NSWNSWCATAP

Frediani v Hall t/as Happy Camper Conversions

[2024] NSWCATAP 134

NCAT Appeal Panel|2024-04-11|Before: Armstrong J

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At a glance

Source facts

Court

NCAT Appeal Panel

Decision date

2024-04-11

Before

Armstrong J

Catchwords

[2020] NSWCCA 220 Rice Marketing Board for the State of New South Wales v Forbidden Foods Pty Limited

Source

Original judgment source is linked above.

Catchwords

[2020] NSWCCA 220 Rice Marketing Board for the State of New South Wales v Forbidden Foods Pty Limited

Judgment (16 paragraphs)

[1]

Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 Capic v Ford Motor Company Pty Ltd [2021] FCA 715 Collins v Urban [2014] NSWCATAP 17 Commissioner of Police, NSW Police Force v DYD [2023] NSWCATAP 244 Commissioner of Police, NSW Police Force v Hogan [2024] NSWCATAP 77 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; [2003] HCA 26 Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211 Dwyer v Volkswagen Group Australia Pty Ltd t/as Volkswagen Australia [2021] NSWSC 715 Ferella & Anor v Chief Commissioner of State Revenue [2014] NSWCA 378 Ford Motor Company of Australia Pty Ltd v Capic [2023] FCAFC 179 Garofali v Moshkovich [2021] NSWCATAP 242 Liu v Director of Public Prosecutions (NSW) [2024] NSWSC 382 LSH Auto (Sydney) Pty Ltd v Sherman [2020] NSWCATAP 246 New South Wales Housing Corporation v Orr [2019] NSWCA 231 Nu-Stone Building Ltd v McInerney [2023] NSWSC 940 Orr v Cobar Management Pty Limited (2020) 103 NSWLR 36; [2020] NSWCCA 220 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 Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597 Starr v Johnson [2023] NSWCATAP 190 Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 TNT Building Trades Pty Ltd v Baker [2023] NSWCATAP 178 Toyota Motor Corporation Australia Limited v Williams (2023) 296 FCR 514; [2023] FCAFC 50 Waverly Council v Whitehouse Properties Pty Limited [2020] NSWLEC 171 Williams v Toyota Motor Corporation Australia Limited [2022] FCA 344 Wilson v Winnicott [2021] NSWCATAP 211 Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 Texts Cited: Macquarie Dictionary Category: Principal judgment Parties: Julianne Frediani (Appellant) Matthew James Hall t/as Happy Camper Conversions (Respondent) Representation: Counsel: A Wilson (Appellant) P Wiggins (Respondent)

[3]

Overview

On 22 August 2022, the appellant commenced proceedings in the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal seeking orders that the respondent refund the monies she had paid the respondent to convert her 2019 Volkswagen Crafter van (the vehicle) into a campervan/motorhome, and consequential losses the appellant alleged she had sustained. On 8 January 2024 the Tribunal ordered that the respondent perform repairs to the appellant's vehicle, which had been converted by the respondent into a campervan/motorhome. On 5 February 2024, the appellant lodged an appeal of the Tribunal's decision.
There is no dispute that there was a contract between the parties for the respondent to supply goods and services to the appellant in trade or commerce. The respondent conducts a business that converts certain vehicles into campervans/motorhomes. In these reasons, we will refer to the appellant as the consumer, and to the respondent as the supplier.
The works performed by the supplier occurred in the period between July 2020 and November 2020, with additional subsequent work to the vehicle occurring in about April and May 2021. The consumer paid the supplier $69,519.60 for the conversion works.
Before the Tribunal below, the consumer's causes of action were based on the supplier breaching consumer guarantee provisions of the Australian Consumer Law (NSW) (ACL) in respect of the provision of goods (relevantly, ss 54 and 55) and services (relevantly, ss 60 and 61).
The evidence of the consumer included expert evidence from a mechanical engineer, Mr Dewhurst. In Mr Dewhurst's opinion, the vehicle was not in a condition capable of registration when it was supplied after the conversion, because its gross vehicle mass (GVM) exceeded the manufacturers limit; and there were other significant defects in the work performed by the supplier (in particular, electrical works) that caused the vehicle to be unsafe.
The supplier did not put forward any independent expert evidence to the Tribunal. The only evidence of the supplier was the evidence of Mr Hall. Part of his evidence involved the cost of a GVM upgrade to the vehicle.
The consumer relevantly argued that, in respect of the provision of goods, the breach of the consumer guarantees under both s 54 (acceptable quality) and s 55 (fit for purpose) constituted a "major failure" as defined in s 260 of the ACL; the consumer had rejected the goods within the "rejection period" under s 262(1) of the ACL; and the consumer had the right to elect to reject the goods and obtain a refund of the monies paid for the conversion works, together with consequential loss. The total monetary amount claimed by the consumer was $99,769.60.
The Tribunal found that, although the supplier had breached the consumer guarantee that goods be fit for purpose under s 55 of the ACL, the failure was not a "major failure" under s 260 of the ACL. As noted, the Tribunal ordered that the supplier perform repairs to the vehicle.
The critical issues in this appeal are whether the Tribunal erred by failing to make findings as to whether the consumer guarantee under s 54 of the ACL had been breached; and by failing to apply the correct legal test as to whether the breach of the consumer guarantee provisions constituted a "major failure" under ss 259(3) and 260 of the ACL.
We are satisfied that the Tribunal committed errors on questions of law in respect of its failure to deal with s 54 of the ACL, and in respect of its application of the legal test as to whether the breach of the consumer guarantee was a "major failure" within the meaning of the ACL. We consider these errors to be material (considered separately, and cumulatively) and accordingly, we allow the consumer's appeal.
At the appeal hearing, both parties sought that we should, to the extent that it was possible to do so, redetermine the proceedings under s 81 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Due to the nature and scope of the issues that remain in dispute and in respect of which no factual findings have been made, we have decided that the case is to be remitted to the Consumer and Commercial Division of the Tribunal, to be reconsidered in accordance with law, with the following exception. That part of the Tribunal's decision in which it found that the supplier breached the consumer guarantee under s 55 of the ACL is to remain undisturbed.

[4]

Statutory Framework

The decision under appeal refers to the consumer guarantee provisions in respect of goods and services. The remedial provisions of the ACL for breach of the consumer guarantees for provision of services against a supplier (ss 267-269) involve damages; compensation; and the ability to terminate the contract.
The remedial provisions of the ACL for breach of the consumer guarantees for provision of goods against a supplier (ss 259-264) are more complex, and involve repair; replacement of goods; refund (and return) of goods; and damages for loss. As Wheelan J stated in Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [16]-[17]: "At a general level, and without being exhaustive, in respect of the consumer guarantees the ACL provides for the following remedies against a supplier of goods, against a manufacturer of goods, and as between a supplier of goods and a manufacturer. In relation to a supplier - (1) a supplier of goods is liable to a consumer to remedy any failure of the goods to comply with the statutory guarantees of acceptable quality and fitness for purpose, and for damages for any foreseeable loss as a result of the failure [ss 259(2) and (4), 261]; and (2) where a failure is a "major failure," or a failure cannot be remedied, the consumer is entitled as against the supplier to reject the goods, and is entitled at the consumer's election to replacement goods, or to a refund of the purchase price [ss 259(3), 263(4)]."
It is unnecessary for us to set out and explore the findings and reasons of the Tribunal regarding breach of the consumer guarantees to provide services with due care and skill (s 60) and services fit for purpose (s 61).
The reason that such an analysis is unnecessary is that the contract to modify the van and transform it to a campervan/motorhome involved the provision of both goods (the installation of various items into the van, including plumbing; electrical items and outlets; toilet; bedding; sink; taps; and joinery) and services. The installation of goods was substantial. By reason of the definition of the supply of "goods" in ss 2 and 11 of the ACL, the whole of the transaction is properly characterised as a supply of goods (Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647; [2016] FCA 196 at [131]-[134]; Wilson v Winnicott [2021] NSWCATAP 211 at [77]-[99]).
Section 54 of the ACL relevantly states: 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. (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods. …
Section 55(1) of the ACL contains a consumer guarantee that goods be reasonably fit for any disclosed purpose and any purpose for which the supplier represents the goods are reasonably fit for. It is unnecessary for us to set out the applicable legal principles in respect of s 55 of the ACL. The Tribunal found that the vehicle was not fit for purpose under s 55(1) and the supplier has not appealed that part of the decision.
The matters in s 54(3) are "mandatory considerations" to establish whether or not goods are not of acceptable quality under s 54(2)(a)-(e) such that a reasonable consumer, fully acquainted with the state and condition of the goods, would regard the goods as being of acceptable quality, determined at the date of the supply of the goods (Ford Motor Company of Australia Pty Ltd v Capic [2023] FCAFC 179 (Capic-Appeal) at [43] and [56]).
The principles applicable to s 54(2) of the ACL can be summarised as follows: 1. The "reasonable consumer" in s 54(2) is assessed objectively, and idiosyncratic subjective views by the consumer about the state or condition of the goods or what is, or is not, acceptable, is irrelevant (Toyota Motor Corporation Australia Limited v Williams (2023) 296 FCR 514; [2023] FCAFC 50 (Williams-Appeal) at [42]-[43]). 2. Section 54 of the ACL requires consideration of at least some knowledge acquired after supply, or else it would not be possible to hold that goods were not of acceptable quality by reason of a latent or hidden defect (Capic-Appeal at [57]). 3. The statutory language of s 54(2) does not confine "acceptable quality" to "not potentially fatal" or "unusable" (Capic-Appeal) at [53]. 4. The existence of a manufacturer's warranty should generally have no bearing on the question of whether the goods comply with the statutory guarantees of acceptable quality (Capic-Appeal at [63], applying Jayco at [43]; and Toyota Motor Corporation Australia Limited v Williams (2023) 296 FCR 514; [2023] FCAFC 50 at [45]). 5. The consumer guarantee in s 54 should not be "read down" because it could otherwise lead to a "disproportionate outcome" (Capic-Appeal at [75]). 6. A reasonable consumer in the hypothetical circumstances in s 54 would be aware that motor vehicles are complicated pieces of machinery that may develop future problems that may require rectification by the vehicle's manufacturer during its lifetime, and a merely speculative theoretical possibility of a future problem may not be regarded as unacceptable by a reasonable consumer (Dwyer v Volkswagen Group Australia Pty Ltd t/as Volkswagen Australia [2021] NSWSC 715 at [158]; Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211 at [154]-[156]). 7. A reasonable consumer being aware that motor vehicles are complicated pieces of machinery that may develop problems is different to a reasonable consumer accepting that a vehicle, because of a defect already present at the time of supply, cannot be used in a reasonable and normal way without malfunctioning and consequently exposing the vehicle one or more non-trivial adverse consequences (Williams v Toyota Motor Corporation Australia Limited [2022] FCA 344 at [198]; Capic v Ford Motor Company Pty Ltd [2021] FCA 715 at [636]).
Where the consumer guarantee is not complied with, the next issue is the appropriate remedy. Sections 259 and 260 of the ACL state as follows: 259 Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time - the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. (5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier. (6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). (7) The consumer may take action under this section whether or not the goods are in their original packaging. 260 When a failure to comply with a guarantee is a major failure (1) A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) the goods depart in one or more significant respects: (i) if they were supplied by description - from that description; or (ii) if they were supplied by reference to a sample or demonstration model - from that sample or demonstration model; or (c) the goods are substantially unfit for a purpose for which goods 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 (d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe. (2) A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is also a major failure if: (a) the failure is one of 2 or more failures to comply with a guarantee referred to in section 259(1)(b) that apply to the supply; and (b) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of those failures, taken as a whole. Note: The multiple failures do not need to relate to the same guarantee. (3) Subsection (2) applies regardless of whether the consumer has taken action under section 259 in relation to any of the failures.
Sections 262 and 263 of the ACL provide for the circumstances in which consumers are not entitled to reject goods (s 262) and the consequences of the consumer rejecting the goods (s 263). Those provisions state as follows: 262 When consumers are not entitled to reject goods (1) A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if: (a) the rejection period for the goods has ended; or (b) the goods have been lost, destroyed or disposed of by the consumer; or (c) the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or (d) the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them. (2) The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to: (a) the type of goods; and (b) the use to which a consumer is likely to put them; and (c) the length of time for which it is reasonable for them to be used; and (d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent. 263 Consequences of rejecting goods (1) This section applies if, under section 259, a consumer notifies a supplier of goods that the consumer rejects the goods. (2) The consumer must return the goods to the supplier unless: (a) the goods have already been returned to, or retrieved by, the supplier; or (b) the goods cannot be returned, removed or transported without significant cost to the consumer because of: (i) the nature of the failure to comply with the guarantee to which the rejection relates; or (ii) the size or height, or method of attachment, of the goods. (3) If subsection (2)(b) applies, the supplier must, within a reasonable time, collect the goods at the supplier's expense. (4) The supplier must, in accordance with an election made by the consumer: (a) refund: (i) any money paid by the consumer for the goods; and (ii) an amount that is equal to the value of any other consideration provided by the consumer for the goods; or (b) replace the rejected goods with goods of the same type, and of similar value, if such goods are reasonably available to the supplier. (5) The supplier cannot satisfy subsection (4)(a) by permitting the consumer to acquire goods from the supplier. (6) If the property in the rejected goods had passed to the consumer before the rejection was notified, the property in those goods revests in the supplier on the notification of the rejection.
In summary, the following principles apply: 1. The consumer has a right to claim damages under s 259(4) of the ACL against the supplier for reasonably foreseeable loss caused by breach of the consumer guarantee, irrespective of whether or not the breach is repairable, or is a "major failure". 2. There are different remedies against the supplier available depending upon whether or not the goods are repairable or the goods have a "major failure" (s 259(2) and (3)). 3. If the goods cannot be repaired or have a "major failure", the consumer may notify the supplier he or she rejects the goods and the grounds of rejection (s 259(3)(a)). 4. If the goods have been rejected in compliance with s 262, the supplier must, in accordance with the election of the consumer, either: (a) provide a refund (being monies paid by the consumer to the supplier for the goods, and any amount equal to the value of any other consideration provided by the consumer for the goods); or (b) replace the goods with goods of the same type and of similar value that are reasonably available to the supplier (s 263(4)). The consumer must return the goods to the supplier in accordance with s 263(2) and (3) of the ACL.

[5]

The Decision Under Appeal

Both parties were legally represented at all relevant times. At the hearing, there was evidence by the consumer; her expert Mr Dewhurst; and Mr Hall.
The consumer's evidence included quotations and reports in respect of repairs to the vehicle from another supplier of campervans/motorhomes; and automotive electricians.
Mr Dewhurst's evidence was that the vehicle's weight exceeded the manufacturer's GVM after supply, irrespective of additional items that had been added to the vehicle by the consumer (including a bull-bar; roof racks and roof mounted solar panels). Mr Dewhurst accepted that it was possible for a GVM "upgrade" to be added to the vehicle after it was supplied at a moderate cost, but even when such an upgrade was made, the vehicle would still be overweight and unable to be registered unless items were removed from it to bring it within the maximum upgraded GVM.
Importantly, Mr Dewhurst was also of the opinion that the vehicle was unsafe because electrical defects in the vehicle posed a fire and electrical shock hazard.
The Tribunal below found that the vehicle was not fit for purpose in breach of the consumer guarantee under s 55 of the ACL because (a) the vehicle was overweight and could not be registered under the applicable Vehicle Safety Compliance Certification Scheme (VSCC Scheme); and (b) the electrical and other defects identified by Mr Dewhurst prevented the vehicle from being registered (see Tribunal's reasons for decision ("Reasons") at [86]; [91]; [94]).
The Tribunal found the vehicle was repairable, but there was no "major failure" under ss 259(3) and 260 of the ACL because (a) the vehicle could be repaired at moderate cost; (b) the consumer was aware the vehicle could not be driven until the certification and registration process was complete; (c) the vehicle was not unsafe, because it could not be legally driven until the modifications had been approved under the VSCC Scheme; and (d) a reasonable consumer would expect "teething problems" (Reasons at [95]-[105]).
As the Tribunal was not satisfied that there was a "major failure" under ss 259(3) and 260 of the ACL, it ordered the supplier to collect the vehicle; perform repairs (including a GVM upgrade); and then return the vehicle.

[6]

Scope and nature of internal appeals

Decisions of the Tribunal such as the decision before us are internally appealable decisions. An appeal to the Tribunal's Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run its case again, nor is it sufficient for an appellant to disagree with the outcome and to contend there should have been a different outcome.
To succeed in an appeal, an appellant must demonstrate either an error by the Tribunal below on a question of law, which may be argued as of right; or that permission (that is, "leave") to appeal should be granted to bring the appeal: NCAT Act, s 80(2).
An appellant to an internal appeal brought under s 80(2)(b) of the NCAT Act must identify with precision a question of law said to be raised by the appeal: Ferella & Anor v Chief Commissioner of State Revenue [2014] NSWCA 378 at [6], [22]; Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13]. Whether a question is one of law must be approached as a matter of substance: Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92 at 62, [94], [203]; Kudrynski v Orange City Council [2024] NSWCA 33 at [50].
We are of the view that each such question must be a pure question of law (adopting what was said in Orr v Cobar Management Pty Limited (2020) 103 NSWLR 36; [2020] NSWCCA 220 (Cobar) at [44], [49]; and Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 at [71], albeit in relation to different statutory provisions). In Cobar at [109] it was said by Bathurst CJ and Bell P (as the Chief Justice then was) with Garling, Johnson and Lonergan JJ agreeing: "Those questions of law should be, in our opinion, what are sometimes described as 'pure questions of law'. They should not draw the Court of Criminal Appeal into questions of fact. Moreover, they must be questions whose character as a question of law can be recognised on the face of the question, and not depend upon the answer given to the question. This does not include a question which may ultimately disclose an error of law depending on an analysis of the facts but where this cannot be known without scrutiny of the facts."
The principles governing an application for leave to appeal under the NCAT Act are well-established and are repeated in many decisions of the Appeal Panel, often quoting Collins v Urban [2014] NSWCATAP 17. They are the same principles applied by the courts. It is only if the decision is attended with sufficient doubt to warrant its reconsideration on appeal will leave be granted. Ordinarily it is appropriate to grant leave where there is an issue of principle, a question of public importance or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597 at [28]. As explained in Collins v Urban at [84], it is not sufficient merely to show that the Tribunal below was arguably wrong or that there was a bona fide challenge to an issue of fact.
Further, the circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division of this Tribunal under s 80(2)(b) of the NCAT Act are limited to those set out in cl 12(1) of Sch 4 to the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: (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 Collins v Urban, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12 (1) of Sch 4 may have been suffered where: "… there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance."

[7]

Grounds of Appeal

The appeal was filed on 5 February 2024, within the applicable time period under r 25 of the Civil and Administrative Tribunal Rules 2014 (NSW).
Turning to the Notice of Appeal, we note that the grounds of appeal have been set out in a prolix and confusing manner, with multiple sub-paragraphs that mix purported errors on a question of law with purported errors in factual findings.
The importance of legally represented appellants setting out appeal grounds in a way that clearly identifies the purported errors on a question of law, and the errors that require which leave to appeal, has been emphasised in previous Appeal Panel decisions: see e.g. Garofali v Moshkovich [2021] NSWCATAP 242 at [51]-[55] and Bell Solar Pty Limited t/as Sunboost v Anderson [2021] NSWCATAP 278 at [33]. We endorse what was said in those earlier decisions, and it is regrettable that the grounds of appeal were not set out in such a manner.
The consumer's grounds of appeal are summarised as follows: 1. Ground 1 - Error on a question of law in respect of the failure to find the defects were a 'major failure' under ss 259(3) and 260 of the ACL, and the finding that the consumer was only entitled to the remedy of repair of the vehicle. 2. Ground 2 - Error on a question of law in respect of inadequate reasons. 3. Ground 3 - Leave to appeal under cl 12 of Sch 4 to the NCAT Act.
We set out below what we regard as the questions of law which arise from the consumer's Ground 1, as follows: 1. Whether there has been a constructive failure to exercise jurisdiction on the part of the Tribunal, which includes a failure to consider and address a material issue raised by a party in the proceedings that is within the jurisdiction of the Tribunal to determine (see e.g. Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 at [8]-[12] and [413]). 2. Whether the Tribunal applied the wrong legal principle which materially affected the outcome (Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 at [38]-[53]).
The wrong application of the correct legal principles to the facts is an error of mixed fact and law for which leave to appeal is required under s 80(2)(b) of the NCAT Act (TNT Building Trades Pty Ltd v Baker [2023] NSWCATAP 178 at [42]-[43] and the authorities cited therein).
The consumer's Ground 2 purports to raise a question of law as to whether adequate reasons have been provided. Depending on the precise arguments put by an appellant, an allegation that reasons are inadequate may amount to a challenge to the merits of the Tribunal's decision, for which leave to appeal is required. Simply alleging that the Tribunal's reasons are inadequate may not be sufficient to identify a question of law. There are no submissions before us as to why the issue raised by the consumer amounts to a question of law for the purposes of s 80(2)(b) of the NCAT Act.
Here, no express request under s 62 of the NCAT Act had been received by the Tribunal below. Nevertheless, the Tribunal delivered a written statement disclosing reasons for its decision. There has been some consideration about whether there is a duty in the Tribunal to provide reasons, absent a request under s 62 of the NCAT Act for a written statement of reasons, given that there is no common law duty to give reasons: Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [43]. Whether there is such a duty raises its own question of law; but if there is no such duty, then it stands to reason that a failure to provide adequate reasons would not constitute an error of law, let alone raise a pure question of law.
That said, there have been a number of Appeal Panel decisions which have proceeded on the view that, even in the absence of a request made under s 62 of the NCAT Act for written reasons, whether there has been a failure to provide adequate reasons amounts to a question of law for the purposes of s 80(2)(b): see e.g. Commissioner of Police, NSW Police Force v DYD [2023] NSWCATAP 244 at [11]-[18], [27]-[30]; Starr v Johnson [2023] NSWCATAP 190 at [23]; Commissioner of Police, NSW Police Force v Hogan [2024] NSWCATAP 77 at [21]. Without expressing a view, we note the decision of Wright J in Nu-Stone Building Ltd v McInerney [2023] NSWSC 940 who found at [58] that a written statement of reasons provided by the Appeal Panel, absent a request by the parties, was itself subject to the strictures of s 62(2) of the NCAT Act.
While the question cannot be regarded as free from doubt (see e.g. Starr v Johnson [2022] NSWCATAP 190 at [37]-[53]) or authoritatively determined by the Courts in NSW, we are prepared to accept, for the purposes of this appeal, that the question of whether or not the Tribunal's reasons are adequate is a question of law and leave to appeal is not required.

[9]

Was there a constructive failure to exercise jurisdiction?

The Tribunal's reasons make no reference to having made findings regarding whether the consumer had established a breach of the consumer guarantee in s 54 of the ACL. If the consumer clearly raised an argument that there was a breach of s 54, and the Tribunal failed to engage with a clearly articulated argument or case put to it, 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] 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 … 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 overlooked or otherwise failed to deal with a potential breach of s 54 of the ACL. Breach of s 54 was clearly raised by the consumer's legal representative both in Points of Claim and submissions. Notwithstanding that, the application of s 54 and the effect, if any, on whether or not there was a "major failure", is not addressed in the Reasons.
Determination of whether or not the supplier had breached s 54 of the ACL was critical as to the finding as to whether or not there was a "major failure" under s 259(3)(a) of the ACL and s 260(1)(a) of the ACL.
The matters in s 260(1)(a)-(e) of the ACL are matters to be considered separately. If there is a breach of a consumer guarantee regarding the supply of goods (other than in respect of ss 58 and 59(1)), then only one of the matters in s 260 needs to be established for there to be a "major failure".
The Tribunal, in the Reasons, only briefly referred to whether the goods would have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure (s 260(1)(a) of the ACL). The brief reasons given were that a reasonable consumer would expect "teething problems"; and the extent of the defects in the vehicle identified in the evidence of Mr Dewhurst were "insufficient" to find that a reasonable consumer, acquainted with the nature and extent of the failures, individually or collectively, would not have acquired the goods (Reasons at [104]-[105]).
However, that finding was only made in the context where the Tribunal had found that the goods supplied were not fit for purpose under s 55 of the ACL. There were no findings made in respect of whether the goods were of acceptable quality under s 54 of the ACL. To consider (albeit briefly) s 260(1)(a) in the context of the found breach of s 55 of the ACL, but not to consider it in the context of any found breach of s 54 of the ACL where the consumer was clearly arguing there was a breach of s 54, was a failure to engage with a clearly articulated case. To put it another way, it is a constructive failure to exercise jurisdiction.
The failure to deal with s 54 was clearly material to the outcome. Accordingly, an error on a question of law is established. That is sufficient for the appeal to be allowed. However, it is appropriate we also deal with the issue of whether a wrong legal principle was applied in respect of the manner in which ss 259(3) and 260(1)(e) of the ACL were considered, and also deal with the issue of leave to appeal.

[10]

Was the wrong legal principle applied under s 259(3) and 260 of the ACL?

We are satisfied the wrong legal principle was applied in respect of whether the goods had a "major failure" because they were not of acceptable quality because they were unsafe.
Goods are "unsafe" if they are not "safe". The Macquarie Dictionary definition of "safe" was referred to in LSH Auto (Sydney) Pty Ltd v Sherman [2020] NSWCATAP 246 at [52] as follows: secure from liability to harm, injury, danger, or risk; free from hurt, injury, danger, or risk; or involving no risk of mishap, error
The Tribunal found that the vehicle was not "unsafe" because it could not be legally driven without being certified under the VSCC Scheme and registered (Reasons at [100-103]).
To find that the vehicle was only "unsafe" if it was not driven in the condition it was supplied by the supplier makes s 260(1)(a) of the ACL redundant. The whole purpose of the conversion of the vehicle into a motorhome/campervan was for it to be able to be registered and be safe to drive.
The legal test applied by the Tribunal was the wrong legal test under s 260(1)(e), because the Tribunal considered a vehicle that could not be driven in the condition it was supplied was safe until it was approved under the VSCC Scheme and registered, rather than whether the goods were not of acceptable quality because they were unsafe in the condition in which they had been supplied. That is a pure question of law, because it does not involve consideration of the factual findings.
Further, there was no proper consideration of whether the goods were "not of acceptable quality because they are unsafe". As we said earlier, the Tribunal made no findings as to whether or not the goods were of acceptable quality under s 54 of the ACL. The Tribunal only considered the issue of "safety" in the context of its findings that the goods were not fit for purpose under s 55 of the ACL, not whether the goods were not of acceptable quality because they were supplied in an unsafe condition.
What the Tribunal did is focus on s 260(1)(c) and (d), which involve whether the goods can be easily, and within a reasonable period of time, be remedied to make them fit for purpose. However, if the breach of the consumer guarantee was a "major failure" within s 260(1)(a) or s 260(1)(e) of the ACL, it does not matter whether the goods were capable of being easily, and within a reasonable period of time, being remedied (by way of repair) to make them fit for purpose.

[13]

Disposition of the Appeal

Under s 81 of the NCAT Act, in determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for the decision under appeal to be varied (s 81(1)(b)), or quashed or set aside and another decision substituted for it (s 81(1)(d)). Section 81(2) provides that the Appeal Panel may exercise all the functions that are conferred or imposed by the NCAT Act or other legislation on the Tribunal at first instance when varying, or making a decision in substitution for, the decision under appeal, and may exercise such functions on grounds other than those relied upon at first instance. Further, if the grounds of appeal so warrant, the Tribunal may conduct a new hearing under s 80(3)(a) of the NCAT Act.
In the event that we decided to allow the appeal, both parties asked the Appeal Panel to redetermine the matter if possible, rather than sending the matter back to the Tribunal, due to the expense and delay of the litigation process.
We do not consider that the grounds of appeal in this matter warrant a new hearing under s 80(3)(a) of the NCAT Act.
Further, we do not think it is appropriate for us to redetermine the matter in the circumstances of this appeal under s 81 of the NCAT Act for a number of reasons, as follows: 1. No findings have been made in respect of breach of the consumer guarantee under s 54 of the ACL; and the Tribunal made material errors in determining whether there was a "major failure" under s 259(3) and 260 of the ACL. Determining those issues involves factual and legal findings that, in our view, are most appropriately made in the remitted proceedings when further issues will also require determination. 2. Whether there is a "major failure" under ss 259(3) and 260(1)(a)-(e) is only part of the requirement that the consumer will have to establish to obtain a refund of the purchase price. The consumer still has to have rejected the goods in accordance with ss 262 and 263. Those are not matters it is appropriate for us to make findings about on this appeal. 3. When the vehicle is defitted, it is likely to require further repair. The consumer's Counsel described the vehicle, after it has been defitted as likely being so full of holes it will look like "swiss cheese". The vehicle may then either required further repair (the cost of which may give rise to damages under s 259(4) of the ACL) or, otherwise, damages under s 259(4) of the ACL for loss of value to the vehicle (i.e. the difference in the value of the vehicle after the defitting works in comparison to an equivalent 2019 Volkswagen Crafter van with similar kilometres travelled). That may require amendment to the application; and it may require further evidence. 4. There is a dispute between the parties as to whether the supplier is suitably licensed to perform any repairs to the vehicle after it has been defitted. We cannot determine that issue in this appeal. 5. There are aspects to the consumer's claim that require further legal argument and consideration. For example, the consumer argues that she should be awarded damages for defitting the vehicle in the amount of $15,000. However, it is difficult to comprehend how the consumer can obtain a refund under s 263(4) of the ACL and additionally be awarded damages for the cost of defitting the vehicle herself. 6. There is a potential monetary jurisdiction issue. The monetary jurisdictional limit of the Tribunal is $100,000 in this type of proceedings (s 79S(7) of the Fair Trading Act 1987 (NSW) and reg 13A of the Fair Trading Regulation 2019 (NSW)). To this point in time, the consumer has consented to the jurisdictional limit of the Tribunal. Whether that remains the case when the issue of any damages arising from the condition of the vehicle is considered is uncertain, and leads to the possibility that there may be an application to transfer proceedings to a court under cl 6 of Sch 4 to the NCAT Act. 7. The consumer's claim for damages in respect of the cost of hiring another campervan/motorhome when her vehicle is being defitted has not been determined.
It is appropriate that the matter be remitted to the Tribunal for reconsideration under s 81(1)(e) of the NCAT Act. However, there is one issue does not require reconsideration. The Tribunal found the goods were not fit for purpose in breach of the consumer guarantee under s 55 of the ACL. The supplier did not appeal the decision, and those findings should accordingly remain undisturbed.

[15]

Orders

We make the following orders: 1. The appeal is allowed. 2. The orders of the Tribunal made on 8 January 2024 are set aside. 3. The proceedings are remitted to the Tribunal to be reconsidered according to law, other than the finding of the Tribunal that the respondent has breached the consumer guarantee under s 55 of the Australian Consumer Law (NSW) which remains undisturbed. 4. In the remitted proceedings, the appellant is granted leave to rely upon the report of NSW Fair Trading dated 4 December 2023; the affidavit of the appellant affirmed on 14 March 2024; and the documents referred to as "Bundle 1" in the decision of the Tribunal made on 8 January 2024. 5. What further or other evidence can be relied upon by the parties in the remitted proceedings is to be considered by the Tribunal at an interlocutory directions hearing. 6. The costs of the appeal proceedings are to be determined as follows: 1. The appellant is to file with the Appeal Panel and serve on the respondent all costs submissions and documents (no more than 5 pages) by 14 days from the date of this decision. 2. The respondent is to file with the Appeal Panel and serve on the appellant all costs submissions and documents (no more than 5 pages) by 28 days from the date of this decision. 3. The appellant is to file with the Appeal Panel and serve on the respondent all costs submissions in reply (no more than 3 pages) by 35 days from the date of this decision. 4. The costs submissions of the parties are to include whether or not a hearing on the issue of costs can be dispensed with and if not, why not. 5. Subject to consideration of the costs submissions of the parties, the Appeal Panel may determine the issue of costs on the papers and without a hearing under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 6. If a party seeks an extension of time to comply with directions regarding the disposition of the issue of costs, an application should be made in writing to the Appeal Panel by no later than the day prior to the date of the relevant timetable obligation.

Frediani v Hall t/as Happy Camper Conversions - [2024] NSWCATAP 134 - NSWCATAP 2024 case summary — Zoe

Frediani v Hall t/as Happy Camper Conversions

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