Paul Madsen v Agrison Pty Ltd [2014] NSWCATCD 79 | Case summary

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Paul Madsen v Agrison Pty Ltd [2014] NSWCATCD 79 | Case summary | Zoe

SUMMARY

On 3 April 2013 the applicant purchased a second-hand tractor and a new slasher from the respondent as a package. Both items were purchases sight unseen on the description given by the respondent. The tractor was described as being 'as new' and the slasher was new. These were delivered on 5 April 2013, but the spare parts for the slasher did not arrive until July 2013.
The applicant claims that the tractor and slasher are not as described to him by the respondent's sales representative, and are so defective that they cannot be used safely or for the intended purpose on his farm.
The respondent claims that the tractor is as described, and is operational, and that the slasher is of reasonable design and has been damaged during use by the applicant.
The applicant's claims are supported by a report from his mechanic; the respondent's by a report from an engineer. The applicant has also provided a significant amount of photographic evidence to substantiate his claims.
The applicant seeks a full refund of the purchase price of the tractor. CHRONOLOGY
On 3 April 2013, the applicant purchased a tractor from the respondent for $24,699.00. The tractor in question was a second-hand Agrison 50HP G3 Series tractor, 2012 four-wheel-drive model. The deal offered by the respondent included a complementary 6-foot slasher, a pair of spare slasher blades and a 'clean and service'. The applicant also paid for 4 years parts warranty and freight. These details are recorded on the invoice, number 7931, dated 3 April 2013.
The sales consultant the applicant dealt with was Mr Peter McFarland, now Sales Manager; they were in contact from March to April 2013 regarding this purchase.
On 4 April 2013, the respondent lodged the warranty registration form. This form records the tractor as being a 2013 model, and as having being operated for 14 hours at delivery. The sales invoice and a statement by the respondent's Sales Manager indicate the correct model year is 2012.
At 10:30 on the morning of 5 April 2013, the tractor and slasher were delivered to the applicant. The applicant noted the following, about which he rang the respondent: (a)The front guard of the slasher made contact with the tractor's rear tyres whenever the slasher was lifted. (b)Hydraulic oil was visible on the delivery truck underneath where the tractor had been. By 5pm that afternoon, oil was also visible on the floor of the shed where the applicant stored the tractor. (c)No spare slasher blades accompanied the delivery.
On 8 April 2013, the applicant emailed the respondent a list of defects with the tractor which were visually apparent to the applicant including: (a) Persistent leakage of hydraulic oil; (b) Front wheel toe misaligned by 35mm; (c) Front bar of tractor very twisted; (d) Crack in fibreglass roof; (e) Roof has been silicone around the top quite poorly; (f) Entire engine has received a poor re-spray; (g) Slasher hits rear tyres when raised; (h)Wrong size pins on slasher three point linkage (two different categories); (i) Overall slasher quality very poor; (j) Minor crack in right hand side rear tail light; (k)Machine shows 15 hours use, not the 12 that the applicant claims was claimed pre-sale;
In this email the applicant also claims that "I was told by the sales person that the machine was like new": "Traded because it was too small and owner purchased a larger machine. I was told that the machine would be clean and serviced... I don't believe that I was fully informed on the condition of this tractor and I clearly don't think that it was "like new" as stated by Peter [the sales representative]."
On 9 April 2013, the applicant phoned the respondent and spoke to Alan. The first time, at 10:30am, Alan was busy and said he would call the applicant back. At 1:30pm, the applicant called again but Alan wished only to speak to the applicant's mechanic, not to the applicant.
On 23 April 2013, the applicant's mechanic, Cory Tatarko of Mobile Mechanic Plus Pty Ltd, conducted a preliminary inspection of the tractor. Mr Tatarko rang the respondent and discussed servicing the tractor with Alan. The respondent agreed to send the necessary filters and to pay Mr Tatarko for his services.
On 23 April 2013, Mr Tatarko informed the applicant of his conversation with the respondent, and advised him to operate the tractor in order to identify any further issues. The applicant did so but no further issues were apparent.
On 27 April 2013, Mr Tatarko conducted a detailed inspected of the applicant's tractor and advised the applicant not to operate it further, and to ask for a refund as repairs were not practical.
On 29 April 2013, the applicant emailed the respondent, provided a list of defects, claimed that the condition of the tractor was misrepresented to him during the sale process, and requested a refund.
On 30 April 2013, Isobel Yokus, General Manager of the respondent, responded to the applicant's email, and requested details of the applicant's claims. The applicant responded that evening.
On 9 May 2013, the applicant rang the respondent but none of the employees was available to talk to him.
On 13 May 2013, after another abortive attempt to contact the respondent, the applicant lodged a complaint with the NSW Department of Fair Trading.
On 28 May 2014, the applicant again attempted to call the respondent, unsuccessfully.
On 29 May 2013, Ms Yokus called the applicant. She claimed to have been contacted by the Department of Spare Trading, proposed to look into the applicant's claims, and contact the applicant by 31 May 2013.
On 31 May 2013, Ms Yokus emailed the applicant to say she would contact him on Monday, 3 June 2014.
On 3 May 2013, at 4:20pm, the applicant rang the respondent and spoke to Ms Yokus. The respondent offered to repair the tractor, or if that was not possible to replace it with another second-hand tractor. The applicant rejected this offer and requested a refund; this was denied.
On 5 May 2013, the applicant lodged a complaint with the Consumer, Trader and Tenancy Tribunal, now the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal ('the Tribunal').
On 23 June 2013, Mr Tatarko provided the applicant with an inspection report. This report itemised defects to the slasher and to the tractor, at 28 hours of operation. The report states that: "I have found many faults and design flaws, some dangerous and others due to poor quality. The tractor has so many problems that the repairs would take a lot of time and money...not to mention "down time" of not having an operational tractor on your farm."
In July 2013 the respondent hired an independent engineer to examine the applicant's tractor. On 27 July 2013, Mr Jeremy Banks, Chartered professional engineer employed by Advance Control Equipment Pty Ltd, inspected the applicant's tractor on the applicant's property. The tractor was at 28 hours of operation. The Tribunal received his report, which responded to the itemised defects identified by the applicant and by Mr Tatarko, on 15 August 2013. The report essentially concludes that the tractor is operational but requires some repairs for cosmetic reasons.
Approximately 5 months after receiving the tractor, in August-September 2013, the applicant received a pair of spare slasher blades from the respondent.
On 12 December 2013, Mr Peter McFarland filed a statement that "I did not at any stage represent to Mr Madsen that the tractor was new, or as new." APPLICATION
On 3 July 2013 the matter came before the former Consumer, Trader and Tenancy Tribunal in Queanbeyan. Both parties were present by telephone, the respondent in the person of Ms Isobel Yokus, General Manager. The following orders were made: (a) The hearing was adjourned to a date to be fixed by the Registrar; (b)The Respondent is to arrange an engineer's report on the tractor to be filed and served by 3 August 2013; (c) The Applicant is to facilitate access to the tractor on 48hrs notice; (d)The Applicant was informed of his duty to mitigate his losses including through the hire of a replacement tractor. (e)On 21 August 2013, the matter came before the Tribunal for a directions hearing. Both parties attended by telephone. The following orders were made: (f) The hearing was adjourned to a date to be fixed by the Registrar; (g) At the next directions hearing, the applicant is to advise whether he intended to obtain and serve an engineer's report addressing the issues raised in the respondent's engineer's report. (h)It was foreshadowed to the parties that if the engineer's report is to be forthcoming then the matter would be listed for hearing. If no engineer's report is to be forthcoming then the matter is one suitable to be completed on the papers. The parties will need to address this issue at the next directions hearing.
The matter came before the Tribunal on 17 September 2013 for another hearing. Only the applicant was physically present; the respondent did not attend. By consent, the hearing was adjourned to a date to be fixed by the Registrar.
On 3 October 2013, the directions hearing set for 23 October 2013, at Queanbeyan, was adjourned due to unavailability of the Tribunal Member.
On 4 December 2013, the matter came before the Tribunal in Queanbeyan. The applicant was present in person; the respondent was present in the person of Ms Yokus, who appeared by telephone. The following orders were made: (a)The respondent is to file and serve final submissions by 20 December 2013; (b)Once the final submissions are received the Tribunal will proceed to a decision without further hearing. 33.On 19 February 2014, the Tribunal reserved its decision. JURISDICTION
The NCAT is a statutory body, established on 1 January 2014 by the Civil and Administrative Tribunal Act 2013 (NSW) ('NCAT Act'). The same legislation abolished the former Consumer Trader and Tenancy Tribunal (CTTT) under which the present proceedings were commenced. Schedule 1 of the NCAT Act made provision for part heard matters before the CTTT to continue before NCAT where NCAT is to exercise the jurisdiction and powers of the former CTTT. Part heard proceedings before the CTTT are to be heard in the Consumer and Commercial Division of NCAT.
The former CTTT's jurisdiction included matters arising under the Consumer Claims Act 1998 (NSW) which in turned invoked causes of action under the Australian Consumer Law (NSW), and the Motor Dealers Act 1974 (NSW) Consumer Claims Act 1998 (NSW)(CCA)
Section 7(1) CCA confers jurisdiction upon the Tribunal to hear and determine consumer claims under the Act, subject to section 7(2): The Tribunal has jurisdiction to hear and determine a consumer claim only if: (a)the goods or services to which the claim relates were supplied in New South Wales; or (b)a contract or other agreement to which the claim relates contemplated that the goods or services be supplied in New South Wales; or (c) a contract or other agreement to which the claim relates was made in New South Wales.
In this case, although the respondent is based in Victoria, the goods were supplied to the applicant's property in New South Wales. Section 7(2) is therefore not an impediment to the Tribunal's jurisdiction.
Section 3A(1) defines a 'consumer claim' to include claims arising from the supply of goods or services to the consumer, whether under a contract or not, including: (a) a claim by a consumer for the payment of a specified sum of money, or (b) a claim by a consumer for the supply of specified services, or (c) a claim by a consumer for relief from payment of a specified sum of money, or (d) a claim by a consumer for the delivery, return or replacement of specified goods or goods of a specified description, or (e) a claim by a consumer for a combination of two or more of the remedies referred to in paragraphs (a)-(d).
Section 3 of the CCA defines a 'consumer' to include a natural person to whom a supplier has supplied or agreed to supply goods or services, whether under a contract or not.
Section 3 also defines 'supply', as including the supply of goods by way of contract for sale.
This matter falls within the Tribunal's jurisdiction under the CCA.
Any determination of liability by the Tribunal under the CCA must be grounded in a cause of action known to law, after which the Tribunal has flexibility to mould its orders according to the fairness and equity of the occasion.1 The applicant's present action is founded in the common law of contract that is a sufficient basis for the invocation of the CCA; but it is also found in causes of action under the Australian Consumer Law and the Motor Dealers Act 1974 i.e. the CCA may provide a remedy for actions arising under these laws. Australian Consumer Law (ACL)
In Australia statutory consumer protection provisions are found in the ACL, which was incorporated into the law of New South Wales by section 28(1) of the Fair Trading Act 1987 (NSW) ('FTA').
The ACL consists of Schedule 2 of the Competition and Consumer Act 2010 (Cth), and the regulations under section 139G of that Act (FTA section 27).
Under section 32 of the FTA, the ACL applies to and in relation to: (a) persons carrying on business within this jurisdiction, or (b) bodies corporate incorporated or registered under the law of this jurisdiction, or (c) persons ordinarily resident in this jurisdiction, or (d) persons otherwise connected with this jurisdiction.
In this case, the applicant is a resident of NSW, and the respondent can be said to be connected with NSW by virtue of the contract for sale and delivery of the tractor to the applicant .
Under section 3(1) of the ACL, a person is taken to have acquired goods as a consumer if the amount paid for the goods did not exceed $40,000.00. 'Goods' includes vehicles and second-hand goods (section 2).
The applicant's purchase of a second-hand tractor for $24,699.00 meets this description; the applicant is therefore a consumer who may enforce their rights under the ACL.
The ACL contains general and specific protections for consumers. As discussed below, the applicant's claim primarily falls under the ACL, although the following legislation is also relevant.
The ACL establishes statutory protections for consumers. Part 2 of the ACL contains general protections for consumers. Part 3.1 contains specific protections for consumers. Part 3.2 deals with implied guarantees relating to the supply of goods and services to consumers. Part 3.3 deals with the safety of consumer goods. 51.The following issues arise from the facts and the relevant ACL provisions: (a) Misleading or Deceptive Conduct (Part 2 section 18) (b) Unconscionable conduct (Part 2 section 21) (c) False or misleading representation (Part 3.1 section 29) (d) Goods guaranteed to be of acceptable quality (Part 3.2 section 54) (e)Goods guaranteed to be fit for a disclosed purpose (Part 3.2 section 55) (f)Goods guaranteed to correspond with their description (Part 3.2 section 56)
These issues will be dealt with in turn. The issues relating to the guarantees in Part 3.2 will be discussed first, as the other issues turn on the question of whether the tractor is of acceptable quality, and if not, whether this was known to the respondent. Issue 1. Goods Guaranteed to be of Acceptable Quality (Part 3.2 section 54)
Section 54 guarantees that goods supplied in trade and commerce, other than by auction, will be of acceptable quality. Under section 54(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).
Relevant matters include the nature and price of the goods, any statements made about the goods on any packaging, any representation made about the goods by the supplier or manufacturer, and any other relevant circumstance (section 54(3)).
If goods are not acceptable under section 54(2), but the reasons for this were specifically drawn to the consumer's attention, the goods are still taken to be of acceptable quality (section 54(4)).
Similarly, goods do not fail to be of acceptable quality if the consumer causes the defects in question, or fails to prevent these arising (section 54(6)) or if the consumer inspected the goods prior to purchase and such inspection should have revealed the faults (section 54(7)). Fit for Purpose
It is debateable whether the tractor is fit for the purpose of operating the applicant's farm. In the absence of submissions as to what specific activities the applicant would use it for, it will be assumed to have been necessary for general usage and property maintenance, such as keeping paddocks in working order, for instance by slashing. This is inferred from the facts that the applicant has a rural property, and chose a deal which included a slasher as well as a tractor in the purchase price, and the fact the applicant has attempted to use the slasher, and claims to have suffered economic losses due to the inoperability of the tractor and slasher.
The applicant claims that the tractor is not fit for this purpose due to significant structural defects of the tractor, and the nature of the slasher. He has submitted a mechanic's report supporting his claims in regard to both machines. Of particular note is the report's statement that the tractor has 'numerous faults, some dangerous and others due to poor quality.'2
The respondent, relying upon an engineer's report by Mr Banks, claims that the tractor is operational, but needs some repairs to improve its aesthetic condition.3
Whether the tractor is fit for use as a farm machine depends in part upon whether the defects alleged by the applicant are proven. This is discussed below, in the 'free from defects' section where the Tribunal finds that the tractor was not 'fit for purpose'.
The applicant also asserts that the slasher is of poor design. His mechanic's report states that its chassis is poorly designed: Steel gauge is thin to the point of being dangerous. Gearbox is mounted on thin metal. At inspection the gearbox had twisted the sheet metal causing the blades to hit the chassis of the slasher.' The report also noted that the linkage pins were of the wrong size, and the slasher blades were welded to the blade holder, which means they will have to be grinded off in order to replace them.
The applicant also claims that he had to remove the front guard of the slasher in order to be able to use it with the tractor.
The respondent denies that the slasher is poorly designed, and Mr Banks suggests that damage to the slasher blades most probably occurred due to it being driven over rocks on the applicant's property.
These facts cumulatively indicate that the slasher provided to the applicant is not compatible with the applicant's tractor, and is only fit for very light use, such as mowing lawns. It is not fit for use on regular, un-groomed paddocks. Acceptable Appearance
The applicant is patently dissatisfied with the appearance of the tractor. In particular, he noted the obvious loop sided chassis, that there is a crack in right rear mud guard along the bend, with filler evident, sundry dents, and an overall respray which is poorly done. He also describes an excessive amount of silicon in the cab, adjoining the roof.
Mr Banks acknowledges that repairs are needed in order for the tractor to be aesthetically satisfactory, but dismisses the applicant's specific claims in regard to the mudguard and respray. He considers that the repairs to the outer profile of the guard and the mudguard have been 'performed to a satisfactory standard.'4 In regards to the respray, Mr Banks states that 'in general the paint is smooth and free from ... foreign bodies and runs. I would classify the paint work as good.'5 He does concede, however, that the silicon is 'unique to Mr Madsen's tractor.'
The respondent's main response has been that the vehicle was considered to be satisfactory in appearance prior to delivery, and as this is a second-hand agricultural vehicle, some aesthetic defects are to be expected.
However, what the respondent has not addressed is the obviously loop sided chassis, why the paintwork was needed on such a young vehicle, and why the silicon was necessary. The appearance is not satisfactory. Free from Defects (Tractor)
The applicant has provided itemised lists of the failings of the tractor. His mechanic's report itemises defects including: (a) Tractor requires a service; (b)Hydraulic leak at hydraulic pump, and from the rear of tractor around valve mechanism; (c) Tractor front framework for front bucket twisted/buckled badly; (d) Bucket controls decal incorrect; (e) Clutch pedal when at operational temperature does not return; (f) Exterior door handle inoperative; (g) Moulded roof has large amount of cracking; (h)Excessive amount of sealant sealing roof moulding to cab, possibly due to poor fitting roof; (i) Crack in right rear guard along bend; (j) Poor respray.6
Correspondence between the parties on 8 April 2013 reveals that the rear right tail light is cracked, and on 30 April 2013 the applicant states that there are shards of glass under the floor mat, the air conditioner leaks water onto the driver, one of the roof vents is missing its cover, the right-hand mirror is loose, the right door latch vibrates and fell off, and the rear right mudguard is bent.
The engineer's report submitted by the respondent counters each of these claims; Mr Banks asserts that the tractor is operational, but needs some repairs to improve its aesthetic condition.7
The Tribunal will consider each of these defects briefly. The cracked guard and poor paintwork have already been considered above.
The service issue, defective clutch pedal, inoperative door handle, and incorrect control labels arguably amount to a safety defects. These will be addressed below, in the relevant section.
In regards to the hydraulic leak, the applicant claims that there was oil leakage visible underneath and upon the tractor on delivery, and that that leakage has continued since then, defying attempts to rectify it. This suggests that the respondent overfilled the oil to the point of damaging the seals of the hydraulic system, or there is a defective breather.
In response, the respondent asserts that it is standard practice to overfill the vehicle with hydraulic fluid to allow for the vehicle to be run in, and that the function of the breather is to allow small amounts of oil to be released from the hydraulic system.8
Mr Bank's report is inconclusive as to the source of the problem, as he did not observe significant leakage as claimed by the applicant.9 However, in relation to the breather, he states that there has been discharge of oil (as is the function of the device), and that attaching a short hose to raise the level of the breather from the hydraulic fluid tank will rectify excessive discharge.
The Tribunal observes that 'running in' is typically only necessary for new vehicles, not second-hand ones such as this, and that even if standard practice for second-hand tractors, any leakage should be temporary and not continuous. It could hardly be standard practice to do overfill the hydraulic oil to the point of damaging the tractor so that repairs are necessary.
The roof of the cab has visible cracks and sealant.10 Mr Banks considers that although there are craze marks on the gel coat surface of the roof, the surfaces and shapes of the moulded roof are satisfactory, and adds that the cab is waterproof.11 However, Mr Banks offers no proof of how this was tested, as pointed out by the applicant who was present during his inspection and did not observe Mr Banks test the water-resistance of the roof.
Mr Banks notes that he found one piece of glass inside the cab.12
In response to the applicant's claim that excessive amounts of sealant have been used to seal the roof to the cab, Mr Banks observes that 'the sealant is unique to Mr Madsen's tractor and is not required.'13 He does not ask why, if such sealant is unnecessary, it has been used on Mr Madsen's tractor.
The twisted frame of the tractor is clearly depicted by the photographic evidence supplied to the Tribunal. When viewed from the front, the tractor's front framework supporting the front-end loader, the battery mount and the bonnet seal is higher on the left than on the right. Additionally, the cab is misaligned over the body of the tractor, tilting to the left, due to the mounting brackets.
Mr Banks acknowledges these defects, and their 'unsightly' nature, but states that 'the twist does not affect the function of the frame or the front-end loader braces' which it supports, and that 'the cab function, safety and mounting strength are not affected by the [cab] bracket'.14 He also observes that the engine, suspension, bonnet, frontend loader frame and gearbox are all in correct alignment.
However, the mere fact that these features need rectification suggests that the tractor was sold in a defective condition. Moreover, Mr Banks provides no substantiation for his claim that these are purely cosmetic issues, nor does he address why the cab is misaligned and the frame twisted.
Pursuing this line of analysis, the Tribunal notes the following defects: the bent mudguard, the twisted framework, the buckled cab support bracket, the cracked roof, excessive silicon joining the roof to the cab and glass on the interior of the cab. Collectively, these faults suggest that the tractor has been involved in an accident involving an impact to the cabin or body of the tractor.
In sum, the tractor seems to the Tribunal to carry numerous defects of a serious character. In particular, the twisted frame and misaligned cab are structural flaws which place undue strain upon connected mechanical apparatus', liable to cause future failures. The view of the appellant's mechanic, that the tractor is not free of defect, is mechanically unsound and should not be used, is therefore accepted. Free from Defects (Slasher)
The applicant's mechanic, Mr Tatarko, asserts that the slasher suffers from the following defects: (a)Poorly designed chassis. Steel gauge thin to the point of being dangerous. Gearbox is mounted to thin sheet metal. At inspection, the gearbox had twisted the sheet metal causing the blades to his the chassis of the slasher; (b) 3-point linkage pins wrong size for tractor; (c)Slasher blade bolts welded to slasher blade holder; will have to be grinded off to replace blades.15
Additionally, the applicant states that the front guard of the slasher must be removed in order to operate it as it impacts against the tractor tyres when raised, and that the spare slasher blades not only arrived 5 months late, but were bent.
Mr Banks' report concurs with the applicant's observations regarding the front guard of the slasher, and does not consider the matter further. The fact that the slasher cannot be raised properly when fully assembled and connected to the tractor indicates that it is not compatible with the tractor sold to the applicant. This in itself is not a defect.
The bent slasher blades arrived after Mr Banks conducted his inspection and so have not been commented on in his report. However, the Tribunal notes the importance of having a matching pair of blades, and that if one or both is bent, this is a defect which will prevent operation of the slasher.
Mr Banks agrees that the welding of the slasher blade bolts means they must be ground off if it is necessary to replace the blades. This, in Mr Banks' opinion, evidences the manufacturer's confidence of the blades' durability.16 Given the frequency of maintenance and heavy usage involved with agricultural equipment, this seems an unusually dismissive attitude to take. However, in the absence of evidence that this is not standard practice of the manufacturer, and is unique to the applicant's slasher, this feature will not be considered further.
The fact that the pins are the wrong size is admitted in Mr Banks' report. The report states that the tractor is capable of carrying a higher category pin than that used to attach the slasher, and that 'although not elegant, this arrangement presents no risk of failure and is functional.'17 Given that the slasher was sold new to the applicant, and was not second-hand like the tractor, this evidences careless sales preparation by the respondent, but is not a defect.
The respondent contends that the slasher is not poorly designed. Mr Banks asserts that the top sheet is 2.5mm thick, which is reasonable for its intended purpose as a guard over the blades. He describes the gearbox as being mounted upon a folded section that makes up a box, and, as the mount is bent on the lateral plane, describes four scenarios which could have caused the fault. Of these, two are claimed to be possible. These involve incorrect usage of the slasher, such as driving it over a rock such as Mr Banks observed scattered across the applicant's paddocks, which has bent the slasher blades and caused them to deflect upwards, damaging the top sheet and gearbox mount.18
In other words, Mr Banks considers slasher to be not defective but damaged, and the applicant to be responsible for the damage. However, this conclusion is premised on measurements of the slasher blades which are demonstrably incorrect. This was physically proven to the Tribunal by the applicant on 17 September 2013, and is evident from applicant's the photographic submissions illustrating the measurements.19 There is no unfairness to the respondent as they had the opportunity to attend the hearing, and have been supplied with hard copies of these submissions. Photo F depicts the entire length measured; the red numbers on the tape at 100mm intervals, and the black indicia of 10mm segments in between them, are clearly visible, and, when counted, depict a measurement of 850mm. This figure is verified by a close-up picture of the measuring tape and slasher blade in Photo G.
The Tribunal will take this opportunity to note that engineer's report submitted by the respondent is of dubious evidentiary value. This observation rests on two grounds. Firstly, Mr Banks' report evidences an attitude that was dismissive, rather than inquisitive. Mr Banks contradicts most of the applicant's claims; those of which are conceded are deemed of no operational importance, or easily rectified, and dismissed without further enquiry, as discussed above.
While this attitude in itself is not evidence that Mr Bank's assertions are incorrect or misleading, the applicant has proven to the satisfaction of the Tribunal that there are significant errors in Mr Bank's report, which render his conclusions to be of uncertain reliability.
The slasher itself may not be defective but its supply as part of a package with the particular tractor made it unfit for its known and intended use. Safe
Given the conclusion that the tractor is defective, and has significant structural flaws, it seems a logical conclusion that it cannot be considered safe to operate. This was the opinion of Mr Tatarko, who, having conducted a detailed inspection of the vehicle, advised the applicant not to operate the tractor, and who has stated that some of the defects are dangerous.
It is relevant that section 9(1) provides that 'goods have a "safety defect" if their safety is not such as persons generally are entitled to expect.' Under section 9(2), in determining the extent of the safety of goods, regard is to be given to all relevant circumstances, including: (a)the manner in which, and the purposes for which, they have been marketed; and (b) their packaging; and (c) the use of any mark in relation to them; and (d) any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to them; and (e) what might reasonably be expected to be done with or in relation to them; and (f) the time when they were supplied by their manufacturer.
Aside from the structural flaws discussed above, specific issues include the mislabelled operational instructions, and the detachable mirror, which render operation of the tractor - in particular for a new owner who is unfamiliar with the vehicle - to be unsafe. The fact that these flaws can be corrected with relative ease - as observed by Mr Banks - is irrelevant; the applicant is entitled to expect that controls be labelled correctly, and their not being so constitutes a safety hazard. So too does the defective door handle, which hinders the operator entering and exiting the vehicle both during normal operation and should an emergency occur. Mr Banks claims he fixed this problem, however the applicant states that it has since recurred.
The defective clutch pedal is also a safety concern as it means - as described by the applicant - that the vehicle may become stuck in gear. The Tribunal notes, however, that Mr Banks was unable to reproduce this fault when he tested the tractor.20
The Tribunal concludes that the tractor is, if not unsafe, of unsound condition.
It should also be noted that Part 3.3 of the ACL deals with the safety of consumer goods. Section 106 provides that once a safety standard for particular goods is declared under section 105 and in force, a person must not, in trade or commerce, supply consumer goods which do not comply with that standard. To do so constitutes an offence under section 194. Durable
Given the above finding that the tractor is defective and in unsound condition, it cannot be said to be in an overall, durable condition.
The respondent's assertions to the contrary are disproved by the evidence before the Tribunal. In particular, the applicant's photographic evidence demonstrates that the fibreglass roof of the cab is already failing, due to the stress placed upon it by the structural misalignment and/or to damage suffered by the vehicle prior to purchase by the applicant.
Moreover, the structural defects, in particular the twisted frame and misaligned cab, are such that the Tribunal places no reliance upon the existing or continuing structural integrity of the vehicle. Conclusion
The Tractor was not delivered to the applicant in an acceptable condition; the respondent is in breach of the guarantee in section 54. Issue 2. Goods Guaranteed to be Fit for Any Disclosed Purpose (Part 3.2 section 55)
Section 55(1) guarantees that goods supplied in trade and commerce, other than by auction, will be fit for any purpose disclosed by the consumer, or any purpose for which the supplier represents that they are reasonably fit.
This guarantee covers disclosures made expressly, and by implication by the consumer to the supplier or manufacturer (section 55(2)). However, it does not apply if the consumer did not rely, or relied unreasonably, upon the skill or judgment of the supplier (section 55(3)).
In this case, the applicant 'purchased the tractor as both a necessary tool to operate my farm, and as an asset.'21
It is unclear whether the applicant's intention to use the tractor on his farm was expressed directly or with any degree of specificity to the respondent. However, this general purpose can certainly be implied, as tractors of this kind are typically used for agricultural work.
It is also unknown whether the applicant had chosen the size and model of tractor to purchase before entering discussions with the respondent. Even if he had not, and his choice was informed by the respondent's expertise as to the suitability of various types of tractor for certain purposes, this cannot be said to be unreasonable.
As discussed above, in relation to the guarantee of acceptable quality, the tractor supplied to the applicant is not fit for the purpose it was expressed to be purchased for; the respondent is in breach of this section. Issue 3. Goods Guaranteed to Correspond with their Description (Part 3.2 section 56)
Section 56(1) guarantees that goods supplied in trade or commerce by description, other than goods sold by auction, will correspond with that description.
The applicant purchased the tractor sight unseen, on the basis of the descriptions given online, in emails, and over the phone by the respondent's sales representative Mr McFarland.
The applicant claims that the tractor was described to him as having 12 hours on the meter, and being in as new condition. It was received with 15 hours on the meter, and with numerous faults (aesthetic, mechanical and structural) indicative of it being patchily repaired after an accident.
However, neither party has submitted documentary evidence as to the exact description given by Mr McFarland. The Tribunal has only the applicant's word that it was described as being in 'as new' condition; the only emails provided are correspondence between the parties alleging this fact, and a pre-sale email briefly describing the new model of tractors for sale by the respondent.
Whilst Mr McFarlane denies describing the tractor as being 'as new', the fact that it was described as having had only 12hrs work is consistent with the making of this representation. It is also consistent with the kind of assurance that the applicant and a reasonable purchaser of a second tractor would seek. The Tribunal accepts that this representation was made.
The invoice for the tractor purchased by the applicant describes the tractor as being 'second-hand', and lists various technical features; there is no reference to the aesthetic, mechanical or structural condition of the vehicle.
The photographic evidence alone is sufficient to dispel any assertion that the tractor was 'as new'. Accordingly this guarantee has been breached. Issue 4. Misleading or Deceptive Conduct (Part 2 section 18)
Part 2 of the ACL contains general protections for consumers.
Section 18 provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
The applicant alleges that the respondent deceived him as to the quality of the tractor he was purchasing. He claims that Mr McFarland described the tractor 'as being in "as new" condition, with only 12 hours on the meter.'
The applicant claims that he specifically asked whether the tractor had any faults, and why it was being traded were so few hours, in response to which he was told the original purchaser required a larger horsepower tractor, and that the tractor was in as new condition.
The Tribunal accepts that the applicant make these inquiries of the respondent and did not receive objectively truthful answers. Accordingly the respondent is in breach of this section.
The applicant also claims that the respondent has not abided by their mission statement to provide 'Best quality and value without compromise', and that this assertion is misleading.
However, such statements are to be interpreted as aspirational mission statements, not statements of fact. There is a term in contract law for claims which are exaggerated, fanciful or vague: 'puffery'.22 An example that is somewhat analogous to this case is a claim that a café makes the best coffee in the world.
While there is no legal distinction between puffery and misleading or deceptive conduct, if no reasonable person could have taken the claim seriously it will not constitute a breach of the ACL.
In this case, the mission statement can be dismissed as puffery on which no-one would rely; the applicant is better served by relying on the consumer guarantees discussed above. Issue 5. Unconscionable Conduct (Part 2 section 21)
Section 21 provides that a person must not, in trade or commerce connected with the supply of goods to another person, engage in conduct that is unconscionable.
Section 22(1) sets out a list of factors to be considered when determining whether a supplier's conduct was unconscionable, including: (a)the relative strengths of the bargaining positions of the supplier and the customer; and ... (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier...; and (e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and (f)the extent to which the supplier's conduct towards the customer was consistent with the supplier's conduct in similar transactions between the supplier and other like customers; and (g) the requirements of any applicable industry code; and (h) ..... (i)the extent to which the supplier and the customer acted in good faith.
It is not disputed that the applicant had the option to purchase a new vehicle, and chose instead to purchase this second-hand tractor. In this case, the greatest concern is whether the respondent acted in good faith in selling this particular tractor to the applicant.
The condition of the tractor must have been known to the respondent, yet the applicant claims that he was told there were no defects.
The respondent claims to have fully informed the applicant of the condition of the tractor. There is no evidence for this; and this assertion conflicts with the applicant's surprise at the condition of the tractor upon delivery and the photographic evidence.
It seems unlikely that a person in the applicant's position would have chosen to purchase a tractor in this defective condition. The applicant has stated that had he known the tractor was this bent, there was no way known I would have purchased this machine.23
However, although this augurs a lack of good faith on the part of the respondent, the applicant's conduct should also be taken into account.
Standard practice when purchasing a second-hand vehicle is to obtain a mechanical report prior to completing the sale, either from the dealer or by hiring your own mechanic. The applicant did neither. Nor did he request any visual evidence of the tractor's condition, such as photographs which could have been emailed to him; instead, he relied upon the respondent's representations - largely verbally made, it seems - as to the operational condition of the tractor. Satisfactory mechanical quality is not a given in any second-hand vehicle; the applicant's failure to ascertain the actual condition of the vehicle prior to sale, and his reliance upon the respondent, borders on the naïve.
The applicant cannot be said to have taken reasonable steps to protect himself during this transaction. Rather than ascertaining the actual condition of the tractor prior to purchasing it, he relied purely upon the upon the respondent's representations - largely made verbally, it seems - as to the condition of the vehicle.
Put at its highest for the respondent, there specific evidence of the respondent's knowledge of the condition of the tractor, such as a pre-sale mechanical report, or an inspection report from when the original purchaser traded in the tractor. But there was the obvious visual state of the tractor as shown in the photographs. It seems at the very least the respondent has been remiss in terms of investigating the condition of the vehicle, a surprising fact given the professional nature of the respondent's business.
On the facts before the Tribunal, and giving the respondent the benefit of the doubt, there is insufficient evidence to determine whether the respondent acted unconscionably. Issue 6. False or Misleading Representation (Part 3.1 section 29)
Part 3.1 contains specific protections for consumers. Under section 29(1), a person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services: (a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or ... (c) make a false or misleading representation that goods are new; or ... (g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; ...
To make such a false or misleading representation constitutes an offence under section 151. The penalty for this is $1,100,000.00 for bodies corporate, or $220,000.00 for persons who are not a body corporate.
The applicant alleges that the respondent deceived him as to the nature and quality of the tractor he was purchasing. He claims that Mr McFarland described the tractor 'as being in "as new" condition, with only 12 hours on the meter.'
The applicant claims that he specifically asked whether the tractor had any faults and why it was being traded were so few hours, in response to which he was told that the original purchaser required a larger horsepower tractor, and that the tractor was in as new condition.24
The Tribunal accepts the Applicant's evidence and where it conflicts with that of the respondent, the applicant's evidence is to be preferred.
In the light of the findings above, the Tribunal is satisfied that the respondent made objectively false and misleading representations to the applicant which induced the applicant to enter the sale.
Section 259(1) ACL provides that a consumer may take action against a supplier who does not comply with the Part 3.2 guarantees discussed here.
If the failure to comply can be remedied and is not a major failure, the consumer may require the supplier to remedy it within a reasonable time; if the supplier refuses, the consumer may take action to recover all reasonable costs incurred by the consumer in having the failure remedied, or notify the supplier that the consumer rejects the goods, and of the grounds for doing so (section 259(2)).
If the failure to comply cannot be remedied or is a major failure, the consumer may (a) notify the supplier that the consumer rejects the goods, and on what grounds, or (b) take action against to supplier to recover compensation for any reduction in the value of the goods below the price paid for the goods (section 259(3)).
The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure (section 259(4)).
Under section 260, a failure to comply with a guarantee 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 (b)the goods depart in one or more significant respects: (i) if they were supplied by description-from that description; or (ii) if they were supplied by reference to a sample or demonstration model-from that sample or demonstration model; 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 (d)the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; (e)the goods are not of acceptable quality because they are unsafe.
Suppliers may remedy a failure to comply with a guarantee by curing any defect in title, repairing the goods, replacing the goods with an identical type, or by refunding any money paid by the consumer for the goods (section 261).
If the consumer 'rejects' the goods, given the size of the goods (a tractor), the supplier must collect the goods at their own expense, and either refund or replace the goods in accordance with the consumer's choice (section 263).
In this case, the applicant has rejected the respondent's offer to repair or replace the tractor due to a lack of confidence in the respondent, and is seeking a full refund of the purchase price.
The Tribunal considers the respondent's failure to comply with the guarantees to be a major failure in accordance with section 260(c), (d) and (e, any one of which is sufficient reason.
In terms of section 259(c), the tractor is substantially unfit for any purpose tractors are commonly used for, and the defects are of a number and nature which render the vehicle unable to be easily repaired or replaced.
As discussed, the structural defects of the tractor and the nature of the slasher make them unfit for the disclosed purpose of purchase (section 260(d)), and the tractor is not of acceptable quality because it is arguably unsafe (section 260(e)). Even if found not to be actually 'unsafe', the application of subsections (c) and (d) ensure that this constitutes a major failure. Motor Dealers Act 1974 (NSW)
The cause of action under this Act is an entirely separate and distinct cause of action to that under the ACL.
Under section 4 of that Act, 'motor vehicle' means any type of vehicle built to be propelled by a motor and explicitly includes a tractor.
Under section 4, dealer' means a person who carries on the business of dealing in motor vehicles as a retailer on a wholesale basis. A 'second hand motor vehicle' is defined to be a 'motor vehicle that has, at any time before being offered or displayed for sale, or sold, been registered, and includes a demonstrator motor vehicle.' The tractor in the present case answers this description.
Under section 27, the dealer has a mandatory obligation to repairs defective vehicle where the defect arises in the statutory warranty period, which is the present case. That duty reads: ... the dealer shall, whether or not the defect existed at the time of the sale, at the dealer's own expense, repair or make good, or cause to be repaired or made good the defect so as to place the vehicle in a reasonable condition having regard to its age and the dealer's obligation to do so shall be deemed to be a term of the contract of sale relating to the vehicle.
In the light of the findings of fact above, the respondent has not complied with this statutory guarantee. FINDINGS
Of the six potential breaches of the ACL, five have been established on the facts. The Tribunal's finding include that the respondent has breached the express oral warranty at common law given by the respondent concerning the quality of the tractor and slasher; and breached the implied guarantee that goods will be of acceptable quality (section 54 ACL ), fit for a disclosed purpose (section 55 ACL); and has breached the guarantee under the Motor Dealers Act 1974. Any one of these breaches would be a sufficient basis for the orders made below.
The Tribunal powers in relation to remedy are formally those in the CCA. But the CCA permits the Tribunal a wide discretion in the remedy. The Tribunal is properly guided by the statutory remedy provided in the ACL.
Therefore, in accordance with sections 259 and 260 ACL, as well as the applicant's expressed wishes, the respondent is required to fully refund to the applicant the purchase price of the tractor: $24,699.00.
The applicant has not provided evidence to the Tribunal quantifying any losses associated with the inoperability of the tractor, so no compensation is awarded to the applicant for this.
However, the respondent is required to collect the tractor from the applicant's property at a time convenient to both parties, arranged with at least 48 hours advance notice. The respondent is to bear the cost of any expenses occurred in doing so.
Both parties are required to negotiate the time at which the respondent will collect the tractor, and the applicant is to provide access to the respondent to collect the tractor at the arranged time. (signed) A Anforth General Member Civil and Administrative Tribunal of New South Wales 16 May 2014 List of exhibit documents: Date filed Description of document 25 Jun 2013 Tax invoice for purchase filed by the applicant 25 Jun 2013 Letter from respondent dated 34 April 2013 filed by applicant 25 Jun 2013 Warranty registration form dated 4 April 2013 filed by the applicant 25 Jun 2013 Letter from respondent to applicant dated 15 April 2013 filed by applicant 25 Jun 2013 Report from Mr Tatarko, mechanic filed by the applicant 25 Jun 2013 Photos of the tractor filed by the applicant 25 Jun 2013 List of correspondence between the parties with copies, filed by the applicant 25 Jun 2013 Applicant's statement of reasons for requesting a refund, filed by the applicant 15 Aug 2013 Report of Mr J Banks, engineer filed by the respondent 17 Oct 2013 Photographs filed by applicant 9 Dec 2013 Final Submissions of the applicant 12 Dec 2013 Final Submissions from the respondent 12 Dec 2013 Statement from Mr McFarland with attached email of 13 March 2013, filed by the respondent I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar

Paul Madsen v Agrison Pty Ltd

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