This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 23 September 2022.
For the reasons that follow, we have allowed the appeal and substituted a decision for the decision made by the Tribunal.
[2]
The appealed decision
The Tribunal's decision concerned an application brought by the appellant (Mr Humphries) against the respondent CJ and DS trading as B & S Panels (B & S Panels) seeking compensation for defective workmanship in repainting a 1974 Torana. The vehicle was taken to B & S Panels as a shell in 2017 and returned still as a shell in February 2019. The work done included repairing body damage in preparation for repainting, and repainting the car. Mr Humphries paid a total of $16,580 for this work, which the Tribunal found consisted of repair costs of $11.148.50 and repainting of $5,431.50.
The Tribunal found, on the basis of expert evidence produced by Mr Humphries, that in repainting the vehicle B & S Panels "performed work which resulted in a shortfall of the standard required by the relevant consumer guarantee under the Australian Consumer Law" and was not fit for purpose. Mr Humphries' expert report found that the major, but not the only, problem with the paintwork was an "intercoat adhesion failure of the final finish which is deemed to be CATASTOPHIC over the entire vehicle." The report advised:
"Unfortunately, the only method of rectification is the complete removal of all costing back to bare metal, reprepare, reprime and repaint paying particular attention to the application process and mixing recommendations of the manufacturer of the products used while staying within the maximum recommended film thicknesses (300 microns) to be applied."
The Tribunal preferred Mr Humphries' report to two reports B & S Panels relied on, from employees of the paint manufacturer (PPG), which "did not grapple with" the findings in Mr Humphries' report.
Mr Humphries claimed the sum of $33,000 being the costs of:
1. removing panels sandblasting the vehicle back to bare metal;
2. repairing panels in preparation for a complete respray, inside and out;
3. refit panels for transport.
There was no breakdown of these costs in the lump sum quote relied on by Mr Humphries.
In defending the compensation claim B & S Panels denied that the work was defective and claimed that before the work commenced, Ms Meyn advised Mr Humphries to get the car sandblasted, to avoid the difficulties he was now experiencing due to number of coats of paint on it. The Tribunal found, at [17], that "this was no answer to liability" but informed the question of, at [18], "what is reasonable compensation for the issue arising from the spray work."
In assessing damages the Tribunal wrote:
"17. The consumer's starting point is that he is entitled to compensation in excess of $30,000. This is founded upon the proposition that the necessary work to get the car right includes a high component for sandblasting, the very thing the consumer was told was necessary in the first place. An award on this basis is not compensation, it is to penalise the supplier for the consumer failing to follow the supplier's advice, and it is not reasonable.
18. There may be a case - indeed, flagged by the expert - that a measure of loss may be the diminution in the value of the car. For the reasons given, this is in the facts of this matter an unreal measure and neither party brings evidence either way.
19. The next step is a curious step, in the sense that the particular facts of this case make the step a curious one. The consumer has paint defectively sprayed on his car, but a cost of a respray isn't really the point. What reasonable person would respray the vehicle to rehide the problems. Indeed, it is inherent in the consumer's own quote, a quote including a sandblast, that this is not a reasonable course.
20. As things turn out, the supplier loses in the sense that the paintwork is defective. On the material before it and for the reasons given, the Tribunal is satisfied that $5,431.50 represents reasonable compensation. Either it is the best evidence of the likely cost of a respray, although no-one thinks a mere respray without a sandblast as feasible. Or it is the best evidence that in work done under an arrangement, it represents the work that was not done. Either way, the Tribunal is satisfied that an order in this amount is a just and equitable outcome."
Mr Humphries has appealed that decision arguing that the Tribunal erred in the assessment of damages. B & S Panels supports that Tribunal's decision.
Mr Humphries sought to introduce new evidence on appeal that was not considered by the Tribunal when it made its decision. B & S Panels opposed the admission of new evidence before the Appeal Panel.
[3]
Scope and nature of internal appeals
Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) NCAT Act.
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law. The list includes whether the Tribunal applied a wrong principle of law.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division, such as this decision, are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that:
1. the decision of the Tribunal under appeal was not fair and equitable; or
2. the decision of the Tribunal under appeal was against the weight of evidence; or
3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where:
… there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve:
1. issues of principle;
2. questions of public importance or matters of administration or policy which might have general application; or
3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;
4. a factual error that was unreasonably arrived at and clearly mistaken; or
5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided on the appeal and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal: see Cominos v Di Rico [2016] NSWCATAP 5 at [13].
[4]
Material before the Appeal Panel
In deciding the appeal, we have had regard to the material and submissions:
The Notice of Appeal lodged on 10 October 2022;
The Reply to Appeal lodged on 17 October 2022;
Bundle of documents and submissions lodged by Mr Humphries on 9 November 2022;
Bundle of documents and submissions lodged by Ms Meyn on 25 November 2022;
Mr Humphries submission in reply lodged 2 December 2022.
The Tribunal's Notice of Order dated 14 September 2022;
The procedural directions made at the appeal callover;
The original application to the Tribunal in MV 22/24072;
The material before the Tribunal in in MV 22/24072; and
The oral submissions made by the parties at the appeal hearing.
[5]
Regarding Mr Humphries application to admit fresh evidence
Mr Humphries withdrew his application to rely on new evidence after it was explained to him that in order to rely on new evidence, we had to be persuaded that the new evidence was not reasonably available at the time of the hearing before the Tribunal.
Ms Meyn had identified that new evidence as that contained in pages 131, 145, 149 and 150 Mr Humphries's bundle filed on 9 November 2022. Mr Humphries maintained that page 131, a quote for the cost of sandblasting the vehicle dated 15 March 2022 in the sum of $4,800 plus GST, had been among the evidence before the Tribunal. We indicated that we would check the original Tribunal file to see if it was among the material considered by the Tribunal.
We have since confirmed by inspection of the Tribunal file that the quote from JSpec Auto, Truck and Plant Maintenance to sandblast and prime the vehicle, dated 15 March 2022, in the sum of $4,800, plus GST ($5,280.00), was among the material Mr Humphries relied on before the Tribunal. The other documents identified by Ms Meyn were not.
[6]
Grounds of Appeal
Mr Humphries is self-represented and, unsurprisingly, has not articulated grounds of appeal in a conventional manner. Consistent with the principle set out in Cominos v Di Rico, we have examined the material generally to discern whether a question of law, or a basis for leave to appeal, is raised.
The notice of appeal clearly raises Mr Humphries' dissatisfaction with the assessment of damages by the Tribunal. Having reviewed the decision we are satisfied that the appeal raises a question of law, namely did the Tribunal, when assessing damages, correctly apply the provisions s 267 of the Australian Consumer Law (the ACL) concerning a breach of consumer guarantee as to due care and skill, and fitness for purpose, with respect to the provision of services. The services concerned were the repairs to and respraying of Mr Humphries 1974 Torana. While Builder & S Panels also supplied the paint and materials used in respraying the vehicle, the complaint is about the quality of the repainting work, not the quality of the paint itself.
The ACL provides consumer guarantees with respect to the supply of goods and services to consumers, as defined, in trade and commerce. Sections 60 and 61(1) (found in Subdivision B of Division 1 of Part 3‑2) provide, with respect to the supply of services:
"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.
61 Guarantees as to fitness for a particular purpose etc.
(1) If:
(a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and
(b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer;
there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose.
…"
We think it clear that the Member's finding that B & S Panels "performed work, which resulted in a shortfall of the standard required by the relevant consumer guarantee under the Australian Consumer Law" and was not "fit for purpose", constitute findings that the consumer guarantees in s 60 and 61 of the ACL applied and had not been complied with.
Section 267 of the ACL then provides:
"267 Action against suppliers of services
(1) A consumer may take action under this section if:
(a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and
(b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3‑2 is not complied with; and
(c) unless the guarantee is the guarantee under section 60 - the failure to comply with the guarantee did not occur only because of:
(i) an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or
(ii) a cause independent of human control that occurred after the services were supplied.
(2) If the failure to comply with the guarantee can be remedied and is not a major failure:
(a) the consumer may require the supplier to remedy the failure within a reasonable time; or
(b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time - the consumer may:
(i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii) terminate the contract for the supply of the services.
(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) terminate the contract for the supply of the services; or
(b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
(4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
(5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3)."
In making his decision the Member did not refer to s 267 of the ACL at all and did not systematically address its requirements. Importantly, the Member did not consider whether the loss claimed by Mr Humphries under s 267 was "reasonably foreseeable" in the circumstances, as required by s 267(4). Rather, the question the Member posed was what was "reasonable compensation" in the circumstances? In doing so, the Tribunal erred.
It was not necessary, given the compensation claimed by Mr Humphries, for the Tribunal to determine whether or not the failure to comply with the consumer guarantees was a major failure or not. This is so because the right to recover damages under s 267(4) applies irrespective of whether or not the failure was a major one.
Mr Humphries entitlement under s 267(4) was to recover damages for any loss or damage he suffered because of the failure to comply with the guarantees, if it was reasonably foreseeable that he would suffer that loss or damage as a result of the failure. In our view, the reasonably foreseeable loss suffered by Mr Humphries as a result of the intercoat adhesion failure necessarily included the cost of removing the faulty paintwork, by sandblasting it, before respraying the vehicle. Given the expert report accepted by the Tribunal, this was an inevitable conclusion.
When we asked Ms Meyn to address this, her reply was that the problem with the paintwork flowed from the vehicle's pre-existing paintwork, not any problem with the repainting work performed by her business. We noted that she had not appealed the findings of the Tribunal with respect to the quality of workmanship provided by B & S Panels, and that it was not a question raised by the appeal.
The Tribunal's failure to ask itself whether the loss claimed by Mr Humphries was a reasonably foreseeable consequence of B & S Panels' failure to comply with the consumer guarantees was an error of law. It is one which does not require that the whole decision be set aside, but that the damages recoverable under s 267(4) be reassessed.
[7]
Assessment of Damages
In this case we think that in order to fulfill the Tribunal's guiding principle under s 36 of the NCAT Act of facilitating "the just, quick and cheap resolution of the real issues in the proceeding," we should reassess the damages payable for breach of the consumer guarantees by B & S Panels. This is preferable to remitting the claim for damages to be assessed again, with resultant costs and difficulties for the parties.
The Tribunal assessed "reasonable compensation" at $5,431.50. This was the amount Mr Humphries had paid for repainting, rather than repairing, the vehicle.
Mr Humphries had claimed $33,000.00 for sandblasting, repairing and respraying the vehicle. The quote for that amount was a lump sum quote, without any breakdown of the costs, or any indication of what panels were to be repaired and at what cost. Given that Mr Humphries had already paid B & S Panels $11,148.50 for panel repairs, which he does not complain about, it is unclear why further repairs are needed. These problems with the $33,000 quote cause us to approach it with some scepticism and significant caution as to whether it actually represents Mr Humphries' reasonably foreseeable loss, with respect to the cost of repainting and respraying the vehicle. In this regard we note there was evidence before the Tribunal, which was not referred to by it, in the form of the quote for sandblasting the vehicle in the sum of $4,800 plus GST (i.e. $5,280.00). We have difficulty reconciling this amount with the Tribunal's comment that the $33.000 lump sum quote included, "a high component for sandblasting."
Difficulty in assessing damages, however, does not relieve the Tribunal from doing the best it can to estimate Mr Humphries' loss. As Mason CJ and Dawson J explained in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 at [31]"
The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can: Fink v Fink (1946) 74 CLR 127 at 143; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 411-12 ; Chaplin v Hicks [1911] 2 K 786 at 792. Indeed, in Jones v Schiffmann (1971) 124 CLR 303, Menzies J went so far as to say that the "assessment of damages… does sometimes, of necessity involve what is guess work rather than estimation": at 308. Where precise evidence is not available the court must do the best it can: Biggin & Co Ltd v Permanite Ltd [1951] 1 KB 422, per Devlin J at 438. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages: see McGregor on Damages, 15th ed (1988), paras 357-9.
This settled rule applies equally in the Tribunal: Baak v Concrete Services Group Pty Ltd [2016] NSWCATAP 42, at [17] and Tuck v White [2016] NSWCATAP 132, at [44], and Bavin v Parklea Operations Pty Ltd [2019] NSWCATAP 120 at [99] (Bavin). In Fink v Fink [1946] HCA 54; (1946) 74 CLR 127, at page 143 where, Dixon and McTiernan JJ (with whom Latham CJ and Williams J agreed) said:
"Where there has been an actual loss of some sort, the Common Law does not permit difficulties of estimating the loss in money to defeat the only remedy it provided for breach of contract, an award of damages."
In the present case we are satisfied that the reasonable foreseeable loss suffered by Mr Humphries is the cost of sandblasting the vehicle and respraying it to the same standard that he originally bargained for. The Tribunal found that respraying the vehicle had cost him $5,431.50. Given the paucity of evidence with respect the cost of respraying that was before the Tribunal, we think that the amount Mr Humphries paid B & S Panels for the original job is the best available evidence of the cost of having the vehicle resprayed. To that sum, should be added the cost of having the vehicle sandblasted in preparation for respraying. This totals $10,711.50 ($5,431.50 + $5,280.00 = $10,711.50). No allowance should be made for additional but unidentified repair costs as claimed in Mr Humphries' quotation.
[8]
Orders
In the light of the above, the Appeal Panel makes the following orders:
1. Appeal allowed.
2. The order made by the Tribunal on 14 September 2022 is set aside and in substitution for it the following order is made:
C J & D M Meyn t/a B & S Panels is to pay Christopher Nigel Humphries the sum of $10,711.50 immediately.
[9]
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: 19 January 2023