Drain v. Eagle Auto Parts Pty Ltd [2015] NSWCATAP 109

The Tribunal's Decision at first instance

1. The Tribunal member held that the appellant, a fully qualified and experienced motor mechanic, had been undertaking the restoration of a Holden VH Commodore, in respect of which he purchased an engine from the respondent on 16 November 2011 at the cost of $8,250, plus $1,450 for a controller and wiring. The respondent provided a warranty for the engine for 12 months or 20,000km, which ever occurred first.
2. The appellant installed the engine in accordance with the specifications provided, with the exception of the sump and the oil pick up.
3. On 6 September 2013, more than 18 months after purchase, the engine failed, having operated for only 223km.
4. Upon visual inspection, the appellant found that the No.6 big end bearing had spun. The oil pickup and "O" rings were found to be in good working order. Neither the oil pressure gauge nor the oil pressure warning light indicated any engine oil pressure problems.
5. The appellant had the engine inspected by Mr Mark Barter of Streamline Automotive. Mr Barter similarly found that the NO. 6 big end bearing had spun and that the other bearings were in reasonably good order. Similarly, he found that the oil pick up and "O" rings were in good order. He found that there was a clearance problem or bad bearing that had been delaminated.
6. The respondent also had the engine inspected, by Mr Ron Murphy. Mr Murphy is employed by Australian Automotive Solutions in Melbourne. Australian Automotive Solutions provides inspections of engines provided by the respondent the subject of claims of any manufacturing defect. Mr Murphy has a diploma in mechanical engineering, is a member of the Society of Automotive Engineers and has specialised in automotive engineering for the past forty years.
7. In his report dated 28 October 2013, Mr Murphy relevantly concluded that the No.6 big end bearing had failed, that it had lost all of its bearing material and that the remaining steel backing on the two bearing shells had spun in the connection rod's big end. He found a slight deformation in the two bearing shells, which indicated that the engine would have been "knocking" for only a short period of time. He also found that that, given to the absence of any severe discolouration on the two failed big end bearing shells, the big end bearing did not fail as a resulted of a complete loss of oil supply, but rather oil was being supplied to them as they were failing. He found that the absence of severe discolouration around the No. 6 connection rod's big end also supported this conclusion. He made a number of other observations which, he opined, supported his conclusion that there was no evidence to suggest that the No.6 big end bearing had failed due to insufficient bearing clearance, incorrect assembly, foreign contamination, a total loss of oil support, or driver abuse. He found that the No. 6 big end bearing was supplied with sufficient lubrication and that the oil supply to the engine bearing was being disrupted intermittently. Relevantly, he found there to be an oil pick up pipe, which was replaced, which had some damage to both the mounting points and to the end of the pipe. In conclusion he held that the "most likely scenario was that there were periods when the oil pickup pipe was allowing some are [sic] to be sucked in with the oil. Although a small amount of air being drawn in with the oil will have a detrimental affect on the bearings, it will not necessarily be seen as an oil pressure drop in the gauges."
8. The Tribunal member took into account the appellant's contentions: that he had not tested the engine, but rather relied on a visual inspection; and that the Murphy report demonstrated a bias towards the respondent.
9. The Tribunal member rejected the contention of bias.
10. The Tribunal member referred to the appellant's evidence, in particular the performance of two tests of the engine and oil pickup. In respect of the oil pickup it was noted that the appellant pressure-tested the oil pickup and pump and also the oil pickup tube. The appellant submitted before the Tribunal member that the tests undertaken proved that the oil pickup was not faulty and therefore did not cause the engine failure.
11. The Tribunal member also referred to the appellant's reliance on a document titled "Failure Analysis for Engine Bearings" from the Westrac Institute to support a submission that Mr Murphy's report was flawed regarding the wiping on the bearings.
12. The Tribunal member referred to the appellant's response to Mr Murphy's report, namely that: had intermittent oil supply been the cause of the engine failure, as asserted by Mr Murphy, the oil gauge would have shown a drop in pressure and there would have been a failure at the No. 8 big end bearing before failure of the No. 6 big end bearing. The appellant alleged in response that: the wiping recorded by Mr Murphy was normal wear; there were no signs of oil leaks; the oil pump and relief valve were in working order; the enlargement of the oil pickup support bracket hole was appropriate to prevent O-ring twist on the seal O-ring for oil pick up; the mounting bolt for the oil pump was torqued appropriately; and the O-ring was in good condition.
13. Finally he asserted that the clearing on the failed bearing could not be discounted as the only remaining cause of failure. The Appellant also contended that the causes of failure identified by Mr Murphy were not consistent with failure of the No. 6 big end bearing failure (absent damage to the other bearings) and his failure to test this, rendered his opinion unreliable.
14. The Tribunal Member referred to the appellant's reports, from Mark Barter of Streamline Automotive & Brakes and Kevin Pryce, Director of Pryce Engines, explaining the common practice of elongating the steady bracket, so that it creates a perfect seal with the oil pump O-ring.
15. Ultimately the Tribunal Member was unable to come to a concluded view, faced with the evidence from the appellant on the one hand and the respondent on the other. Given that: the appellant bore the onus of proof; the respondent had obtained a report from Mr Murphy; and the appellant had not obtained an independent expert to respond to it, but rather relied on his own expertise arising from the fact that he was a qualified and experienced mechanic, the Tribunal Member found that the appellant had not established his cause of action.

The Appellant's Grounds of Appeal

1. The appellant seeks leave to appeal and relies on subclauses 12(1)(a) and (b) of Schedule 4 to the Act. In his Notice of Appeal he asserts that the Tribunal member failed to understand the complexity of the engine failure and the fact that the appellant's evidence excluded all other reasons for engine failure, leaving only the fact that the engine bearing clearance was inadequate and, as such the engine was unfit for purpose. He asserts also that the Tribunal member failed to take into account the most likely reason for the engine failure and that, on the balance of probabilities, the engine was not fit for purpose.
2. The appellant contends that the Tribunal member's conclusion was not fair and equitable on the basis that she found that the engine was fit for purpose on the respondent's evidence that there was intermittent oil pressure in the engine and that this was based solely on a visual inspection. It is contended that the Tribunal Member completely discounted the appellant's testing showing there to be not oil leak, such that the drop in oil pressure could not have been the source of the engine failure. It is contended also that the Tribunal member failed to consider that the respondent's evidence did not indicate that it could not establish the bearing clearance, which, it is submitted was the most likely cause of the engine failure. This was said to be unfair and inequitable as not all of the evidence was fully reviewed and understood by the Tribunal member, resulting in an incorrect decision.
3. Second, it is contended that the decision of the Tribunal was against the weight of the evidence as the appellant's evidence, including his own detailed testing, clearly rebutted the respondent's evidence, in particular that given in a report by Mr Murphy from Australian Automotive Solutions. It is contended by the appellant that his evidence clearly established that the engine was not fit for purpose as the most likely reason for its failure was insufficient bearing clearance, all other reasonable possibilities such as intermittent oil disruption, having been excluded.
4. In his written submissions the Appellant contends that: 1. It was important to the reliability of the report that Mr Murphy only conducted a visual inspection of the engine and did not complete any testing of the parts, which would have provided evidence of the cause of the engine failure; 2. It is accepted that once the engine fails, it is not possible to show whether or not there were insufficient bearing clearances, however Mr Murphy's evidence that there was no evidence of insufficient bearing clearances should have acknowledged that fact and he ought to have indicated that this was a likely reason for the engine failing; 3. That in the absence of other proven mechanical failures, insufficient bearing clearances is the most likely reason for the engine failure; 4. For Mr Murphy's report to be accurate and complete, it ought to have included all possible reasons for engine failure and it ought to have included all possible testing to determine the cause of the engine failure. 5. He refuted before the Tribunal all of the conclusions reached by Mr Murphy in his report, including those reached by reference to independent materials such as the Westrac document regarding bearing wear patterns.

The Respondent's Reply

1. The respondent contends that Mr Murphy could not pressure test the oil pickup and oil pump and could only perform a visual inspection as the engine had been disassembled by the Appellant.
2. The respondent also seeks to rely on the modification of the engine and a number of related parts. It points to damage in a number of respects as a result of the modification and to what it asserts was evidence of damage as shown even on a visual inspection, for example with respect to the oil pump pickup.
3. The respondent contends that the appellant has been unable to prove and in fact concedes he cannot establish that the bearing clearance has caused the failure.
4. The respondent relies on the conclusions by Mr Murphy, a well-qualified expert mechanical engineer.

The Appellant's Response to the Respondent's Reply

1. The appellant contends that the engine had not been disassembled, only that the sump had been removed and the failed bearing identified before being refitted. It is contended that none of the internal working had been interfered with and that any damage to the engine as a result of his modifications was cosmetic only and had no affect on the engine failure.
2. He contends that Mr Murphy failed to check the bearing clearances on any other of the other big end bearings or on the main bearing to see if there were any clearance problems.
3. The appellant further contends that the Tribunal member failed to understand the technical and complicated issue of the nature of the engine failure and of its possible causes.
4. The appellant relies on the Westrac documents to support his claim regarding the lack of engine bearing wear other than in the No. 6 big end bearing and to challenge Mr Murphy's opinion as set out in his report.
5. The appellant also challenges the respondent's submission in respect of the what he describes as the common practice of elongation of the oil pickup support bracket, allowing for the correct alignment of oil pick up.
6. The appellant takes issue with the respondent's contention regarding the affect of pressure testing, and contends that it proved that the oil pickup was aligned correctly and that the O-ring seal was adequate, establishing that this was not a likely cause of engine failure.
7. Finally he reasserts that his tests have shown the opinion of Mr Murphy to "not be possible" given the exclusion of all other causes of engine failure, other than the failure of the bearing clearances.

Consideration of the Question of Leave

1. In deciding whether to grant leave to extend time, we must first decide the appellant's prospects of being granted leave to appeal. The decision appealed from was made by the Consumer and Commercial Division of the Tribunal, under cl12(2) of Schedule 4 of the Act. The Appeal Panel's discretion to grant leave is only enlivened if the Appeal Panel is satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. The decision of the Tribunal was not fair and equitable; 2. The decision of the Tribunal was against the weight of the evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
2. A miscarriage of justice refers to a failure in the way the matter was conducted or decided which deprives the appellant of a chance that was fairly open, of achieving an outcome more favourable than that which occurred: Collins v. Urban [2014] NSWCATAP 17 at [71].
3. If the Appeal Panel is satisfied that the appellant may have suffered a substantial miscarriage of justice on one or more of the grounds referred to in clause 12, the Appeal Panel may grant leave: s.80(2)(b) of the Act. In deciding whether or not to do so, it must be established that something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact. Ordinarily it is appropriate to grant leave only in matters that involve: 1. Issues of principle; 2. Questions of public importance or matters of administration or policy which might have general application; 3. An injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. A factual error that was unreasonably arrived at and clearly mistaken; or 5. The Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it is likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed: See Urban at [84].

Consideration of the Tribunal's Decision and the prospect of success

1. The difficulty with the appellant's contentions on before the Appeal Panel is that he seeks to find error in the Tribunal's decision by undermining the opinion of Mr Murphy in circumstances where, rather than to cross-examine Mr Murphy and obtain appropriate concessions before the Tribunal Member, he sought only to present evidence in contra distinction. This left the Tribunal in no position to decide between the arguments or whether or not the evidence presented by Mr Murphy was sufficient to displace that presented by the appellant, bearing in mind that the appellant bore the onus of proof.
2. The appellant bore the onus of proof before the Tribunal member to establish that the evidence put forward by the respondent was insufficient to rebut his evidence. In circumstances were Mr Murphy was not cross-examined, the Tribunal member was in no position to do so. Despite the allegations made in respect of the technical matters, where a party seeks to challenge the evidence put forward, it is incumbent upon them to cross-examine and put those challenges to the witness: Browne v. Dunne [1894] 6 R 67.
3. The High Court considered, albeit in the criminal context, the application of what is referred to as the rule in Browne v Dunn in MWJ v The Queen [2005] NCA 74; (2005) 80 ALJR 329. This rule also applies in civil cases, and is a rule of fairness, which, notwithstanding the less formal procedures of the Tribunal, applies.
4. Gleeson CJ and Heydon J in MWJ said (omitting references) - "[18] The principle of fair conduct on the part of an advocate, stated in Browne v Dunn, is an important aspect of the adversarial system of justice. It has been held in England, New South Wales, South Australia, Queensland, and New Zealand, to apply in the administration of criminal justice, which, as well as being accusatorial, is adversarial. Murphy J, in this Court, even applied it to the conduct of an unrepresented accused. …Fairness ordinarily requires that if a challenge is to be made to the evidence of a witness, the ground of the challenge be put to the witness in cross-examination. This requirement is accepted, and applied day by day, in criminal trials. However, the consequences of a failure to cross-examine on a certain issue may need to be considered in the light of the nature and course of the proceedings."
5. Gummow, Kirby and Callinan JJ said (references omitted) - [38] "We should next say something about the rule in Browne v Dunn ….The rule is essentially that a party is obliged to give appropriate notice to the other party, and any of that person's witnesses, of any imputation that the former intends to make against either of the latter about his or her conduct relevant to the case, or a party's or a witness' credit. [39] … any witness whose conduct is to be impugned, should be given an opportunity in the cross-examination to deal with the imputation intended to be made against him or her... "
6. In the ordinary course and in the context of this matter, the rule in Browne v Dunn required any facts about which there is a genuine contest, to be put by the appellant to Mr Murphy so that he can comment. This is so that the contest in respect of the facts, and particularly as in this case were there are complicated and technical motor engineering issues, can be resolved in a way that is fair to that witness and to the parties to the litigation. That was not done.
7. Lastly, it is noted by the appeal panel that the expert evidence presented by the appellant was his own, and was tendered in his capacity as a licensed mechanic. Whilst the applicant may have relevant expertise in the motor engineering field, as a party it cannot be said that his opinion is independent.
8. The Tribunal member arrived at a decision at paragraph 43 of her decision: "Although the applicant is a qualified and experienced mechanic, his case would have been much stronger if he engaged an independent expert to examine the engine, provide a report and comment on the findings of Mr Murphy." The appellant conceded that he elected not to get an independent report as the costs were prohibitive and he held the relevant expertise to provide an opinion. The appeal panel is not satisfied the appellant has shown that the conclusion reached by the Tribunal to prefer the opinion of Mr Murphy was not reasonably open to it given the tactical decision the appellant made to prepare his own report. We are not satisfied that the conclusion reached by the Tribunal to prefer Mr Murphy's opinion was against the weight of the evidence.
9. On these bases the Appeal Panel is not satisfied that the appellant has any prospects in establishing that he may have suffered a substantial miscarriage of justice on either of the bases specified in cl12(1) of Schedule 4 of the Act upon which the appellant relied.
10. For these reasons we are not satisfied that the merits of the ground of appeal favour an extension of time in which to appeal.

ORDERS

1. Accordingly, the Tribunal makes the following orders: 1. The application for an extension of time in which to appeal is refused. 2. The appeal is dismissed. 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: 17 June 2015