My Fashion Republic Pty Ltd trading as Cosette v Ho

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). In John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) at [13] the Appeal Panel listed questions of law as follows: (1) Whether there has been a failure to provide proper reasons… (2) Whether the Tribunal identified the wrong issue or asked the wrong question … (3) Whether a wrong principle of law had been applied … (4) Whether there was a failure to afford procedural fairness … (5) Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations … (6) Whether the Tribunal took into account an irrelevant consideration … (7) Whether there was no evidence to support a finding of fact … (8) Whether the decision is so unreasonable that no reasonable decision-maker would make it …
2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 to the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: (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. In Collins v Urban [2014] NSWCATAP 17 (Collins), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered 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.
4. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). In Collins, at [84], the Appeal Panel stated that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
5. The orders which may be made by an Appeal Panel are set out in s 81(1) of the NCAT Act, which is quoted below: (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following - (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel.

Grounds of appeal

1. The Notice of Appeal, which recorded that the supplier was not seeking leave to appeal, specified the nine grounds of appeal which are quoted below: 1. The Tribunal erred by making a finding under section 54 of the Australian Consumer Law (NSW) (ACL) in circumstances where the Tribunal's order of 6 November 2023 … stated that the matter was to be decided under section 56 of the ACL, stating: "The issues for determination at the final hearing are: a. whether the respondent failed to comply with the guarantee as to the supply of goods by description contained in s 56 of the Australian Consumer law when it supplied the handbag to the applicant (that is. Whether it was a genuine designer handbag or counterfeit) b. If there was a failure to comply with s 56 whether the applicant is entitled to the following remedies i refund of the purchase price ii compensation for the costs of return and authentication analysis" 2. The Tribunal erred in law by finding that the Appellant breached the consumer guarantee set out in s 54 of the ACL by "the provision of a certificate of authenticity that could not, without more, be relied on, whether or not the goods were authentic" (paragraph 60 of the Tribunal's decision) in circumstances were: a. the relevant issue in dispute is whether the handbag purchases by the Respondent is authentic or not, and not whether the certificate of authenticity provided with the handbag could be relied on; and b. the Appellant maintained that the handbag supplied to the applicant as, and is, authentic. 3. The Tribunal erred in law by finding that the Appellant breached the consumer guarantee set out in section 54 of the ACL by finding that the handbag supplied was not of acceptable quality "because of the inherent risk that they were not authentic since a reliable measure of authenticity was not supplied for the purchasing consumer's comfort" (paragraph 49 of the Tribunals decision) in circumstances where: a. the relevant dispute is whether or not the Respondent is satisfied that the goods supplied are authentic or not; b. the Appellant submitted evidence that authenticity certificates issued by third parties are not a reliable measure of authenticity; and c. the Appellant maintained that the handbag supplied to the applicant was, and is, authentic. 4. The Tribunal erred in law by making a finding that the Appellant's evidence amounted to a disavowal of the reliability of the certificate of authenticity the Appellant had provided to the Respondent. 5. The Tribunal erred in law by finding that there was sufficient evidence to establish the Respondent's claim that the handbag supplied to the Respondent by the Appellant was not authentic 'in the absence of contrary material" because the Tribunal failed to place appropriate weight on : a. the Applicant's evidence regarding the certificates of authenticity provided by the Respondent, which expressly stated that they could not be relied on by stating that: i. "We work independently from luxury brands and our authentication services are opinions from our experts. Such opinions should not be treated as legal documentation in any way" (LegitGrails Terms of Service); ii. "We do not warrant that the results that may be obtained from use of the service will be accurate or reliable" (LegitGrails Terms of Service); iii. "Save for using all reasonable care and due diligence to provide any service offered by LAA, LAA does not warrant or insure the reliability or accuracy for the outcome of the order or service." (Luxury Authentication Australia Pty Ltd Terms and Conditions). b. the Appellant's evidence that one of the Respondent's authenticators, Luxury Authentication Australia Pty Ltd, did not conduct authentication on behalf of the Respondent stating that "A third party subcontracting authenticator will be provided with all photos uploaded to the LAA website by you for purposes of that order" (Luxury Authentication Australia Pty Ltd Terms and Conditions). c. the Appellant's evidence insofar as it relates to the deficiencies and/or probative value of the Respondent's evidence; d. the Appellant's positive evidence to establish the authenticity of the handbag supplied by the Respondent; and e. the evidence that the Appellant had obtained and provided a certificate of authenticity that stated that the handbag was genuine (notwithstanding that the Appellant did not seek to rely on that certificate of authenticity to make good its case). 6. The Tribunal erred in law by drawing an adverse inference against the Appellant for not requesting the Respondent's witnesses to be available for cross-examination at the hearing in circumstances where: a. the certificates of authenticity obtained by the Respondent were given by a corporation and not an individual; b. the certificates of authenticity obtained by the Respondent expressly stated that they could not be relied on (see paragraph 3 above); and c. one of the certificates issued b an intermediary authenticator who purported to express an opinion which was merely adopted from a subcontractor, stating that "the organisation who adopted the assessment as its opinion said that all its appraisers were professional brand specific luxury goods authenticators with knowledge and experience gained from years of collecting, selling and authenticating branded luxury goods." (paragraph 32 of the Tribunal decision). 7. The Tribunal erred in law by characterising the Respondent's authentication certificates as opinions of the organisations, capable of discharging the Respondent's burden of proof, in circumstances where: a. Luxury Authentication Australia Pty Ltd merely adopted the opinion of an unknown subcontractor (see paragraphs 5.b and 6.c above); and b. LegitGarils specifically states that its document / opinion cannot be used for legal purposes (refer to paragraph 5.a.i above). 8. The Tribunal erred in law by finding that "the evidential onus can shift with each party's evidence". 9. The Tribunal erred in law by not applying a mandatory legal requirement by making orders under division 3 Part 6A of the Fair Trading Act 1987 (NSW) without consideration of whether it was satisfied that such order would be "fair and equitable to all parties to the claim" as required by section 79U(1) of the Fair Trading Act 1987 (NSW).

Timing

1. The reasons were dated 15 May 2024 and r 25 of the Civil and Administrative Tribunal Rules 2014 (NSW) required that the Notice of Appeal be lodged within the following 28 days, which is by 12 June 2024. As the Notice of Appeal was lodged on that day, the appeal has been commenced within time.

Documents

1. Documents lodged by the parties in respect of this appeal were those received from the supplier, on 24 July 2024 and from the consumer on 7 August 2024.

Hearing

1. After introductory matters, and having identified the relevant documents, the Tribunal first considered the request to rely on new evidence, being a statutory declaration of David Jean-Luc Solimena dated 24 July 2024, which was submitted despite the Notice of Appeal not raising that aspect. That statutory declaration referred to events said to have occurred (1) late in May 2024, after the 10 May 2024 hearing, and (2) in August and September in 2023, prior to the hearing. In each case, the subject of the evidence was the reliability or otherwise of third-party authentication services.
2. The relevant test, set out in cl 12(1)(c) in Part 6 of Schedule 4 of the NCAT Act is that "significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with)".
3. The reliability of third-party authentication services was clearly an issue prior to the hearing. Evidence of matters occurring before the hearing could have been led, and evidence of what Mr Solimena did after the hearing relates to steps he could and should have taken prior to the hearing. As that evidence was reasonably available at the time of the first instance proceedings, the relevant test was not satisfied and leave to rely on new evidence was refused.
4. We then proceeded to hear oral submissions in the usual sequence of appellant then respondent, followed by the appellant in reply, so that each party was able to speak in support of their case and to respond to the case of the other party.
5. Following those submissions, the parties were asked to indicate their views as to what we should do if we allowed the appeal: (1) decide the application ourselves, (2) remit the application for reconsideration, based on the same evidence, or (3) remit the application for reconsideration, with leave to submit additional evidence. Both parties preferred the first of those alternatives.

Supplier's submissions

1. In support of the nine grounds of appeal, 43 pages of written submissions were lodged. They were supplemented by 50 minutes of oral submissions. By reason of the position in relation to the first of the nine grounds of appeal, it is not necessary to summarise those submissions.

Consumer's submissions

1. The consumer noted that both parties provided evidence on the issue of whether the bag purchased by him was authentic and maintained that the supplier was unable to establish the supply chain at the hearing. He said that he provided two certificates, which both suggested the bag was fake, in contrast to the certificate he received when the bag was purchased. It was also contended that the supplier had provided purchasers with refunds which involved up to $2 million.
2. Summarising his case, the consumer submitted he was entitled to assume the bag was authentic but that he had provided evidence which established, on the balance of probabilities, that the subject bag was not authentic.

Submissions in reply

1. It was submitted (1) there was sufficient evidence of the supply chain, (2) each case depends on its own facts, and (3) there was no evidence of media reports of refunds by the supplier.

Grounds of appeal

1. In the Australian Consumer Law (ACL), s 54 and s 56 both provide consumer guarantees. It is only necessary to set out the first subsection of each of those statutory provisions (emphasis added to highlight the difference): 54 Guarantee as to acceptable quality (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality. 54 Guarantee as to acceptable quality (1) If: (a) a person supplies, in trade or commerce, goods 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.
2. At the initial hearing, on 6 November 2023, the presiding member indicated that the issue requiring determination at the final hearing would be whether there had been a breach of s 56.
3. However, the 15 May 2024 decision was based on s 54. The transcript of the 10 May 2024 final hearing does not reveal any reference to s 54. As a result, neither party was able to make submissions in relation to the statutory provision upon which the challenged decision was based. In those circumstances, there was a denial of procedural fairness in that the parties, and the supplier was unable to address the case that had to be met. As Prendergast clearly indicates, a denial of procedural fairness is a question of law. It must follow that there has been an error on a question of law and the appeal must be allowed.
4. While that decision in relation to the first ground of appeal renders it unnecessary to consider the remaining eight grounds, we would make the following observations in relation to the issues of authentication, chain of custody, and burden of proof before considering what course of action to take.

Authentication

1. During the hearing of the appeal, we confirmed that the evidence on the issue of authentication relied on by the parties was: 1. an "Authenticity Certificate", upon which the consumer relied, 2. a "Statement of Non-Authenticity" submitted by the consumer, and 3. a certificate headed "Real Authentication" provided by the supplier.
2. As that evidence is opinion evidence, it is necessary to set out the applicable principles. An expert witness is permitted to give opinion evidence. However, there are matters the Tribunal needs to consider when deciding what weight to give to that evidence. The first is whether the expert has qualifications and/or experience in the relevant field.
3. Secondly, the decisions such as Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 (Makita) make it clear that, for such evidence to be accepted, the following considerations apply: (1) the expert's opinion must clearly indicate the facts upon which it is based, (2) those facts must be proved so there is a factual basis for the opinion, (3) the reasons or the process of reasoning for the opinion must be disclosed, and (4) any opinion must fall within the qualifications and experience of the expert.
4. While Makita was considering admissibility in proceedings in a court, it is well-established that the same considerations go to the weight to be given to expert evidence in proceedings in a forum where the rules of evidence to not apply, such as the Tribunal: South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16; Hancock v East Coast Timber Products Pty Limited [2011] NSWCA 11.
5. It is necessary to assess what weight should be given to each of the three documents going to the issue of authenticity of the bag which was the subject of these proceedings.
6. The Authenticity Certificate, upon which the consumer relied, was expressed to have been provided by LegitGrails but there is no indication of any author, no indication of any qualifications and/or experience of that author. The operative part of that certificate reads: Authentication Outcome: Fake Reason: Inside label
7. However, there does not appear to be any photo of that inside label and there is nothing to indicate what it is about that label that warrants that opinion. Further, there is no evidence the provider of that certificate has seen the actual bag, with the result that the opinion appears to be based on photos. In view of those matters, this certificate is of very low weight and is plainly insufficient to prove the consumer's case.
8. The Statement of Non-Authenticity, said to have been provided by Luxury Authentication Australia, also provides no indication of the author. Quoted below are the relevant portions of that statement, omitting the five photos appearing therein (emphasis original): Summary of Non-Authenticity: Based on our review of the information provided to us as outlined in this statement, we have determined this Saint Laurent Lou camera bag is not authentic. For the purposes of our determination, we have assumed that this item purports to be a Saint Laurent Lou camera bag. Appraiser's information: Our appraisers are professional brand specific luxury goods authenticators with knowledge and experience gained from years of collecting, selling and authenticating branded luxury goods. Photos illustrating evidence of concerns with authenticity: The following photos were obtained directly from the client. [five photos inserted at this point in the document] Particular concerns with authenticity: Factors demonstrating non-authenticity for this item are as follows: 1. The logo is in the wrong position on the front of the bag. 2. The engraving on the underside of the zipper head is rough and in the wrong font. 3. The stamping in the internal heat stamp is not in accordance with brand standards, particularly the gold stamp and made in stamp are in the incorrect font. 4. The stamping on the serial number leather tab is uneven and messy. 5. The stitching on the serial number leather tab is uneven and messy. 6. The print and font on the accompanying cards is incorrect, including the incorrect font. Conclusion: On our opinion, the particulars of non-authenticity noted above for this item, are evidence that the item you received is a counterfeit. Accordingly, we consider this Saint Laurent Lou camera bag to be non-authentic.
9. This statement has little probative value for the following reasons. First, there is no identification of the author(s). Secondly, there is no evidence of qualifications and/or experience, only assertions. Thirdly, the opinions were based on photos of the bag rather than examination of the bag.
10. Further, the reasons provided are deficient, such as (1) suggesting a font is incorrect but not indicating what is the correct font and (2) referring to "brand standards" but not including any indication of what those brand standards are.
11. It remains to consider the document provided by the supplier, that was headed "Real Authentication". That document is also of little weight for a variety of reasons: (1) no indication of the author, (2) no indications of either qualifications or experience, (3) no indication of the factual foundation for the expressed opinion, and (4) no indication of either the reasons or process of reasoning upon which the opinion is based.

Chain of custody

1. Another way of establishing that an item is authentic is to prove a chain of custody. The supplier relied on this.
2. Assume an item passes from a manufacturer to a wholesaler to a retailer then to a consumer. If that item bears a serial number, then confirmation that the serial number of the item purchased by the consumer matches that supplied by the manufacturer to the wholesaler then the retailer would provide some evidence of authenticity, but only some evidence because the serial number on the item provided to the consumer may be fake.
3. Evidence which only suggests that the wholesaler is an authorised reseller of the manufacturer's products is of less weight for two reasons. First, there is no evidence identifying the item that was sold to the consumer. Secondly, the wholesaler, or the retailer, may obtain and sell both authentic and fake items.
4. Where a consumer buys direct from the manufacturer's outlet, and the item contains a serial number which matches the serial number on the invoice then the chain of custody would be clear, and authenticity should not be an issue. In any other case, it may be expected there will be a question as to what weight should be given to evidence going to the chain of custody of the item in question.

Burden of proof

1. The starting point in any legal proceedings is that the party making an allegation bears the burden of proving that allegation. Usually, that burden falls on the applicant, but it may fall on the respondent, such as if it is alleged there is a failure to mitigate loss, or a defence provided by statute. In civil proceedings, the standard of proof which must be met is on the balance of probabilities, commonly summarised as more likely than not. That burden, which is a burden that never shifts throughout the proceedings, is commonly referred to as the legal burden of proof.
2. In contrast, reference to the evidential burden of proof is a reference to a burden that may shift during the proceedings. If a party provides some evidence in support of an allegation, that may be sufficient to prove that allegation unless the other party provides evidence to the contrary. The term evidential burden of proof is used to indicate the need for that evidence to the contrary.
3. The distinction may be illustrated by reference to a set of scales. In relation to these proceedings, which were commenced by the consumer, he bore the legal burden of proving that the bag he purchased was not authentic to establish a breach of a consumer guarantee in the ACL. He was required to tip the scales in his favour to meet the legal burden or proof. However, if the consumer provided evidence of sufficient weight, the supplier would have had an evidential burden to tip the scales in its favour.
4. It follows that, if the consumer to the appeal failed to provide evidence of sufficient weight, questions of the presence, absence or weight of the evidence provided by the supplier do not require consideration. Simply stated, any weakness in the evidence of the supplier does not increase the strength of the evidence upon which the consumer relied.
5. Had the consumer provided some reliable evidence, then he would have been able to submit that the supplier's evidence was insufficient to overcome the effect of that evidence.

Redetermination

1. The effect of s 81(1)(d) and s 81(2) of the NCAT Act is that we can redetermine the application rather than subject the parties to the time and cost of a rehearing. We are satisfied that we should do so in this case since (1) we have the evidence that was before the Tribunal at first instance and (2) both parties expressed a preference for that alternative.
2. In an application dated 16 October 2023, the consumer sought $1,368.94 in relation to a "Saint Laurent Lou Camera Bag in Quilted Leather Bronze Hardware" purchased from the supplier on 26 October 2020. The primary issue was whether that bag was authentic, or fake. Evidence provided in support of that issue was an "Authenticity Certificate" obtained on 13 August 2023, and a "Statement of Non-Authenticity" dated 11 November 2023. For the reasons set out above, that evidence is considered insufficient to satisfy the (legal) burden of proof which the consumer bears. It necessarily follows that the application should be dismissed.

Costs

1. On 3 July 2024 a Principal Member granted the supplier leave to be legally represented on the condition that no legal costs may be recovered.
2. Accordingly, the appropriate order is that each party is to bear their own costs of the appeal.

Orders

1. The orders made on 15 May 2024 were (1) that the supplier pay the consumer $1,438.94, and (2) that the consumer return the bag to the supplier. Compliance with those orders means that orders should now be made to reverse their effect.
2. Accordingly, the following orders are made: 1. Appeal allowed. 2. Each party is to bear their own costs of the appeal. 3. The orders made on 15 May 2024 are set aside and the following orders are substituted. 4. The respondent is to pay the appellant $1,438.94 immediately. 5. Within seven days of that payment being made, the appellant is to return the bag to the respondent (for the avoidance of doubt, at the appellant's cost).

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: 03 October 2024