Bob Abbott v Charlton Lakeside Marine v Charlton

Original decision and grounds of appeal 12In its reasons for decision, the Tribunal made the following findings: (d)Mr Charlton purchased a number of outboard motors from All Inflatable Boats without problems, including the Tohatsu motors on 6 August 2012. (e)Problems were reported in about June 2013 with the air compressor attached to the motor. (f)Almost immediately after fitting the new compressor, salt water was noticed on the engine block near the compressor mounting bolts. This was identified as a hairline crack in the engine block. (g)None of the parties have provided expert evidence sufficient to prove the cause of the crack. (h)"There is certainly no evidence to prove the allegation of a manufacturing defect". (i)There is no manufacturer's warranty applicable. (j)Mr Charlton was "not able to prove on the basis of independent expert evidence that there is a manufacturing fault, but neither have the (appellants) demonstrated their stated cause of the crack". (k)The outboard motor was required to "withstand the usual rigours of a motor used in the conditions of the Torres Strait. (l)"Without being able to demonstrate any particular manufacturing fault (the Tribunal was) satisfied that the goods the subject of this claim cannot be stated to be fit for all purposes of such goods, or durable". (m)There was a major defect and Mr Charlton would not have purchased outboard motor if he was aware it would not be durable enough for his purposes. (n)In these circumstances there was a breach of the guarantee found in section 54 of the Australian Consumer Law. 13Each of the appellants contends that the decision of the Tribunal was in error for the following reasons: (a)The decision in respect of the guarantee under section 54 of the ACL that the goods were not fit for purpose or durable is against the weight of evidence and contrary to the finding that a manufacturing fault had not been proven. (b)The evidence demonstrated that the respondent was carrying out his own repairs and maintenance and that despite the crack the outboard motor continues to be operated by the respondent; (c)The particular defect was, in any event capable of repair; (d)The evidence from the appellants was sufficient to explain the crack and that it occurred in consequence of the failure of the air compressor, for which the appellants were not responsible. 14In reply, the respondent said the decision of the Tribunal was correct and/or the appeals should be dismissed for the following reasons: (a)The evidence provided supported a conclusion that a manufacturing defect exists. Two reports were provided by the respondent including from The Tinnie Shack, an authorised Tohatsu dealer; (b)The payment required in order 3 made 1 September 2014 has not been satisfied and a stay of the original orders had been refused;

Decision 15The original decision of the Tribunal is an internally appealable decision. Pursuant to section 80 of the Civil and Administrative Tribunal Act, 2013 (Act) there is a right of appeal on a question of law without leave and on any other question with leave. In an appeal from a decision of the Consumer and Commercial Division there is an additional requirement for leave set out in clause 12 of Schedule 4 of the Act, namely that an appellant must demonstrate they have suffered a substantial miscarriage of justice because: (a)the decision of the Tribunal under appeal was not fair and equitable; (b)the decision of the Tribunal under appeal was against the weight of evidence; or (c)significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were dealt with). 16The meaning of and relevant considerations in determining whether there has been a substantial miscarriage of justice were dealt with by the Appeal Panel in Urban v Collins [2014] NSWCATAP 17. 17In our opinion, the Tribunal made two errors of law in the original decision. 18Firstly, having found that: (a)The outboard motor had been in operation for more than 10 months prior to the crack first appearing near the mounting points of the air compressor; (b)there had been a failure of the air compressor shortly before the crack had been noticed; (c)there was certainly no evidence to prove the allegation of a manufacturing defect; (d)Mr Charlton was not able to prove on the basis of independent expert evidence that there is a manufacturing fault; and (e)no particular manufacturing fault was demonstrated the conclusion that the outboard motor supplied by the appellant Bob Abbott was not of acceptable quality within the meaning of section 54 of the Australian Consumer Law was a decision contrary to the facts as found.and constitutes an error of law: see Sammut v AVM Holdings Pty Ltd (No 2) [2012] WASC 27 at [91]. 19Secondly, there is an error of law in so far as an award under section 54 was made because the appellants failed to "demonstrate their stated cause of the crack". 20The Australian Consumer Law does not have a provision which places upon a respondent to a claim the onus to prove that the goods are of acceptable quality within the relevant statutory definition. The error is that the conclusion of the Tribunal reverses the onus of proof under section 54 by requiring a respondent to a claim to demonstrate that any fault appearing in the goods was not caused by the supplier. 21The essential element in the respondent's cause of action was the fact that the goods were not of acceptable quality in breach of s 54(2) of the Australian Consumer Law. In the absence of a statutory provision to the contrary, the onus of proof must fall upon the respondent; see eg Currie v Dempsey (1967) 69 SR (NSW) 116 per Walsh JA at 125. 22In these circumstances the appeal should be allowed and the original order for payment of the refund set aside. 23The question is whether the proceedings should be remitted for rehearing or dismissed. This depends on whether the findings of the Tribunal should be upheld or set aside. The relevant findings were: (1)that there was certainly no evidence to prove the allegation of a manufacturing defect; and (2)None of the parties has provided expert evidence sufficient to prove the cause of the crack. 24The appellants contended that the evidence provided by them was sufficient to prove the cause of the crack and that the Tribunal failed to properly understand and evaluate the evidence. 25The respondent to the appeals contended that the evidence before the Tribunal demonstrated there was in fact a manufacturing fault for which the appellants were responsible. In this regard the respondent relied upon a statutory declaration of Mr Paltridge made 26 August 2013 and a letter from Mr Grieve of The Tinnie Shack dated 27 November 2013, an authorised Tohatsu dealer. The respondent also accepted that the outboard motor could be repaired and that he continued to use the outboard motor, at least for limited purposes. 26Relevantly, Mr Paltridge said: (a)he inspected the motor and observed a crack in the engine block which, in his opinion, appears to be a fault in the casting rather than fair wear and tear; and (b)the mounting points for the air compressor show no signs of having been loose. 27Mr Grieve, a director of The Tinnie Shack said: (a)he inspected the motor and there is a crack in the block above the rear mounted stem for the compressor unit; (b)he believed this is a manufacturing issue because he could not see another reason for this crack to be in this position on the block; (c)the crack is too far away from the mount steam to be caused by over tightening the rear mounting bolt; (d)the bolt does not bottom out in the thread and the thread is clean and intact; (e)if the bolts were loose and vibrating, any damage would have been closer to the mount stem or the mount itself. 28The above evidence was not independent expert evidence and the provisions of Practice Direction 3: Expert Witnesses had not been met. 29The appellants also provided evidence to the Tribunal by way of letter dated 29 October 2013. Again this evidence was not independent expert evidence and the provisions of the Practice Direction had not been met. The effect of this evidence was as follows: (a)the premature failure of the air compressor components has occurred and the fracturing and dislodgement of the internal reed valve assembly has resulted in the intermittent locking up of the air compressor as internal components are driven together by inertia transmitting excessive undue stress to all mounting points of the air compressor; (b)as the stress fracture appeared after fitting of a second air compressor misaligned fitting or incorrect tensioning of the air compressor mounting bolts could also contribute to the formation of such a stress fracture. 30Oral evidence was also given on behalf of Lakeside by Mr Denny at the original hearing of the Tribunal to this effect and photographs of the outboard motor showing the crack and failed air compressor were referred to which had been examined by Lakeside in providing its report. The photographs had been provided by the respondent. 31It was common ground that the photographic evidence of the air compressor showed it had failed and it was not contended in the proceedings before the Tribunal or in the appeal that the appellants were liable for the failure of the compressor. There was no relevant evidence that might attribute to the appellants any responsibility for the failure of the air compressor. However the respondent said that the air compressor did not "lock" and was free when he removed it. 32Having listened to the audio recording of the original hearing and reviewed the reports referred to above, we have come to the conclusion that the Tribunal's original decision that the respondent had not proved a manufacturing defect was correct for the following reasons. (a)The evidence of Mr Paltridge provides no basis for his opinion, he has not explained the failure mechanism that caused the crack in the block nor has he provided an explanation as to why the block might crack after more than 10 months operation in the environment of the Torres Strait. (b)Mr Grieve from The Tinnie Shack does say that if the bolts were loose or vibrating that the damage would be done closer to the mount stem or in the mount stem itself. However similarly to Mr Paltridge, while Mr Grieve says he could not see another reason for the failure, no explanation is given as to the basis of his opinion that there was a manufacturing fault, the mechanism of failure is not explained and no metallurgical examination been undertaken to demonstrate a flaw in the block; (c)While Mr Grieve does say that the crack is too far away from the mount stem to have been caused by over tightening of the rear mount bolt, and that the threads of the mounting bolts are clean and intact, he does not address the issues which Lakeside says was the cause of the failure, namely the failure of the air compressor and the installation of the new air compressor which induced a stress fracture in the block. 33On the other hand, Lakeside has provided an explanation as to how stress was induced in the block close at the point of the crack by reason of the failure of the air compressor and that the reinstallation of the new air compressor, even if the bolts were tight, could have contributed to the crack due to the various bolts being incorrectly tensioned or the new air compressor being misaligned. The appellants also point to the fact the outboard had been operated without failure for more than 10 months and the crack only appeared after the failure of the air compressor for which the respondent did not contend the appellants were responsible. The appellants' explanation about how the stress was induced was provided by reference to the photographic evidence provided to them by the respondent. 34While it is true that none of the opinions from the various parties were in the form of independent expert evidence, each party has had an opportunity to present what evidence they wish and in the context of a claim in the Tribunal have done so using various qualified personnel, there being no suggestion that those presenting various statements were not experienced in the use, servicing and operation of outboard motors. While not independent expert evidence, it is nonetheless relevant evidence from people whose qualifications were not challenged. 35The rules of evidence do not apply in the Tribunal and statements from qualified people or those with relevant experience may be relied upon by the Tribunal in making findings of fact. For example, as was pointed out by the Appeal Panel in Khan v Kang [2014] NSWCATAP 48, a quotation for carrying out repair work may be evidence of the existence of defects and the reasonable cost of repairs which must be evaluated and given weight in the fact finding process undertaken by the Tribunal. 36However, that does not relieve the person making the claim from having to prove the matters asserted and the evidence provided by a relevant witness must be capable of evaluation to enable the Tribunal to make appropriate findings of fact. 37In the present case, the respondent's evidence does not explain what caused the failure, whether arising from the casting of the block or some other reason. It does not explain why the defect did not manifest itself at some earlier point in time in circumstances where the outboard motor had been in operation for about 10 months. 38On the other hand, the appellants' evidence provides an explanation as to how a stress was induced by reason of the failure of the air compressor, that damage to the air compressor being shown in the photographic material provided by the respondent. 39The respondent had the Lakeside report (apparently sent about 31 October 2013) prior to obtaining The Tinnie Shack report from Mr Grieve (dated 27 November 2013). Mr Grieve did not respond to this report, other than in relation to whether the bolts show signs of over tightening or by suggesting that loose bolts would have produced a failure in a position closer to the stem mounts. In this regard the Appeal Panel notes the last point in Mr Grieve's opinion suggests that problems with the bolts could give rise to a failure in the block (rather than in the stem), although in a different location closer to the stem. 40There was no evidence in reply from the respondent dealing with the opinion that stress was induced by the failure of the air compressor or that there may have been a misalignment of the replacement air compressor. 41In these circumstances, in the opinion of the Appeal Panel the Tribunal was correct to conclude on the evidence before it that a manufacturing defect had not been established. 42Further, a review of the evidence leads the Appeal Panel to conclude (a)that there was sufficient evidence before the Tribunal to conclude that the crack to the block was caused by the failure of the air compressor and/or contributed to by the fitment of the replacement air compressor; and (b)that there was no explanation as to why the outboard motor had operated without failure for 10 months, and that having regard to these conclusions the appellants have demonstrated on the balance of probabilities that the crack in the block was not a manufacturing defect. 43Therefore the appeals should be allowed, the original orders set aside and in lieu thereof the application of Mr Charlton dismissed. 44A final matter to be dealt with is the directions made on 1 September 2014 and whether this appeal is competent. 45As indicated above, no order dismissing the proceedings was in fact made by reason of the appellants' failure to pay the amount of the original order. The respondent first advised the Tribunal that payment had not been made by email dated 24 September 2014. 46In the opinion of the Appeal Panel, the grant of leave to appeal pursuant to order 2 was not conditional on payment. Rather, the form of orders was that leave was granted. The grant was not on terms that it would be revoked if the payment was not made. Rather the appeal was to be dismissed under s55(1)(b) of the Act. This form of order contemplated a competent appeal that was subsequently to be dismissed if payment was not made. 47The form of order 3 was not self-executing. Rather, Order 3 contemplated the making of a further order at a future date to dismiss the appeal. One would expect that order could be made upon proof that the required payment had not been made. 48The request to dismiss was effectively made by the respondent on 24 September 2014. 49As no formal order to dismiss had been made prior to the constitution of the present Appeal Panel, in our opinion the appeals remained on foot when listed before the Appeal Panel for hearing. 50The request to dismiss came to the attention of the Appeal Panel as presently constituted to hear the appeals. The Appeal Panel has declined to make that order. This is because it is not satisfied the proceedings should in the circumstances be dismissed under s55(1)(b) of the Act. Having regard to the views we have expressed, the appeals are not shown to be "frivolous or vexatious or otherwise misconceived or lacking in substance". 51Further, in so far as we are wrong in our interpretation of the order, we would have exercised our discretion under section 41 of the Act and extended time to comply with this condition up to and including the disposition of this appeal. Once set aside, the order for payment ceases to have effect. As provided by subsection 41(2) such discretion can be exercised despite the fact the time for compliance has already expired: see FAI General Insurance Company and Ors v Southern Cross Exploration NL and Ors 165 CLR 268 at 286. This is because a review of the reasons of the Tribunal to the effect that a manufacturing fault had not been proven and yet an award was made in favour of the Mr Charlton demonstrate an error on the face of the award which if not corrected would be an injustice to the appellants. Further, having regard to the original decision and the relative strength of the appeal, to compel payment as a condition of appeal would have meant that the respondent received both a full refund of the purchase price of the outboard motor as well as retaining and operating the outboard motor as has occurred. 52Accordingly the Appeal Panel makes the following orders in each of appeals AP 14/46481 and AP 14/46482: (c)Appeal allowed; (d)The order made by the Tribunal in application GEN 13/52217 on 1 May 2014 is set aside; (e)Application GEN 13/52217 is 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: 23 December 2014