The central issues in this appeal are whether the Tribunal provided adequate reasons regarding the central factual issue of the case, and whether the Tribunal analysed and resolved appropriately the competing evidence relevant to that issue.
A summary of the relevant principle in relation to reasons was provided by the President of the Tribunal, Armstrong J, and R L Hamilton SC, Senior Member in Meacham v Commissioner of Police [2020] NSWCATAP 107 at [35], namely:
"In line with the authorities referred to in Orr, it has also generally been accepted that, while not every submission or piece of evidence put forward by the parties must be referred to, "central controversies" put up for resolution by the parties must be dealt with, and the competing evidence relevant to those controversies analysed and resolved: Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 ("Mitchell") at [2]."
Parties in the Tribunal, and especially the unsuccessful parties, are entitled to an adequate explanation of how the Tribunal decided the central issues in their case against them.
Meacham also referred to analysing the competing evidence on central issues. A failure to do so - overlooking material evidence - may amount to a constructive failure to exercise jurisdiction. In Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 Basten JA, with whom Beazley JA (as Her Excellency then was) agreed, said at [9]:
"The term 'constructive failure to exercise jurisdiction' is used to describe a situation where the court has purported to resolve the parties' dispute but has not in fact done so. Thus, particularly with a court or tribunal required to provide reasons for its decision, it may become apparent from those reasons that a material issue has simply not been addressed or that material evidence has been overlooked."
Disputed factual issues are best resolved by analysing the contemporary materials, objectively established facts and the apparent logic of events - see Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31]. In that passage the plurality said (footnote omitted):
"Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical."
It follows that, in relation to central factual disputes, adequate reasons should ordinarily analyse the important contemporary materials, objectively established facts, the apparent logic of events and any testimonial evidence relevant to the central factual controversies, with the High Court's reservation regarding testimonial evidence kept firmly in mind.
In this case the Tribunal failed to provide adequate reasons and simply stated its factual finding on the central factual dispute without explaining to the appellant how it resolved that factual dispute against her and without analysing the competing evidence on that issue.
The case must be remitted to the Tribunal to be heard according to law.
[2]
Background
In this case the parties entered into two contracts, each for the supply and installation of specified reverse cycle split systems air conditioners at two different properties owned by the appellant. The contract concerning the appellant's Albion Park property was the contract the subject of these proceedings.
That contract was partly in writing (the respondent's quote and various text messages) and partly oral.
At Albion Park the appellant was constructing four single storey adjoining units. She wished to install a single reverse cycle split system air conditioner in each unit. Each air conditioner consisted of one inside unit and one outside unit, connected by pipework and electrical cabling.
She contacted the respondent and requested a quote to supply and install those air conditioning units at Albion Park.
Both parties agree that the respondent undertook a site inspection and spoke to someone working onsite. The date of this inspection was not identified but was before the respondent provided his quote.
The appellant also gave oral evidence at the hearing (at about 28.00 of the sound recording) to the effect that she had spoken to the respondent (on an unidentified date) before he gave his quote. She said that the respondent had asked her if she required a rough-in. She replied by saying that a rough-in may be required. A rough-in refers to the installation of a building's plumbing and electrical services in wall cavities, before the walls are lined with plasterboard. This conversation was not contained or referred to in the appellant's written material.
The sound recording is not clear, but it does not seem that the respondent denied this conversation occurred.
The respondent's version is that he met with a worker onsite, named "Ben", who agreed with the respondent that the inside and outside units for each air conditioner would be installed "back-to-back", meaning that they would be directly opposite one another with only a wall separating them. The significance of this is that no rough-in would be required, thus reducing the amount of labour and materials required for installation.
The appellant informed the Tribunal that Ben was a carpenter working at the site, was not the licensed builder responsible for the construction, and had no authority to speak on behalf of the appellant. This was not entirely consistent with what the appellant had put in her Application Form. In that document the appellant had said:
"… (the respondent) met with our builder/carpenter on site to discuss the installation there …"
On 7 September, at 10.35 am, the appellant sent a set of the construction (or possibly architectural) plans to the respondent before he quoted. The appellant tendered a text message to that effect and the respondent agreed (at about 22.50 of the sound recording) that he had received the plans before he quoted.
The plans did not show the proposed location of the air conditioning units but did show certain features of the site that the appellant said would have informed a reasonable tradesman that the air conditioning units could not be installed back-to-back.
Later in the day on 7 September 2021, the respondent sent a quote to the appellant.
The quote was for:
"Supply and installation 1x 7.1 kw Mitsubishi Heavy Air-Conditioner and 3x 5kw Mitsubishi Air-Conditioners.
- all new pipe-work supplied and installed
- all new covers supplied and installed
- all new drainage supplied and installed
- all new interconnect supplied and installed
- all units will be mounted on nice adjustable rubber feet level to the concrete
- all units will be installed in the best position possible from layout of home to divert air-flow into all rooms
- all rubbish will be removed from site and all areas will be cleaned
A half deposit will need to be made before commencement of job and remainder on completion of job
The quote was accepted.
Ultimately, despite the last sentence, and adding in some subsequent agreed variations to the price, the appellant paid the respondent the sum of $14,405 for the work to be done at Albion Park and paid that sum at the respondent's request before the work started.
On 21 October 2021, before the start of work, the appellant informed the respondent that a rough-in would be required before the air conditioning units were installed.
The respondent informed the appellant that more work would be required for a rough-in (than he had allowed for in his quote based on a back-to-back installation) and more cost would be involved.
On 29 October 2021, the respondent sought a further $9,240 for the (extra) work, which he subsequently reduced to $4,400. The appellant refused to agree to pay this extra amount.
On 30 October 2021, the appellant terminated the contract and requested a refund of $14,405. The respondent refused to refund those monies.
On 19 November 2021, the appellant commenced proceedings in the Tribunal against the respondent. She claimed $14,405 for "monies paid but work not started".
The central issue in the case was whether the parties had agreed that the scope of work included a possible rough-in or had agreed to a back-to-back installation. The resolution of that issue determined who had breached the contract and who was entitled to a remedy.
In relation to remedies, the respondent did not and has not (as far as we are aware) commenced any proceedings against the appellant for damages for, on his case, the appellant's wrongful termination of the contract.
[3]
The Hearing Before the Tribunal
We were provided with some, but not all, of the documents which were before the Tribunal, although we did have a copy of the sound recording of the hearing and a copy of the Tribunal's written reasons for decision.
It appears that the Tribunal had a statement from the appellant and an affidavit from the respondent setting out the appellant's and respondent's testimonial evidence. We did not have either document, although we did have another version of the appellant's statement which was, we were told, much the same although not identical to that given to the Tribunal.
We were not provided with a copy of the respondent's documents he had given to the Tribunal, including his affidavit and submissions said to have been drafted by a solicitor.
The procedure adopted by the Tribunal at the hearing, having read the testimonial and other documentary evidence provided by the parties, consisted solely of the Tribunal asking the parties a series of questions.
The answers to the Tribunal's questions were a mix of submission, assertion and recollection evidence, including material which was additional to that contained in the documentary evidence.
The new assertions made, and the new recollection evidence given, were apparently received by the Tribunal although the witnesses were not administered an oath or affirmation to tell the truth.
The Tribunal did not explain the Tribunal's procedures to the parties and did not ask either of them whether she or he wished to cross-examine the other.
It is readily apparent from listening to the sound recording that the Tribunal was attempting to get to the real issues in dispute between the parties in a quick and cheap manner as required by s 36(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the "NCAT Act").
However, the procedure adopted by the Tribunal hampered the "just" resolution of those issues [as is also required by s 36(1)]. The witnesses were not sworn, their oral evidence was not taken in an organised and clear fashion and the parties were not advised that they may seek to cross-examine one another. Lest it be thought that time was short, and prevented such occurring, the matter was listed for 90 minutes and was concluded in under 44 minutes.
[4]
The Tribunal's Decision
The critical issue in the case, as the Tribunal correctly identified and communicated to the parties at the end of the hearing, was in determining whether it was a term of the contract that the air conditioning units would be installed in separated locations which would require a rough-in (the appellant's case) or whether they were to be installed back-to-back (the respondent's case) which would not require a rough-in.
That issue was critical because it determined who had breached the contract. The appellant's case was that the respondent breached the contract by demanding more money (without legal justification). The respondent's case was that the work the subject of the contract had been varied and so he was entitled to seek further monies because there had been a variation to the contract. The appellant's termination of the contract, in those circumstances, was therefore wrongful.
The appellant's case was based on the conversation she had with the respondent when he asked whether a rough-in would be required (and which does not seem to have been denied), and the written term of the quote that:
"- all units will be installed in the best position possible from layout of home to divert air-flow into all rooms"
The written term is to some extent important because it does not seem to be consistent with the respondent's version that he had agreed with Ben that the units would be installed back-to-back. That is because the best position for the inside units to divert airflow into all the rooms may not have allowed for back-to-back installation.
The respondent's case was, of course, reliant on the conversation with Ben.
The Tribunal's reasons were:
"The Tribunal is satisfied that the request for a rough in by the applicant did amount to a variation of the contract which entitled the respondent to charge an additional amount. The information before the Tribunal indicates that the plans were provided after the quote was given and there was no indication that a rough in was required. Further, the quote itself was not specific as to the location but the Tribunal accepts that the respondent did discuss the location and installation with the relevant person available at the time, being "Ben", from whom the Tribunal has no contradictory evidence. The respondent was therefore entitled to seek an additional payment."
That passage contains four errors.
First, the Tribunal overlooked the appellant's evidence that she had discussed with the respondent the possibility of a rough-in being required before the respondent quoted. That conversation does not seem to have been denied by the respondent, and its contents are inconsistent with an agreement for back-to-back installation and more consistent with the written term that all units would be installed in the best position possible to divert airflow into all rooms. That critical conversation is not mentioned in the Tribunal's reasons.
Second, there was no evidence to support the implied finding that Ben was the appellant's agent. The appellant gave uncontradicted that Ben had no authority to decide or agree on locations for the air conditioning units. The contents of the Application Form wherein the appellant said that the respondent met with "our builder/carpenter on site to discuss the installation there" may have been inconsistent with that evidence, but it was not analysed by the Tribunal.
It is possible that the Tribunal might have found that Ben was clothed with ostensible authority (meaning, the appellant, by her words or conduct, led others to believe Ben had her authority), but the reasons are silent on this topic.
Third, the finding that the plans were provided to the respondent after the quote was simply wrong. The appellant tendered a text message which was sent before the quote and which included the plans, and the respondent agreed during the hearing that he had received those plans before he quoted.
Fourth, the written term was specific as to location. It is apparent from the sound recording that the Tribunal regarded the written term that all units would be installed in the best position possible to divert airflow into all rooms as so vague as to be meaningless, and we take that to be what the Tribunal meant by saying the term was "not specific as to the location". We disagree. It would have been a reasonably simple matter for evidence to be adduced of the best position for the internal units to divert airflow into all of the rooms.
Ben did not give any evidence in the case, but we do not know whether that conversation was contained in the respondent's written material served before the hearing and thus whether the appellant had a fair opportunity to respond to the respondent's oral evidence on that issue.
Returning to the first and second errors, the Tribunal did not analyse the evidence to which we have referred, it being content to simply make the implied factual finding that Ben was the appellant's agent when there was no evidence to support such a finding and overlooking the appellant's oral evidence of the conversation with the respondent.
If Ben was not the appellant's agent, then a back-to-back installation was not a term of the contract. If the appellant's recollection of the rough-in conversation with the respondent were accepted then it, together with the written term of the quote (see above at [42]) would support a finding that a rough-in was part of the work contracted for. In that case the respondent breached the contract, which breach was accepted by the appellant and the contract terminated. In those circumstances she was entitled to the whole of the $14,405 she had paid the respondent.
Those matters are sufficient to decide this appeal and to set aside the Tribunal's decision. Regrettably, the matter will need to be reheard.
We would have preferred to decide the case ourselves if possible (we were not certain whether any issues of credit would require resolution) but we did not have all of the evidence which was before the Tribunal. Perhaps there is some evidence which would support a finding of agency, or perhaps the respondent denied the conversation with the appellant, we do not know. In the absence of all of the evidence before the Tribunal we are unable to decide the case ourselves.
We should note, because it was a matter raised by the appellant, that the Tribunal also erred in awarding the respondent damages in the sum of $7,000. It is not clear to us how the Tribunal could have made any award to the respondent considering the fact he had brought no proceedings against the appellant. Whilst the Tribunal is required to conduct itself with minimum formality and to reach decisions according to the substantive merits of the case, and not by reference to legal form or technicalities, it is not released from the obligation to apply rules of law in arriving at its decisions - Moloney v Taylor [2016] NSWCA 199 at [29]-[30].
One relevant rule of law is procedural fairness, and Application Forms are a party's formal notification to the other that a claim is being made against that other party so that that other party may prepare its defence to that case. In the absence of some other formal notification of which we are unaware, it was procedurally unfair to make an award in favour of the respondent in the absence of a proceeding having been brought by him.
The Tribunal also erred in assessing damages. The Tribunal awarded the respondent the full cost of the air conditioning units even though he retained them in his possession. They had some value, even if sold secondhand, and so to allow him the full cost of those units as well as allowing him to retain them resulted in overcompensation (assuming compensation was payable).
The Tribunal also erred in assessing the purchase price of those units as being what the appellant paid for the replacement units she purchased at retail prices. The respondent did not tender any document showing what (trade) price he paid for the units, if he in fact purchased them at all. There was no documentary evidence in the form of paid invoices or receipts before the Tribunal below establishing that he had done so.
This assessment may have been made because the Tribunal erroneously told the parties that damages for breach of contract (for someone in the respondent's position) was usually the full price of the contract. That is incorrect. It is lost profit (assuming expectation damages were sought) or money wasted (reliance damages) that is the appropriate compensation, not the contract price.
Finally, the Tribunal ordered the respondent pay the appellant the sum of $7,405, being the balance owed after deducting the $7,000 damages the Tribunal awarded the respondent from the $14,405 paid to the respondent in advance of the work. We note that the $7,405 has been repaid by the respondent to the appellant leaving $7,000 as the amount in issue between the parties.
[5]
Orders
We make the following orders:
1. Appeal upheld.
2. The orders of the Tribunal dated 2 May 2022 are set aside.
3. The proceedings are remitted to the Tribunal (differently constituted) to be determined according to law.
[6]
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: 10 August 2022