De Coster v Wynstan Designs

Evidence of the respondent

1. Mr Collis told the Tribunal that if there was a fault with the fabric and it was the respondent's obligation was to repair and rectify it. The awning was brought back for a repair and was sewed to seam. He said, The awning was a good looking awning, however, Mr De Coster refused to have it installed.
2. The applicant would not accept its return, we had a custom made product that was rectified and we wanted t to install it. The different in the thickness of the fabric caused the ripples and that the respondent had tried to rectify it multiple times, however, the applicants declined the installation.
3. It is the claim by the respondent that the awning although initially defective was rectified and the awning was of acceptable quality.
4. The respondent's also rely on the terms of the warranty as set out in the terms and conditions of the contract. The respondent claims that the repaired awning meets the industry guideline as provided at Exhibit R1 [5] in the guideline Waviness or Corrugation in the seam/weld area.

Relevant legislation

1. Section 54 of the Australian Consumer Law provides the following guarantee:

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.

1. Section 259 of the Australian Consumer Law (NSW) provides where there is a failure of the guarantee and provides the following:

Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time--the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

Consideration

1. The respondent relies on the terms and conditions of the contract which are contained in Exhibit R1 [3] clause 13. The warranty of all products shall be (3) years limited warranty. This warranty is only valid when the products have been fully paid for and does not cover wear and tear, including fading of fabrics and other materials. The warranty does not cover accidental damage, misuse or incorrect installation from the Customer. A copy of the warranty document can be found at www.wynstan.com.au.
2. The warranty document which is contained at Exhibit R1 [4] it provides "Wynstan warrants the initial purchaser that the product will be uninhibited from defects in materials and workmanship for a period of 3 years from the date of installation… The obligation of Wynstan is limited to the repair or replacement of products or components found to have a manufacturing defect that is not the result of normal wear and tear. The Blind Manufacturers' Association of Australia in their guideline sub-titled. Waviness or corrugation in the seam / weld area - As the fabric rolls up along the roller tube on the awning the seams will roll up with more accumulated material then the areas surrounding it. The difference in thickness may cause the fabric to wrinkly slightly around the seams .. On the other hand if you notice the slightest problem concerning the major qualities of your fabric within its warranty please let the supplier know.
3. In my view, although the contract and warranty do not provide for a refund for the product, the applicant can bring a claim pursuant to the Australian Consumer Law where the product is not of acceptable quality. The claim by the applicant is that the product returned to them is not the same product in finish that they purchased. The guideline of the Blind Manufactures'' Association refers to the fabric wrinkly slightly when rolled up.
4. This is in contrast to the rippling and puffing effect that is a significant change in the product purchased by the applicants. In the photographs provided by the applicants Exhibit A1 [25 to 29] there is significant rippling rather than slight wrinkling around the seams.

Issue of acceptable quality

1. The test as to whether goods are of an "acceptable quality" is an objective one; being taken from the perspective of a "reasonable consumer" (APS Satellite Pty Ltd (formerly known as Sky Mesh Pty Ltd) v Ipstar Australia Pty Ltd [2016] NSWSC 1898 (APS Satellite Pty Ltd) at [57]; Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145; 284 ALR 1; [2011] FCAFC 128).
2. The question for the "reasonable consumer" is whether the goods in question have the identified qualities enumerated in 54(2) to an "acceptable standard". This requirement is derived from the words "as a reasonable consumer … would regard as acceptable".
3. The "acceptable standard" is used as the yardstick against which the qualities of the goods are to be measured. It is ascertained by a consideration of the matters referred to in s 54(3); the nature of the goods, their price, any statement made about the goods on packaging or labels, any representations made about the goods by the supplier or manufacturer, and any other circumstance relating to their supply.
4. It is necessary the goods have all of the qualities identified in s 54(2) to the ascertained acceptable standard. Those qualities are that the goods are fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable.
5. In the assessment of whether the goods meet that relevant standard, the reasonable consumer is taken to be fully acquainted with the state and condition of the goods (including any hidden defects of the goods).
6. If the goods supplied do not have all of the identified qualities to the acceptable standard, they will not be of an "acceptable quality".
7. In Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 Wheelahan J said: "[25] … The standards under s 54(2) include that goods will be fit for all purposes for which goods of that kind are commonly supplied. This general standard of fitness for purpose is not dependent upon the consumer communicating any intended purpose to the supplier, or relying upon the supplier's skill or judgment. And, in relation to the general standard, it does not suffice that the goods will be fit for only some of those purposes. [26] The standard of acceptable quality in s 54(2) has as its reference point a construct, namely the objective standard of a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects of the goods. The reasonable consumer sits with an array of other hypothetical persons who have been recruited by the law and by reference to whom objective standards are evaluated: see, Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49; 4 All ER 210 at [1]-[4] (Lord Reed JSC). Such a person has been described as an anthropomorphic conception of justice that is and must be the court itself: see Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 at 728 (Lord Radcliffe). [27] The hypothetical question whether the reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply. However, the reference in s 54(2) to hidden defects has the consequence that for the purposes of determining that question, the reasonable consumer may be acquainted with information known at the time of trial: cf, Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182 at [70] (Branson J, Jacobson J agreeing). The standard of acceptable quality prescribed by s 54(2) is not absolute, or a standard of perfection. It is tempered by what a reasonable consumer would regard as acceptable having regard to the several matters in s 54(3). These matters render the standard of acceptable quality elastic, and context specific: Contact Energy Ltd v Jones [2009] 2 NZLR 830 at [95] (Miller J). The significance of the components of the guarantee of acceptable quality will therefore vary with the circumstances of each case."
8. It is uncontroversial that the product was defective initially and had to be repaired by the respondent. The issue is whether after the rectification of the awning it is of acceptable quality. I accept the oral evidence of the applicant, the awning that he purchased was not to the same quality when it was repaired and returned to him. He rejected it as it was bubbling and rippling as in the photographs in Exhibit A1 [25 to 27] and was not the product that he had purchased. He told the Tribunal that he would not have had the awning installed in the first place if the fabric was in the condition it was after being repaired.
9. The fabric is also not wrinkled slightly and this occurs after it is rolled up. In my view, there is significant rippling and puffing caused by the repair and it is not in the same condition when the applicant purchased it.
10. I find that a reasonable consumer would not have purchased the awning if they had been aware that the product was defective in appearance and finish.
11. In considering whether the a refund should be ordered the Tribunal has to consider where the defect is a major failure in accordance with Section 260 of the Australian Consumer Law (NSW).
12. In Smith v Ozzy's Cheapest Cars Pty Ltd [2019] NSWCATAP 278 citing Safi v Heartland Motors Pty Ltd t/as Heartland Chrysler [2016] NSWCATAP 80 at [85]-[107] the Appeal Panel analysed the case law on what constituted a major failure under the consumer guarantee provisions of the ACL mentioned above, summarising its conclusions at [99]-[102]. The Panel rejected the view that any breach of the guarantee of acceptable quality is a major failure. Under s 260(a), the test is objective. A series of individual or specific defects taken as a whole may constitute a major failure. The cost of repairs relative to purchase price and the nature of the defect are factors. Of particular significance is whether the defects are "teething problems" or go beyond that in terms of extent, timing and frequency of repair: that is, whether or not the defects can be remedied easily and in a timely manner. Overall, the test is whether, faced with advance knowledge of the problems and what was needed in terms of time, costs and degree of difficulty to fix them, a reasonable consumer would have bought the goods or bought nothing or something else.
13. Under ACL s 260(a), the rejection period for goods that are subject to a major failure is the period from the supply of the goods within which it would be reasonable to expect the relevant failure to comply with a consumer guarantee to become apparent, having regard to the type and likely use, and length of time and amount of use before a failure would reasonably become apparent. For a major failure constituted by chronic or repetitive defects taken as a whole, such a period is likely to be longer than for a single catastrophic defect. If there is a major failure, the consumer's entitlement to a refund is not dependent on proof of loss: Ferraro v DBN Holdings Aust PL t/as Sports Auto Group [2015] FCA 1127.
14. In my view, the defects to the awning fabric were more than just "teething problems" and that a reasonable consumer faced with advanced knowledge of the problems with the time, costs and degree of difficulty to fix would not have purchased the awning. I am satisfied that there is a major failure.

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: 26 August 2022