NEW SOUTH WALES COURT ISSUES JUDGEMENT FOR DEREK LARSEN, ET AL. V/S TASTEC, ET AL. CASE

Australia, Aug. 4 -- New South Wales Land and Environment Court issued text of the following judgement on July 4:

1. ADAMSON JA: The appellants, Derek and Floyd Larsen as trustees for the Larsen Superannuation Fund (the Larsens), appeal against orders made on 7 November 2024 by Cole DCJ (the primary judge) in the District Court (the Court below), dismissing their claim for relief under ss 236 or 237 of the Australian Consumer Law (the Law) against the first respondent, Tastec Pty Ltd (Tastec), and the second respondent, Stephen Sainsbury, for the respondents' misleading or deceptive conduct.

2. The procedural history is lengthy but can be shortly summarised. Tastec supplied and erected a house on the Larsens' land under a fixed price building contract which specified that the roof and walls be clad with Standard Insulated Panels (SIP) covered by Maxline 340 sheeting. The respondents proposed a variation (Variation 6) which specified different materials for that purpose, to which the Larsens agreed. The Larsens commenced proceedings against the respondents in the Court below. Their claims were dismissed on 17 December 2021 by Gibb DCJ. The Larsens' appeal to this Court was allowed on the basis that the Larsens had agreed to Variation 6 in reliance on various false or misleading representations made by the respondents to the Larsens regarding the substitute materials: Larsen v Tastec Pty Ltd [2023] NSWCA 39 (CA 1) at [102], [108], [113]-[116], [118] and [125] (Mitchelmore JA, Ward P and Kirk JA agreeing).

3. As Gibb DCJ had not determined what the Larsens would have done but for the respondents' misleading or deceptive conduct, this Court remitted the question of relief under the Law to the Court below for determination.

4. On remitter, the Larsens claimed the cost of rectifying their residence to bring it into compliance with their contract with Tastec. That is, they claimed the cost of installing the Maxline 340 to the residence.

5. The primary judge on remitter was not satisfied that the Larsens had established an entitlement to damages or compensation under ss 236 or 237 of the Law as the Larsens had not shown that the value of their residence with Maxline 340 would be worth more than it would be without it. Accordingly, her Honour dismissed the claim for relief without making any findings as to the cost of rectification (which was the subject of expert evidence). The Larsens appealed to this Court.

6. The Larsens have identified the following issues for determination on this appeal, the short answers to which follow in italics:

1) is the cost of the work to return the Larsens substantially to the position they would have been in but for the contravening conduct a kind of loss or damage for which an amount may be recovered in an action for damages under the Law? (Grounds 1, 4(a) and 4(b)) Yes.

2) is loss of a bargain (expectation loss) a kind of loss or damage for which the Larsens may be compensated in an action for damages under the Law? (Grounds 1(a), 1(b), 1(d) and 4(a)) Yes.

3) is the measurement of loss or damage in the present case confined to the difference between the contract price and value? (Grounds 1(b), 1(c), 1(d) and 4(b)) No.

4) is the loss of the right to receive cladding materials specified in the contract and the costs of rectification to obtain the specified cladding a form of economic loss? (Grounds 1(c), 1(d) and 4(b)) Yes.

5) is the loss of the specified use of a product a form of loss or damage within the meaning of ss 236 and 237? (Grounds 2, 3(b) and 4(a)) Yes.

6) was there a real (not negligible) possibility the Larsens would have agreed to vary the materials in any case if the misleading or deceptive conduct had not occurred? (Ground 3(a)) No.

7) would the Larsens have received the benefit of the cladding specified in the original contract if the misleading or deceptive conduct had not occurred? (Grounds 3(b) and 3(c)) Yes, if Tastec had performed its contract.

8) have the respondents demonstrated that installing the specified cladding was not a reasonable course to adopt? (Grounds 4(c) and 4(d)) No.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/197c4318e2ce6cd63b0cf65f)

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