Burton v Chad One Pty Limited

Tribunal's decision 21The Tribunal held that any reasonable consumer, on signing a Form 8, could be considered to be fully acquainted with the state and condition of the vehicle, including hidden defects, and realised that the vehicle is sold, as is, perhaps with defects either apparent, hidden or latent, and that by purchasing the vehicle the purchaser assumes the risk of the vehicle being of an acceptable quality under the guarantees given by the ACL. 22The Tribunal dismissed the applicant's claim.

The present appeal 23On appeal, the applicant said that the questions with respect to a matter of law were these: (a)The construction of the Australian Consumer Law and, in particular, the construction of s.54; (b)Whether the facts found fell within the proper construction of the Australian Consumer Law, in particular s.54(3); and (c)The construction of the statutory warranty provisions of the Motor Dealers Act. 24Although the applicant Summons identified seven alleged errors of law by the Tribunal, they were distilled in argument to the following:- (a)The Tribunal erred by failing to give the ACL a purposive, beneficial construction; and (b)The Tribunal erred in its interpretation of the Motor Dealers Act by treating the Form 8 as notifying the exclusion of all warranties for all purposes when the effect the Motor Dealers Act is only to exclude a statutory warranty under the MDA.

The relevant decision of the Tribunal 25The process of the Tribunal's reasoning and construction of the ACL is found at paragraphs 28 to 35 of the reasons for decision. "28. At first blush, there appears to be tension between the ACL guarantee of acceptable quality and the dealer's obligations, or lack thereof, under the Motor Dealers Act. 29. The Tribunal is of the view that the ACL guarantee has to be flexible as it covers a vast range of goods, whose durability may be as short as only hours or days, while other goods have the potential to remain durable for years. On the other hand, the fixed terms of the Motor Dealers Act applies to one class of goods only: second hand motor vehicles. 30. The crux of this litigation is the question of acceptable quality. 31. Section 54(2) of the ACL defines "acceptable quality". Five criteria are contained in subclauses. But 54(2) is qualified by 54(3). 32. Section 54(3) sets out five qualifications. The major one, for the purpose of this litigation, is subclause (e) which allows acceptable quality to be subject to "any other relevant circumstances relating to the supply of the goods". 33. The Tribunal is of the view that a relevant circumstance would encompass the circumstances involving the requirement of the dealer to affix a Form 8 to the vehicle to be sold, and for the consumer to sign that form. 34. The Tribunal is of the view that any reasonable consumer, on signing a Form 8, could be considered to be fully acquainted with the state and condition of the vehicle, including any hidden defects, and realise that the vehicle is sold, as is, perhaps with defects either apparent, hidden or latent, and that by purchasing the vehicle, the purchaser assumes the risk of the vehicle being in an acceptable quality under the guarantees given by the ACL. 35. The Tribunal is reinforced in adopting this conclusion due to the applicant obtaining, at no cost, an extended warranty. He did not decline that bonus. He must have realised that there may have been defects which would appear in the vehicle later, and so accepted that possibility, realising that should such defect manifest itself, he could rely on that warranty There was no evidence before the Tribunal about any claim made by the applicant on that extended warranty. The applicant was aware that by signing the Form 8, there could be future problems with the mechanics of the vehicle, but nevertheless, took advantage of that situation by being covered by an extended warranty." 26It is to paragraph 34 that the applicant's argument was specifically directed. 27A proper construction of a statutory provision always involves a decision of a question with respect to a matter of law: Norrie v NSW Registrar of Births Deaths and Marriages [2013] NSWCA 145 at [52].

Discussion 28There was no dispute that the Tribunal had jurisdiction to hear the plaintiff's claim: the combined operation of s.21(1) of the CTTT Act and s.7 of the Consumer Claims Act 1998 and s.74 of the Fair Trading Act 1987 (FTA). 29Section 74(3) of the Fair Trading Act provides: "A Tribunal may decide the matter of whether a person has suffered loss or damage because of the conduct of another person that constitutes a local contravention or a contravention of chapter 2 or 3 of the ACL if that matter arises in connection with another matter the subject of proceedings in the Tribunal. In deciding the matter of loss or damage, the Tribunal may award such sum, and make such ancillary orders, as it thinks fit." 30The ACL is a law of New South Wales by virtue of the operation of s.28 of the Fair Trading Act 1987. The applicant's application to the Tribunal was a consumer claim within the meaning of the Consumer Claims Act and accordingly the Tribunal had jurisdiction under s.74(3) of the FTA to decide the claim for damages for breach of the implied warranty of s.54 of the ACL. 31Section 31(3) of the Fair Trading Act provides that the Interpretation Act 1897 (NSW) does not apply to the Australian Consumer Law (NSW) or any instrument under that law. 32However, s.15AA of the Acts Interpretation Act 1901 (Cth) does apply to it. It says: "In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose of object is expressly stated in the Act) is to be preferred to each other interpretation." 33Legislation that has a remedial or beneficial purpose is to be given a liberal construction, rather than a literal or technical construction: Norrie v NSW Registrar of Births, Deaths and Marriages [2013] NSWCA 145 at [73]. 34The purpose of the ACL is the protection of consumers, in particular in the present case by the implication of guarantees as to quality in consumer contracts. 35The tension between the MDA and the ACL identified by the Tribunal in paragraph 28 is only an apparent one. The Form 8 document on its face makes clear that there is no warranty under the MDA and that the dealer is not required by the MDA to repair any defect. 36This does not signify to a purchaser that all warranties are excluded. In any event, s. 63 of the ACL renders void any term of a contract which purports to exclude or modify a guarantee under the ACL. 37The Second Reading Speech of the ACL on 24 June 2010 said at page 4284: "A single set of statutory consumer guarantees replaces the existing system of implied conditions and warranties in the Trade Practices Act under State and Territory laws. Statutory consumer guarantees will give consumers clearer and more effective laws regarding their rights when buying goods and services........The consumer guarantees law is closely aligned to the existing New Zealand Law....." 38The decision of the Auckland Motor Vehicle Disputes Tribunal in Witton v Taupo Motor Company Limited 29 November 2010 contains a helpful analysis of the equivalent New Zealand provision of s.54: "The guarantee of acceptable quality contained in s.54 is in three parts. A set of quality elements contained in s.54(2)(a) to (e), a reasonable consumer test which applies a consumer's objective evaluation of those quality elements, and a set of factors in s.54(3)(a) to (e) which are to be taken into account by the reasonable." 39The New Zealand High Court in Contact Energy Ltd v Jones [2009] 2 NZLR 830 at [86] and following, said: "The quality standard is set by reference to the expectations of a reasonable consumer "fully acquainted with the state and condition of the goods, including any hidden defects." The phrase derives from s 16(b) of the Sale of Goods Act 1908, which established an exception to the warranty of merchantable quality of goods bought by description from sellers dealing in goods of that description. The warranty does not apply where the buyer had examined the goods, as regards defects which such examination ought to have revealed." 40The court referred to Australian Knitting Mills Ltd v Grant (1933) 50 CLR 387 and continued at [88]: "...s 7(1)(a) of the Consumer Guarantees Act [the equivalent of s.54 of the ACL] requires that quality be assessed by reference not only to defects and price but also fitness for purpose. Fitness for purpose is assessed by reference to all purposes for which the goods are commonly supplied, so it does not suffice if the goods are suitable for any one or more of their common purposes (compare Hardwick Game Farm v Suffolk Agricultural Producers Association [1969] 2 AC 31). But it is not an absolute requirement, in that the Act does not positively require that the goods be fit for all common purposes." 41At [94] the court said: "The hypothetical reasonable consumer is taken to be fully acquainted with the "state and condition" of the goods, including any hidden defects. Less obviously, he or she must also be taken to know the nature of the goods, all relevant circumstances of supply and any representations made about the goods by the manufacturer or supplier, so far as relevant. That is so because it is the hypothetical consumer who determines by reference to those considerations whether the goods are acceptable. The test is objective, but it is applied to the particular goods and circumstances. Acceptable quality is a composite and context-specific attribute. I adopt the observations of Ormrod LJ, speaking of merchantable quality, in Cehave NV v Bremer Handelsgesellschaft mbH at page 80: 'It is a composite quality comprising elements of description, purpose, condition and price. The relative significance of each of these elements will vary from case to case according to the nature of the goods in question and the characteristics of the market which exists for them. This may explain why the formulations of the test of merchantable quality vary so much from case to case.'" 42Applying that to the present situation, it is apparent that such authority as there is on the NZ equivalent provision of s.54(3) makes it clear that all of the matters in that sub-section are to be considered when determining whether or not the goods were of acceptable quality. The use of the conjunctive "and" within the section supports this interpretation. 43In this case, the Tribunal had before it: (a)The contract for sale expressed to be the entire contract between the parties (clause 11 of the terms and conditions) which made no reference to the Form 8 and in fact included a three month warranty. (b)Evidence that the price paid by the applicant for the car was $16,990.00. (c)Evidence from Redbook.com.au - an online valuation guide to used cars - for the month of October 2012 that valued a 1998 Nissan Patrol in "average" condition, having done 250,816kms at between $6,300.00 and $8,900.00. It valued a vehicle of the same description but in "as new" condition at between $20,350.00 and $12,950.00. (d)Evidence from carsguide.com.au - an online car sales site - from a search for "All Used Nissan Patrol". Although there are variations (as there must be) in the age, condition and number of kilometres travelled by the different vehicles there advertised, for vehicles manufactured between 1989 and 1995, the advertised prices range between $2,998.00 and $5,900.00. 44The preponderance of evidence before the Tribunal was that the subject vehicle was sold for a price that was greatly in excess of the market price for a vehicle of that age and mileage. Price is a factor to be considered in the matters to be considered in s.54(3) of the ACL. The evidence suggests that in this case, it was an important factor. 45The Form 8 document is no more than an expression of the statutory exemption available to a motor dealer, based only on the age and mileage of the vehicle. 46Moreover, if this document alone was able to invest the hypothetical consumer with qualitative information about the vehicle ("fully acquainted with the state and condition of the goods including any hidden conditions") it would give the ACL in this context no work to do. 47I am satisfied that the Tribunal's decision involved an error of law, being the proper construction of section 54(3) of the ACL. 48In my view the Tribunal erred in: (i)failing to consider each of the elements in the subsection, in particular that of price in the context and circumstances of the evidence regarding value and price, and (ii)by investing the consumer with knowledge of the state and condition of the vehicle solely from a form which provided no qualitative information about the vehicle. 49In doing so, the Tribunal erred in the proper interpretation or application of s.54(3) and moreover, failed to give effect to a construction that would best achieve the consumer protection purpose of the ACL by failing to give it a beneficial construction.

Findings and orders (1)The appeal is upheld. (2)The decision of the Tribunal is quashed. (3)I order that the matter be remitted to the Tribunal for hearing. (4)With respect to costs, the order I propose is that the respondent pay the costs of the applicant but as neither party addressed on the point, I give the parties leave to have the matter re-listed for that purpose. If that leave is not exercised within 14 days of the date hereof, the proposed order as to costs will stand. 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: 12 March 2014