Annova Pty Ltd v Keshavarz

NCAT Appeal Panel|2019-05-08

Background

This is an internal appeal from a decision made in the Consumer and Commercial Division of this Tribunal on 5 February 2019, that Annova Pty Ltd (trading as A1 BabyCare) (the appellant) pay to Kavian Keshavarz and Aisha Yunusa (the respondents), the sum of $449.00 (the Decision).
The appellant manufactures and sells prams. It was represented by Mr Sharples, a Director of the appellant Company who designs prams for it. The respondents bought a pram from the appellant which, they say, was faulty.
The respondents purchased the pram on 1 April 2018 for their baby born on 7 May 2018. The pram was used about two or three times per week after the birth. On 26 June 2018 a bolt came loose, and Mr Sharples went to the respondent's home to replace the bolt and nut entirely. On 1 November 2018, when the baby was in the pram, that bolt fell out completely and the pram dropped down in the frame. On 2 November 2018, Mr Sharples again inspected the pram at the respondents' home. He told them he believed the pram only failed because of their misuse of it and that there was no manufacturing defect or any breach of any of the applicable consumer guarantees in the Australian Consumer Law (NSW): Mr Sharples' statement dated 12 January 2019, paragraphs 37 to 46.
The respondents commenced proceedings in the Tribunal and, on 5 February 2019, obtained an order that they return the pram to the appellant for a full refund. The basis of the decision was that the Tribunal found that the pram was not of acceptable quality, in breach of s 54 of the Australian Consumer Law (NSW) ("the ACL") as it was substantially unfit for purpose and unsafe to use. The Tribunal rejected assertions by the appellant that the failure of the pram to be of acceptable quality was caused by misuse of the pram by the respondents or their failure to maintain the pram in accordance with the manufacturers recommendations.

The grounds of appeal

The appellant listed six grounds of appeal in its Notice of Appeal. By the end of the hearing, Mr Sharples narrowed those grounds to the following alleged errors in the decision under appeal: 1. that the Tribunal erred in finding there was a 'safety defect' in the pram, without considering s 9 of the ACL; 2. that the Tribunal erred in failing to give the appellant an opportunity to access the pram to obtain an expert report prior to the hearing (or by implication at the hearing even if this required an adjournment); and 3. that the Decision was against the weight of the evidence, particularly in [13]-[15], specifically in light of testing undertaken by and for the appellant after the hearing, the results of which were contained in reports relied upon by the appellant in this appeal with our leave.
The first ground of appeal alleges an error of law which does not require leave.
The second ground is an allegation that there was a lack of procedural fairness afforded to the appellant. This, if found, is also an error of law, for which no leave to appeal is required: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13(4)] and s 80(2)(b) Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act").
The third ground of appeal alleges an error other than on a question of law and so leave is required to bring the appeal on this basis: s 80(2)(b) of the NCAT Act.
This third ground is essentially that which was argued in Agrison Pty Ltd v Madsen [2014] NSWCATAP 95 (see [11(2) and 11(3)]). In Agrison the then President explained, at [52]-[55]: 52 The appellant requires leave to appeal in respect of [findings were against the weight of the evidence] and, to the extent that they raise factual challenges to the findings, [there was no evidence to support the finding or, alternatively, the factual findings that should not have been made]. 53 Under c 12(1) of Schedule 4 [of the NCAT Act], …the Appeal Panel may only grant leave to appeal if it [is] satisfied that the appellant may have suffered a serious miscarriage of justice because the decision was not fair and equitable, was against the weight of the evidence or there is significant new evidence that was not reasonably available at the time of the hearing. … 55 In relation to the question as to whether a "serious miscarriage of justice" has occurred, the appellant may have suffered a substantial miscarriage of justice because of one of the relevant circumstances referred to in cl 12(1)(a), (b) or (c), where there is a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance not occurred before the Tribunal at first instance (see Collins v Urban [2014] NSWCATAP 17 at [68] to [76]).

The relevant law

The relevant cause of action in the application below was for breach of the consumer guarantee as to acceptable quality, contained in s 54 of the ACL. This consumer guarantee applies to all goods supplied to a consumer (defined in both the Fair Trading Act 1987 (NSW) and the ACL), in trade or commerce. There was no argument, and we are satisfied, that the Tribunal had jurisdiction to make the orders it did at first instance.
Section 54 of the ACL provides: 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; 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 (b) the examination ought reasonably to have revealed that the goods were not of acceptable quality. [Emphasis added.]
As to the practice and procedure of the Tribunal, ss 36 and 38 of the NCAT Act relevantly provide: 36 Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it: (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal: (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. … 38 Procedure of Tribunal generally (1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. (2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. … (4) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. (5) The Tribunal is to take such measures as are reasonably practicable: (a) to ensure that the parties to the proceedings before it understand the nature of the proceedings, and (b) if requested to do so - to explain to the parties any aspect of the procedure of the Tribunal, or any decision or ruling made by the Tribunal, that relates to the proceedings, and (c) to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings. (6) The Tribunal: (a) is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings, and (b) may require evidence or argument to be presented orally or in writing, and (c) in the case of a hearing - may require the presentation of the respective cases of the parties before it to be limited to the periods of time that it determines are reasonably necessary for the fair and adequate presentation of the cases.

The first ground - that the Tribunal erred in finding that the pram had a 'safety defect,' without considering s 9 of the ACL

The appellant complained that the member found that the pram had a 'safety defect,' a term that is defined in s 9 of the ACL.
This ground is misguided. The Member found the pram was not of acceptable quality as it was substantially unfit for purpose and was unsafe to use: ss 54(2)(a) and 54(2)(d) of the ACL and Decision [7]. She made no finding that the pram had a safety defect, as that term is defined in s 9 of the ACL.
Section 9 of the ACL defines a safety defect in relation to goods, for the purposes of Parts 3-5 of the ACL which commence at s 138 of the ACL.
Section 9 of the ACL was not applicable to the resolution of the issues in dispute between the parties and did not need to be considered by the Member.

The second ground - that the appellant was denied procedural fairness

On 17 December 2018, the parties appeared at conciliation and a group list hearing. They were not able to resolve the matter. The Member on that day made orders for the exchange of evidence and made some other procedural directions. It is apparent that the appellant did not request an order that it be allowed to inspect the pram, to obtain an expert report about it.
On 17 December 2018 at 5:49pm, Mr Sharples wrote to the Tribunal, relevantly, in the following terms: Thank you for your notice of the hearing. Please advise me on what opportunities are provided for me to view or test the goods that are the subject of the claim. The goods are currently in the possession of the applicant. I also request to be notified of hearing dates by email, the email address is the address …
On 18 December 2018, the Tribunal wrote to the parties advising: Correspondence has been received from the [appellant] on 18.12.18. The Tribunal has not made any orders regarding the provision to view or test the goods in question. Parties can negotiate and have further discussions in respect to settling the matter. The correspondence has been placed on file and a copy sent to the [respondents]. The issues should be raised at the next hearing.
On 19 December 2018, the parties were sent a Notice of Hearing nominating 5 February 2019 at 9:15am as the time for the final hearing of the matter. The matter was listed for two hours.
In the intervening period, Mr Sharples twice requested that the respondents produce the pram for inspection or testing, but they declined. Mr Sharples made mention of this in a statement he provided to the Tribunal at first instance at paragraphs 53 and 54.
The Decision records that the pram was available for inspection by the parties and the Tribunal at the hearing.
At the appeal hearing, Mr Sharples suggested, for the first time, that he told the Member at first instance that the matter "should proceed on expert evidence". He said that, in response, the Member said that this is "not justified for a claim of $449.00". He did not ask that the matter be adjourned for that to occur, or for an order or direction that the pram be supplied for testing. He said that he did not understand the process enough to do so.
This alleged conversation between Mr Sharples and the Member was not conceded by the respondent.
Well prior to the appeal hearing, the parties were directed to lodge with the Tribunal a sound recording and transcript of the hearing at first instance, if what happened at the first hearing was being relied upon.
The appellant had not done so although Mr Sharples advised that he had requested a copy of the audio recording but it had not been received.
We asked Mr Sharples whether the appellant wished to seek an adjournment of the appeal hearing to obtain the transcript of the hearing below. It did not.
Generally, the parties are responsible for their conduct of the hearing and the forensic decisions they make about the evidence they wish to call. However, the Member was obliged to take reasonable steps to ensure a fair hearing and that may, in some circumstances, extend to offering an adjournment: Street v Finessence Pty Ltd [2017] NSWCATAP 172 at [28]. The appellant was entitled to have its case heard, which "includes … an opportunity to call evidence, an opportunity to make submissions and the right to have his or her evidence and submissions given appropriate consideration by the decision-maker": Shi v Abi-K Pty Ltd (2014) 87 NSWLR 568 at [50].
Determining whether the Tribunal at first instance should have adjourned the matter and made provision for the appellant to be able to inspect the pram for testing requires an examination of all of the relevant circumstances, including what was said by Mr Sharples and the Member at the hearing, which is not before us.
The issue is further complicated by the fact that in Mr Sharples' evidence to the Tribunal at first instance he claimed expert knowledge on the matters in issue as an engineer: paragraph 55 of the statement of Mr Sharples dated 12 January 2019. Therefore, even if it was to be accepted that Mr Sharples told the Tribunal that the "matter should proceed on expert evidence," as he claims, that would not be determinative of the issue.
Certainly, the appellant's letter to the Tribunal of 17 December 2018 and the paragraphs of Mr Sharples' statement where he confirmed that he asked the respondents for access to the pram were enough to put the Tribunal on notice that this was a matter in issue. Equally, though, the Tribunal put the appellant on notice, by its letter of 18 December 2018, that the appellant should raise the need for production of the pram with the Tribunal if it wished to agitate the issue.
In our view, the question of whether an adjournment for the inspection and testing of the pram should have been granted, despite the appellant not having requested it, is finely balanced. The evidence which may have assisted us to determine the issue in favour of the appellant, in the form of the transcript of the hearing at first instance, is unavailable to us.
Ultimately, it is for the appellant to establish an error in the proceedings below, if it is to succeed on this point. On the evidence available to us, it has not done so.
This ground is not made out.
Even if we are incorrect in this view, in any internal appeal the Tribunal retains discretion as to the orders it makes: s 81(1) NCAT Act. In Stead v State Government Insurance Commission (1986) 161 CLR 141, where the appellant's counsel had been prevented from addressing on an issue of causation, the Court qualified a party's entitlement to relief where unfairness had been demonstrated, stating at 145: That qualification is that an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility. For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.
In that regard we have the advantage that, prior to the appeal hearing, the appellant obtained the further evidence it had wished to obtain for the hearing at first instance, which we allowed into evidence in the appeal.
That evidence was: 1. a 'report' by Mr Sharples annexing photographs of a similar pram's handlebar, after Mr Sharples applied various weights to pram hooks on the handlebar, which the appellant submits shows that damage to the handlebar was consistent with it being overloaded by hanging weights of up to five kilograms from it; and 2. independent test results on the pram the subject of this dispute, conducted after the hearing at first instance, showing that it met the relevant voluntary Australian Standard, even when testing was conducted with weights of one kilogram and five kilograms hung from pram hooks. The testing included dynamic testing intended to replicate use of the pram with the weights attached.
The appellant argued below that the respondents had misused the pram, causing it to fail. Insofar as it is relevant to this new evidence, it alleged the failure of the bolt on the pram was caused by the respondents hanging objects from pram hooks attached to the handle. Mr Sharples' hypothesis was that this "abnormal use," to use the term in s 54(6) ACL, created cyclic loads and caused the bolt to fail on both occasions.
The respondents had given evidence that they did hang some items of minimal weight (less than one kilogram) from the hooks, They said that the indentations left on the foam of the handle, observed by the member at the hearing, was predominantly from clasps attached to the handle to hold a muslin cloth over the pram, which were tightly attached and left there for some months.
In relation to this evidence, the member at first instance recorded, at [12]: I observed two hanging hooks and five clasps on the handlebars (sic). I accept the oral evidence of the applicant that the two hooks were used to hang his partner's handbag weighing less than 1 kilo and empty plastic bags for nappy disposal. I observed that the clasps and hooks had caused some indentations in the foam protection around the handlebars (sic).
The appellant's concerns particularly relates to findings at [13]-[15] of the Decision that: The [appellant] asked me to draw an inference from the indentations on the foam handlebars that the items hung there must have been heavier than 1kg. On the evidence before me I do not find that this assertion is proved on the balance of probabilities. I find that, while the ACCC advice to consumers it [sic] not to hang objects from prams, the consumer's use of the goods did not constitute misuse of the pram, and did not cause the fault. The express warranty provided with the product includes a section on 'maintenance' which states that consumers should check that all nuts and bolts are tight every three months and also every six months. It also advises not to over tighten bolts. The supplier's position was that the failure of the consumer to check and tighten the bolts meant that he had not taken reasonable steps to maintain the pram. I find that while the supplier's advice on maintenance (and that of other manufacturers and regulators in evidence) to check moving parts of prams is sound advice in order to identify any faults, it does not shift the duties of suppliers and manufacturers to ensure that the product is safe. The first fault occurred in under 3 months of light use and the second occasion after 4 months of very light use. It was uncontested that the bolt should not have come completely out after such use. I find that the fault is not caused by the consumer's failure to maintain the goods.
Even taken at its highest, the newly admitted evidence from the appellant does not support the findings it seeks. Leaving aside the fact that there is no apparent reason that Mr Sharples could not have undertaken the testing referred to in his report on a similar pram prior to the first instance hearing and that his report does not differentiate between the marks left by the pram hooks and the clasps, we accept that his evidence, if the matter was to be re-determined, is capable of producing an inference that the respondents hung objects of up to five kilograms weight from pram hooks on the handlebar of the pram. However, the independent testing the appellant now relies upon verifies the Tribunal's finding that loading the handlebar of the pram, even with a weight of that magnitude, did not cause the bolt to loosen in response to vibration and ultimately fail.
The new evidence, then, is incapable of taking the matter further in relation to whether the pram was of not of 'acceptable quality'.
For that reason, we are in any event satisfied that there was no practical injustice to the appellant and that a rehearing would be a futility: CSR Limited v Eddy [2008] NSWCA 83.
The appeal should not be allowed on this ground.

The third ground - that the Decision was against the weight of the evidence

In order to argue this ground of appeal the appellant needs leave.
The appellant relied on the ground in cl 12(1)(c) of Sch 4 of the NCAT Act as the basis that leave should be granted, namely that significant new evidence is now available that was not reasonably available at the time of the hearing. The evidence now relied upon was that referred to above in relation to the second ground.
As set out above in relation to Ground 2, the appellant prosecuted no application for directions for production of the pram to facilitate testing prior to the hearing. Nor did it seek an adjournment of the hearing to do so.
Had the appellant requested access to the pram for the purpose of performing more testing it may have received an order for access. Further, as referred to above, the bulk of the report by Mr Sharples detailed testing on another pram in his possession and there is no explanation why that could not have been carried out before the hearing at first instance, such that the results could have been compared to the pram that was produced for examination by the member at the hearing.
On that basis, we cannot be satisfied that the newly admitted evidence was not reasonably available on 5 February 2019.
In any event, for the reasons set out in relation to the second ground, even if we were satisfied that the newly admitted evidence was not reasonably available at the time of the hearing, we could not find that there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance not occurred before the Tribunal at first instance: Collins v Urban [2014] NSWCATAP 17 at [68]-[76].
Finally, as was set out in Pholi v Wearne [2014] NSWCATAP 78 at [32]: Even if the appellant establishes that [they] may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel then retains the discretion whether to grant leave under s 80(2) of the Act (see Collins v Urban, supra at [80]-[84]). [The appellant] must demonstrate something more than that the Tribunal was arguably wrong. Leave is ordinarily granted only where the matter involves an issue of principle, questions of public importance, where the injustice is reasonably clear or where the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result.
That is not the case here.
Leave to appeal on this ground is refused.

Orders

We order that: 1. Leave to appeal refused; 2. Appeal dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar 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: 02 August 2019

Completion and Consumer Act 2010(Cth)

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