HEADNOTE
[This headnote is not to be read as part of the judgment]
The appellants, Floyd and Derek Larsen, are the trustees of the Larsen Superannuation Fund (the "Fund"). The Fund is the owner of a property in Glen Alice, NSW. In 2018, the Larsens entered into a contract with the first respondent, Tastec Pty Ltd ("Tastec"), for the supply and assembly of a pre-fabricated house on the Glen Alice property. The second respondent, Stephen Sainsbury, is a registered architect and a director of Tastec.
The contract initially contemplated that the roof and walls of the house would be clad in a product called "Maxline 340". However, following discussions with the respondents regarding their concerns as to the availability and feasibility of the Maxline 340 product, the parties executed a variation to the contract. By that variation, the parties agreed to change to a different cladding system using a product the respondents referred to as "Extraline 294". It was common ground that the cladding manufacturer did not produce a cladding product under that name. Instead, the product was a different panel product, which the Larsens had rejected on a previous occasion, with the addition of a t-strip glued down the centre of each panel. The Larsens first became aware that the Extraline 294 was the previously rejected product with a glued-on t-strip when it was delivered to the Glen Alice property. After inspecting the product, they instructed Tastec to proceed using the unmodified panels (without the t-strip), being the product that they had previously rejected.
In the proceedings below, the Larsens alleged that the first respondent's supply and assembly of the house was defective as to the roof and wall components, the windows, and the doors. They also alleged that both respondents had made misleading or deceptive representations about the cladding material, which caused the defective cladding product to be installed. They sought damages against the first respondent for breach of contract, and damages and/or compensation under the Australian Consumer Law. They separately sought orders against Mr Sainsbury in relation to the same contravening conduct as the first respondent, or for his involvement in that conduct.
The primary judge dismissed the Larsens' claims, finding that there was no contractual relationship between the Larsens and the respondents in respect of which they could bring a claim. Alternatively, her Honour held that the Larsens' claims failed for various other reasons, including that they had failed to establish damage and/or causation in respect of the contractual claims, and failed to establish that the respondents had made false or misleading representations on which the Larsens had relied to their detriment.
On appeal, the Larsens contended that the primary judge erred by dismissing their allegations that the respondents had made false or misleading representations about the cladding on which they had relied to their detriment. They also submitted that her Honour made further errors in respect of her findings on the loss and damage related to the cladding. The Larsens argued that her Honour erred by concluding that they had contracted with Tastec in their personal capacity, and not as trustees of the Fund, such that their claim in contract could not be maintained. They further contended that her Honour erred in dismissing their allegations that the windows and external doors were not fit for purpose, and in dismissing their claim for breach of contract in relation to four of the internal doors. Finally, they appealed against the primary judge's failure to find that Tastec owed them a duty of care pursuant to the Design and Building Practitioners Act 2020 (NSW).
The Court (Mitchelmore JA, Ward P and Kirk JA agreeing), allowing the appeal, held:
As to the cladding representations:
1. When determining whether the first respondent's conduct was misleading or deceptive, it is necessary to objectively consider and determine the character of that conduct in relation to the appellants, bearing in mind what matters of fact each knew, or may be taken to have known, about the other as a result of the nature of their dealings and the conversations between them. The conduct of the person alleged to have engaged in the misleading or deceptive conduct must be viewed as a whole: [103].
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 considered.
1. In relation to the question of reliance, there is no requirement that the contravening conduct be the sole cause of loss or damage. It will suffice that the conduct "make some non-trivial, material, or substantial, contribution to the decision of a claimant to act in a particular way": [122].
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41; Zong v Wang [2022] NSWCA 80 applied.
1. Contrary to the primary judge's conclusions, the first respondent engaged in conduct that was misleading or deceptive or was likely to mislead or deceive, which the appellants relied on in deciding to proceed with the cladding solution ultimately installed: [8], [102].
2. The primary judge erred by failing to assess reliance at the time when the appellants executed the variation to the contract which led to the change in cladding material. This error also infected her Honour's conclusions as to the loss or damage sustained by the appellants: [123], [133].
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526; [1992] HCA 55; Harvard Nominees Pty Ltd v Tiller (2020) 282 FCR 530; [2020] FCAFC 229 considered.
As to whether the Larsens had contracted in their personal capacity or as trustees of the Fund:
1. In circumstances where the Fund was the owner of the land on which the house was built, the appellants could have had no capacity to enter into the contract with the respondents other than as trustees of the Fund. The primary judge erred in concluding to the contrary: [9], [139].
As to the claims relating to the internal doors, windows and external doors:
1. The primary judge did not err in the respects advanced by the appellants in dismissing their claim for loss and damage in relation to the external doors and windows. There was also no error in her Honour's conclusion regarding the claim for breach of contract in relation to the internal doors: [9], [151], [155]-[157].
As to the claim under the Design and Building Practitioners Act:
1. It is an arid exercise to consider whether the primary judge failed to consider the claim made under the Act in circumstances where, in any event, the loss and damage claimed rested on evidence which her Honour rejected and that rejection is not challenged on appeal: [10].