Burger v Orca Corporation Pty Ltd trading as KAYAKS2FISH

Fair Trading

1. On 25 August 2021, the applicant advised Orca that he had been in contact with NSW Fair Trading for guidance on the matter. Mr Burger said that Fair Trading's view was that the nature of the complaint is a "fit for purpose" issue and there is a major fault in the goods supplied. Mr Burger suggested that Fair Trading is willing to take the matter further if the parties are not able to come to a solution.
2. Mr Burger's e-mail to Orca around that time is in the following terms: I would really appreciate it if I could get a refund for the kayak and the trolley. I am happy to wear the costs of the pedal drive and loss of my personal possessions.

The refund

1. The applicant alleges that the goods are "not fit for the purpose" as supplied, being a sub-set of matters set out at section 54 ACL, the overarching provision of the statutory guarantee being that the goods are of "acceptable" quality.
2. If Mr Burger is successful in his application, he concedes that the pedals propelling the kayak were allegedly not properly secured on the kayak's second use, having been lost on the kayak's first use. Mr Burger concedes that the nett effect of that concession is that any refund to which he may be entitled is limited to $ 1,000.

The manufacturer's guidelines

1. An issue arose during the course the hearing, raised by the tribunal member, that the manufacturer's guidelines indicated that the trolley was suitable for the transportation of a kayak up to 3.2 M.
2. It was non-controversial that the length of the kayak was 3.3M and one of the issues that arose was whether that impacted upon the suitability of the trolley for use with the kayak.

The respondent's position

1. Mr Jain appeared for Orca on each listing before the tribunal.
2. Mr Jain's position was that if the paddle-drive locking system was broken (on the first use of the kayak) then the kayak should not have been used on the second occasion when the water ingress incident occurred.
3. Mr Jain's evidence was that Mr Burger had e-mailed Orca after the second incident. Mr Jain provided the tribunal with a screen shot of that communication. Mr Jain's evidence was that Mr Burger should have contacted the respondent company after the pedal propulsion had allegedly snapped but failed to do so. Mr Jain's view was that Orca would send Mr Burger a set of replacement peddles as the claim was covered under the warranty.
4. The tribunal remarks that on the second occasion, without the pedals, the kayak appeared to be using a different method of propulsion.
5. Just in relation to any conversation that Mr Burger was alleged to have had with any staff member from the respondent company, Mr Jain said that at the time of the "click and collect" arrangement during COVID, it was unlikely that Mr Burger would have spoken to any staff member seeking any guidance in that regard. The tribunal suggests that not a lot turns on this given the nature of the complaint.
6. After the water ingress incident, Mr Jain said that he was happy to send out the patches and plastic for repair of the holes in the scuppers, at no charge, and to provide Mr Burger with a heavily discounted set of pedals at a cost of $ 400.
7. Mr Jain also referred to the respondent's warranty page. Mr Jain submitted that the warranty did not cover damage done by the SOT trolley, i.e. damage caused by the kayak's scupper holes allegedly being inserted into the sprockets on the trolley.
8. Mr Jain's main complaint was that he had not had the benefit of inspecting the alleged damage to the kayak after the water ingress incident. However, Mr Jain's view was that the nature of the damage was not covered by the warranty. Mr Jain's position was to provide a repair kit for the applicant's use, rather than to accept a return of the goods and provide a refund as set out in the provisions of the ACL.

Inspection of the kayak

1. Mr Jain said that he had asked to inspect the damage to the kayak, though the request was made somewhat belatedly during the hearing in December, when the parties were well advanced in the proceedings.
2. Perhaps that opportunity may have been lost given Mr Jain's view that he was not prepared to offer a refund to the applicant upon Mr Burger rejecting the goods and requesting a refund. Any relief was limited to the supply of a kit to repair the scupper holes, and to offer Mr Burger a set of heavily discounted replacement paddles.

Adjournment to allow exchange of applicant's independent reports

1. The tribunal had asked Mr Burger to provide some independent commentary or evidence regarding the damage to the Kayak's scupper tubes. The matter was adjourned to allow the applicant to secure that evidence, if available. Similarly, Orca was given an opportunity to respond to the applicant's evidence.

The applicant's "redacted" reports

1. Initially, Mr Burger provided a "redacted" version of the reports that he proposed to rely upon without reference to author identity. Orca opposed any reliance upon those reports. The tribunal adjourned the matter to allow Mr Burger to serve unredacted versions of the reports that he relied upon, that identified the authorship of those reports. The reports available for the tribunal's consideration were "unredacted" in the first instance.

The applicant's reports

1. Mr Burger relied upon two reports, one prepared by Mr Ben Hankinson from Western Beyond Distributors Pty Limited, and another prepared by Mr Slattery.

Mr Harkinson's report

1. Mr Harkinson's report dated 16 November 2021, confirmed that he had an opportunity to inspect the Kayak's damaged scupper tubes. Mr Harkinson said that he had been working in the moulded plastics industry, specifically with Kayaks, for 17 years, both at wholesale and retail levels, including some involvement in warranty assessments.
2. Mr Harkinson opined that: The consistency of the plastic thickness throughout the boat is not that of a product of first quality. Scupper tubes are one of the most difficult areas of a kayak to mould and these boats exhibit a significant variation in thickness from about 1 mm through to a more suitable thickness, where I could not flex the plastic by hand which is necessary to be structurally sound. When inspecting the tubes, it is clear that you can deform the plastic significantly; and easily with the force of a finger. It may even be possible to break the tube by pushing the finger through it.
3. Mr Harkinson further opined that: I feel that damage to the kayak was inevitable with the use of any trolley and I do not see how the specific trolley is any different to any other trolley in that regard as trolleys load up the scupper holes through normal use and insertion. The trolleys can also fall out onto their wheels again. I do not believe that this product was fit for purpose and should not have been sold as a first quality product. Repair is not possible as the plastic is so thin it cannot act as a suitable substrate to mould onto. Further, I found other areas of the hull that I feel are not thick enough to be safe.
4. As to the issue that the tribunal raised regarding the length of the kayak being slightly over the length of the kayak that the manufacturer had recommended, Mr Harkinson commented: I do not see how its length of 3.3 M has had any effect on the failure of the scupper holes. If moulded correctly with a consistent minimum thickness it would not have occurred.

Mr Slattery

1. Mr Burger also relied upon commentary from David Slattery dated 16 November 2021. Mr Slattery said that he had been involved in canoeing and kayaking for over 50 years, both as a peddler and a retailer. Mr Slattery opined that: He had never heard of a trolley not being able to perform based on the length of the craft it was carrying.
2. Mr Slattery further commented that: as the kayak trolley clears the top of the scupper holes, your scupper holes should not have become damaged.
3. The tribunal remarked that Mr Slattery's comments may not necessarily assist Mr Burger's claim.

A matter for consideration - no expert evidence - Mr Jain's expertise

1. Orca did not rely upon any independent commentary or expert report to support its proposition that the basis of the "issue" with the kayak was in fact causally related to the applicant's misuse of the kayak, or some issue with Mr Burger not following instructions in the assembly of the trolley.

The response to the reports

1. Mr Jian's view was that in terms of the applicant's expert reports, he had been a designer and manufacturer of kayaks. Mr Jain stood by the quality of his product and advanced a view that he asked the tribunal to prefer (to that of the applicant's experts) that the quality of the product was such that leaving aside what the tribunal shall call "the trolley compatibility issue", the resultant damage to the scupper holes responsible for the water ingress, was causally related to the manner of the applicant's usage of the products.

Tribunal not bound by the rules of evidence

1. The Tribunal is not bound by the rules of evidence [see s 38(2) of the NCAT Act] subject to the rules of natural justice. In Sproule v D P James Carpet Laying Pty Ltd [2018] NSWCATAP 177 (19 July 2018) the appeal panel considered the application of the exception at section 79(1) of the Evidence Act in relation to a person expressing an opinion based on specialised knowledge in a jurisdiction not bound by the rules of evidence. Section 79(1) of the Evidence Act provides: 79 Exception: opinions based on specialised knowledge (1) If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge. The opinion rule, to which s 79(1) is an exception, is that set out in s 76 and provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.
2. The appeal panel cited Hancock v East Coast Timber Products Pty Ltd [2011] NSWCA 11; (2011) 80 NSWLR 43 [wherein] the Court of Appeal considered the question of the admissibility of evidence in a non-evidence-based jurisdiction The Commission is not bound by the rules of evidence but may inform itself on any matter in such manner as the Commission thinks appropriate and as the proper consideration of the matter before the Commission permits.
3. In light of the above authorities, the tribunal took into consideration in making its award, Mr Jain's specialised knowledge as a designer and manufacturer of kayaks. The tribunal was aware that Orca may have been disadvantaged in not inspecting the kayak and the trolley after the water ingress event.
4. However, the evidence is that Orca had formed a view at the time of the applicant rejecting the goods, without any invitation extended for conducting an inspection, that Mr Burger's complaint was not a matter covered by the terms of the warranty, and had offered the applicant a repair kit to remedy the damage to the kayak.
5. Mr Jain's position was that Orca was not obliged to provide a refund to the applicant upon his making the complaint alleging that there was a breach of a guarantee pursuant to the ACL, and it was a major fault under the Australian Consumer Law, entitling the applicant to reject the goods and seek a refund.

Statutory guarantee - Matters for consideration

1. Section 54 ACL provides that if a person supplies, in trade or commerce, goods to a consumer, there is a guarantee that the goods will be of acceptable quality and the goods are of such a nature, quality, state or condition, fit for all the purposes for which goods of that kind are commonly supplied. For ease of reference, the tribunal sets out the section below: 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) …. (5) …. (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) ……….

What is acceptable quality?

1. The issue of acceptable quality pursuant to section 54 of the ACL was considered by Judge Olsson in the decision of Burton -v- Chad One Pty Limited [1 November 2013] NSWDC 301. Her Honour referenced the second reading speech of the ACL on 24 June 2010 and said that the proposed consumer guarantee law is closely aligned to the existing New Zealand law.
2. Her Honour cited the decision of the Auckland Motor Vehicle Disputes Tribunal in Whitton -v- Taupo Motor Company Limited 29 November 2010. The case provided her Honour with a helpful analysis of the New Zealand equivalent of section 54. The guarantee of acceptable quality is contained in 3 parts: 1. A set of quality elements contained in section 54 (1); 2. Section 54 (2)( a) through to (e) being a reasonable consumer test which applies a consumer's objective evaluation of those elements; and 3. a set of factors in section 54 (3) (a) through to (e) which are to be taken into account by the reasonable consumer.
3. Her Honour further cited the New Zealand High Court in Contact Energy Limited -v- Jones [2009] 2 NZLR 830 at 886, wherein the hypothetical reasonable consumer is taken to be fully acquainted with the state and condition of the goods including any hidden defects. The acceptable quality is a composite and context specific attribute.
4. In Morphy v Beaufort Townsville Pty Ltd (Civil Claims) [2018] VCAT 1520 (2 October 2018) cited Adams J of the Supreme Court of NSW in Prestige Auto Traders Australia Ltd v Bonnefin The relevant test in s.54(2) of the ACL of whether or not goods are of 'acceptable quality' is an objective one based on whether a reasonable consumer who was aware of the 'defects' in the goods at the time of supply would have considered them to be of acceptable quality. .... Taking into account the relevant information known as at the time of the trial, including 'after acquired knowledge'; Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 at [64] and [70].

Was there a breach, and if so was it a major failure?

"Major failure" - the interaction between section 54 and section 260 ACL

1. Matters to be considered when a failure to comply with a guarantee is a major failure are set out at Section 260 ACL. A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) the goods depart in one or more significant respects: (i) if they were supplied by description--from that description; or (iii) if they were supplied by reference to a sample or demonstration model--from that sample or demonstration model; or (c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe.
2. In Safi -v- Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80, the appeal panel considered a number of decisions regarding the interaction between sections 54 and 260 of the Act, in the context of the supply of a motor vehicle.
3. In identifying whether a breach constitutes a major failure, the appeal panel proffered the following guidelines that may be helpful: 1. A major failure may be constituted by one defect or a series of specific or individual defects, when taken as a whole, constitute a major failure; 2. The test of whether the goods "would have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; 3. A "reasonable consumer" would expect teething problems; 4. The question to ask is whether the reasonable consumer, given the option of acquiring that particular good or alternatively purchasing either nothing or a different model, would not have acquired the goods; 5. Defects which result in goods failing to comply with the guarantee of acceptable quality will not invariably be a major failure and will depend on the nature and extent of the failure; and 6. The cost of repair, in proportion to the purchase price, and the question whether the defects can be remedied easily in a timely manner are relevant considerations.
4. In Baas v JB Hi Fi Group Pty Ltd [2021] NSWCATAP 10 (20 January 2021) the appeal panel cited Safi v Heartland Motors PL t/as Heartland Chrysler [2016] NSWCATAP 80. The test is objective. Relevant considerations include: 1. the availability and cost of repairs relative to purchase price; and 2. the nature of the fault(s).
5. The tribunal remarks that Mr Burger's evidence provides the goods are not repairable given the nature of the faults alleged.

The return of the Kayak

1. In Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 (22 August 2016) the appeal panel commented that Section 263(4) has been the subject of very little judicial consideration and referred to a decision of Besanko J in the Federal Court. The appeal panel further said that when dealing with an application for default judgment, His Honour was called upon to consider making an order for the payment of a sum which included the amount of a refund under s 263(4). His Honour held in Ferraro v DBN Holdings Aust Pty Ltd T/As Sports Auto Group [2015] FCA 1127 at [21] and [22] that: 21. I am satisfied on the face of the statement of claim, treating the facts alleged as admitted as is appropriate in the case of an application for default judgment (Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2007] FCAFC 146 at [42]), that the applicant is entitled to a refund and damages under ss 263(4)(a)(i) and 259(4). I am further satisfied that each element of the cause of action has been properly pleaded, namely, supply of goods in trade or commerce, major failure to comply with the guarantee contained in s 56 of the Act, and rejection of the vehicle in accordance with s 259(3)(a). 22. I am satisfied that the applicant is entitled to judgment in the sum of $111, 900.06. I am satisfied that the vehicle cannot be returned, removed or transported to the applicant without significant cost to him because of the size of the goods within s 263(2)(b). That means that the respondent must collect the vehicle at its own expense (s 263(3)). The respondent must refund the amount by the applicant to him (s 263(4)).
2. In O'Neill v Country Motor Company Pty Ltd [2019] NSWCATAP 129 (21 May 2019) the appeal panel commented: It can be noted that s 263 has some similarities to s 40N of the FT Act (in its pre-- 2011 form). Under s 263, if rejection of goods is permitted by s 259, the consumer must generally return the goods to the supplier and then the consumer has an election as to whether the supplier is required to provide a refund or replacement. Somewhat strangely unlike s 40N, s 263 does not expressly establish the mechanism or means by which a consumer can enforce the supplier's obligation to refund the money paid for the goods and an amount equal to any other consideration provided or to replace the rejected goods, arising under S263 (4)."
3. The appeal panel further commented: Despite the general observations made by the Appeal Panel in Lam, it is significant that there was no issue in that case as to whether the return of the goods was a precondition to the consumer's right to make an election between obtaining a refund or replacement of the goods. We do not understand the decision in Lam to be asserting such a precondition. This is emphasised by the orders in fact made by the Appeal Panel in Lam at [220]. Order (3) required the supplier to refund the purchase price of the motor vehicle to the consumer within 14 days. Order (4) provided that if the consumer had possession of the motor vehicle at the date of the orders, he was to return the vehicle to the supplier within seven days of the payment to him of the sum referred to in Order (3). These orders are not consistent with the Appeal Panel in Lam interpreting s 263 to require that the goods must be returned to the supplier before the consumer could elect to seek a refund, or indeed before the refund was payable to the consumer.
4. The appeal panel said that: In assessing whether Mr O'Neill acted inconsistently with the rejection notice we consider that the Tribunal was correct to take into account CMC's refusal to accept Mr O'Neill's claim for a refund and the fact that CMC disputed that claim. In these circumstances, we consider that the Tribunal was correct to conclude that there was no unequivocal conduct by Mr O'Neill inconsistent with the rejection notice.

The findings

1. The tribunal accepts the position set out in Mr Harkinson's report as foreshadowed at the final hearing and makes the following findings: 1. The respondent has breached section 54 (2) ACL: the variation in the thickness of the moulded plastic in the scupper tubes caused the piercing of the tubes with the use of the trolley. The Kayak was 1. Not fit for all the purposes for which goods of that kind are commonly supplied; and 2. Not acceptable in appearance and finish; and 3. Not free from defects; and 4. Not safe and 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. 1. The fault is a major fault and is not repairable; 2. That upon Mr Burger giving notice of rejection of the goods, and the request for the refund, Mr Burger is obliged to return the goods; 3. in light of Mr Jian's response, it was unlikely that a refund would be provided at the time of any return of the goods; the tribunal makes a finding that the applicant is not in breach or is non-compliant with a provision for the return of the goods; 4. There is no evidence to support that Mr Burger has caused the goods to become of unacceptable quality, or has failed to take reasonable steps to prevent them from becoming of unacceptable quality, or that the goods were damaged as a result of any abnormal use of the goods. 5. Upon the consumer's election to reject the goods and seek a refund, the title of the goods revests in the respondent, Orca.

The relief

1. The appropriate relief is that the respondent is to pay the sum of $ 1,000 to the applicant's simultaneous with the return of the goods to the respondent.

Order 1. On or before 14 April 2022, simultaneous with the applicant's return of the goods, to the respondent, (kayak and the trolley) the respondent is to pay to the applicant the sum of $ 1,000

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: 11 July 2022