Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA

Appeal - Consumer guarantees - Fitness for purpose - Time for assessing breach at time of supply - Procedural fairness

Fair Trading Act 2010 (WA), s 18, s 19

Magistrates Court (Civil Proceedings) Act 2004 (WA), s 40

Ford Motor Company of Australia Pty Ltd v Capic [2023] FCAFC 179

Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182

1. In February 2022 Mr Werczyk purchased equipment from Commodore Australia Pty Ltd including a solar inverter/charger and distribution board.
2. Mr Werczyk later commenced proceedings against Commodore Australia in the Magistrates Court for alleged breaches of consumer law guarantees arising under the Australian Consumer Law[1] (ACL) in relation to the quality and fitness for purpose of the equipment he purchased.
3. Following a trial, at which both parties were not legally represented, the trial magistrate delivered judgment dismissing the proceedings. Mr Werczyk appeals against that decision.
4. The respondent did not seek to appear and be heard in response to the appeal other than in relation to any costs order that may be sought against it.
5. The principal appeal ground advanced by Mr Werczyk concerns an error contended to have been made by the trial magistrate in not correctly applying the ACL and not considering and making a determination as to whether, at the time the goods were supplied to him, they were not fit for purpose.
6. Mr Werczyk also advanced various other arguments concerning other errors allegedly made by the trial magistrate.
7. For the following reasons I am satisfied that the principal ground of appeal is made out, the appeal should be allowed, the decision of the trial magistrate set aside and the proceedings remitted for rehearing before a differently constituted court.

1. Mr Werczyk's claims in the primary proceedings included a claim that the equipment supplied was not fit for purpose. This included because the equipment was said not to be compatible with being connected to the Western Power electricity grid or with his existing system. His case was that he communicated those intended purposes to a representative of Commodore Australia in February 2022, prior to purchasing the equipment, and was told the equipment was compatible.
2. Mr Werczyk claimed that despite contacting numerous electricians he was unable to arrange for the equipment to be installed and approved by Western Power for connection to the grid. The uncontradicted evidence at trial included evidence that in addition to issues with diagrams submitted to secure Western Power approval, it eventuated that Western Power would not approve the equipment for grid connection as the inverter supplied did not meet its approval requirements. This was because it was not listed on the Clean Energy Council approved (grid connect) inverter list. The listing expired in December 2021, prior to the equipment being purchased from, and supplied by, Commodore Australia to Mr Werczyk.
3. Mr Werczyk claimed that on 6 July 2022 he first requested a refund from Commodore Australia, a refund was not provided, and the only solution it would entertain involved him spending more money and using one of their affiliated electricians. His case was that in circumstances where a refund was not forthcoming, in September 2022 he reluctantly agreed to expend a further $1,600 to acquire a manual bypass switch from Commodore Australia. This enabled the equipment previously supplied to him to be installed without being grid connected as he had initially intended, but with the ability to return to grid-only functionality if required. Mr Werczyk claimed he was effectively 'coerced' into that outcome.
4. Mr Werczyk also advanced claims about the safety and adequacy of functioning of the equipment he initially purchased and multiple small faults with the equipment. He claimed that his initial and later requests for a full refund ought to have been honoured, but were not.

1. By its statement of defence, Commodore Australia, amongst other things, contended that the system supplied included various components which were intended to be installed by a licensed electrician to local standards. It said that it did not provide any installation services. Its case was that Mr Werczyk subsequently requested assistance to find an electrician who could install the system, and it referred him to an electrician and solar installer, with whom it had dealt on several occasions. Mr Werczyk engaged the electrician.
2. Commodore Australia's position was that the electrician identified that Western Power approval was required to grid connect the system. It said that Western Power rejected the application and advised that the system could only be connected on the property if it did not have a grid connection to the Victron battery inverter.
3. Commodore Australia said that following discussions between it, the electrician and Mr Werczyk, an alternative connection method was identified, which did not involve connection of the equipment supplied to the grid, under which the system could not charge off the grid or export power to the grid. It said that it recommended that a manual bypass switch be purchased by Mr Werczyk and installed. This was to enable the system to return to grid-only functionality if required and ensure the system would charge from the existing solar array.
4. By its defence Commodore Australia maintained that Mr Werczyk was made aware of, and confirmed his understanding of, the proposed new system configuration and function, purchased the additional item of equipment and requested the electrician to proceed with the installation in accordance with the new design. It said the installation was finalised and installed as per the new design and was functioning as per the new design. It contended that any issues with the system likely related to the operation of batteries he supplied himself rather than any fault of the system.

1. In her oral decision, dismissing the claim, the trial magistrate made findings including to the effect that:
   • The contract between the parties was for the supply only of the components, which were to be fitted to a solar system, located at Mr Werczyk's home.
   • Mr Werczyk's pre-existing solar system exported power to the grid, and that was Mr Werczyk's intention, on purchasing the new components, as conceded by Mr Howells of Commodore Australia in his evidence.
   • Mr Werczyk sourced the components from Victoria.
   • As a buyer Mr Werczyk must exercise due diligence to ensure that what he buys can do what he wants it to do.
   • After purchase and attempted authority to connect to the grid, Mr Werczyk found out that the inverter's listing with the Clean Energy Council had expired on 18 December 2021.
   • The application for installation, which required the components to be compatible with the grid, was declined on 18 August 2022, as it was said to have insufficient technical information provided for the application.
   • The system was able to be installed at Mr Werczyk's property but could not be connected to the grid.
   • A certificate of testing received in evidence proved the items passed testing and inspection.
   • Whilst not connected to the grid, the solar system, with components from Commodore Australia, was working and reduced Mr Werczyk's requirements to take power from the grid to power his home.
   • On 6 September 2022 Mr Werczyk sent Mr Howell an email confirming what her Honour described as 'the alteration to the agreement'. He accepted that there would be no grid connection and that the system, in effect, would be standalone.
   • After the amended agreement the components were connected to Mr Werczyk's existing batteries and system. They produced power and reduced his use of power from the grid. As they did so, and the system, as altered, was accepted by Mr Werczyk, the components were fit for purpose.

1. Under the ACL s 54 and s 55, if a person supplies,[2] in trade or in commerce, goods to a consumer, certain non-excludable[3] guarantees arise: a guarantee that the goods are of acceptable quality (s 54); and a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit (s 55).
2. Under s 54(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).

1. The matters in subsection (3) include the nature of the goods, any representation made about the goods by the supplier or manufacturer of the goods, and any other relevant circumstances relating to the supply of the goods.[4]
2. Whether or not a good is of acceptable quality is an objective question determined from the perspective of a reasonable consumer.[5]
3. In relation to the consumer guarantee arising under the ACL s 55, a 'disclosed purpose' is a particular purpose for which the goods are being acquired by the consumer and that the consumer makes known, expressly or by implication, to the supplier or a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made.[6]
4. An exception to the s 55 guarantee arises if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier or the person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made. The supplier may seek to establish this by way of defence.

1. The principal appeal ground advanced by Mr Werczyk concerns an error contended to have been made by the trial magistrate in not correctly applying the ACL and not considering and making a determination as to whether, at the time the goods were supplied, they were not fit for purpose.

1. Mr Werczyk did not specifically identify during the Magistrates Court proceedings the ACL provisions on which he relied. Nevertheless, in my view having regard to the nature of the claims he advanced under the ACL it was clear that they engaged the operation of s 55 of the ACL and potentially s 54.
2. The learned magistrate did not seek to clarify which ACL provisions were relied on by Mr Werczyk. Nor did her Honour refer in her reasons to the ACL or any of its provisions. It is therefore unclear to which of those provisions her Honour had regard in making her decision. The uncertainty is compounded by her Honour's observation that, as a buyer, Mr Werczyk must exercise due diligence to ensure that what he buys can do what he wants it to do. Neither s 54 nor s 55 refer to 'due diligence'. Section 55 is breached where goods are not reasonably fit for any disclosed purpose or for any purpose for which the supplier represents that they are reasonably fit. Mr Werczyk's case was in part that he disclosed certain purposes to Commodore Australia's representative who represented that the equipment was reasonably fit for those purposes - including grid connection.
3. Putting those difficulties with her Honour's reasons to one side, based on the claims advanced it was necessary for her Honour to at least consider and determine, and give reasons for determining, whether at the time the initial equipment was supplied in early 2022, the s 55 consumer law guarantee was breached.
4. In my view, it is clear from the language of s 54 that the time at which the s 54 guarantee arises, and any alleged breach of the guarantee is to be determined, is the time when the goods were supplied. Consequently, under s 54, whether a reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply,[7] although regard may be had to relevant information available at the time of trial.[8]
5. In my opinion the position is the same in respect of s 55. Whether goods supplied are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit, is required to be determined at the time of supply, although regard may be had to relevant information available at the time of trial.
6. In this case, that required consideration and determination of Mr Werczyk's case, including that a purpose he specified to a representative of Commodore Australia was that the equipment be able to be grid connected, and that the representative represented it was. On Mr Werczyk's case the consumer guarantee arising was breached as the equipment was not able to be grid connected, as found by the trial magistrate.
7. If the equipment initially purchased was found not to have been fit for purpose at the time it was supplied contrary to the s 55 consumer guarantee, a further issue for determination would have been whether Mr Werczyk had established he had suffered loss or damage or was entitled to any other form of relief claimed. The significance of any agreement or arrangement entered into after any such breach would then need to have been assessed in that context.
8. In my view her Honour erred in law by not specifically considering and determining whether, at the time of the supply of the initial equipment that was purchased, those goods were reasonably fit for any disclosed purpose, and for any purpose for which the supplier represented that they were reasonably fit. While her Honour made various findings of some potential relevance to those issues, her Honour did not specifically consider or determine those issues.
9. Rather, her Honour considered and assessed the question of fitness for purpose by reference to the 'modified agreement' she found was subsequently agreed to by Mr Werczyk in September 2022. That occurred after the original equipment had been purchased by, and supplied to, Mr Werczyk and Western Power had refused to approve its connection to the grid.
10. Ground 1 is made out.

1. Before turning to ground 2, I note for completeness that her Honour's finding that Mr Werczyk intended, on purchasing the new components, to continue to export power from his pre-existing solar system to the grid, was erroneous or, at least, incomplete. In substance the uncontradicted evidence of Mr Werczyk was that he was advised by a representative of Commodore Australia prior to purchase that the equipment was approved for grid connection but that it would not be able to be used to export power to the grid. In other words, grid connection would enable access to electricity via the grid but not export back to the grid. As the adequacy of this finding was not the subject of a ground of appeal, it can be put to one side.

1. Mr Werczyk also contends that he was denied procedural fairness on the basis that he was not afforded an opportunity to ask further questions of witnesses he called.
2. In my view this ground is not made out.
3. The orders made by the trial magistrate in advance of trial required the filing of statements of intended evidence of witnesses in advance of trial. The orders expressly provided that where a witness was then called at trial, that party may not, without leave of the court, lead evidence from that witness if the substance of the evidence was not included in the statement served. The orders also provided that subject to objections as to the admissibility of any evidence in a statement, the statement would stand as the evidence-in-chief of the witness.
4. At the trial, Mr Werczyk did not seek leave to adduce any additional evidence from any witness he called prior to them being cross-examined. He was also afforded the opportunity to give further evidence himself and ask questions of his witnesses, by way of re-examination. It was only after all the witnesses he called had concluded their evidence and had been released that he raised any issue about whether he could ask further questions of them, outside of re-examination. In all the circumstances, in my view Mr Werczyk was not denied procedural fairness in relation to the course of the proceedings and the opportunity he was afforded to ask questions of his witnesses.
5. In support of this ground Mr Werczyk also suggested that certain statements were made by the trial magistrate in relation to questioning witnesses which were not recorded in the transcript. Arrangements were made for him to access an audio recording of the original proceedings. He now accepts that the matters he recollects were not recorded on the audio recording but maintains his recollection.
6. I have also listened to relevant parts of the recordings. I am not satisfied that the additional matters Mr Werczyk references were in fact said. Even if they were, it does not in my view advance this ground of appeal.

1. Mr Werczyk also advanced numerous arguments in his oral and written submissions about matters which fell outside his grounds of appeal. Even if they had been the subject of reformulated grounds, I would not have upheld the appeal by reference to any of the arguments advanced.
2. One matter raised by Mr Werczyk concerned whether he had been denied procedural fairness and/or the trial magistrate erred in relation to her approach to the admissibility of certain documents he had sought to rely on. In particular, he pointed to the trial magistrate's determination that an email he sought to rely on was inadmissible despite it being an email from a representative of Commodore Australia to Mr Werczyk responding to various enquiries he made about the equipment. While in my view the email was admissible, I do not consider that any error did or may have materially affected the hearing as the email was subsequently received in evidence as part of the attachments to a subsequent witness's statement.
3. A further matter raised by Mr Werczyk concerned a ruling that an electricity invoice he sought to adduce in evidence at trial was not admissible. Despite the ruling, Commodore Australia was then allowed to make reference to the content of the electricity invoice, and findings were made partly by reference to the invoice. Even if the invoice ought to have been admitted when Mr Werczyk sought to tender it, in my view any error had no material consequence in circumstances where it was, in effect, received in evidence at a later point in the trial. I am not satisfied that the ruling did or may have materially affected the conduct of the hearing.
4. Finally, to the extent Mr Werczyk sought to challenge the trial magistrate's findings in relation to the quality and fitness of the equipment purchased, other than in relation to its ability to be grid connected, in my view he did not establish that there was any material error in the fact finding process or reasons given by the magistrate for dismissing that aspect of his claim.
5. Other arguments advanced by Mr Werczyk about matters outside the grounds of appeal were in my view misconceived or lacking in substance.

Application to adduce additional evidence in appeal

1. Mr Werczyk applied to adduce additional evidence in the appeal. I reserved my decision as to whether to admit that further evidence.
2. The hearing of an appeal under the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCP Act) is required to be decided by the District Court on the material and evidence that were before the Magistrates Court and any other evidence that it gives leave to be admitted.[9] Leave may only be given in exceptional circumstances.[10]
3. I am not satisfied that exceptional circumstances have been demonstrated, or that it would be appropriate to exercise my discretion in favour of admitting the evidence, in any event.
4. First, most of the bundle of documents sought to be adduced comprised emails between Mr Werczyk and Mr Howells of Commodore Australia from 13 June to 16 June 2023. They related to communications between the parties in relation to a potential resolution of the dispute the subject of the proceedings.[11] Most of those documents were additional to certain related emails Mr Werczyk had unsuccessfully sought to tender at the hearing.
5. Secondly, Mr Werczyk ultimately conceded that he was unable to identify any way in which the documents, if admitted, would materially advance his grounds of appeal. At times in submissions, Mr Werczyk suggested that he and Commodore Australia had reached an agreement to resolve the dispute on terms on which Commodore Australia resiled from. However, he accepted that his claim before the Magistrates Court was made under the ACL and that he did not seek to prove and enforce any alleged agreement. Further, when questioned about the suggested agreement he indicated that he was not prepared to resolve the dispute on terms that were ultimately acceptable to Commodore Australia, hence he proceeded with the claim.
6. Thirdly, Mr Werczyk also acknowledged that those emails were available to him at the time of the original hearing. He said that he did not seek to adduce them in evidence at the hearing because he thought that the other evidence he had was so strong that he would not have needed it.
7. Mr Werczyk also provided in the bundle a summary of expenses making up the sum claimed. As the summary was received in evidence at the original hearing, leave was not required to admit it on the appeal.
8. Further, during the hearing of the appeal Mr Werczyk referred to a document entitled 'Statement of Claim' dated 23 June 2023 and provided a copy to the court.[12] Mr Werczyk lodged that document at the Magistrates Court on 23 June 2023. Shortly after he lodged a slightly less fulsome Statement of General Procedure Claim on the same afternoon. The book of materials before the Magistrates Court that was admitted in evidence in the appeal included that document. Leave was therefore not required to admit it on appeal.

1. As ground 1 is established I will allow the appeal, set aside the decision of the Magistrates Court dismissing the claim of Mr Werczyk and remit the proceedings for rehearing before a differently constituted court.
2. I will hear from the parties in relation to the question of costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

[1] Australian Consumer Law (sch 2) Competition and Consumer Act 2010 (Cth) s 131. See also Fair Trading Act 2010 (WA) s 18 and s 19.

[2] Other than by way of sale by auction.

[3] ACL s 64.

[4] ACL s 54(3).

[5] Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 [64] (Branson J), [81] (Jacobson J agreeing); Ford Motor Company of Australia Pty Ltd v Capic [2023] FCAFC 179 [41], [56] (the court).

[6] ACL s 55(2).

[7] Medtel Pty Ltd v Courtney [64] (Branson J), [81] (Jacobson J agreeing), [27], [28] (Moore J).

[8] Ford Motor Company of Australia Pty Ltd v Capic [57] (the court).