Welsh v Lawbeach Pty Ltd

Background

1. In late 2019 the parties entered into two separate agreements. The first was for the construction of a retaining wall at a contract price of $6920 inclusive of GST. The second agreement was for paving around the pool area at a contract price of $4400 including GST. That second contract was for labour only, as the appellant supplied his own pavers.
2. The respondent commenced proceedings in the Tribunal on 28 May 2020 under the Home Building Act 1989 (the HB Act). The appellant claimed that both the retaining wall and the paving are defective.
3. In relation to the retaining wall, the appellant claimed that the AG coil drainage system was incorrectly laid and the ends of the coil drain were buried in the earth. The appellant claimed that the drain did not work properly, causing dirty water to flow into the pool during heavy periods of rain.
4. In relation to the paving, the appellant claimed that the pool edging had sharp edges and was dangerous, that the pavers were laid incorrectly, that there was excessive lipping, that the expansion joints were insufficient, that the paved areas had the incorrect slope and that there was excessive "seesawing". The appellant claimed that all of the pavers would need to be removed and disposed of.
5. The Tribunal relevantly found that: 1. The claim in respect of the retaining wall contract was a building claim under the HB Act. 2. The respondent did not seriously dispute that there was a problem with the coil drainage system. 3. The respondent should be ordered to carry out remedial work to the drainage system to make it operational. 4. The claim in respect of the pool paving contract was not a building claim under the HB Act because the reasonable market value of labour and materials involved in the work did not exceed $5000. 5. The claim in respect of the pool paving contract could be considered as a consumer claim under the Fair Trading Act 1987 (the FT Act). 6. In its performance of the paving contract the respondent breached the consumer guarantee as to due care and skill set out in s 60 of the Australian Consumer Law (NSW) (the ACL (NSW)). 7. Some of the identified defects in the paving work were lippage, sharp edges on tile edges, lack of expansion joints, scratches, no proper sloping and holes in the cross cut marble travertine. 8. Importantly (for reasons we elaborate on below), the respondent should not have accepted the condition of the concrete base (which had been laid by a third party contractor) and should have demanded that the defects in the concrete base be remedied prior to carrying out the paving contract works. 9. The appellant was aware of the defects in the slab before the pavers were laid and told the respondent's director to proceed in any case. 10. The failure could be remedied and was not a major failure. 11. The appellant was entitled to recover reasonably foreseeable loss or damage suffered because of the respondent's failure. 12. The reasonably foreseeable loss suffered by the appellant was the cost to rectify the defects. 13. The defects could be remedied other than by completely redoing the works. 14. The defects "other than the sloping issue" could be rectified in accordance with the scope of works provided by Marble Renewal which would fix "most of the identified defects except for the sloping issue". 15. The Marble Renewal scope of works involved restoration of the stone surface of the pavers in situ. It did not involve removal or re-laying of the pavers. 16. The quote provided by Marble Renewal was for $2320.72 and therefore the loss to the appellant was $2320.72.

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (the NCAT Act).
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).

Submissions and evidence

1. In deciding the appeal, we have had regard to the following: 1. The Notice of Appeal lodged on 1 July 2021 with attached documents; 2. Further documents which the appellant emailed to the Tribunal on 23 and 25 July 2021; 3. A bundle of documents provided by the respondent on 23 August 2021; 4. The Tribunal's reasons for decision; 5. The procedural directions made at call over; 6. The application lodged in the Tribunal on 28 May 2020; and 7. The oral submissions made by the appellant during the appeal hearing.

Timing

1. The Notice of Appeal is date stamped as having been lodged with the Appeal Panel on 1 July 2021, which is outside of the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules).
2. The deadline for lodging the appeal in this case was 17 June 2021.
3. However, the appellant told us that he lodged the appeal at the Liverpool Registry of the Tribunal on 16 June 2021. The only evidence which the appellant was able to take us to in this regard was the fact that the date which appears next to the appellant's signature on the Notice of Appeal is 16 June 2021.
4. We have also noted that the Notice of Appeal does not bear any date stamp of the Tribunal's Liverpool Registry. The only Tribunal date stamp which appears on the Notice of Appeal is the date stamp of the Appeal Panel Registry.
5. However, notwithstanding the lack of a date stamp from the Liverpool Registry, it is not implausible that the Liverpool Registry would have accepted the Notice of Appeal without stamping it. In the circumstances, we accept that the appeal was lodged at the Liverpool Registry on 16 June 2021 and was therefore brought within time.
6. Even if the appeal had been brought out of time, we would have extended time for lodging the appeal to 1 July 2021 in any event for the following reasons.
7. Section 41 of the NCAT Act gives the Appeal Panel power to extend time.
8. The principles relevant to an application for an extension of time were set out by the Appeal Panel in Jackson v NSW Land & Housing Corporation [2014] NSWCATAP 22 at [21]-[22]: "Time limits, including the specification of the time within which an appeal from an internally appealable decision to the Appeal Panel of the Tribunal must be lodged, are established by legislation for the purpose of promoting the orderly and efficient conduct of proceedings in the Tribunal, providing certainty for the parties to proceedings, especially the party in whose favour orders have been made, and achieving finality in litigation. For these reasons, these time limits should generally be strictly enforced. That is not to say, however, that exceptions should not be made where the interests of justice so require. The express power in s 41 of the Act to grant extensions of time allows the Tribunal to prevent the rigid enforcement of time limits becoming an instrument of injustice."
9. The criteria for assessing an extension of time application can be summarised from Jackson as follows: 1. The appellant must demonstrate that strict enforcement of the time limit will work an injustice on the appellant; 2. The respondent, having obtained a favourable primary decision, can be thought of as having a "vested right" to retain the benefit of that decision after the normal time for appeal has expired; 3. Consistent with the foregoing, the factors to be considered are the length of the delay, the reason for the delay, the prospects of success ("that is usually where the applicant has a fairly arguable case"), and the extent of any prejudice suffered by the respondent to the appeal; 4. "It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable".
10. In this case, applying the factors identified in Jackson, if the Notice of Appeal had in fact been lodged on 1 July 2021: 1. It was lodged only 15 days out of time. 2. The respondent did not attend the hearing and there is no suggestion that the respondent would suffer any disadvantage or prejudice as a result of the relatively short delay. 3. For the reasons which follow we are satisfied that the appellant has strong grounds of success and that strict enforcement of the time limit would therefore work an injustice against the appellant.

Grounds of Appeal

1. The appellant did not clearly set out grounds of appeal in the Notice of Appeal. Nor did he provide written submissions that specified the grounds of appeal.
2. In Cominos v Di Rico [2016] NSWCATAP 5, the Appeal Panel stated at [13]: It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]-[316]). Relevantly, s 38(2) provides that that Tribunal "may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.
3. Applying these principles in light of both the documentary material provided by the appellant to the Appeal Panel, and the responses to our questions provided by the appellant during the hearing, we understand that the appellant claims that the Tribunal erred in the following respects: 1. Significant new evidence has arisen which was not reasonably available at the time the proceedings under appeal were being dealt with. 2. The Tribunal made an error of law when it found that the claim in relation to the pool paving contract was not a building claim for the purposes of the HB Act. 3. The award of $2320.72 in compensation in respect of the paving defects involved an error of law because the Tribunal applied incorrect principles regarding assessment of damages. 4. Alternatively, the decision to award only $2320.72 was against the weight of evidence or was not fair and equitable.
4. The appellant confirmed that the respondent has complied with the work order made by the Tribunal in relation to the retaining wall and that he is not appealing that part of the decision.

Ground 1 - Significant new evidence

1. The appellant has asked the Appeal Panel to consider additional expert reports obtained since the Tribunal decision was published. He says that these reports contain significant new evidence which was not reasonably available at the time of the hearing. This ground does not involve an error of law and therefore the leave of the Appeal Panel must be sought.
2. In accordance with cl 12(1)(c) of Schedule 4 of the NCAT Act this ground of appeal requires there to be "significant new evidence that was not reasonably available at the time the proceedings under appeal were being dealt with."
3. Leave can only be given on this ground if the appellant may have suffered a substantial miscarriage of justice.
4. In Collins v Urban [2014] NSWCATAP 17 at [71] the Appeal Panel stated that the concept of a substantial miscarriage of justice refers to "a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred."
5. In the decision under appeal the Member made the following findings: On 12/10/20 and 5/2/2021 the Tribunal made directions for the parties to file and serve evidence. Both parties complied with the procedural directions. The documents filed and served by both parties were tendered and marked as exhibits in the proceedings. At the hearing on 5/2/21 the Tribunal emphasised to the parties the importance of providing expert evidence in support of their respective cases and the requirements for an expert report.
6. There is nothing before us to suggest that these findings are incorrect in any way or that the appellant was not given the opportunity at first instance to file evidence in support of his case.
7. The appellant says that he had believed the evidence he supplied at first instance was sufficient. He also says: [T]he member seemed to not pay any attention to all of the evidence I provided, so I have provided a further more detailed report from a highly experienced tradesman specialising in working with natural stone surfaces [and] an updated report from a highly experienced tiling and block laying tradesman that has previously inspected and advised on the current site condition.
8. The appellant's explanation for not providing these reports at first instance is that "I thought I'd submitted all documents and reports NCAT required."
9. The two additional reports on which the appellant seeks to rely are effectively more detailed and comprehensive versions of the reports supplied at first instance. They do not contain significant new evidence. Moreover, they contain evidence which was reasonably available at the time of the hearing. The only reason they were not provided at that time is that the appellant believed the evidence he had furnished was sufficient to establish his case.
10. Accordingly, we are not satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that significant new evidence has arisen that was not reasonably available at the time the proceedings under appeal were being dealt with. In these circumstances it is not necessary to consider issues which go to the Appeal Panel's discretion to grant leave.

Ground 2 - Was the claim in relation to the paving contract a building claim?

1. This ground of appeal involves an error of law for which leave to appeal is not required.
2. A building claim is defined in s 48A of the HB Act as a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim.
3. Building goods and services are relevantly defined in s 48A as "goods or services supplied for or in connection with the carrying out of residential building work or specialist work".
4. Residential building work is defined in cl 12 of Schedule 1 of the HB Act as: ….. any work involved in, or involved in co-ordinating or supervising any work involved in - (a) the construction of a dwelling, or (b) the making of alterations or additions to a dwelling, or (c) the repairing, renovation, decoration or protective treatment of a dwelling.
5. Relevantly, cl 2(3)(a) excludes from the definition: (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,
6. The prescribed amount for the purposes of cl 2(3)(a) is $5000: cl 12 of the Home Building Regulation 2014.
7. The paving contract between the parties was for labour only and was for $4000 plus GST, which is an amount less than $5000. The pavers were supplied by the appellant at a cost of $5394.40.
8. The exclusion in cl 2(3)(a) of Schedule 1 is not referable to the contract price, but to the "reasonable market cost of the labour and materials involved" in the work.
9. In our view the reference in cl 2(3)(a) to "the labour and materials involved in the work" applies only to the labour and materials provided by the contractor. It does not apply to labour or materials provided by third parties. In this case the scope of work agreed with the respondent included labour only at a cost of less than $5000. The materials in question - the pavers - were supplied by the homeowner and not by the contractor. There is nothing before us to suggest that the labour costs charged by the contractor were not the reasonable market cost.
10. Therefore we see no error in the Tribunal's conclusion that the reasonable market cost of the labour and materials involved in the work did not exceed $5000 and that the claim was therefore not a building claim.
11. In any case, we note that even if the claim had been treated by the Tribunal as a building claim this would not have been likely to affect the outcome.
12. The appellant claimed that the respondent had breached the statutory warranties set out in s 18B(1) of the HB Act. Section 18B(1) lists a number of warranties that are implied in every contract to do residential building work. Although not specified either in the application to the Tribunal or in the Tribunal's decision, we have gleaned that the claim was specifically for a breach of the warranty in s 18B(1)(a) which is a warranty that: the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,
13. The Tribunal, having determined that the HB Act did not apply, proceeded to consider the claim as a consumer claim under s 79E of the Fair Trading Act 1987 (the FT Act). The Tribunal concluded that the respondent had breached the guarantee as to due care and skill in s 60 of the ACL NSW.
14. The Tribunal has jurisdiction to hear and determine claims brought in reliance on the ACL (NSW): Lam v Steve Jarvin Motors [2016] NSWCATAP 186 at [16] - [45]. Part 3-2 of the ACL (NSW) confers on consumers acquiring goods or services various guarantees. Section 60, which is contained in Part 3-2, states: If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill.
15. The wording of s 60 of the ACL (NSW) and s 18E(1)(a) of the HB Act are substantially similar and involve essentially the same test, namely whether there has been a failure to provide services with due care and skill. As the Tribunal has found a breach of s 60 of the ACL (NSW) we do not think the result would have been different if the Tribunal had considered the claim (erroneously) as a building claim under the HB Act.

Ground 3 - Did the Tribunal err in its approach to assessment of damages?

1. The appellant sought an order that the respondent pay damages of $11,320 in respect of the defective paving. The appellant says that the cost to rectify the respondent's defective work is the cost to remove the pavers, the cost to re-lay the pavers, and the cost to replace the pavers. The Tribunal concluded that the respondent was obliged to pay the appellant $2320.72, being the cost to repair the surface of the damaged pavers.
2. The Tribunal correctly identified that the appellant was entitled to compensation under s 267(4) of the ACL (NSW) which provides: The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
3. However, when assessing damages, the Tribunal concluded that the cost to rectify the defective work was limited to the cost to repair the pavers in situ, and that the appellant was not entitled to the cost of removing or re-laying the pavers. The problem with this approach is that the Tribunal had found that the defective work included the carrying out of the paving work on a defective slab and that the respondent should not have carried out that work without first demanding that the concreter "fix the angulations as per their satisfaction prior to the installation".
4. It follows therefore that when assessing damages the Tribunal should have taken into account that rectifying the defective work would involve the removal and re-laying of the pavers in order for the sloping issue with the slab to be repaired (albeit that the sloping issue would need to be repaired by the concreter who did the work). As the Appeal Panel explained in Chang v Azari [2020] NSWCATAP 154 at [29]: Whilst the test for recovery of loss is set out in s 267(4), the situation is analogous to the awarding of damages for the cost of rectification due to breach of contract by the performance of defective residential building work where the appropriate test is to assess damages for the work reasonable and necessary to produce conformity with the contract, along with any consequential losses by reason of the breach : Bellgrove v Eldridge (1954) 90 CLR 613. It will only be in "fairly exceptional circumstances" that proposed rectification work (provided it is necessary to produce conformity with the contract) is regarded as unreasonable: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272.
5. It was reasonably foreseeable that the respondent's breach would result in the need to remove and re-lay the pavers so that the sloping issue could be rectified and it was also reasonably foreseeable that this would necessitate replacing the pavers themselves. This is work which is reasonable and necessary to produce conformity with the paving contract.
6. In our view the Tribunal's decision to award damages which were sufficient only to repair the tiles in situ, and did not address the fact that the pavers had been incorrectly laid on a defective slab, therefore involved an incorrect approach to the assessment of damages under s 265(4) of the ACL NSW.
7. We note that the Tribunal stated that it accepted the respondent's representative's evidence that the appellant was "aware of the defects in the concrete base prior to laying the pavers" and that the respondent "was told by him to proceed."
8. The Tribunal has not explained the relevance, if any, of this finding to its conclusion regarding damages so it is not apparent whether, or how, it affected the Tribunal's approach to assessment of damages. However, for completeness we would add that in our view, even if the appellant was made aware that the concrete slab was defective and told the respondent to proceed, this would not, without more, be a sufficient basis on which to refuse to award damages for the cost of removing and re-laying the pavers so that the concrete slab could be repaired. Unless the evidence established that the appellant was aware of the full extent of the defects in the slab, and the effect that those defects would have on the paving work (which is not apparent from the documentary evidence which was before the Tribunal or from the decision itself), then his awareness would not be relevant to the question of damages.
9. The appellant submitted that the Tribunal should also have awarded damages in relation to the drainage system installed by the respondent between the retaining wall and the pavers. The appellant suggests that the respondent should have installed a "Rein" strip channel drain in the cavity between the wall and the pavers, whereas instead the respondent installed a drainage system involving dress stones to fill the cavity.
10. In our view this aspect of the appeal is misconceived.
11. The application filed by the appellant in the Tribunal did not seek damages in respect of this drainage system and there is nothing before us to suggest that the appellant sought to amend the application at any stage of the proceedings to include a remedy in relation to this issue. In any event, the parties did not contract for the installation of a Rein strip channel drain. The scope of work set out in the paving contract did not include installation of such a drain.
12. Accordingly, we do not see how the failure by the Tribunal to award damages in respect of the drainage system involves either an error of law or an error of fact that may give rise to a substantial miscarriage of justice on any of the grounds listed in cl 12(1) of Schedule 4 of the NCAT Act.

Ground 4 - Was the award of damages against the weight of evidence or not fair and equitable?

1. We have determined that the Tribunal erred in its approach to assessment of damages. As this is a question of law, it is not necessary to consider whether the decision regarding damages was not fair and equitable or was against the weight of evidence.

Disposition of the appeal

1. The next question to determine is whether the matter should be remitted to the Tribunal for consideration of the quantum of damages, or whether the Appeal Panel should substitute its own decision.
2. The Appeal Panel's powers are listed in ss 80(3) and s 81 of the NCAT Act: (3) The Appeal Panel may-- (a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and (b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances. 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following-- (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
3. Section 81(1)(d) allows us to quash or set aside the Tribunal's decision and to substitute another decision for it.
4. We are mindful that under s 36(1) of the NCAT Act the Tribunal's guiding principle is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". Remitting the matter to the Tribunal would involve considerable additional time and expense for the parties. Taking this into account, as well as the relatively small size of the claim and the fact that the evidence which was before the Tribunal is available to us, including evidence in relation to the cost to remove and replace the tiles and the cost of the tiles themselves, we are of the view that it is in accordance with the Tribunal's guiding principle to substitute our own decision on the basis of that evidence.
5. Having regard to the quote provided by Maynard's Quality Tiling and the quote provided by MJK Tiling, we are satisfied that the cost to remove the existing tiles would be $2000, and the cost to re-lay the tiles would be $4840. The quote of Marblous Group establishes that the replacement cost of the tiles is $5394.40. The total cost to rectify the defects is therefore $12234.40. However, this amount is higher than the amount of the money order originally sought by the appellant which was $11320. There is nothing before us which shows that the appellant sought, or was granted, leave of the Tribunal to amend the claim to an amount more than $11320. Therefore the order should be limited to $11320. We accordingly make an order substituting order 1 made by the Tribunal with an order that the respondent pay the appellant $11320.

Conclusion

1. For these reasons we make the following orders: 1. The appeal is allowed. 2. Order 1 made by the Tribunal on 13 May 2021 in GEN 20/23338 is set aside. 3. In substitution for order 1 made by the Tribunal on 13 May 2021 in GEN 20/23338, the following order is made: Lawbeach Pty Ltd trading as Tonka Mini Excavators and Landscaping is to pay Michael Welch the sum of $11,320 within 28 days of the date of publication of these orders.

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: 12 October 2021