Kelly v Chulio & Ors [2007] NSWSC 677 | Case summary

Factual background 4 In December 2005 the defendants had decided to have some paving done in their backyard. The defendants contacted the plaintiff, who inspected the site and agreed to carry out the works. Subsequently the scope of the works was extended and a price agreed upon. Disputes arose between the defendants and the plaintiff as to the quality of the work, which culminated in the plaintiff leaving the job in mid January 2006. It was common ground that the plaintiff did not have an appropriate licence to perform this work at the time the contract was entered into. 5 On the only evidence before the CTTT and this Court (the engineering report from Mr Cantali, 3 June 2006) the work was unfinished and that which had been completed had been performed in a poor manner. The work had been so poorly carried out that it was incapable of rectification. It would have to be demolished and completely redone. 6 The defendants commenced proceedings in the CTTT against the plaintiff. Orders were made from time to time by the CTTT requiring the defendants to particularise their claim against the plaintiff and requiring the service of evidence including experts' report. By letter dated 31 July 2006 the defendants served on the plaintiff a copy of the engineer's report from Mr Cantali and a quotation for demolition and rectification work from Grey Gums Landscaping dated 27 July 2006. 7 The matter commenced before CTTT member, Mr Smith, on 13 September 2006. There was no legal representation. The defendants represented themselves. The plaintiff was represented by his father, Greg Kelly. Placed before the Court was a medical report which stated that the plaintiff had been a patient in Bankstown Hospital between 20 June and 16 July 2006 for a stress and anxiety related illness. The report recommended that it would not be in his best interests to be exposed to any stressful situation for at least six months following his discharge. The CTTT gave leave to Mr Greg Kelly to appear on behalf of the plaintiff. 8 At the commencement of the hearing the defendants advised that they wished to increase the quantum of their claim from $23,000, which had been previously particularised, to $32,850. The CTTT asked Mr Kelly whether he was in a position to meet that amendment or whether he wished to apply for an adjournment. Mr Kelly advised that he wished the matter to proceed and did not want an adjournment. The amount of the defendants' claim was amended accordingly. 9 It is clear from the evidence that the defendants had some difficulty in understanding and articulating their entitlement to damages. They placed before the Tribunal a schedule of damage which they could not explain. Nevertheless, the nature of their claim was expressed reasonably clearly. Early in his evidence the male defendant said (with reference to the report of Mr Cantali): "He carry out the inspection and he give us a report on 3 June. In it, he has observed the site. He looked at the work that was carried out, the state of the work that he was left, and their standards of work that was done there, safety issues, footings, soil, the actual pavers. He come to the conclusion that no matter what, it have to be taken away completely and restart again because there was a lot of issues involved, and who'd ever will take the job over, he will not be able to go and do the job whatsoever, so that's why he had to be taken away and we didn't realise how bad it was until somebody professional pointed it out to us. We were under the impression that it could be repaired but it's unrepairable. In his recommendation, he says this is what he come up with a conclusion that I would take the money. He said whatever money we have paid he would take an additional $45,000 plus 15% to 20% of the cost of pavers plus also to fix up for the …" (T.15) 10 It was against that background that the CTTT member said: "Let me just explain something to you before you tell me that. If you establish that one or both of the respondents are liable to you in damage and if you establish that it is not possible to rectify the defects that you point out, or Mr Cantali points out, then the correct way of measuring the damages in contract law is that sum of money which it will cost you to achieve what should have been achieved in order to comply with the original contract. So I want you to think about that. It's a difficult concept for the lay person I know but people very often want to double dip. They want the cost of fixing it and they want a refund of what they paid. That's purely double dipping. … So we're talking about the cost to you of achieving compliance with the contract. How do you figure it out? A. Well there's two issues here on that particular matter. The first issue is if we were just to get our money back and take everything away, that's one way of solving the problem, and if we have to do anything, we do it again ourselves, you understand what I mean? … Well the other thing is rectify what is there now, and to rectify what is there now, the both - the money in both to finalise that job this is what it will take … Q. Refer me to the quotes and tell me which ones you're claiming on. A. Down here, Mr Grey Gums. Q. Grey Gums Landscape, yes? A. On 27th of the 7th was - is being amended at the time. Q. Let's have a look at their quotation. They've got three quotations none of which are anywhere like the amount you're claiming. One's for $30,350, one is $39,420 and one's for $38,860. So how does that assist you in establishing the amount that you're claiming? A. Because we got the engineer's report that we have to pay for it." (T.16) 11 Later in the proceedings Mr Kelly gave evidence as to his understanding of to what had occurred between his son and the defendants. Of necessity that evidence suffered from the defect that it was hearsay and that he had not in any way been directly involved with the transaction. 12 Mr Kelly sought to rely upon a document which purported to be an expert's report prepared on behalf of the plaintiff. The document was unsigned and did not identify an author. It contained a number of assertions with little by way of justification or analysis to indicate the basis for those assertions. Mr Kelly advised the CTTT that the document had been prepared by Mr Murphy and by an engineer Mr Rose. 13 Mr Murphy was present at the hearing but because he apparently lacked qualifications to express an opinion as to the paving work, it was not intended to call him. Mr Rose, the person identified as the engineer, was not present. 14 The CTTT member advised Mr Kelly that he could give little weight to the document apparently jointly prepared by Mr Murphy and Mr Rose because apart from its other deficiencies, there was no indication on its face that it had been prepared by a person with engineering or similar expertise. The following exchange took place between the CTTT member and Mr Kelly: "Q. I've read your responses and all I will say at this stage is that I give very little weight to that response for the reasons that I've explained to you. Had Mr Rose come into court today, had he provided a written report together with some basis of his qualifications, had he told us why he believed this then certainly it would have or could have had the same weight given to it as Mr Cantali's report. It would have been a contest between two expert witnesses, then it would have been necessary for me to look very closely at what each of them has to say, but in reality in this case I don't have two expert witness reports. I've got one expert witness report and a comment by a person unknown that has been adopted as your submission in the proceedings. So essentially what I'm saying to you is that I accept Mr Cantali's report as an expert's report, give it the weight that it deserves. I give much less weight to section 3 of your response. Is there anything else you want to say about it? I have read it. A. If it's a case of producing an expert's report, then might I apply that this matter adjourn until that is produced. Q. No sir you may not. You have been given ample opportunity to do that. You have been provided with a direction to that effect as early as 11 May of this year by the Tribunal and later on. I think that was done again by the Tribunal. In any event, there were directions made by the Tribunal for you to provide that evidence had you chosen to do so, and also before we started today's hearing I asked you if you were fully prepared and had all of the evidence with you today that you chose to rely on. It would be grossly unfair to both the other respondent and the applicant to adjourn this matter now for that purpose. So no, there will not be any further adjournment for that purpose Mr Kelly, but I am happy to hear anything else you want to say to me. A. No I think that wraps it up as far as I'm concerned."(T.37-38) 15 The CTTT member then adjourned to read the material which had been placed before him. Upon his return he delivered his decision and his reasons for that decision. 16 In those reasons he indicated that he accepted the report of Mr Cantali and thought that the lowest of the quotes provided by Grey Gums Landscaping most closely followed the scope of works referred to by Mr Cantali as being necessary to demolish the defective work and to thereafter complete the contract works. Because there was some betterment built into that quotation he reduced it by 10% and awarded to the defendants the amount of $27,315 against the plaintiff. 17 The plaintiff believed that any entitlement of the defendants to damages was less than $25,000. For that reason he attempted over a number of months to persuade the CTTT to grant a rehearing of the matter. It was only when he received advice that the correct avenue of appeal was to the Supreme Court that these proceedings were commenced on 29 November 2006. 18 I am prepared to grant an extension of time for the filing of the summons. The appeal provisions of the Act and the procedural provisions of this Court are difficult for a lay person to understand. It is clear from the various applications made by the plaintiff to the CTTT that he was dissatisfied with the decision from an early point in time and wished to overturn it.

Consideration 19 It was submitted on behalf of the plaintiff that the CTTT was in breach of s 28 of the Act in that the member had failed to ensure that Mr Kelly understood the nature of the case which was being brought by the defendants. It was submitted the defendants' inability to properly articulate their case and justify the figures in their schedule meant that their claim must fail. It was submitted that it was unfair of the member to rely upon the Grey Gums Landscaping quotation when calculating the damages to which the defendants were entitled when the defendants had not themselves relied upon that quotation. 20 That submission is not made out. It seems to me that Mr Kelly well understood what was being claimed by the defendants but regarded it as being ridiculously high. This is clear from his rejection of any settlement discussions at transcript 9. 21 The plaintiff accepted that he had received the report of Mr Cantali and the quotations from Grey Gums Landscapes. Those documents are clear in their content and purport. Mr Cantali said that the existing work would have to be demolished and done again and further work done to complete the job. The quotations from Grey Gums Landscapes set out the cost of that work. 22 Although the defendants' command of English was not particularly good, the evidence set out above makes it tolerably clear what they were claiming - the cost of demolishing the existing work, having that work redone and completing the contract. It was in that context that the defendants made specific mention of the Grey Gums quote. 23 If there were any doubt on that issue it was removed when the member explained how the defendants' claim should be put and sought to explain why the defendants were not entitled to a refund of the monies which they had paid plus the costs of completing the contract. Although he was directing those comments to the defendants, they would have been heard and understood by Mr Kelly. 24 It is also necessary to consider the submission against the background of how these proceedings were conducted. Legal representation is not allowed under the Act without leave of the Tribunal. It is necessary for lay persons to do the best they can to put forward the factual basis for their claims. It is then necessary for the Tribunal member to sift through that material and place it in a legal framework. 25 In his oral reasons (which differ slightly from the written reasons ultimately provided), the member explained his calculation of damages as follows: "Based on the expert opinion of Mr Cantali I am satisfied that it is the only way of achieving contract compliance and is therefore a reasonable course to adopt. We ran into some problems with Mr and Mrs Chulio's explanation of the sum that they were seeking as compensation. In the final analysis it's not necessary for me to go through that calculation that they relied on and apply it to this case because that's not what it's about. It's not about a refund. It's not about those compensations or those costs that were incurred during the course of the work such as the cost of cutting off the bottom of the laundry door. This is about the cost to the applicants of having the work done by somebody else to bring it to the standard it should have been in when Mr Kelly walked off the job, that is at the completion of the works. There have been a number of quotations provided and I have relied on the most recent one from Grey Gums Landscaping. That seems to me, an option number one under that quotation, and I have relied on that because to me it most closely follows the scope of work that would be necessary to be done in order to achieve contract compliance. That is take up the pavers, store them, redo the work, relay the foundation for it, redo the wall, put those pavers back which can be put back and buy some more in order to deal with the fact that some of them can't be reused. That quotation is in the sum of $30,350. However, there is a concept of betterment, that is a homeowner is not entitled to something that is better than what they originally contracted for and it seems to me that the agreement or quotation, rather, from Grey Gums Landscaping option one includes the laying of the pavers in a diagonal fashion rather than as they were laid by Mr Kelly. That, I would accept, the argument put to me by Mr Greg Kelly that constitutes - not in his words, he didn't say betterment - but that's what it is. It's an improvement on what was originally contracted for. My difficulty is that I don't know the value of that betterment because there was no specific evidence provided in relation to that. However, I am obliged to do the best I can with the evidence that's available to me. It seems to me that there will perhaps be some additional pavers provided and some additional work done in order to achieve the diagonal pattern. I have deducted 10% from the quotation for that betterment and that's how I've arrived at the figure of $27,315." (T.43-44) 26 The very fact that Mr Kelly made a submission in relation to the Grey Gums Landscaping quotations leads me to infer that Mr Kelly well understood that one of the bases on which the defendants were claiming damages relied upon the Grey Gums Landscaping quotations. 27 In the circumstances I am not satisfied that the plaintiff was denied procedural fairness on that issue. 28 The second matter raised by the plaintiff is the failure to grant an adjournment to Mr Kelly when he requested one. The exchange between the member and Mr Kelly has been set out above. 29 A refusal to grant an adjournment may give rise to procedural unfairness. Some guidance is provided in Italiano v Carbone [2005] NSWCA 177: "[102] The relevant question is what test a court exercising supervisory jurisdiction should apply in considering whether the request was "reasonable". In Touma v Saparas [2000] NSWCA 11, this Court applied the principles in House v R (1936) 55 CLR 499 in determining whether a District Court judge had erred in refusing an adjournment, so as to render the trial before him procedurally unfair: at [27]. The minimum requirement of fairness, consistent with a legal exercise of power, will depend not only on the circumstances of the case, but also upon the statutory regime. The fact that the provisions of the CTTT Act referred to above permit the Tribunal a considerable area of discretion in moulding its own procedures suggests that the bounds of legality may need to be expanded beyond those which might apply in other circumstances. Indeed, it is well understood that the requirements of natural justice may need to be modified from time to time "to meet the particular exigencies of the case": see Kioa v West (1985) 159 CLR 550 at 615, per Brennan J." 30 The matters which the member took into account in refusing the adjournment were the fact that a number of orders had been made by the CTTT in relation to both sides serving experts' reports. He also took into account the failure on the part of Mr Kelly to request an adjournment before the proceedings started. Finally, the member took into account the inconvenience and potential unfairness to the other parties of granting an adjournment at such a late stage in the proceedings. 31 It seems to me that these were all relevant considerations. Accordingly, it cannot be said that the member took into account irrelevant considerations in exercising his discretion to refuse the adjournment. 32 It is true that the member did not refer in detail to each order and variation of order as to the service of experts' reports made by the Tribunal on earlier occasions. It was not necessary for him to do so. Not only had the plaintiff been served with a copy of Mr Cantali's report, which must have made it clear what matters had to be answered by his own expert, but correspondence between the plaintiff and the CTTT made it clear that the plaintiff realised how important it was to have an expert's report. The background to that correspondence was the plaintiff's complaint about difficulties he was experiencing because the defendants refused to allow his expert onto their premises. 33 Applying the principles set out in House v R and also taking into account the "considerable area of discretion in moulding its own procedures" possessed by the CTTT I am not persuaded that the member's exercise of his discretion miscarried. 34 It was submitted that the plaintiff was denied procedural fairness because in refusing the adjournment the member breached a mandatory and fundamental requirement of s 35(b) of the Act in that the plaintiff was not given a reasonable opportunity to call or give evidence and to otherwise present his case. 35 There are two answers to that submission. The first is that the series of orders made by the CTTT on earlier occasions about the service of experts' reports gave to the plaintiff ample opportunity to prepare and provide such a report. 36 There is, however, another difficulty with the submission. No evidence was placed before the Court in this application, either by way of a report from Mr Rose or some other suitably qualified expert, which would indicate the nature of the evidence which could have been called to meet the report of Mr Cantali. On that state of the evidence the submission on behalf of the plaintiff can be put no higher than that there might have been expert evidence which could have contradicted the report of Mr Cantali either in whole or in part. That is not sufficient, in my opinion, to constitute a breach by the member of s 35(b) of the Act. 37 I am not persuaded that the plaintiff was denied procedural fairness when the member refused Mr Kelly's application for an adjournment.

Kelly v Chulio & Ors

At a glance

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Judgment (19 paragraphs)

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Cases Cited (4)

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