Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Kwiatek v Elite Services (Aust) Pty Ltd [2021] NSWCATAP 80 Hearing dates: 1 March 2021 Date of orders: 30 March 2021 Decision date: 30 March 2021 Jurisdiction: Appeal Panel Before: M Harrowell, Deputy President A Lo Surdo SC, Senior Member Decision: Leave to appeal is refused and the appeal is dismissed. Catchwords: CONTRACT LAW – Claim for breach of contract to carry out floor repairs – formation of contract and terms – no breach established Legislation Cited: Civil and Administrative Tribunal Act, 2013 (NSW) Home Building Act 1989 (NSW) Cases Cited: Collins v Urban [2014] NSWCATAP 17 Texts Cited: None cited Category: Principal judgment Parties: Harold Kwiatek (Appellant) Elite Services (Aust) Pty Ltd (Respondent) Representation: Appellant (Self Represented) Respondent (No Appearance) File Number(s): 2020/00371180 (AP 20/49058) Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 16 October 2020 Before: G Bassett, General Member File Number(s): HB 20/19313 reasons for decision Introduction 1. This appeal relates to home building application HB 20/19313. In those proceedings the appellant was the applicant homeowner and the respondent was a builder who carried out flooring work to a property owned by the appellant. 2. The appellant's property had been damaged by a rain event which had caused flooding within the premises, including on timber flooring. The appellant entered into a contract with the respondent to carry out various works, an issue to which we will return below. The contract sum was $7000. 3. The appellant claimed an amount of $7000 as compensation following the respondent carrying out repairs to floorboards which had been water damaged. In his application the appellant said: One week after the so called repair the floorboards began warping and will have to be completely replaced according to the insurer. 1. The Tribunal dismissed the application on 16 October 2020. The Tribunal provided written reasons for its decision. Notice of Appeal and history of appeal proceedings 1. The appellant appealed the decision by Notice of Appeal filed on 18 November 2020. Notice of the decision was said to have been given to the appellant on 29 October 2020. Consequently, the appeal was filed in time. 2. The grounds of appeal can be summarised as follows: 1. The appellant was "unable to explain [his] case properly because the member did not appear to have my indexed evidence I sent to NCAT. Rather the member was referring to evidence [the appellant] had submitted at an earlier hearing in January at which time [the appellant] was advised to provide more concise evidence that was indexed". 2. The Tribunal appeared not to have in front of it the appellant's "evidence of scope of work from the insurer's builder that prove the water damaged floor needed total replacement". 3. The Tribunal failed to have regard to the claim that there was a "wet substrate … relevant in the subsequent warping of the floorboards a week after the respondent had completed his repair", that the respondent had not detected the extent of the water damage and that under cross-examination the respondent failed to inspect under the house and that the failure to carry out these inspections and determine the extent of water damage was contrary to "standard practice". 1. The respondent did not file a Reply to Appeal. 2. The Appeal was listed for call over on 9 December 2020. At that time directions were made for the filing and service of relevant evidence and submissions. The directions included a requirement for the appellant to file and serve a copy of the sound recording together with a typed copy of the relevant parts. 3. The appeal was heard on 1 March 2021. At that time the respondent did not appear. However, we determined that notice of the hearing had been given to the respondent and the matter proceeded in its absence. 4. The appellant appeared by telephone and provided oral submissions. 5. Prior to the hearing, the appellant served documents in partial compliance with the directions. That material included three bundles which we will refer to as Appeal Bundles (AB) parts A, B and C, and the sound recording of the hearing at first instance. 6. The respondent provided no evidence or submissions. 7. As part of his grounds of appeal and during the hearing, the appellant sought to rely on what happened at the hearing at first instance and make submissions concerning the manner in which that hearing was conducted by the Tribunal. He did so in circumstances where he had not provided a complete transcript of the hearing. At the conclusion of the hearing, we made directions to permit the whole of the transcript or any relevant parts to be provided, having noted to the appellant that in the absence of the full transcript and him identifying precisely the parts on which he intended to rely his appeal in relation to this aspect might be dismissed. We did so having explained that we needed to know precisely what parts of the sound recording he wished to rely upon in addition to those matters referenced throughout the documentation provided in the appeal. 8. We were subsequently provided with a part of the transcript, not the whole of the transcript, which was relied upon by the appellant. There was also a narrative from the appellant setting out some evidence he said Mr Urra provided at the hearing and what the appellants said had occurred. We will treat this narrative as a further submission. 9. Also following the hearing, we received a communication from Mr Urra on behalf of the respondent. In essence, Mr Urra said that the respondent did not have notice of the appeal and was unaware of the hearing on 1 March 2021. In effect, the respondent sought an opportunity to file documents, make submissions and re-open the hearing of the appeal. 10. The communications from the respondent included an email address to which the Tribunal had sent the respondent information concerning the appeal, including the directions which had been made at the call over and the notice of hearing. 11. We made directions to permit the respondent to file and serve submissions in a statutory declaration in support of its application to the Appeal Panel to be granted leave to file and serve a reply to appeal, evidence and submissions. These directions required a statutory declaration from "an officer of the respondent properly authorised and with knowledge of the respondent's affairs and access to [the respondent's] email account" concerning whether the respondent had received communications from the Tribunal, in particular, the various directions of the Appeal Panel, the Notice of Appeal and other orders made and what action was taken in consequence thereof. 12. The respondent was required to provide this material by 18 March 2021 but has failed to comply with the directions or provide any further information to the Appeal Panel. Consequently, it is unnecessary to deal with this application. Consideration 1. There is a right of appeal on a question of law. Otherwise, leave to appeal is required: s 80(2)(b). The grant of leave from a decision of the Consumer and Commercial Division is limited by Sch 4 cl 12(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). 2. The central questions in this appeal are: 1. Was there a failure to afford procedural fairness at the hearing? 2. What were the terms of the contract between the parties? 3. Did the respondent breach the contract? 4. If yes, what loss and damage was suffered? Was there a failure to afford procedural fairness at the hearing? 1. The submissions on this aspect are, in part, found in AB part C p 10. There the appellant sets out various references to the sound recording and what was said at the hearing. These submissions included: 1. the Tribunal ignoring an offer of the appellant to re-send his bundle of documents- apparently because the appellant had failed to index and paginate the bundle provided to the Tribunal; 2. "the members depiction of the events being littered with mistakes"; 3. the manner in which the member questioned the respondent's witness and "put his own words into the mouth of the respondent"; 4. the Tribunal directing the respondent to parts of the appellant's evidence, which evidence the appellant said "was completely irrelevant to the case because it was taken out of context". 1. Section 38(5)(c) of the NCAT Act requires the Tribunal "to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings". 2. There is nothing in the material provided to us that suggest the Tribunal failed to meet this obligation. The appellant was given a chance to provide his evidence and to speak at the final hearing. Where parties are unrepresented, this often involves questioning by the Tribunal to understand the evidence and make enquiries about facts relevant to a determination of the proceedings. This is what occurred in the proceedings at first instance. 3. Consequently, the challenge based on a denial of procedural fairness fails. 4. Further, the real complaint raised by these submissions is about how the Tribunal analysed the evidence and whether it was correct in its conclusions concerning the terms of the contract, breach and damages. We will deal with these in turn. What were the terms of the contract between the parties? 1. There was no formal signed contract. Rather, the contract was partly oral and party in writing and was formed in the following circumstances. 2. After water damage to his premises following a storm event, the appellant determined not to make an insurance claim at that time due to the amount of excess and the possible effect on his no claim bonus. Rather, he advertised by tender on the Internet seeking expressions of interest for the carrying out of work. Relevantly, the Internet advertisement (AB part A p 2) recorded the following: Description: Water damage for weeks in storm with water damaging what looks like floating floor causing some warping in room one. Not claiming insurance since have large excess . What type of dwelling is this? House How many rooms required flooring? 1-2 What best describes your project? Existing floor repairs What type of flooring? Floating timber floors Have you purchased your flooring? No-I need you to supply as well Budget Ready to hire 1. Following a phone call with the respondent's representative, Mr Urra, on 4 October 2019, Mr Urra attended the premises on about 9 October 2019. 2. We were not referred to any direct evidence in the form of a written statement containing the terms of any conversations between the appellant and Mr Urra concerning formation of the contract. In this regard, directions had been made on 14 August 2020 for the parties to file and serve documents, including witness statements. However, we were referred to a document contained in a complaint made by the appellant to the Department of Fair Trading concerning the work carried out by the builder: (AB part A p 29). There, the appellant said: I advertised with hipages in the $5000 bracket mentioning repairing a water damaged wooden floor. I received a call from Marcelo of Eliteservices who wanted to quote for the job the next day. He visited the house at ### mentioning to my adult aged children how high the water had been showing a watermark 5 cm high on the kitchen cabinets. He then rang me and said it was a big job, it would take a week, would have to take at least a metre of boards away from both walls to release the pressure, work to skirting boards and joists. He wanted $7000 cash and do the job the next week starting Tuesday 8 October. I agreed to the price confirming with him that the water damage floor would be completely repaired with no need for any further works. 1. While this evidence might be regarded as hearsay if the rules of evidence applied to the hearing before the Tribunal, having regard to s 38(2) of the NCAT Act, it is nonetheless some evidence from the appellant as to the discussions between him and the respondent about the terms of the contract and the work involved and the facts surrounding formation of the contract. 2. We were subsequently provided with an extract of the transcript after the conclusion of the hearing. At time entry 04.30 of the transcript extract, the appellant gave the following oral evidence: Marcello Urra said he was interested in the job. I was interstate. He said he would fix up the water damaged floor is for $7000 cash. So it was stretching me more than $5000 but I thought if the job is going to be completely done and I would have no further problems with it, why not. And I did stress with him that was all I was willing to pay. No more than that, and I remember my exact words "for that price that's the end of my problem with that floor". "Yes" was his reply. 1. The Tribunal noted in its reasons that there was a conflict as to the terms of the contract. At [3] the Tribunal said: The [appellant] said the contract was to replace all floorboards (and perhaps even joists) of a wooden floor in a kitchen/living room area. The respondent said the contract was to replace wet floors only and sand and stain and seal the area. 1. The Tribunal concluded that the scope of work was to take up and dispose of timber flooring that is damaged by water and then sand and polish the lounge/ kitchen floor area. The Tribunal found there was no agreement "to take up all flooring be it upper flooring or a newly discovered underfloor", such a scope never being mentioned: reasons at [4]. 2. At the hearing of the appeal, the appellant made clear that his claim was that he had a contract with the respondent to repair the water damaged floor. The appellant submitted to the effect that "it turned out the whole floor was water damaged" and that the respondent failed to detect the damage and replace the whole floor. Consequently, the appellant said he had made an insurance claim, reference being made to a report from Australia's Insurance Builders Pty Ltd (Expert Report) found in AB part A p 16 and following. 3. In our view, having regard to the evidence above, there was a contract formed not later than 8 October 2019. That contract was partly oral and partly in writing, the writing being the Internet advertisement which were set out above. 4. As is evidenced by the written component, the scope of work required was for "existing floor repairs", the principal work required being to fix water damage "causing some warping [of floor boards] in room 1". This was to be done by a visual inspection and the removal and replacement of damaged floorboards. As agreed orally, the work included "to take at least a metre of boards away from both walls to release the pressure, work to skirting boards and joists". The price was $7000. 5. The contract was greater than $5000 in value. We would infer that the reasonable market cost of the labour and materials is in excess of $5000. Consequently, the work is residential building work and there are terms implied under s 18B of the Home Building Act 1989 (NSW) (HB Act) as follows: (a) 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, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. 1. Having regard to warranties (a) and (d), the work was to be done with due care and skill and with due diligence, within a reasonable time. Did the respondent breach the contract? 1. The next question is whether the respondent breached the contract. 2. There is no specific evidence to suggest the builder did not remove the floor boards then affected by water ingress, replace those floorboards and sand and seal the floor. To the contrary, photographic evidence shows that floorboards were removed adjacent to the wall area as was the skirting boards and floorboards adjacent to a sliding door: AB part A p 8 and 9. There is also evidence of moisture readings being taken of the subfloor, described as yellow tongue boards, where floorboards had been removed. The meter reading showed the subfloor was dry: AB part A p 9. In this regard the Mr Urra sent a text saying "so far we good it's all dry": also at p 9. 3. Having paid a deposit of $3500, the balance of $3500 was paid on about 11 October 2019, the work being completed on 11 October 2019. At that stage, it would appear that all the previously affected floorboards had been replaced, the appellant saying in his text "The kids said you did a great job.": AB part A p 10. 4. The evidence discloses that on about 20 October 2019, the appellant's children observed further movement and/or warping of the floor: AB part A p 11. The next day the appellant and the respondent (Mr Urra) exchange the following texts (AB part A p 13): Appellant Hi Marcello Because the floor is continuing to warp suggesting further moisture problems probably because the yellow tongue cannot dry easily, I believe the floor will have to be mostly all replaced. I have decided to make a claim on my home insurance since the repair will cost more than you and I thought. Therefore I need an invoice/receipt for the $7000 I gave you so I can claim back from insurance. I will have to use the insurers tradesmen from now. Thanks for your attempts repairing. Just need that receipt. Thanks Harry. Mr Urra No problem Harry what I can do for you give you a quote for ripping hole (sic) for up with a quote for 3 different company which the insurance requires and we just add 7K extra so you be happy let me know. Appellant Probably not worth you getting the quotes. Once the insurance company gets involved they like to use their own tradesmen. Better for me just to send them your quote/invoice/receipt for the $7000. I am insured with NRMA 1. This further warping is also confirmed by the statement of the appellant in his application, set out above, where he says one week after the repairs the floorboards began warping. 2. At this time, namely 20 October 2020, no suggestion was made that the respondent had breached its contract. However, the following day the appellant sent a further text message to Mr Urra stating that the appellant had "taken a call from the builder/floor guy who was shocked" and said "[the respondent's] work was substandard and by sanding the floor has caused further damage" and that the other builder was "making a report to the insurance company": AB part A p 14. 3. The following text message exchange then occurred: Mr Urra Harry it's a repair job it has no guarantee it's obvious that there is more moisture throughout the floor and in the yellow tung(sic). Appellant I paid $7000. The guy was shocked. The underfloor is obviously water saturated steel as shown by further movement of the boards. I advise you of this possibility. The builder said the floorboards should have been lifted for everything to dry at least 3 weeks. Your sanding shows dust throughout. The damage is under the cabinetry which should have been lifted. The few boards you have replaced have been nailed differently. Basically for $7000 the floor should have been completely replaced. 1. It is clear that the person who attended site on 22 October 2019 was Mr Wilding, who prepared the Expert Report referred to above. In that report Mr Wilding records the following (AB part A p 17): CLIENT DISCUSSION Client has advised the entire process of engaging his private tradesmen to complete repairs to the home and is not happy with the damages occurring. The insured explained the trade started and completed the entire repairs in 3 days, and has laid the flooring over wet substrate. RESULTANT DAMAGE: At the time of inspection I serve damaged (sic) to the following areas:- NOTE -Flooring has been repaired and poor workmanship is present. … CAUSE OF DAMAGE Our inspection has confirmed that the damages listed above have been caused by previous poor workmanship. In speaking with the insured, a trade has come to the home recently and charged approximate $7000 to complete repairs to the home. No images are present of the damages to the property prior to the repair is taking place. The scope of works was not presented at the time of assessment. AIB are unable to correctly identify the damages to the property as a result of the storm event-due to works been completed to the home in damages now been (sic) exacerbated by the insured's contractors. The insured will be required to contact the trader completed repairs for a potential warranty claim. 1. Photographs are attached to the Expert Report. 2. It appears that at this time the appellant decided to make an insurance claim due to the further problems and that the building assessor for the insurance company attended the premises on 22 October 2019. 3. While there are assertions in the text messages of things the inspector, Mr Wilding, might have said to the appellant, there is no evidence from Mr Wilding or otherwise in the Expert Report that details the nature and extent of any defective work carried out by the respondent. 4. There is no specific expert evidence: 1. identifying the particular works that were carried out by the respondent and why that work was defective; 2. explaining why the work was not carried out with due skill and care or otherwise constituted a breach of contract; 3. setting out the work necessary to rectify any defective work carried out by the respondent, both in terms of scope and location; or 4. detailing the reasonable cost of rectification work. 1. Rather, the evidence to which we have referred suggests that the respondent in fact removed and replaced floorboards that had warped. In doing so the respondent took moisture readings to confirm the substrate was dry and completed the rectification work on this basis. 2. While it can be accepted on the scant evidence that the moisture can cause warping of the timber floor, the limited scope of replacing damaged boards and doing so with due skill and care appears satisfied by taking moisture readings at the locations where replacement was to occur. Otherwise, there is no evidence the areas repaired (as opposed to other areas of the floor) subsequently failed by reason of moisture affecting the new/ repaired flooring. 3. In these circumstances, no breach is established as the contract did not require the respondent to remove the whole floor, take moisture readings throughout the whole floor, ensure the whole subfloor area of the two rooms was dry and thereafter replace all flooring in two rooms (work we note the Expert Report says will cost in the range of $20,000 -$25,000). Rather, as we have found, there was a limited scope to carry out localised repairs with due skill and care which, in the absence of any appropriate evidence concerning the need to do particular additional work, was satisfied by the respondent removing and replacing affected floorboards and replacing them after taking appropriate moisture readings. 4. It follows that to the extent the appellant suggests the contract required a detailed investigation of the whole of the floor and subfloor area, we do not agree. 5. As to the claim of defects concerning the nailing, sanding and resealing of the floor, there is no expert evidence or evidence from a qualified person to prove the location, extent or nature of these complaints. Certainly, the Expert Report does not do so, the limited comment being "Flooring has been repaired and poor workmanship is present" and that the appellant will need "to contact the trade who comprised the repairs for a potential warranty claim": AB part A p18. These is also no evidence of the cost to rectify such defects. 6. At [6] of the reasons, the Tribunal determined that the evidence did not establish any breach. 7. This is a finding of fact for which leave to appeal is required, the grant of leave being constrained by the provisions of Sch 4 cl 12(1) of the NCAT Act. As provided in cl 12(1)(a)-(c), leave may only be granted if we are satisfied the appellant may have suffered a substantial miscarriage of justice because: 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). 1. Having regard to the evidence we have set out above, it could not be said the decision was not fair and equitable or was against the weight of evidence because "the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach": Collins v Urban [2014] NSWCATAP 17 at [77]. Simply put, the evidence does not establish a breach of the contract. Consequently, we are not satisfied the appellant may have suffered a substantial miscarriage of justice. Leave should be refused. If yes, what loss and damage was suffered? 1. As we stated above, there is no evidence of the nature and extent of any defective work, the work required to rectify the defects or the reasonable costs to do so. Consequently, even if breach had been established, the relevant loss has not been proved. Orders 1. It follows from the above that leave to appeal should be refused and the appeal should otherwise be dismissed. 2. The Appeal Panel makes the following orders: 1. Leave to appeal is refused and the appeal is dismissed. ********** 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: 30 March 2021