Legend Signage Pty Ltd v Australian Managed Print Solutions Pty Ltd

Grounds of appeal

1. The grounds of appeal can be distilled as follows: 1. The primary member ought to have found that the conceded misdescription in respect of the invoiced-cost printer constituted a breach of consumer guarantee and misleading conduct. The misdescription was a major failure and entitled the appellant to return both printers (since they were supplied as a package) for a refund; the same relief was available for misleading conduct. 2. The invoiced-cost printer was not of acceptable quality because of the water damage and consequent electrical hazard and (in any event) its chronic inoperability. This entitled the appellant to a refund for major failure or failures. In respect of this ground of appeal the appellant sought to rely upon evidence that was not before the primary member. Some of this evidence was said not to have been available to the appellant at the time of the hearing because it was only subsequently recovered from a computer which had crashed and could not be accessed at the time of the hearing. The appellant led no evidence to support this assertion. 3. If a refund was not granted then the primary member found that there was a 5 year, not 2 year, warranty and the supplier ought to be required to repair the printer under that warranty.

Applicable legal principles

1. Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (CATA) states: "Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds."
2. Clause 12 of Schedule 4 to CATA states: 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).
3. A Division decision is a primary decision of the Consumer and Commercial Division. The primary decision here is such a decision.
4. In Collins v Urban [2014] NSWCATAP 17 an Appeal Panel stated at [74]-[75] and [78]-[79]: 74 Accordingly, it should be accepted that a substantial miscarriage of justice may have been suffered because of any of the circumstances referred to in cl 12(1)(a), (b) or (c) where there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. 75 As to the particular grounds in cl 12(1)(a) and (b), without seeking to be exhaustive in any way, the authorities establish that: 1 If there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" - Hutchings v CTTT [2008] NSWSC 717 at [35], Atkinson v Crowley [2011] NSWCA 194 at [12]. 2 The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153]. … 78 If in either of those circumstances the appellant may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved then the Appeal Panel may be satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or because the decision was against the weight of the evidence. 79 In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b) or (c), it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this then, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred - see the general discussion in Kyriakou v Long [2013] NSWSC 1890 at [32] and following concerning the corresponding provisions of the [statutory predecessor to CATA (s 68 of the Consumer Trader and Tenancy Tribunal Act)] and especially at [46] and [55].
5. The question of what constitutes significant new evidence not reasonably available at the time the proceedings under appeal were being dealt with was considered by an Appeal Panel in Owen v Kim [2017] NSWCATAP 26. In that decision the Appeal Panel stated at [37] -[39]: 37 In Owners - SP 76269 v Draybi Bros Pty Ltd [2014] NSWCATAP 29 the Appeal Panel stated at [109] in connection with cl 12(1)(c) of Schedule 4 to the Civil and Administrative Tribunal Act: 'In order to fall within this paragraph the appellant must be able to point to evidence which: (1) is significant; and (2) has arisen and is new in the sense that it was not reasonably available at the time the proceedings below were being heard.' 38 In Leisure Brothers Pty Ltd v Smith [2017] NSWCATAP 11 the Appeal Panel stated at [40 ]: 'The meaning of this clause was considered by the Appeal Panel in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111. At [23] - [24] the Appeal Panel said: '23 Unlike the WIM Act, the expression "reasonably available" is not qualified by the words "to the party". This difference suggests that the test of whether evidence is reasonably available is not to be considered by reference to any subjective explanation from the party seeking leave but, rather, by applying an objective test and considering whether the evidence in question was unavailable because no person could have reasonably obtained the evidence. For example, in Owners SP 76269 v Draybi Bros [2014] NSWCATAP 20 at [114] the Appeal Panel refused leave because, although the appellant may not have been aware of the evidence (being an email), it could have obtained the evidence by summons. In Prestige Auto Centre Pty Ltd v Apurva Mishra [2014] NSWCATAP 81 at [17] the Appeal Panel granted leave because the respondent to the appeal had fraudulently altered evidence. The party seeking leave under cl 12(1)(c) could not reasonably have had available to them the evidence that the report in question had been fraudulently altered at the time the proceedings were being dealt with by the Tribunal. That fact was not known to the appellant at the time of the hearing and could not reasonably be known due to fraud. 24 Each of these cases illustrates that something more than a party's incapacity to procure evidence is necessary to satisfy the requirements of cl 12(1)(c).' 39 As stated at [27] in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown: 'the issue is whether, objectively, the evidence has arisen since the hearing and was "not reasonably available" at the time of the hearing.'
6. In Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 an Appeal Panel stated: An appeal does not provide a losing party with the opportunity to run their case again except in the narrow circumstances which we have described. Mr Ryan has not satisfied us that those circumstances apply to his case and we refuse permission for him to appeal.
7. A question of law may include, not only an error in ascertaining the legal principle or in applying it to the facts of the case, but also taking into account an irrelevant consideration, or not taking into account a consideration which is required to be taken into account, which includes not making a finding on an ingredient or central issue required to make out a claimed entitlement to relief: see CEO of Customs v AMI Toyota Ltd (2000) 102 FCR 578 (Full Fed Ct), [2000] FCA 1343 at [45], applying the statement of principle in Craig v South Australia (1995) 184 CLR 163 at 179. These categories are not exhaustive of errors of law.
8. In Safi v Heartland Motors PL t/as Heartland Chrysler [2016] NSWCATAP 80 at [85]-[107] the Appeal Panel analysed the case law on what constituted a major failure under the consumer guarantee provisions of the ACL mentioned above, summarising its conclusions at [99]-[102]. The Panel rejected the view that any breach of the guarantee of acceptable quality is a major failure. Under s 260(a), the test is objective. A series of individual or specific defects taken as a whole may constitute a major failure. The cost of repairs relative to purchase price and the nature of the defect are factors. Of particular significance is whether the defects are "teething problems" or go beyond that in terms of extent, timing and frequency of repair: that is, whether or not the defects can be remedied easily and in a timely manner. Overall, the test is whether, faced with advance knowledge of the problems and what was needed in terms of time, costs and degree of difficulty to fix them, a reasonable consumer would have bought the goods or bought nothing or something else.
9. Under ACL s 260(a), the rejection period for goods that are subject to a major failure is the period from the supply of the goods within which it would be reasonable to expect the relevant failure to comply with a consumer guarantee to become apparent, having regard to the type and likely use, and length of time and amount of use before a failure would reasonably become apparent. For a major failure constituted by chronic or repetitive defects taken as a whole, such a period is likely to be longer than for a single catastrophic defect. If there is a major failure, the consumer's entitlement to a refund is not dependent on proof of loss: Ferraro v DBN Holdings Aust PL t/as Sports Auto Group [2015] FCA 1127.

Sale by misdescription and misleading conduct

1. The primary member found that it was common ground by time of the hearing that the invoiced-cost printer was advertised as a "new demo model", when in fact it had been water-damaged, purchased from an insurer and made operational by the supplier. (For completeness, we add that the appellant's claim in relation to the second printer, that it was to be supplied a different model entirely, was rejected by the primary member who found that the parties had renegotiated their agreement in respect of that printer so that the model supplied was the correct model . This finding was not challenged by the appellant in its notice of appeal. There was also a reference in the originating application to a wrong take-up unit which does not feature in the primary members' reasons, is not the subject of a ground of appeal and is only mentioned in the consumer's appeal submissions in a manner that does not enable a proper consideration of it as an issue on appeal. The supplier's documents asserted that the supplier did deliver two sets of take-up units and additional parts.)
2. In our view the divergence of the invoiced-cost printer from the advertised description was a clear breach of the consumer guarantee that the goods would comply with that description. The supply of a refurbished, water-damaged machine is a substantial and significant departure from the description by which the goods were supplied, ie a "new demo model". If goods supplied by description depart in a significant respect from the description by which they were supplied, that is a major failure (s 260(b)(i) of the ACL).
3. This would entitle the appellant to return the printers and obtain a refund if that claim to return for a refund was exercised within the statutorily-defined rejection period.
4. To reach a conclusion that the appellant was not entitled to the relief sought, that is to return the goods and obtain a refund, it was necessary to conclude that the appellant had not sought to return or otherwise rejected the goods within the rejection period.
5. The primary member did not, in the primary reasons, give any consideration to that question. The rejection period expired "when it was reasonable to expect the relevant failure to comply with [the guarantee] to become apparent" (s 262(2) of the ACL). The primary member did not refer in her reasons either to the time when the appellant became aware of the misdescription or when it might reasonably have become aware of the misdescription.
6. As is made clear in the authorities we have referred to above, the failure to address issues critical to the ultimate determination of the proceedings is an error of law. The primary reasons referred only to the absence of evidence of any defect arising from the misdescription, the absence of evidence of what the consumer would have done if it had known the actual description (water-damaged and purchased from an insurer) prior to purchase and the absence of evidence of loss from the misdescribed elements (water damage and purchase from an insurer). On the basis of these matters the primary member held that there was no breach of contract or of statutory warranty arising from the misdescription.
7. In our respectful view, in taking into account those considerations in reaching a conclusion on the claimed entitlement to relief, the primary reasons disclose an error of law. A consumer does not have to prove those matters to establish a breach of the relevant statutory guarantee. It is only necessary to establish that there was not a supply which accorded with the description.
8. There was, in the primary reasons, no express consideration of or conclusion concerning the alleged misleading conduct or consequential relief. It is possible to infer, from the similarity between the alleged misdescription and the alleged misleading conduct, that the primary member's conclusion, and the supporting reasoning, applied to both.
9. However, there was also no consideration in the primary reasons of what is, in our view, an issue which should have been given attention, namely, whether the nature of the misdescription and the likely effect it would have on a potential purchaser, followed by the act of purchase, is of itself sufficient proof by inference of the necessary causal link between the misleading conduct (constituted by the misdescription) and loss or damage to the claimant, so as to establish liability for damages or other relief: Gould v Vaggelas (1985) 157 CLR 215 esp at 238; Sanofi-Aventis Aust PL v Apotex PL (No 3) [2011] FCA 846 at 278 and authority there cited (and not affected by appeal of the actual decision).
10. If the matter referred to in the preceding paragraph had been established, it would be necessary to consider whether the relief sought by the appellant (a refund) was appropriate. The matters relevant to determining whether the rejection period in relation to the breach of a consumer guarantee had expired, would also be relevant to determining whether a refund was the appropriate form of relief in respect of the claim of misleading conduct. There was no consideration of those matters in the primary reasons.

Acceptable quality and caused loss

1. The primary member, in effect, came to the conclusion that, if there was a breach of any other statutory guarantee or breach of contract, the consumer had failed to discharge the onus of proof that its alleged loss was caused by that breach. The primary member accepted the evidence from the supplier that the supplier had responded with service calls on 9 occasions and the manufacturer on one occasion, that the same problem was identified on each occasion, and that the problem was that the consumer was operating the machine in an environment that did not comply with the temperature guidelines for proper operation of the printers. The manufacturer also reported a blockage on one occasion due to out-of-date inks being used. The primary member pointed to the absence of independent expert evidence from the appellant to rebut these conclusions.
2. We can see no error of law in those conclusions on the material before the primary member. We also can see no basis for a grant of leave to challenge those conclusions on the material before the primary member. They appear to us to be in accord with the weight of evidence before the primary member and we consider that the primary member properly considered the evidence before her in a fair and equitable manner.

Enforcement of warranty

1. The primary member, correctly in our respectful view, found for the consumer (now the appellant) that there was a 5 year, not one year, warranty provided by the supplier, and that such longer-than-usual warranty was not the subject of duress as the supplier maintained.
2. However, the primary member went on to say that it followed, from her findings on the absence of proof that we have already described, that the consumer had failed to prove any breach of warranty. We respectfully agree on the material before the primary member. On that material, the supplier was found to have attended on numerous occasions, the manufacturer on one occasion, and on all occasions the problem was found to have lain at the feet of the consumer and its usage of the printers. A warranty is not a strict liability insurance policy against all disruption or breakdown.
3. If the breakdowns continue and can be demonstrated to be attributable to the matters the appellant asserts, including the matters raised by its new evidence put forward on appeal and addressed below, then the consumer can rely on the contractual warranty and bring fresh proceedings (or raise the issue in the course of the re-determination of these proceedings) if the problem is not rectified. At that point the supplier may, if so advised, raise, for testing and determination, any asserted voiding of the warranty, including by reason of the consumer allegedly using the wrong number of ink colours, and any other relevant matters concerning the alleged breach of warranty (but not the validity or length of the warranty).
4. It is likely that the first opportunity to raise those matters will arise in the course of the primary reconsideration of the matter in accordance with the orders we propose to make. That reconsideration will not be restricted by our conclusions on this appeal if the reconsideration proceeds with further evidence.

Material not before primary member

1. The appellant asserted in submissions at the appeal hearing that it would not have bought the printers if the misdescription had been known. The appellant also presented material which it alleged showed that the lack of operation of the printers was caused by a faulty ink tube system, printhead and printhead cable rather than by operating environment temperatures. This additional material discloses, on its face, that it would have been available at the time of the primary hearing. That material could not, therefore, on the authorities that we have cited earlier, provide the basis for a grant of leave to appeal.
2. The appellant also sought to rely upon material which it said was not accessible on its computer storage when it was required to present its evidence and was, despite reasonable efforts, recovered only later. We note that the appellant did not provide any evidence, by way of affidavit, statement or expert report, to establish its assertions regarding the availability of the emails. Without such evidence we would not be able to conclude that the material was not reasonably available at the time of the original hearing.
3. Moreover, even if the appellant's explanation for not adducing the emails in evidence at the original hearing was accepted, the emails did not in themselves show a significantly open chance or a fair possibility of another more favourable outcome for the consumer. The emails did not address to that level the central issues of what caused the chronic lack of operation of the printers. Accordingly, we could not, consistently with the authorities we have referred to above, grant leave to appeal on the basis of the material the appellant claims to have recovered from its computer.

Appropriate relief on appeal

1. CATA s 81 provides that, in determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal. The section sets out a list of available orders which is not exhaustive. That list includes: allowing the appeal, setting aside the primary decision and remitting the whole or any part of the case to the primary level of the Tribunal for reconsideration, either with or without further evidence and in accord with the Appeal Panel's directions.
2. The errors of law that we have identified necessitate reconsideration of at least the sale by misdescription component and misleading conduct component of the case. It is not appropriate that the Appeal Panel itself engage in the primary fact-finding in relation to those components of the case, both because it does not have before it all of the evidence that was before the Tribunal at the original hearing and because it has not heard full argument on those issues. At least those aspects of the case must be remitted for reconsideration and determination by the primary level of the Tribunal.
3. It is clear, from the material that the appellant sought to adduce before the Appeal Panel, that the appellant wishes to adduce further lay and, potentially, expert evidence on the issues in the case, including those on which it has not succeeded on appeal. We do not consider that those issues could fairly be excluded from consideration at the further primary hearing or that the appellant should be denied the opportunity to put forward that evidence and have it fully tested. That evidence will be material to the consideration of the rejection period and the appropriate relief for misleading conduct. The respondent should be afforded an opportunity to respond with further evidence to any additional material to be relied upon by the appellant.
4. We therefore conclude that the appeal should be allowed, and the entire case remitted to be reconsidered by a member of the Tribunal with the parties having the opportunity, before that further primary hearing, to lodge any further evidence in chief and reply that they may wish to rely upon. The proceedings should be listed for directions in the Consumer and Commercial Division to enable the parties to address the scope and timing of any further evidence.
5. Although the primary member did not make explicit findings in relation to the credit of witnesses, she did make findings on two issues, involving the renegotiation of the contract concerning the other printer and the length of the warranty, which appear to have involved, at least implicitly, the rejection of evidence given by witnesses and, in any event, there is no advantage from a re-hearing before the original primary member because there will be, in effect, a fresh start on expanded evidence in the further hearing. In those circumstances it is appropriate that the proceedings be remitted to be heard by a Tribunal differently constituted (see Walker Corporation v Sydney Harbour Foreshore Authority (2009) 168 LGERA 1 at [121] (5) and (7)).

Orders

1. The orders we make are: 1. Leave to appeal is granted to the extent that leave is required. 2. Appeal allowed. 3. Remit the matter to the Consumer and Commercial Division, differently constituted, for hearing, with directions to be made by the Division to permit the lodgement and service of further evidence.

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 November 2018