In November 2020 the appellant (Seller) sold a 2006 Nissan Patrol to the respondent (Buyer) for a price of $23,000. The Buyer paid $17,301.00 at the time when he took delivery but paid nothing further toward the purchase price.
In April 2021 the Buyer brought proceedings in the Tribunal to reverse the sale and for a refund of the $23,000 that he paid. The Tribunal upheld his claim and the Seller has appealed from that decision.
As explained below, because inadequate reasons were provided for that decision we have decided to allow the appeal and order that the proceedings be re determined by a differently constituted Tribunal.
[2]
The nature of the claim and the contest before the Tribunal at first instance
The Buyer's application to the Tribunal set out the following reasons for the order sought:
2006 GU patrol was brought from OC… On closer inspection the car has indication of a cracked head within the first 3 weeks. The matter was taken up with Larry the owner of OC Automotive where he agreed to have it booked in at local mechanic S and P Automotive in Port Macquarie on further inspection the compliance plates on the vehicle have been tampered with this being a suspicious of rebirthing or dodgy work. The head and piston with crack and no compression in 1 cylinder due to water being in the oil this is not a common issue. Mechanic Patrick has informed me that chemical weld has been used in this engine to prolong the life of a cracked head for resale. This being a chemical not recommended for use in any motor. This car being a $25,000 car from a car yard I'd expect to have a car that was driveable and fit for use. The repairs have been quoted for over $15,000 this amount being a high percentage of the car's value. The car sits at S & P Automotive with the following problems not to be driven.
The written sale contract for the vehicle was dated 19 November 2020 and it was uncontroversial that the Buyer had taken delivery on 25 November 2020 at the seller's premises in Lansvale. Because the vehicle was a second-hand vehicle that had been driven for more than 160,000 km and was more than 10 years old the vehicle was sold without the benefit of a dealer guarantee under the Motor Dealers and Repairers Act 2013.
However, relevant statutory guarantees under the Australian Consumer Law (NSW) (ACL) were applicable, including the guarantee in s 54, which, relevantly, provides:
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.
(2) Goods are of acceptable quality if they are as:
(a) fit for all the purposes for which goods of that kind are commonly supplied; and
(b) acceptable in appearance and finish; and
(c) free from defects; and
(d) safe; and
(e) durable;
as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).
(3) The matters for the purposes of subsection (2) are:
(a) the nature of the goods; and
(b) the price of the goods (if relevant); and
(c) any statements made about the goods on any packaging or label on the goods; and
(d) any representation made about the goods by the supplier or manufacturer of the goods; and
(e) any other relevant circumstances relating to the supply of the goods.
(4) If:
(a) goods supplied to a consumer are not of acceptable quality; and
(b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply;
the goods are taken to be of acceptable quality.
(5) If:
(a) goods are displayed for sale or hire; and
(b) the goods would not be of acceptable quality if they were supplied to a consumer;
the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent.
(6) Goods do not fail to be of acceptable quality if:
(a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and
(b) they are damaged by abnormal use.
(7) Goods do not fail to be of acceptable quality if:
(a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and
(b) the examination ought reasonably to have revealed that the goods were not of acceptable quality.
Relevant provisions in the ACL concerning the cause of action and remedy sought by the Buyer appeared to be as follows:
259 Action against suppliers of goods
(1) A consumer may take action under this section if:
(a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and
(b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3‑2 (other than sections 58 and 59(1)) is not complied with.
…
(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or
(b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.
260 When a failure to comply with a guarantee is a major failure
(1) A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if:
(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
…
(c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
…
262 When consumers are not entitled to reject goods
(1) A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if:
(a) the rejection period for the goods has ended; or
…
(c) the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply;
…
(2) The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to:
(a) the type of goods; and
(b) the use to which a consumer is likely to put them; and
(c) the length of time for which it is reasonable for them to be used; and
(d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.
The central document presented by the Buyer to the Tribunal to establish his case of a sufficient defect in the vehicle at the time of supply was a copy of a tax invoice from S & P Complete Automotive in Port Macquarie, dated 15 January 2021.
This invoice was for the sum of $100 for what was said to be 1 hour of work and, relevantly, stated:
Inspect customer concerns of possible blown head gasket.
*Has had blown head gasket/cracked head someone has tried to cover up with Chemi weld. Vehicle has been driven overheating & now has broken piston-Zero compression on 1 Cylinder.
*Air-conditioning lines wrong for vehicle-not connected.
*Drivers door hinge damaged & cropped.
*Compliance plates have been tampered with.
This tax invoice referred to a mileage for the vehicle of 190,621 km. The odometer reading on the sale contract was 186,880 km and on the Form 5 Motor dealer's notice, dated 25 November 2020, it was 187,592 km. It was uncontroversial that the Buyer had driven the vehicle from the Seller's premises back to his home in Port Macquarie That was a distance of some 390 km on the Pacific Highway route or some 500 km on another route.
Copies of the sale contract and the Form 5 notice were presented to the Tribunal, as also were copies of an e-Safety Check Report based on an inspection on 24 November 2020 and a poor copy of an invoice from Tans Auto Repairs for $8,587.25 said by the Buyer to have been found by him in the vehicle. The Form 5 notice included a statement that the vehicle had had major modifications of an unspecified nature carried out before the sale. The e-Safety Check Report had come at a cost of $42.00 and stated that the vehicle had passed a NSW Safety Check.
At the hearing in the Tribunal at first instance, the Buyer told the Tribunal about some problems he had experienced with the vehicle on the drive back to Port Macquarie (these did not appear to related to the problems referred to in the S & P Complete Automotive invoice), that it was a mechanic at S & P Automotive that had inspected the vehicle and described his findings in the invoice and that the vehicle was not able to be driven.
On the material before the Tribunal, there were issues to be resolved as to, at least:
1. What were the defects with the vehicle at the time of supply to the Buyer, including as to the significance of the Chemi weld application, when this was applied, the circumstances concerning the vehicle being driven overheating and the significance of that event, the significance of the other matters referred to in the S & P Automotive invoice, including the nature of the alleged tampering with compliance plates, the problems experienced by the Buyer on the drive back to Port Macquarie and the significance of the extent to which the vehicle had been driven by the Buyer before the inspection by S & P Complete Automotive on 15 January 2021.
2. The outcome of the test set out in s 54 of the ACL concerning what a reasonable consumer would have concluded about acceptable quality, in the light of the matters referred to in (1), and the outcome of the tests set out in s 260 of the ACL (concerning a "major failure") and in s262 (concerning the "rejection period") in these circumstances.
Having said that, we think it is clear that the information about the vehicle contained in the S & P Complete Automotive invoice was, at least, relevant information to be considered in determining the claim even though it was prepared quite some time after the sale: see LSH Auto (Sydney) Pty Ltd v Sherman (No 2) [2021] NSWCATAP 272 referring at [36] to the decision in Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [27]:
The hypothetical question whether the reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply. However, the reference in s 54(2) to hidden defects has the consequence that for the purposes of determining that question, the reasonable consumer may be acquainted with information known at the time of trial: cf, Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182 at [70] (Branson J, Jacobson J agreeing)…
[3]
The hearing and decision of the Tribunal
In a short hearing before the Tribunal that went for about 19 minutes (the matter had been set down for a hearing of one and half hours) there was no exploration with the parties about the significance of the Chemi weld application, the reference in the S & P Complete Automotive invoice to the other items, the extent to which the vehicle had been driven since purchase and the nature of the repairs said to be required to the vehicle.
The written reasons of the Tribunal, which followed orders made, were:
1. The subject vehicle did not have the benefit of a statutory dealers warranty as is set under the provisions of the Motor Dealers and Repairers Act 2013.
2. However, the evidence clearly establishes that there were significant and fundamental defects within the vehicle at the time of sale.
3. The relevant defects arose and were discovered shortly after purchase by the applicant.
4. The subject defects included a cracked head/blown head gasket, a broken piston, resultant absence of compression, unconnected and incorrect-conditioning lines, a damaged drivers door and altered compliance plates.
5. The above defects are of such nature and effect as to constitute a breach of section 54 of the Australian Consumer Law which imposes a statutory guarantee that a vehicle sold in the present circumstances must be of acceptable quality.
6. The subject vehicle suffered a major mechanical failure shortly after the time of purchase by the applicant, which the evidence satisfactorily establishes was of such significance that there has also been a total failure of contractual consideration in addition to the vehicle not being of acceptable quality is defined by the Australian Consumer Law. The vehicle as supplied to the applicant is seriously defective and is not fit for its intended or stated purpose as a vehicle able to be registered and safely driven upon public roads.
7. Pursuant to the above findings, there should in the circumstances be a refund of the total amount of payments made to date by the applicant to the respondent for the vehicle; further to this, any amount claimed by the respondent is still payable by the applicant for the balance of the purchase price or accumulated interest or other charges should be waived and declared as not payable.
8. Upon receipt of payment by the respondent in accordance with the Orders now made, the applicant should have the subject vehicle available for collection and removal by the respondent or its nominated agent.
[4]
The nature of the appeal
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)
[5]
Grounds of appeal
From the Notice of Appeal and the written submissions of the Seller we have identified the following grounds of appeal which raised errors of law:
1. The reasons for decision were inadequate;
2. There was no evidence to support conclusions that the evidence established that there were significant fundamental defects within the vehicle at the time of sale and that the vehicle was sold in a seriously defective state.
Other grounds were put forward in support of an application for leave to appeal but in view of the decision we have arrived at concerning inadequacy of reasons it is unnecessary for us to deal with these.
[6]
Consideration-inadequate reasons
We must assess whether the reasons meet the minimum acceptable standard rather than the optimal level of detail: per Bell P in NSW Land and Housing Corporation v Orr (2019) 100 NSWLR 578 per Bell P at [66].
The reasons need not be elaborate, the basis for the decision should be made apparent, and the features required for reasons (where requested) set out in s 62 (3) of the NCAT Act provide guidance as to the detail to be supplied in the present case: see at [71] and [74] per Bell P in Orr.
The features concerning written reasons set out in s 62 (3) of the NCAT Act are:
(3) A written statement of reasons for the purposes of this section must set out the following -
(a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based,
(b) the Tribunal's understanding of the applicable law,
(c) the reasoning processes that lead the Tribunal to the conclusions it made.
We have also had regard to the matters that were set out in [77] of the judgement of Bell P in Orr, namely:
These principles include the following:
(i) "Decision-makers commonly express their reasons sequentially; but that does not mean that they decide each factual issue in isolation from the others. Ordinarily they review the whole of the evidence, and consider all issues of fact, before they write anything. Expression of conclusions in a certain sequence does not indicate a failure to consider the evidence as a whole": Re Minister for Immigration and Multicultural Affairs, Re; Ex parte Applicant S20/2002; Appellant S106/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 30; 77 ALJR 1165 per Gleeson CJ at [14] (Ex parte Applicant);
(ii) the court should not read passages from the reasons for decision in isolation from others to which they may be related: Re Maria Politis v Commissioner of Taxation [1988] FCA 739 at [14]; 20 ATR 108 at 111;
(iii) the reasons must be read fairly and as a whole: Ex parte Applicant at [147] per Kirby J; Wu Shan Liang at 291; Bisley at 251;
(iv) the reasons recorded ought not to be inspected with a fine tooth-comb attuned to identifying error: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287; [1993] FCA 456 (Pozzolanic) at 287; Wu Shan Liang at 272, 291;
(v) there should be a degree of tolerance for looseness in the language of the tribunal, unhappy phrasing of the tribunal's thoughts or verbal slips: Pozzolanic at 287, Wu Shu Liang at 272 and 291.
In our opinion, bearing in mind the issues that arose for consideration to which we have referred, the reasons for decision did not meet the minimum acceptable standard because they did not set out the reasoning process, including the material evidence, for the conclusions that:
1. The defects referred to existed at the time of sale;
2. The defects were of such a nature and effect as to constitute a breach of s 54 of the ACL;
3. The subject vehicle suffered a major mechanical failure shortly after the time of purchase and as to the significance of that failure;
4. The vehicle as supplied was seriously defective and not fit for its intended purpose;
5. Pursuant to the findings there should in the circumstances be a refund of the amount paid.
In view of this conclusion, it is unnecessary for us to deal with the other error of law advanced by the Seller.
We have made Order (4) below because it became clear at the hearing of the appeal that during the conduct of the proceedings that were determined at first instance (at which both parties were unrepresented) the parties had a poor understanding of the issues that the legal elements of the claim gave rise to
[7]
Orders
For the above reasons, we make the following orders:
1. The appeal is allowed.
2. The orders made by the Tribunal on 14 October 2021 are set aside.
3. The proceedings are remitted to a differently constituted Tribunal for re-determination.
4. For the purpose of the re-determination, the Tribunal is to make directions which give each party an opportunity to serve such material and submissions in advance of a new hearing as they may wish to provide in the light of our reasons for decision.
[8]
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: 04 February 2022