Appellant v Respondent

1 In February 2015, Nicole Missen, the Respondent, purchased an ex-racehorse, Rex, from Tracey Boogs, the Appellant, for $7,500 on a terms payment arrangement, which included an upfront payment of $5,000.

2 Within a couple of months Rex had gone sore and Ms Missen wanted her money back and to return Rex to Ms Boogs. A lengthy and acrimonious dispute ensued culminating in a hearing at the Victorian Civil and Administrative Tribunal ('VCAT') at Geelong on 8 December 2015. The tribunal was constituted by a single member. Ms Missen was successful, essentially on the basis that Ms Boogs had breached a statutory guarantee, provided by s 54 of the Australian Consumer Law (Victoria) ('ACL').[1]

3 The VCAT Member ordered that Ms Boogs pay Ms Missen just short of $6,000 and the filing fee. Ms Boogs' claim for payment of the balance owing was dismissed.

4 But that was not the end of the matter. Ms Boogs, in August 2016 (some seven months out of time) issued an originating motion in this Court seeking leave to appeal the decision of the member under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('VCAT Act').

5 Notwithstanding my pleas to the parties that they endeavour to resolve this matter, I heard and determined the application for extension of time, leave to appeal and appeal on 15 February 2017. I gave ex tempore reasons and now provide a slightly more fulsome exposition of those reasons.

6 In essence, I concluded that there was a reasonable basis upon which to grant the extension of time to Ms Boogs and that the appeal should be allowed as the VCAT Member erred in law in her approach to the determination of the claim. The nub of my decision is that the Member incorrectly assumed, without inquiry, that the guarantee of acceptable quality under s 54 of the ACL applied to the transaction between Ms Boogs and Ms Missen.

7 I reached this conclusion with some reluctance given the scope of the claim, and the inevitable remitter of the claim to VCAT for a further hearing with attendant costs if the appeal was successful.

Leave to appeal out of time and the substantive basis of the appeal

8 An appeal from the decision of VCAT must be instituted no later than 28 days after the day of the order.[2] However, s 148(5) enables this Court to 'at any time extend or abridge any time limit fixed by or under this section'.

9 VCAT gave its decision and made orders on 8 December 2015. Ms Boogs did not lodge her application for leave to appeal until 15 August 2016. However, in her affidavit of that date, Ms Boogs explains that the delay was due to her endeavouring to obtain a copy of the transcript of the VCAT hearing, which she believed was essential for her to prosecute the appeal.

10 In her affidavit, Ms Boogs refers to a number of attempts made by her to prosecute the appeal and, in particular, to obtain copies of the transcript. These commenced on the day of the hearing when Ms Boogs applied to VCAT for the audio CD to be provided to Spark and Cannon for transcribing.

11 If leave to appeal is granted out of time, the basis for Ms Boogs' application and appeal is relatively simple. She says that the member applied the guarantees under s 54 of the ACL in relation to the supply of goods without ascertaining whether the Act applied to the agreement between Ms Missen and herself. Fundamental to the application of that section, is that the supply of the goods must occur 'in trade or commerce': s 54(1)(a). If this is established, then 'there is a guarantee that the goods are of acceptable quality'.[3]

12 It is not the task, on an application such as this, of this Court to examine the facts in any detail, as the sole question is that of whether there has been an error of law.[4]

14 After a round of negotiations between Ms Boogs and Ms Missen, Rex was purchased for $7,500 on 22 February 2015. Ms Missen wanted to buy the horse to compete in 'showing and eventing' (i.e. show jumping and one-day eventing). The agreement was in writing, and provided for the $7,500 to be paid by way of an upfront amount of $5,000 and the balance to be paid by weekly payments of $100. The agreement carried no express warranties as to the soundness of the horse nor for the carrying out of a veterinary examination.

15 Within a matter of weeks Ms Missen asserts that she had problems with Rex and particularly with his soundness. From May 2015 onwards, Ms Boogs and Ms Missen exchanged salvos about the soundness of the horse and the payment of the balance of the purchase price. From time to time solicitors were engaged by Ms Missen to act on her behalf.

16 A veterinarian, Dr Simon Pearce, the principal of Golden Plains Equine, examined Rex on 26 May 2015. He provided a report which identified that the horse:

was obviously abnormal behind (bilaterally lame) in both hind legs at the trot on the lunge and also resented trotting on the left rein, which was considered likely to be a result of lameness in the left fore.

17 He arranged for x-rays to be carried out, which demonstrated:

obviously arthritic changes in the tarsometatarsal and distal intertarsal joints of both hind legs. Radiographs of the front pasterns also showed signs consistent with arthritis (ringbone).

At the time of my examination this horse was not sound and would not be suitable as a competition (eventing) horse.

18 It is unnecessary to go into any great detail of the conduct of the hearing. It suffices to say that it was conducted at the Geelong Magistrates' Court on 8 December 2015 and the presiding member took evidence from both Ms Missen and Ms Boogs. The report of Dr Pearce was tendered. Ms Missen sought a refund of the amount she had paid for the horse. Ms Boogs sought payment of the balance of the purchase price.

19 Neither Ms Boogs nor Ms Missen were represented.

20 At the time of the hearing (and for that matter, the time of this hearing) the horse remained in the possession of Ms Missen.

21 It is necessary, however, given the primary ground of complaint, to set out the opening stanza of the hearing. The Member, having informed the parties that she had read the file and could see that there were 'a lot of facts in dispute', identified the main complaint being that the horse was not fit for showing or eventing and that was supported by the veterinary certificate. The Member then said as follows:

MEMBER: Right. Then there is a lot of material on the file about what Ms Boogs did or didn't know and other, you know, a whole history of stuff and I can understand why you think it very relevant but I just like to explain how the law works in this area. Ms Boogs, when you sell a good - and this horse is a good...under the Australian Consumer Law it implies into the contract of sale guarantees.

MS BOOGS: Yes.

MEMBER: Let me explain what those guarantees are. So there are nine guarantees that apply to goods - not all of those are going to be relevant - one of them is that the goods are of an acceptable quality at the time that they're sold.

MS BOOGS: Yes.

MEMBER: And that's a question of fact for the tribunal that I will decide on the balance of probabilities.

22 Having heard both Ms Missen and Ms Boogs and, as already noted, having examined the documentary evidence before her, the Member left the hearing room to consider her decision. She then returned and delivered an ex tempore judgment, which commenced as follows:

All right. Thank you for waiting. So as I indicated at the start of the hearing, there are a lot of facts in dispute in this case but ultimately the only question for me is whether on the balance of probabilities the applicant has been able to satisfy the Tribunal that at the time the horse was sold to her that the supplier, being Ms Boogs, did not comply with the Australian Consumer Law guarantees that the horse was an acceptable quality, that it was reasonably fit for its purpose, being to ride and to event. I think really they are the only two guarantees that are relevant to this application.

23 The Member then went on to summarise aspects of the evidence including the veterinarian certificate and concluded:

In those circumstances given that the applicant has been able to provide a report to the Tribunal that states categorically that the horse has arthritis and that there are a number of issues with the horse in relation to its hocks, I am satisfied on the balance of probabilities that at the time it was sold by the respondent to the applicant the horse was in that condition that that it was not of an acceptable quality and that it was not fit for the purpose for which the applicant bought the horse, which was to ride it and to event the horse.[5]

24 The Member ordered that Ms Boogs refund $5,000 along with associated veterinary fees of just short of $1,000. The claim brought by Ms Boogs for payment pursuant of the monies outstanding pursuant to the agreement was dismissed.

Should Ms Boogs be given an extension of time in which to bring her application?

25 The power to extend time is an unfettered discretion to be exercised judiciously. In Edwards v Transport Accident Commission, Derham AsJ identified some of the factors to be considered:

Other relevant matters have been held to include the length of the delay, the reasons for the delay, the chances of leave being granted if an extension of time is granted, and the degree of prejudice to the defendant if time is extended. Clearly, the party seeking the extension bears the onus of proving that it should be granted. An extension will not be granted if the case is hopeless, unarguable or bound to fail, because it would be futile to grant the extension in those circumstances.

Although the court does not decide an application to extend or enlarge time for doing an act according to some formula, the factors identified above provide a useful guide.[6]

26 The primary explanation given by Ms Boogs is that she believed that before she could issue the application she needed to have the transcript of the hearing available to her and that this belief flowed from some advice she received from the Court.

27 Ms Boogs' affidavit discloses multiple attempts made by her to secure the transcript over the months between December 2015 and August 2016.

28 In addition, as I mentioned earlier, Ms Boogs made contact with Court staff. Whilst I suspect that there may have been a degree of misunderstanding between Ms Boogs and the Court staff, I readily accept that she may well have been advised that a copy of the transcript of the hearing and the decision was integral to any appeal - as that is a standing instruction to the Registry staff. Similarly, it is notorious that obtaining transcripts of VCAT proceedings can be a difficult and time-consuming process for lawyers, let alone members of the community with no legal experience.

29 I also take into account the fact that Ms Boogs had represented herself below and, until the day prior to the hearing, this continued with little, if any, legal advice. The fact that she communicated with the Court Self-Represented Litigants Co-ordinator in February 2016 confirms that she has always intended to appeal the decision and this application was not just some late passing thought.

30 Finally, as I made clear at the hearing (and do so in these reasons), the application and appeal is well founded.

31 My only concern in relation to granting leave is that Ms Missen has expended an amount of just over $400 in relation to enforcement of the VCAT order. She was, of course, perfectly entitled to do so given that the application for leave to appeal had not been lodged.

32 I think that the appropriate solution is to grant leave to appeal out of time but only on the condition that Ms Boogs pay Ms Missen the costs concerned with the enforcement of the agreement. This ensures that there is no real prejudice to Ms Missen in allowing the application to be determined.

33 I should mention one other matter. During the hearing before me I indicated that I wished to see some email correspondence between Ms Boogs and Ms Missen which may be relevant to the provision of the transcript. Ultimately, I determined the case without reference to that correspondence as it seemed to me to be clear on the material that the certified copy of the transcript did not come into the possession of Ms Boogs until 12 August 2016 and then within three days she had instituted this proceeding.[7]

34 It is clear from the excerpts that I have referred to that the Member regarded the provisions of the ACL as being the only applicable law and that the exercise she was engaged in was to determine whether there had been a breach of those provisions. The member focused on s 54 of the ACL which reads as follows:

(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.

(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;

(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.

35 The 'guarantee' provided by s 54 of the ACL is only applicable where it is established that the transaction was 'in trade or commerce'. This expression, which has its genesis in previous iterations of the ACL (e.g. the Trade Practices Act 1974 (Cth)), requires the Court to be satisfied that the transaction has a commercial flavour in the sense described in cases such as Re Ku-Ring-Gai Cooperative Building Society (No 12) Ltd[8] and Concrete Constructions (NSW) Pty Ltd v Nelson.[9]

36 Such an inquiry, as cases such as Bevanere Pty Ltd v Lubidineuse[10] and O'Brien v Smolonogov[11] demonstrate, requires an examination of a number of factors relevant to the transaction. The following are illustrative (but not necessarily exhaustive) in the present case:

(c) whether the agreement reflects a commercial as opposed to a private deal;

(f) the dominant reason for the purchase of the horse; and

(g) the antecedents of the vendor and whether Ms Boogs engaged in such sales in the past such as to indicate that she was engaged in a business of trading in horses, rather than a one-off private sale.

37 So, in this case, ascertaining whether the transaction took place in 'trade or commerce' was an essential part of the legal exercise to determine whether the guarantee applied. Unfortunately, it follows that the Member's assumption (without analysis) that the guarantee in s 54 of the ACL applied was wrong and, on that basis, Ms Boogs is entitled to have the decision set aside.

38 I should add one other matter. In the event that this provision did not apply to the agreement then s 19 of the Goods Act 1958 (Vic) ('Goods Act') may apply.[12] I discussed with counsel for Ms Boogs whether the end result (i.e. judgment for Ms Missen) would have been any different if s 19 of the Goods Act was held to apply. Section 19 reads as follows:

Subject to the provisions of this Part and of any Act in that behalf there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows -

(a) where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not) there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose;

(b) where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods there shall be no implied condition as regards defects which such examination ought to have revealed;

(c) an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade;

(d) an express warranty or condition does not negative a warranty or condition implied by this Part unless inconsistent therewith.

39 That section would, if it were engaged, impose a statutory warranty of fitness for purpose or merchantability - of, arguably, a similar nature to that of the ACL s 54 guarantee. However, I accept counsel's submissions that there are a number of preconditions (as in the case of the s 54 guarantee) that need to be satisfied (and determined by VCAT) before that section is engaged - such as whether Ms Boogs was engaged in business; and whether Ms Missen relied on Ms Boogs' skill or judgment.

40 Just as there are no findings concerning the question of trade or commerce, there are no findings that could be relied upon to conclude that s 19 of the Goods Act warranty applied (or conversely was not engaged).

41 Finally, I do not wish to be seen to be prescriptive but, given what occurred at the VCAT hearing, I think the relevant steps in a case such as this may be as follows:

(a) determine the content of the terms of the agreement (express or implied by conduct) and any relevant representations that might either form part of the agreement or provide an alternative cause of action (such as a collateral contract or a misrepresentation);

(ii) if the ACL does not apply, under the Goods Act.

(c) determine whether the established factual matters constitute a breach of whatever terms are found to be part of the agreement.

42 I should add one other matter. Whilst I have found that the Tribunal was wrong in law, I am by no means critical of the way in which this hearing was conducted. Clearly, the Member endeavoured to give both parties a say, and considered the documentary evidence. This was done in the context of a very busy Tribunal and a claim over a relatively modest amount. Indeed, it may ultimately be that the Member was correct in applying the ACL - but that is not to the point. That said, I have considerable sympathy for the Member who, as far as I can tell, conducted a fair and common sense hearing, and delivered a clearly understood decision.

43 The application for leave to appeal and appeal are allowed and the orders of VCAT set aside. The only viable course of action is for the matter to be remitted to VCAT for further determination with the following orders:

1. Pursuant to s 148(5) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the Applicant have leave to extend time for the issuing of the application to 15 August 2016.
2. The Applicant is granted leave to appeal the orders of the Victorian Civil and Administrative Tribunal dated 8 December 2015 ("The orders").
3. Pursuant to s 148(7) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic):

(b) The orders are set aside and the matter is remitted to the Victorian Civil and Administrative Tribunal for rehearing by a differently constituted Tribunal.

1. The orders in paragraphs 1-3 are conditional upon the Applicant's payment of the Respondent's costs of $468.00, relating to enforcement proceedings and issuing of warrant, within 28 days.
2. The costs of the Applicant be fixed in the amount of $4,500.00.
3. The order in paragraph 5 be stayed until the finalisation of the VCAT proceeding.
4. A Certificate be granted to the Respondent, pursuant to s 4 of the Appeal Costs Act 1998 (Vic).
5. There be liberty to parties to apply.

[1] By virtue of s 8 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) the Australian Consumer Law (contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth)) forms part of Victorian Law.

[3] The section does not apply to a sale by way of auction.

[4] VCAT Act s 148(1). See Secretary to Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163; (2007) 18 VR 48.

[6] [2013] VSC 557, [37]-[38].

[8] [1978] FCA 50; (1978) 22 ALR 621, 648-649.

[9] [1990] HCA 17; (1990) 169 CLR 594.

[10] [1985] FCA 134; (1985) 7 FCR 325.

[11] (1983) 53 ALR 107.

[12] See s 31(1) of the Australian Consumer Law and Fair Trading Act 2012 (Vic).