McCarthy v Hunter

1. The appellant is a car mechanic. This appeal concerns work he contracted to do during the period from December 2020 to February 2021 to rebuild the engine in the respondent's 2009 Subaru Impreza WRX.
2. The appellant appeals from an order made by the Consumer and Commercial Division of the Tribunal on 13 November 2024 requiring the appellant to pay the respondent damages in the sum of $21,804.20. The damages were awarded in relation to the Tribunal's finding that the work carried out by the appellant did not comply with the guarantee of due, care and skill contained in s 60 of the Australian Consumer Law (NSW) (ACL). The amount awarded was the cost quoted by another repairer (Blacktown Service Centre) to repair the vehicle.
3. Competing expert evidence was presented by the parties in the primary proceedings. The Tribunal decided to prefer the expert evidence presented by the respondent to that presented by the appellant.
4. For the reasons set out below we have decided that leave to appeal should be refused and the appeal should be dismissed.

1. The Tribunal found that on or about 12 December 2020 the parties entered into a contract for the appellant to install a rebuilt engine. The work was the subject of an invoice from the appellant dated 9 February 2021.
2. The Tribunal focused upon the competing expert evidence, namely expert reports from Mr Alessi dated 5 October 2023 adduced by the appellant and a report from Mr Kannen dated 8 February 2024 adduced by the respondent. On appeal we were provided with complete copies of those reports.
3. Ultimately, the Tribunal expressed the following key conclusions:

24 This is a dispute where the evidence of the experts conflict. Despite this being one of the issues in dispute and hotly contested, the parties did not call the experts to give evidence and be cross-examined. The consequences are that the Tribunal has to determine which report to rely upon based on the written reports of both experts that have conflicting opinions.

25 Where the expert evidence conflicts to such an extent the Tribunal informing its view can prefer one expert over the other. In this regard I prefer the evidence of Mr Kannen. He has identified issues with the report of Mr Alessi that the vehicle was not modified and that he had not mentioned the vehicle being returned to the [appellant]. [The Tribunal then referred to Mr Alessi's evidence about the 3 inch exhaust system and the information from GCG Turbo Charges]. However, there is no supporting documentary evidence from GCG Turbo Charges that states the vehicle was modified and that 3 inches is not the factory exhaust. I do not accept that the failure is due to incorrect tuning and abusive driving as claimed by Mr Alessi. He claims that the engine failed due to excessive internal combustion temperatures due to higher boost and fuel mixtures determined by the non-factory ECU in the custom tune after the engine was reconditioned.

26 According to Mr Kannen, the damage to the vehicle was caused by catastrophic damage to the crankshaft, pistons, conrods and engine block. The original engine block was replaced with a second hand engine with a service history unknown. It was not one major component that failed and caused the engine to be damaged, but rather a general lack of due care and skill that caused the engine to fail. Mr Kannen reports that the engine was a second hand engine rather than a fully reconditioned engine and that the work completed by the respondent of an overhaul of the engine was not completed with due care and skill.

27 Mr Kannen also reports that Mr Alessi hypothesises that the driver could miss a gear which would be the same as an excessive boost but does not provide evidence to support this. Further Mr Alessi reports about the tuning of the engine and in response Mr Kaneen's states that had the vehicle been tuned with due care and skill then it would not have broken down on 10 occasions. Mr Alessi claims that the vehicle was taken to Rumble Shack and Ichiban to tune and that they incorrectly tuned the vehicle. I accept that the vehicle should have been checked for tuning when it was returned to the [appellant] on at least five occasions.

1. In the penultimate sentence of paragraph 28 the word "not" is mistakenly missing after the word "would". That is clear from paragraph 6 (6) of Mr Kannen's report where, when dealing with the "Fifth Instruction", he said "The engine had an underlying problem, that would not have been solved by a regular service". Clearly, the Tribunal was accepting this evidence given the Tribunal's final sentence in paragraph 28.
2. The Tribunal then assessed the damages payable pursuant to s 267 (4) of the ACL as being the cost of $21,804.20.

1. Under s 80 of the NCAT Act, a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law. In respect of any other grounds, in the case of an appeal from the Consumer and Commercial Division of the Tribunal, as this is, the appellant must satisfy the Appeal Panel that leave to appeal should be granted under cl 12 sch 4 of the NCAT Act on the basis that:

.....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).

1. Even if these conditions for the grant of leave are satisfied, the Tribunal has a discretion concerning the grant of leave which it will ordinarily only exercise in the circumstances described in Collins v Urban [2014] NSWCATAP 17 at [84 (2)], namely.

Ordinarily it is appropriate to grant leave to appeal only in matters that involve:

1 issues of principle;

2 questions of public importance or matters of administration or policy which might have general application; or

3 an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;

4 a factual error that was unreasonably arrived at and clearly mistaken; or

5 the Tribunal having gone about the fact- finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed,

1. The appellant, who was self- represented, did not identify any question of law or put forward any criticism of the Tribunal's reasons from which we were able to discern any question of law.
2. In his Notice of Appeal lodged on 29 November 2024 and his written submissions lodged on 28 January 2025 the appellant based his appeal, principally, upon the contention that paragraphs 26, 27 and 28 of the Tribunal's reasons "are wrong". Those written submissions were contained within a paginated bundle consisting of 89 pages with an index on page 1 (the appellant's bundle). As will be seen below, a number of the documents in this bundle were not presented to the Tribunal in the primary proceedings and, in that sense, they were new evidence.
3. Whilst leave to appeal was sought in the Notice of Appeal on the basis that the decision was not fair and equitable, was against the weight of the evidence and there was new evidence not reasonably available at the time of the hearing, the appellant's submissions did not categorise the arguments in this way but instead set out arguments about why parts of paragraphs 26, 27 and 28 were said to be wrong. Accordingly, we deal with these points separately as grounds of appeal.
4. The respondent's submissions were contained within a 139-page bundle lodged on 12 February 2025. Pages 114-125 of this bundle contain documents that were not presented to the Tribunal. We take no account of these pages for the purpose of this appeal.
5. The respondent's written submissions included that no point of law had been raised by the appeal, leave to appeal should be refused based upon the approach set out in Collins v Urban, the weight of the evidence supported the respondent's claim and that the appellant now sought to rely upon new evidence in circumstances where there was no evidence showing that this new evidence could not have been reasonably obtained for the hearing on 13 November 2024.

1. As to paragraph 26 of the reasons, the appellant challenged the statement "[T]he original engine block was replaced with a second- hand engine with a service history unknown" (Ground 1).
2. In support of Ground 1, the appellant submitted:

[Referring to the above statement] this is incorrect as we have an invoice from Reconditioning services which states a full recondition, this was made available to us recently as the owner of the business had retired we have just been in contact. We had also supplied the member with photos of the block before it was placed back into the vehicle. In this case the recondition would have used Miss Hunters original block, they would have cleaned and reconditioned it, but Miss Hunters block was badly damaged and couldn't be used. I have attached photos from my original evidence and also new photos showing the recondition engine going in.

1. However, the appellant misinterprets the Tribunal's reasons when they are read as a whole. In making this statement the Tribunal was acting upon the evidence from Mr Kannen founded upon the appellant's own invoice that a second-hand engine block had been installed (not a whole second-hand engine). This appears from the Tribunal's correct reference at [16] to that part of the appellant's invoice dated 9 February 2021 which states: "replace engine block with second hand block" [our emphasis]. The Tribunal was proceeding on the basis of Mr Kannen's evidence that it was a second-hand engine block that had been installed as part of the rebuild and was accepting Mr Kannen's criticisms of this step. As to this, the Tribunal stated (at [11]):

.... Mr Kannen observes in his summary of assessment that rather than having installed a "fully" overhauled or "new" engine a second hand block was used without the block, being checked for defects. [Our emphasis].

1. Accordingly, we consider that the appellant's criticism of this aspect of the Tribunal's reasons is misconceived.
2. Because of this, it is, strictly, unnecessary for us to address the appellant's submission in so far as it seeks to rely upon new evidence consisting of an invoice from "Reconditioning Services" dated 1 February 2021 and new photographs. Nevertheless, these new items of evidence would not warrant a grant of leave to appeal. Firstly, the evidence is not significant because it does not show that any material fact relied upon by the Tribunal was incorrect- we have already explained that we do not consider that the Tribunal proceeded on the basis that the engine as a whole was second-hand. Secondly, the invoice carries no or little weight because it does not show who the buyer of the services was, not does it establish any clear, relevant fact. Thirdly, we are not satisfied that this new evidence was evidence that was not reasonably available at the time of the hearing. As to the invoice, the appellant said that they had only just been in contact with the owner of the business who had retired but this does not explain why such evidence could not reasonably have been obtained before the hearing. As to the photographs, there is no explanation why these were not obtained before the hearing.
3. Accordingly, we do not accept that Ground 1 of the appeal warrants the grant of leave to appeal.

1. With respect to paragraph 27 of the Tribunal's reasons, the appellant challenged the Tribunal's conclusion that: "[I] accept that the vehicle should have been checked for tuning when it was returned to the [appellant] on at least 5 occasions."
2. In this regard, the appellant submitted (emphasis original):

Point 27: We could have checked the tuning, this is also incorrect, dyno tuning is a specialist service that requires specialist equipment and computer software. I am not trained in this. I did not advise Mrs Hunter to do this as they alluded to, I do not approve of tuning and altering manufacturer settings. This was done by Mrs Hunter at her own will.

1. There are two reasons why this contention does not establish that the Tribunal erred in arriving at this conclusion, let alone that it was more than arguably wrong about it. Firstly, the appellant did not point to any evidence before the Tribunal to this effect to show that the Tribunal had arguably overlooked such evidence. In any event, the Tribunal's conclusion was founded upon Mr Kannen's view that tuning should have been checked when the vehicle was returned to the appellant on a number of occasions after the rebuild for repairs. The fact that the appellant itself did not do dyno tuning does not establish Mr Kannen's opinion was wrong. If the appellant itself did not do such a tuning check, then it was in a position to ensure that someone else did it.
2. More significantly, as explained in paragraphs 35 to 51 below, the Tribunal's ultimate conclusion about a breach of s 60 of the ACL was not founded upon any specific finding of a lack of due care and skill in failing to check the tuning. The Tribunal relied upon other instances of lack of due care and skill as identified by Mr Kannen.
3. Accordingly, we do not accept that Ground 2 warrants the grant of leave to appeal.

1. With respect to paragraph 28 of the reasons, the appellant challenged the Tribunal's conclusion that: "I accept that the engine was defective after it left the [appellant] and that other repairers had not tampered or made modifications to the engine as claimed by the [appellant]".
2. The appellant took strong exception to this conclusion. We examine the appellant's arguments in some detail below. However, overall, the problems for the appellant on appeal are threefold. First, he seeks to reargue the merits as if the Appeal Panel was re-determining afresh the merits of the respondent's claim, but that is not our role on appeal. Secondly, to a considerable extent, the appellant seeks to rely upon new evidence that was not presented to the Tribunal and which the appellant fails to show was not reasonably available at the time of the hearing. Thirdly, none of the appellant's arguments serve to demonstrate why any of the discretionary aspects of the grant of leave to appeal have been satisfied, most pertinently, the arguments do not show that the Tribunal was more than arguably wrong about the factual elements of the conclusion that the appellant had failed to comply with the statutory guarantee in s 60 of the ACL.
3. Before turning to the arguments in detail it is convenient to identify the new evidence sought to be relied upon, which for the reasons we have already referred to and in part expand upon below, we do not accept warrant the grant of leave to appeal. We do so by reference to the index to the appellant's bundle. The new evidence consists of page 9 (Reconditioning Services invoice), pages 10-12 (photos of the engine rebuild), pages 13-14(Guidelines for reconditioning services),page 15(text messages from the respondent's daughter on 31 March 2021 with Cobb photo), pages 16-17 (Rumbleshack tune report), pages 28,29 and 30 (photos by Mr Alessi of disassembled parts), page 34 (photo "Stainless Steel Equal Length Headers for Subaru WRX/STI), pages 35-37(Clutch material), page 45 (text messages with the respondent's daughter on 17 January 2021) and pages 76-84 (material on Subaru engines).
4. The appellant's arguments in its written submissions can be fairly summarised as set out in the following paragraphs, to which we respond as indicated:

1. First, the engine was not a second-hand engine. We have already addressed this point.

The owner failed to have the vehicle serviced when it should have been

1. Secondly, the vehicle was not serviced when it should have been. The appellant submitted that this was the responsibility of the owner and if the owner is negligent and does not service the vehicle the warranty is void.
2. However, the respondent's claim was not for breach of warranty. It was a claim founded upon breach of the statutory guarantee in s 60 of the ACL. Furthermore, as we have already mentioned the Tribunal, accepted that the engine had an underlying problem that would not have been solved by a regular service. The appellant has not shown that the Tribunal was more than arguably wrong about this latter conclusion.

There was an incorrectly carried out performance tune done by others

1. Thirdly, there was a major, incorrectly executed modification made in respect of the engine by another person in carrying out a performance tune.
2. However, the appellant's arguments, apparently, founded, principally, upon aspects of Mr Alessi's main expert report do not contradict Mr Kannen's response to the effect that Mr Alessi was theorising about this issue without being able to specify just what had occurred and show that incorrect tuning was the problem. We address this in more detail below, including, the associated argument, which the appellant emphasised at the hearing of the appeal, that both experts agreed that tuning was the cause of engine failure and not the workmanship in carrying out the rebuild.
3. In support of the contention in paragraph 35 above the appellant stated:

The tune performed on the 14.04.22 by Ichiban they are using 17.5 PSI boost which is higher than recommended by Subaru the max on an original turbo is 14.7 PSI so there would have been changes made. Again, this is a modification. I have also attached a photo of Miss Hunter using 20.81 psi boost.

1. The 14 April 2022 report by Ichiban (a 1 page "Mainline Dynolog Chassis Dyno Report") was in evidence before the Tribunal (see page 75 of the respondent's bundle). It contains no comments about the size of the boost or any modifications made. In his first report Mr Alessi made no reference to this boost being higher than recommended (at [22] and [32]).
2. The appellant did not identify the evidentiary support for the statement about being higher than recommended by Subaru, nor did he show how any of the following aspects of the Tribunal's reasons were more than arguably wrong:

9 [Referring to Mr Kannen's evidence] Furthermore, all Subaru Impreza WRX are fitting (sic) with turbo chargers when they leave the factory, this vehicle was not different the original turbo was defective and subsequently replaced. The expert for the respondent claims excessive turbo boost could have caused the engine failure. After having viewed the pistons, that claim does not stand up to scrutiny. The top of the pistons which are exposed to combustion, look remarkably clean and are largely unmarked, quite different to the side of the pistons. A diagnostic check by Ichiban verified that the turbo operated within the specified parameters.[our emphasis]

....

25 .....He [Mr Alessi] contacted GCG Turbo Charges and they state that the turbo was supplied for high boost pressures and primarily for racing. However, there is no supporting evidence from GCG Turbo Charges that states the vehicle was modified...I do not accept that the failure is due to incorrect tuning.

1. In concluding as it did the Tribunal was preferring the evidence of Mr Kannen over that from Mr Alessi.
2. Furthermore, the photo about Miss Hunter using a 20.81 psi boost was new evidence but the appellant did not show why this evidence was not reasonably available at the time of the hearing.
3. The appellant also sought to rely upon new evidence consisting of a "Mainline Chassis Dyno Report" in respect of the vehicle from The Rumbleshack dated 9 March 2021. The appellant referred to this as the original run- in tune. In his submissions the appellant said that this showed that the engine ran at 200 kws and that Rumbleshack had the engine running at just over 19psi of boost. The appellant says that this report had only just been made available to him, but this falls well short of meeting the requirement that it be shown that the evidence was not reasonably available at the time of the hearing in the primary proceedings.
4. Furthermore, it is far from clear how this report establishes any significant new facts. For example, it does not show that there was some incorrectly carried out tuning after the rebuild.
5. The appellant sought to rely upon more new evidence consisting of some transcript passages of an earlier hearing in the proceedings on 15 April 2024 before Member Ruschen. The appellant sought to rely upon a comment from the Member about the significance of work done on the vehicle after the rebuild. However, this does not amount to evidence-it is no more than a remark made by the Member about an issue in the case. Furthermore, it is not shown why this was not reasonably available at the time of the hearing in the primary proceedings.
6. We return to the appellant's reliance on the contention that the Tribunal erred by not considering what the appellant said was the main point, namely that both experts agreed that the engine failure was due to incorrect tuning.
7. In his main report dated 5 October 2023 stated that a high performance tune was carried out (at [30]), there had been dyno tuning to run on 98 octane fuel and E85 but he was unaware if Flex Fuel Sensor had been fitted to the vehicle so as to ensure the Engine Control Unit (ECU) altered and managed the fuel and ignition map for the desired fuel (at [31], and the tune result shows that the vehicle was fitted with the 19.5 psi actuator to control the turbo boost (at [32]). He then went on to talk in theoretical terms about the nature and risks of custom tuning (at [33], [38]),[40] and [41]) and said that the appellant had no control over the custom tuning (and the larger turbo).

(1) Rather than having installed a "fully" overhauled, or "new" engine, second hand engine block was used, without the block, being checked defects (sic).

(2) The crankshaft was re-used, even though excessive wear was evident on the number four (4) journal (con-rod connecting bearing).

(3) Second hand con-rods we used, at least one of which are previously overheated-no new con-rods are listed on the Respondent's repair invoice.

(4) The uneven wear, visible on the con-rod bearings, was the result of second hand crankshaft being matched with the new con-rod bearings.

(5) The pistons and cylinders seem not to be fully compatible, causing blow-buy, where gases escape between the piston and cylinder walls, discolouring the piston walls, causing mis-firing and rough engine running.

(6) My opinion is, that the engine has not been overhauled, repaired, or refurbished with due care and skill.

(7) My conclusion detailed above, is supported by the fact that the vehicle had to be returned to the Respondent on 10 (10) occasions for warranty work.

.....

62. In my opinion it was not one major component that failed and caused the engine to be damaged, but rather it was a general lack of due care and skill that caused the engine to fail.

63. The reason for the conclusion:

(1) There is a good reason why most repairers opt to use engines that have been fully reconditioned by specialised repairers.

(2) Short cuts in engine reconditioning, invariably leads to future problems, as is the case with this engine [our emphasis]

(3) It should not be necessary to return the vehicle on ten occasions in the first year for warranty work to the repairer.

(4) In the second year, the defects keep on raising their head and vehicle's engine required continued repair...

(5) The full detail are listed on Annex 11.

1. None of this evidence is to the effect that the engine failure was due to incorrect tuning.
2. Subsequently, Mr Kannen addresses another question he was asked which was to comment on Mr Alessi's report. His overall comment was that Mr Alessi's report provides few, if any, answers as to why the engine failed, he points out that Mr Alessi did not know if a flex fuel sensor had been fitted, and that Mr Alessi did not conclude that the turbo provides excessive boost. He then referred to Mr Alessi's unspecific remarks about custom tuning and says, "My opinion is that, had the engine when first installed by the Respondent, been tuned with due care and skill, the vehicle would not have broken down on 10 occasions."
3. In the context we have outlined, this comment from Mr Kannen does not warrant the conclusion that the experts were agreed that incorrect tuning caused the engine failure. Neither expert in their main reports had given this as the cause of the failure and no specific incorrect tuning had been identified.
4. Given the state of this evidence about tuning, it was reasonably open to the Tribunal to conclude that it did not accept that the engine failure was due to incorrect tuning (at [25]) and the appellant has not shown that the Tribunal was more than arguably wrong about this.

The respondent and her daughter lied under oath

1. The appellant submitted that at the hearing the respondent and her daughter lied under oath.
2. The first point to make about this contention is that the appellant did not show that this was a submission that was made to the Tribunal, let alone an allegation that was put to the witnesses in cross-examination. For this reason alone, the contention should not be permitted on appeal. Plainly, it raises a very serious factual allegation that might have been answered by evidence in the primary proceedings: see, for example, Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 at 438
3. We should, nevertheless, mention some other aspects of the allegation. The appellant relies upon 7 pages of transcript of the hearing in the primary proceedings on 2 August 2024, along with two other pages. Parts of the transcript are highlighted and in relation to some of the highlighted parts hand- written comments are made against them by or on behalf of the appellant.
4. One of these two other pages is new evidence. It consists of some text messages between "Brit Subaru", the respondent's daughter, and the appellant on 17 January 2021 (at page 45 of the appellant's bundle on appeal). There is no evidence as to why this document was not reasonably available to be presented at the hearing in the primary proceedings. On the contrary, given the nature of the document, one would infer that the messages were available to the appellant at the time of the hearing.
5. This is an allegation to which what was said in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336, namely that the level of satisfaction required depends on matters including the seriousness of the allegation, is applicable. We have also considered all of the other highlighted passages in the transcript provided in conjunction with the one other page relied upon and we fail to see how any of this material is capable of establishing that the respondent and her daughter lied under oath.

The respondent's expert inspected a disassembled engine that had been cleaned of carbon residue

1. The appellant submitted that the fact that Mr Kannen did not see the engine in its entirety should make his report null and void. He submitted that Mr Kannen viewed the engine apart and cleaned by Scott Diver of Ichiban "meaning he took away evidence of carbon buildup from excessive fuel dumping which takes away the lubricant within the engine bore which causes scoring on the piston." The appellant said he believed that Mr Kannen was misled in his evidence. He attached "other photos" taken by Mr Alessi on the day with a date stamped.
2. There are a number of reasons for rejecting these points. Mr Kannen made it clear in his report that he had viewed the engine in a fully disassembled state. However, the appellant did not point to any proof that relevant engine parts as seen by Mr Kannen had been cleaned such as to take away carbon buildup as alleged by the appellant. The appellant relied upon a statement from Scott Diver that was presented to the Tribunal, but it provides no evidence of any such cleanup. Furthermore, Mr Diver provides no support for the contention of "excessive fuel dumping". The "other photos" are new evidence, but these were, plainly, available to the appellant at the time of the hearing.

The Tribunal failed to appreciate the evidence about a clutch replacement

1. The appellant submits that the Tribunal erred by failing to attach significance to the clutch replacement after the rebuild which showed that the respondent's daughter had been driving the vehicle aggressively. However, the only material relied upon by the appellant that was before the Tribunal went no further than to show that a replacement had occurred. Otherwise, there were 3 pages of new evidence (pages 35,36 and 37 of the appellant's appeal bundle) that were not presented to the Tribunal. There was no evidence as to why these were not reasonably available to the appellant at the time of the hearing.

The respondent made changes that were not "like for like"

1. Finally, the appellant makes the assertion that the respondent did not put "like for like" into the vehicle but this contention is not supported by any detail as to the evidence that was before the Tribunal and as to the significance of that evidence.

1. In the Notice of Appeal, the appellant contended that the decision was against the weight of the evidence. It seems to us that we have already dealt with the specific matters raised about this. We should mention one other matter.
2. In Collins v Urban (at [77], the Appeal Panel said:

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...

1. From what we have already said, it is apparent that we do not consider that this test concerning a decision against the weight of evidence has been satisfied.
2. When dealing with the subject that the decision was not fair and equitable in the Notice of Appeal a contention was made about the quantum of the sum awarded to the respondent. It was contended that the respondent was seeking to improve and further modify the engine. However, this contention was not developed in the appellant's submissions, and it was not shown how it was said there was any appealable error by the Tribunal in respect of this aspect of the decision.

(1) Leave to appeal is refused.

(2) The appeal is dismissed.

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.

24 April 2025 - Coversheet - former substantive case number removed.