Appellant v Respondents

2 In essence, the appellant's claim at VCAT was that the respondents were engaged to perform work on his vehicle. This work included the fitting of a turbocharger. The work was defective and/or the parts used by the respondents were defective. As a result of the defective work, the vehicle broke down shortly after the work was performed. Losses were suffered as a result. There were further dealings between the parties. Notwithstanding these further dealings, the vehicle (at the time the claim was made) remained "in a state of disrepair".[1]

3 The original amount claimed by the appellant was $15,000. This amount was the total of the payments made by the appellant to the respondents for the work they performed together with the losses the appellant alleged he suffered by way of tow truck fees, taxi hire, hire car and transmission repair costs. Originally, there was a counterclaim in the sum of $2,287.50. However, before trial, this amount was paid by the appellant, and then added as a further particular of loss to the appellant's claim.

4 The matter was heard at VCAT (constituted by member D. McCann) on 1 and 2 February 2010. On 9 March 2010, VCAT ordered the first and second respondents to pay the appellant the sum of $930, and dismissed the appellant's application against the third respondent.

5 On 11 November 2010, Daly AsJ gave the appellant leave to appeal pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 in respect of the following questions of law:

"(a) whether ... [the tribunal] erred in law in finding that Mr Peter McNamara had tampered with or interfered with the turbocharger in the plaintiff's vehicle; and

(b) whether ... [the tribunal] erred in law in finding that Mr Peter McNamara tampered with or interfered with the exhaust manifold in the ... [appellant's] vehicle."

6 Pursuant to the leave granted, the appellant filed and served a notice of appeal seeking that the appeal be allowed, the orders of VCAT to which I have referred be set aside and the proceeding be remitted to be reheard by a differently constituted tribunal. The grounds of appeal are as follows:

"1. The Tribunal Member erred in law, in that there was insufficient evidence before the Member to reach the conclusion, which in effect he did reach, that McNamara had interfered with or tampered with the components of the turbocharger in the Appellant's vehicle.

1. 2. The Tribunal Member erred in law in failing to sufficiently explain the path of reasoning that led him to conclude that Mr Peter McNamara had tampered with or interfered with the components of the turbocharger in the Appellant's vehicle.
2. 3. The Tribunal member erred in law in failing to sufficiently explain the path of reasoning, which led him to conclude that the Third Respondent had fitted a turbocharger with new seals and bearings.
3. 4. Given the Members finding of fact based on the expert evidence of Mr Ron Murphy, that:

(a) the turbocharger supplied by the Third Respondent was unserviceable;

(b) the exhaust side bearing was old (certainly more than 3000klm's [sic] old); and,

(c) its failure had caused the turbo vanes to come into contact with the housing;

the Member ought to have concluded that the Respondents had supplied and fitted a turbocharger that was of poor quality and in breach of the agreement between the Appellant and the Respondents.

1. 5. The tribunal member erred in law, in that there was insufficient evidence before the Member to reach the conclusion, which in effect he did reach, that Mr Peter McNamara had interfered with or tampered with the components of the exhaust manifold in the Appellant's vehicle so as to cause an exhaust leak.
2. 6. The Tribunal Member erred in law in failing to sufficiently explain the path of reasoning that led him to conclude that Mr Peter McNamara had tampered with or interfered with the components of the exhaust manifold in the Appellant's vehicle so as to cause an exhaust leak.
3. 7. Given the members findings of fact concerning the exhaust, that:

(a) there was an exhaust leak at the time when Mr Ron Murphy inspected the vehicle; and

(b) that the leak was caused by ill matching faces of the engine head and the exhaust manifold;

the Member ought to have concluded that the Respondents had poorly performed the work and were in breach of the agreement."

7 The VCAT judgment is 292 paragraphs in length. In paragraph 1, the parties are identified. In paragraph 2, the claim is described in broad terms. In paragraph 3, reference is made to an earlier order by which the parties were permitted representation by a lawyer. In paragraphs 4 and 5, the representation of each party is described. In paragraph 5, it is stated:

"The first respondent Coombe has provided written authority to Mannens to act on his behalf. It is accepted and I make the formal finding that Coombe and Mannens are jointly and severally liable for any order made against them."

8 To this point in the judgment, neither the issues nor what is in dispute between the parties is identified. The judgment then proceeds with the heading "Summary of contentions". Under this heading, the tribunal then sets out the evidence of:

(b) Ron Murphy, a mechanical engineer called on behalf of the appellant (paragraphs 50 to 94);

(c) Peter McNamara, a motor mechanic called by the appellant (paragraphs 95 to 111);

(e) the second respondent (paragraphs 158 to 207); and

(f) David Price, a motor engineer called by the respondents (paragraphs 208 to 220).

9 The evidence set out in paragraphs 6 to 220 is set out without reference to the issues and without explanation as to the significance of most of it.

10 The next heading in the VCAT judgment is "Jurisdiction". Under this heading, only the following appears:

"221. There is no jurisdictional issue in this case. It is a damages case, due to breach of contract as well as an action under the Fair Trading Act."

11 Next follows a section of the judgment headed "THE FACTS". This section of the judgment is divided into two parts:

(a) first, a section headed "Findings of fact - relevant matters, but not in dispute" (paragraphs 222 to 240); and

(b) a section headed "Findings of fact - identifying matters in dispute" (paragraphs 241 to 255).

12 Paragraphs 241 to 255 of the judgment are as follows:

"241. The initial dispute is whether Dimatos knew that he was dealing with Auto Academy regarding the installation of the turbocharger. Mahnken says he made it clear, Dimatos denies that.

1. 242. There is a dispute about whether Dimatos had relied on the 'expertise' of Wayne Mahnken in agreeing to pursue this project.
2. 243. The worth of the turbocharger unit is questioned. The condition of the turbocharger is disputed.
3. 244. The cost of the contract is disputed.
4. 245. There is a dispute as to the cause of the breakdown in NSW.
5. 246. The cause of the heating issue is disputed.
6. 247. The cause and significance of an exhaust leak is disputed.
7. 248. The existence of a tuning problem and its cause are in dispute.
8. 249. Whether the exhaust pipe hit the floor when driving is disputed.
9. 250. There is a dispute about what caused the damage to the transmission and also when the rebuilt transmission was fitted.
10. 251. The panel damage to the vehicle is disputed, particularly the heat damage to the bonnet. The claim for the panel repairs is disputed, both liability and cost.
11. 252. The workmanship is disputed.
12. 253. The liability for the rectification and the cost as provided by Peter McNamara is disputed.
13. 254. Some of the chronology is disputed.
14. 255. Some of the findings in the reports by the experts and Peter McNamara are disputed."

13 Paragraphs 241 to 255 is the first time in the judgment where what is in dispute is identified in any real way. However, it must be noted that precisely what is in dispute in respect of each matter and the basis of each such dispute is not identified.

14 The next heading in the judgment is "Findings of fact - matters in dispute". In this section (paragraphs 256 to 277), no less than 55 findings of fact are made. Most of these are made in sentences that commence "I find that ...". Regrettably, little (if any) explanation is given for the making of each of these findings. With respect to occasional findings, there is some surrounding reasoning. However, even in these cases such reasoning is, with respect, not easy to follow. For example, in paragraph 261 it is stated:

"Under cross-examination, McNamara admitted changing other parts and was unsure as to chronology. On more than one occasion, he turned in the hearing room to look at Dimatos. I find that this was an attempt to seek clarification and or support. I will say more later in the decision however I find that (sic) McNamara's evidence to be questionable. Therefore, while I accept Murphy's evidence, I am unable to find on the balance of probabilities that the unit had not been tampered with. I therefore find that probably Mahnken did fit new seals and bearings to the turbocharger."

15 While it may be that the reasoning in paragraph 261 is also based upon an earlier finding that the third respondent was "an honest, open witness", precisely why the appellant bore the onus of proving on the balance of probabilities that the unit had not been tampered with is not explained. The appellant bore the onus of establishing his claims for breach of contract, not that he had not tampered with some part of the subject matter of the contract prior to trial.

16 The next part of the judgment is headed "CONCLUSIONS". Under this heading, there are two sections:

(a) a section headed "Conclusions regarding the evidence" (paragraphs 278 to 286); and

(b) a section headed "Conclusions regarding the law" (paragraph 287).

17 Under the heading "Conclusions regarding the evidence" more findings are made. Most of these are made in sentences that begin "I find that ..." or "I find ...". Again, there is little in the way of any reasoning process in relation to these findings.

18 Under the heading "Conclusions regarding the law", there is only one paragraph (paragraph 287). That paragraph provides:

"287. Having regard to my findings of fact, I conclude that the respondents have partially breached the contract."

It is to be noted that nowhere in the judgment is there a precise description of the contract or a description of the relevant terms of the contract. Additionally, one is left to infer that the so-called "partial breaches" of the contract are constituted by the matters referred to in paragraphs 274, 275 and 276 of the judgment wherein findings are made that the applicant is entitled to $660, $50 and $220 respectively, and that all other claims made by the appellant (whatever they may be) are not made out.

19 Finally, there is then a two paragraph section in the judgment (paragraphs 288 and 289) under the heading "Costs", before the decision is recorded (paragraphs 290 to 292). In these last three paragraphs, under the heading "Decision", the first and second respondents are ordered to pay the appellant the sum of $930 and the proceeding as against the third respondent is dismissed.

20 Having made final orders dismissing the substantial parts of the appellant's claims, the tribunal was required to give reasons.[2] Whilst the extent of the reasons in any case will depend upon the circumstances of the case, the reasons should identify the issues in dispute; deal with the substantial points which have been raised; include findings on material questions of fact; refer to the evidence or other material upon which those findings are based; and provide an intelligible explanation of the process of reasoning that has led the tribunal from the evidence to the findings and from the findings to the ultimate conclusion.[3] Failure to expose this path of reasoning is an error of law.[4] Further, as has been said on a number of occasions, in general, the mere recitation of evidence followed by a statement of findings, without commentary as to why the evidence is said to lead to the findings, is "about as good as useless".[5]

21 Unfortunately, the reasons in the present case are deficient. No path of reasoning has been exposed. The failure to expose a path of reasoning is, as I have said, an error of law. Accordingly, the appeal must be allowed, and the orders made below must be set aside. Whilst the judgment below contains a substantial recitation of the evidence given, little (if any) explanation has been given as to why any particular piece of evidence (or the evidence as a whole) is said to lead to the critical findings leading to the final result. Much of the present problem may have been avoided if there had been a concise statement of the issues in dispute (including the parameters of each dispute) at the commencement of the judgment with the evidence (conflicting or otherwise) then being analysed by reference to those issues.

22 Ground 3 is thus made out. More specifically, the appeal must be allowed because the reasons of the tribunal for rejecting the substance of the appellant's claims[6] are not adequately disclosed in the tribunal's judgment.

23 In ground 2, complaint is made that the tribunal failed to sufficiently explain the path of reasoning that led to the conclusion that Mr McNamara had tampered with or interfered with the components of the turbocharger in the appellant's vehicle. The source of this ground is paragraph 261 of the tribunal's judgment. In that paragraph, the tribunal found Mr McNamara's evidence "to be questionable". It was then said to follow that the tribunal was unable to find on the balance of probabilities that the unit had not been tampered with. The appellant asserts that this is tantamount to a finding that Mr McNamara had tampered with the unit and therefore (accepting other evidence) the unit was appropriate as fitted. Whilst there is some force in the appellant's submission, in my view the reasoning in paragraph 261 is not clear enough to determine whether or not in fact the tribunal made a positive finding that Mr McNamara tampered with the unit. This is a further problem with the tribunal's reasons. Further, as I have said above, no explanation or reasoning is given in the judgment to explain why it was necessary for the appellant to prove that the unit had not been tampered with.

24 Ground 6 makes complaint that the tribunal failed to explain the path of reasoning that led it to conclude that Mr McNamara had tampered with or interfered with the components of the exhaust manifold in the appellant's vehicle so as to cause an exhaust leak. The source of this ground is paragraph 267 of the tribunal's judgment. That paragraph provides:

"267. I find that there was an exhaust leak at the time Murphy first inspected the vehicle. I find that the leak was caused by ill-matching faces of the engine head and the exhaust manifold. I accept the evidence of Mahnken when he said he faced the manifold. I have evidence that the cylinder head was similarly machined. I have evidence from Murphy that such a leak could be caused by loose bolts. I find that, at least Peter McNamara has done some work to the vehicle prior to Murphy doing his examination, and it is possible others may have also. On the evidence I am unable to find that Mannens or Mahnkens probably caused the exhaust leak to the extent claimed."

25 The appellant asserts that paragraph 267 contains a finding that Mr McNamara tampered with or interfered with the components of the exhaust manifold so as to cause the leak. Again, while there is some force in this submission, in reality the reasoning in this paragraph is not clear enough to be able to determine whether any such finding was actually made. While the reference to Mr McNamara's work suggests that such a finding might be made, the reasons again fail to disclose an actual path of reasoning on this issue. Further, there is no reasoning in the tribunal's judgment linking the finding in the last sentence to the balance of the reasoning. As such there is no path of reasoning disclosed that leads to this finding, and the ultimate dismissal of this part (whatever it was) of the appellant's claim.

26 Having concluded that the appeal must be allowed because the reasons of the tribunal are inadequate, it is not necessary to deal specifically with the balance of the grounds of appeal. However, for the sake of completeness I will make brief reference to them.

27 In advancing argument in respect of the remaining grounds of appeal (grounds 1, 4, 5 and 7), the appellant placed significant reliance upon Fox v Percy[7] and other decisions in this line of authority. This reliance was misconceived. The Fox v Percy line of authority deals with cases where the appeal is an appeal as of right and is a rehearing. Appeals in such cases are to be contrasted with the present appeal, which is an appeal by leave on a question of law. As has been said before, a question of law is not involved in a decision simply because a tribunal makes one or more findings of fact that are not supported by evidence; nor is it sufficient that the reasoning whereby a conclusion of fact is reached is demonstrably unsound.[8]

28 The appellant's arguments in respect of grounds 1, 4, 5 and 7 laboured to convert what are essentially questions of fact into questions of law. As Phillips J said in Nikolic v Schultz:[9]

"Such attempts have not gone unnoticed by the courts which have tended to deprecate the practice of 'attempting to magnify or inflate questions of fact into questions of law and trying to obtain decisions from the courts on matters which the legislature would appear to have thought suitable for decisions by' some other body ...".

29 In any event, having determined that the appeal should be allowed and the matter reheard, it is not necessary to say anything further about grounds 1, 4, 5 and 7.

30 The appeal must be allowed. The orders made by the tribunal on 9 March 2010 must be set aside. The matter will be remitted to be reheard by a differently constituted tribunal. I will hear the parties on the precise form of order and any question of costs.

[1] See the appellant's Application to Civil Claims List dated 3 June 2008.

[2] Victorian Civil and Administrative Tribunal Act 1998, s 117.

[3] Hunter v Transport Accident Commission & Anor [2005] VSCA 1, [21].

[4] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, 279-280 and 282; Fletcher Constructions Australia Limited v Lines Macfarlane & Marshall Pty Ltd [2001] VSCA 167; (2001) 4 VR 28, 35 [18]; Hunter v Transport Accident Commission & Anor [2005] VSCA 1, [21]; Franklin v Ubaldi Foods Pty Ltd [2005] VSCA 317, [38] and Transport Accident Commission v Kamel [2011] VSCA 110, [71].

[5] Hunter v Transport Accident Commission & Anor [2005] VSCA 1, [28] and Transport Accident Commission v Kamel [2011] VSCA 110, [73].

[6] Being the appellant's claims other than the three claims assessed at a total value of $930.

[7] [2003] HCA 22; (2003) 214 CLR 118.

[8] See Transport Accident Commission v O'Reilly [1992] 2 VR 436, 460 [58] (per Callaway JA).

[9] Unreported Supreme Court of Victoria delivered 22 October 1991.