ACT CIVIL & ADMINISTRATIVE TRIBUNAL

ROBERTS v MORGAN & ANOR (Appeal) [2017] ACAT 70

AA 14/2016

Catchwords: APPEAL – civil dispute – whether ‘set off’ can be relied upon to bring a claim within the Tribunal’s jurisdictional limit – process adopted at hearing - whether the Tribunal’s failure to allow cross-examination of witnesses amounted to a lack of procedural fairness – Tribunal erred in failing to advise parties of process hearing was to take – jurisdictional limit increased during the course of the matter – hearing of appeal as new application

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 7, 18, 30, 21, 22, 82Australian Consumer Law (Cth) ss 54, 55, 64, 259, 260Evidence Act 2011 ss 21, 27Legislation Act 2001 ss 256Magistrates Court Act 1930 s 237, 284 (repealed)

SubordinateLegislation cited: ACT Civil and Administrative Tribunal Procedure Rules 2009

(no 2) r 21Court Procedure Rules 2006 r 3743 (repealed)

Cases cited: B&T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and Anor [2013] ACTSC 219Gibb Australia Pty Limited v Cremor Pty Limited (1992) 108 FLR 129Kioa v West (1985) 159 CLR 550Mansour v Dangar [2017] ACAT 49Morgan & Anor v Roberts [2016] ACAT 24The Legal Practitioner v Council of the Law Society of the ACT [2011] ACTSC 207

Tribunal: Presidential Member M-T Daniel

Date of Orders: 15 September 2017Date of Reasons for Decision: 15 September 2017

AUSTRALIAN CAPITAL TERRITORY )CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 14/2016

BETWEEN:

GLENN ROBERTSAppellant

AND:

DAVID & JANETTE MORGANRespondents

TRIBUNAL: Presidential Member M-T Daniel

DATE: 15 September 2017

ORDER

The Tribunal orders that:

1. The orders of 27 January 2016 are set aside.

2. Proceedings XD15/800 and XD15/824 are to be heard together.

3. In relation to matter XD15/800 judgment for Mr and Mrs Morgan.

4. In relation to matter XD15/824 judgment for Mr Roberts.

5. Mr and Mrs Morgan are to pay to Mr Roberts the sum of $3,317.00, being

comprised of $9,796.00 found owing by them on XD15/824 less $6,479.00

payable by Mr Roberts to them on XD 15/800.

………………………………..Presidential Member M-T Daniel

REASONS FOR DECISION

Introduction

1. On 27 January 2016 the Tribunal heard and decided two competing civil dispute

applications and ordered that Glenn Roberts (the appellant) pay to David and

Janette Morgan (the respondents) the amount of $2641.00 plus the filing fee of

$140.00.

2. Mr Roberts has appealed from the orders made on those applications.

3. For consistency and to avoid confusion in these reasons Mr Roberts will be

referred to as the appellant and David and Janette Morgan will be referred to as

the respondents, including when referring to the decision subject to appeal.

4. The issues raised on this appeal are:

(a) whether the doctrine of ‘set-off’ can be utilised to reduce a claim to below

the Tribunal’s jurisdictional limit, when the ACT Civil and Administrative

Tribunal Act 2008 does not expressly provide that this may occur;

(b) whether the Tribunal’s failure to allow the appellant to test the evidence in

relation to contested factual matters (by cross-examination of witnesses)

amounted to a failure to accord procedural fairness;

(c) what jurisdictional limit should be applied when hearing an appeal as a

new application, if the Tribunal’s jurisdictional limit changes during the

course of the matter or while the decision is reserved; and

(d) after hearing the appeal as a new application, should the original orders be

confirmed, set aside or varied.

Background to the original proceedings

5. The respondents contracted with the appellant to undertake renovation work in

three rooms of their home, including first ‘gutting’ existing built in furnishings,

then building wardrobes, two wall beds, a desk and other joinery, painting and

finishing. While work was performed by the appellant, the respondents did not

pay the entire contract price. The appellant argued that he had largely completed

the work and was entitled to a final payment of $9,796.50, and that to the extent

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there were any minor rectification works to be undertaken he had been denied

access to complete that work. The respondents acknowledged that they owed

the appellant a final payment under the contract of $9,796.50 but claimed that

the work undertaken was either defective or unfinished, that the appellant had

refused to complete or fix the work, and that they had suffered loss in rectifying

and completing the work.

6. The respondents filed an application (XD 800/2015) seeking “exoneration of the

outstanding debt of $9796.50” and a claim for contractual damages in the

amount of $2641.00. The amount of $2641.00 was the difference between the

asserted costs of rectifying/finishing the work ($12,437) and the debt claimed

by the appellant.

7. The appellant also filed an application (XD 824/2015) seeking payment of a debt

for works completed in the amount of $9796.00.

The original hearing and decision

8. The two applications were listed together, and were heard and decided on

27 January 2016.

9. At the commencement of the hearing, the Tribunal explained the process that it

would follow for the hearing. The Tribunal stated:

…these proceedings are meant to be informal, insofar as that is consistent with achieving the interests of justice and procedural fairness so it’s not a free-for-all and, of course, we apply the law. … The rules of evidence specifically don’t apply in these proceedings – section 8 says that – and I can inform myself in any way that I see fit with regard to any of the issues that are in dispute. So, it’s a more informal arrangement and it’s not so adversarial, the way that I would generally run these proceedings, particularly as both parties have submitted a lot of material.

So they’ve submitted hopefully all of their evidence and a number of their arguments. The other party has had a chance to look at them. I’m not expecting people to be rehashing all that material and making lengthy submissions about the law. So, I’ve had a look at them and the way in which I will conduct these proceedings is to be on the front foot and to really draw out from the parties further explanations of their positions or the evidence based on the material that I’ve already had an opportunity to have a look at, so if it feels like it’s not, you know, proceedings in a

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normal courtroom, it’s not, but please be assured the law will still be applied.1

10. The Tribunal then dealt with a number of preliminary matters. One preliminary

matter was the nature and amount of the respondents’ claim. The Tribunal was

concerned that the total amount of the claim in the application – $12,437 – was

over the Tribunal’s then jurisdictional limit of $10,000. After a short

adjournment, the respondents through their solicitor admitted the debt of

$9,796.00, and sought to set that debt off against the amount of their claim, by

this time framed as being under the Australian Consumer Law (ACL), so as to

bring their claim within the jurisdiction of the Tribunal. The Tribunal found:

…by admitting the debt and not pursuing a debt declaration the applicant’s claim was within the jurisdictional limit of section 18(a).

The applicant’s admission also resolved the debt claimed against them by the respondent in his application…2

11. The Tribunal then considered the fluctuating amount of the respondents’ claim.

The Tribunal noted that correspondence sent on behalf of the respondents to the

appellant and filed with the Tribunal had varied the amount claimed for

‘rectification’ on a number of occasions. The Tribunal noted that the

respondents had been directed to file an amended application by 22 September

2015, and concluded that:

…none of the material filed by the [respondents], or any of the correspondence between the parties, could properly be construed, as amending the amount of $2, 641 originally claimed and therefore I would cap any money order in favour of the [respondents] at that amount.3

In addition to the competing applications and responses filed by the parties, the

Tribunal had the following material before it at the original hearing:

(a) Three quotes dated 11 March 2015, 31 March 2015 and 14 April 2015.

(b) Written contract dated 14 April 2015.

(c) Plan signed 14 April 2015.

1 Transcript of proceedings 27 January 2016 p2 line 23ff2 Morgan & Anor v Roberts [2016] ACAT 24 at [43] and [44] 3 P Morgan & Anor v Roberts [2016] ACAT 24 at [57]

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(d) Quote from Chris van der Sterren from `Your Way Maintenance’ (YWM)

dated 19 June 2015 for rectifying carpentry.

(e) Letter from Chris van der Sterren dated 5 July 2015.

(f) Expert report from Peter Leary, Peak Consulting dated 29 September

2015, including photographs.

(g) Report of Brian Combridge regarding standard of painting dated

31 August 2015, including photographs.

(h) Quote from Jose Painting and Maintenance Service for repainting dated

30 June 2015 for $7,500.

(i) Quote from Walter Antioch EHM for repainting dated 16 July 2015 for

$6083.00.

(j) Quote for replacement sliding doors – undated.

(k) Each parties’ own photographs of the work.

(l) Email correspondence between the parties, filed by appellant and by

respondents.

(m) Quotes and other materials relevant to the king single wall bed.

(n) Witness statement of Mrs Janette Morgan dated 30 September 2015.

(o) Witness statement of Mr David Morgan dated 30 September 2015.

(p) Timelines of events filed by Mr Glenn Roberts dated 17 September 2015.

12. As foreshadowed when the hearing commenced, the Tribunal did not hold an

adversarial hearing. Instead, it went through each alleged defect individually

and heard submissions on each alleged defect from the parties. The Tribunal

asked some questions of the parties by way of clarification, but did not take a

chronological approach to the evidence. No questions were asked of non-party

witnesses, and the parties were not invited to question witnesses themselves.

13. In its written reasons for the decision the Tribunal set out the defects alleged by

the respondents at [77] as follows:

(a) The wardrobe and credenza drawers in bedroom one were sticking.

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(b) The storage configuration in the built in wardrobe in bedroom one was not fit for purpose.

(c) The storage configuration in the built in wardrobes in bedrooms two and three not fit for purpose.

(d) The credenza top was not completed.(e) The paint used on credenza top was not fit for purpose.(f) The standard of painting throughout was not of an acceptable

professional standard.(g) The built in desk and drawer unit in bedroom two was not in

accordance with specifications and the materials were not fit for purpose.

(h) The shelves on either sides of the window in bedroom two were not fit for purpose.

(i) The king single wall bed in bedroom two was not in accordance with specifications.

(j) The cost of the carpet more than agreed.(k) The respondent had disposed of the applicant’s freestanding chest of

drawers against their express instructions.(l) A wardrobe door was defective.

14. Although the debt of $9,796.00 was admitted, the respondents argued that the

work done in the above respects was substandard or incomplete, not fit for

purpose, and that the appellant had refused to finish the work or rectify the

defective workmanship. The appellant submitted that his work was fit for

purpose, completed to an acceptable standard and in the terms specified in the

contract. Further, the appellant argued that the respondents had failed to notify

him of the defects within the defects liability period, or to comply the dispute

resolution processes set out in the contract. The appellant submitted that he had

been denied the opportunity to rectify or complete any defective or incomplete

work.

15. At the conclusion of the hearing, the Tribunal found that the wardrobe and

credenza in bedroom 1; the wardrobe in bedroom 2; the king single wall bed

and general paintwork were not fit for purpose as they were not of an acceptable

standard. The Tribunal found in favour of the appellant in relation to the built in

desk and window shelves in the second bedroom; the paint on the credenza top

and the cost of the carpet.

16. The Tribunal awarded the respondents $12,579.00 based on the quotes obtained

by the respondents. This amount was set off against the debt admitted to be

owed to the appellant in the amount of $9,796.00, leaving an amount of

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$2,783.00 owing to the respondents. Having earlier ‘capped’ the amount

claimable against the appellant, the Tribunal made orders dismissing the

appellant’s debt application, and in relation to the respondents’ application

ordered the appellant to pay the respondents $2,641.00 plus their filing fee.

Application for appeal

17. The appellant filed an application for appeal from the decision on 22 February

2016. The grounds of appeal can be summarised as follows:

(a) The appellant did not have a lawyer but the respondents did.

(b) The Tribunal raised that there was a potential conflict of interest with the

lawyer for the respondents, but the appellant did not know he could

request another member.

(c) The Tribunal and the respondents’ lawyer “bamboozled” the appellant

into agreeing to join the two matters together and waive the excess claim

to bring the matter under the tribunal’s $10,000 jurisdictional limit.

(d) By joining the two matters together, the Tribunal did not hear the

appellant’s application and no orders were made in relation to it.

(e) The Tribunal gave no regard to the contract between the parties.

(f) The appellant was denied the opportunity to repair defects, if any.

(g) The evidence, quotes and reports provided by the respondents were

“frivolous and false.”

(h) The expert opinion of Brian Combridge did not comply with the tribunal’s

expert witness code of conduct, the witness was not made available to

answer questions at the hearing thus denying the appellant procedural

fairness, and the appellant was denied the opportunity to have his own

expert inspect the work.

(i) The appellant was denied the right to agree to variations in writing and to

apply the 15% profit margin on variations to the contact.

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(j) The respondents did not act in good faith with regards to information

provided to the Tribunal.

18. The application for appeal sought leave for the appellant to introduce further

evidence on appeal, this included copies of GST registration information for

certain entities, expert painting opinion, carpenter/joiner opinion and the opinion

of a bed manufacturer, structural engineering reports regarding the premises,

evidence of conversations that took place during the completion of the works,

manufacturer information relating to the paint used, and evidence from a third

party.

19. An amended application for appeal was filed on 22 April 2016, after the written

reasons for decision had been provided. In the amended application the

appellant further submitted that the Tribunal had erred:

(a) in relying upon the letter of Mr Van der Sterren dated 5 July 2017 which

had never been provided to the appellant or filed with the Tribunal, and

further in that the witness was not available at the hearing to be asked

questions about his comments in that letter, or the work he undertook;

(b) by not providing the appellant the opportunity to cross-examine the

respondent Mrs Morgan in relation to her witness statement;

(c) by not providing sufficient time to the appellant to question the time line

of events filed by the respondents.

Nature of the appeal

20. Section 82 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act)

provides that the appeal tribunal may either deal with the appeal as a new

application (a hearing de novo/new hearing) or as a review (rehearing) of all or

part of the original decision.

21. In Mansour v Dangar [2017] ACAT 49 I summarised the distinguishing features

of the two different approaches as set out in the authorities4, as follows

4 The Legal Practitioner v Council of the Law Society of the ACT [2011] ACTSC 207 at [14]; B&T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and Anor [2013] ACTSC 219 at [11] & [12]

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For a new hearing, established principles dictate that the hearing starts afresh, evidence is given again, and the appeal tribunal’s view on any question of fact or law is determinative of the issue. Any discretion to be exercised by the original tribunal is exercised anew by the appeal tribunal.

By contrast, for a rehearing, the appeal tribunal relies upon the evidence given to the original tribunal, supplemented by any additional evidence which the parties are given leave to adduce. The appeal tribunal’s findings on questions of law are determinative. The appeal tribunal will not lightly substitute its own findings of fact for the original tribunal’s primary findings of fact, but may be less constrained in relation to drawing inferences of fact. The appeal tribunal is not at liberty to interfere with a discretionary decision unless satisfied that there has been an error in the exercise of discretion. (Footnotes omitted)

22. The decision as to how an appeal should proceed is in the first instance made at

the directions hearing:

[20] … In deciding the correct approach to take, the appeal tribunal is required by the ACAT Act to adopt a procedure which is as simple, quick, inexpensive and informal as is consistent with achieving justice, and the requirements of procedural fairness.5

…

[23] …the appeal tribunal will consider the nature of the questions asserted in the application for appeal, the conduct of the original hearing, and other relevant matters such as the availability of new evidence,6 to determine whether the appeal should proceed by way of rehearing or as a new application. Applications for appeal raising only questions of law or confined questions of fact are most expeditiously dealt with as a rehearing, occasionally with further evidence admitted in relation to areas of factual dispute. By contrast, where there appears to have been a real failure of process at the original hearing, such as a failure to hear both parties, the appeal might be heard as a new application. In such circumstances, this approach is often the simplest, quickest and most inexpensive way to achieve a fair and just outcome.7

23. In this appeal, directions were made on 11 March 2017 which provided that the

appeal would proceed by way of a review of the whole of the original decision.

Further directions were made for the filing of an amended application for

appeal, a response to the amended application, and submissions by the parties.

5 ACAT Act, section 76 Burns J in B& T at [13]7 Mansour v Dangar at [20], [23]

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The hearing of the appeal on 15 June 2016 – is there an error of law?

24. On 15 June 2016 the appeal came on for hearing. Prior to considering the

application for further evidence to be admitted, the Tribunal heard submissions

from the appellant and the respondents’ solicitor in relation to each ground of

appeal. It is not necessary to canvas all of the submissions, suffice it to say that

the Tribunal was satisfied that one ground of appeal, when expanded upon by

the appellant in submissions, amounted to an error of law on the part of the

Tribunal. That issue was the question of whether the appellant had been

accorded procedural fairness in relation to the hearing process adopted by the

Tribunal.

25. The appellant submitted that the way the hearing was conducted, with no

opportunity to cross-examine key witnesses, amounted to a failure to accord

him procedural fairness.

26. The ACAT Act provides by section 8 and section 26 that the Tribunal is not

bound by the rules of evidence and may inform itself in any manner in which it

see fit. This can be contrasted with the approach taken in courts generally, and

in the tribunal in specific matters8, where the Evidence Act 2011 (Evidence Act)

applies. In proceedings where it applies, the Evidence Act with limited

exceptions requires evidence to be on oath or affirmation9, and provides that any

witness should be open to cross-examination10, albeit within limits imposed by

the court or tribunal. The Tribunal’s entitlement to inform itself as it sees fit is

always subject to the requirements of procedural fairness and natural justice.

27. The process of hearing adopted by the Tribunal, whereby witnesses of the facts

were not required to be accountable for their statements either by cross-

examination by the other party or by questioning by the Tribunal, was not

unusual. This process is often adopted, without contention, when there are no

relevant facts in dispute. In other small claims jurisdictions, hearings involving

contested facts are routinely undertaken on the basis of written witness

8 For example, disciplinary proceedings in the tribunal under the Legal Profession Act 2006

9 Section 21 of the Evidence Act 201110 Section 27 of the Evidence Act 2011

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statements11 and documents, with no cross-examination of witnesses.12 In such

jurisdictions, the manner in which the hearing is to be conducted is known to the

participants in advance, and there is facility for the parties to seek that evidence

be given orally, or that there be cross-examination of a witness or witnesses,

where the interests of justice require.

28. It cannot be said that a ‘fair hearing’ requires that in all cases, witnesses in relation

to contested facts must be made available for cross-examination.13 While

procedural fairness requires that a party have a fair opportunity to present their

case, this does not always include being given an opportunity to test the

opposing case by cross-examination. The content of the ‘fair hearing’ aspect of

procedural fairness will vary depending upon the circumstances.14 For example,

in some cases the evidence which a party wishes to rely upon in ‘their’ case can

only be adduced by cross-examination of an opposing witness. However the

tribunal may decide that given the nature of the evidence or amount in dispute,

or the delay or costs of hearing from that witness, the witness will not be

required for cross-examination.

29. In all cases, it is a requirement of procedural fairness that a party know in advance

the procedure to be adopted for the hearing so that they may present their case

effectively within those parameters. Where the procedure to be followed can

vary, parties should be given adequate opportunity to submit that a different

procedure would be preferable, be that for efficiency, timeliness, the interests of

justice or any other relevant circumstance.15 Neither of those steps occurred in

this case.

30. The respondents submitted that to the extent that the process of hearing adopted

by the Tribunal was unusual, this was acquiesced in by the appellant who at no

time requested that witnesses be put on oath, or required to submit to cross-11 Usually sworn or affirmed12 See for example Practice Note Civ 1 Part C applicable to the Small

Claims Division of the Local Court of New South Wales13 A contrast can be drawn between civil or administrative proceedings

in the tribunal, and criminal proceedings in a court where the right to fair trial includes the right to cross-examine prosecution witnesses, subject to some limitations

14 Kioa v West (1985) 159 CLR 55015 See for example section 20.8 of Practice Note Civ 1

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examination. The transcript of the hearing demonstrates that this was the case,

however there seems to have been no point at which such a submission could

have been made by the self-represented appellant. Indeed, the opening words of

the Tribunal, quoted at paragraph 9 above, implicitly cautioned the parties not to

query the process.

31. In this matter, it was clear that there was factual dispute as to the terms of the

contract, the quality of the work performed, the circumstances under which the

appellant ceased to do work, the extent of rectification work required or already

undertaken and cost of that work. The only way to resolve those issues was for

the Tribunal to choose which witnesses’ evidence to prefer. The usual way to

distinguish between witnesses is through an exploration of the veracity,

reliability and limitations of their evidence through questioning, either by the

tribunal or by opposing parties. If the Tribunal proposed to choose between the

conflicting evidence of witnesses of fact, including expert witnesses, without

allowing their evidence to be tested by questioning, this needed to be made clear

to the parties, and the parties’ submissions on the process considered.

32. The Appeal Tribunal was satisfied that, in this case, the Tribunal had failed to

provide procedural fairness to the appellant by failing to undertake those steps.

Such a failure is an error of law.

33. Whether that error was material to the outcome in the matter is another question.

It is difficult to know whether, had a different course been adopted and a

lengthier hearing embarked upon, the outcome would have been different in the

end. On the appeal, the appellant had sought to bring further evidence.

However, it seemed to the Appeal Tribunal that the key evidence which was

required – on both sides – was the answers to questions posed to the

respondents and their witnesses, and the appellant and his witnesses.

34. After advising the parties of the Appeal Tribunal’s conclusion in this respect, the

Appeal Tribunal invited the parties for their views on whether the Appeal

Tribunal should direct that the further hearing of the appeal proceed as a new

application.16 Given that there had been no oral evidence at the original hearing, 16 While section 82 appears to provide a ‘one-off’ choice for how an

appeal should proceed, by virtue of section 180 of the Legislation Act

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this also seemed to be the most efficient approach. There being no

disagreement, the Appeal Tribunal determined that this course should be

adopted.

The resumed hearing of the appeal – was the error material to the outcome?

35. The further hearing of the appeal was to resume on 16 June 2016, however on that

date an application for an adjournment was made by the appellant in order that

he might obtain further expert evidence. That application was granted, and

directions were made for the filing of further evidence or documents, by either

party, to occur by 14 July 2016.

36. The hearing of the appeal then resumed on 9 August 2016. In the meantime, the

respondents had filed an application to amend their application to clarify the

monetary value of the compensation claims. Given that the matter was

proceeding as a new hearing, I granted leave to amend the application. This

clarified the respondents’ claims as:

Rectification of paintwork $6,083.00

Replace bed with king single bed $1,860.00

Replace wardrobe doors for bedroom 1 $779.00

Chest of drawers destroyed $200.00

Insufficient postage paid for Glenn Roberts $5.05

Rectification of carpentry works $4,700

Subtotal $13,627.05

Set-off (Glenn Roberts debt claim) $9796.00

Net claim $3,831.05

37. For the appeal the Appeal Tribunal had before it the documentary evidence before

the original Tribunal, and further evidence and documents filed by each party.

For the appellant, the further material consisted of:

2001 it is open to the Appeal Tribunal to revisit this decision

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(a) A further witness statement of the appellant.

(b) A witness statement of Mr Coots.

38. For the respondents, the further material consisted of:

(a) A combined response of the respondents to the further witness statement

of the appellant.

(b) The diary of Mr Van Der Sterren.

(c) Wardrobe door replacement quote.

(d) Email about Dulux paint.

(e) Further colour photographs taken by Mr Morgan in July 2016.

39. The hearing on 9 August 2016 proceeded with evidence from the third party

witnesses. Mr Leary, Mr Coots, Mr Van der Sterren, and Mr Combridge all

gave evidence and were asked questions by the parties and the Tribunal. The

matter was then adjourned to 24 August 2016 on which date Mr and

Mrs Morgan each gave evidence and were cross-examined. The matter resumed

on 9 September 2016 to conclude the evidence of Mrs Morgan and hear from

Mr Roberts.

40. The decision was reserved, and the respondents and appellant directed to file

further written submissions by 30 September and 14 October 2016, respectively.

The preliminary legal issues of set-off and jurisdiction

41. It is first necessary to address the legal question, raised by the appellant before the

Tribunal and before the Appeal Tribunal, as to whether it is permissible for the

respondents to make a claim which is over the jurisdictional limit, and then

reduce it by ‘setting off’ an amount they admit they owe.

42. Historically a set-off is raised as a defence. A defendant establishes a claim

against the plaintiff which either exceeds the plaintiff’s claim (thereby

extinguishing it) or being less than the plaintiff’s claim, reduces it. The basis of

set off can be under contract law, in equity, or as provided for by statute.17

17 The complexity of the circumstances under which in the ACT cross-claims could be set-off either at law or in equity are canvassed in Gibb Australia Pty Limited v Cremor Pty Limited (1992) 108 FLR 129.

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43. The respondent’s argument is that because set-off may be relied upon in the

exercise of jurisdiction in determining the extent of their obligation to pay the

appellant, and only one judgment or order issued for the remaining amount, this

means that their claim is within the jurisdictional limit. This conflates the issues

of legal liability and the tribunal’s power to issue only one judgment with the

preliminary question of where one is entitled to bring an application for a civil

dispute. The latter question relies upon interpretation of the relevant legislation.

44. In the Magistrates Court, which is limited to claims of less than $250,000, section

237 of the Magistrates Court Act 1930 (Magistrates Court Act) sets out how

to calculate the amount of a claim for the purposes of that jurisdictional limit.

Section 237 specifically provides for taking account of a set off in bringing the

amount of the claim under the jurisdictional limit. It also provides for not

counting interest, and for abandonment of any excess.

45. For the tribunal, section 18 of the ACAT Act at the time of the hearing of the

appeal provided:

18 $10 000 limit on civil dispute applications(1) A civil dispute application cannot be made to the tribunal for an amount

greater than the tribunal’s jurisdictional limit, unless section 20 (Abandoning excess to come within jurisdiction) or section 21 (Jurisdiction by agreement—amounts over $10 000) allows the application to be made.

(2) The tribunal’s jurisdiction is limited to—(a) civil dispute applications claiming amounts of not more than

$10 000; or(b) in relation to debt declarations—applications for declarations for

debts of not more than $10 000.Note For working out an amount to decide whether the tribunal has jurisdiction—see s 19.

(3) This section does not apply to—(a) an application for a common boundaries determination; or(b) an application prescribed by regulation.

46. Section 19 then (and now) provides:

These days, in the Magistrates Court and Supreme Court, many of these legal technicalities are rendered irrelevant by the provisions of the Court Procedures Rules

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19 Working out amount of application for jurisdiction(1) In working out the amount claimed, or the amount sought to be declared as a

debt, to decide whether the tribunal has jurisdiction in relation to a civil dispute application, the following amounts for the application are to be disregarded:(a)a claim for interest; (b)a claim for a lump sum instead of interest.

(2) In working out the amount claimed, to decide whether the tribunal has jurisdiction in relation to a goods application, the following amounts are to be considered:(a)the value of the goods or services; (b)any amount claimed for damages for the detention of the goods.

47. The ACAT Act provisions are different to the Magistrates Court provisions

because they do not expressly include a set-off. Section 18 references the

abandonment of excess (section 20) and additional jurisdiction by agreement

(section 21). Section 19 provides that interest is to be disregarded.

48. The respondents submitted that because section 22 of the ACAT Act provides that

the Tribunal in hearing an application has all the powers of the Magistrates

Court in a like matter, it is able to apply the approach set out in section 237 of

the Magistrates Court Act (albeit with a substitution of $10,000 for the figure

$250,000) in setting off the debt owed to reduce the amount claimed.

49. I am not persuaded by this submission. First, for the obvious reason that section

22 (and consequently the application of section 237 of the Magistrates Court

Act) does not have effect until the Tribunal is ‘hearing’ an application. This

means it cannot be relied upon in relation to section 18(1) of the ACAT Act

which prohibits an application being made to the Tribunal for an amount of

more than $10,000. Secondly, it is beyond the terms of section 22 to just swap

the figure of $10,000 for the figure of $250,000 as it appears in section 237(1).

That is not a power of the Magistrates Court that is being applied, but the

rewriting of a procedural provision to apply it to the tribunal. Thirdly, if section

22 did operate as suggested, to pick up the operation of section 237 by analogy,

this would make both section 19 and section 20 of the ACAT Act otiose. Such

an interpretation is not to be preferred.

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50. The ACAT Act provisions are very similar to former rule 3743 of the Court

Procedure Rules 2006 (Rules) which applied to the Small Claims Court prior to

creation of the ACAT. Former Rule 3743 specifically provided that a counter-

claim or set-off could not exceed $10,000, and that in cases where the

respondent’s total counter claim or set-offs amounted to more than $10,000 the

excess could be abandoned or application made to transfer the proceedings to

the Magistrates Court. Also at that time, then section 284 of the Magistrates

Court Act provided that the Small Claims Court jurisdiction was limited to

applications claiming less than $10,000, and did not refer to the availability of

set-off to bring a claim within that monetary limit.

51. The wording of the Small Claims provisions was carried over to the ACAT Act

and ACT Civil and Administrative Tribunal Procedural Directions 2010 (No.

1). There is no suggestion in the Explanatory Statement to the ACAT Act that

upon creation of the tribunal set-off was now intended to be available when

calculating the amount claimed for the purpose of the jurisdictional limit.

52. The correct interpretation of the jurisdictional limit provisions in the ACAT Act,

is to apply the express words of the relevant provisions. Those words do not

include set-off. This means that it is not open to rely upon set off to reduce an

amount claimed in a civil dispute application, or cross-claim, to below the

tribunal’s jurisdictional limit.

53. As an added complication, on 15 December 2016 the Tribunal’s jurisdiction

increased from $10,000 to $25,000. No transitional provisions were put in place

to limit how the Tribunal should deal with matters already filed in the Tribunal.

It was open to parties to seek to amend their applications to seek a greater

amount than originally claimed.

54. Some authorities indicate that the Appeal Tribunal, when hearing a matter by way

of a new application, would be required to apply the law as it is at the time of

making its decision. This would mean that in the current matter, the question of

set-off would become immaterial as the amount sought by the respondents

would be within the jurisdictional limit at the time of deciding the appeal,

although not at the time of hearing it.

17

55. In the end, the answer to the questions of set-off and increased jurisdiction are not

determinative. This is because for the reasons that follow I was not satisfied that

the respondents established their claim for an amount of over $10,000 to be paid

to them.

The Appeal Tribunal’s findings of fact

56. From the evidence of the parties, and reference to the contemporaneous

documents, I am satisfied of the following history.

57. The respondents own an older house in Downer. Prior to 2014 the respondents

obtained three quotes from specialist wardrobe companies on modernizing the

built in joinery in three bedrooms, installing wall beds in two of those rooms,

and providing other joinery, plastering, painting and carpet. These quotes

ranged from $22,000 to $27,000 without including the plastering, painting,

carpeting or electrical work. The project was then put on hold for a time.

58. In March 2015 Mrs Morgan contacted the appellant as a consequence of his

advertisement in The Chronicle. Mr Roberts attended the home and inspected

bedroom 1. Mrs Morgan was clear as to the work she wanted undertaken, and

Mr Roberts undertook to provide a quote. A quote on letterhead which referred

to ‘design’ and ‘project management’ services was received the next day.

59. Mr and Mrs Morgan were happy with the quote, and particularly with the idea that

Mr Roberts would arrange all the subcontractors. Mrs Morgan asked

Mr Roberts to provide a quote for the work for the remaining two bedrooms. He

agreed and inspected the bedrooms that day. Again, Mrs Morgan was precise as

to the work she wanted undertaken in each of the other rooms.

60. A second quote was received, with further plans, these were acceptable to Mr and

Mrs Morgan. Mrs Morgan made some changes to the scope of the works,

including moving the location of the sewing cupboard and ironing board, adding

some power points in bedroom 1, and requiring the hallway, bedrooms

bathroom and toilet all to be painted. Another quote was prepared, dated 14

April 2015, together with plans for the work, and these were signed by the

parties that day. During the hearing of the appeal it became evident that the final

18

copy of the plans also had a handwritten amendment on 15 April 2015, to add

double hanging in the wardrobe in bedroom 3.

61. The total contract price was $40,034 including GST. The contract provided that

the builder’s margin on variations and additions to the contract would be 15%.

62. The respondents paid an initial amount of $4,000.00 on the 15 April 2015,

received by the appellant on 17 April 2015. Work commenced on 4 May 2015.

The respondents moved into a caravan on their property for the duration of the

work, which was expected to take about five weeks.

63. The respondents had concerns about the work being performed from early on. On

17 May 2015 the appellant submitted a claim for the progress payment of

$16,000 due on 20 May 2015. On 18 May, Mr Morgan provided the appellant

by hand with a letter advising that the progress payment would be made once

six listed matters had been rectified to the respondent’s satisfaction. On 19 May

the appellant provided a letter in response, adverting to the builder’s right to

suspend the contract if the owner fails to make a payment due under the

contract. The letter also responded to the six areas of rectification required.

64. At 5:34 pm on 20 May 2017, the appellant issued a notice of suspension to the

respondents by email. An hour or so later, the respondents emailed the appellant

back advising that the progress payment would be made after they were

provided with a receipt for the wall beds. The respondents also referred the

appellant to clause 12a paragraph c of the contract (which permits the owner to

terminate the contract if the contractor persistently fails to comply with written

notice to replace defective work or improper materials).

65. On 21 May the appellant emailed a reply to the respondents, explaining that the

contract would remain suspended until the progress payment was made, and

denying that there had been any persistent failure to comply with written notices

or to complete the work within the contract price or contract period. The

appellant also advised that the cost of the Murphy single wall bed was

$1,778.00 plus installation of $350.00 plus GST, and had been paid on

17 April 2015.

19

66. The respondents were unhappy with the work in bedroom 1, however they were

advised to make the payment as work had stopped and in Mrs Morgan’s words

“everything was everywhere”. On 25 May 2015 the progress payment was

received by the appellant.

67. The appellant emailed the respondents the next day advising that work would

resume on 28 May 2015, and asking that in the meantime the respondents

advise of any proposed variations to the contract, as well as any outstanding

issues from the respondents’ earlier email which remained unresolved. The

appellant then emailed the respondents on 27 May 2015, advising that an

extension to the contract of one week was required due to the suspension.

68. Work recommenced on 28 May 2015. As the respondents had not replied by email

or verbally to the appellant’s email of 28 May 2015, the appellant sent a further

email on 31 May 2015 reiterating, in summary form, his response to each of the

six matters of complaint, and asking that the respondents detail any changes to

the contract at the earliest convenience. On 2 June 2015 the appellant emailed

the respondents again, seeking their views on TV wall brackets and advice as to

the choice of carpet.

69. On 3 June 2015 the respondents sent a lengthy email response to the appellant,

comprehensively setting out all of their concerns about the work that had been

done to that date. They explained that the bank cheque for the progress payment

had been ready for collection by the appellant, but that after he failed to collect

it and “against their better judgment they tore it up”18 and made a direct deposit

to the appellant’s bank account. The respondents advised that they had

contacted the MBA for dispute resolution in accordance with the contract, and

that Mr Michael Hopkins from the MBA had asked that the appellant contact

him.

70. The appellant responded to the letter of 3 June 2015 by issuing a ‘Dispute Notice’

later the same day. In that notice the appellant denied the issues raised by the

respondents, and further asserted that the respondents were interfering with his

18 Email of 3 June 2015

20

subcontractors (namely the electrician and carpet installers) and that this placed

him at risk of not completing the work within time.

71. On 6 June 2015 the respondents emailed a ‘letter of demand’ to the appellant. In

this letter the respondents set out a way forward in relation to each of the

outstanding issues. They advised that the carpet installers were “ready when you

are”. They also advised that they did not accept the representative of the MBA

as an independent adjudicator, and that if matters were not resolved by

29 May 2015 they would apply to the Tribunal for resolution.

72. Work had continued during this period, and the time for completion was fast

approaching. The parties had agreed that the completion date was now 16 June

2015.

73. On 7 June 2015 the appellant emailed the respondents in relation to their email

entitled ‘letter of demand’, appointing Mr Hopkins as his representative to meet

with the owner’s representative as provided under the contract, to try and sort

out the dispute.

74. On 13 June the respondent’s emailed the appellant explaining the nature of their

contact with Mr Hopkins, and advising that the electrician had not inserted the

requested power point in bedroom 1, and that the carpet installers had failed to

install ramps and had covered the heating vents, leaving an unsafe situation. The

respondents set out a number of deductions which they suggested should be

made from the final contract payment. The appellant emailed the respondents

back the same day, explaining that as the respondents had proceeded to contract

separately with Nulay Carpets, the issues with installation were for them to

manage.19 In relation to the incorrect power point in bedroom 1, the appellant

stated that the owners had been in discussion with the subcontractor directly and

without the knowledge or agreement of the appellant. The appellant said the

invoice would be issued in accordance with the contract.

75. The final invoice was issued on 14 June 2015. After making a number of

deductions the outstanding amount was $16,197.50.

19 Notwithstanding this assertion, it is clear from a subsequent email that the appellant contacted Nulay and tried to arrange a solution.

21

76. The appellant emailed the respondents on 16 June 2015 a further ‘suspension

notice’ on the basis that the final payment had not been made, and the

respondents had not made any further attempts to resolve the outstanding issues.

On 17 June 2015 the respondents emailed the appellant that they did not

consider the contract completed as there were a list of defects that had to be

resolved. The respondents indicated they would be willing to have Mr Hopkins

meet them, and their representative, on site in coming days to resolve the issues.

77. The appellant replied by a ‘without prejudice’ email on 18 June20, stating that

effectively the contract was in suspension, and that he would not be doing any

works while it remained so. He pointed out that once the final payment was

made, the ‘defects liability period’ which (in his view) had commenced on

17 June 2015 on completion of the work would recommence, and he suggested

that the list of defects be provided to him. In any event, the appellant asserted

that none of the issues raised amounted to a defect in the correct sense of the

word.

78. Communication between the parties went further downhill from this point and

need not be set out further.

79. On 29 June 2015 the respondents paid to the appellant the amount of $6,401.00,

leaving an amount owing under the contract of $9,796.50. The respondents filed

their civil dispute application on 3 July 2015, the appellant filed his civil dispute

application on 8 July 2015.

Consideration of the competing claims

80. The appellant claims $9796 as the amount owing under the contract. The amount

owing under the contract is admitted by the respondents, subject to a claim that

the work was incomplete and not up to the required standard.

81. The respondent’s application, as amended, is brought under the ACL. Although

the ACL usually applies to contracts of a value under $40,000, this limit is

20 Tendered in these proceedings by the appellant

22

irrelevant where the works were primarily for personal, domestic of household

purposes21. I am satisfied that this was the case in this matter.

82. The appellant queried how he can be held accountable under the ACL for

performing work which was as specified in the contract, and relying on his

rights in accordance with the contract. The answer is that where the ACL

applies to goods or services, it operates in addition to the terms of the contract.

The parties to the contract will need to comply with their obligations under the

contract, as well as those under the ACL. In the event of a conflict between

those obligations, section 64 of the ACL provides that consumer guarantees

under that legislation cannot be excluded by contract. This does not mean,

however, that the terms of the contract and the circumstances under which it

came into being or is put into effect are irrelevant in the determination of

questions under the ACL. For example, the respondents relied upon the

consumer guarantees set out in sections 54 and 55 of the ACL, the operation of

both of these sections is informed by the circumstances in which the goods or

services are provided.

83. Section 54 of the ACL provides that goods must be of acceptable quality as

follows:

54 Guarantee as to acceptable quality

(1) If:

(a) a person supplies, in trade or commerce, goods to a consumer; and

(b) the supply does not occur by way of sale by auction;

there is a guarantee that the goods are of acceptable quality.

(2) Goods are of acceptable quality if they are as:

(a) fit for all the purposes for which goods of that kind are commonly

supplied; and

(b) acceptable in appearance and finish; and

(c) free from defects; and

(d) safe; and

(e) durable;

21 Section 3, ACL

23

as a reasonable consumer fully acquainted with the state and condition of the

goods (including any hidden defects of the goods), would regard as acceptable

having regard to the matters in subsection (3).

(3) The matters for the purposes of subsection (2) are:

(a) the nature of the goods; and

(b) the price of the goods (if relevant); and

(c) any statements made about the goods on any packaging or label on the

goods; and

(d) any representation made about the goods by the supplier or

manufacturer of the goods; and

(e) any other relevant circumstances relating to the supply of the goods.

(4) If:

(a) goods supplied to a consumer are not of acceptable quality; and

(b) the only reason or reasons why they are not of acceptable quality were

specifically drawn to the consumer’s attention before the consumer agreed

to the supply;

the goods are taken to be of acceptable quality.

(5) If:

(a) goods are displayed for sale or hire; and

(b) the goods would not be of acceptable quality if they were supplied to a

consumer;

the reason or reasons why they are not of acceptable quality are taken, for the

purposes of subsection (4), to have been specifically drawn to a consumer’s

attention if those reasons were disclosed on a written notice that was displayed

with the goods and that was transparent.

(6) Goods do not fail to be of acceptable quality if:

(a) the consumer to whom they are supplied causes them to become of

unacceptable quality, or fails to take reasonable steps to prevent

them from becoming of unacceptable quality; and

(b) they are damaged by abnormal use.

(7) Goods do not fail to be of acceptable quality if:

(a) the consumer acquiring the goods examines them before the consumer

agrees to the supply of the goods; and

24

(b) the examination ought reasonably to have revealed that the goods

were not of acceptable quality.

84. Section 55 of the ACL provides a guarantee as to fitness for any disclosed

purpose:

55 Guarantee as to fitness for any disclosed purpose etc.

(1) If:

(a) a person (the supplier) supplies, in trade or commerce, goods to a

consumer; and

(b) the supply does not occur by way of sale by auction;

there is a guarantee that the goods are reasonably fit for any disclosed purpose,

and for any purpose for which the supplier represents that they are reasonably

fit.

(2) A disclosed purpose is a particular purpose (whether or not that purpose is

a purpose for which the goods are commonly supplied) for which the goods are

being acquired by the consumer and that:

(a) the consumer makes known, expressly or by implication, to:

(i) the supplier; or

(ii) a person by whom any prior negotiations or arrangements in relation

to the acquisition of the goods were conducted or made; or

(b) the consumer makes known to the manufacturer of the goods either

directly or through the supplier or the person referred to in paragraph

(a)(ii).

(3) This section does not apply if the circumstances show that the consumer did

not rely on, or that it was unreasonable for the consumer to rely on, the skill or

judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the

manufacturer, as the case may be.

85. The respondents also relied upon sections 60 and 61 of the ACL which set out

consumer guarantees of due care and skill and fitness for purpose in relation to

the provision of services. Without setting these provisions out in full, the

circumstances of the case are picked up by the express terms of section 61, and

are may be relevant in determining what amounts to ‘due’ care and skill.

25

86. Further, the provisions of the ACL providing remedies for breach of these

guarantees, being sections 259 and 267, require the Tribunal to consider the

concepts of reasonableness and reasonable foreseeability.

87. I turn next to the question of whether any breach of contract or consumer

guarantees is established by the respondents. It is convenient to consider the

evidence as to the work performed, and the standard of workmanship, by

reference to the areas in which it is alleged the goods or services fell short of

what was required.

Wardrobe design

88. I am satisfied from the evidence of the parties, and the photographic evidence, that

the internal configuration of the wardrobes in the three rooms was constructed

in accordance with the plans and quote signed 14 and 15 May 2015. The

respondents assert that the wardrobes were not fit for purpose and were of

unacceptable quality, in bedrooms 1 and 3 because the height did not properly

accommodate double hanging and the provision for a shoe rack, and in bedroom

2 because the robe was too small. In addition, the wardrobe in bedroom 3 was

said to be too shallow as it had a depth of only 520 mm according to the plans.

89. Mr Leary, a licensed builder and constructor who provided an expert report for the

respondents and gave evidence to the Tribunal, conceded that there was no

standard for the height or depth for double or single hanging, but stated that

most manufacturers recommend a shelf height of 2000mm when installing

double hanging. He concluded that given the space was to accommodate both

double hanging and a shoe rack, the design fell well short in this respect. He

also gave evidence that a minimum depth of 600mm is nowadays required for

adequate clothes hanging, and a wardrobe of 520mm as in bedroom 3, did not

meet that intended function of hanging once around 75mm was taken by the

addition of sliding door tracks. When cross-examined, Mr Leary conceded that

the construction was in accordance with the plans, and agreed he was unable to

comment on whether the contract was for design and construction or simply

construction. He stated that he would not himself charge a separate line item for

‘design’ on a quote of this nature, but conceded that others might.

26

90. I am satisfied that the design of the internal configuration of the double hanging

space was not optimal. Similarly, the proposal to add sliding door tracks to the

existing wardrobe cavity in bedroom 3 placed constraints on how the remaining

space could be used for hanging.

91. The factual questions are, to what extent was the appellant responsible for the

design of the wardrobes, and to what extent did the respondents rely upon his

expertise? If they did rely upon his expertise, was this reasonable in the

circumstances? Mr Roberts gave evidence that he was not retained to design the

wardrobes, but only drew up plans to build what Mrs Morgan told him she

wanted. He says after drawing up the plans with measurements on them, he

gave these plans to the respondents and they were approved. Mrs Morgan in her

evidence confirmed that she was very clear to Mr Roberts as to what she wanted

in each wardrobe. She also stated that the previous specialised wardrobe

companies who had quoted in relation to the wardrobe in bedroom 3, had

advised her that because the existing wardrobe cavity was shallow, it would

have to be built out. It is incontrovertible that the plans and quotes which form

the contract expressly stated the height of the double hanging, the depth of the

wardrobe, and did not depict or refer to any ‘building out’ of wardrobe in

bedroom 3. In this respect, Mrs Morgan explained that with the personal issues

confronting them at the time, she didn’t “have the capacity to get my head

around these things.”22

92. In relation to the height of the double hanging, and presence of the shoe rack, I am

satisfied that the wardrobe design was not perfect or even optimal, but it

remained possible to use these wardrobes for their intended purpose, provided

care was given to the choice of hangers and kinds of clothing in various areas. It

was the appellant who selected the height of 1650 mm, however there is no

evidence that he was instructed by Mrs Morgan to go further than putting

sliding doors on to the existing wardrobe cavity in bedroom 3. Mrs Morgan

stated that she was aware from the previous wardrobe companies that the only

way to get more depth in the bedroom 3 wardrobe was to build it out, or to take

22 Transcript of proceedings 26 August 2016 page 61, line 40

27

space from the wardrobe in bedroom 1. She stated that she knew this when

talking with Mr Roberts, but did not raise it with him.23

93. With regard to the factors in sub-section 54(3) of the ACL there would have been

little price differential in placing the hanging racks at a different height, there

would have been additional cost in building a deeper wardrobe in bedroom 3. A

reasonable consumer having new wardrobes configured would have expected

the internal space to have the top hanging rail at 2000 mm, and the depth of

wardrobes to be the current standard. However, the dimensions were shown on

the plans and quotes. To the extent that it can be argued that these aspects made

the wardrobes not fit for purpose, the reasons for that inadequacy were drawn to

the respondents’ attention by the written plans and quote. An examination of the

plans ought reasonably to have revealed that there would be difficulties with

hanging what Mr and Mrs Morgan now say they wanted to hang, in each area. A

reasonable consumer, with the respondents’ previous contact with specialist

wardrobe companies, would have noted these limitations.

94. In relation to the depth of wardrobe 3, I am satisfied that when one has regard to

the cost of building out the wardrobe to achieve the required depth, the fact that

the respondents were well aware that such construction would be required in

order to achieve a ‘normal’ depth, and the fact that neither the plans nor the

quote showed such construction would be done, the wardrobe was as fit for the

purposes of a wardrobe as a reasonable consumer would regard as acceptable.

The depth of the wardrobe in bedroom 3 was of acceptable quality in the

circumstances. While it might be argued that the wardrobe as designed and

constructed was not fit for the disclosed purpose of 90 degrees sidewards

hanging, in circumstances where the respondents were aware of the constraints

posed by the shallowness of the existing wardrobe cavity, and the necessity for

the wall to be extended to create further depth, it was not reasonable for a

consumer in such circumstances to rely upon the skill and judgment of the

supplier.

95. In relation to the size of the small wardrobe in bedroom 2, which is asserted to be

not fit for purpose, I note that Mr Leary did not provide specific comment in his

23 Transcript of proceedings 26 August 2016, page 79

28

report. I am satisfied that the depth of that wardrobe was less than 600mm and

inadequate for hanging clothes in the usual 90 degrees sidewards manner. In this

respect this wardrobe was not fit for purpose, and not of acceptable quality. On

the other hand, it was designed for occasional use by guests, and the depth was

predetermined by adjoining joinery for the wall bed unit. The depth was

disclosed on the plans and at 600mm wide it could be utilized for hanging if

suitable hangers were used. I am not satisfied that in these circumstances the

goods were not of acceptable quality, or not fit for purpose.

96. The respondents’ claims under the ACL in relation to wardrobe design are not

made out.

The drawers

97. The wardrobe drawers in bedroom 1, and bedroom 3, and the drawers to the

credenza in bedroom 1 and desk in bedroom 2, were all asserted by the

respondents to be stiff and hard to open. Mr Van der Sterren from Your Way,

gave evidence that he fixed these drawers by taking them apart and inserting

spacers. The appellant initially submitted to the Tribunal that silicone would

enable the drawer runners to slide better, however Mr Coot, a structural

engineer who gave evidence for the appellant, stated that having examined the

house it was his opinion that it was prone to excessive movement, and that it

was not inconceivable that movement in the foundations could cause drawers

which were affixed to walls to stick, even within a month (although the more

usual time frame, in his opinion, would be a number of months).

98. The respondents raised the issue of the sticking drawers with the appellant in their

first letter of 18 May 2015. This was less than two weeks after the work

commenced. Mr Morgan gave evidence that he noticed the stiffness of the

drawers only a day or two after they were installed. While Mr Coot’s opinion

may be sound in principle, in explaining the drawer stiffness in this case I prefer

the explanation of Mr van der Sterren which is more consistent with the

surrounding circumstances, and particularly the evidence of Mr Morgan as to

when he first noted the drawers were sticking.

29

99. I am satisfied that the drawers were not properly constructed, and that in this

respect the appellant failed to comply with a consumer guarantee.

100. I am satisfied that the failure to comply with the consumer guarantees were

capable of remedy within a reasonable time and consequently not major

failures.24 Under section 259(2) of the ACL the respondents were therefore

entitled to require the appellant to remedy these failures. Section 259 relevantly

provides:

259 Action against suppliers of goods

(1) A consumer may take action under this section if:(a) a person (the supplier) supplies, in trade or commerce, goods to the

consumer; and(b) a guarantee that applies to the supply under Subdivision A of Division 1

of Part 3-2 (other than sections 58 and 59(1)) is not complied with.(2) If the failure to comply with the guarantee can be remedied and is not a

major failure:(a) the consumer may require the supplier to remedy the failure within a

reasonable time; or(b) if such a requirement is made of the supplier but the supplier refuses or

fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:(i) otherwise have the failure remedied and, by action against the

supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or

(ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.

(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:(a) subject to section 262, notify the supplier that the consumer rejects the

goods and of the ground or grounds for the rejection; or(b) by action against the supplier, recover compensation for any reduction

in the value of the goods below the price paid or payable by the consumer for the goods.

(4) 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.

(5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier.

(6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).(7) The consumer may take action under this section whether or not the goods

are in their original packaging.

24 Section 260 of the ACL

30

101. The respondents are entitled to compensation for the reasonably foreseeable loss

they have suffered as a result of the appellant’s failure to comply with the

consumer guarantees, and the reasonable costs of having the failure remedied if

the appellant refused to comply with the requirement to remedy within a

reasonable time.

102. The respondents advised the appellant on multiple occasions of their

dissatisfaction with the drawers. This started with the first letter of the

respondents on 18 May 2015. The appellant asserted in these proceedings that

the drawers were fixable by the application of silicone. If so, this would have

been a five minute job. Notwithstanding that the contract was from time to time

suspended, five minutes could have been found to fix the drawers, if it was

possible to fix them in this way. I am satisfied that the drawers could not have

been fixed by the application of silicone, but required reinstallation as

undertaken by Mr Van der Sterren. While this was a bigger task, it would not

have taken significant time and was done on site. Again, despite the contract

being from time to time suspended the time to rectify the drawers could have

been found between 18 May 2015 and Mr Van der Sterren completing the work

himself. The appellant declined to do so, largely because of his view that the

contract was ‘suspended’ and then ‘terminated’. These factors are relevant, but

not determinative, of whether the appellant failed to remedy within a reasonable

time.

103. I am satisfied the appellant was requested to rectify the failures in relation to the

drawers, and failed to remedy within a reasonable period of time. The appellant

argued that the respondents refused to let him rectify the work. While the

respondents made it clear in their response to the appellants application filed

(5 August 2015) that they did not wish the appellant to complete the work, this

was not their original position.

104. The failure was capable of remedy and was not a major failure. The respondents

requested that the failure be remedied and it was not remedied within a

reasonable time. They are entitled to be reimbursed the amount they paid to

have the drawers fixed.

31

The wardrobe doors in bedroom 1

105. The plan for the wardrobe in this room showed three mirror doors. Mrs Morgan

gave evidence that she had wanted there to be three doors, of which two were

plain and one mirrored, so as to reduce glare. Mr Morgan agreed that this was

his understanding. Mr Roberts stated that when he was about to order the doors

it was agreed with Mr Morgan that the doors would be reduced from three to

two, so as to give greater accessibility to the interior of the wardrobe.

Mr Morgan did not recollect this conversation taking place. The variation

described by Mr Roberts was not recorded in writing, notwithstanding Mr

Roberts’ strong adherence to the principle that all variations should be in

writing.

106. Given the written documents, I am not satisfied that the terms of the contract

were as described by Mrs Morgan, and I am not satisfied that the contract was

varied as asserted by Mr Roberts.

107. I am satisfied that the wardrobe doors were not supplied in accordance with the

contract, as there were two doors and not three. The respondents propose to

return the doors to their original number, and have provided a quote for $779.00

to replace the doors for this wardrobe. As there was no suggestion before the

Appeal Tribunal that the cost of three mirrored doors (as provided by the

contract) would be less than two plain and one mirrored door (as provided by

the quote), I am satisfied that the amount claimed for this work to be undertaken

is reasonable.

The credenza top and shelf in bedroom 1

108. The final quote and plans provided for a credenza made of mdf, “enamel

painted to match the wall colour”. The credenza was painted with a water based

acrylic which the respondents submitted was unsuitable as a finish and was not

‘enamel’. The appellant stated that the paint was a water-based enamel by

Dulux called Aquanamel. The respondents provided the Tribunal with an email

from Dulux customer service in which the author stated that Dulux would not

recommend Aquanamel on a woman’s dressing table as it would get marked or

stained more easily. An oil based paint was recommended by Dulux for this

purpose.

32

109. Mr Van der Sterren gave evidence that the paint used was a poor choice for a

horizontal or high wear surface, as it would absorb oil from the skin and appear

‘blotchy’ and unattractive very quickly. In terms of rectification, Mr Van der

Sterren explained that it was not suitable to simply repaint the credenza with an

oil based enamel. Mr Van der Sterren also explained that in any event he would

not have advised painting the surface with an oil based enamel. He stated that in

order to get a better looking finish on the credenza he replaced the drawer faces

with melamine, and the credenza top with a laminated bench top. He estimated

that the cost of this part of the joinery work that he undertook was about $900.

110. Also in bedroom 1 the respondents submitted that a shelf was to be put in place

to the left of the credenza to act as a vanity table. No such shelf is shown on the

final plans, but it does appear on an earlier version. The appellant conceded that

a conversation about such a shelf occurred during the course of construction, but

stated that the requirements were never put in writing. The shelf had not been

constructed when the works were completed, although emails were sent

between the parties about the need for the shelf, and its proposed location.

Mr Van der Sterren installed the shelf together with the new top to the credenza.

The respondents submitted that the cost of this work was $275.00.

111. The Appeal Tribunal is not satisfied that the appellant breached the contract by

failing to provide the dressing table shelf. The Appeal Tribunal is not satisfied

that the provision of the shelf was a part of the contracted works, either initially

or by variation, although the appellant ultimately engaged in discussions about

constructing it. The Tribunal is however satisfied that the paint that was used on

the credenza was not fit for purpose. Despite the quote expressly referring to the

use of enamel paint, the meaning of ‘enamel’ paint was unclear, as there are

both water and oil based enamel paints now available. In those circumstances,

the product that is appropriate on the manufacturer’s advice should have been

used. It was not.

112. The respondents sought that the appellant fix the credenza painting by their

email of 18 June 2015. The respondent refused to undertake any further work

because the final payment had not been received. The rectification work was

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undertaken by Mr Van der Sterren over the period from end July to mid-

September 2015.

113. Under the ACL, the respondents are entitled to compensation for the loss that

was reasonably incurred as a result of their undertaking the rectification work,

because the breach was not a major breach, was capable of remedy and the

appellant failed to rectify the work himself within a reasonable time. Putting a

new top on the credenza might seem an excessive solution, as it was laminex

and more expensive than the original. While the material was more expensive

than what is provided for in the contract, a cheaper material would have had to

be purchased and painted with at least two coats of oil-based enamel, or the

existing top would have had to be stripped, sanded and repainted with the two

coats, both of which options would have had higher labour costs. I am satisfied

that the amount paid by the respondents in this respect is reasonable and should

be compensated by the appellant.

Loss of a set of green drawers

114. The respondents required the appellant to remove furniture from the rooms,

when undertaking the ‘gutting’ and disposal of the existing built in furnishings.

Three items were to be removed to the back verandah. Unfortunately one item, a

green chest of drawers, was removed and taken to the tip by mistake. The

respondents seek $200 compensation for this item. No justification for the value

of $200 is provided.

115. The appellant submitted that it was largely the fault of the respondents that the

drawers were destroyed in error, however I was not persuaded by the evidence

that this was so. The respondents are entitled to compensation for what they

have lost, and the amount of $200 is within the Appeal Tribunal’s knowledge of

the range of cost of second hand drawers. No objective evidence to the contrary

was provided by the appellant.

Wall hung double bed in bedroom 2

116. A wall hung double bed was to be installed in bedroom 2. After installation, the

respondents raised with the appellant their concern that the bed unit provided

had a steel bar base. The respondents gave evidence that the bed would need to

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be used for elderly and large persons, and that steel bars would not be suitable

for such guests. The respondents submitted that the appellant should have

consulted them as to the design of the proposed bed, before purchasing it. The

respondents conceded in evidence that they did not explain to the appellant the

proposed use of the bed, nor did they ask to view the options and make the bed

selection. Mrs Morgan stated that she expected that she would have been given

a choice of beds, but that did not occur. The appellant submitted that such beds

are standard construction, that he was not made aware of any special use or

needs of guests, and that the respondents did not request to make the selection.

117. The respondents’ submit that the bed installed was not of acceptable quality or

fit for purpose. I cannot reach that conclusion on the evidence given. The bed is

a standard kind, of which there are many varieties available. There was no

evidence that a particular kind of bed or purpose was communicated to the

appellant, as would be necessary to make out a claim under the ACL. This claim

is not made out.

Desk in bedroom 2

118. The desk constructed in bedroom 2 was shown on the plans as being at one

continuous level, and constructed of lamiboard. The respondents submitted that

what was constructed was a desk with ‘steps’, that is, not one continuous level,

and made of inadequate material that could not hold the weight of a man where

required to clean the window, or install curtains. The respondents also submitted

that the appellant had been shown the existing bullnosed kitchen bench as an

example of what was required, and the material used for the desk was not

bullnose, and not strong enough to take the weight of a man.

119. Mr Roberts denied any conversation in which the requirements as to strength of

the material were given to him, but said that on one occasion after construction

Mrs Morgan said to him that it seemed ‘floppy’, and for that reason he put

another bracket under the desk. He said that the material used was capable of

supporting a man’s weight, if additional brackets were put in place.

120. Mr Morgan was not able to recall a conversation about weight requirements.

Mrs Morgan said that paramount in her mind was that the strength and finish of

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the desk had to be similar to the kitchen bench, and that she “probably said” that

they were looking for “this strength, this finish, this bullnose edge and the

capability for you to stand up on it.”25

121. Much of Mrs Morgan’s recollection of conversations was expressed in such

hypothetical terms. Mrs Morgan appeared to be reluctant to give evidence of

what she had actually said, but instead theorized as to what she would have said.

This observation is not meant in any way critical of the witness, as it may have

been done in an attempt to ensure that the evidence given was reliable. It must

also be noted that at the relevant time Mr Morgan was unwell, and Mrs Morgan

was under a high degree of emotional stress as a result which may have affected

her ability to now recollect of some matters. This led the Appeal Tribunal to be

reluctant to prefer her evidence over the evidence of other witnesses.

122. Mr van der Sterren gave evidence that the desk installation was not good, and

was in his words “drummy”.

123. I am satisfied that the desk construction in bedroom 2 was not in accordance

with the plans, as it was not one continuous level. Further, no bullnose was

provided despite being specified on the plans. This was a breach of the contract,

and a breach of section 54 of the ACL, as the goods were not acceptable in

appearance or finish.

124. Ultimately, Mr Van der Sterren undertook the work to reconfigure the desk to

one level, when fixing the desk drawers. The appellant had been requested to

undertake this work by the letter of 18 May 2015, but failed to do so. The

respondents are entitled to their reasonable costs in this respect.

Shelves in bedroom 2

125. The shelves in bedroom 2 were added at the suggestion of Mr Roberts, and in

the recollection of Mr and Mrs Morgan were intended to hold A4 files.

However, when constructed the shelves were not dimensioned so as to

accommodate A4 folders. Mr Roberts denied that the shelves were intended to

accommodate A4 folders in particular, and said he had no recollection of a

conversation about A4 files. There were no written specifications for this work, 25 Transcript of Proceedings 26 August 2016 page 35

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they were not included in the contract or a variation to it. The arrangement was

verbal. In relation to the terms of that arrangement, neither Mr Morgan nor Mrs

Morgan could say that the word ‘A4’ was definitely used.

126. Again, Mr Van der Sterren removed both of the shelf units and reconfigured

them.

127. Under the ACL I am not satisfied that the shelves were not of acceptable quality

or not fit for purpose, as I am not satisfied that the specific purpose of holding

A4 files was communicated to the appellant. This claim is not made out.

Wall hung king single bed in bedroom 3

128. The plans and quote for bedroom 3 refer to a king single wall unit, and provide

dimensions for the wall unit. An allowance for purchase of a mattress was

included in the contract price. The respondent sourced a wall unit from Murphy

beds. That bed was not designated as a ‘king single’, however the appellant

gave evidence that the mattress frame was in fact bigger than a single bed.

129. After the bed unit had been ordered, the respondents advised the appellant that

they wished to use their existing king single mattress in the unit. After the unit

had been installed, the respondents found that their king single mattress which

they wished to re-use did not fit into the frame. They then raised with the

appellant that this defect should be rectified, and a new wall unit obtained which

would fit their existing mattress. In the end, the appellants paid $1860.00 for a

new wall unit to be installed, so that they could save the allowance by reusing

their existing king single mattress.

130. The appellant gave evidence that he had collected the wall unit in accordance

with the orders of the previous Tribunal, and had inserted his old king single

mattress into it with no difficulty. The appellant also gave evidence that a

mattress to fit the bed could be made at less cost than it would cost to source

another wall unit.

131. Much evidence was given by the parties and their witnesses as to the

dimensions of a ‘king single’ bed. It was agreed that there is no Australian

Standard, and that mattresses can vary between suppliers. Unfortunately,

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nobody had measured the dimensions of the wall unit frame so as to be able to

tell the Tribunal the precise disparity. The appellant stated that the respondents’

mattress was about 150mm too long and 40mm, too wide, for the frame. But it

is not known whether the respondents’ mattress, which is about 20 years old, is

what is currently referred to as a king single size. The appellant says that his

king single mattress fits the frame – but it is not known whether the appellant’s

mattress is standard.

132. The evidence is insufficient to satisfy the Appeal Tribunal that the bed sourced

by the appellant does not fall within the description of a ‘king single’ bed. I am

not satisfied that there was any breach of the contract, or of the consumer law,

in this regard.

Painting throughout

133. The respondents submitted that the painting work performed by the appellant

was substandard. They relied upon a report of Mr Brian Combridge, a member

of the Master Painters Association, who also gave evidence to the Appeal

Tribunal.

134. Mr Combridge said that the choice of paint was correct, but that most areas of

the paint job showed defects. He observed poor opacity on both walls and

ceilings, and said there were gaps, cracks and bare patches on the walls which

required better preparation prior to painting. Similar issues were present on

some door frames, doors and skirtings.

135. Mr Combridge was questioned by the appellant. He conceded that he had not

seen the quotes given by the appellant but had based his report on a visual

inspection conducted on 26 August 2015. He could not comment on whether all

of the defective work he had noted had been done by the appellant, or was the

result of later activities by persons such as Mr Van der Sterren or Mr Morgan.

He agreed that in old houses there would be movement and cracking which

might make cracks appear in new paintwork.

136. He stated that the rectification work to bring the painting up to standard could

be done for $1000 - $2000 if the original paint was still available, or $2000 -

$3000 if paint had to be purchased.

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137. I am satisfied that the painting was not undertaken with due care and skill, as

required by section 60 of the ACL fundamentally due to the lack of opacity on

walls and ceilings. I am satisfied that other painting work was done by Mr

Morgan and by Mr Van der Sterren, but the evidence of insufficient cutting in

and the need for further coats is not attributable to their activities. I am satisfied

from the evidence of Mr Combridge that the relevant areas need at least one

more coat of paint, and at that time any further patching or filling could be

undertaken.

138. The appellant has refused to undertake this painting work, despite being notified

of the need by the email of 18 June 2015. The work could have been done by

the appellant at any time up to the hearing of this appeal, as it had not been

undertaken.

139. The respondents provided a quote for an amount of $6,083 to rectify the work.

This included all preparation, one coat of primer and two coats of paint on walls

and ceilings, and two top coats to doors, frames, architraves and skirtings. A

second quotation, also for all preparation, and multiple coats, was for $7,500. It

is difficult to reconcile these quotes with the evidence of Mr Combridge as to

what had to be done, and the approximate cost. I prefer the evidence of Mr

Combridge, and consider that an amount of $3000 to rectify the work would be

reasonable.

The claim for $5.05 insufficient postage

140. The respondents made a claim for $5.05 insufficient postage that they say they

paid in order to collect a letter from Mr Roberts to them. The basis for this claim

was not established at the hearing of the appeal.

The costs of rectifying the desk, credenza, and drawers

141. The entirety of the work done by Your Way maintenance cost $5125. In

evidence was the initial quote for $4,371.00, of which $2,400.00 was labour costs.

This work included reconfiguration of the internal design of the wardrobes, as

well as fixing the drawers, the credenza, additional shelf in BR1, A4 shelves and

desk. It is difficult to exclude the cost of the wardrobe configuration and shelves,

from the other items. Based on the information provided by Mr Van Der Sterren

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as to the cost of those other items (detailed separately above), the Appeal Tribunal

would consider that an amount of $2500 is reasonable costs for rectification of the

drawers, desk and credenza.

Conclusion

142. The Appeal Tribunal has found the facts to be different to those found by the

original Tribunal. This is because the evidence available to the Appeal Tribunal

was more comprehensive than that available to the original Tribunal. When the

law is applied to those facts a different outcome is achieved. The findings of

fact and of law of the Appeal Tribunal are to be adopted on the hearing of an

appeal as a new application, and this leads to a markedly different outcome to

the original decision. Consequently it can be concluded that the error of the

Tribunal in the manner in which approached the hearing below was material to

the outcome.

143. I have found that while Mr Roberts is entitled to $9,796.00 outstanding under

the contract, the respondents are entitled to be paid the amount of $6,479.00

under the ACL and for breach of the contract, this being comprised of $2,500.00

for the rectification of desk, credenza and drawers, $3,000.00 for painting yet to

be undertaken, $200.00 compensation for the lost chest of drawers and $779.00

for reinstallation of the correct sliding doors in bedroom 1.

144. Accordingly I will make orders setting aside the decision below, and replace the

orders made with an order for the payment of $3,317.00 by the respondents to

the appellant.

145. The appellant sought orders as to costs and argued that costs followed the event.

The Tribunal’s powers in relation to costs for a civil dispute application are set

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out in section 48 of the ACAT Act, and are limited. Each party has been

successful on their application, and I decline to make any orders as to costs.

………………………………..Presidential Member M-T Daniel

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HEARING DETAILS

FILE NUMBER: AA 14/2016

PARTIES, APPLICANT: Glenn Roberts

PARTIES, RESPONDENT: David and Janette Morgan

COUNSEL APPEARING, APPLICANT N/A

COUNSEL APPEARING, RESPONDENT N/A

SOLICITORS FOR APPLICANT N/A

SOLICITORS FOR RESPONDENT Consumer Law Centre of the ACT

TRIBUNAL MEMBERS: Presidential Member M-T Daniel

DATES OF HEARING: 9 & 26 August, 9 September 2016

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