New South Wales Supreme Court CITATION : Director-General of the Department of Fair Trading v Smith t/a Stylerite Designs & anor [2002] NSWSC 784 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 11510/02 HEARING DATE(S) : 12 June 2002 JUDGMENT DATE : 12 June 2002 Director-General of the Department of Fair Trading (Plaintiff) PARTIES : John Anthony Smith t/as Stylerite Designs (First Defendant) Damien Smith (Second Defendant) JUDGMENT OF : Dunford J COUNSEL : J. Loofs (Plaintiff) C. Dibb (Defendants) SOLICITORS : D. Catt (Plaintiff) In Person (Defendants) CATCHWORDS : CONTRACTS - consumer protection - work and labour - installation of kitchens - work not completed - frequent breaches LEGISLATION CITED : Home Building Act 1989, s 4 Fair Trading Act 1987, s 42 CASES CITED : Trend Properties Pty Limited v Casa Maria Pty Limited (unreported - Windeyer J - 20 August 1998) Casa Maria Pty Limited v Trend Properties Pty Limited (Court of Appeal - 18 December 1998) DECISION : Refer to para 27. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DUNFORD J Wednesday, 12 JUNE 2002 11510/02 Director-General of the Department of Fair Trading v John Anthony Smith t/a Stylerite Designs & Anor JUDGMENT 1 His Honour: This is an application pursuant to the Notice of Motion filed 30 May 2002, concurrently with the Summons, seeking interlocutory orders against the defendants to restrain breaches of the Home Building Act 1989 and the Fair Trading Act 1987. 2 It appears, from the evidence, that since about 1997 the first defendant, in conjunction with the second defendant, or both of them together, have engaged in the business of designing and arranging the installation of kitchen cabinets, and other fittings, to provide new kitchens in residential buildings. 3 The form of contract used is attached to a number of affidavits that have been filed. The business is carried on under the name of Stylerite Designs, which is a registered business name, in the name of the first defendant. 4 The written contract provides that: "The clients hereby contract "the company" in the specification and floor plan (annexed hereto) at the property located above." 5 There is a floor plan generally attached, which includes a full design of the kitchen with measurements and the locations of various cupboards and other fittings. 6 There is nothing specified above, but in an adjoining column the name and address of the customer and of the site address is set out, together with a Schedule of Payments providing as follows: "Amount paid on acceptance of design … Balance of initial payment (if any) … Balance on delivery … Installation … Total price …" Cl 5 of the Terms and Conditions provides that, "Should the client not be ready to accept the installation within a specified time, the company may cancel the agreement." Cl 6 provides that, "The whole of Agreement is expressed in the document, and any prior agreement, warranty or representation, is superseded by the agreement." 7 There is provision for special conditions, which vary from contract to contract; that that provided to Michele Menier includes the words "kitchen delivered and installed". And in Miss Menier's affidavit she states that the second defendant quoted a price and continued, "That includes the supply and installation, but not removing the old kitchen". 8 When Mr Afarifdan consulted the defendants, the first defendant said, "I will renovate the kitchen and pull out the old kitchen. I'll put in a new kitchen with taps, sinks, dishwasher, all the cabinets, stove and oven", and on a later occasion said, "I can finish the kitchen in four days." 9 The special conditions of that contract also contained the following words, "Delivery and install, rip/remove plumbing, electrical and tiling, labour, under bench oven, cook top, range hood, dishwasher, sink, one and a half bowl and taps." 10 Mr Marcus Bolton was told by the second defendant, "We have a lot of satisfied customers. We are a one-stop service. We'll come and do all the work, take out the old kitchen, and put in the new one." 11 I have referred to these particular instances, because Mr Dibb, on behalf of the defendants, has submitted that his clients were not engaged in "residential building work", and were not contracting to do residential building work, in breach of s4 of the Home Building Act. There is some evidence in the case, that often they did not do the installation, and he relies on cl 8 (1) (e) of the Home Building Regulation 1997, which excludes from the definition of "residential building work", "The supervision only of residential building work by a person, if all the residential building work is being done, or supervised by the holder of a contract or licence authorising its holder to contract to do that work." 12 There is evidence that Mr Yu He Weng was a licensed builder, who on occasions was engaged by the defendants to install the kitchens. 13 However, in my view this is not relevant and does not bring the defendants' contracts within the exception because the customers' contracts with the defendants did not provide that the installation work would be carried out by a licensed contractor. It merely provided for the defendants, or the first defendant, using the business name Stylerite Designs to provide the installation, and under the contract, it was open to the first defendant to do the installation himself as a matter of contract law, although by doing so, he would have been in breach of the Home Building Act. 14 The case is distinguishable from the case of Trend Properties Pty Limited v Casa Maria Pty Limited (unreported - Windeyer J - 20 August 1998), and on appeal Casa Maria Pty Limited v Trend Properties Pty Limited (Court of Appeal - 18 December 1998), because in that case the contract expressly provided that the work to be supervised by Trend Properties would be carried out by a licensed contractor. Moreover, such evidence as there is discloses that the defendants did not supervise the installation. They may have sent Mr Weng along, or someone else along, to do the installation, but they certainly did not supervise the installation, and in many cases the kitchens were not installed at all; in some cases the materials were not even supplied. 15 It may be necessary, at a later stage, to consider the distinction between co-ordination and supervising, as referred to in the definition of "residential building work", but it is not necessary to go into that on this interlocutory application. The fact of the matter is that the contracts provided for the design, manufacture, delivery and installation of all the materials necessary for the building work. 16 I have already referred to Mr Afaridan's contract, which expressly included references to plumbing and electrical work, which are "specialist work" within the definition, and therefore must always be done by a licensed person. 17 It would also appear that the mere manufacture of the cupboards and other fittings, with the intention that they be attached to, and form part of, the fabric of the dwelling itself, renders them part of the dwelling, even at the time of manufacture, and even prior to delivery, or installation: see cl 5 (d) of the Regulation. 18 I have paid particular attention to this consideration, because of Mr Dibb's submission that there is a genuine and substantial dispute as to whether the defendants engaged, or contracted to engage in residential building work, such as required a licence under the Act, and for these reasons I am satisfied that the overwhelming preponderance of the evidence at this stage, is that they did contract to do "residential building work", within the meaning of the Act, and that they did do it. 19 It follows that by doing such work, and contracting to do such work, and seeking work of that nature, the defendants were in breach of the Act. They were also in breach of the Act by obtaining deposits in excess of 10 percent of the contract price, and that is clearly established on the evidence presently available: s 8(2)(b). 20 That however, is only part of the picture. The evidence also discloses a history of misleading and deceptive conduct contrary to s 42 of the Fair Trading Act 1987, and other forms of dishonesty over a period of time. 21 They gave a number of false addresses to various customers, where they could not be located, and they said they had workshops and showrooms at places which they did not. They used a number of different telephone numbers, and in many cases, having received the deposit, they failed to deliver the goods or to install the kitchens, or cause them to be installed, and 15 customers have obtained orders for repayment of their deposits from the Fair Trading Tribunal, as it then was, and on the present state of the evidence there is nothing to suggest that any of these orders have been complied with. 22 There is further evidence of deceptive conduct on a prime facie basis, and that is the insertion in the Manly Daily newspaper, of an advertisement quoting a licence number, which was not the licence number of the defendants, but Mr Weng's licence number. This was done without his permission, and even if it was intended (which I very much doubt) that Mr Weng should carry out the installation of any kitchens ordered pursuant to the advertisement, the form of advertisement clearly indicated that the number quoted was the licence number of the persons putting the advertisement in the paper. 23 I appreciate that this is an interlocutory hearing pursuant to short notice, and that there may be evidence available to the defendants which will paint a very different picture at the final hearing, but I can only proceed at this stage on the evidence that is before me. 24 Mr Dibb has submitted that the injunctions sought are very wide and should not be granted in such wide form, as they will prevent each of the defendants from carrying out any building work, or the design of any work. This may be so, but having regard to the sorry picture painted by the evidence, it appears to me that this would be a most desirable course in the interests of the community. 25 He also submits that there is no urgency, because the Department has known of the conduct for sometime. But the evidence also discloses that the Department had considerable difficulty in locating the defendants to give them notice of the investigation, in calling for a reply. 26 I am satisfied that the plaintiff has established a prime facie case, and that for the protection of the community, the balance of convenience favours the grant of the injunctions. 27 I make Orders 1 to 8 and 10 to 17 as sought in the Notice of Motion, both inclusive. Such orders to remain in force until further order. I make orders in accordance with paragraphs 9 and 18 as in the Notice of Motion, subject to the variation, that such affidavits be filed and served on or before 19 June 2002, in lieu of the time period of 72 hours specified in the Notice of Motion, and varying 24 hours to 48 hours. Costs of the Motion to be costs in the cause. I direct that any further affidavits on behalf of the plaintiff be filed and served by Wednesday 26 June 2002. Any affidavits for the defendants to be filed and served by Wednesday 24 July 2002. Any affidavits in reply by Wednesday 7 August 2002. Order the plaintiff to supply the defendants, within 14 days of particulars of the misleading or deceptive conduct alleged in paragraphs 5, 6, 15, and 16 of the Summons. Proceedings stood over to the Applications List on Monday 12 August 2002. 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