The appellant, Heartland Motors Pty Ltd (Heartland), is a motor vehicle dealer. On 20 June 2015 the respondent, Mr Serge Piatow, purchased a Suzuki S-Cross GLX Hatch for $28,494.01. The vehicle was a 2014 model, having been manufactured in December 2013. The compliance plate was dated April 2014. The contract for sale was headed "New Vehicle Contract" but the production and compliance date were disclosed on the front page of the contract.
On the day that he paid and took delivery of the vehicle, Mr Piatow says that he noticed for the first time the production and compliance date. Mr Piatow requested an alternative vehicle, being a 2015 model, or a refund. Both were refused. Following the purchase, Mr Piatow had problems with the vehicle which was returned to Heartland for warranty repairs over a period of about 10 days from the time of purchase.
On 13 August 2015, Mr Piatow commenced proceedings in the Consumer and Commercial Division of the Tribunal for a refund. The basis for the claim was that Mr Piatow had intended to purchase a new vehicle, he had paid full price for the vehicle but had been sold a vehicle that was 19 months old. There is no dispute that the vehicle purchased by Mr Piatow was manufactured in December 2013 or that Mr Piatow entered into the contract dated 20 June 2015 and that the contract disclosed the production and compliance date. It was Mr Piatow's case that he did not notice this when he signed the contract and that "the dealer has an obligation to a prospective buyer of a new vehicle to disclose the age of the vehicle, especially if the vehicle is more than a year old".
On 16 October 2015, the Tribunal, after a contested hearing, ordered that Heartland deliver to Mr Piatow "a new Suzuki S-Cross GLX Hatch which complies with the criteria in Annand & Thompson Pty Ltd v Trade Practices Commission (1979) 40 FLR 165 at 168 (set out in the attached reasons) with no less than the specifications and features (other than the 5-piece floor mats) as the vehicle delivered under the New Vehicle Contract" between Heartland and Mr Piatow dated 20 June 2015. Mr Piatow was ordered to return the vehicle, without the mats, and then pay Heartland a pro rata amount for the expired portion of the annual registration and compulsory third party insurance on the vehicle. Heartland was ordered to pay all other costs and expenses in relation to the registration, insurance and number plates of the new vehicle.
Heartland lodged an internal appeal on 13 November 2015, contending the Tribunal made an error in failing to correctly apply the relevant provisions of the 'Australian Consumer Law' and the legal principles in Annand & Thompson v TPC. Heartland also seeks leave to appeal on the basis that the decision was not fair and equitable.
An internal appeal may be made in respect of a decision of the Consumer and Commercial Division as of right on a question of law or with the leave of the Appeal Panel on any other ground: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the Act). Clause 12 of Schedule 4 of the Act provides that the Appeal Panel may grant leave only if it is satisfied that the appellant may have suffered a "substantial miscarriage of justice" because the decision was not fair and equitable, against the weight of evidence or because significant new evidence had arisen, which was not reasonably available at the hearing.
Heartland raises a question of law about the application of the law and legal principles by the Tribunal at first instance and therefore does not require leave to appeal. The question of leave to appeal will only arise if Heartland is not able to establish that that there was an error of law that warrants the decision being set aside.
The Appeal Panel has allowed the appeal in part and has remitted the question of the orders that should be made to the Tribunal as previously constituted to be reconsidered in accordance with these Reasons.
[2]
Relevant statutory framework
The claim made by Mr Piatow was pursuant to s 7 of the former Consumer Claims Act 1998 (NSW) (the CCA), which was repealed effective from 22 October 2015 with the equivalent provisions now incorporated into Fair Trading Act 1987 (NSW) (the FTA).
At the relevant time, the Tribunal had jurisdiction to hear and determine any "consumer claim" brought before it (s 7(1) of the former CCA). Section 3A(1) of the CCA provided that a "consumer claim" included a claim by a consumer for the payment of a specified sum of money that arises from a supply of goods or services by a supplier to the consumer. Mr Piatow was a consumer within the meaning of s 3 of the former CCA and their claim arose out of the supply of goods by Heartland Chrysler, which was a supplier. The Tribunal was empowered under s 8(1) to, amongst other things, make an order requiring a supplier to pay the claimant a specified sum of money. In exercising this power, the Tribunal was required to "make such orders as, in its opinion, will be fair and equitable to all the parties to the claim" (s 13(1)).
The claim made by Mr Piatow was under the Australian Consumer Law, the text of which is set out in sch 2 of the Competition and Consumer Act 2010 (Cth) (the CCA). The Australian Consumer Law, which is a law of the Commonwealth, applies in New South Wales as part of the FTA: Part 3 of the FTA and, in particular ss 27 to 32.
Section 32 of the FTA provides that the Australian Consumer Law (NSW) (referred to in these Reasons as the "ACL(NSW)") applies to persons carrying on business in New South Wales, bodies corporate incorporated or registered under the law of New South Wales and persons ordinarily resident in New South Wales or otherwise connected with New South Wales.
Section 3 of the ACL (NSW) provides the grounds on which a person is taken to have acquired goods as a "consumer". Relevantly, certain remedies in the ACL (NSW), including those relating to consumer guarantees, are only available to consumers. There was no dispute before the Tribunal at first instance or in the appeal that the Tribunal had jurisdiction to hear this claim under the ACL (NSW).
Chapter 2 of the ACL (NSW), headed "General protections", contains provisions designed to protect consumers in relation to the misselling of products and services. Part 2-1 contains provisions dealing with misleading or deceptive conduct (ss 18 and 19). Relevantly, s 18 provides:
18 Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).
Chapter 3 contains provisions about "Specific protections" for consumers. Part 3-1 deals with "unfair practices". Division 1 of Part 3-1 deals with "false or misleading statements". Section 29(1) relevantly provides as follows:
29 False or misleading representations about goods or services
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
…
(c) make a false or misleading representation that goods are new;
It is an offence to make a false or misleading representation that goods are new (s 151(1)(c) ACL (NSW)).
Section 236 provides that a claimant may recover damages if the claimant has suffered loss and damage because of the conduct of another if the conduct is found to have contravened Chapters 2 and 3 of the ACL(NSW).
In addition to the foregoing provisions, the ACL (NSW) contains consumer protections by way of statutory guarantees in relation to goods or services provided to consumers (see subdivision 2A, Division 1 of Part 3.2 of the ACL (NSW)).
Section 56(1) provides:
56 Guarantee relating to the supply of goods by description
(1) If:
(a) a person supplies, in trade or commerce, goods by description to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the goods correspond with the description.
Part 5.4 of the ACL (NSW) sets out the remedies for breach of the statutory guarantees.
Section 259(1) provides that a consumer may take action against a supplier if one of the guarantees that relates to the supply of goods is not complied with. If the failure to comply can be remedied and is not a major failure, the consumer may require the supplier to remedy the failure within a reasonable period (s 259(2)(a)). If the supplier refuses or fails to comply, the consumer may have the failure remedied and recover all reasonable expenses incurred by the consumer in having the failure so remedied or notify the supplier that the goods are rejected (s 259(2)(b)).
If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may notify the supplier that the consumer rejects the goods or, by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid (s 259(3)). A consumer may recover damages for breach of a consumer guarantee under s 259(4) which states:
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.
Section 260 provides:
260 When a failure to comply with a guarantee is a major failure
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.
If a consumer requires the supplier to remedy a failure to comply with a guarantee, the supplier may repair the goods, replace the goods with goods of an identical type or provide a refund for the goods (s 261).
Section 262(1) provides that a consumer may not reject the goods if the rejection period has ended, the goods are lost, destroyed or disposed of by the consumer, the goods were damaged after delivery for reasons not related to the state or condition of the goods at the time of supply or the goods have been attached to or incorporated into any other personal or real property and cannot be detached without damaging the goods. The "rejection period" 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 the factors enumerated in s 262(2).
Section 263 contains provisions concerning the consequences of a consumer rejecting goods. As already noted, there are two circumstances when a consumer will be entitled to reject goods. The first is where the supplier has refused or failed to remedy the failure in a reasonable period, or at all (see s 259(2)(b)(ii)). The second is where the failure cannot be remedied or is a major failure (see s 259(3)(a)). If goods are rejected the consumer must return the goods to the supplier and the supplier must refund the money to the consumer (s 263(4)(a)) or replace the rejected goods with goods of the same type, if such goods are reasonably available (s 263(4)(b)).
[3]
Decision at first instance
The Tribunal provided written Reasons for Decision on 21 October 2015. The Reasons set out the material facts upon which the decision was based at [4] which can be summarised as follows:
1. On 13 June 2015, Mr Piatow made an agreement to purchase a Suzuki S-Cross GL Hatch (Suzuki GL) for $24,099 after a discount of $4868.64. This agreement was signed by Mr Piatow but did not include the vehicle identifying details such as the VIN, the engine number or the production, and compliance plate;
2. Later that evening, Mr Piatow changed his mind and decided to purchase a different model being the Suzuki S-Cross GLX Hatch (Suzuki GLX) for $28,494.01. He informed the salesman, Mr Gun Banlusin, who agreed to the change and arrangements were made for Mr Piatow to collect this second vehicle the following Saturday, on 20 June 2015;
3. Mr Banlusin and another representative of Heartland, Ms Sharon Daly, provided a second agreement to Mr Piatow to sign which was headed "New Vehicle Contract". This contract set out the vehicle specifications which included the production and compliance plate date for the Suzuki GLX. Neither of these matters was drawn to the attention of Mr Piatow by Mr Banlusin or Ms Daley and Mr Piatow did not notice these dates at the time of signing the second agreement;
4. The discount for the Suzuki GL and the Suzuki GLX was offered by Heartland as a matter of course and the discount for the Suzuki GL was not offered as compensation for the age of the vehicle;
5. On 20 June 2015, as Mr Piatow's wife started to drive the Suzuki GLX out of the premises when a warning light came on. While the bonnet was up, Mr Piatow noticed the production and compliance date and raised the issue with Mr Banlusin who told him there were no cars with a 2015 build date;
6. On the following Monday, namely 22 June 2015, Mr Piatow telephoned Mr Banlusin and told him it was not happy with the age of the vehicle and requested an alternative vehicle or a refund;
7. A representative from Heartland on 24 June 2016 rang him on 24 June 2016 to tell him that Heartland would not provide a refund or replacement vehicle;
8. After the purchase of the Suzuki GLX, Mr Piatow encountered a series of problems, including, most significantly, a failure in the air-conditioning system and overheating of the engine. These were subsequently repaired;
9. The Suzuki GLX was returned for warranty work over a period of about 10 days from the time of purchase.
The Tribunal noted the contentions of the parties at [5] to [8]. Mr Piatow contended that he had entered into the second agreement for the purchase of a new car but the Suzuki GLX was not new. He contended that he would not have accepted delivery of the Suzuki GLX if he had been aware of the production and compliance plate date. Mr Piatow further contended that he had suffered loss and damage as he paid a new price for the Suzuki GLX even though it was worth less due to its age. In contrast, Heartland contended that at the time Mr Piatow signed the second agreement, he agreed to accept the Suzuki GLX and could not now complain about the production and compliance date, which were disclosed in the contract.
The Tribunal set out the relevant provisions of the ACL (NSW), being ss 29 and 56 of the ACL (NSW), and referred to the legal principles governing misleading or deceptive conduct (at [10] to [14]). Relevantly, the Tribunal noted that whether there was an intention to mislead is not relevant to the question of whether there has been a breach of s 29 at [13]. The Tribunal also noted that the question of whether conduct is misleading "is to be determined having regard to the conduct and all of the circumstances in the case" at [14].
The Tribunal found that Heartland knew the age of the Suzuki GLX but did nothing to draw this to Mr Piatow's attention at [15].
The Tribunal identified the relevant issue for determination at [16] as follows:
The question is whether any of those representations were capable of conveying a misrepresentation by the respondent of the fact that the time they were made.
The Tribunal found that the conduct of Heartland was misleading at [17] and the reasons for this can be found at [18] to [30], which can be summarised as follows:
1. The Suzuki GLX Hatch was not a new vehicle within the meaning of "new" set out in Annand & Thomson supra;
2. In the circumstances of this case, the failure of the sales representative to bring to Mr Piatow's attention prior to or at the time of signing the contract that the Suzuki GLX was manufactured in December 2013 was misleading;
3. Whether silence is misleading or deceptive is to be tested in all the circumstances constituting the acts, omissions, statements, or silence (Demagogue Pty Ltd v Ramesky (1992) FCR 31; 110 ALR 608). In particular, the Tribunal noted at [21] to [23]:
21. Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all of the relevant circumstances, there has been conduct that is misleading or deceptive of likely to mislead or deceive. [Case references omitted]
22. Whether or not a fact should be disclosed arises from the circumstances, including whether there is an expectation that a relevant fact would be disclosed if it exists. In the absence of such an expectation the cases say that it is difficult to see how silence can be misleading or deceptive: Winterton Constructions Pty Ltd v Hambros Aust Ltd (1992) 39 FCR 97 per Hill J:
"If the circumstances are such that a person entitled to believe that a relevant matter affecting him or her would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed."
23. There is no doubt that the applicant would have refused delivery of the GLX if he had known of the age matters. His expectation was that the GLX would be new, when it was not. He was entitled to have the age matters brought to his attention. The failure of the respondent to do so was designed to cause the applicant to act to his detriment, which he did at the time he signed the Second Agreement. The respondent then took the position that one the applicant had signed the Second Agreement it was too late for him to complain.
The Tribunal noted at [24] that the onus of proof in silence cases "is on an applicant so alleging" and "the applicant must prove what was not said was likely to mislead or deceive", referring to Fraser v NRMA Holdings Ltd (1995) 55 FCR 452. The Tribunal also concluded at [24]:
I am satisfied in circumstances of this case, that the applicant has proved that the respondent's silence was or was likely to mislead or deceive him, and it did.
The Tribunal further noted at [25] that there were some circumstances in which a respondent should draw certain matters to the attention of the applicant by the "so called red waving hand". Relevantly, the Tribunal found at [26]:
This matter is one of the circumstances to which the red waving hand principle applies. The production date in the compliance date plate date were matters which were not expected by the applicant who had ordered a new car and thought he was making the Second Agreement for a new car. In other words, he did not make an informed decision to accept the GLX which was less than a new car.
The Tribunal concluded:
Having regard to the facts, I am satisfied that the representations were false or misleading, and were misleading and deceptive.
The Tribunal also concluded that the contract for the purchase of the Suzuki GLX was for a new vehicle, which Heartland did not deliver. As such, Heartland had failed to comply with the statutory guarantee relating to the supply of goods by description (s 56).
The Tribunal then considered what would be the appropriate remedy and relevantly concluded as follows:
32. I am satisfied that the applicant would not have accepted a GLX which was not new (the nature) and to which the Compliance Plate Date was some 14 months previously (the extent of the failure).
33. At the end of the hearing I indicated to the parties that I initially considered at that time that the appropriate remedy was damages, consisting of the difference between the value of the GLX as a 2013 vehicle, and a current GLX. However, as I said then, there was no evidence of the difference in value. I also considered whether I should do my best to arrive at an amount of compensation and damages even if it involves guess-work or speculation: Biggin & Co Limited v Permanite Limited (1951) 1 KB 422, at pp 438-439 per Devlin J (as he was);
Callaghan v William C Lynch Pty Limited (1962) NSWR 871 (Full Court) at p 877; and Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; FCR 450 at [68], which provides for more than nominal damages. Upon reflection, this is inappropriate as it leaves open the possibility of injustice to one or both of the parties.
34. In relation to the sequence of remedies, a repair will not provide a remedy as no repair can make the GLX new.
35. That leaves replacement or refund. A refund by way of damages or compensation will only be available where the respondent is not able to provide a new GLX.
36. There is no evidence to suggest that a new GLX is not available. The applicant bargained for a new GLX and the appropriate remedy for the applicant is for the respondent to supply a new GLX of the same specifications. A pro rata adjustment should be allowed by the applicant for the period of registration and CTP insurance that have expired since June 2015 when the GLX was first delivered. The car mats can be moved from the GLX to the replacement vehicle.
The Tribunal made the orders referred to at [4] above.
[4]
Grounds of appeal and reply to appeal
The grounds of appeal of Heartland, as set out in its Notice of Appeal and written submissions, are:
1. The Tribunal erred in its application of the principles set out in Annand & Thompson by finding that the Suzuki GLX was not new (Ground 1);
2. The Tribunal erred in its application of the principles of s 18 of the ACL (NSW) by finding that Heartland engaged in misleading and deceptive conduct by omitting to verbally disclose the production and compliance plate date of the Suzuki GLX in circumstances where those details were correctly disclosed in the sale agreement (Ground 2); and
3. The Tribunal erred in finding that the Suzuki GLX suffered from a major failure pursuant to s 260 of the ACL (NSW) (Ground 3).
Heartland also sought leave to appeal on the basis that there may have been a substantial miscarriage of justice because the decision was not fair and equitable (Ground 4).
Heartland sought orders that the appeal be allowed and that Mr Piatow's application be dismissed. The Appeal Panel takes this to mean that Heartland seeks an order that the decision be set aside and that it be substituted with a decision that Mr Piatow's application at first instance be dismissed.
In his Reply to Appeal to the Notice of Appeal, Mr Piatow stated that he supported the decision of the Tribunal at first instance, asserted the decision was fair and equitable and that the Tribunal made no error regarding its findings or application of s 260 of the ACL (NSW). Mr Piatow further noted that that there was no evidence provided regarding the existence or otherwise of a more recent Suzuki GLX. In his written submissions, Mr Piatow repeated the submissions made before the Tribunal at first instance.
Both parties provided to the Appeal Panel the material that was provided before the Tribunal but, in addition, Heartland provided an affidavit sworn 23 December 2015 from Mr Emanuele Cirillo, General Manager of Heartland, to the effect that the retail value of the Suzuki GLX would be approximately $19,990. Heartland further provided a copy of an email from Mr Michael Pachota, National Sales Manager, Suzuki Australia Pty Ltd, dated 12 November 2015 to the following effect:
I can confirm, there was no 2015 built S Cross available in Suzuki Australia pool stock in June 2015.
[5]
Ground 1: Did the Tribunal make an error of law in its application of the principles set out in Annand & Thompson by finding that the Suzuki GLX was not new?
Heartland contends that the Tribunal misapplied the principles in Annand & Thompson because:
1. The meaning of "new" differs according to the context. The majority of the Full Court found that there was no misleading and deceptive conduct in relation to the purchase by one of the consumers in the proceedings, Mr Andrado, from which it could "necessarily" be inferred that the conclusion of the Federal Court was that the vehicle purchased by Mr Andrado was, in the context of the case "new" despite being built approximately two years earlier;
2. The circumstances in which Mr Piatow purchased the Suzuki GLX are indistinguishable from those of Mr Andrado and because the vehicle was "of recent origin" it was therefore new; and
3. Given the vehicle was new, there was no contravention of ss 18, 29 or 56 of the ACL (NSW).
Heartland also contends that the Tribunal failed to give proper consideration to the facts, namely the evidence referred to in [4h] of the Reasons that there were no Suzuki GLX models with a 2015 build date.
We reject the submissions made by Heartland referred to in [44] but accept there is some substance to the criticism referred to in [45].
The submission misstates, or at least misconceives, the findings of the Federal Court in Annand & Thompson. The Full Court of the Federal Court (Frank and Fisher JJ, Northrop J dissenting, who found there was no contravention at all) found that the claim involving Mr Andrado did not involve a contravention of s 52 of the Trade Practice Act 1974 (Cth) (TPA) (now s 18 of the ACL (NSW)) because there was no evidence of a misrepresentation. In contrast, it found that there was a contravention in respect of Mr Watson, the other consumer who was the subject of the proceedings.
The relevant findings on the meaning of "new" can be found at 168 per Franki J as follows:
5. The meaning of the word "new" particularly in relation to motor vehicles has been considered several times in the courts. It seems there are at least five possible meanings which the word may bear when used to describe a vehicle. They are: 1. That the vehicle has not been previously sold by retail, that is, that it is not a secondhand vehicle; 2. That the vehicle is a current and not a superseded model; 3. That the vehicle has not suffered significant deterioration or been used to any significant extent; 4. That the vehicle is of recent origin; and 5. That the vehicle is one which has suffered a measure of damage but this damage has been quite effectively repaired or any damaged part replaced and the vehicle is otherwise new in every respect. (at p168)
And Fisher J at 190:
…the word "new" has so many meanings, and standing alone is so ambiguous that reference to the context is invariably necessary to determine the sense in which it is used and whether its use in that particular context was misleading or deceptive. Moreover the contravention alleged in the order to show cause lay in representing that the motor vehicles were of more recent manufacture than in fact they were and the use of the word "new" by the respondent would need to draw much from its context before it could establish such an allegation. Apart from the use of the word "new" in the order form, where it is used in contradistinction to a secondhand or demonstration model (and I agree with Franki J. that there it is not misleading or deceptive because of the context) the other circumstances in which it was used differed markedly in the two matters before us and would be likely to differ from case to case.
The reason why Franki J (with whom Fisher J agreed) found there was no contravention in respect of Mr Andrado is explained at 176:
In relation to the sale to Mr. Andrado I do not consider that misleading or deceptive conduct by the appellant has been established on the balance of probabilities. It is necessary to look at the whole of the transaction of sale and purchase and not only at one aspect of it. Different principles may be applicable in the case of an advertisement. No representation was made that the Jeep was of any particular age and the appearance of the word "new" in the order form associated with "demo" and "used" points to the word "new" being used in contradistinction to the words "demo" or "used". Also the reference to the year model points in the same direction. The test is whether in an objective sense the conduct of the appellant was such as to be misleading or deceptive when viewed in the light of the type of person who is likely to be exposed to that conduct. Broadly speaking it is fair to say that the question is to be tested by the effect on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average intelligence and background knowledge although the test is not the effect on a person who is, for example, quite unusually stupid. The question is not whether the purchaser was deceived but whether the conduct was misleading or deceptive. In the subject case the trade meaning of "new" is not directly relevant.
In Annand & Thompson, one of the critical issues for the Full Court on the appeal was whether the Tribunal below had erred in finding a contravention of s 52 of the TPA. The focus was on the conduct and representations made by the salesperson to each of the consumers and whether this was misleading or deceptive or likely to mislead or deceive within the meaning of s 52 in the circumstances of the case. This is relevant to the issues raised in respect of Ground 2 (refer below) but it cannot be said that the findings in Annand & Thompson necessarily lead to an inference that the Full Court found that a car which is two years old but has not been previously sold or used is "new".
Whether a vehicle is "new", having regard to the potential meanings attributed by his Honour Justice Franki, is a question of fact rather than law.
In this case the Tribunal found that the Suzuki GLX was not new at [30] on the basis that it was not "of recent origin" given the production date and the compliance plate date. This finding was open to the Tribunal.
We accept that the Tribunal did not engage with the other evidence in its reasons, namely the assertion that there were no 2015 built models available. However, for the reasons that follow, we do not consider that this issue was material to the findings made by the Tribunal or to the outcome.
The assertion said to have been made by the salesman (see [4h]) was hearsay and so non-specific so as to be of little weight or assistance. The new evidence from Suzuki Australia is also unhelpful. The fact that there were no Suzuki GLXs available in the Suzuki Australia pool in June 2015 is not determinative of the issue of whether, for instance, the 2014 model was the current model of the Suzuki GLX and had not been superseded.
If it was the fact that there were no 2015 model Suzuki GLXs in existence in June 2015 because Suzuki did not make a new model after 2014, there may have been an argument the vehicle purchased was "new" as contemplated by the second meaning identified by Franki J, namely the vehicle was "a current and not superseded model". If, however, the Suzuki Australia email means there were no 2015 Suzuki GLXs available from Suzuki Australia at that time (but they were otherwise available), this does not assist Heartland. On this construction of the email, the Suzuki GLX sold would not have been the current model, regardless of whether the model specifications changed or remained the same. This would be material because it is likely that the market value of a superseded model would be less than a current model, even where the specifications remained unchanged. This is common sense.
Heartland did not present any evidence about this at the hearing at first instance or to the Appeal Panel. As such, the only evidence available was the evidence about the production and compliance plate date. As already noted, the finding by the Tribunal that the Suzuki GLX was not of recent original was therefore open to the Tribunal and there was no error of law in this regard. This ground fails.
[6]
Grounds 2: Was there an error of law made by the Tribunal in applying the relevant legal principles?
While it is not entirely clear from the Reasons for Decision, it appears that the Tribunal made findings that there was a breach of s 18 (see [17] and [19]) and s 29 (see [12] and [27]). Section 18 is broader than s 29 in that it applies to conduct that is misleading or deceptive or likely to mislead or deceive whereas s 29 requires the claimant to establish that there has been a false or misleading representation. As noted in Russell Miller, Millers 2015 Australian and Competition and Consumer Law Annotated (37th ed, Thomson Reuters (Lawbook Co)) at 1646, there is no material difference between the phrase "misleading or deceptive" and "false or misleading". Section 29 supports s 18 and enumerates specific types of conduct that will give rise to a breach in the ACL (NSW).
A representation is a statement, made orally or in writing or by implication from words or conduct, relating to a matter of fact (refer Miller para 1.S2.29.35 and the cases cited). The representation alleged is not specified in the Reasons for Decision or in Mr Piatow's original application, although there is a reference to "those representations" at [16].
Mr Piatow's application and the thrust of the reasoning of the Tribunal was to the effect that there was an obligation on the Heartland salesman to tell Mr Piatow, or draw to his attention before or at the time he signed the contract, that the Suzuki GLX was the 2014 model. The Tribunal found that this obligation arose because of the circumstances set out at [4] and because of what the Tribunal referred to as the "red waving hand" principle.
Heartland submits that there is no general duty of disclose and the question is whether, having regard to all of the relevant circumstances, there has been conduct that is misleading or deceptive or likely to mislead or deceive. It was submitted that there was no evidence the salesman represented the Suzuki GLX was new and the second agreement clearly referred to the production and compliance plate date on the front page. This was said to be similar to the circumstances of Mr Andrado in Annand & Thompson, where it was found there was no contravention of s 52 of the TPA.
This failure to specify and make findings about the representations alleged to have been made gives rise to Heartland's second ground of appeal. Heartland also submits that the Tribunal wrongly applied the law.
As noted by the Tribunal at first instance and conceded by Heartland, silence may amount to misleading or deceptive conduct but it will depend on the whole of the circumstances and a careful consideration of the factual matrix surrounding the failure by one party to a negotiation to disclose a material fact. The Tribunal correctly stated the relevant legal principles in this regard.
It is, however, less likely that "silence" will be capable of supporting a finding that there was a representation or statement about a matter, unless, for instance, a consumer made a statement to a salesperson directly raising a factual matter that the salesperson knew to be wrong but said nothing to correct the erroneous assumption made by the consumer. In this case, the silence by the salesperson would be an implied affirmation of the fact asserted by the consumer.
There is no evidence, as disclosed in the Reasons for Decision or the application, submissions and material provided by Mr Piatow, that this occurred in this case. For the reasons later outlined, we are not satisfied there was evidence capable of supporting a finding of a contravention of s 29 of the ACL (NSW). The same cannot be said of the finding of breach of s 18.
The issue of whether silence is misleading or deceptive or likely to mislead or deceive in contravention of s 18 will depend on all of the circumstances of the case, as constituted by the acts, omissions, and statements of a party, which may include silence. Relevantly, the phrase "engage in conduct" in s 18 is wide enough to include refusing doing an act, which in turn includes "refraining (otherwise that inadvertently) from doing that act," (see s 4(2) of the CCA).
As a general proposition, s 18 does not require a party to a commercial negotiation to volunteer information to the other party. It will depend on the circumstances of the case. As explained by Hill J in at [75] to [77]:
75. The most usual case where silence may constitute misleading conduct, is that which I have elsewhere referred to as the half-truth case. A vendor may make a series of representations about the property to be sold, but omit from them some matter which is absolutely vital, so that what is said constitutes but a half-truth…
76. This is the case where a statement is made which is fully true at the time it is made but where events intervene to make it false. The failure to advise these circumstances may, in a particular case, be conduct which is misleading and deceptive, but only because the person to whom the representation was originally made is entitled to expect to be informed of any change.
77. The so-called "duty to advise" cases really depend upon the same principle. Obviously, it is difficult to see how a mere silence could, of itself, constitute conduct which is misleading or deceptive or likely to mislead or deceive. However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to so communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger of detriment existed. Thus, where a duty to speak is imposed, silence may constitute misleading and deceptive conduct. [Case references and extracts omitted]
More recently in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 FCR 357; 84 ALJR 644; 270 ALR 204, French CJ and Keifel J discussed the concept of "reasonable expectation" creating an obligation of disclosure at [19] to [21] as follows:
19. The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, of conduct consisting of, or including, non-disclosure of information. That approach may differ in its application according to whether the conduct is said to be misleading or deceptive to members of the public, or whether it arises between entities in commercial negotiations. An example in the former category is non-disclosure of material facts in a prospectus.
20. In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52.
21. To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute…[Citations removed]
And at [22] to [23], referring to the limits:
22. However, as a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence. Yet that appears to have been, in practical effect, the character of the obligation said to have rested upon Miller in this case.
23. Reasonable expectation analysis is unnecessary in the case of a false representation where the undisclosed fact is the falsity of the representation. A party to precontractual negotiations who provides to another party a document containing a false representation which is not disclaimed will, in all probability, have engaged in misleading or deceptive conduct. When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient would be misled, absent such disclosure, into believing that the statement was complete. In some cases it might not be necessary to invoke non-disclosure at all where a statement which is literally true, but incomplete in some material respect, conveys a false representation that it is complete.
The Tribunal referred to the expectation of disclosure at [22]:
Whether or not a fact should be disclosed arises from the circumstances, including whether there is an expectation that a relevant fact would be disclosed if it exists. In the absence of such an expectation the cases say that it is difficult to see how silence can be misleading or deceptive [referring to Winterton]
In [23] the Tribunal noted that Mr Piatow's "expectation was that the GLX would be new, when it was not". The Tribunal further noted, again at [23]:
He was entitled to have the age matters brought to his attention. The failure of the respondent to do so was designed to cause the applicant to act to his detriment, which he did at the time he signed the Second Agreement. The respondent then took the position that once the applicant had signed the Second Agreement it was too late for him to complain.
The Tribunal found at [26] that the date of production and the compliance plate "would not have been expected by the applicant who ordered a new car and thought he was making the Second Agreement for a new car".
It may be argued that the reasoning in [23] and [26] discloses error, first, because there is no evidentiary basis for the finding that the failure of the salesperson to make the disclosure was "designed to cause the applicant to act to his detriment" and, secondly, because the evidentiary basis for the finding about Mr Piatow's expectation that the Suzuki GLX was new and that he had "ordered a new car" is not disclosed in the Reasons for Decision. This may raise an error of law on the grounds there was no evidence for the finding made (refer Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390) or error because the Reasons were inadequate (refer s 62(3) of the Act and Collins v Urban [2014] NSWCATAP 17 at [43] to [64]).
Against this, it is relevant to observe the following principles:
1. Once there is some evidence for a finding, any error is one of fact not law: Fordham v Davies [2014] NSWCATAP 60 at [22] citing the relevant authorities; and
2. In assessing reasons, it is not best approached with an "eye keenly attuned to the perception of error": Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259.
In the Reasons for Decision, the Tribunal referred to a number of factual matters from which it is apparent the findings were based. Those matters are as follows:
1. Mr Piatow was intending to purchase a new vehicle when he went to the Heartland premises (at [4a]);
2. He signed an agreement on 13 June 2015 for a Suzuki GL which did not record the production and compliance plate date details on the contract (at [4c]) but which was headed "New Vehicle Contract";
3. Mr Piatow changed his mind overnight and decided to purchase the more expensive GLX model (at [4d]);
4. The discount offered for the second vehicle was similar to that offered for the first vehicle, namely there was no compensation offered for the fact the Suzuki GLX was a 2014 model (at [4g]);
5. The Second Agreement was also headed "New Vehicle Contract" and even though the production and compliance plate date were included on the front page, they were not drawn to his attention (at [4f]); and
6. The age of the vehicle (as disclosed by its production and compliance plate date) were matters known to Heartland ([at 15]) and these were matters of importance as they affect the value of the vehicle at the time of purchase and somewhat notoriously, at the time of later disposal as a sale or trade in (at [9b]).
There was no evidence that Mr Piatow told the sales person he wanted to purchase a new vehicle, although there is evidence this was clearly his intention.
Erroneous assumptions and expectations do not, of themselves, create an obligation of disclosure. However, in this case the Tribunal found that there were a number of factors that created such an obligation.
There is no dispute that the salesperson did not bring the age of the Suzuki GLX to Mr Piatow's attention at any time, either before or at the time the contract was signed by him. The question of whether this was "designed" to cause Mr Piatow to act to his detriment is not critical to any finding of breach of s 18. As observed by the Tribunal at first instance, and we accept that this is a correct statement of the law, it is not necessary to find an intention to mislead or deceive to establish a contravention (Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191). As such, the issue of whether there was any evidentiary basis for the finding at [23] that the failure to disclose the age of the Suzuki GLX was designed to cause Mr Piatow to act to his detriment was not material to the finding of breach.
The critical questions were whether the conduct of the sales person and the circumstances as a whole were capable of creating the impression that the Suzuki GLX was the 2015 model and whether the sales person knew or ought to have known this was Mr Piatow's expectation. In our view, the matters relied on by the Tribunal, as referred to in [73] above, are capable of supporting such a finding. There was also evidence Mr Piatow was given little opportunity to review the second agreement and even though the production and compliance plate date were recorded in a section on the front page, they were not in a prominent position or in bold or enlarged print. These matters were known to the sales person who was dealing with Mr Piatow.
Having regard to these circumstances, the finding of the Tribunal that the failure of the sales person to specifically bring the age of the Suzuki GLX to Mr Piatow's attention was misleading or deceptive or likely to mislead or deceive was clearly open to the Tribunal. The Tribunal's Reasons for Decision were sufficiently detailed to set out its findings and reasoning process. The Appeal Panel is satisfied that there was evidence to support the finding of contravention of s 18 and this was consistent with the relevant authorities (refer [66] and [67] above). We therefore reject this ground of appeal insofar as Heartland challenges the finding of contravention of s 18 of the ACL (NSW).
In contrast, we are not satisfied that the failure to disclose amounted to a false or misleading representation that the Suzuki GLX was new. There was no half-truth or statement made by the salesperson about the age of the vehicle, nor was there evidence of conduct, such as silence in response to a direct question or positive assertion about the vehicle.
Mr Piatow contends that the price he paid for the vehicle was the new price. In this regard, it could be said that the price constituted a representation the vehicle was new. While there was evidence that the discount was modest, there was no evidence about whether the price of the Suzuki GLX was the recommended retail price for a current vehicle. As already noted, there was a paucity of evidence about whether the vehicle purchased was the latest model in any event.
In summary, the evidence does not reach the status of a "representation" but it is sufficient to constitute conduct that is likely to mislead or deceive Mr Piatow into believing the second vehicle purchased was new.
This also has an implication on the apparent finding that the Suzuki GLX was supplied by description as a "new" vehicle. We are not satisfied that the evidence would support such a finding but in any event note that the Tribunal has failed to articulate in its Reasons the basis for such a finding. It is therefore difficult for the Appeal Panel to assess whether there has been error.
Accordingly, insofar as Heartland contends there was an error of law by the Tribunal in finding breach of ss 29 and 56 of the ACL (NSW), we accept this contention but find no error in respect of the finding of breach of s 18. This is relevant to Heartland's third ground of appeal but for the reasons later set out, it is not ultimately material to the outcome of this appeal.
[7]
Ground 3: Was there error by the Tribunal in finding that replacement was the appropriate remedy?
Heartland submitted that there was no "major failure" in the Suzuki GLX and therefore replacement of the vehicle was not warranted. It was further submitted that damages, being the difference between the current value of the vehicle and the current 2015 model, would be an appropriate measure of damages.
There are two problems with these submissions.
Firstly, if this was a sale by description and the goods did not comply with the description, s 260 (b) applies and the failure to comply with the guarantee under s 56 would be a major failure. If breach of s 56 was established (which we doubt), Mr Piatow would have been entitled to reject the goods, which he attempted to do, and would have been entitled to a refund or replacement vehicle. Alternatively, Mr Piatow would have been entitled to recover damages occasioned by the failure to comply with the guarantee. Therefore, while the contention must fail as a legal proposition, s 260 does not apply because we are not satisfied that the Tribunal finding that there was a breach of s 56 can be maintained. However, even if we had been so satisfied, we have reservations about the orders made in any event for the reasons later provided (see [88] to [91] below).
Secondly, the difference between the current value of the vehicle and the price of a current 2015 model (as necessarily assessed now) may not be an appropriate measure of damages as it would not put Mr Piatow in the position he would have been in as at June 2015 if he had not purchased the Suzuki GLX. For instance, this measure does not take into account any depreciation in the 2015 model given it is likely, or at the least possible, that this model will have already been superseded by a 2016 model.
The orders made by the Tribunal have an element of uncertainty because they refer to the decision of Annand & Thompson, which itself may be open to interpretation. Relevantly, there was no consensus in the Full Court on the meaning of "new", essentially because the focus of the proceedings was whether there had been a contravention of s 52 of the TPA in the circumstances. In considering whether there had been a breach, Franki J set out five possible meanings of "new". Fisher J stated that "the question of whether or not the conduct is misleading or deceptive depends not so much on the use of the word 'new' as the circumstances or context in which it is used" (at 190). Northrop J appears to accept that the meaning of "new" in the context of the case meant "a current model which previously has not been sold by retail" (at 189).
It is difficult to see how this order could be enforced and it is unnecessarily complicated.
The relevant measure of damages for contravention of s 18 of the ACL (NSW) is to put Mr Piatow in the position he would have been if he had not purchased the vehicle. The Tribunal accepted, as does the Appeal Panel, that Mr Piatow would not have purchased the second vehicle if he had been aware it was a 2014 model. As such, Mr Piatow's damages as at October 2015 would have been the difference between the value of the Suzuki GLX and the value of a 2015 model together with compensation for any depreciation from June 2015. As noted by the Tribunal, there was no evidence of this at the hearing by either party. For reasons that are not clear, the Tribunal did not adjourn the matter with directions about evidence and made the current orders in the interests of doing justice between the parties. For the foregoing reasons, we do not consider these orders can be enforced with any certainty. As stated by Reeves J in Wyman on behalf of the Bidjara People v State of Queensland [2012] FCA 397 at [35] orders that are "ambiguous, imprecise and uncertain" should be avoided. Ordinarily such orders would not be enforceable and could not properly be the subject sanction by the Tribunal. Accordingly, we find that the reasoning process and the orders made disclose an error of law.
A simpler alternative may have been for the Tribunal to order a return of the Suzuki GLX, a refund of the original purchase price (including costs and charges) together with interest on the purchase price paid, but discounting the price and charges by an amount reflecting the use of the car by the applicant over a prolonged period of time and accounting for the depreciated value However, The Appeal Panel is not in a position to adjudicate on these matters or to substitute a decision under s 81(1)(d) of the Act. There is no evidence before the Appeal Panel on these issues nor have the parties had the opportunity to make submissions on the appropriate orders or outcome.
[8]
Conclusion
Having regard to our reasons and findings, the Appeal Panel:
1. Rejects Ground 1;
2. Allows Ground 2 insofar as the grounds relate to the findings of the Tribunal at first instance that Heartland breached ss 29 and 56 of the ACL (NSW);
3. Allows Ground 3 in part;
4. Sets aside orders 1 to 4 made on 16 October 2015; and
5. Remits the question of the orders to be made, to allow a re-hearing on the issue of damages by the Tribunal as previously constituted for reconsideration.
[9]
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: 11 April 2016