JRJ Group Ltd v Winter

(1) That Paul Winter be joined to the proceedings as a Co-Applicant. There is no appeal from this order.

(2) An order to that the Appellant pay to the Respondents the sum of $42,256.50 (constituting a refund of the purchase price paid by the Respondents for the tiles and a further amount for storage charges incurred by the Respondents).

(3) The Tribunal made a declaration that the sum of $12,199 is not due and owing by the Respondents to the Appellant in respect of an invoice dated 9 January 2024.

(4) That tiles in storage be made available by the Respondents for the Appellant to collect.

1. We understand that order 4 has been complied with and that order 2 has been partly complied with. In other words, a further sum is due and payable by the Appellant to the Respondents.
2. In order to understand the appeal, it is necessary to summarise the Decision and in particular the findings of fact made by the Tribunal. This is done in the following paragraphs.

1. In late August 2024, the Appellant and Mrs Winter exchanged emails concerning the proposal by Mrs Winter to acquire a quantity of tiles for use at new premises ([11] of the Decision). There was discussion as to colour of the tiles and that there be no "banding" [12].
2. On 1 September 2023 the Appellant delivered an invoice to Mrs Winter for "Paving, 100 pieces" and other items such as "Drop down edge (82 pieces...."), "Riser 90 pieces" etc. The invoice totalled $40,799. The Tribunal found that there was no other written evidence of the agreement and that its terms should be construed in the light of the preliminary negotiations referred to in the Decision prior to the issue of the invoice [20].
3. At [24] the Tribunal found that it was an implied term of the agreement that the goods, the subject of the invoice, would be of acceptable quality.
4. At [26] the Tribunal found that by email dated 23 December 2023 the builder representing the Respondents revised the order. The Appellant accepted the revision in January 2024 and issued a further invoice totalling $12,199.
5. On or about 2 or 7 February 2024 tiles were delivered to the premises of the Respondents and were inspected soon afterwards [35]. The tiles were rejected because of colour variation and because they were "heavily banded" (according to the Respondents' builder). At [36] the Tribunal recorded that the Appellant offered to supply extra tiles to substitute for those rejected because of colour variation. At [40] the Tribunal recorded that the Appellant requested the Respondents to "advise a reasonable quantity of extra tiles you are requesting to be delivered to site ASAP so we can arrange for new tiles to be ordered from the overseas manufacturer. The tiles to be delivered will be extra above the original and revised orders received by you and delivered at no cost".
6. However, at [41] the Tribunal recorded that the Respondents' builder responded by stating that the "whole 100 m² currently on site will need to be replaced to meet our expectations".
7. From [45] the Tribunal described the content of a report by an "expert", Mr Cass and a supplementary report also from Mr Cass. The Tribunal recorded that the Appellant did not engage its own expert and "does not disagree with the opinions in the Cass reports but says they do not disclose any breach of the Agreement".
8. In summary, the Cass reports dealt with colour variations and the presence of banding on tiles and also expressed the view that the "mitre in the photo does not appear to be particularly well fabricated with a crack visible and also a slight overhang" [47].
9. At [50] the Tribunal found that it was satisfied that the Cass report "identifies the colour banding as being outside the Agreement and the mitre is unsatisfactory".
10. At [62] the Tribunal found that the agreement "was for the supply of lighter coloured tiles with little or no red banding".
11. At [63] the Tribunal found that the Cass report disclosed that 30% to 60% of the tiles contained "banding".
12. At [64] the Tribunal stated that the Cass report was of the opinion that there were "such a large difference in colours" that it can lead to difficulties in laying as an even spread of the colours must be achieved for aesthetic reasons. The Cass report stated that it would be difficult for the colours to be blended without presenting with a somewhat chequered appearance [64].
13. At [67] the Tribunal found that the tiles were "not of acceptable quality as they are not of acceptable appearance". The Tribunal then considered whether it was reasonable for the Winters to have rejected the tiles.
14. At [69] the Tribunal found that it was satisfied that the Respondents were reasonable consumers "who would not have even ordered the tiles if the above matters were known to them". It is clear that the reference to the above matters is a reference to the colour variation and banding being the opinions referred to in the Cass reports.
15. At [72] the Tribunal found that there had been a breach of the guarantee to provide goods of acceptable quality. The Tribunal referred to s55 of the ACL but it is clear that the Tribunal intended to refer to s 54.
16. At [74] the Tribunal found that there was "another imperative relevant to the Winters' decision to reject the tiles", namely possible delay and uncertainty in obtaining replacement tiles from China without banding and with consistent colour". The Tribunal found that it was satisfied that there had been a major failure which could not be remedied by replacing the whole of the tiles and that it was no answer for the Appellant to invite the Respondents to identify which of the tiles should be replaced. The Tribunal found that the offer of the Appellant to replace a reasonable quantity of tiles as contained in the email of 13 February 2024 "left open the uncertainty of further dispute" [74]. The Tribunal found that the Respondents were entitled to reject the whole of the tiles. They had decided to obtain replacement tiles from a third party.
17. Based upon the above findings, the Tribunal made the orders referred to above.

1. The grounds of appeal are summarised in the following paragraphs.
2. Ground 1: the Tribunal erred in the application of the principle of "reasonable consumer" as provided in the ACL. The Appellant submitted that the Respondents knew that the tiles/pavers was subject to colour variations and it is unreasonable for the Respondents to expect that the product that they ordered would not have variation. The Respondents revised their order and the Appellant accommodated the revisions.
3. Ground 2: the Tribunal erred in the application of the principle of what constitutes a major failure. The Appellant's submissions deal with aspects of the ACL concerning what constitutes a major failure. The Appellant submitted that there was no major failure in this case because the Appellant was able to remedy the position by resupply and had not failed to offer to do so. However, in our respectful view the Appellant has not dealt with the provisions of ss 259 and 260 of the ACL as relevant to the issues in this case. Section 259(3) provides that if the failure to comply with the relevant guarantee is a major failure, the consumer may notify the supplier that the consumer rejects the goods. Section 260 defines a major failure by reference to a number of scenarios. Section 260(1) provides that a failure to comply with a guarantee referred to s 259(1)(b) that applies to a supply of goods is a major failure if the goods would not have been acquired by a reasonable purchaser fully acquainted with the nature and extent of the failure. At [69] of the Decision the Tribunal found that the Winters were reasonable consumers "who would not have even ordered the Tiles if the above matters were known to them". The above matters were the features of the tiles concerning colour and banding being the opinions contained in the Cass reports.
4. Ground 3: this concerns a submission that the Appeal Panel should grant leave to appeal having regard to the provisions of cl 12 sch 4 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). The Appellant's submissions state that the factual determinations made by the Tribunal demonstrate that there has been an injustice which is reasonably clear, factual errors that were unreasonably arrived at and clearly mistaken and that the Tribunal has 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. The Appellant's submissions go on to submit that the Decision was not equitable, and the submissions then go on to analyse the factual contentions made by Mrs Winter and by the builder, Mr Scott. The Appellant's primary submission is that it was willing to accommodate the concerns of Mrs Winter and Mr Scott. The Appellant submitted that the finding that the tiles were not of acceptable quality due to appearance, referring to colour variations, was not justified because it was only the pavers that were subject to the assessment for colour variations through the opinions of Mr Cass.
5. Further, the Appellant took issue with the fact that the Tribunal partly justified the rejection of the tiles on the basis that there would be some delay in resupply of replacement tiles. The Appellant's submission was that any delay was caused by the Respondents' and their builder giving conflicting instructions.

1. The Respondents have lodged a Reply to Appeal by which they oppose the appeal.

1. Both parties have filed material including submissions in support of their respective positions. The Appellant lodged a report from United Stone Australia Pty Ltd dated the 23 December 2024. This report was new evidence not lodged in support of the proceedings at first instance and there was no explanation from the Appellant at the hearing of the appeal as to why the report (or a similar report) could not have been lodged in the primary proceedings. At the hearing, we explained to the Appellant's representative that we would not accept the report because it could not be described as a report that was not reasonably available prior to the hearing. The Appellant also lodged a statement on 15 November 2024. For the same reasons we decline to consider that statement insofar as it constitutes fresh evidence. To the extent that it constitutes submissions based upon the evidence considered by the primary member it has been considered by us.
2. At the hearing of the appeal, the representative of the Appellant made the points which are summarised below.
3. The first point is that the pavers objected to could have been replaced and an offer was made that they would be replaced at no additional cost. The second point concerned Mr Cass' opinion that the dropdown edges which had been the subject of fabrication were not up to standard. The expression "fabrication" refers to a process by which certain tiles were cut and rejoined at the request of the Respondents or their builder. That occurred in December 2023 but the task was discontinued when Mr Winter inspected the tiles and requested that fabrication not proceed. The Cass report expresses the opinion that the work was not up to standard. The Appellant's objection was that Mr Cass' opinion was based only upon photographs.

1. This is an appeal from a decision made in the Consumer and Commercial Division of the Tribunal. This means that the Appellant has a right to appeal on the question of law but requires leave on other grounds: see s 80 of the NCAT Act and cl 12 sch 4 of the same Act. The Appellant does not contend that the Tribunal misconstrued the relevant provisions of the ACL but rather that the Tribunal wrongly applied the principles. This is not a question of law. As such, the Appellant needs leave to appeal and the Appeal Panel must be satisfied the Appellant may have suffered a substantial miscarriage of justice because of one or more of the grounds in cl 12 sch 4 of the NCAT Act.
2. We are of the opinion that there is no error in the Decision and that the appeal should be dismissed. Our reasons for coming to this view are explained in the paragraphs that follow.
3. The Tribunal found that it was a term of the agreement between the parties that the Appellant would supply "lightly coloured tiles with little or no red banding" [62]. Relying upon the observations and opinions contained in the Cass reports, the Tribunal found that there were large differences in the colours of the pavers such that there would be difficulties in laying them without presenting a somewhat chequered appearance. The Tribunal referred to the "large difference in colours" observed in the Cass reports. It is clear from the Decision that the focus was on the extent of the variations in colour and banding and that there was an acceptance that there would be natural variations in colour but within limits. The claim by the Appellant that there would be natural variations is not disputed. Rather, the evidence upon which the Tribunal relied demonstrated that the variations in colour and banding went beyond natural variations.
4. The Tribunal's finding that the tiles were not of acceptable quality (thus breaching one of the guarantees required by the ACL) because they were not of acceptable appearance was open on the evidence. The finding that the Respondents would not have ordered the tiles had they known of what was ultimately delivered again was open on the evidence. That evidence consisted of the exchange of emails in which the colour/banding requirements of the Respondents were made clear. There was no error in our opinion in the Tribunal's conclusion that there was a major failure under s 260 of the ACL by reason of the facts demonstrating that had the Respondents known of what was ultimately delivered, they would not have entered into the transaction.
5. The Appellant submitted that it was only the pavers that were not in conformity with the colour/banding requirements and that they could be replaced. The Tribunal found that the Appellant's offer in this respect could lead to further disputation and uncertainty. That finding was open and reasonable in the circumstances. The circumstances to which we refer are that the Appellant required the Respondent to inspect all of the tiles and to then order the requisite number of replacement tiles. There is obviously a fear that that approach could result in a dispute as to whether the number requested would be agreed by the Appellant and further uncertainty as to whether the replacement tiles would be an appropriate match for the pavers not rejected. There was also an issue of further delay. Although the Appellant submitted that most of the delay was caused by the conduct of the Respondents, the fact remains that by early February 2024 (when the Appellant delivered pavers which it claimed were in conformity with the agreement) there was going to be further delay if the Respondents were to be persuaded to order replacement tiles and await their delivery.
6. The Appellant submitted that the criticism of the fabrication contained in the Cass report was based only upon photographs. That may be so, but the fact remains that that was the best evidence available to the Tribunal. The Appellant had an opportunity to put forward countervailing evidence but did not do so.
7. It is not necessary for us to consider whether the points of appeal raised by the Appellant raise questions of law or raise other questions requiring leave (ie. Permission). Such an analysis is unnecessary because in our view the grounds of appeal (and supporting submissions) do not demonstrate that the Tribunal made any error of law or that is an apparent injustice or other miscarriage of justice which might be a basis for granting leave to appeal under cl 12 sch 4 of the NCAT Act.
8. Accordingly, the appeal must be dismissed, and the following orders are made:

(1) Appeal dismissed.

(2) The orders in proceedings 2024/00171326 are affirmed.

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.