For the reasons below, I have decided that the applicants succeed on the greater part in monetary terms of their respective claims for damages against the first respondent (Epoxy) but not against the second respondent (Mr Srouji) and that Epoxy is entitled to the balance of the contract price from the first applicant (Orange).
In accord with the parties' wishes to defer questions of costs (including whether or not a further hearing on costs is to be applied for), I have provided a timetable for costs material.
[2]
The second applicant, Mrs Rita Torbay, owns a house in Picnic Point in southern Sydney, NSW. She lives in the house with her husband Mr Paul Torbay who is sole director of the first applicant (Orange).
On 19 August 2023 Orange by Mr Torbay requested from the first respondent (Epoxy), whose sole director was the second respondent Mr Srouji, a quotation to install an epoxy floor in the basement of the home which included a kitchen, bathroom with shower and toilet and gymnasium occupying a significant part of the floor space. The quotation was supplied in writing, titled "Invoice", on 21 August 2023 with a price of $18,700 including GST. It was orally accepted and $5,610 or 30% was paid as required on 4 September 2023 with the balance to be paid on completion of the work ("once the last coat goes down"). The flooring was installed between 19 and 23 September 2023. (It should be noted that there were minor discrepancies in the points of claim and defence and evidence as to whether $5,600 or $5,610 was paid and consequently what was the balance owing - 30% of the contract price was $5,610 mathematically and I have adopted that amount.)
The proceedings which have the file number 2024/00067451 were filed on 21 February 2024. In them the applicants initially claimed $30,841.19 for remediation of alleged incomplete and defective work which caused widespread damage to the property. The claim was made against Epoxy under the contract and against Mr Srouji under an alleged oral guarantee on 21 August 2023 by him to Mr Torbay on behalf of Orange of the quality of the work.
At a directions hearing on 5 April 2024, leave was granted to both parties for legal representation and an order was made for the claim to be heard with a claim for the unpaid balance of the contract price totalling $13,090. The latter was said to have been the subject of a separately-filed claim by Epoxy which was said to have been filed on that day. The parties conducted the proceedings on the basis that it had been filed. There was a stamped points of claim filed 5 April 2024 with the same file number as the original claim.
The proceedings started life including a home building application. Owing to an exclusion for this type of floor surfacing under the Home Building Act 1989 (NSW) and the claim being under the minimum for home warranty insurance of $20,000 (since by this point the claim was for return of the contract price and damages that did not exceed such minimum), the claim has been litigated as a consumer claim for damages for defective and incomplete work, as discussed below and as reflected in amended points of claim. In the amended points of claim Orange was alleged also to have contracted on behalf of the property owner Mrs Torbay.
Orange alleged that Epoxy breached the contract (including an implied term not to cause damage to the property in performance of the contract works) and applicable consumer guarantees, being ss 60 and 61 of the Australian Consumer Law (NSW) described below. Epoxy was alleged to have failed to complete the works to the promised fitness for purpose as a gymnasium, kitchen and bathroom; in particular, the absence of a final sealer coat left black epoxy flakes exposed. This made the floor rough, unable to be mopped and catching on clothes. The uneven application of sealant showed differential light reflection and colour that made the floor visually unappealing. There was further damage by splattering of epoxy on surrounding surfaces - cupboard panels, kick boards, doors, door jambs, step treads and tiles. Mr Srouji was alleged to be liable on his oral guarantee in respect of such breaches and losses.
Epoxy was alleged to have breached by the same conduct its duty to Mrs Torbay as the property owner and its implied contractual duty to Orange to take reasonable care not to damage the property by providing masking and other protection to areas where epoxy was not to be applied.
It was not alleged that the failure to complete constituted a "major failure" as defined in the ACL consumer guarantees described below. When Epoxy inspected on 26 September 2023, Orange required rectification and completion within a reasonable time.
It was alleged that Epoxy repudiated the contract by refusing offered opportunities to remedy the alleged defects and associated damage and to complete the works, including that Epoxy required further payment before applying additional sealer and left the site without further work and without clearing waste and empty drums.
It was said that Orange accepted the repudiation and between 6 and 9 October 2023 Mr Torbay and his son, with materials costing $2,868.25, sanded and buffed the floor and applied two sealer coats to finish the job.
Epoxy and Mr Srouji denied the alleged breaches and claimed the unpaid contract price balance of $13,090 or a quantum meruit. They said that the basement was mainly a garage for luxury cars, that on 26 September 2023, when they attended to collect tools and removed a small amount of excess epoxy, Mr Torbay became agitated and said that he required an extra coat to be applied which the respondents contended was outside the contract scope.
The applicants did not press at hearing the contractual claim for incomplete works except as a defence to Epoxy's claim under the contract or in quantum meruit. There was also not pressed a claim for impact damage or a claim concerning rubbish removal, the latter presumably because the quotation stated that bin provision was Orange's responsibility. The respondents did not press at hearing the quantum meruit claim, which was not required given the absence of the requirements for enforceability of a home building contract.
Epoxy and Mr Srouji's evidence was that the patchiness would "matt out after there is traffic over it. This is normal." As to mopping, Mr Srouji said "OK, but it is a textured finish. This is what you were quoted for and that is what was given to you".
There was no issue between the parties that the Tribunal has jurisdiction under Pt 6A of the Fair Trading Act 1987 (NSW) (FTA) to deal with the matter as a "consumer claim", under the compulsory consumer guarantees in the Australian Consumer Law which is Sch 2 to the Competition and Consumer Act 2010 (Cth) and is made part of NSW law by FTA s 28 under the title Australian Consumer Law NSW (ACL NSW).
That is clearly the case with the claims between Orange, Epoxy and Mr Srouji. Epoxy supplied services of applying epoxy floor coating for Orange as a consumer in NSW and Mr Srouji's alleged guarantee was a collateral contract to the supply contract: FTA s 79D "consumer" para (a), "supplier"; ss 79E-79K(1)(a). The claim was clearly made within three years after it "first accrued": s 79L(1). The amount claimed was under the current Tribunal jurisdictional limit of $100,000 and under the prior limit of $40,000: s 79S. The Tribunal can make a money order under s 79N(a) with s 79Q(1). No debate on other than a money order (or not) occurred.
FTA s 32 applies the ACLNSW to persons carrying on business within NSW, entities incorporated or registered under NSW law and persons ordinarily resident in or otherwise connected with NSW and for such applications extends to conduct and other acts, matters and things occurring or existing outside or partly outside NSW (whether within or outside Australia).
The ACLNSW clearly applies to Epoxy, which has several of the FTA s 32 connections with NSW, including that it is registered and carries on business within NSW. It is therefore clear that ACLNSW and the consumer guarantees within it referred to below apply to the supply of services to Orange if there is otherwise jurisdiction. Hereafter, the reference is to the ACL for convenience but it is the ACLNSW that is the relevant embodiment of the provisions.
The ACL provides, in respect of the supply of services to a consumer, guarantees that the services were supplied with due care and skill (ACL s 60) and were reasonably fit for any expressly or implicitly disclosed purpose or result (s 61). Under s 64A(2), a term of a contract for the supply of services other than services of a kind ordinarily acquired for personal, domestic or household use or consumption is not void if the term limits a person's liability for failure to comply with a guarantee to the supplying of the services again or the payment of the cost of supplying the services again.
Where these guarantees are not complied with, the consumer has rights pursuant to ACL ss 267-270. Under s 267(2), if the failure is not major and can be remedied, the consumer may require remediation within a reasonable time or, if such request is not complied with, otherwise have the failure remedied and recover all reasonable costs of remediation from the supplier, or terminate the contract. If the failure cannot be remedied or is major, the consumer may terminate the contract or recover by action from the supplier any reduction in the value of the services below the price paid or payable for the services: s 267(3).
Additionally, under s 267(4) the consumer may recover by action from the supplier damages for any reasonably foreseeable loss or damage suffered by the consumer because of the failure.
A major failure occurs under ACL s 268 if: the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or the services are substantially unfit for a purpose for which services of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such purpose; or the services and any product resulting from the services are unfit for a particular purpose made known to the supplier and the services and product cannot easily and within a reasonable time be remedied to make them fit for such purpose; or the services and any product are not of such a nature, quality, state or condition that they might reasonably be expected to achieve a result desired by the consumer made known to the supplier and the services and product cannot easily and within a reasonable time be remedied to achieve such a result.
In Safi v Heartland Motors PL t/as Heartland Chrysler[2016] NSWCATAP 80 at [85]- [107] the Appeal Panel analysed the case law on what constituted a major failure in respect of a supply of goods, summarising its conclusions at [99]-[102]. Under s 260(a) for a major failure in respect of goods, the test is objective and can be applied by analogy to services. Overall, the test is whether, faced with advance knowledge of the problems and what was needed in terms of time, costs and degree of difficulty to remedy them, a reasonable consumer would have acquired the supply of services or acquired nothing or something else. Thus, for a major failure constituted by chronic or repetitive defective supply taken as a whole, such a period is likely to be longer than for a single catastrophic defect.
ACL ss 269 and 270 regulate refunds and termination of services contracts and return of goods and refunds under any connected services contract.
There is additional specific relief in ACL ss 232-235 and a right of action for damages in s 236 that also apply to contraventions of the consumer guarantees since the guarantees are within ACL Ch 3 to which these rights of relief apply (they also apply to Ch 2).
If a defect is established, a respondent has failed to remediate within a reasonable time and an applicant has obtained quotations for remediation by another supplier and seeks that amount as the reasonable cost of remediation, then that reasonable cost would also be the measure of loss in an action under ACL s 267(4). In these circumstances, it also would be the reduction in the value of the services below the price paid or payable for the services in an action for major failure (s 267(3)). This is substantially consistent with the general law discussed below.
The right of action for damages under the ACL has a six-year time limit starting the day after the cause of action that relates to the conduct accrued. The reference to cause of action appears to include the rights of action for damages in ss 259(4) and 267(4) and the rights of action for reduction in value in s 259(3) and s 267(3). There are similar time limits on compensation orders under ss 237 and 239.
The rights of recovery available to a complainant comprise two elements in order to accrue: the contravention of a consumer guarantee and the choice or other trigger for the form of relief. Even if the consumer guarantee was contravened by an inherent defect at time of supply, the choice or other trigger for the form of relief may be later when the effect of the contravention emerges.
The Tribunal jurisdiction under FTA s 79L(1), discussed earlier, is a distinct issue from the relevant ACL limitation period, including because of the test of first accrual in s 79L(1). If the ACL claim is outside the Tribunal jurisdiction as a consumer claim, the ACL claim would need to be pursued in a court.
Here, the applicant's claim was clearly brought within the six year time limit under the ACL for substantially similar reasons to those that bring the applicant's claim within the Tribunal's jurisdiction for consumer claims.
Whether or not the Tribunal's jurisdiction under the FTA extends to Mrs Torbay's claim in negligence as owner against Epoxy in the present circumstances needs more inquiry. Under FTA s 79H, for the purposes of Pt 6A a person claiming to be a consumer, as Mrs Torbay was, is presumed to be a consumer until the contrary is proved and the onus of proof is on the challenger. No such challenge was made. Under s 79D a "consumer" (among other matters) means a natural person to whom a supplier has supplied services whether or not under a contract. Under s 79E a "consumer claim" means (among other matters) a claim by a consumer for a money payment that "arises from" a supply of services "by a supplier to the consumer (whether or not under a contract)". There was no challenge that the supply of flooring services was also to the house owner as well as the contracting party. Under s 79I, any consumer may apply to the Tribunal for determination of a consumer claim. Under s 79J the Tribunal has jurisdiction to hear and determine a consumer claim the subject of such an application. The other jurisdictional pre-requisites in ss 79K and 79L are clearly satisfied for the same reasons as for Orange's claims.
In the absence of challenge, or reference to authority, when both parties were legally represented (it seemed prior to and throughout the proceedings), I have proceeded on the basis that the Tribunal has jurisdiction to hear Mrs Torbay's claim. In the outcome that I have found, the co-ordinate but alternate relief that includes Mrs Torbay should not change the economic position, as explained below.
The applicants relied upon an expert report dated 16 August 2024 (with inspections on 17 January and 29 July 2024) and the respondents on an expert report dated 13 September 2024 (with inspection 23 April 2024). The experts conclaved onsite on 24 September 2024 and signed a conclave report on 26 September 2024.
The experts were constrained by the work done in October 2023 to assessing the flooring quality from photographs. I accept that the photographs and associated descriptive evidence were sufficiently clear to enable assessment from this material.
[3]
Principles governing loss arising from defective and incomplete work
[4]
The ordinary, natural and probable consequence of a breach of contract as elected by the applicants is remediation to achieve compliance, due care and fitness by doing of the remediation work or paying to have it done by others. As the High Court said in Bellgrove v Eldridge(1954) 90 CLR 613, [1954] HCA 36 at 617, cited with approval by the High Court in Tabcorp Holdings Ltd v Bowen Investments PL(2009) 236 CLR 272, [2009] HCA 8 at [15]:
[5]
"In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract."
[6]
This is applicable unless disproportionate on the principles discussed below.
In Bellgrove v Eldridge(1954) 90 CLR 613, [1954] HCA 36, the High Court said that the scope of remedial works must not be disproportionate to the defect. The High Court has also stated that there is a high bar for unreasonableness or disproportion once a breach is established: Tabcorp Holdings Ltd v Bowen Investments PL(2009) 236 CLR 272, [2009] HCA 8 at [13]- [20]; see also Walker Group Constructions PL v Tzaneros Investments PL[2017] NSWCA 27 at [186]; Barwick v Shetab[2017] NSWCATAP 127 at [87]- [88].
The analysis in the paragraphs in the Tabcorp decision, and the authority there reviewed, also makes it clear in these passages that reinstatement, provided it is not extravagantly disproportionate, is the appropriate measure of relief. The principles have been enunciated in Roberts v Goodwin Street Developments PL[2023] NSWCA 5; (2023) 110 NSWLR 557 at [119].
Reinstatement means what was obliged to be supplied, namely, contract works with a certain standard of regulatory compliance, amenity and presentation which includes not being at risk of emergent problems returning or growing.
It also means that the form and finish of remediation and rectification produces an outcome that matches other components of the contracted works in form and finish and makes the works of the originally-intended quality and integrity.
[7]
Mr Srouji did not deny but could not recall the alleged conversation constituting his alleged personal guarantee. While writing is no longer required in NSW law for such guarantees (absent consumer legislation requirements which were not argued to be relevant), the same cautionary approach that informed the previous writing requirements must apply. This is all the more so where, as here, there is an absence of documentary material from which to infer the giving of a legally-enforceable guarantee or which is consistent with it and where such a director's guarantee in respect of such residential services by the supplier (as opposed to a director's guarantee of payment by a corporate purchaser or recipient) is surprising.
However, the operative weakness is in the content of a guarantee if found. It is stated in the points of claim and evidenced as that Mr Srouji "would personally guarantee the work". That stands as one of several matters particularised and evidenced as what Mr Srouji allegedly "represented", the others being that "the work would be of the highest standard", "he would do it as if it was his own home", "the job will be top quality", and "that Mr Torbay would be absolutely delighted with the finished result which will have a smooth finish". The entire collection of what was "represented" is defined as the "Personal Guarantee" referred to in the balance of the points of claim.
While the Tribunal is not a court of strict pleading, points of claim and defence are directed to give clarity and procedural fairness to the parties in knowing what is alleged and has to be established. In context, what is defined as a personal guarantee is a collection of representations which of themselves do not inform the content of the guarantee - rather, the guarantee is but one of the alleged representations. No misleading conduct case with respect to a future matter (or alleging an intentionally false present matter) is advanced.
In that context, it seems to me that the alleged representation by Mr Srouji that "he would personally guarantee the works" sounds like a representation rather than a guarantee. Even if it could be construed as a promise or representation to give a guarantee, the content of the guarantee ("guarantee the works") is simply too vague and sparse to be legally enforceable, particularly taking into account the forensic difficulties with finding the existence and clear terms of oral statements alleged to have legal effect: Watson v Foxman[1995] NSWCA 497; (1995) 49 NSWLR 315 at 318-319.
This is all the more the case when the conversation was put to Mr Srouji in cross-examination differently from the already vague content that was in the amended points of claim but accorded with the terms of the alleged conversation in Mr Torbay's affidavit: "Do you deny that you told Mr Torbay that you guaranteed he would be happy with your work?" and "Did you promise Mr Torbay that he would be happy with the work?". Mr Torbay's evidence in cross-examination was no more specific, namely, that Mr Srouji used the word 'guarantee' when talking about the works.
I accordingly consider that the claim against Mr Srouji is not made out on this ground, additional to any other grounds on which Epoxy as the alleged principal succeeds below.
[8]
Turning to the _alleged breach_es of consumer guarantees and other breaches, contrary to the respondents' submission, there is no basis for parsing areas of the contract works and nothing turns on whether the garage was primarily to be used as such rather than as a gym, kitchen and bathroom. There was to be one uniform quality of application which by definition would therefore need to be of suitable quality and fitness for the uses of gym, kitchen and bathroom. The quotation/invoice did not refer to differential standards of quality for different parts of the works. The photographic evidence shows that the uses of parts of the area for other than cars must have been self-evident on inspection prior to quotation.
The applicants relied on statements on Epoxy's website as informing the content of what constituted due care and skill and fitness for purpose. That content referred to a five-coat system and "the perfect blend of toughness and modern aesthetics" where "the smooth surface is easily wiped or mopped".
It is difficult to convert that marketing language into performance obligation where it is not directly consistent with the language in the accepted quotation/invoice. Areas of direct consistency would however reinforce the content of the due care and skill and fitness for purpose required by the consumer guarantees to perform the contract formed by acceptance of the quotation/invoice.
The quotation referred to a defined method of application, a "somewhat textured finish" but to "scrape and vacuum flake to knock off high spots", with a "clear top coat" (not two top coats) to be applied.
What is consistent between that wording and the website description is: a defined system of application; a surface that, while textured, was to a standard compatible with bathroom and kitchen usage and which was able to be wiped and mopped, and, arguably, would be tough while looking good. It certainly did not include epoxy flakes sticking through the final surface coat which was to be one coat.
In cross-examination, Mr Srouji stood by what was said on the website that the floor was textured but easy to clean and mop, despite the textured surface, and said that he had had no complaints from other customers about mopping. This does not contradict but, rather, endorses, the objective consistencies just described.
Mr Torbay's affidavit said that in the conversation on 21 August 2023 he said that it needed to be a "clean" finish and "easy to clean" rather than "smooth". (The use of the words is denied by the second respondent.)
Turning to the expert evidence, I do not accept the respondents' contention that the applicants' expert was less qualified and experienced than the respondents' expert and that the latter's evidence should for that reason be preferred when there was a difference of opinion. There was no indication that the respondents' expert's more recent direct experience gave an advantage from, for instance, a change in the methodology and other epoxy-related matters the subject of the proceedings.
On patchiness, the applicants' expert said that photographs taken three days after works stopped would usually be enough time to determine whether enough sealant had been applied and the floor looked patchy with insufficient sealant, but accepted that climatic conditions, including temperature and humidity, might affect sealant curing time. The respondents' expert said that the three-day photographs showed a job that was still patchy.
On roughness and exposed flakes, the experts agreed that inability to mop or to walk with socks meant an absence of proper finish. The applicants' expert put that down to insufficient sealant. Epoxy's expert said that this was a sign of incorrect preparation and scraping which would not be cured by another coat of sealant - the extruding flakes had to be ground down.
Although they disagreed on the precise reason, the experts were therefore agreed on the absence of proper finish owing to defective work in installing the floor. The nature of the defect meant that disagreement on whether the floor was patchy through insufficient sealing did not matter. Either further sealant needed to be applied or further grinding and scraping needed to occur followed by sealant.
There was little debate that there was damage to surrounding surfaces from inadequate protection (except in respect of the bathroom tiles). It showed clearly on the photographic evidence, including in the respondents' expert's photographs of the bathroom. In cross-examination Mr Srouji effectively admitted liability:
[9]
"Q: And so you must know as well that if there is a risk of causing property damage, that it would be reasonable to take step to prevent that risk from happening.
Mr Srouji (CS): Yep.
Q: But you didn't do that with Mr Torbay's property, did you?
CS: On this occasion, no we didn't. ...
Q: Is that an approach that you would normally take, not covering adjacent surfaces?
CS: We do appropriately, that garage was, there's no excuse but I had contractors on in that particular week because my grandmother passed away on that week and I wasn't there to oversee. There is no excuse. Yes, it should be. It should be covered up and every precaution should be taken which we did, yes.
Q: But just not on this occasion.
CS: Just not on this occasion. ...
Q: Do you accept that any splatters of epoxy in the basement were produced or were caused by Sydney Epoxy?
CS: Yes, yes, we did cause the splatter to the joinery. Yes. I didn't deny that."
[10]
Epoxy had previously denied such damage, including Mr Srouji saying to Mr Torbay "It's all been done perfectly". The respondents in closing submissions accepted that the splatter on cupboard doors and kickboards were either a defect or associated damage. The same was at least implicitly accepted in the respondents' closing submissions concerning splatter on doors and door jambs. It was not accepted for the bathroom tiles but was sufficiently clear from photographs that there was some splatter on the tiles and basin.
Epoxy's expert corroborated protective steps against such splatter as reasonable and not expensive or difficult and always done.
Turning to quantification of the splatter remediation, the main contest in the proceedings was over the quantification of the areas of splatter: cupboard doors and kickboards; doors and door jambs; stair treads; bathroom tiles.
Very belatedly (ten days before hearing) Epoxy put forward a quotation for the splatter remedial work of $4,400 including GST to replace splattered doors and kickboards only. The preferred evidence is the actual cost where it is available unless that cost is established to be unreasonable or that other bases are appropriate: Hyder Consulting (Australia) PL v Wilh Wilhelmsen Agency PL[2001] NSWCA 313 at [19], [99]; Renown Corporation PL v SEMF PL[2022] NSWCA 233; (2022) 110 NSWLR 246 at [20]. A quotation is the preferred evidence by analogy with Hyder unless the basis of the quotation is successfully challenged. The invoice was admitted over objection, to be assessed in terms of its weight, given the inability of the applicants to obtain material to test it even if the quoting supplier gave evidence (which did not occur) and potentially obtain competing quotations. The parties' cases to this point having been prepared on competing expert reports on the topic.
Although a quotation is what a new supplier says that it would be prepared to do the work for, in this case it is not the preferred evidence. It was open for only the day of quotation. There was no opportunity to test the basis, compared with the detailed preparation in the expert reports. The quoted scope of work does not include all found remediation work.
The experts agreed about the difficult of removing epoxy from surfaces as set out by the applicants' expert.
The experts agreed builder's margin at 20%, which I accept as reasonable for remedial work.
I do not accept the respondents' submission that GST should not be part of the damages awarded. The money order for damages is to reflect what the applicants will be required to pay a third party (or have paid a third party in terms of floor materials). The third party will be obliged to charge the applicant GST as part of the third party's price, so GST forms part of the compensation; further GST is not added to the award: Padstow Corp PL v Fleming [No 3][2013] NSWSC 24 at [32]- [36].
Dealing first with cupboard doors and kickboards, it should be noted that the quotation's narrative supports the applicants' expert's methodology of replacement; indeed, the new supplier apparently indicated a view consistent with the applicants' expert's reason for the need for replacement according to a letter put into evidence by the respondents' lawyers.
Independently of the view of the new supplier, but I note consistent with it, I prefer the applicants' expert's evidence concerning the need to replace rather than seek to repair the melamine cabinet door run. Repair by spraying polyurethane over melamine runs the risk of colour disuniformity and of adhesion failure and delamination. There was no evidence that such work would be warranted. As said earlier, the applicants are entitled to the same amenity as originally to be provided, which is self-evident - properly-finished surfaces on new base material which has not been stripped and re-applied and which will be warranted by the supplier. Aging of existing surfaces compared with the remedial surfaces is not a reason to choose the option of recoating rather than replacement since the recoating would be likely to be subject to a differential colouring as well if, as the respondents' expert maintained, it provided an as-new finish by a similar process to a fresh supply. The respondents' expert effectively recognised the risk of disuniformity by doubling his estimate to replace all doors. The applicants would not have the same amenity if remediation was limited to some doors because of their distance from other doors.
In those circumstances, Epoxy has not discharged the burden, discussed in the authorities earlier in these reasons, of showing that the replacement of affected cabinetry is disproportionate.
I accordingly accept the applicants' expert's assessment of scope of works for the cabinetry and skirting/kick boards.
The respondents' expert conceded the number of hours for remediation (40) was fair but the respondents sought to average their expert's carpenter's rate with the applicants' expert's carpenter rate. Both rates were within the range within Rawlinson's cost guide and there was no reasoned basis for "splitting the difference". In those circumstances the respondents have not discharged the onus of showing the applicants' expert's rate of $98ph was disproportionate. Total labour cost was therefore $3,920.
I accept that there was some agreement on costs of doors and kickboards totalling $2,900, to which needs to be added $99.50 for one drawer front, totalling $2,999.50.
On this item the total net trade cost is therefore $6,919.50. With builder's margin at 20% and GST, the total for this item is $9,133.74.
The respondents formally conceded the need for missed epoxy coating of tops of skirting tiles with an agreed net trade cost of $605.45. With agreed margin of 20% plus GST the total for this item is $799.19.
Turning to other splatter remediation, the respondents' expert did not contradict the scope of work and remediation cost of the applicants' expert for repairing epoxy damage to doors and door jambs, being by way of re-paint from corner to corner rather than patch or touch-up. I accept the applicants' expert's opinion as reasonable.
As to step treads, the applicants' expert said that recoating four of the steps from garage basement to ground level was required on the basis that, in removing epoxy from the lower step tread, the first respondent had removed surface coating and to do one stair again would be noticeable. This appeared not to be disputed by the respondents' expert. The applicants' expert's approach is reasoned and I accept it.
Remediating splashes of epoxy from bathroom tiles was supported by and I accept the photographic evidence and descriptive evidence as said earlier, including the observations of the applicants' expert.
The doors and door jambs costing was reduced in the applicants' closing submissions, by reference to the expert's answers in concurrent evidence, from the 12 hours in the applicants' expert's report to eight hours; the respondents' expert allowed four hours. There was no real submission against the applicants' expert's choice of mid-range in the Rawlinson cost guide for painters of $90ph. I accept the respondents' critique of the applicants' expert's amount of paint at 20 litres as disproportionate and that two four litre tins would be sufficient, totalling $192; in the applicants' closing submissions, by reference to the expert's answers in concurrent evidence, the amount was reduced to 10 litres.
Although I see the force of the respondents' critique that the excessive estimate of paint may have affected the applicants' expert's assessment of number of hours at 12, the respondents' expert's estimate appeared too low and the applicants' contention for eight hours has not been shown to be disproportionate, particularly since the applicants' expert properly allowed, for uniformity and amenity, re-painting from architectural feature to architectural feature rather than localised touch-up.
Accordingly, I assess labour at $270, total net trade cost at $462 and total with margin and GST at $609.84. I have not allowed the applicants' expert's extra $300 to "protect surfaces" on the basis, consistent with the respondents' expert's opinion, that painters provide drop sheets and masking as part of the overall charge.
I could see no alternative costing to the applicants' expert's for the stair treads, which appears only to include materials (so presumably the job would be done as part of the other re-painting labour). I accept it at $80 and total with margin and GST at $105.60.
On the bathroom tiles costing, labour was reduced in the applicants' closing submissions, by reference to the expert's answers in concurrent evidence, from the hours in the applicants' expert's report to three hours (although only five hours was mentioned in the applicants' closing submissions, in fact the expert had mentioned a total of 13 for removal of sealer and re-sealing after scraping of epoxy). Sealing material was costed at $150. The respondents' expert's estimate, if a defect was found, was one hour of cleaning only. Given the localised nature of the splatter, the doubt in concurrent evidence over whether the tiles were sealed (and if not would not need to be re-sealed) and whether much if any grout was affected, I accept the reduction to three hours of cleaner's labour and no allowance for materials, giving three hours at $82ph, a total net trade cost of $246 and with margin and GST $324.72.
Turning finally to the respondents' contention that there ought to be an offset of any found damages against the unpaid balance of the contract price and the applicants' contention that there should be an offset against the contract price only against damages awarded to the first respondent and an offset against the contract of what the applicants call completion costs of their work on the epoxy coating, this is a case where the work contracted for was complete but, on the evidence described in these reasons, performed defectively, thus constituting a breach of contract and of the compulsory consumer guarantees relied on by the applicants and of the duty of care earlier described. Defective performance is not an absence of completion unless it qualifies as total or substantial failure of consideration, which was not claimed here. The quotation/invoice dated 21 August 2023 which formed the basis for the contract (and did not require the formalities of a home building contract to be enforceable) expressly provided that, beyond the 30% deposit to secure booking and order product, "the remainder to be paid once the last coat goes down". The top coat in the quotation/invoice scope of works had gone down.
Accordingly, the applicants cannot maintain, as a defence to Epoxy's claim for the balance of contract price, a defence that the works were incomplete so the price was not payable.
However, the applicants' claim for damages for defective performance of the flooring work, discussed in the following paragraphs, can be offset as an equitable set off or on a balance of awards, as can the damages for remediation cost of splatter already dealt with.
To the extent that such orders are made for breach of contract or consumer guarantees, they could be made in favour of both applicants on the applicants' amended points of claim that Orange accepted the quotation and paid the 30% on behalf of itself and as agent of Mrs Torbay, if that relationship of agency had been established. I was pointed to no evidence or final submission to that effect. Accordingly, the breach of contract and consumer guarantee claim results in orders against Epoxy only in favour of Orange which is amenable to balance (in the manner already described) against Epoxy's claim for outstanding contract price.
Mrs Torbay's claim in tort for breach of duty of care was not directly amenable to the same balance against Epoxy's claim for outstanding contract price. The end result would be the same if the applicants were considered together. Both applicants could not receive payment for the same damages. If Mrs Torbay received the fruits of the damages order, Orange would pay the full balance of contract price without any crediting of the same damages order in its favour.
Since the applicants have made the submission that effectively invites not treating the applicants as one economic unit for the purposes of orders, I shall make separate orders as submitted for.
Turning to the claim for defective coating of the floor, it was clear on the evidence earlier described that liability was made out to Orange for breach of the relevant consumer guarantees and breach of contract and to Mrs Torbay for breach of duty of care in the same amount.
As said earlier, the applicants agreed that the failure that constituted a breach of the consumer guarantees did not constitute a major failure as defined in ACL s 268.
Epoxy refused the invitation to apply an extra coat of sealant which was requested as a form of remediation and which was, on the foregoing evidence, a justified request, but was not a requirement to complete the contract scope of works. Consequentially, under ACL s 267(2), Orange as the contracting party could "otherwise have the failure remedied and, by action against [Epoxy], recover all reasonable costs incurred by [Orange/Mrs Torbay] in having the failure so remedied, or terminate the contract for the supply of services". The position at general law was the same at least on damages.
The refusal also would justify rejection of any defence of alleged failure to mitigate loss by allowing Epoxy back to do the remediation. In ordinary principles of contract law imported into contracts such as the present, a consumer's claim for monetary compensation requires the consumer to act reasonably in relation to the claimed monetary loss in order for the claimed loss to be recoverable. This includes giving the supplier a reasonable opportunity to remediate or complete, or to minimise damages by remediating what it can and will do. The consumer may be justified in a reasonable loss of confidence in the willingness and ability of the supplier to do the required work (remediation and/or completion); the evidential onus is on the supplier to prove that the owner acted unreasonably; once in issue, all circumstances of the supplier's conduct at the time are examinable, not only what is known to the consumer: Owners SP 76674 v Di Blasio Constructions PL[2014] NSWSC 1067 at [42]- [48], adopted in Owners SP 78465 v MD Constructions PL[2016] NSWSC 162 at [26]- [30] and GPM Constructions PL v Baker[2018] NSWCATAP 119 at [38]; Owners SP 89041 v Galyan PL[2019] NSWSC 619 at [21]. This is consistent with the orthodox principles at general law: TCN Channel 9 PL v Hayden Enterprises PL(1989) 16 NSWLR 130 at 158; principles summarised in Downer EDI Rail PL v John Holland PL[2018] NSWSC 326 at and authority there cited.
If the consumer has acted reasonably then, since the supplier is a wrongdoer, it will not defeat the consumer's claim that the supplier can suggest other and more beneficial alternative methods of remediation: Unity Insurance Brokers PL v Rocco Pezzano PL(1998) 192 CLR 603 at 654; Karakominakis v Big Country Developments PL[2000] NSWCA 313 at [187].
It appears that the applicants in reality did both as permitted under the ACL - termination of contract by Epoxy and remediation by other than the supplier. In this circumstance, each path and the path for a negligence claim lead to the same outcome. The applicants are to be in the position in which they would have been had the contract been properly performed or had the negligence not occurred, under a general law consumer claim or the alternative of terminating the contract in ACL s 267(2)(b)(ii). That requires one to assess the cost of remediating the defects (floor and collateral damage) but in the contract claim giving credit for what was the contract price to the extent that it had not already been paid and, if the contract price balance exceeded the damages, awarding that net amount to the supplier. Under the alternative in s 267(2)(b)(i), the cost of remediation was recoverable and the supplier was left to other remedies for pursuing any unpaid amount, which the supplier (Epoxy) has done.
If the applicants had engaged a remedial contractor, that cost would be in the above assessment. Here the applicants used their own labour for remediating the floor. The respondents' closing submissions did not accept that what the applicants did by way of remediation (sanding back the epoxy flakes and applying one sealer coat) accorded with the experts' method of remediation (being diamond grinding the flakes and applying two sealer coats). It appears to be sufficiently proximate to be compensable; there was no real challenge in the expert evidence in that respect.
Although the respondents' expert posited a slightly different cost for materials, the respondents accepted that the applicants could claim the actual invoiced cost of the materials they used, totalling $2,868.25.
Additionally, the applicants contended that they were entitled to be reimbursed for the labour of Mr Torbay and his son. The rate posited was the mean of the respondents' expert's labour rates at $86.63 per hour, for 32 hours (corrected from 36 in submissions) as the two days the work took, totalling $2,772.16 with no margin to be applied. The basis was that the work effectively was a quantum meruit assessment that benefited the respondents who would be enriched if this sum was not offset when, if a third party contractor had been engaged, the respondents would be liable for a greater amount (including margin).
As said earlier, this aspect of the claim was pursued only as an offset against any amount found to be owing to Epoxy. It totalled $5,640.41 with no margin or GST.
The respondents' expert, if damages were to be awarded, assessed materials at $2,607.50 and labour for experienced workers engaged in the method adopted by the experts (described above) of 16 hours at the lowest rate in the costing band of $85.75ph totalling $1,400 (I have corrected from the maths in the respondents' closing submission). The overall net trade cost would be $4,007.50 with no margin or GST applicable.
However, the respondents said that there was no evidence of actual time for each of father and son on the two days and no evidence of what the time was worth or was being charged at (for example, to Orange or by Orange to Mrs Torbay) for either of them, at all or above the minimum wage of $24.10ph. The evidence rose at best to a discussion when the job was finalised and that Mr Torbay had a builder's licence with experience in epoxy floors. The evidence was specifically within the knowledge of the applicants or the ability of the applicants to be obtained and was not led by them, with the forensic consequence as stated by Lord Mansfield LCJ in Blatch v Archer[1774] EngR 2; (1774) 1 Cowp 63, 98 ER 969 at 970: "[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted"; Cosco v Hutley [No 2][2020] NSWSC 893 at [16] et seq. The applicants did not provide the required proof for labour cost.
I accept the respondents' submission. There was no evidence of labour cost to the applicants for which to compensate them, nor what it might have been if, for example, the father and son had given up other chargeable time and intended to recoup it. There was no claim in quantum meruit by the applicants against the respondents and no juridical basis articulated for it. Simply because the respondents benefited from a reduced compensation bill because of voluntary work was not, without further articulation, a basis of claim in law.
The applicants' relief against the contract price claim is accordingly restricted on this aspect to the actual invoiced cost of the materials they used, totalling $2,868.25.
[11]
The applicants' total remediation damages on the above (characterising the flooring rectification as defective work) total $13,841.34.
The balance of contract price owed by Orange to Epoxy is $13,090. On a balance of awards between Orange and Epoxy, the balance is in favour of Orange by $751.34.
In the outcome, there will be an award in favour of Orange against Epoxy of $751.34 if the alternative order in favour of Mrs Torbay is not enforced, being for $13,841.34. If that order is enforced there will be an order in favour of Epoxy against Orange for $13,090.
[12]
(1) Order that on or before 31 July 2025: (a) CSS Holdings Pty Ltd t/as Sydney Epoxy Coatings is to pay Orange Bins Group Pty Ltd $751.34 if order 2 is not enforced; (b) Orange Bins Group Pty Ltd is to pay CSS Holdings Pty Ltd t/as Sydney Epoxy Coatings $13,090 if order 2 is enforced.
(2) Order that on or before 31 July 2025 CSS Holdings Pty Ltd t/as Sydney Epoxy Coatings is to pay Rita Torbay $13,841.34.
(3) Order as follows in respect of costs:
(a) Any application in respect of costs (including any application for a further hearing on costs) with supporting evidence (beyond existing evidence) and written submissions are to be filed and served on or before 17 July 2025.
(b) Any evidence and written submissions in response to be filed and served on or before 31 July 2025.
[13]
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.
Parties
Applicant/Plaintiff:
Orange Bins Group PL
Respondent/Defendant:
CSS Holdings PL t/as Sydney Epoxy Coatings [2025] NSWCATCD 68;