Because we have found a number of errors of law in the Tribunal's decision which enable us to consider and address all the matters complained of by the appellant, we have not proceeded to consider whether or not the appellant should also be granted leave to appeal. It is not necessary to do so.
[2]
Disposition of the appeal
Rather than remitting the determination of the appellant's claims for compensation and damages to the Tribunal, we have decided to determine those claims (s 80(3) NCAT Act).
[3]
Refund and return
The work done by the respondent in attempting to repair the motor was of no value to the appellant. What was a motor with minor, but repairable, timing problems, ended up seized and requiring replacement because it could not be reconditioned again.
Under s 267(3)(b) of the Australian Consumer Law the appellant is entitled to be relieved of his obligation to pay respondent the $2,348.77 for that worthless work. This the Tribunal did by making order 3.
The appellant is also entitled to the return of his boat, its old motor and all of the parts he supplied, albeit with the motor disassembled. The parts and the boat, but not the bottom end of the motor, are to be in good order and undamaged. If they are not, then the appellant will have leave to renew before the CCD under cl 8 of Sch 4 of the NCAT Act.
[4]
Any reasonably foreseeable loss
Damages under s 267(4) of the Australian Consumer Law for reasonably foreseeable loss following a failure to comply with a consumer guarantee, are in addition to any refund obtained under s 267(3)(b).
The appellant is entitled to recover damages for reasonably foreseeable losses he sustained as a result of the major failure. In our view, the measure of damages with respect to the motor fixed by the Tribunal, namely the depreciated value of the motor, did not compensate the appellant for his reasonably foreseeable losses. Those losses include the costs of rebuilding the motor, with existing parts, around a new or reconditioned block, and reinstalling it into the boat in operating order. We will discuss the amount of that loss shortly.
We will also consider the list of losses totalling $14,783.06, which the Tribunal summarily dismissed as relating to expenses incurred over the last two years, to determine whether they constitute evidence of reasonably foreseeable losses due to the major failure.
[5]
The cost of rebuilding the motor and reinstalling it in the boat
A review of the transcript of the hearing shows that the member spent some time trying to ascertain from the parties the probable costs of parts and labour in repairing and reinstalling the engine.
The appellant was unable to quantify the cost of that work. He did, however, have a number of quotes among the materials he relied, which shed some light on some of the costs involved. These were:
1. Quotes from Rocket Industries Pty Ltd for a replacement block and bottom end parts being:
1. A Ford 302 iron block with a 4.125 bore $4,507.01 and with a 4.000 bore $2,952.21 (there was no evidence as to the bore size of the failed motor); and
2. Parts for the bottom end of the motor, e.g. pistons, bearings, etc totalling $2,310.
The cheaper block, and the other parts, total cost is $5,262.33.
There was a quote from BG Engines for reconditioning the Ford 302 motor, (using the existing block and reconditioning it) including the provision of a Holley carburettor, a new water pump, new electronic ignition, alloy fuel pump, and chrome air cleaner, among others, for a total of $9,785.00, including parts, labour and GST. We are not satisfied that it is necessary to replace these parts as there is no evidence that they are damaged or unusable. This quote also envisaged machining the existing cylinder block, which the Tribunal found was not possible. As a consequence, the quote is likely to increase by some thousands of dollars as a result of the need to purchase a replacement block.
The appellant also had a quote from Rocket Industries for a replacement motor costing $7,480.00 (not a Ford 302, but a Ford 347W c.i.d. crate engine with aluminium heads.) This did not include the cost of completing the motor, fitting the motor with a cold-water intake, or of installing it in the boat.
This evidence relied on by the appellant did not assist the Tribunal in ascertaining with any certainty the precise cost of rebuilding the motor based on a new block, and of reinstalling it in the boat.
During the hearing the following discussion took place between the member and the respondent's representative (at 35 -36):
Member: So what does pitstop say is necessary to get this engine working?
Representative: The engine needs a new block. It needs a new bottom part, the block of the engine. All the existing parts that Darren, Mr France has supplied, can be put back onto it and it can go again. The engine itself is past its use by date. It can't be rebored out again, it's already had as many bores out as it possibly can/
Member: And what's the cost of a new block?
Representative: Pardon?
Member: Do you have any evidence of the cost of a new block?
Representative: No. We researched it, and it's roughly around between, as [unintelligible 01:53;41] has said previously, between $5,000 and $8,000.
Read in context, this was evidence from the respondent that the costs of rebuilding the engine with a replacement block and reinstalling it in the boat is between $5,000.00 and $8,000.00. Given that the appellant's evidence puts the costs of a replacement block with, necessary bottom end parts, in the region of $5,000.00, we think that the costs of repairing and reinstalling the motor is going to be at least $7,000.00.
Considering the vintage nature of the inboard motor, and the appellant's long-standing intention to upgrade and continue to use the motor in his boat, the proper measure of the appellant's loss is not the loss in the motor's value as a result of the breach of the consumer guarantee, but the costs of repairing it and reinstalling it, so that the boat is operational. Given the nature of the necessary repairs and the fact that the motor is a vintage motor, no reduction in damages should be made on the basis of betterment: the motor will still be essentially the same motor, albeit built around a new or reconditioned block.
In Anthoness v Bland Shire Council (1960) 60 SR (NSW) 659, Evatt CJ, Herron and Sugerman JJ, with respect to an award of damages for the cost of repairs to a rare vehicle that exceeded its pre-accident value, said that (at 666):
The fact that in special circumstances the result of complete repair of all damage done may render the property damage worth more than it was before the collision is not an answer to the plaintiff's claim… The fact that a chattel is more valuable after being repaired than it was before it was damaged by the wrongful act of a defendant, does not constitute a valid objection to the amount of plaintiff's claim. If it is necessary, for instance, to replace old parts by new, the wrong-doer must bear the cost without deduction.
While that action was in tort, we think those words equally applicable to an action to recover reasonably foreseeable damages under s 267(4) of the Australian Consumer Law: see also Catherine Penhallurick, The principle of 'betterment' in damages for contract and tort (2002) 22 Aust Bar Rev 109.
We add that, if a reduction in the allowed costs of repairs due to betterment were appropriate, the respondent has provided no evidence which would satisfy the burden on it of proving the appropriate reduction.
We propose to order the respondent pay the appellant that amount as damages under s 267(4) of the Australian Consumer Law for breach of the consumer guarantee under s 60.
[6]
Other reasonably foreseeable losses
As already discussed, the appellant claimed additional losses totalling $14,793.60 comprised of 37 separate items. Of those many were for parts he had purchased for the engine, when it was being repaired by the respondent, and others were for parts, equipment and fittings he had purchased over the years leading up to the boat going to the respondent for repairs.
As we understand it, the appellant claimed the cost of parts that were purchased by him while the motor was being repaired by the respondent, with the intention that they be used in the course of the repairs. Some, such as the new carburettor, represent a planned upgrade to the motor. The appellant is claiming the cost of these parts on the basis that they are now used; and that their warranties are void, as a result of being fitted to a motor that failed. There is no evidence to establish that the warranties are void, merely assertions on his part. The reality is that they became second hand parts the minute they were fitted to the motor, with his consent. He intended for that to happen.
The respondent asserts that those parts are in good order and can be used again.
These claims are not reasonably foreseeable losses as the evidence does not establish that the parts concerned are not able to be used and that, as a result, a loss has been suffered. As noted above, we will order that these parts be returned to the appellant who will be able to renew if they are not in good order and undamaged.
The respondent also claimed the cost of other parts, equipment and fittings for the boat, purchased in the years leading up to the failure (such as seat material) on the basis that they were no longer of use to him. The appellant did not explain to the Tribunal below, or to us on appeal, the reasoning that led him to reach that conclusion. It is not apparent to us how the respondent can claim those costs as reasonably foreseeable losses. Those claims are therefore dismissed.
Finally, the appellant claimed a refund of the registration fees paid on the boat ($122.00) and its trailer ($229.00), which have been of no benefit to him while the boat has been not fit for use. The $122.00 paid for the boat registration included $52.00 previously underpaid. We do not understand how the appellant claims this. The remaining $70.00 is for a "vessel registration amendment". Without more, we do not think this is a reasonably foreseeable loss
The $229.00 for the trailer registration is for the year ending 20 June 2019. As the trailer is for the boat, we accept that it was reasonably foreseeable, in the event of a major failure which deprived the appellant of use of the boat, that registration costs for the trailer used to tow the boat would be thrown away and wasted while the boat was unusable.
The motor failed on 10 January 2019 at the respondent's premises. The appellant had no use for the trailer from then until the registration expired, on 20 June 2019. This is a period of approximately 5 months. The respondent should pay the cost of trailer registration thrown away in that period, which we calculate at $95.42. This was clearly a reasonably foreseeable loss.
[7]
Orders
In the light of the above the Appeal Panel makes the following orders:
1. Appeal allowed.
2. Orders 1 and 3 made by the Tribunal 22 August 2019 are affirmed.
3. Orders 2 made by the Tribunal 22 August 2019 is set aside and, in its place, the following order is made:
The respondent shall pay the appellant sum of $7,095.42 being damages for breach of a consumer guarantee under s 267(4) of the Australian Consumer Law forthwith.
1. Order 4 made by the Tribunal 22 August 2019 is set aside and, in its place, the following order is made:
On 8 April 2020 at 12 noon the respondent, at its expense, is to make the appellant's boat, disassembled motor and all parts supplied by him for use with the motor available for collection by the appellant from the respondent's premises in Bombaderry, or as otherwise agreed in writing by the parties. The parts and the boat, but not the bottom end of the motor, are to be in the good order and undamaged. If they are not, then the appellant has leave to renew before the Consumer and Commercial Division under cl 8 of Sch 4 of the Civil and Administrative Tribunal Act 2013.
[8]
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 March 2020
Parties
Applicant/Plaintiff:
France
Respondent/Defendant:
Man Up Group Pty Ltd trading as Pitstop Auto and Marine
Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) states:
"Any internal appeal may be made:
(a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and
(b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds."
Clause 12 of Schedule 4 to the NCAT Act states with respect to decisions made in the CCD that:
An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because:
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In the present appeal the appellant relied on errors of law. He also sought leave to appeal on the ground that the decision was not fair and equitable.
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13], the Appeal Panel said that the following are errors of law:
1. whether the Tribunal provided adequate reasons, which explain the Tribunal's findings of fact and how the Tribunal's ultimate conclusion is based on those findings of fact and relevant legal principle;
2. whether the Tribunal identified the wrong issue or asked the wrong question;
3. whether it applied a wrong principle of law;
4. whether there was a failure to afford procedural fairness;
5. whether the Tribunal failed to take into account a relevant (that is, a mandatory) consideration;
6. whether it took into account an irrelevant consideration;
7. whether there was no evidence to support a finding of fact; and
8. whether the decision was legally unreasonable.
The Appeal Panel stated that, in circumstances where an appellant is not legally represented, it is appropriate for the Tribunal to look at the grounds of appeal generally, and to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations in favour of the respondent: Prendergast at [12].
The categories of errors of law that give rise to an appeal as of right, discussed in Prendergast, are not closed.
The principles regarding whether or not leave to appeal should be granted under Cl 12 Sch 4 of the NCAT Act were set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [76]-[84].
In circumstances where an appellant is not legally represented it is appropriate for the Tribunal to look at the grounds of appeal generally, and, to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations in favour of the respondent: Prendergast at [12]. As to appeals by self-represented litigants, in Cominos v Di Rico [2016] NSWCATAP 5, the Appeal Panel explained at [13]:
13. It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]- [316]). Relevantly, s 38(2) provides that that Tribunal "may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.
In this matter we discern the grounds of appeal to be:
1. the Tribunal erred in applying the relevant principles to the assessment of any loss suffered by the appellant as a result of the respondent's failure to affect the repairs to the motor with due care and skill;
2. the Tribunal failed in making its decision to have regard to all the evidence before it; and
3. the decision was not fair and equitable, largely as a result of the errors in (1) and (2).
Compensation for breach of a consumer guarantee relating to the supply of services
Part 5-4 of the Australian Consumer Law is headed "remedies relating to guarantee." Subdivision A of Division 1 (s 259 to 266) is concerned with actions against suppliers of goods, while sub-division B (s 267 to 270) is concerned with actions against suppliers of services.
Section 267 provides:
(1) A consumer may take action under this section if:
(a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and
(b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3-2 is not complied with; and
(c) unless the guarantee is the guarantee under section 60--the failure to comply with the guarantee did not occur only because of:
(i) an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or
(ii) a cause independent of human control that occurred after the services were supplied.
(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) terminate the contract for the supply of the services.
(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) terminate the contract for the supply of the services; or
(b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
(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.
(5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).
It should be noted that the remedy in subsections (4) "recovering damages", is available to a consumer whether or not the failure is a major failure, and, if it is a major failure, is in addition to any right the consumer may exercise under sub-section (2) or (3).
Whether a failure to comply with a consumer guarantee with respect to the delivery of services is a major failure is to be determined in accordance with s 268, which says:
A failure to comply with a guarantee referred to in section 267(1)(b) that applies to a supply of services is a major failure if:
(a) the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b) the services are substantially unfit for a purpose for which services of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(c) both of the following apply:
(i) the services, and any product resulting from the services, are unfit for a particular purpose for which the services were acquired by the consumer that was made known to the supplier of the services;
(ii) the services, and any of those products, cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(d) both of the following apply:
(i) the services, and any product resulting from the services, are not of such a nature, or quality, state or condition, that they might reasonably be expected to achieve a result desired by the consumer that was made known to the supplier;
(ii) the services, and any of those products, cannot, easily and within a reasonable time, be remedied to achieve such a result; or
(e) the supply of the services creates an unsafe situation.
It is apparent that, when the member considered the appellant's entitlements for breach of a consumer guarantee, he did not have regard to the provisions of s 267 of the Australian Consumer Law. He did not consider:
1. whether the appellant was able to take action under s 267 and particularly, given that action would be for breach of the consumer guarantee under s 60, whether s 267(1)(c) was satisfied; and,
2. if so, decide whether the failure to honour the consumer guarantee was a "major failure" or not; and,
3. if so, ask whether the appellant was entitled to compensation under s 267(3)(b); and
4. ask what losses claimed by the appellant were reasonably foreseeable following the breach of the consumer guarantee under s 267(4).
The failure to do so is, in each case, a failure to have regard to matter required by the Australian Consumer Law and an error of law as the member failed to apply the correct legal principle.
We note that while the member did not specifically consider the reduction in the value of the services below the price paid by the appellant: he did however, order that that appellant was not required to pay for those services.
In our view, a consideration of the evidence before the member and of his findings of fact shows that:
1. the repair work on the motor undertaken by the respondent was a supply of services in trade and commerce by the respondent to the appellant as a consumer;
2. the consumer guarantee under s 60 of the Australian Consumer Law required that those services would be rendered with due care and skill has not been complied with; and
3. that failure to comply was not the fault of an act, default or omission by anybody but the respondent and its employees.
As a consequence, the appellant was entitled to take action under s 267.
We think that the failure to comply with s 60 was a major failure. A reasonable consumer, fully appraised of the nature and extent of the respondent's failure to take reasonable care, would not have acquired the respondent's services. That failure left the motor inoperative, requiring substantial and expensive repairs, including a replacement bottom end. Additionally, the motor could not easily be repaired within a reasonable time, given its vintage and rarity. As a result, the failure was a major failure within the meaning of both s 268(a) and (b).
The Tribunal appears to have assessed the damages suffered by the appellant on the basis that it was restoring the appellant to a financial position akin to that he would have been in had the motor not been damaged by the respondent in undertaking the repairs. The Tribunal ordered the respondent to pay the appellant the depreciated value of the motor, which it assessed at $2,000, and to refund the costs of the worthless repairs of $2,346.77: a total of $4,346.77. This appears to reflect the measure of damages in tort, often referred to as reliance loss.
In Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Mason, Wilson and Dawson JJ explained at [10]:
In contract, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the contract been performed - he is entitled to damages for loss of bargain (expectation loss) and damage suffered, including expenditure incurred, in reliance on the contract (reliance loss). In tort, on the other hand, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the tort not been committed (similar to reliance loss).
We think it clear from the Tribunals findings that, by the time the appellant commenced proceedings in the CCD, both parties regarded the contract for repairs to the motor as at an end. There had been discussions concerning the appellant's demand that the respondent repair the motor, which led nowhere. They had reached a point of stand off, where the appellant had decided to rely on his consumer rights and litigate the matter, relying on the consumer guarantee.
In enforcing the consumer guarantee the appellant was entitled to recover:
1. compensation for any reduction in the value of the services below the price paid or payable under s 267(3)(b) as the failure was a major failure; and,
2. damages for any reasonably foreseeable loss suffered as a result of the failure.
In assessing the appellant's damages the member did not ask what damages were reasonably foreseeable. This, as we have already said, was an error of law.
The Tribunal dismissed the appellant's claims for $14,783.06 as -
… a wish list, that quite plainly refers to all of the expenses that he's incurred on the boat in the last year or two.
The member did not consider any of the many items included in that list and ask whether they, individually or collectively, constituted a loss that it was reasonably foreseeable that the consumer would suffer as a result of the respondent's failure to exercise due care and skill. Once again, this is an error of law.
In reaching the conclusion that the motor's depreciated value was $2,000 (as against a claimed replacement costs of $7,480) the Tribunal did not have regard to evidence that the motor:
1. had been fully reconditioned earlier in the year;
2. had been fully operational and well used from 23 August 2018 to 1 August 2018;
3. had been turning over, without apparent difficulty, after the appellant worked on it and before it was taken to the respondent; and
4. was a vintage motor and not easily replaced.
It is clear from reading the decision as whole, however, that these are factors of which the Tribunal was aware, but that the member did not refer to them when assessing the value of the motor. This amounts to a failure to deal with evidence. Such a failure may in appropriate circumstances be characterised as a failure to have regard to a relevant consideration or a failure to have regard to critical evidence.
It is generally not mandatory to consider particular evidence: Rodger v De Gelder (2015) 71 MVR 514, [2015] NSWCA 211 at [86]; Allianz Australia Insurance Ltd v Cervantes (2012) 61 MVR 443, [2012] NSWCA 244 at [15] per Basten JA (McColl and Macfarlan JJA agreeing). However, by s 38(6)(a) of the NCAT Act, the Tribunal "is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings." This includes an obligation to have regard to material which has been disclosed to the Tribunal and which is relevant to the facts in issue, at least where that material is of some significance. Further, at common law, where a decision-maker ignores evidence which is critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the decision-maker, this is an error of law: Mifsud v Campbell (1991) 21 NSWLR 725 at 728; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [62]-[63]; Eadie v Harvey [2017] NSWCATAP 201 at [61]-[62]. In this matter the member erred in not taking the relevant evidence into account.