Bentley v Garage 88 Sydney Pty Ltd

Notice of appeal and submissions

1. The appellant filed a Notice of Appeal on 14 July 2016. The appeal was filed in time.
2. The appellant sought the following orders: 1. That the respondent is to supply the appellant with a standard left hand side mirror unit cover for a Toyota GT 86 (compliant with Australian standard; ie a folding unit); 2. That thereafter the appellant return the previous unit to the respondent at the cost of the respondent. 3. The respondent is to pay the costs of the appellant to have the incorrect part removed and the correct installed; [OR] 1. In the alternative to 1-3 above; 1. That the respondent refund of the $420 previously paid; 2. That the respondent pay damages in the sum of $528.15 (being the difference between the sum paid that (sic) the cost to the appellant to obtain the part from a different supplier); 3. That the appellant return the incorrect unit to the respondent at the respondent's cost within 60 days; 4. That the respondent pay the costs of the appellant to have the incorrect part removed and the correct are installed; 1. That in addition to 1-3 [or 4(a)-4(d)] above, the respondent pay the costs of the appellant namely: 1. Filing fee for the application to NCAT: $47.00; 2. Filing fee for this Notice of Appeal: $405.00.
3. The appellant contended the Tribunal made a number of errors.
4. The appellant said that the Tribunal incorrectly assessed damages. The appellant said that he was entitled to damages to place him in the position as if the contract had been performed and that the Tribunal incorrectly made an award to place him in the "position he would have been in had the contract not been entered into". He said that the cost of acquiring a part suitable for his Australian specified Toyota from an alternative supplier was $948.15. This was the amount in a quote he obtained in about 3 December 2015 for the purpose of evidence in his application to the Tribunal, a copy of which was provided at the hearing at first instance.
5. The appellant said that the Tribunal correctly found there was a contract between the parties for the supply of a mirror unit suitable for fitting to an Australian specified Toyota. However, insofar as the Tribunal found there was a mistake by the respondent in entering a contract for the supply of a folding mirror unit at a price less than half the cost of obtaining such a mirror unit from an alternative supplier, the appellant said that the Tribunal was in error in concluding that the appellant's remedy was limited to an amount of $420.00 being a refund of the original purchase price upon return of the original mirror unit. The appellant said as a matter of fact and a matter of law there was no mistake on the part of the respondent, and even if such a mistake existed there was no basis to conclude the appellant suspected the quoted price was incorrect or was for a different part to that which the appellant sought to purchase. Consequently, there was no basis to order restitution on grounds of mistake.
6. Through his representative, the appellant made similar oral submissions at the hearing of the appeal.
7. When questioned by the Appeal Panel concerning the fact that the mirror had been installed and used for some time until proceedings were commenced in 2015, the appellant said that the mirror was needed in order to drive the vehicle. The appellant also said it was not until the part was installed on the car that the lack of functionality of the folding mirror became known. Further, the appellant said that the respondent had in effect consented to the use of the mirror in the intervening period.
8. Consequently, the appellant said he was entitled to orders in the nature of specific performance or damages being the difference between the amount paid and the cost of a mirror unit that met the Australian specification (with the appellant to keep the old mirror unit).Alternatively, the appellant sought orders that the mirror unit be returned and the appellant received a total of $948.15.
9. Further, the appellant said there had been no failure to mitigate his loss and damage. Rather, he was entitled to be supplied with the correct part at the quoted price.
10. On the issue of mistake, the appellant accepted that a party to a contract might be relieved from the consequences of a unilateral mistake where the other party had acted unconscionably. However, the appellant said that there was no evidence of unconscionability in the present case. Further, there was no basis to conclude there was any mistake because the respondent, having recognised the incorrect part had been supplied, offered to and did acquire the correct part for an Australian specified Toyota.
11. The respondent filed a Reply to Appeal dated 10 August 2016. In that reply, the respondent said that the decision was not unfair for the reasons explained by the Tribunal at [30] of the decision. The respondent said that the appellant had the use and benefit of the original mirror unit and knew, when ordering the part, that the price was half the cost of the part he wanted and was therefore on notice that the respondent was "operating under a mistake".
12. At the hearing of the appeal, in discussions with the Appeal Panel, the respondent's representative accepted the Tribunal's finding at [23] that the mirror on a standard Toyota GT 86 was a folding mirror, but submitted there was no basis for the Tribunal to conclude the appellant's car was a standard vehicle. The respondent said that, in reading the decision, it cannot be discerned whether or not the Tribunal found the appellant vehicle was a standard vehicle.
13. Further, the respondent says that having found the respondent was operating under a mistake, the Tribunal should have concluded that no contract had been formed. Consequently, the order for restitution was appropriate.
14. In relation to the issue of costs of the appeal and whether or not there were special circumstances, neither party sought a costs order.

Consideration

1. The appellant challenges the decision of the Tribunal on the basis that the Tribunal made errors of law and errors of fact. In relation to errors of law, the appellant has a right of appeal and otherwise requires leave of the Appeal Panel: see s80(2)(b) of the Civil and Administrative Tribunal Act, 2013 (NCAT Act). Leave may only be granted if the appellant may have suffered a substantial miscarriage of justice: see Sch4 cl12 of the NCAT Act.
2. The appellant did not provide a copy of the sound recording of the hearing at first instance. The appellant proceeded on the basis of the reasons for decision provided by the Tribunal and the findings made therein. The only documents provided to the Appeal Panel were the Notice of Appeal, the Reply to Appeal and a copy of the original application which had attached to it the documents referred to in the reasons including various emails and a quotation from CMI Toyota dated 3 December 2015 in the sum of $948.15.
3. The essential findings of the Tribunal were as follows: 1. The parties entered into a contract, the essential term of which was that the applicant be provided with a standard mirror unit for a Toyota GT 86, which mirror unit included "a folding mirror" function: [19], [23] and [24]. 2. The mirror unit supplied was "a three wire unit i.e. not a folding mirror".[21]. 3. The appellant was therefore entitled to damages for breach of contract: [25]. 4. The time at which damages is to be assessed is the time when the appellant discovered there had been a breach of contract: [28]. 5. No issue was raised by the respondent that the appellant failed to mitigate his loss and therefore no such finding was made: [29]. 6. Specific performance should not be ordered nor should an amount of money be ordered in excess of what the appellant paid to the respondent as to do so would be contrary to the rules of betterment and would not be fair and equitable. [30]. 7. Given the evidence that the applicant had been quoted a price for supply of the correct mirror unit of $948.15 from Toyota Australia prior to the placing of the order, it was reasonable to assume the appellant was aware that the respondent had made an error when quoting the price of $420.00. However, rather than raise this issue with the respondent, the appellant chose to obtain a benefit from the respondent's error, that is to obtain a new part with the difference in price being borne by the respondent. [30].
4. Consequently, the Tribunal ordered the respondent to refund the appellant $420.00 being the purchase price of the incorrect mirror unit and ordered the appellant to return the mirror unit to the respondent.
5. The first question is what was the proper measure of damages for breach of the contract of supply?
6. It is clear that the Tribunal accepted the goods supplied were not in conformance with the contract. Consequently, the usual measure of damages for breach of contract was the amount of money necessary to bring the goods into conformity. As was said by the High Court in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at [5]. In assessing damages in cases which are concerned with the sale of goods the measure, prima facie, to be applied where defective goods have been tendered and accepted, is the difference between the value of the goods at the time of delivery and the value they would have had if they had conformed to the contract.
7. It is clear that when the appellant discovered the error, he sought to return the nonconforming mirror and have it replaced by a standard mirror. This was an option available to him under the contract. However, when advised by the respondent by email on 10 July 2014 that a conforming mirror was available for supply, the appellant did not elect to return the mirror, but rather retained it having installed it and used it on his motor vehicle. The appellant subsequently commenced proceedings nearly 18 months later seeking a payment to him for the then price of a new mirror, namely $948.15.
8. There is no evidence before the Appeal Panel to explain why this occurred and there are no findings by the Tribunal about these issues. Absent such a finding, the only conclusion the Appeal Panel can reach is that the appellant accepted and used the original mirror unit, in consequence of which he was entitled to sue for the difference in value.
9. There was no issue raised at the original hearing or on appeal that the value of the goods originally supplied (the nonconforming mirror unit) was $420.00, being the price paid.
10. Further, the evidence of the value of goods conforming with the contract at the time of supply was $820.00 (including GST). This was the price of a mirror unit conforming with the contract (ie a folding mirror for an Australian specified Toyota GT 86) which the respondent otherwise offered to supply at a "10% reduction… (Offered) 'for your trouble'" . Decision at [18].
11. At this time, namely July 2014, it was open to the appellant to seek orders in the nature of specific performance and require the respondent to provide a standard (folding) mirror unit for the sum of $420.00 originally paid. However, having accepted and used the nonconforming mirror unit for nearly 2 years before the Tribunal proceedings were heard, in our view the appellant's actions can only be seen as an election to accept the goods. Consequently, in the present circumstances, any claim was limited to an award of damages.
12. The appellant contended that the installation and use of the goods had been authorised by the respondent. There is no evidence to support this submission provided in this appeal. Further, such a submission appears inconsistent with the evidence provided by the respondent that on 10 July 2014 it told the appellant that upon "the (appellant returning) the unused unit in its original packaging and upon receipt a refund of the purchase price would be issued". Decision at [18].
13. Further, while the appellant claimed the price of conforming goods was $948.15, the quotation relied upon from Toyota was, as the appellant submitted, dated 3 December 2015, more than a year after the goods had been supplied. Again, in the absence of an explanation as to the delay in commencing proceedings, such evidence was not material to assessing damages at the time of breach of the contract.
14. Consequently, and subject to the issue of mistake, the appellant was entitled to the difference between the goods actually supplied ($420) and the value of goods in conformance with the contract ($820) a difference of $400.
15. The other issue to be dealt with appeal is whether the Tribunal was correct to order a refund on the basis of a unilateral mistake.
16. This issue was recently considered by the Appeal Panel in Royal Diamonds Pty Ltd v Buttle [2016] NSWCATAP 230. At [26] and following the Appeal Panel referred to various authorities including a decision of Barrett J in Fox Entertainment Precinct Pty Ltd v Centennial Park and Moore Park Trust [2004] NSWSC 214. In referring to the decision of the High Court in Taylor v Johnson (1983) 151 CLR 422 His Honour said at [24]: In the case of unilateral mistake, where the actuating misapprehension is said to have operated upon one party but not the other, rectification is generally not permissible. There is, however, an exception where the party not under the misapprehension is guilty of fraud, whether actual, constructive or equitable. The relevant principle was stated by Mason ACJ, Murphy and Deane JJ in Taylor v Johnson (1983) 151 CLR 422 at 432-433 as follows: "The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension. ... In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party's actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it."
17. At [30] of the decision, the Tribunal said: Given the evidence of the [appellant] (Folio 10 [appellant's] submissions) he had been quoted a price of $948.15 from Toyota Australia prior to placing the order with the respondent, it is reasonable to assume the [appellant] was aware the respondent had made an error when quoting the price of $420. The applicant did not raise this with the respondent. Rather he chose to seek to obtain the benefit of that error. The [appellant] would then be able to obtain a new part with the difference in price being born by the respondent. This being in the context of his having used the supplied part for some two years.
18. Consequently, the Tribunal refused to make the orders sought and ordered a return of the goods and refund.
19. Implicitly, this finding suggests that the Tribunal was satisfied it would be unconscionable for the appellant to rely on a mistake made by the respondent because that mistake was known to the appellant at the time he entered into the contract and the appellant inappropriately sought to take advantage of that mistake.
20. In our view, this decision cannot be sustained for two reasons.
21. Firstly, there are no findings in the decision to support the conclusion that the respondent in fact made a mistake in pricing the goods which it agreed to supply. To the contrary, the evidence suggests that the respondent accepted that it had supplied the wrong goods and went about acquiring the correct goods as a replacement. see eg [10] and [13]. It was not until the email of 10 July 2014 that the issue of any extra cost was first raised by the respondent. The evidence and findings record that at the time the contract was formed the respondent intended to sell a mirror unit suitable for an Australian specified car at an agreed price that was $420. The fact that it was substantially less than the price offered by a Toyota dealer is not of itself sufficient to conclude there was any inappropriate conduct by the appellant, let alone to conclude the appellant kept quiet knowing a mistake had been made.
22. Secondly, the basis upon which the Tribunal has imputed knowledge to the appellant of the respondent's mistake is that the appellant had received the quotation from the Toyota dealer for $948.15 prior to entering into the contract.
23. The problem with this conclusion is that the quotation which was attached to the appellant's original application is dated 3 December 2015, more than a year and a half after the contract was formed. Otherwise, there was no evidence identified by the Tribunal or referred to in the decision that would support the conclusion that, at all prior to the date of the contract, the appellant knew that a mistake had been made.
24. Therefore there was no basis to conclude the contract should be set aside and an order for restitution made because of unilateral mistake.
25. Otherwise, it seems to us there was no basis to reduce the award for damages because of the principles of betterment. Rather, the appellant was entitled to be compensated for the loss of bargain arising from the respondent's failure to supply goods in conformance with the contract at an agreed price.
26. It follows that the Tribunal was in error in ordering return of the goods and a refund of monies paid. Further, having regard to the matters set out above, we are satisfied that the appellant may have suffered a substantial miscarriage of justice and, to the extent necessary, leave should be given to appeal on a question other than a question of law.
27. Accordingly, leave to appeal should be granted, the appeal allowed, the orders of the Tribunal set aside and in lieu thereof an order made in favour of the appellant in the sum of $400.00. The appellant is otherwise entitled to retain the mirror unit originally supplied.
28. In his Notice of Appeal, the appellant also sought to recover its costs being the filing fee of the original application of $47.00 and the costs of filing the Notice of Appeal in the sum of $405.00.
29. As stated above, at the hearing of the appeal the appellant did not pursue his cost of the appeal which included the filing fee for the appeal. Accordingly no order should be made for the amount of $405.00.
30. In relation to the filing fee of $47.00 for the original application, this amount represents the costs incurred in the original proceedings.
31. An award of costs in the original proceedings is regulated by s60 of the NCAT Act. This requires a party claiming costs to demonstrate special circumstances. Otherwise the party is to pay their own costs.
32. No submissions were provided to the Appeal Panel to suggest that the original proceedings were out of the ordinary. See Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11] and following. No features of the case we have identified suggest the original proceedings were out of the ordinary. Accordingly, no order should be made in respect of the filing fee.

Orders

1. The Appeal Panel makes the following orders: 1. To the extent necessary, leave to appeal is granted; 2. The appeal is allowed and the orders made 27 June 2016 are set aside; 3. In lieu thereof the Appeal Panel makes the following order in application GEN 15/66915: The respondent is to pay the applicant the sum of $400.00 immediately. 1. Each part is to pay their own costs of the appeal and the proceedings at first instance.

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: 06 January 2017