Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 48, 82

Australian Consumer Law ss 263, 267, 271

Cases cited: Bellgrove v Eldridge [1954] HCA 36

Burton v Rojas Constructions Pty Ltd [2018] ACAT 117

Giusida Pty Ltd v Commissioner of ACT Revenue [2016] ACTSC 275

Minister for Immigration and Border Protection v Singh [2014] FCAFC 1

Robinson v Harman [1848] EngR 135; (1848) 154 ER 363

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8

KARYN GRACE DUNNE TRADING AS ACT GUTTER SERVICE

ANDREW JOHN SMITH TRADING AS ACT GUTTER SERVICE

1. The appeal is allowed in part.
2. The orders of 29 November 2023 are substituted with an order that:

(a) Karyn Grace Dunn and Andrew John Smith trading as ACT Gutter Service pay to Malisa Lengyel and Sean Lengyel the sum of $7,015.23 comprised of:

(i) $6,354.70 - rectification works;

(ii) $176.00 - ACAT filing fee for the original hearing; and

(iii) $484.53 - Interest.

1. This is an appeal from an unpublished decision of the Tribunal on 29 November 2023 in the matter of XD 687 of 2023 (Original Tribunal). The dispute between the parties is over the costs of gutter repairs undertaken by the appellant company.

1. The appellants, who were the respondents in the original proceedings, are spouses trading under the business name of ACT Gutter Service. The respondents, who were the applicants in the original proceedings, engaged the appellants to undertake gutter repairs to their property in Macgregor in the Australian Capital Territory.
2. There were some disputes between the parties, but also much common ground.
3. It is uncontentious that the appellants attended the respondents' property on 3 September 2022 to undertake a measure and quote. The respondents accepted the quote on 13 September 2022, and work commenced sometime thereafter. The appellants advised the respondents prior to commencing work that they did not require a deposit but would appreciate prompt payment after completion of the work.
4. On 28 October 2022, the appellants sent an invoice to the respondents for $6,954.20. The invoice had the notation:

Please let us know if you get the front downpipe inlet clear and we can install the metal rectangle downpipe for you. Also if you have any issue with the hooking up of the tanks we can come around and help you with that also.

1. On 5 November 2022, the respondents contacted the appellants to confirm they had paid the invoice and ask that they fix a leak by the backdoor. They also advised the appellants that the water tanks had been delivered and asked them to complete the hookup. There was a delay with the payment reaching the appellants' account, but that was resolved.
2. The appellants did not attend the respondents' property as requested, despite the respondents making several requests during December 2022 through to mid-February 2023. It turns out that during this period, Mr Smith was injured and unable to work, but the respondents had no way of knowing this. The appellants concede that their communication could have been better.
3. Eventually, the respondents complained to Access Canberra. Access Canberra mediated the dispute, and the appellants offered the respondents an $85 reimbursement, being equivalent to what they considered to be the cost of undertaking the required work, given the required materials were onsite.
4. The respondents were not satisfied with this response. They engaged Mr Patrick Turl, a building consultant, to prepare a report about the work undertaken by the appellants (the Turl Report).[1] That report identified a number of defects in the work.
5. The respondents then commenced proceedings in the tribunal.

1. In their original application for resolution of a dispute (original application), the respondents sought $6,954.20 for remedial work (remediation cost); $1,319.50 recompense for the Turl Report; printing costs of $65; and interest. The remediation cost was as per the sum calculated in the Turl Report.
2. The original hearing proceeded before a senior member of the tribunal. All parties represented themselves. The respondents (then applicants) relied upon the Turl Report, and called evidence from Mr Turl, who was cross examined by Mr Smith and Ms Dunne. The appellants filed a joint written response that included factual assertions and Mr Smith more informally gave evidence.
3. The Original Tribunal delivered oral reasons on the day. The senior member did not make detailed factual findings about what went wrong with the contract process, but concluded that there were "defects, rather than a complete failure of the contract." These defects arose because the works were not performed to an acceptable standard, in that the work was not compliant with the Australian Standards (AS) of the manufacturers installation guide.
4. The Original Tribunal was satisfied that rectification damages were appropriate. The Original Tribunal was not satisfied that the rectification work could be performed without taking down the existing guttering and downpipes. The Senior Member accepted the evidence of Mr Turl that the rectification works would cost $6,954.20 and ordered the respondents to pay that sum to the applicants.
5. The Original Tribunal also allowed the cost of Mr Turl's report. The Senior Member considered it was reasonable for the applicants to get the report, given the lack of contact between the parties from January 2023,[2] and the resulting reasonable concern as to whether the issues were going to be addressed.
6. The Senior Member disallowed the claim for printing but accepted that interest was payable.

1. The submissions filed in support of the appeal are lengthy and detailed. Having regard to those submissions, and Ms Dunne's oral submission at the hearing, the grounds of appeal can be summarised thus:

(a) The Original Tribunal erred by accepting the evidence of Mr Turl and not giving sufficient weight to Mr Smith's evidence, given his "extensive experience in replacing gutter systems rather than relying on Lengyel's carpentry expert with no demonstrable expertise in replacing gutter systems" (the weight ground);

(b) The Original Tribunal erred in finding the work and services of unacceptable quality on the basis of Mr Turl's evidence, because under section 271 of the Australian Consumer Law (ACL), "goods are not considered defective just because the Lengyel's expert asserts in his opinion they are";

(c) The decision was silent as to whether ACT Gutter Service could retrieve the goods if they are rejected - section 263 of the ACL states that a consumer must return the goods if they are rejected;

(d) The Original Tribunal erred in not permitting ACT Gutter Service to exercise its right under section 267 of the ACL to remedy the failure;

(e) The Original Tribunal erred in awarding the cost of the report, as it was an unnecessary expense, and was contrary to the requirement that parties pay their own costs as set out in section 48 of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) (the costs ground).

1. This appeal was dealt with as a review under section 82(b) of the ACAT Act. A review or 'rehearing' of this kind is the usual approach to an appeal, and the appellant did not advance any reason why this Tribunal should have undertaken the appeal as a de novo hearing instead.
2. To succeed on this kind of appeal, the appellant had to establish a material error of fact or law or in the exercise of discretion by the Original Tribunal.[3] This Tribunal must undertake a full and proper review, but the emphasis is on the correction of any error made by the Original Tribunal. It is not an opportunity for a party to correct inadequacies in their original case, as presented, or to "have a second go".
3. An appeal by way of rehearing is usually done by the Appeal Tribunal on the material that was before the Original Tribunal, with fresh evidence allowed in only exceptionally.

1. Grounds (b), (c) and (d) of the appellants' submissions effectively allege errors of law in relation to the application of the ACL. Both parties have engaged with these arguments with admirable thoroughness in their submissions. Nonetheless, these arguments are outside of what may properly be considered by the Tribunal on appeal, as they were not raised before the Original Tribunal.
2. There does appear to be some uncertainty about what was intended to be before the Original Tribunal. The respondents lodged their application on a standard "civil dispute application" form. The form has a section entitled "type of application", and a series of tick boxes next to a list of application types. The respondents ticked "contract application". They did not tick "consumer law application". Moreover, under the box entitled "application under other authorising law", the respondents wrote "Australian contract law". This Appeal Tribunal questioned the respondents as to what was intended by this. The respondents explained that this was a mistake, and they had intended to write "Australian Consumer Law." This is supported by the extracts from the ACL included in the respondents' documents and submissions.[4] However, there was little in the way of argument addressing them in the respondent's written submissions. The appellants did not mention the ACL in their response to the claim at all.
3. Rather, at the hearing, the argument before the Original Tribunal was primarily factual, with reference made to the Australian Standards. The respondents made some reference to the ACL in their reply and closing submissions, but, again, the arguments were not clearly articulated, and no detailed submissions were made on the law to be applied or the legal framework. The Original Tribunal decided the matter on a factual basis, applying contractual principles.
4. The appellants now say that the Original Tribunal did not consider their rights, as suppliers, under the ACL. In her submissions to the Appeal Tribunal, Ms Dunne explained that she had identified these errors only while preparing for the appeal:

So basically the process for the appeal - after being warned at the original directions hearing for this appeal, I was warned as you have done as well about the fact that it's not a second chance to go through the appeal process and that I have to look at the Australian Consumer Law. So because throughout the - at the final hearing when Senior Member Kerslake gave his decision about what he thought in the matter or what he - the decision he made and the resulting final order, there was no references to any kind of legislation at all about - under consumer law or any others about how he has actually made this decision. So I had to do some research about what he might have been applying when making that decision.

When I did that research, I found that it didn't seem to have been applied in this case.

1. The appellant is quite correct that the ACL was not applied, but that was because it not argued in any real sense, and hence the Original Tribunal did not consider it. No criticism is intended of the parties in this regard, who as lay persons, they were clearly relying to some degree on the Tribunal, as an expert Tribunal, to apply the law. However, this does not alter the fact that the matter was not argued as a consumer law claim. It was argued as a breach of contract. It is not for the Original Tribunal to reframe the parties' arguments in the manner suggested by the appellants in this case.
2. Contract law is concerned with the enforcement and performance of contractual obligations. The ACL sits on top of a contract and imposes a range of non-excludable guarantees that may override the terms of a contract. Under section 267 of the ACL, when a business supplies a product or service with a minor problem, the business must fix the problem or repair the product for free. The business does not have to offer a replacement or refund for a minor problem, although it can choose to do this. When a business sells a product with a major problem, or a product that later develops a major problem, it must give the consumer the choice of a refund, or replacement of the same type of product. These requirements are there to protect the consumer and are enforceable under the ACL, notwithstanding contrary provisions in a contract.
3. The ACL also provides for a range of remedies that the common law does not. With some rare exceptions, when applying damages for breach of contract, the courts generally apply what is referred to as the "ruling principle" of contract law damages, the rule in Robinson v Harman, that provides:

...the rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.[5]

Under the ACL, there is scope for other kinds of relief, including injunctive relief, direct refunds, variation of the contract, and broad compensation powers. Some of these forms of relief require that certain prerequisites be met.

1. Original Tribunal decided the matter on the basis of contract law, having regard to the damages necessary to put the consumers in the position they would have been, had the contract been performed, stating:

Now, in granting the claim for these works, for the remedial works, I note that what has happened in this instance is not a breakdown of the contract, as such. If the contract completely failed, the applicant would be entitled to claim the amount that was paid in the first instance. But in this case we're talking about rectification works, which means it's really a case of damages to rectify the defects...[6]

1. As a matter of principle, "rectification costs" are calculated by reference to the cost of the building work required to achieve conformity with the building contract, and are usually the appropriate compensation, other than the exceptional case where the costs are unreasonable.[7]
2. What the Original Tribunal found was that there was a contract between the parties, and the contract had not completely failed, but rather the work performed under the contract was defective. The respondents were accordingly entitled to compensation to put them in the position they would have been in had the contract been completed - that is, with effective gutters.
3. As we understand it, the appellants now say that they should have had the opportunity to "rectify" the work under section 267 of the ACL. This would have required a factual finding that the defects in the guttering were "minor failures". No evidence was led specifically on this point, and it is not clear to us, on the evidence before us, that the defects in this case would be considered "minor failures", but in any case, even if such a finding was so open to us, section 267 of ACL cannot be used, for the first time, as a defence to a claim for damages for breach of contract, on appeal.
4. Turning to the ground (b) specifically, we note, for completeness, that we also do not agree with the respondents' interpretation of section 271 of the ACL. This section provides:

271 Action for damages against manufacturers of goods

(a) the guarantee under section 54 applies to a supply of goods to a consumer; and

(b) the guarantee is not complied with;

an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer.

(2) Subsection (1) does not apply if the guarantee under section 54 is not complied with only because of:

(a) an act, default or omission of, or any representation made by, any person other than the manufacturer or an employee or agent of the manufacturer; or

(b) a cause independent of human control that occurred after the goods left the control of the manufacturer; or

(c) the fact that the price charged by the supplier was higher than the manufacturer's recommended retail price, or the average retail price, for the goods.

(a) a person supplies, in trade or commerce, goods by description to a consumer; and

(b) the description was applied to the goods by or on behalf of the manufacturer of the goods, or with express or implied consent of the manufacturer; and

(c) the guarantee under section 56 applies to the supply and it is not complied with;

an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer.

(4) Subsection (3) does not apply if the guarantee under section 56 is not complied with only because of:

(a) an act, default or omission of any person other than the manufacturer or an employee or agent of the manufacturer; or

(b) a cause independent of human control that occurred after the goods left the control of the manufacturer.

(a) the guarantee under section 58 or 59(1) applies to a supply of goods to a consumer; and

(b) the guarantee is not complied with;

an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer.

(6) If an affected person in relation to goods has, in accordance with an express warranty given or made by the manufacturer of the goods, required the manufacturer to remedy a failure to comply with a guarantee referred to in subsection (1), (3) or (5):

(a) by repairing the goods; or

(b) by replacing the goods with goods of an identical type;

then, despite that subsection, the affected person is not entitled to commence an action under that subsection to recover damages of a kind referred to in section 272(1)(a) unless the manufacturer has refused or failed to remedy the failure, or has failed to remedy the failure within a reasonable time.

(7) The affected person in relation to the goods may commence an action under this section whether or not the goods are in their original packaging.

1. The ACL envisages that a consumer will take action against a retailer or supplier, but this provision makes it clear that a consumer may commence action against a manufacturer where goods are in breach of a guarantee as to acceptable quality. Where this happens, the purpose of section 271 is to limit the manufacturer's liability where the misrepresentation is made by another person over which it has no control. Section 271 does not operate to prevent or limit the weight the Tribunal may give to Mr Turl's evidence.
2. The consumer law appeal grounds are dismissed.

1. The question is whether the Original Tribunal acted unreasonably in accepting Mr Turl's evidence, and giving more weight to it than to Mr Smith's evidence.
2. Mr Smith gave evidence on behalf of he and his wife, as respondents. Mr Smith is an experienced tradesperson with 17 years' experience in "roof plumbing". He has been trading under the name ACT Gutter Service since 2015. He asserts, and it was not challenged, that he has performed work to the satisfaction of many builders, plumbers and clients, including through direct engagement by builders "on their own homes." There is not reason not to accept this.
3. In their response to the application, the appellants set out what they said were the problems with drainage on the property, and what could, or should, have been done to correct the problems with the gutters and pipes. They also provided a comprehensive response to Mr Turl's report. This response was in the form of a submission Mr Smith co-signed with Ms Dunne. The filing of documents containing a mix of evidence, opinions, legal and other submissions is not uncommon in this tribunal, and the Original Tribunal accepted this document, quite appropriately, as Mr Smith's witness statement, insofar as it related to the "expert evidence" about the gutters and plumbing. Although the appellants were clearly not experienced in writing legal documents, the substance of Mr Smith's factual evidence was clear.
4. By contrast, Mr Turl's report suggests he is experienced in giving evidence. It includes an outline of the matters for which he was engaged, the assumptions he made, a defects table, photographs, and a clear explanation as to what he said were the defects and proposed solutions, as well as costs. One needs to careful about form over substance, but Mr Turl's report clearly identified the alleged defects, and made reference to the relevant extracts from the Victorian Building Authority's 2015 Guide to Standards and Tolerance. It addresses the issues in question clearly and is easy to follow. Mr Turl acknowledges his obligation to assist the Tribunal. According to the declaration in his report, Mr Turl is a licenced builder with 14 years "licensed practice." Mr Turl was subject to questioning by both Mr Smith and the Tribunal.
5. Whose evidence was to be preferred?
6. The Original Tribunal did not clearly state why it preferred the evidence of Mr Turk to that of Mr Smith, but the senior member does accept that the works were not carried out to an acceptable standard, which implies acceptance of Mr Turl's evidence that the works were inadequate, and not necessarily just incomplete. The senior member clearly accepted Mr Turl's evidence that the defects cannot be addressed without taking down the gutters and downpipes. Allowance needs to be made for the fact the decision was given orally, shortly after the hearing, and in circumstance where it would not have been expected that the senior member would address every evidentiary or legal point, but the situation is not ideal, because we do not know what the Original Tribunal's reasoning was and cannot review it.
7. It is not appropriate that this Appeal Tribunal read justifications into the reasons: Minister for Immigration and Border Protection v Singh [2014] FCAFC 1 at [47]. Nonetheless, the appellants' argument relies on nothing but a bare assertion that Mr Smith's evidence should have been preferred simply because of his experience and qualifications. I do not accept that is the case. Mr Turl is a building professional. He set out his experience clearly. He recognised his duty to the Tribunal, gave clear evidence, was cross-examined by both Mr Smith and Ms Dunne, and quite rigorously by the Tribunal, and he answered questions clearly. The appellants were given an opportunity to respond to the evidence. They conceded some defects in installation, particularly in relation to the screws.
8. There is nothing in this process that is suggestive of error by the Original Tribunal. There is nothing that leads us, as an Appeal Tribunal, to conclude that it was not open to the Original Tribunal to accept Mr Turl's evidence, or to give it greater weight. To succeed on this ground, the appellants needed to demonstrate more than that it was open to the Original Tribunal to accept Mr Smith's evidence over Mr Turl's, there need to establish that there was an error in not doing so. The onus is on the appellants to establish this. They have failed to do so.
9. No error is established.
10. This ground of appeal is not made out.

1. The Original Tribunal awarded the costs of the Turl Report on the basis that it was "reasonable" to go and get the report because:

(a) There was a lack of communication from January 2013 onwards; and

(b) It would have been reasonable to doubt whether the matters were going to get addressed and therefore reasonable to go and get an expert report in those circumstances; and

(c) They could not have gotten a reasonable assurance about the quality of the work from a supplier.

1. The tribunal is a "no cost" jurisdiction. Section 48 of the ACAT Act provides that:

(1) The parties to an application must bear their own costs unless this Act or another territory law otherwise provides or the tribunal otherwise orders.

(a) if the tribunal decides an application in favour of the applicant, the tribunal may order the other party to pay the applicant--

(i) the filing fee for the application; and

(ii) any other fee incurred by the applicant that the tribunal considers necessary for the application; or

(b) if the tribunal considers that a party to an application caused unreasonable delay or obstruction before or while the tribunal was dealing with the application - the tribunal may order the party to pay the reasonable costs of the other party arising from the delay or obstruction; or

(c) subject to section 49, if a party to the application contravenes an order of the tribunal - the tribunal may order the party to pay the costs or part of the costs of the application to the other party; or

(d) if the application is an application for review of a decision under the Heritage Act 2004, the Planning Act 2023 or the Urban Forest Act 2023, and the tribunal makes an order under section 32 (2) (Dismissing or striking out applications) - the tribunal may order the applicant to pay the reasonable costs of the other party arising from the application.

Note A legal expense relating to a proceeding in the tribunal may be recoverable as a debt under the Unit Titles (Management) Act 2011, s 31.

(3) For subsection (2)(d), reasonable costs of the other party arising from the application include reasonable legal costs but do not include holding costs.

• interest and lender imposed charges associated with a loan

• costs of engaging workers and subcontractors and hiring equipment for a development

1. Section 48(1) of the ACAT Act makes it clear that the parties to proceedings must bear their own costs unless otherwise provided by the Act. There are few exceptions, but only one is possibly relevant in this case.
2. Under section 48(2), the tribunal has a discretion, where the applicant in a claim or counterclaim is successful, to order the other party to pay certain "expenses" of the application.
3. In Burton v Rojas Constructions Pty Ltd (Burton), the Tribunal considered whether the cost of an expert report, paid for by the successful party, should be re-imbursed:[8]

78. Section 48(2)(a) of the ACT Civil and Administrative Tribunal Act 2008 was amended in 2014 by the Courts Legislation Amendment Bill 2013.

79. Prior to that time, ACAT could only award the application fee to a successful applicant. However, people particularly in the civil jurisdiction are faced with other compulsory government fees in order to access justice, such as a fee for an ASIC search, which we require clients to provide if, for example, they are making a claim against a company, and hearing or subpoena fees.

80. The amendment was intended to allow those other fees to be reimbursed.

81. However, there was no suggestion or intention that a party could claim a 'disbursement' such as expert witness expenses, although sometimes these are referred to as witness 'expenses or fees'.

82. The explanatory statement to the amendment provided:

This clause clarifies that when the Tribunal decides an application in favour of the applicant, it can award incidental costs of an application against the other party. Incidental costs may include application filing fees, business name search fees, subpoena filing fees and hearing fees.

83. The word 'fee' was used intentionally, instead of a broader word 'costs' or 'expenses' to try to distinguish from other kinds of costs or expenses which would ordinarily be considered disbursements.

1. Applying the reasoning in Burton, the expert report of Mr Turl is a disbursement and not a "fee", and no order can be made for its recovery under section 48(2).
2. There may be some cases where a report will fall within the claim for compensation, whether as loss suffered or rectification costs. For example, a call-out fee for an appropriate professional to identify and repair a defect may be form part of the claim, as it is a reasonable and unavoidable loss incurred in remedying the breach. However, the Turl Report is clearly an expert report prepared for the purpose of dispute resolution, if not legal action, and used by the respondents to formulate and prove their case. It is the kind of cost that section 48 is intended to exclude. That the cost of the report was "reasonable" does not give the Tribunal to power to award it. The award of compensation for the report was contrary to the requirement that parties pay their own costs, as set out in section 48 of the ACAT Act. The Original Tribunal was in error in awarding this sum, and that aspect of the decision must be set aside.

1. For these reasons, we are satisfied the Original Tribunal erred in awarding costs of $1,319.50 to cover the expert report of Mr Patrick Turl. No other error was identified.
2. Accordingly, the appeal is allowed by setting aside the Original Tribunal's order, and ordering instead that:

(a) Karyn Grace Dunn and Andrew John Smith trading as ACT Gutter Service pay to Malisa Lengyel and Sean Lengyel the sum of $7,015.23 comprised of:

(i) $6,354.70 - rectification works;

(ii) $176.00 - ACAT filing fee; and

(iii) $484.53 - Interest.

[1] Special Purpose Inspection Report dated 6 June 2023

[2] The Original Tribunal said 2013 in his reasons, but it is clear that he misspoke

[3] Giusida Pty Ltd v Commissioner of ACT Revenue [2016] ACTSC 275 at [32]- [38]

[4] Index of documents filed 12 October 2023

[5] See Parke B in Robinson v Harman [1848] EngR 135; (1848) 154 ER 363

[6] Transcript of proceedings dated 29 November 2023, page 62, line 43

[7] See Bellgrove v Eldridge [1954] HCA 36; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8

[8] [2018] ACAT 117 at [78]- [83]