Civil and Administrative Tribunal New South Wales Medium Neutral Citation: AWD Cavallo Pty Ltd t/as Kutchenhaus v Turner [2024] NSWCATAP 197 Hearing dates: 19 September 2024 Date of orders: 11 October 2024 Decision date: 11 October 2024 Jurisdiction: Appeal Panel Before: M Harrowell, Deputy President R Perrignon, Senior Member Decision: (1) Leave to appeal is granted, the appeal is allowed and the amount of $6375.00 in order 1 made 20 June 2024 in proceedings 2024/00075480 is varied to $325.00, that amount to be paid immediately. (2) Subject to order 3, each party is to pay their own costs of the proceedings. (3) If either party contends for a different order to that of order 3, the following directions apply: (a) Within 7 days from the publication of these reasons, any applicant for costs (costs applicant) is to file and serve any application for costs (costs application) which is to include any evidence and submissions, submissions to be not more than 5 pages. In this event, order 2 will cease and have no effect. (b) Within 14 days from the publication of these reasons, the respondent to the costs application is to file and serve any evidence and submissions in reply, submissions to be not more than 5 pages. (c) Within 21 days from the publication of these reasons, the costs applicant is to file and serve any submissions in reply (not more than 2 pages). Catchwords: CONTRACT LAW – mutual cancellation of contract – recovery of reasonable charges to date of cancellation – meaning of the expression "reasonable charges" – requirements for evidence to establish reasonable charges – relevance of other provisions in contract – sufficiency of evidence Legislation Cited: Australian Consumer Law (NSW) Civil and Administrative Tribunal Act, 2013 (NSW) Civil and Administrative Tribunal Rules, 2014 (NSW) Cases Cited: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24; Collins v Urban [2014] NSWCATAP 17 Khan v Kang [2014] NSWCATAP 48 Texts Cited: Nil Category: Principal judgment Parties: AWD Cavallo Pty Ltd t/as Kutchenhaus (Appellant) Julie Turner (Respondent) Representation: Solicitors: Gupta & Co Pty Ltd (Appellant) Respondents (Self-represented) File Number(s): 2024/00238694 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 20 June 2024 Before: Dr K George, General Member File Number(s): 2024/00074580 reasons for decision Introduction 1. This appeal concerns a dispute in relation to a contract made on 26 October 2023 for the design and supply of a kitchen. 2. The appellant was the kitchen supplier. The respondent was the customer. 3. The appellant business was described in the appeal as being the design and supply of "high-end" kitchens. The business involved preparing drawings and arranging for a German company to manufacture the cabinetry work which was then shipped to Australia for installation. 4. When the contract was entered into, the respondent paid the appellant a deposit of $6375.00 as required by the terms of the contract. Various design work was carried out by the appellant who prepared drawings in preparation for their submissions to the German company to manufacture the cabinetry. 5. However, in an email to the appellant dated 31 October 2023, the respondent requested cancellation of the contract. . The request was made under cl 13.1 of the contract. On 1 November 2023, the appellant's representative Mr Dowling responded by email, the details of which we will refer to below. 6. The appellant did not refund the respondent's deposit. 7. On 27 February 2024, the respondent (as applicant) commenced proceedings number 2024/00075480 (proceedings) seeking repayment of the deposit from the appellant (as respondent). The respondent attached to her application a detailed document entitled "Points of Claim". 8. In short, the respondent contended: 1. prior to formation of the contract, representations had been made to her concerning: 1. waiver of design fees for her kitchen and laundry "if the appellant was given the opportunity to present an alternative design to the one the respondent had already obtained from competing supplier"; 2. the appellant would project manage the installation/trade work for the kitchen products; 3. a shipment of certain kitchen products was due from Germany soon, and that the appellant could include the respondent's chosen design in that shipment if the applicant could commit to a design by 26 October 2023; and 4. if the cabinetry could be included in the upcoming shipment the kitchen could be renovated by late January – February 2024 as opposed to April – May 2024 and there would be $3500 less in shipping costs. 1. Secondly, a representation was made on 26 October 2023, prior to signing the contract to the effect that if the respondent signed the contract the appellant could "perform a check measure of the [respondent's] apartment at 3 pm that day". 2. Thirdly, a representation was made on 30 October 2023 that the respondent's order for the kitchen had not yet been submitted to the factory in Germany for manufacturing to proceed (Manufacturing Representation). 1. In relation to the representations in (1) and (2) above, the respondent says she entered into the contract in reliance thereon. In relation to the representation in (3) the respondent says she relied on that representation and gave notice to the appellant on 31 October 2023 that "she was terminating the contract in accordance with clause 13.1 of the contract" and requested the appellant to return the deposit. 2. The respondent did not seek any relief in the application under the Australian Consumer Law (NSW). Rather, her claim, as recorded at [24]-[26] of the Points of Claim was as follows: 2. On 30 October 2023, the [respondent] wrote to the [appellant] raising the [respondent's] Concerns and requesting that the design not proceed to manufacture until the [respondent's] Concerns had been addressed. Particulars Email from the [appellant] to the [respondent] dated 30 October 2023. 22. On 31 October 2023, due to events outlined in paragraph 21 and in reliance of the Manufacturing Representation, the [respondent]: (a) gave notice to the [appellant] that she was terminating the contract in accordance with clause 13.1 of the contract; (b) requested the respondent return the Deposit to her. 23. On 1 November 2023, the [appellant] wrote to the [respondent] representing that: (a) The [appellant] consented to the termination; (b) Contrary to the Manufacturing Representation, the order for the design was sent to the [appellant's] manufacturers on 26 October 2023; (c) The [appellant] was exercising its powers pursuant to clause 13.2 of the contract and retaining the Deposit on account of alleged out-of-pocket expenses comprising design fees totalling $5500.00 plus GST. Particulars Email from the [appellant] to the [respondent] dated 1 November 2023. 24. By reason of the Design Waiver Term in the Contract, the alleged design fees are not payable by the [respondent]. 25. In the premises, the [appellant]: (a) has no basis not to return the Deposit to the [respondent]; (b) is in breach of the Contract in retaining the Deposit. 26. The [appellant] has refused to return the Deposit to the [respondent] despite subsequent request. AND the [respondent] claims: (a) An order pursuant to s 79N(a) of the Fair Trading Act 1987 that the [appellant] pay the [respondent] the sum of $6375.00, (b) Interest. 1. The "Design Waiver Term" referred to in paragraph 24 of the Points of Claim is identified in paragraphs 16 and 17 of that document, which states: The Design Waiver Representation is a term of the Contract 16. By force of the Variation Clause and the Design Waiver Representation made in writing, it was a term of the Contract that the respondent would not charge the applicant any design fees for the renovation of the kitchen and laundry at the Property. 17. Further or in the alternative, it was an implied term of the Contract that the respondent would not charge the applicant any design fees for renovation of the kitchen and laundry at the Property. Particulars The term is implied by fact. 1. The Points of Claim at paragraph 6(a)(ii) identified an email from the appellant to the respondent dated 19 October 2023 (respondent's bundle (RB) page 49) by which it is said the "Design Waiver Representation" was made in writing. Relevantly, that email states: … Our European trained designers will assist you in setting out the perfect layout of your space and allow you to understand how any design will work best with your lifestyle. Our designers will also discuss finishes, colours, mechanisms, appliances, and accessories that are available to you. All these items combined will formulate your quote (emphasis added). At the end of this specialised service, you will receive a 3D colour image of your personalised design. The cost of this service is $675 which will be credited towards the purchase of your kitchen. … 1. The proceedings were heard by the Tribunal on 20 June 2024. The Tribunal ordered the appellant to repay to the respondent the deposit of $6375.00 (decision). The Tribunal provided written reasons for decision (reasons). Notice of Appeal and history of appeal proceedings 1. The appellant appealed the decision by Notice of Appeal filed 28 June 2024. The appeal was lodged in time. 2. The grounds of appeal can be summarised as follows: 1. The Tribunal erred in finding the appellant gave unconditional consent to termination. 2. The appellant had a right to retain the deposit to offset against the amounts due to the respondent for the provision of unsigned services and plans "which are priced at $5500 plus GST and other costs associated with the kitchen", in the event of termination. 3. The Tribunal was in error in considering expenses incurred by the appellant "given that the contract disclosed the price for the provision of design services and plans as $5500 plus GST". In addition, the Tribunal should have allowed amounts for additional work carried out by the appellant's employees under the contract. 4. Given the appellant was unrepresented "once the Tribunal considered a claim in quantum meruit, it should have calculated the reasonable value of the works from the evidence before it drawing reasonable inferences." 1. The orders sought on the appeal were that the decision be set aside and that the respondent pay the appellant's costs. 2. Leave to appeal was sought on the basis that the decision was not fair and equitable and/or was against the weight of evidence. 3. On the issue of whether the decision was fair and equitable, the appellant said the design charges and other costs should have been offset against the deposit under the contract. A failure to allow any compensation to the appellant would result in unjust enrichment, in that the respondent would have the benefit of the drawings provided. 4. As to the decision being against the weight of evidence, the appellant relies on the statements of its witnesses, Mr Dowling and Ms Brooks. The appellant says the Tribunal "should interpret the terms of the contract correctly to find that the contract stipulates that a price for the provision of design services and plans is $5500 plus GST". Next, other costs should also be recoverable, particularly in circumstances where "the contract is terminated after the client receives the plans". The Tribunal should also have given more weight to the evidence concerning the significant hours divided by the employees of the appellant in the provision of design services and developing plans. 5. The respondent filed a reply to appeal. First, she said the decision of the Tribunal was correct. 6. In addition, she contended that various representations were made including removal of the existing kitchen, installation of the new kitchen and the waiving of design fees. She said she relied on the representations when she entered into a contract for the supply of cabinetry from a German manufacturer. When she "subsequently became aware that Kutchenhaus did not have a license or appropriate insurance to project manage the installation, [she] cancelled the contract before any further costs had been incurred." 7. This, the respondent said, meant the appellant had breached its contract by: 1. being unable to legally provide Project Management services; and 2. refusing to return the deposit based on a design fee. 1. The respondent then continued that "cancellation occurred 3 working days after the contract was signed" and "one day after being informed by email that the order had been generated but had not been submitted to the German manufacturer". At this stage the respondent says she directed that no further work was to be done pending clarification of the Project Management position. 2. Consequently the respondent said it would be unfair for the appellant to retain the deposit. 3. The respondent also said: 1. that "the original orders establish that there were multiple grounds on which to support the decision that the deposit should be refunded; and 2. even if the Tribunal was in error to conclude the agreement terminated unconditionally, there had been an unconditional waiver of the design fee. Further there was no documented evidence of costs that the appellant had incurred. 1. The respondent also submitted that "the first time that a value for design costs was ever specified" was on 1 November 2023 and that "it was not something for which I believe that I had previously contractually agreed". In this regard, she submitted, the Tribunal was correct concerning its interpretation of clause 3.3 and the irrelevance of the amount of $5500 plus GST specified in that clause in determining any entitlement under clause 13. 2. Of the amount of $5500 and whether it would be payable under clause 13 the respondent says: 1. "a fee bill for a service, generally involves an element of profit which is different from cost incurred. Certainly, GST chargeable on sales is not an incurred cost. 2. There is no indication of what that profit margin may be. 3. There is no 'standard' costs specified to which that margin is applied. 4. Cost incurred to design a kitchen will vary depending on size, shape, complexity, functional detail, and quality of finishes. A cookie-cutter approach of 'costing' the design element of all kitchens at $5500, is inadequate to establish cost incurred for a specific kitchen. 1. The respondent then continues that if the deposit is not returned to her, she will suffer economic loss and will have received no benefit. She also made submissions concerning the business model of the appellant and submissions concerning the inadequate evidence to support any monetary claim. 2. Consequently, she said that leave to appeal should not be granted. 3. The appeal was listed for call over and directions were made for hearing. Pursuant to the directions, each of the parties filed submissions in support of the respective positions. 4. The hearing occurred on 19 September 2024. The appellant was represented at the hearing by Mr Gupta, solicitor. The respondent appeared in person. Each party made oral submissions to the Appeal Panel. 5. As necessary we will return to those submissions below. 6. At the hearing we identified the documents relied upon by the parties. In doing so, we noted that a transcript had not been provided. The appellant's representative indicated he had listened to the sound recording which he did not think was useful to provide. We also raised the issue of the absence of the transcript with the respondent. We indicated to her she could seek an adjournment if she wished to provide the transcript. She declined to do so and the hearing proceeded in the absence of this material. 7. In reply submissions, the respondent raised issues concerning the applicaiton of the Australian Consumer Law (NSW) (ACL). As they were not included in her Points of Claim, they were not considered by the Tribunal below and form no part of the decision from which appeal is made. The respondent is bound by the way in which she chose to run her case at first instance and cannot raise a new dispute on appeal. Consideration 1. There is a right of appeal on a question of law. Otherwise leave to appeal is required: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). As the appeal is from a decision of the Consumer and Commercial Division, Sch 4 cl 12(1) provides that leave to appeal may only be granted where, relevantly, an appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or was against the weight of evidence. 2. The principles applicable to the grant of leave are set out in the decision of Collins v Urban [2014] NSWSCATAP 17. 3. In its reasons, the Tribunal made the following findings which are not the subject of challenge in this appeal: 1. the parties entered a contract in writing dated 26 October 2023. That contract is found at RB page 61. The respondent and representative of the appellant signed the contract. 2. The respondent paid to the appellant a deposit of $6375.00. 3. The contract consisted of 2 pages of standard terms and conditions of sale. This included a provision concerning cancellation - clause 13. 4. By email dated 31 October 2023, the respondent requested cancellation under clause 13. 1. The Tribunal accepted that, by email dated 1 November 2023, the appellant accepted the cancellation. However, the Tribunal found that this email constituted unconditional consent and did not make the termination conditional as permitted by clause 13.2. This clause permitted the appellant to condition its consent upon the respondent paying charges of the appellant for work done to the date of cancellation. We will return to the precise terms of the agreement below. Consequently, an order for repayment was made. 2. In reaching this conclusion, the Tribunal made further determinations, in case it be wrong on its primary conclusion that the appellant's consent was unconditional. These determinations were: 1. The actual and reasonable expenses incurred by the appellant had not been established on the evidence. In this regard the Tribunal found: Clause 13.2 requires the respondent to establish i) actual expenses incurred and ii) that those expenses are reasonable. 1. Even if the amount specified in clause 3.3 ($5500 plus GST) represented the costing of the design and plans, there was insufficient evidence to satisfy the Tribunal that this amount "represents the actual cost incurred by the respondent for this particular kitchen, nor whether the costs are reasonable". 2. As to the evidence of Mr Dowling and Ms Brooks concerning time spent in providing services to the respondent, there were no timesheets, logbooks or diary entries that might evidence this work. Further, there was no evidence at all from other employees such as Mr Nield concerning his work. In addition, as to the hourly rate of $175.00, the evidence provided is insufficient to determine if the amount claimed was accurate or reasonable and no evidence as to the employees' qualifications, experience and role in the work. 3. No weight should be given to the evidence of Mr Murphy, who provided an email that the "cost of kitchen design is around $3500 plus GST". In this regard the Tribunal found there was "very minimal information about Mr Murphy's experience and qualifications. Further there was no indication of the size or scope of the kitchen design on which he bases his estimate, nor whether it is comparable to the applicant's design. 4. Lastly, "the contract does not identify a component of the overall cost which is attributable to the design and plans". 1. Consequently, the Tribunal concluded there was an "insufficient basis to establish the actual and reasonable cost incurred by the [appellant]". The Tribunal determined that the appellant cannot rely on clause 13.2 in order to retain the money. 2. In reaching this conclusion, the Tribunal also considered whether the appellant might have a claim in quantum meruit. Again this was rejected due to insufficient evidence as to the reasonable value of the work performed. 3. In order to examine the correctness of the Tribunal's decision, it is necessary to consider the terms of the contract and the various documents by which the contract was terminated. 4. First is the email from the respondent to the appellant dated 31 October 2023 (cancellation email) which says (formal parts omitted): Following our conversation today I have pondered, and just can't get comfortable with, the lack of insurance or written warranty offered by Kutchen Haus relating to the cabinetry and its transportation from Germany. Your disclosure that your company is not licensed to legitimately offer Project Management services causes me further unease, as it does not reflect the tone of our discussions before I accepted the design and signed the contract, allowing the check measure to go ahead on the same day. As a comparison Kitchen Connection offer a 10-year warranty, Product and Public Liability, and Workers Compensation insurance in addition to being fully licensed to manage the trades during installation. As the order has not yet been placed and significant cost not yet incurred, I request that the agreement is cancelled per clause 13.1 of the terms. Please ensure that Richard does no work regarding the obtaining of license and insurance details from your contractors. As you undertook to waive any design fee for the opportunity to provide a preferable solution to the one presented by Kitchen Connection, I would like my deposit refunded please. I really did like the solution that Taylor drafted and am disappointed it won't happen, but this is just not the full level of service that I had in mind when I sought to employ a kitchen supplier. These are my bank account details. 1. The response from the appellant's representative (Mr Dowling) was contained in his email dated 1 November 2023 (consent to cancellation email). That email says (formal parts omitted and noting those parts of the email referred to as in RED are reproduced in italics below): I am away from the business however wanted to acknowledge your email. I am disappointed in your decision however will respect the same. Please see my comments in RED. the lack of insurance or written warranty offered by Kutchen Haus relating to the cabinetry and its transportation from Germany. Kuchenhaus has a FACTORY/Manufacturers warranty for 10 years unlike a clayton's warranty offered by Kitchen companies who don't manufacture their own cabinets and the manufacturer they use only offers a 7 year warranty hence cannot fathom how they offer a 10 year warranty when it cannot be backed nought materials available after 7 years by law to honour the warranty. Kuchenhaus has business insurance, workers compensation and public liability as well as marine insurance. I explained all this to you. However, what I cannot offer you is Homeowners insurance warranty as it is not required as we do not charge for trade nor include trades on our supply contract. Being fully licensed to manage the trades during installation: Kuchenhaus is a manufacturer and not a trades or building company. No kitchen company has these credentials or skills, what they do is use someone else's building licence contracted to them which allows them to charge a margin on the trades. We do not. However, our preferred trades project manage your kitchen and are of a higher quality than most kitchen companies tend to use. As the order has not yet been placed and significant costs not yet incurred, I request that the agreement is cancel per clause 13.1 of the terms. Please ensure that Richard does no work regarding the obtaining of license and insurance details from your contractors. The order was placed after site check as I explained to you yesterday as we were time sensitive to meet the next container arrival early next year. However, the kitchen has not progress to production. [There] has been significant costs in relation to the preparation of your kitchen, plans, conversion to factory production, site checks, liaising with trades, benchtop companies etc. As you undertook to waive any design fee: I agreed to waive the initial design fee however that does not include the provision of a full set of plans, elevations and detailed measurements, site checks, order preparation and anything else that was facilitated to prepare your kitchen for production. You do have the right to cancel your kitchen order however as clauses 13.2 and 3.2 state that all reasonable costs are to be deducted. The costs alone for only the preparation of plans and design to facilitate kitchen production is $5500 plus gst. This is what we charge clients who would like us to facilitate this service from us and to take these plans to cabinetmakers to manufacture the kitchens. Julie, our kitchen Contract clearly states in bold at the top that is a Kitchen Supply Contract and does not include trades. Benchtops and splash backs. I hope we can come to an arrangement that lets us move forward however I cannot facilitate any requests that breaches the law. 1. The respondent provided a response to the above by email dated 1 November 2023. 2. The Tribunal concluded that the consent to cancellation email was an unconditional consent. This was despite the respondent herself contending the appellant was exercising a power under cl 13.2 of the contract: see particular 23 (c) in the respondent's Points of Claim above. 3. Clause 13 relevantly provides: 13 Cancellation 13.1 This Agreement may be cancelled/varied by us by mutual consent. 13.2 To the extent permitted by law, we may require as a condition of our consent that you pay reasonable charges for such cancellation/variation, which take into account expenses incurred by us to the date of cancellation/variation, including recompense for any commitments made by us in consequence of the order/quotation and all other losses both actual and prospective, incurred as a result of such cancellation/variation. 1. We note in passing that the expression "us" is defined as the appellant. This would suggest that cancellation under clause 13.1 is a right conferred on the appellant, not the respondent. On the other hand, the use of the expression "we may require as a condition of our consent" found in clause 13.2 suggests that the right conferred in 13.1 is not limited to the appellant. 2. Neither party contended in the appeal that the ability to cancel the agreement under clause 13.1 could not also be exercised by the respondent, Ms Turner. Nor does it appear either party made a submission to this effect in the proceedings at first instance. Certainly, the Tribunal proceeded on the basis that such a power was exercisable by the respondent as well as by the appellant. We will proceed on this basis. 3. In its reasons, the Tribunal said: The plain meaning of the email from Mr Dowling dated 1 November 2023 is that the [appellant's] consent to cancelling the contract was provided unconditionally: 'I am disappointed in your decision however will respect the same." Further, the email affirms the [appellant's] position that the [respondent] 'has the right to cancel your kitchen order'. In providing its consent, the [appellant] did not communicate that there was any requirement as a condition e.g. words to the effect: 'We are disappointed but will respect your decision to cancel the contract, provided that our reasonable expenses are paid to date.' The same email goes on to state that the [appellant] has already incurred 'significant cost' and that all 'reasonable cost' are to be "deducted' as per clause 13.2. However, having communicated its unconditional acceptance of the [respondent's] cancellation, the [appellant] cannot then rely on 13.2 as the basis for a claim for expenses. 1. In our view, the Tribunal was incorrect in its conclusion concerning the effect of the email. 2. The approach taken to its interpretation was not to examine the whole of the email to determine its objective meaning. Rather, the Tribunal extracted parts of the letter to support its conclusion, suggesting that those parts indicating the exercise of rights of the appellant to claim for work done and expenses incurred up to the date of termination were not part of the granting of consent on conditions as contemplated by clause 13.2. 3. Read as a whole, the meaning of the appellant's email is clear. The appellant sought to rely on clause 13.2, a fact acknowledged in the respondent's Points of Claim. 4. Further, in our view the Tribunal was incorrect in its conclusion that clause 3.3 of the contract could not be relied upon for the purpose of establishing the entitlement under clause 13.2. 5. Our reasons are as follows. 6. Where a contract is cancelled under clause 13.1, the obligation of the respondent was to "pay reasonable charges for such cancellation/variation, which take into account expenses incurred by us to the date of cancellation/variation, including recompense for any commitments made by us in consequence of the order/quotation". 7. The expression "reasonable charges" is not limited to the amount of the expenses incurred. The words following "reasonable charges" require that "expenses incurred by us to date" are to be taken into account, but do not confine "reasonable charges" to the sum of those expenses. Rather, in our view, the natural meaning of "reasonable charges" is sufficiently wide to encompass charges which include profits and overheads relating to the supply of the service as well as "expenses incurred". There is no ambiguity requiring resolution by application of the contra proferentem rule. 8. In the consent to cancellation email, the appellant indicated that it was seeking to recover a charge for its design work. This claim was in respect of "the preparation of plans and design to facilitate kitchen production" in the amount of $5500 plus GST. 9. As to what is a reasonable charge, the appellant says it is entitled to rely on clause 3.3. This clause says: 3.3 If you do not agree to a revised quotation, this Agreement will terminate automatically and any monies paid by you to us will be refunded, less cost incurred by us, up to the date of termination. Design costs and provision of plans are costed at $5500 plus GST and other costs associated with your kitchen. Noting that once terminated, neither, you or we have any right to claim against each other as a result of this termination. 1. The Tribunal said that the amount of $5500 plus GST "is insufficient evidence to satisfy me that this represents the actual cost incurred by the respondent for this particular kitchen, nor whether the costs were reasonable". 2. However, under clause 13.2, the entitlement to recover is not "the actual cost", but rather "reasonable charges", the meaning of which we have explained above. 3. In a lump sum contract, the reasonable charges for particular items of work are not easily ascertainable. However, the parties may agree that a particular amount in the lump sum price represents the relevant charge for the identified goods or services. Where such agreement is reached in an arm's length transaction, that is some evidence of what is a reasonable charge. 4. In the present case, clause 3.3 is an agreement as to the charge which will apply if, after preparation of plans, variations are requested and a revised quotation is prepared but a decision is made not to proceed with the contract. As it states, it is a costing of the design work. The contract provides that this charge may be deducted from any deposit to be returned. By its terms, the charge under clause 3.3 applies in circumstances where design work has been completed. On the other hand, if the design work has not been carried out, under clause 3.3 any deduction from the deposit would be limited to "costs incurred … up to the date of termination". 5. It was not suggested that the agreed charge under clause 3.3 was a penalty. A review of the material provided to the Appeal Panel does not otherwise suggest the amount was a penalty. Further, it was not suggested that the design work to which clause 3.3 applies is not the same design work which the appellant sought to recover under clause 13.2. 6. There was: 1. Evidence in the form of the plans that had been prepared and that plans had been sent to the German manufacturer on 30 October 2023 (a matter acknowledged by the German manufacturer on 8 November 2023). 2. Evidence of hours worked by the appellant's staff and what was done; and 3. Evidence from an unrelated third party kitchen supplier as to the cost it would charge for a similar service, being a lump sum charge of $3500 plus GST for the "cost to provide a design for a kitchen", additional amounts being charged for "laundries, vanities and wardrobes". Of these additional items, the third party supplier said "a laundry for instance would typically cost $500 plus GST". As to what is included in the charge of $3500, the email from the third party kitchen supplier dated 16 April 2024 (Annexure H to the statement of Mr Dowling) says: The cost includes plans, elevations and a finishes schedule. 3D images can be provided at an additional cost, depending on the views required. Typically $500 plus GST. 1. Applying the approach in Khan v Kang [2014] NSWCATAP 48, taken together, in our view this evidence is capable of supporting a conclusion that the charge of $5500 plus GST was a reasonable charge. 2. Consequently, in order to establish that the appellant had breached its contract by wrongly retaining the whole of the deposit under clause 13.2, it was necessary for the respondent to provide evidence to demonstrate that the charge imposed was unreasonable. However no such evidence was provided. 3. Rather, the respondent said she received no value for the work undertaken. Even if that were true, any absence of value arises from her decision to cancel the contract. It does not mean that, viewed objectively, design work undertaken by the appellant has no value. 4. In circumstances where design work had actually been done by the appellant and plans had been prepared and submitted for manufacture, it is clear that the claim for design work had some value. As we have said above, that value can be ascertained from the amount agreed between the parties as specified in clause 3.3. The reasonableness of the charge is established by the evidence concerning the work done and the evidence from third party supplier we have set out above. 5. In the absence of evidence demonstrating those charges are unreasonable, it seems to us the Tribunal was in error in rejecting the amount specified in clause 3.3 as some evidence of the reasonable charges for undertaking the work. 6. In reaching this conclusion, we should deal with two further matters raised by the respondent in her reply documents. 7. First is the contention that there was a "Design Waiver Term" in the contract to the effect that the appellant would not charge for any design services. 8. We reject this contention. 9. The Tribunal found the contract was in writing dated 26 October 2023. This document does not contain the term in question. On the contrary, it provides an entitlement to recover reasonable charges for work done where the contract is cancelled. Its terms contemplated a charge may be imposed for design services where the contract terminates, not that all design services will be provided free of charge. So much is clear from clause 3.3. 10. Further, and in any event: 1. as is apparent from paragraph 16 and 17 of the Points of Claim and from the terms of the email dated 19 October 2023 said to particularise the written part of the Design Waiver Term, the design charge was for an amount of $675 for "a 3D colour image of your personal design" to be provided with the quotation. 2. this work was done prior to the contract being formed, for which a separate charge might be made. The 19 October email does not, by its terms, include work done in preparing detailed design drawings for manufacture of any supply items pursuant to the Contract. 1. There is no evidence to suggest that the amount of $675 was separately charged to the respondent, or that it was included in the amount retained by the respondent. 2. As to the term being an implied term, it does not satisfy the five criteria necessary for such implication set out in the decision of the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24 per Mason J (as he then was) at [9]. 3. For those reasons, we are not persuaded that the contract included the Design Waiver Term. 4. Finally, even if the email was an additional term in writing that might fall within the chapeau of the written contract dated 26 October 2023 as being a matter "specifically agreed in writing", it was not the same work to be done in preparing detailed designs and drawings for manufacture. 5. It follows, that the Tribunal was in error in failing to conclude that the appellant was entitled to retain the amount of $6050 (being $5500 plus GST) from the deposit of $6375.00. In this regard, as the amount being retained relates to a charge for the supply of services, GST must be added to that amount which, as required by the relevant legislation, will be remitted to the Commissioner of Taxation. Disposition of the appeal 1. As to the balance of the deposit, namely $325, there was no sufficient evidence that reasonable costs had been incurred by the appellant other than in connection with the design work. We see no error in the Tribunal's reasons in connection with the appellant's assertion it was entitled to retain an amount in addition to a charge for the design work. 2. Prima facie, the amount of the award made in favour of the respondent should be varied to correct the identified errors by reducing the amount of the award to $325. 3. However, prior to doing so, there are some further matters which we need to address. 4. First are the allegations made by the respondent in her Points of Claim about representations made by the appellant prior to the formation of the contract. We have identified those representations above. 5. The respondent, in her Points of Claim, did not seek relief under the ACL for misleading and deceptive conduct in connection with those representations. She did not assert the contract was unenforceable or should be set aside by reason of any misrepresentation. Rather, she sought to enforce the contract, according to its terms, including asserting that the contract included the Design Waiver Term – a matter we have dealt with above. 6. The representations were said to be made both in the email of 19 October 2023 and in conversations with Mr Dowling from the appellant at the "First Meeting" on 19 October 2023. The conversations are the subject of the respondent's statement in chief and statement in reply found at RB 9 and following. 7. Taking that material at its highest, it seems to us the alleged "Design Waiver Representation" does no more than assert a representation that no charge would be made for the preliminary work done in providing "a 3D colour image for [the respondent's] personalised design" as part of the process of formulating and providing a quotation for the proposed work prior to the contract being signed. It could not amount to a representation that there would be no charge for design services provided on signing of the contract. In this regard, the evidence to which we have been referred indicates that the detailed design drawings were provided at or after the signing of the contract and were part of the services to be provided following the contract being entered into and the deposit paid. 8. The fact that some work may have been done in preparing such detailed design works in anticipation of the contract does not mean that work was to be undertaken at no charge. Further, while the cost of doing detailed design work may have been wasted if the contract was not signed, that does not mean recovery could not be made. On the other hand, due to the tight time frames applicable to the manufacture in Germany, the need to ship the kitchen to Australia and that the delivery date appeared critical to any decision of the respondent to engage the appellant, it is understandable why the appellant may have done some of this work in anticipation of the contract being signed. 9. Finally, the submission by the respondent that the detailed design drawings were of no value to her cannot affect the disposition of this appeal. Even if work done by the appellant could only render value to the respondent if the contract was completed, it does not follow that reasonable charges for work done by the appellant could not be recovered under clause 13.2. 10. In light of the above, we are not satisfied the proceedings should be remitted for further hearing. Costs 1. Finally, the appellant's representative said the appellant may seek costs of the appeal. 2. Section 60 of the NCAT Act applies to costs of the appeal. As such each party is to pay their own costs: NCAT Act s 60(1). The Tribunal may only award costs if there are special circumstances warranting such an award. 3. Prima facie, there are no special circumstances, this case being typical of appeals brought in connection with consumer claims. Consequently, we will make an order that each party is to pay their own costs as contemplated by s 60(1) but permit either party to apply for a different order if they consider that appropriate. Orders 1. The Appeal Panel makes the following orders: 1. Leave to appeal is granted, the appeal is allowed and the amount of $6375.00 in order 1 made 20 June 2024 in proceedings 2024/00075480 is varied to $325.00, that amount to be paid immediately. 2. Subject to order 3, each party is to pay their own costs of the proceedings. 3. If either party contends for a different order to that of order 2, the following directions apply: 1. Within 7 days from the publication of these reasons, any applicant for costs (costs applicant) is to file and serve any application for costs (costs application) which is to include any evidence and submissions, submissions to be not more than 5 pages. In this event, order 2 will cease and have no effect. 2. Within 14 days from the publication of these reasons, the respondent to the costs application is to file and serve any evidence and submissions in reply, submissions to be not more than 5 pages. 3. Within 21 days from the publication of these reasons, the costs applicant is to file and serve any submissions in reply (not more than 2 pages). ********** 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: 11 October 2024