These proceedings were heard on 11 August 2023. The applicant's evidence was marked exhibit A. The respondent's evidence was marked exhibit 1. On 18 August 2023 the applicant forwarded additional documents and submissions to the Tribunal requesting that they be taken into account when making the decision in these proceedings. I decline to have regard to the additional documents and submissions on the basis that to do so would deprive the applicant of procedural fairness, in that she would not have the opportunity to consider the documents or make submissions in connection with them.
I find that the Home Building Act 1989 (the 'Act') does not apply to these proceedings. Clause 2(3)(a) of Schedule 1 to the Act states:
'Each of the following is excluded from the definition of residential building work -
(a) any work (other than specialist work) the reasonable market cost of the labour and materials involved in which does not exceed the amount prescribed by the regulations,'
The Home Building Regulation 2014 states at regulation 12:
'For the purposes of clause 2 (3) (a) of Schedule 1 to the Act, the prescribed amount is $5,000.'
I find that the reasonable market cost of the labour and materials involved in the work the parties contracted for is to be taken from their agreement and is less than $5,000.00. There is no other evidence available regarding the market cost of the labour and materials involved.
Despite the fact that the Act does not apply, I find that the Tribunal possess the jurisdiction to hear and determine the applicant's claim as a consumer claim under the Fair Trading Act 1987 and that the applicant's claim is a consumer claim for the purposes of that legislation.
The dispute arises out of a contract in entered into between the parties in April 2023 whereby in consideration of the applicant agreeing to pay the respondent a total of $3,400 + GST, the respondent agreed to carry out painting work for the applicant in an apartment owned by her.
There is no dispute that a written quote was provided by the respondent to the applicant on 11 April 2023 for $3,245.00, inclusive of GST. In a revised quote also on 11 April the respondent increased the price to $3,938.00 inclusive of GST. On 13 April the respondent reduced its quote to $3,400 plus GST.
After further negotiation, on 17 April 2023 the applicant accepted the respondent's reduced quote for $3,400 plus GST. There was a provision in the quote about payment which read:
'Payment 75% Total amount at job completion excluding the two bedroom, until vacate then'
The figure of 75% was by agreement reduced to 70% on 17 April. I find that a description of the work to be carried out by the respondent is to be found in its 11 April quote in the sum of $3,938.00 inclusive of GST.
On 9 May 2023 the painter sent an invoice to the applicant claiming $3,150 which with GST came to $3,465. A variation was claimed in the invoice, although the amount claimed for the variation was not stated.
On 9 May 2023 the applicant provided a payment schedule in response to the respondent's invoice which showed that she assessed that the respondent had carried out 71% of the work. She valued the respondent's work including the variation, which she stated was $800.00, at $2,928.75, inclusive of GST.
I find that on 9 May 2023 the respondent agreed to accept $3,000.00 for the work claimed in the progress certificate. There is no dispute that this amount was paid by the applicant to the respondent. At this time the respondent admitted that it had removed the paint it had been using for the work under the contract from the applicant's premises. It gave justifications for doing so.
The evidence is that on or about 9 May the respondent having removed its paint left the site and did not return. On 20 May 2023 the respondent wrote to the applicant stating:
'Sorry I've been very busy. Due to the previous agreement not being fully respected, I am no longer confident in continuing our work together. I feel it is best to stop any further project for now.
Thank you for understanding'
On 19 June 2020 the applicant commenced these proceedings claiming $3,260.00. The applicant claimed $1,460.00 for the cost to complete the works, and $1,800.00 as the cost of rectification of defective work. In order to claim the cost to complete the work, the applicant must establish that the respondent repudiated the contract entitling her to expectation damages, namely those damages as will place her in the same position as she would have been in had the contract been performed. If the conduct of the respondent was a repudiation of the contract and the applicant had accepted the repudiation, then the applicant had standing to claim damages for the increased cost of completing incomplete work; in addition to claiming damages for the cost of rectifying existing defective work: Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 at [62].
The respondent's position is that the applicant was in breach of contract by failing to pay it the full amount claimed in its invoice. Its position is also that because the applicant did not pay 70% of the quoted amount and the variation, it was entitled to cease working at the applicant's premises. The respondent claims $465.00 from the applicant for work carried out without having issued a cross application.
The respondent's documents include a quote dated 7 May which I find updated it's original quote with the variation for $800, bringing the total amount agreed between the parties to be $4,620 inclusive of GST. This document incorrectly shows the payment percentage to be 75% rather than the 70% originally agreed upon. I find that this document was not a document which was in existence when the parties negotiated their contract. Rather it was an update to refer to the fact that a variation had been agreed.
An issue which I must determine is whether the applicant is able to claim for the completion costs. Or to put it another way, did the respondent repudiate the contract by its actions in stopping the work. The applicant claims $1,460.00 as the cost to complete.
An additional issue is whether the applicant was in breach of the contract by failing to pay the amount claimed by the respondent. The respondent also states:
'the applicant has breached the terms of the Contract and is liable to pay the Respondent the difference due of $465.00 and the Applicant has no duty to continue to perform the obligations remaining under the breached contract.' (emphasis added)
In order to make sense of the latter part of the quote set above, I find that the respondent has mistakenly referred to the applicant where emphasised, and that it intended to refer to the respondent
I find that the applicant was in breach of the agreement by failing to pay the amount claimed by the respondent. The contract did not give the applicant the right to issue a payment schedule in response to the respondent's invoice. The next question is what is the effect of the parties agreement that the applicant would pay, and the respondent would accept $3,000.00 in lieu of the amount claimed in the respondent's 9 May 2023 invoice. The respondent submits that there was no consideration for it accepting the lesser sum on the basis that an agreement to accept a lesser sum in lieu of a greater sum is not an agreement which is supported by consideration. In my view the respondent's point is misconceived. The fact is that the respondent agreed to the lesser sum and received that amount. The applicant does rely on the agreement to pay $3,000.00 in order to submit that the respondent has no right to recover the balance payable for the work that it did. I will deal with that submission later in these reasons.
However, I find that by accepting the amount of $3,000.00 the respondent waived its right to treat the non-payment of the full amount as a breach of the contract. In Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38 the High Court described a waiver at [28] and [29] as follows (footnotes omitted):
'It has been repeatedly said that "waiver " is a term that is used in many different senses. Perhaps the most common usage of waiver is to describe an unequivocal decision by a party, communicated to the other party, not to insist upon a right or not to exercise a power.
By itself, a waiver of a right is rarely irrevocable. For that reason, it has sometimes been said that the general rule concerning a waiver of a right, "in the sense of an intimation of an intention not to enforce it", is that the mere act of representing that a right has been waived is "of itself inoperative". Similarly, it has been said that "the mere statement of an intention not to insist on a right is not effectual unless made for consideration ... A mere waiver signifies nothing more than an expression of intention not to insist upon the right". Perhaps more accurately, the legal position is that although a waiver does have legal effect in that "the waiver is binding on the waiving party, unless the waiver is effectively retracted, the waiver can generally be revoked at any time with reasonable notice.'
I find in accordance with the above that the respondent unequivocally decided and communicated to the applicant its decision to accept $3,000.00 and not to insist upon its right to recover the invoiced amount of $3,465.00 inclusive of GST.
The applicant's evidence is that after 11 May she tried to contact the respondent numerous times for it to resume work. The respondent denies this. There is no documentary evidence to sustain the applicant's position.
The issue now becomes which party repudiated the contract. I find that because the respondent accepted a lesser amount of money, it was not entitled to refuse to complete the work in the contract because of the agreement was 'not being fully respected'. The respondent had agreed to a lesser amount although not foregoing rights to full payment. The respondent was not able to do inconsistent things, namely accept payment and then refuse to complete because it had not been paid the amount it had claimed.
In DB Homes Australia Pty Limited v Kes [2019] NSWCATAP 221 an appeal Panel stated at [45] - [47]:
'Repudiation of a contract occurs when a party breaches a fundamental or essential term of the contract; or there was a sufficiently serious breach of a non-essential term of the contract; or a party demonstrates an unwillingness or inability to render substantial performance of the contract and the innocent party elects to accept the repudiation and treat the contract as having ended: Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
As a general rule, wrongful termination of the performance of a contract, where a party has no legal right to do so, will constitute a repudiation of obligation because such an act indicates an absence of readiness or willingness on the part of the party who has wrongfully terminated to perform its obligations under the contract: Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21; (1976) 136 CLR 444 at 453; Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd t/as Durie Design [2017] NSWSC 1171 at [344].
It is axiomatic that to terminate a contract based on repudiatory conduct, the first step is to identify the specific purported repudiatory conduct of the other party.'
I find that by refusing to complete the contract work the respondent breached either a fundamental or essential term of the contract, namely to complete the work; or it demonstrated an unwillingness or inability to render substantial performance of the contract. I find that the applicant accepted the repudiation by the institution of these proceedings when she made it clear that she was seeking damages for the costs of completing the works.
The applicant states that the work to complete is two bedrooms including ceiling, walls, doors , skirting boards and wardrobes.
She has provided quotes from 2 painters each of whom has given a price of $3,080.00 inclusive of GST. The applicant has calculated her damages as follows:
I find that the applicant's method of calculating the cost to complete is correct in that she has allowed a credit representing the balance of the contract price against the cost to complete.
[2]
Defective work
The applicant also claims $1,800.00 for the rectification of defects. The evidence that she has provided of defective work is:
1. Photographs;
2. Extract of Door Care and Maintenance from Corinthian Doors; and
3. References to Rawlinsons.
The applicant has not served an expert's report which provides an opinion that the respondent's work was not carried out with due care and skill, or estimated the rectification costs. What she has done is come to the conclusion herself that the painting work is defective based on the photographs, and then estimated that 1 painter would be required for 2 days at an hourly rate of $92.00 per hour with paint estimated at $328.00, for a total of $1,800.00 in order to rectify the painting defects.
An expert's report is not always required, especially in cases where the amounts claimed are not high. In Khan v Kang [2014] NSWCATAP 48 an Appeal Panel stated at [53]:
'As to the implicit premise that in order to establish a claim for defective or incomplete work in a home building matter there must be a building inspection report by an independent builder to demonstrate any liability of the respondent, such a premise is wrong. Whilst a building inspection report by an independent builder may be very helpful in establishing liability, such a report is not always necessary in a case such as the present. To suggest that an applicant in a home building matter involving only a small monetary amount must engage an independent builder to provide a building inspection report before the applicant can succeed in his or her claim is also inconsistent with the principles set out in ss 36(1) and (4) which require the Tribunal to facilitate the just, quick and cheap resolution of the real issues in proceedings and to conduct proceedings so as to facilitate the resolution of the issues in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject matter.'
Despite what is stated above about an expert's report, an applicant in a defective work case must provide some evidence to support the allegation that the work has not been carried out with due care and skill. In that regard in Khan v Kang the Appeal Panel also discussed using a tradesman's quote as evidence of defective work at [49] - [50]:
'It is not the case that a quotation to rectify or complete work can never be evidence supporting a claim for defective or incomplete work.
A quotation from a supplier willing to rectify defects or complete incomplete work can, depending on the circumstances and the nature and content of the quotation, constitute evidence of the defects or incomplete work and of the amount required to remedy the defective work or complete any incomplete work. For example, if the person providing the quotation was suitably qualified or experienced, inspected the work, identified defects or incomplete work on that inspection, recorded his or her observations in the quotation and gave a price to rectify or complete the work, it is difficult to understand why that quotation would not provide evidence in support of a claim for defective or incomplete work. The weight to be given to the evidence would, of course, depend upon many factors. Nonetheless, it would be wrong to conclude that simply because an applicant relied only upon a quotation or quotations for the rectification or completion of work that there was no evidence to support the claim that the work was defective or incomplete.'
However the applicant has not tendered quotes for the rectification of defective work.
So far as the photographs provided by the applicant are concerned, in X-Build Construction Services Pty Ltd v O'Rourke [2020] NSWCATAP 181 an Appeal Panel discussed the use of photographs as evidence in Tribunal proceedings referring to a number of authorities. It is common for photographs to be tendered as evidence in the Tribunal. However care must be used in drawing conclusions or making findings based on photographs. In Blacktown City Council v Hocking [2008] NSWCA 144, Tobias JA, with whom Giles JA agreed, said at [167]:
"[167] The use of photographic evidence has been the subject of discussion in this Court. Its admissibility as a visual reproduction is beyond doubt: R v Travers (1958) 58 SR (NSW) 85 at 108. However, in Short v Barrett, Court of Appeal, 5 October 1990 (unreported), Meagher JA, with the concurrence of Clarke and Handley JJA, observed that in relying on his own interpretation of photographic evidence, the trial judge had overlooked the "sage advice" of Lord Reid in C Van der Lely NV v Bamfords Ltd [1963] RPC 61 at 71. His Lordship said:
'Lawyers are expected to be experts in the use of the English language, but we are not experts in the reading or interpretation of photographs. The question is what the eye of the man with appropriate engineering skill and experience would see in the photograph, and that appears to me to be a matter for evidence. Where the evidence is contradictory the judge must decide. But the judge ought not, in my opinion, to attempt to read or construe the photograph himself; he looks at the photograph in determining which of the explanations given by the witnesses appears to be most worthy of acceptance.'"
Applying the principles stated in the above quotation, I find that I should not attempt to rely on my own interpretation of the photographs which the applicant has included in exhibit A. I am not an expert and am unable to form an opinion based on the photographic evidence that the painting work carried out by the respondent was not carried out with due care and skill, such that the applicant is entitled to claim damages for remedial work. I find that the applicant has failed to file evidence which establishes that the painting work carried out by the respondent was not carried out with due care and skill. It follows that her claim for $1,800.00 for the rectification of defects must as a result be rejected.
[3]
The respondent's claim
The respondent claims to be entitled to $465.00 This calculation is based on the invoice total of $3,465.00 which it claimed on 9 May 2023, less $3,000.00 paid by the applicant.
As stated above, the applicant's claim is under the Fair Trading Act and the respondent has not filed a cross application for the amount it claims.
Section 79O of the Fair Trading Act states:
'In determining a consumer claim wholly or partly in favour of a respondent to the claim, the Tribunal may make any one or more of the following orders that it considers appropriate -
(a)
(b) an order that requires the claimant to pay to the respondent a specified amount of money,'
The issue for determination is whether I have determined a consumer claim wholly or partly in favour of the respondent. The applicant's claim was in two parts. First, a claim for $1,460.00 for the cost to complete the contract work. The applicant was successful in that part of her claim. Secondly, the applicant claimed $1,800.00 for the rectification of defects. She was unsuccessful in that part of her claim.
Based on the applicant's lack of success in her rectification of defects claim, I find that I have in part determined her consumer claim in favour of the respondent. As a result I have the jurisdiction under s79O of the Fair Trading Act to make an order in favour of the respondent.
The respondent claims to be paid $465.00 for the work the subject of its 9 May invoice which is referred to above at [10]. As stated, the fact that the respondent agreed to accept a payment of $3,000.00 in lieu of the invoiced amount, $3,465.00, inclusive of GST does not lead to the conclusion that it abandoned its claim for the full amount or that there was consideration to support the position that it was unable to claim the full amount.
In her statement which is in exhibit A the applicant states that:
'On 9th May 2023 by agreement between the parties, the respondent accepted $3,000 inc GST is the full and final amount for the progress payment for Stage 1.'
I do not accept that evidence, which is more in the nature of a submission. The respondent's email of 9 May indicates an acceptance of $3,000.00, but there is no indication that acceptance of that amount would be the full and final amount to be claimed and paid for stage 1 of the works. Otherwise the applicant does not suggest that the respondent has not carried out work to the value of the amount claimed in the 9 May invoice. Rather the applicant's payment schedule was to the effect that a 71% valuation of the work carried out only entitled the respondent to receive $2,928.75 inclusive of GST of the amount claimed.
The agreed contract price was $3,400.00 and the agreed variation price was $800.00. Therefore the adjusted contract price was $4,620.00 inc GST. There was also an agreement that the respondent would only claim 70% for the work it carried out, excluding the two bedrooms. Therefore the respondent was entitled to claim $3,234.00 inc GST, being 70% of $4,620.00. In fact the respondent claimed more than that, $3,465.00. I therefore find that the respondent is entitled to recover $234.00 ($3,234.00 - $3,000.00)
I will therefore make an order under section 79O of the Fair Trading Act that the applicant must pay the respondent $234.00.
[4]
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: 22 September 2023