to the amount of $3,685 upon the fourth paragraph under the heading "Delayed instructions and payments, cancelled project work" in the How We Work document. That paragraph is set out above, but it is convenient to extract it again. It provides:
"4 - For projects including Scope of Work documents requiring on-going design development, cancelled projects for any reason, incur a fee based on the average number of billable hours used per week to that date. An estimate of the cancellation fee will be made at the time of agreement to the Scope of Work and held in escrow. The fee held in escrow, if not required as compensation for a cancelled project, will be used as all or part of the last payment for the completed design development stage of the project."
Ms Reid was not in her evidence or submissions able to explain with any clarity what it was that remained to be done pursuant to the contract which the parties had entered into, or the basis upon which the claimed cancellation fee had been calculated.
Even accepting that Ms Croll's project included "Scope of Work documents requiring on-going design development", it is not clear that the design development for which Ms Croll contracted had not been completed. Ms Reid's actions in April 2022 suggested that the design development work had been completed.
Ms Reid acknowledged in cross examination that the proposed Agency Agreement sent to Ms Croll in April 2022 was an optional further agreement. That in itself is indicative that Form and Colour did not understand that the parties were bound to continue with the refurbishment project. It suggests that the design development phase of the proposed refurbishment was completed.
As Mr Gupta's submissions pointed out, the How We Work document provided that an estimate of the cancellation fee would be made at the time of agreement to the Scope of Work and held in escrow. Had that occurred, that would have provided support for the suggestion that Form and Colour would be entitled to a cancellation fee if the project did not proceed to the next stage. That it did not occur does not suggest that Form and Colour was entitled to a cancellation fee.
I also find that the basis of calculation of any cancellation fee is not sufficiently specified in the How We Work document to enable any claim to a cancellation fee to be enforced. The document provides that the fee is to be "based on the average number of billable hours used per week to [the date of cancellation]". There is no indication how the fee is to be based upon the average number of billable hours. An agreement for sale or the provision of services which fails to specify a price may be construed as providing for the payment of a reasonable price. However it is not possible to identify what might be a reasonable cancellation fee in the absence of more elucidation than that it is to be based upon the average number of billable hours per week up to the date of cancellation.
A contractual obligation expressed in language "so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention" is void for uncertainty: G Scammell and Nephew Ltd v Ouston [1941] AC 251 at 268; Meehan v Jones (1982) 149 CLR 571 at 587.
I find that the term of the How We Work document providing for the payment of a cancellation fee is void for uncertainty. The fact that that provision is void does not have the result that the whole of the agreement between the parties is unenforceable. It cannot be suggested that the provision for the payment of a cancellation fee was an essential condition upon which the parties contracted. Accordingly, that term can be severed from the agreement: Fitzgerald v Masters (1956) 95 CLR 420 at 427.
[14]
Alleged unpaid fees
Ms Reid acknowledged that the initial deposit, the subject of Tax Invoice 2022 - Version 1, was a payment on account. For Form and Colour to establish that it is entitled to any further payment it must establish, on the balance of probabilities, that it carried out work pursuant to the agreement between the parties not only sufficient to earn the fees paid by way of the initial deposit but also further fees. The onus of proof lies upon Form and Colour.
The only documentary evidence of time spent by Ms Reid in carrying out work pursuant to the agreement between the parties is two handwritten sheets and a typed list, said to have been created from those sheets and from other records.
As Mr Gupta's submissions demonstrated, there are errors in the typed list and the times recorded on the list do not add up to the total time claimed.
I do not find the typed list to be satisfactory evidence of time spent by Ms Reid in relation to Ms Croll's project. Even were I to accept that the handwritten sheets are a reliable contemporaneous record of time spent by Ms Reid in relation to the refurbishment and styling of the property, those sheets do not provide support for all of the time recorded on the typed list.
In the circumstances I am not satisfied that Form and Colour has established on the balance of probabilities that Ms Reid carried out more work than Form and Colour has been paid for. Accordingly, Form and Colour's cross application must be dismissed.
It follows that Ms Croll is entitled to a declaration that she does not owe Form and Colour the amount of the two invoices for $3,685 and $6,922.30.
The parties sought to be heard on the question of costs. I will make directions for the exchange of submissions regarding the question of costs. The parties were agreed that the question of costs could be determined on the basis of written submissions and without a further hearing.
[15]
orders
My orders are:
In proceedings HB 23/34272:
1. Declare that the sums of $3,685 and $6,922.30 the subject of invoices issued by the respondent on or about 22 April are not owing by the applicant to the respondent.
2. The application is otherwise dismissed.
In proceedings HB 23/34269:
1. The application is dismissed.
In both proceedings:
1. Within 14 days of the date of publication of these orders, either party may file and serve upon the other party an application for costs with submissions in support, not exceeding 5 pages, and any further evidence relevant to the question of costs.
2. If either party files an application in accordance with order (4), the other party may within a further 14 days file and serve upon the party seeking costs submissions in response, not exceeding five pages, and any further evidence relevant to the question of costs.
3. Submissions in reply, not exceeding three pages, may be filed and served within a further 14 days.
[16]
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: 07 November 2024
Legislation Cited (3)
Australian Consumer Law Fair Trading Act 1987(NSW)