Englebrecht v Pryor

NCAT Appeal Panel|2023-10-12

Summary

On 18 July 2023, the Consumer and Commercial Division awarded the respondent to this appeal as a consumer, the sum of $15,500 from the appellant as a supplier of a second hand four wheel drive all-terrain vehicle (ATV). The Tribunal found, in short, that the ATV had a major failure predominantly in the nature of gearbox issues when sold to the respondent and that, having rejected it, the respondent was entitled to a refund. Reasons were provided on 31 July 2023.
There is no dispute that the Tribunal had jurisdiction to determine the claim and power to make the order that it did.
The appellant challenges the decision on the bases that the key evidence relied upon by the Tribunal should not have been admitted to support the findings it made, or once admitted should not have been relied upon by the Tribunal and that the Tribunal failed to engage with an argument raised on his behalf at first instance that he was absolved of responsibility by s 54(7) of the Australian Consumer Law (NSW) (ACL) as it applies in NSW through the operation of s 28 of the Fair Trading Act 1987 (NSW).
For the reasons set out below, we have decided to allow the appeal in respect of one issue but, in redetermining that issue, the outcome will remain substantially unchanged.

Background

It is not in dispute that the appellant advertised the ATV as second hand, "used" and to be sold "as-is." The advertisement invited inspection by prospective purchasers.
Prior to purchase, the respondent did inspect the ATV including by way of test driving it and performing a limited mechanical inspection at the appellant's premises that included the appellant facilitating the ATV being raised for more thorough inspection. As a result of issues identified by the respondent during that inspection, he sought and obtained a discounted sale price to that advertised.
It is also the case that, by way of independent evidence at first instance as to defects in the ATV, the respondent sought to rely on a report by a Mr Martin of Eagle Powersports in relation to the ATV and a quotation for repair provided by that company showing that proposed repairs to the ATV, which had travelled only a few kilometers since purchase, would cost in the order of $12,000 (the Quote).
The appellant objected to the admission of that evidence. The Tribunal rejected the report from Mr Martin (see transcript at 6.02) but admitted the Quote (see transcript at 7.30). In its reasons for decision, it said at [24]: I do however accept the quote by the same business dated 20 April 2023. The business is a licenced motor vehicle repairer and describes at page 2: "Has a major gearbox/rear diff issue-possibly rebuild box, or replace". The Tribunal is not bound by the rules of evidence although the best evidence rule does apply, and this is the best evidence available on the condition of the vehicle as it was at the time of sale. The business is a licenced repairer. No contradictory evidence was served by the respondent.
The context in which the quotation was prepared was explained by the respondent in cross-examination as being that the respondent "…didn't want to spend any money obviously on pulling the whole thing apart to see exactly what the problem was. So I just asked them to do basically a pre-sale inspection. To find out exactly what the problem was they would have had to pull it completely to bits and pull the gear box out and pull it apart to find out whatever's wrong."

Scope and nature of internal appeals

An appeal to the Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. To succeed in an appeal, the appellant must demonstrate either an error on a question of law, which, except in an appeal from an interlocutory decision, may be argued as of right; or that permission (that is, "leave") to appeal should be granted to bring the appeal: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2). Here, the appellant elected not to seek leave to appeal, relying instead on four grounds of appeal each of which was asserted to provide an avenue to appeal without leave.
The Notice of Appeal raised four grounds, as follows: 1. That by admitting into evidence, over the objection of the respondent, the unidentified/unsigned quote from Eagle Powersports dated 17 April 2023, the Tribunal made an error of law, in that it failed to afford the respondent natural justice in relation to the admitted evidence as required by s 38(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. That at paragraphs 24 and 25 of the judgment, the Tribunal makes an error of law when it relies of the unidentified/unsigned quote to find the "vehicle was defective at time of sale". In doing so the Tribunal made an error of law as a business cannot give evidence as a witness in proceedings and the Tribunal's judgment clearly provides that it was relying on "the business''' evidence by way of the quote. 3. That the Tribunal made an error of law when it failed to consider in its judgment, material raised in submissions by the respondent being s 54(7) of the Australian Consumer Law (ACL) was enlivened on the facts in the matter and s 54(7) provided a [defence] to the applicant's claim that the vehicle failed to meet the consumer guarantee under section 54 of the ACL. 4. That in finding a "major failure" pursuant to s 260 of the ACL, rather than a minor problem, on the basis of the of the unidentified/unsigned quote, which was admitted over the opposition of the respondent, the Tribunal made an error of law.

Consideration

A denial of procedural of fairness raises a question of law. However, usually there will be no denial of procedural fairness in the Tribunal admitting documents into evidence where the other party has notice of them and a proper opportunity to provide evidence and submissions in response. As the Tribunal is not bound by the rules of evidence, its treatment of material lodged by the parties is generally a question of the weight it should be given, not its admissibility: NCAT Act, s38; Allen v TriCare (Hastings) Ltd [2016] NSWCATAP 216 at [191]. However, that does not permit the Tribunal to make a finding of fact that is not supported by any probative material: see Elley v Commissioner of Police, NSW Police Force [2023] NSWCATAP 237 at [22]-[24] and [55] and further below.
In answer to materially similar submissions to those relied upon by the appellant here, a differently constituted Appeal Panel found in Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 (Deacon): 35. The builder submits that the document was a hearsay document because the maker of the document could not be identified and was not available for cross-examination. The builder submits the document would be inadmissible by reason of s 59 of the Evidence Act 1995, and is does not fall within exceptions to the hearsay rule in ss 64 and 69 of the Evidence Act. 36. The builder submits that although rules of evidence do not apply in the Tribunal (s 38(2) of the NCAT Act), rules of evidence provide a guide to assessment of the probative value of evidence, within the context of the duty to provide procedural fairness to the parties: Chi Building Pty Ltd v Wedgwood [2016] NSWCATAP 64 at [40]- [41]; Head Mod Nominees Pty Ltd v Macken [2016] NSWCATAP 106 at [69]. 37. It is clear that the rules of evidence are relevant to the operation of procedural fairness. In a home building dispute where both parties are represented and the amount in dispute is significant, a relatively strict consideration of rules of evidence may at times be appropriate to ensure procedural fairness, in comparison to a dispute involving a small amount of money and in which the parties are not legally represented. 38. However, in the circumstances of this matter we are not satisfied that the admission of the survey into evidence as part of Mr Lewer's report was a denial of procedural fairness to the builder. The builder had ample opportunity to obtain its own survey.
In this matter, involving a relatively modest quantum, we are of a similar view to that expressed in Deacon, above. The Tribunal was entitled to admit the quotation as evidence of the nature and cost of repairs potentially required to the ATV and there was no procedural unfairness in it doing so. The appellant had a reasonable opportunity to make its own inquiries about the author and basis of the Quote and to present evidence in response to it.
The appellant's challenge was, though, also expressed as encompassing the Tribunal making its decision based on evidence that was not "logically probative".
If the Tribunal makes a finding of fact for which there is a complete lack of evidence, then it has erred on a question of law: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390, Hayne, Heydon, Crennan and Kiefel JJ at 418 [91], as it does if making a finding of fact, or drawing an inference, without any supporting probative evidence: see Elley above and also Minister for Immigration and Multicultural and Indigenous Affairs v VOAO [2005] FCAFC 50 at [5]; Haider v JP Morgan Holdings Aust Ltd [2007] NSWCA 158 at [33]. Acting without probative evidence is the equivalent of acting without evidence: Skiwing Pty Ltd v Trust Co of Australia t/as Stockland Property Management [2006] NSWCA 276, per Spigelman CJ at [52]. However, the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice: NCAT Act, s 38(2). There must be an absence of material, whether strictly admissible according to the rules of evidence or not, for there to be an error on a question of law on the "no evidence" ground: Smith & Anor v Collings Homes Pty Ltd & Anor [2004] NSWCA 75 at [32]; South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16 at [127]-[129]. Otherwise, where some probative evidence for a finding was before the Tribunal, even "perverse findings of fact do not give rise to a "question of law" under a statutory formulation limiting an appeal to such questions": Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 156-157.
The appellant's position in this regard misconstrues the nature of what the Tribunal had available to it to base a finding that there was a breach of the guarantee in s 54 of the ACL and a major failure in the ATV when it was sold to the respondent.
A fair reading of the decision as a whole, and the evidence that was lodged in the appeal that was before the Tribunal, indicates that the Tribunal had evidence that: 1. The respondent bought the ATV for $15,500 without knowledge of the gearbox defect; 2. Shortly after taking possession of the ATV, the respondent discovered that some drive modes of the gearbox could not be properly engaged, in addition to identifying other mechanical issues; and 3. the cost of repairs could reach $12,000.
That was probative evidence which admitted the findings made by the Tribunal concerning a relevant defect and that "a reasonable consumer fully acquainted with the facts of the defect at the time of the sale would not have purchased the vehicle, and that the defect is a major failure entitling the [respondent] to elect to reject the vehicle and receive a refund": at [27].
Those findings deal with the appellant's grounds one, two and four.
We now turn to the allegation that the Tribunal failed to consider s 54(7) of the ACL (ground 3). Section 54 provides, relevantly: 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. … (7) Goods do not fail to be of acceptable quality if: (a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and (b) the examination ought reasonably to have revealed that the goods were not of acceptable quality.
The Tribunal's reasons make no reference to s 54(7) of the ACL. If the appellant clearly raised an argument that the protection afforded to him by s 54(7) in respect of the defect was engaged, because the defect ought reasonably to have been revealed when the respondent inspected the ATV, then the Tribunal may have constructively failed to exercise its jurisdiction, which is a question of law: Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; (2003) 77 ALJR 1088; [2003] HCA 26.
In Rice Marketing Board for the State of New South Wales v Forbidden Foods Pty Limited; Forbidden Foods Pty Limited v Rice Marketing Board for the State of New South Wales [2020] NSWCATAP 182 an Appeal Panel collated notable judicial comment on this issue, recording at [170] - [172]: In Dennis Willcox, the appellant contended that the Commonwealth Administrative Appeals Tribunal failed to consider a submission it made concerning whether it had gained a "profit" on the sale of shares. Noting that the reasons given by the Tribunal for its decision were "devoid of reference" to that submission, Jenkinson J (with whom Woodward and Foster JJ agreed) stated at [21]: "Not every failure by the Administrative Appeals Tribunal to mention a contention advanced on behalf of a party will amount to a failure to comply with the requirements of s 43(2) of the Administrative Appeals Tribunal Act 1975, or demonstrate that the contention was not considered in deciding the matter before the tribunal. But this submission concerning the ascertainment of profit was worthy of serious consideration and was seriously advanced to the tribunal. It ought, therefore, to be inferred that the submission was inadvertently overlooked by the tribunal either when the reference was being decided or when the reasons for the decision were being committed to writing (cf Sullivan v Department of Transport (1978) 20 ALR 323 at 353)." In D'Amore v Independent Commission Against Corruption [2013] NSWCA 187, Basten JA considered at [230] the obligation of a decision-maker in the context of administrative decision-making to deal with part of an applicant's claim, citing with approval the following passage from Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630; [2003] FCAFC 184 (Applicant WAEE), at [46]-[47], in which French, Sackville and Hely JJ explained: "It is plainly not necessary for the tribunal to refer to every piece of evidence and every contention made by an applicant in its written reasons. It may be that some evidence is irrelevant to the criteria and some contentions misconceived. Moreover, there is a distinction between the tribunal failing to advert to evidence which, if accepted, might have led it to make a different finding of fact ... and a failure by the Tribunal to address a contention which, if accepted, might establish that the applicant had a well-founded fear of persecution for a Convention reason... The inference that the Tribunal has failed to consider an issue may be drawn from its failure to expressly deal with that issue in its reasons. But that is an inference not too readily to be drawn where the reasons are otherwise comprehensive and the issue has at least been identified at some point. It may be that it is unnecessary to make a finding on a particular matter because it is subsumed in findings of greater generality or because there is a factual premise upon which a contention rests which has been rejected. Where, however, there is an issue raised by the evidence advanced on behalf of an applicant and contentions made by the applicant on that issue, if resolved one way, would be dispositive of the Tribunal's review of the delegate's decision, a failure to deal with it in the published reasons may raise a strong inference that it has been overlooked."
We are satisfied that the Tribunal did overlook or fail to deal with this issue. It is clear from a partial transcript of the hearing at first instance that the appellant's representative squarely raised the effect of s 54(7) of the ACL as a basis of the appellant's defence to the respondent's claim. Notwithstanding that, the effect and application of s 54(7) is not addressed in the reasons for decision.
Given that it was not controversial that the respondent had inspected the vehicle and driven it before purchase, the appellant's reliance on s 54(7) should be categorised as "a substantial, clearly articulated argument relying upon established facts" (Dranichnikov at [24]). To provide the appellant with procedural fairness and to properly and fully exercise its jurisdiction, the Tribunal was required to engage with the argument that the inspection ought reasonably to have revealed the defect. The appeal should be allowed on this ground.
The parties agreed that, in the event we allowed the appeal on this ground, we were in a position to redetermine this issue by way of rehearing based upon the material concerning the s 54(7) defence before the Tribunal at first instance.
At the hearing of the appeal, Mr Daley, solicitor, who appeared for the appellant, confirmed that the case made by the appellant concerning s 54(7) was that the defect ought reasonably to have been discovered by the respondent changing gears and changing drive mode during the test drive, as was put to the Tribunal at first instance (see transcript at 1.11.33).
In that regard, we note that the uncontroverted evidence before the Tribunal on this issue was that, despite the respondent having ample opportunity to examine the ATV before sale, he "wasn't aware of where the drive switch was in the buggy, being unfamiliar with that particular model, and [he] would presume that someone would leave it in what would be considered the normal operation mode which is turf mode". When in two wheel drive, as it was when he inspected it, "you can't tell … that it has a problem." No other evidence contradicted the respondent's position.
Furthermore, the appellant, who conducts a business of buying and selling such vehicles and who conducts some necessary repairs himself, deposed that, despite test driving the ATV both before and after conducting unrelated repairs before sale, he "did not observe any gearbox issues in the buggy whatsoever".
In those circumstances, we are not satisfied that the appellant has discharged the evidential onus he carried to show that the examination by the respondent before sale ought reasonably to have revealed that the goods were not of acceptable quality.
In re-determining this issue, then, there is no basis to disturb the Tribunal's ultimate conclusion, but the Tribunal's orders were stayed and have become stale. We will vary the orders to provide for return of the ATV and the payment of a refund.
The parties were given leave to be legally represented on the condition they may not recover costs in the appeal. We will make no order as to costs.

Orders

Our Orders are as follows: 1. The appeal is allowed in respect of ground 3; 2. The decision of the Tribunal in proceedings MV 23/23234 on 18 July 2023 is varied. 3. The Appellant is to pay to the Respondent the sum of $15,500 and collect from the Respondent the 2020 Polaris Ranger XP 1000 within 14 days, upon 48 hours' written notice.

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 October 2023

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Judgment (6 paragraphs)

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Cases Cited (20)