Head Mod Nominees Pty Ltd v Macken

reasons for decision

1. The appellant, Head Mod Nominees Pty Ltd, is a supplier of reconditioned engines and cylinder heads and trades under the name of HM/GEM Engines.
2. The appellant supplier seeks to appeal a decision of the Tribunal, in the Consumer and Commercial Division, that it pay the respondent consumer, Paul Macken, an amount of $10,681.00, as compensation for a faulty reconditioned engine it supplied. The engine was supplied, in August 2012, to the respondent's mechanic, Michael Navin, for installation into the respondent's Nissan Navarra motor vehicle. The engine came with a 12 month unlimited kilometre written warranty. The respondent took delivery of his vehicle with the installed reconditioned engine in late August 2012.
3. In August 2013, after the vehicle had been driven by the respondent for around 20,000 kilometres and just prior to the expiry of the warranty, the reconditioned engine supplied by the appellant failed. On the instructions of the appellant, Mr Navin carried out a compression test followed by removing the cylinder head. He found there was no compression in cylinder 1 and cylinder 4 had low compression. On removing the cylinder head he found that the number 1 piston head had a hole in it. As requested by the appellant, Mr Navin returned the engine, unassembled, to the appellant's Melbourne office. The appellant subsequently advised that there would be no warranty on the motor as the failure of the engine was "due to a combustion issue."
4. The engine was returned to Mr Navin unassembled. Mr Navin, with the agreement of the respondent, repaired, re-assembled and re-installed the engine at a cost of $10,681.00. In the course of his re-assembly, Mr Navin found a number of faults, including a burnt out injector seat in cylinder 4 that required re-machining.
5. In November 2014, the respondent commenced proceedings against the appellant claiming compensation for the repairs undertaken by Mr Navin. The appellant's claim was brought under the terms of the warranty the appellant gave when supplying the engine.
6. The Tribunal heard the respondent's claim, on 16 February 2015. At the conclusion of the hearing the Tribunal made an order that the appellant pay the respondent the amount claimed, on or before 9 March 2015. On 19 February 2015, the Tribunal published its reasons for decision.
7. The appellant lodged its Notice of Appeal, on 9 March 2015. In its Notice of Appeal, the appellant sought leave to appeal on the grounds that: 1. the evidence submitted by the respondent did not account for the engine failure; 2. the findings of the Tribunal were not open to it on the facts of the case; and 3. the weight of the evidence was "vastly against the decision that was made and reasons given."
8. The respondent in his Reply to Appeal submitted that the appellant's appeal was incompetent as the Notice of Appeal did not set out the factual findings challenged and the findings of fact which ought to have been made. The respondent went on to say that the findings made by the Tribunal were correct and properly made on the evidence before the Tribunal.
9. The appellant's appeal was heard on 2 June 2015. Mr Tony Holland, a qualified A grade mechanic and after sales manager of the appellant, appeared on behalf of the appellant. He had also appeared on behalf of the respondent (appellant in these proceedings) in the Tribunal below. Mr D Allan, of counsel appeared for the respondent at the hearing of this appeal.
10. At the conclusion of the hearing we reserved our decision. For the reasons set out below we have granted leave to appeal, allowed the appeal and set aside the orders made below. We have also remitted the application the subject of this appeal for reconsideration by the Tribunal below, differently constituted.

The jurisdiction of the Appeal Panel

1. There is no dispute that the decision of the Tribunal from which the appellant seeks to appeal is an "internally appealable decision" to the Appeal Panel: see subs 27(1) and 80(1) of the Civil and Administrative Tribunal Act 2013.
2. Subsection 80(2)(b) of Civil and Administrative Tribunal Act 2013 provides that an internal appeal may be made: 1. as of right on any question of law, or 2. with the leave of the Appeal Panel, on any other grounds.
3. As we have noted, the appellant also seeks leave of the Appeal Panel to appeal the findings of the Tribunal below. Where leave is sought from a decision of the Consumer and Commercial Division of the Tribunal, the Appeal Panel's power to grant leave is set out in clause 12 of Schedule 4 of the Civil and Administrative Tribunal Act. That clause relevantly provides as follows: "12 Limitations on internal appeals against Division decisions (1) 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)."
4. The appellant submits that it has suffered a substantial miscarriage of justice on the grounds set out in cl 12(1)(a) and (b) (i.e. decision was not fair and equitable and against the weight of the evidence).
5. In our view, the appellant's grounds of appeal also raise a question of law, namely the Tribunal's failure to set out its reasoning processes in reaching the conclusion it reached. Inadequacy of reasons for decision is a ground of appeal that raises a question of law: see John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [18]. The appellant is not legally represented and has not expressly submitted it seeks to appeal on a question of law. However, in our view it is a ground squarely raised in the terms of its appeal.

Material before the Appeal Panel

1. The appellant relied on the following material that had been tendered before the Tribunal below: 1. a claim investigation report of Mr Holland, dated 21 November 2014. Attached to that report was an extract from an industry publication "Rellim" concerning the operating cycle of a compression ignition engine and piston seizure; and 2. a written response, dated 17 December 2014, by Mr Holland, to the documents relied on by the respondent (applicant below).
2. The appellant also sought to rely on an expert report, dated 12 May 2015, of Ron Murphy, a qualified Mechanical Engineer. The respondent objected to this evidence as it was new evidence that could have been obtained at the time of the hearing before the Tribunal below. We allowed that objection and we have not considered that report for the purpose of this application for leave to appeal or for the purpose of the appeal.
3. The material relied on by the respondent included the following material he had relied on in the proceedings below: 1. a statement of Mr Navin, dated 16 December 2014. Attached to Mr Navin's statement was a copy of Mr Chapman's Tax Invoice and report dated 20 December 2013 and photographs of "the bashed in sump and oil strainer, cylinder head injector washer and additional parts"; 2. a statement of the respondent, dated 19 December 2014. Attached to the statement were a number of documents including was a copy of "HM/GM Engines" booklet containing the terms of the appellant's warranty and Mr Navin's Tax Invoices dated 10 August 2012 and 28 March 2014. The respondent, Mr Macken, said Mr Navin had provided him with the booklet and the first invoice when he collected his vehicle, on 17 August 2012, with the reconditioned engine; and 3. a statement, dated 18 December 2014, by John Chapman, Manager of Coffs Harbour Diesel Service's, attaching a copy of his professional experience, "NCAT Procedural Direction 3 - Expert Witnesses", his Tax Invoice and report dated 20 December 2013 and a letter he wrote to Mr Navin on 3 September 2014.
4. Both parties filed and served detailed written submissions. The respondent objected to the contents of the written submissions of Mr Holland to the extent they sought to adduce further evidence, or further argument not relied on below. The submissions are primarily an expansion of the written submissions Mr Holland submitted to the Tribunal below concerning the statement evidence of Mr Navin as to why, in his opinion, the engine failed.
5. We have considered the submissions of Mr Holland to the extent they reflect what is contained in his evidence and submissions relied on below and to the extent they are relevant to the appellant's grounds of appeal.
6. The Appeal Panel was not provided with a copy of the transcript, or sound recording of the hearing before the Tribunal below.

The decision of the Tribunal

1. In its reasons for decision, the Tribunal described the applicant's case (i.e. the case of the respondent in this appeal) in the following terms: "The applicant's case was that he arranged for his repairer to install a reconditioned motor into his vehicle in August 2012 for which he paid the total sum of $14,685.00 to Mr Navin when he picked up the vehicle on 17 August 2012. The engine came with a 12 month unlimited kilometre warranty. The engine failed on 9th August 2013 after it had travelled approximately 20,000.00 kilometres. The vehicle had been serviced at the appropriate intervals. His warranty claim was rejected by the respondent as the problem was said to be a combustion issue and he sought compensation in the sum of $10681.00 being Mr Navins (sic) charge for repairing the engine."
2. The Tribunal then described the evidence of the applicant (i.e. the respondent in this appeal) as follows: "… [Mr Navin] a mechanic of over 40 years' experience did not dispute that there was a combustion issue and gave detailed evidence as to the cause of the engine failure. His evidence was that there was a knock in the motor when he first installed it and that it lacked power. His evidence was that when the motor failed he discovered a hole in the number one piston. He sent the engine back to the respondent who ultimately returned it back to him with 7 faults listed … together with extra parts and a bashed in sump. He stated the number 4 injector had to be replaced due to a combustion leak and that when he did so the motor no longer had a knock, started easier and had more power. Put shortly Mr Navin's evidence was that the cause of the pistons overheating was a defect in the number 4 injector seat which caused the combustion problem. He denied he should have checked or replaced the injector seat when he installed the engine. The applicant also relied upon the independent report of Mr John Chapman … also a very experienced diesel mechanic who expressed the view that "the build-up of carbon in this area would have a squeezing effect on the injector as the engine temperature increases to the designed limits causing high speed needle oscillation required for accurate combustion to cease causing engine damage or failure."
3. The Tribunal described the case of the respondent (i.e. the appellant in this appeal) as follows: "The respondent's case was that the failure of the engine was due to a combustion problem and not the fault of any defect in the engine supplied. Mr Holland also a mechanic of over 40 years' experience gave detailed evidence. He stated that the result of hardness tests on the cylinders showed that it wasn't just a problem with one cylinder. Mr Holland conceded that he wasn't an engineer. Mr Holland also claimed that the injector seat which was supplied and was faulty was a serviceable item and should have been checked or replaced by Mr Navin at the outset. He was not aware that the vehicle was an automatic which would appear to have eliminated one of the respondent's possible causes. No independent mechanics or engineers report was submitted on behalf of the respondent."
4. The Tribunal's findings and reasons for such findings were as follows: "The Tribunal having considered the whole of the evidence both oral and documentary makes the following findings. Where there is a conflict in the expert evidence given on behalf of the applicant and the respondent the Tribunal prefers the evidence given on behalf of the applicant. Mr Navins (sic) evidence was supported by the independent report of Mr Chapman. Mr Navins (sic) evidence explained the cause of the engine failure. The Tribunal does not accept that the injector seat ought to have been replaced or checked by Mr Navin at the outset. The Tribunal accepts the evidence of Mr Navin as to the condition the engine was returned in. … The Tribunal does not accept in the absence of independent mechanical or engineering evidence that the fact that 4 cylinders were soft establishes that the problem was caused by something other than what has been clearly established to be a defective injector seat which when repaired removed the knock and improved power. .."
5. The Tribunal's conclusion was: "The Tribunal finds that the engine supplied by the respondent is in breach of the express warranty provided. The Tribunal finds that the engine supplied by the respondent was not of acceptable quality within the meaning of the Australian Consumer Law. The Tribunal will therefore order the respondent to pay the applicant the sum of $10681."

Legal principles in regard to an application for leave to appeal

1. In Collins v Urban [2014] NSWCATAP 17 at [68], the Appeal Panel noted that cl 12 of Sch 4 of the Civil and Administrative Tribunal Act does not require the Appeal Panel to find that the appellant in fact "suffered a substantial miscarriage of justice." It was only required to find that the appellant "may" have suffered such a miscarriage. However, the Appeal Panel went on to say that there must be a sound basis for granting leave to appeal, namely 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 circumstances in cl 12(1)(a) or (b) not occurred or if the fresh evidence in para (c) had been available: see at [76].
2. At [84], the Appeal Panel set out the general principles in regard to applications for leave to appeal. These were: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed, BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (3) In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21] and the authorities cited there.

Adequacy of reasons

1. In Collins v Urban, at [56], the Appeal Panel also accepted that there was generally a duty on members sitting in the Consumer and Commercial Division to give oral or written reasons for decision and the reasons should comply with the requirements of subs 62(3) of the Civil and Administrative Tribunal Act. That subsection provides: "62 (3) A written statement of reasons for the purposes of this section must set out the following: (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, (c) the reasoning processes that lead the Tribunal to the conclusions it made.
2. As noted by the Appeal Panel in Commissioner of Police, NSW Police Force v Barrett [2015] NSWCATAP 68, at [97], it is well accepted that reasons for decision need not be highly detailed and they should not be examined with an overly critical eye. However, the Appeal Panel went on to cite the following remarks of Gleeson JA in Keith v Gal [2013] NSWCA 339, at [116]: "116 [B]ald conclusionary statements should be eschewed. As stated by Ipp JA in Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 at [28]: 'It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: 'I believe Mr X but not Mr Y and judgment follows accordingly'. That is not the way in which our legal system operates.' 117 Thus, it is essential to expose the reasoning on a point critical to the contest between the parties. This proposition reflects one of the three fundamental elements to a statement of reasons identified by Meagher JA in Beale v GIO [Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430] at 443-444: "Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well.'"
3. The guiding principle set out in subs 36(1) of the Civil and Administrative Tribunal Act must also be borne in mind in determining whether the Tribunal's reasons for decision meet the requirements of subs 62(3) of that Act. The guiding principle for that Act "and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings." As noted by Leeming JA in the recent decision of Zahed v IGA Limited t/as NRMA Insurance [2016] NSWCA 55, at [4], the obligation thereby imposed on the Tribunal is less than that imposed on courts. At [6], His Honour said: "… [The] question is whether the reasoning process can be discerned, reading the reasons as a whole and applying a "beneficial construction" to which the High Court referred in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-272. At least where a gap may be filled as a matter of necessary inference on a fair reading of the reasons, I would consider that the obligation to set out the reasons has been discharged."

Ground 1 - The evidence submitted by the respondent did not account for the engine failure

1. We understand the appellant to contend that the Tribunal erred in finding that respondent's evidence established that the respondent's engine failed because of a defect in the reconditioned engine supplied by the appellant. That is, the Tribunal's decision was not fair and equitable in light of the evidence before it and it was also against the weight of evidence.
2. As suggested by the appellant, the onus was on the respondent to prove his claim, on the balance of probabilities. There was no onus of proof on the appellant, but it did have an evidentiary onus.
3. As noted, the Tribunal found that the respondent (appellant in these proceedings) was in breach of the express warranty it provided. The Tribunal also found that engine supplied by the respondent was not of acceptable quality within the meaning of the Australian Consumer Law.
4. In regard to the latter, in its reasons for decision the Tribunal did not refer to the applicable provisions in the Australian Consumer Law or its reasoning process in making a finding that there had been a breach of that Law. That is, the Tribunal failed to give any explanation about the applicable law or discuss the evidence it found to have established the engine supplied by the appellant was not of an acceptable quality within the meaning of the Australian Consumer Law. By the "Australian Consumer Law" the Tribunal was presumably referring to Australian Consumer Law (NSW), as applied by s 28(1) of the Fair Trading Act 1987, but this was not made clear. Nor did the Tribunal consider the application of the remedy provisions under Part 5-4 of that Law.
5. Finally, it is unclear from the reasons for decision whether the damages the Tribunal awarded were awarded for breach of contract (that is, breach of the express warranty) or for failure to comply with a consumer guarantee.
6. While not raised by the appellant, in our view, tor the reasons given above, the Tribunal erred in law in that its reasons for decision do not comply with subs 62(3) of the Civil and Administrative Tribunal Act.
7. We would make a similar finding in regard to the Tribunal's finding that the respondent (the appellant in these proceedings) was in breach of the express warranty it provided with the engine. Other than to state the appellant's reconditioned engine came with a 12 month unlimited kilometre warranty, the Tribunal did not make any reference to its specific terms and conditions.
8. On page 2 of the appellant's "HM/GEM Engines" booklet (the booklet) there are the following statements: "So that the engine can be fully covered by our Australasia-wide guarantee, this warranty must be filled in by the engine fitter and carried at all times by the owner and the detachable section returned by mail. … The engine is guaranteed, upon and subject to the conditions set out herein against defective material and workmanship for the relevant terms."
9. The terms of the warranty are set out on page 3 and they vary depending on the type of engine. Four wheel drive vehicles and all-wheel drive vehicles are stated to have a 12 month unlimited kilometre warranty on "Parts & Labour." The general conditions of the warranty are contained on page 4 and 5 of the booklet. These conditions contain specific limitations.
10. Also included in the booklet are: 1. an Installation Procedure and Checklist. This Procedure and Checklist marked "Important", 2. E10 Information, and 3. a Service Bulletin, and Service Record.
11. There was no dispute that Mr Navin was certified to install the engine and that he filled in the warranty contained in the booklet.
12. In any event, to succeed in his claim under the terms of the appellant's warranty, the respondent was required to prove, on the balance of probabilities, that: 1. the reconditioned engine supplied by the appellant contained a defective part or defective workmanship (the defect); 2. the defect caused the piston(s) of the engine to overheat and the engine to fail; and 3. the appellant was liable, under the terms of the appellant's warranty, for the cost of rectifying and repairing the engine.
13. There was no dispute that the engine had failed due to the overheating of the pistons. What was in issue was whether the engine supplied by the appellant contained defective material or workmanship that gave rise to the pistons overheating. We reiterate that the onus was on the respondent to prove that there was a defect and that it caused the pistons to overheat.
14. In his statement Mr Navin said: "22. I believe a combination of the following caused the pistons to overheat: (i) Number 4 injector seat in cylinder head burnt 2 millimetres deep would not only lose compression but also burnt gas escaping into crank case then into intake air which would be unmetred at airflow sensor; (ii) Valve clearances too tight would lower compression pressure making it hard to start and down on power; (iii) Balance shaft bearings worn resulting in lower oil pressure. The pistons are kept cool by oil squirting on inside pistons."
15. The Tribunal summarised Mr Navin's evidence as to the cause of the engine's failure as being "a defect in the number 4 injector seat." As noted above, the evidence as set out in Mr Navin's statement did not go so far. He made reference to a 2 millimetre deep burn in the injector seat, but he did not describe this as being a defect in the engine supplied by the appellant.
16. As we understand the evidence, the reconditioned engine supplied by the appellant did not include the fuel injector pump or the fuel injectors. However, the engine supplied by the appellant did contain seats into which the fuel injectors were to be inserted when installing the engine (i.e. the injector seats).
17. There was no dispute that the number 4 injector seat was found to be damaged as described by Mr Navin in his evidence. This damage was identified in 2013 after the engine had failed. The engine had been driven for 20,000 kilometres by that time. The question for determination by the Tribunal was whether the number 4 injector seat in the engine supplied by the appellant was defective and if not, whether any other part of the engine supplied by the appellant was defective and caused the pistons to overheat and the engine to fail.
18. As we have noted, the Tribunal explained that its approach to the fact finding task was to consider the evidence before it and where there was "a conflict in the expert evidence given on behalf of the applicant and the respondent" the evidence given on behalf of the "applicant" (the respondent in this appeal) was preferred because it was supported by the "independent" report of Mr Chapman.
19. In the absence of any explanation, we find the Tribunal's approach to the evidence and findings difficult to understand. Subs 38(2) of the Civil and Administrative Tribunal Act provides that the Tribunal "is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice." However, this does not mean that the rules of evidence should be ignored: see Chi Building Pty Ltd v Wedgewood [2016] NSWCATAP 65 at [40] and [41]. As noted by Evatt J in R v The War Pensions Entitlement Appeals Tribunal; Ex parte Bolt [1933] HCA 30; (1933) 50 CLR 228 at 256: "…[although] rules of evidence, as such, do not bind, every attempt must be made to administer "substantial justice"."
20. In this case, the material before the Tribunal below was not voluminous, but it was technical in nature. The evidence given by the witnesses was, in part, factual and also opinion evidence.
21. The Tribunal appears to have accepted that Mr Navin and Mr Holland were "experts" in their field and that Mr Chapman was an independent witness. In dealing with their respective opinion evidence, the Tribunal: 1. accepted the opinion evidence of Mr Navin because it was supported by the independent report of Mr Chapman; and 2. rejected the opinion evidence of Mr Holland because it was not supported by any independent mechanical or engineering evidence.
22. The Tribunal did not in its reasons for decision explain its understanding of opinion evidence or independent evidence. Nor did it explain why it found Mr Chapman to have given independent evidence, or why Mr Holland's opinion evidence should have been supported by independent mechanical or engineering evidence. We have dealt with this below under the heading "expert evidence."
23. The Tribunal also failed to explain in its reasons for decision the evidence of Mr Holland that conflicted with that of Mr Navin. We have assumed this to have been in regard to the following issues: 1. whether the injector seat was a serviceable item and should have been checked by Mr Navin at the outset; and 2. the cause of the engine failure.
24. Both issues were ultimately questions of fact for determination by the Tribunal.
25. While not raised by the appellant in its Notice of Appeal, we note, in its reasons for decision, the Tribunal did not make a specific finding as to the actual defect in the engine supplied by the appellant that caused the engine to fail. The evidence was that the number 4 cylinder injector seat was damaged - but there was no evidence that it was defective when supplied. As we have noted, a material finding of fact the Tribunal was required to make from the evidence before it was that there was a defect in the labour or parts of the engine supplied by the appellant. This, the Tribunal failed to do.

The injector seat

1. It was the evidence of Mr Holland that the appellant does not "supply any component that is directly related to fuel delivery." These components we understand include the injection pump and injectors. Mr Holland specifically said the appellant did not supply the injection pump or injectors for the engine Mr Navin installed into the respondent's vehicle (see Mr Holland's claim investigation report, under the heading "Conclusion"). It was his evidence that the supply and installation of the injectors into the injector seat of the engine supplied by the appellant was a serviceable item for which Mr Navin was responsible.
2. In his written submissions to the Tribunal below, Mr Holland said that if the fuel injectors are loose or not sealed correctly when installed he would expect a problem relatively soon thereafter. As this did not happen, Mr Holland submitted it was more likely "the injector simply came loose and when it became unseated the seat was damaged by the hot gases created during combustion." That is, Mr Holland contended the damage to the injector seat was as a result of the injector having come loose and not due to any defect in the injector seat.
3. Mr Navin provided almost no details in his statement about what he did when installing the appellant's reconditioned motor, other than to note he detected a knock and it was hard to start. He said he raised this with the appellant at the time. Mr Macken on the other hand made no mention of a knock or that the engine was hard to start. Nor did Mr Navin include this in the four service record entries he made in the appellant's "HM/GEM Engines" booklet between 25 September 2012 and 24 June 2013.
4. In his Tax Invoice to the respondent (Mr Macken), dated 10 August 2012, Mr Navin provided details of the equipment/items he fitted into the respondent's vehicle when installing the appellant's reconditioned engine. Included in the Tax Invoice was the following: "Description Price Fit Reconditioned Motor 5834.00 Have Injector Pump reconditioned & 3455.00 Injectors reconditioned 1090.00 … "
5. These entries support Mr Holland's evidence that the appellant did not supply the injector pump and injectors. They were provided separately and installed by Mr Navin.
6. The appellant's "HM/GEM Engines" booklet also supports a finding that the injection pump and injectors were not supplied or installed by the appellant. As we have noted, the booklet contains an "Installation Procedure and Checklist." This list is found at pages 6 to 9 of the booklet and is a checklist for the installer of the appellant's reconditioned engine. There are 37 items on the list and against each item there is an empty box in which the installer can place a tick to indicate that the item had been checked. Included within the list, is an "Accessories Checklist." Item 33 (on page 9), on that "Accessories Checklist", specifically provides that the injection pump and injectors are to be renewed or overhauled by a registered fuel injection shop. The appellant is not a registered fuel injection shop and a tick has been placed against this item and other relevant items in the warranty. We assume these ticks were inserted by Mr Navin as he was the installer.
7. There was no evidence before the Tribunal as to who reconditioned the injection pump and injectors. Yet as we have noted below, both Mr Navin and Mr Chapman referred to the work Mr Chapman had undertaken on the injection pump and injectors removed from Mr Macken's vehicle after the engine had failed as being a "recheck."
8. The Tribunal made no mention of this evidence in its reasons for decision. Yet it was evidence directly relevant to the issue of what was supplied by the appellant and whether Mr Navin ought to have checked the injector seat at the outset. We can only assume the Tribunal either had no regard to this evidence or rejected the evidence. If the latter, the Tribunal did not explain why it did so in its reasons for decision.
9. Accordingly, we are satisfied that the Tribunal's rejection of Mr Holland's evidence that the injector seat was a serviceable item and should have been checked when the injectors were installed was against the weight of the evidence. We also find that the Tribunal failed to give adequate reasons for its finding in this regard.

Expert evidence

1. Subsection 76(1) of the Evidence Act 1995 (NSW), provides that "evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion is based." This is known as the "opinion evidence rule" and this, and other rules in the Evidence Act relating to opinion evidence, reflect the common law (see HG v The Queen (1999) 197 CLR 414, Gleeson CJ at 427 [39]-[44]). Subsection 76(2) of that Act sets out a number of exceptions to this rule, including "lay opinions" (see s 78) and "expert opinion" (see s 79).
2. Section 78 of the Evidence Act provides that evidence of an opinion expressed by a person is admissible where the opinion is based on what the person saw, heard or otherwise perceived about a relevant matter or event and the evidence of the opinion is necessary to obtain an adequate understanding of the person's perception of the matter or event. Examples of such opinion evidence are found in the text Stephen Odgers "Uniform Evidence Law" (9th Edition, Law Book Company) at [1.3.4180]. It is unnecessary to deal with these other than to note that the opinion must be rationally based and it is for the trier of fact to determine what weight, if any, is to be given to the opinion evidence.
3. Section 79 of the Evidence Act makes provision for the admissibility of opinion evidence based wholly or substantially on the person's specialised knowledge. This is often referred to as "expert evidence". Where the rules of evidence apply, it is well accepted that the facts on which an expert opinion is based must be established to the requisite standard and that the opinion must be one that falls within the witness experience and qualifications: Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 at [85].
4. The rules of evidence form a guide in assessing the probative value of the evidence before the Tribunal so as to ensure "substantial justice" is administered between the parties.
5. In regard expert witness and expert opinion evidence, on 7 February 2014, pursuant to subs 26(1) of the Civil and Administrative Tribunal Act, the President of the Tribunal made a procedural direction in regard to such evidence (the Direction). The Direction is entitled "NCAT Procedural Direction 3 - Expert Witnesses" and applies to proceedings in all Divisions of the Tribunal, including the Consumer and Commercial Division. Subsection 26(4) of the Civil and Administrative Tribunal Act provides that each Tribunal Member, and the parties to proceedings and their representatives, must comply with any applicable procedural direction.
6. Paragraph 5 of the Direction defines the term "expert witness" to mean "a person who has specialised knowledge based on the person's training, study or experience and who give evidence of an opinion based wholly or substantially on that knowledge."
7. The Direction applies to any evidence given by an expert witness in the Tribunal, other than evidence obtained from treating doctors, other health professionals or hospitals (see paragraph 7 of the Direction).
8. Paragraph 8 of the Direction provides that, subject to paragraph 7, any party who retains an expert to provide evidence or a report for the purpose of proceedings in the Tribunal is required to bring to the expert's attention the contents of the Direction including the experts' code of conduct set out in paragraphs 10 to 21 of the Direction.
9. Paragraph 10 provides that the experts' code of conduct applies to any expert witness who provides an expert report, or gives opinion evidence in proceedings before the Tribunal.
10. Paragraphs 11 to 14 sets out the experts' general duty to the Tribunal as follows: "11. An expert witness has an overriding duty to assist the Tribunal impartially on matters relevant to the expert witness's area of expertise. 12. An expert witness's paramount duty is to the Tribunal and not to any party to the proceedings (including the person retaining the expert witness). 13. An expert witness is not an advocate for a party. 14. An expert witness must abide by any direction given by the Tribunal".
11. Paragraph 16 of the experts' code of conduct sets out what is to be contained in an experts' report. This includes an acknowledgement that the expert has read the experts' code of conduct and agrees to be bound by it.
12. Paragraph 3 of the Direction provides that the Tribunal may excuse an expert witness or any other person from complying with the Direction.
13. The Tribunal made no reference to the Direction in its reasons for decision. In our view it should have referred to it and identified any rulings it made in so far as it accepted or rejected the opinion evidence of each of the witnesses it regarded as being an expert.
14. At paragraph 6 of his statement, Mr Chapman said he had read "NCAT Procedural Direction 3 - Expert's code of conduct at clauses 10 to 21." However, Mr Chapman did not go on to state that he agreed to be bound by the experts' code of conduct.
15. As we have noted a copy of the Direction was attached to his statement together with a copy of his Curriculum Vitae.
16. While the Tribunal did not excuse Mr Chapman from complying with the Direction, it would appear no objection was taken in regard to his report. Mr Holland did, however, make submissions in regard to Mr Chapman's report.
17. Mr Navin and Mr Holland made no reference to the Direction in their respective statements. Nor did the Tribunal excuse them from complying with the Direction in so far as it related to their opinion evidence based on their respective training, study or experience as a mechanic. Again no objection appears to have been made in regard to Mr Navin or Mr Holland giving opinion evidence.
18. As noted by the Appeal Panel in the recent decision of Chi Building Pty Ltd v Wedgewood [2016] NSWCATAP 64 at [28], the purposes of the Direction include: "… [assisting] parties and their witnesses to provide the Tribunal, in appropriate cases, soundly based, complete and reliable expert evidence. The purposes do not include establishing a restrictive regime by which expert evidence must be rejected if the expert had some previous involvement with the party with whom the witness is related."
19. At [36], the Appeal Panel held that the experts' code of conduct, as set out in the Direction, did not operate to render a witness incompetent to give opinion evidence or render that evidence inadmissible in proceedings before the Tribunal. Instead, it was a matter for the Tribunal to determine what weight should be given to that evidence in light of the circumstances before it. In certain circumstances a rejection of that evidence can amount to a denial of procedural fairness. In this regard we note, the following remarks of the Appeal Panel in Chi Building Pty Ltd (supra), at [47]: "47 We are satisfied that the exclusion of the evidence in the absence of a valid reason could be said to constitute a denial of procedural fairness."
20. As we have noted, the Tribunal rejected the opinion evidence of Mr Holland, apparently because, there was no independent opinion evidence to support his opinion evidence. Mr Holland's factual evidence included the hardness tests undertaken by the appellant on the pistons in the engine it supplied. The tests were undertaken after the engine had failed. The results of the test were factual in nature and do not appear to have been disputed. However, Mr Holland's opinion evidence (i.e his interpretation) arising from the test results was rejected. In our view, this was not a basis to reject Mr Holland's opinion evidence - it was a question as to what weight should be given to that evidence.
21. The Tribunal should have similarly dealt with the opinion evidence of Mr Navin. Instead, the Tribunal accepted his opinion evidence on the basis of its consistency with the "independent" evidence of Mr Chapman.
22. While Mr Chapman made reference to the Direction in his affidavit, this did not automatically make him "independent" or "impartial." Leaving aside the Tribunal's failure to excuse him from complying with the Direction in so far as he failed to agree to be bound by the expert witness code of conduct, in our opinion, on the material before us there was an issue as to whether Mr Chapman was an advocate for the respondent and not impartial. We reiterate, as noted in Chi Building Pty Ltd (supra), this does not mean his evidence should be rejected. It is a matter going to weight of that evidence.
23. In this regard, the evidence of Mr Navin was that, in December 2013, he requested Mr Chapman of Coffs Harbour Diesel Repairs to "recheck" and report on the injector pumps and injectors of the engine. The request was made after the appellant returned the dismantled engine in late August 2013 and in the course of Mr Navin undertaking repairs and re-assembling the engine (see para 19 of Mr Navin's statement). In his September 2014 letter to Mr Navin, Mr Chapman described the work he had undertaken in December 2013 as a "recheck." Having regard to the material before the Tribunal, there is an inference that this re-check was a re-check of what had previously been supplied, in 2012, when Mr Navin installed the engine supplied by the appellant. If the inference is correct, he could not be seen as being independent.
24. Mr Chapman's initial report is contained in a Tax Invoice, dated 20 December 2013, under the heading "work to be performed" as follows: "Please test and supply report for 1 x Nissan ZD30 VP44 Fuel Injection Pump Check 4 x Injectors (1 x Injector was damaged by combustion seal leak in cylinder head, unit was replaced, all other injectors passed the test criteria)." (bold added)
25. It was not until some nine months later, in September 2014, that Mr Chapman prepared his subsequent report which contains considerably more detail as follows: " … [Upon] receiving the injector assemblies it was noted that some injectors had a heavy build up of carbon around the lower body area (…). This carbon build up was created by the combustion seal failure allowing combustion gases to escape from the sealing area of the cylinder head. This also allowed the o/ring seal to fail and rupture confirming the combustion seal failure. All injectors were tested in accordance with the manufacturer guidelines after ultrasonic cleaning. Three injector assemblies passed all the test criteria and were returned to the owner as serviceable. The fourth injector failed due to overheating created by the excessive build up of carbon around the lower body area. The injector was replaced with another new injector assembly. Please note the build up of carbon in this area would have a squeezing effect on the injector as the engine temperatures increases to the designed limits causing the high speed needle oscillation required for accurate combustion to cease causing the engine to fail." (bold added)
26. As noted above, Mr Chapman makes reference to a "combustion seal failure" but provides no further explanation as to how this is relevant to the engine supplied by the appellant. The evidence of Mr Navin and Mr Chapman indicate that Mr Chapman was not provided with the engine supplied by the appellant. He was only provided with the injection pump and the injectors as this was what his expertise or specialised knowledge related to.
27. Accordingly, we find the Tribunal erred in the manner in which it dealt with the opinion evidence of the witnesses and we cannot say that, had it dealt with that evidence appropriately, a different conclusion would not have been reached.
28. We are also satisfied that the Tribunal erred in law in that in its reasons for decision it failed to adequately explain why it rejected the opinion evidence of Mr Holland and on what basis it found Mr Chapman to be "independent."

Ground 2 - the findings were not open to it on the facts of the case

1. This ground is essentially a rephrasing of ground 1 and we would make similar findings to those set out above. However, this ground includes the finding of the Tribunal that the defect was one falling within the terms of the appellant's warranty. The warranty, as we have noted, was subject to conditions and exclusions. These were not referred to by the Tribunal in its reasons for decision. Accordingly, even if it were to be accepted that there was a defect in the number 4 injector seat, the Tribunal gave no consideration as to whether this was an item falling within the terms of the warranty. As we have noted, the Tribunal did not consider the evidence that Mr Navin had installed the injectors and not the appellant.

Ground 3 - the weight of the evidence was "vastly against the decision that was made and the reason given"

1. Again this ground is also a rephrasing of ground 1 and 2.

Conclusions

1. For the reasons stated above, we find that the Tribunal has erred in law in that it has failed to give adequate reasons for its decision by failing to adequately identify the elements of the claim of the applicant (respondent in this appeal) having regard to the terms of the warranty given by the respondent (appellant in these proceedings) and the relevant provisions of the Australian Consumer Law (NSW). We also find the Tribunal failed to provide its reasoning in: 1. rejecting the evidence of Mr Holland that the injector seat ought to have been replaced or checked by Mr Navin at the outset; 2. rejecting the opinion evidence of Mr Holland on the basis there was no supporting evidence from independent evidence of an engineer or mechanic; and 3. accepting Mr Navin's evidence on the basis of a finding that Mr Chapman gave independent evidence.
2. For the same reasons, we also find the appellant has established that the decision of the Tribunal was not just and equitable and against the weight of the evidence. We are also satisfied that had the Tribunal not so erred there is a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant.
3. Accordingly, we are satisfied that the appellant may have suffered a substantial miscarriage of justice and it is appropriate to make an order granting leave to appeal and allowing the appeal. In light of our findings, we make an order setting aside the orders made by the Tribunal below and remitting the matter for reconsideration.
4. Neither party has submitted that in the event the appeal is allowed and remitted for reconsideration that it should be remitted to the Tribunal differently constituted. This may be because neither party turned their mind to this issue.
5. We note the observations of Adamson J in BCS v NSW Civil and Administrative Tribunal [2015] NSWSC 126 at [54], that the power to make such an order ought to be exercised with caution and should only be made in the interests of justice: see Yong v Antworks Pty Ltd [2016] NSWCATAP 14 at [137], and Chi Building Pty Ltd (supra) at [60]. In BCS, Adamson J found that it was in the interests of justice to remit the matter to the Tribunal differently constituted because the Tribunal Member who determined the matter at first instance had failed to undertake the statutory task required of him. Adamson J also accepted the arguments of the parties of possible risks of an application of apprehended bias being made by the appellant it the matter was remitted to the same Tribunal Member.
6. For the reasons set out above, we also find that the Tribunal Member in this matter failed to undertake the statutory task required of him and made findings which were contrary to the evidence. On this basis, the appellant might have grounds for apprehended bias and may feel that it would not obtain the fresh hearing we have found it is entitled to. Accordingly, in the interests of justice, we find it is appropriate to make an order that the matter be remitted to the Tribunal differently constituted.
7. For the reasons set out above, we order: 1. Appellant granted leave to appeal. 2. The appeal is allowed. 3. The decision of the Tribunal below is set aside. 4. The application that was the subject of the appeal is to be reconsidered by the Tribunal, differently constituted, in accordance with these reasons for decision.

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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: 16 May 2016