Penrith Automotive v Woollard

CATCHWORDS : Appeal CTTT - new car, paint defects - merchantable quality

Consumer Claims Act 1998 (NSW) - s 8 LEGISLATION CITED : Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) - s 67 Sales of Goods Act 1923 (NSW) - ss 19, 64

Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd [2003] VSC 275 CASES CITED : Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456 Kalokerinos & Anor v HIA Insurance Services P/L & Anor [2004] NSWCA 312

Penrith Automotive Pty Ltd t/as Penrith Mazda - Plaintiff PARTIES : Debbie Woollard - First Defendant Consumer Trader & Tenancy Tribunal - Second Defendant

Corrs Chambers Westgarth - Plaintiff SOLICITORS : Ms D Woollard - First Defendant in person Submitting Appearance - Crown Solicitor - Second Defendant

LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW

LOWER COURT JUDICIAL OFFICER : Tribunal Member McMillan

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30142/2006 PENRITH AUTOMOTIVE PTY LTD (t/as PENRITH MAZDA) v DEBBIE WOOLLARD & ANOR

JUDGMENT (Appeal CTTT - new car, paint defects - merchantable quality) 1 HER HONOUR: By amended summons filled 30 October 2006 the plaintiff seeks firstly, an order that the orders of the NSW Consumer Trader and Tenancy Tribunal (CTTT) in Tribunal matter MV 06/26657 dated 15 September 2006 be set aside; and secondly, an order that the matter be remitted to the CTTT for rehearing and determination in accordance with law. 2 The plaintiff in these proceedings is Penrith Automotive Pty Ltd (t/as Penrith Mazda). The first defendant is Debbie Woollard (Ms Woollard) and the second defendant is the CTTT, who has filed a submitting appearance. For convenience I shall refer to the parties by name. 3 Penrith Mazda relies on the affidavits of Peter Matthew Mitchell sworn 10 November 2006 and 14 December 2006. Ms Woollard relies on her own affidavit sworn 25 November 2006. Ms Woollard appeared unrepresented as she is of limited financial means and was unable to obtain pro bono legal representation for this appeal. She was articulate and well prepared.

The relevant statutory provisions 4 Section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (the Act) allows for an appeal to be made to this court on a question with respect to a matter of law. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal (s 67(8)). The onus lies on the plaintiff to demonstrate that there has been an error with respect to a matter of law. 5 Section 67(3) of the Act provides that, after deciding the question of the subject of an appeal, the court may affirm the decision of the Tribunal, or it may make an order in relation to the proceedings in which the question arose as it, in its opinion, should have been made by the Tribunal, or it may remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal. 6 The width of s 67 was discussed in Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456. Hodgson JA (with whom Beazley and Tobias JJA agreed) stated succinctly [at para 33]: "… in my opinion, to establish an error of law by the Senior Member, it was necessary to show that he applied a wrong principle of law. That could be shown either from what he said, or because the ultimate result, associated with the facts that he expressly or impliedly found, indicates that he must have applied the wrong principle of law". 7 See also Kalokerinos & Anor v HIA Insurance Services P/L & Anor [2004] NSWCA 312 at paragraphs [39], [40], [41], [47] and [59].

The Tribunal generally 8 At the outset, it is helpful to set out some of the provisions of the Act. The functions of the Tribunal are to adjudicate disputes between consumers and commercial disputes between landlords and tenants. The Tribunal is not constrained by the rigour of the courtroom. Its objects are to ensure that the Tribunal is accessible, its proceedings are efficient and effective, its decisions are fair and to enable proceedings before the Tribunal to be determined in an informal, expeditious and inexpensive manner. The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 28). 9 Evidence must be given on oath or statutory declaration (s 39(1)) but the Tribunal is not bound by the rules or practice of evidence and the Tribunal may inform itself on any matter in such manner as it considers appropriate (s 28(2)). The Tribunal must conform to the rules of natural justice, but broadly speaking, has control of and responsibility for its own procedures (s 28(1) and (2)). Its business is conducted in public (s 33). Section 35 provides that the Tribunal must ensure that each party in any proceedings is given a reasonable opportunity to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise); and to make submissions in relation to the issues in the proceedings. Normally, a party to the proceedings has carriage of his or her own case and is not entitled to be legally represented (s 36(1)). The Tribunal has the power to award costs (s 53), but usually each party bears its own costs. Pursuant to s 54 of the Act, the Tribunal is obliged to use its best endeavours to bring the parties to a settlement before making an order. The Tribunal has a power to correct its decision (s 50) and the Registrar can issue a certificate, which operates as a judgment to recover amounts ordered to be paid (s 51).

The Tribunal Member's decision 10 On 15 September 2006, Tribunal Member McMillan gave reasons for his decision and made orders that Ms Woollard return the vehicle to Penrith Mazda and that Penrith Mazda was to replace the vehicle with a similar vehicle.

Grounds of appeal 11 Penrith Mazda appeal against the whole of the decision of Tribunal Member McMillan dated 15 September 2006. The grounds of appeal are that (i) the Tribunal member erred in finding that for a new car to be of merchantable quality within the meaning of section 19(2) of the Sale of Goods Act 1923 (NSW) (the Act), all parts of the car must be new and without flaw; (ii) the Tribunal member erred in finding that the presence of foreign particles in the paintwork of a motor vehicle had the necessary consequence that the motor vehicle was not of merchantable quality, without deciding the cause of the presence of the foreign particles; (iii) the Tribunal member erred in finding that, as a matter of law, the defendant was automatically entitled to have her motor vehicle replaced upon a finding that the motor vehicle was not of merchantable quality; (iv) the tribunal member erred in the exercise of his discretion in that, upon finding that the defendant's motor vehicle was not of merchantable quality, he made an order that the motor vehicle be replaced, notwithstanding the consensus in the evidence before him that the motor vehicle could be repaired. 12 Ms Woollard purchased a new Mazda 2 Genki motor vehicle from the Penrith Mazda. On 23 January 2006, she collected her new car. The next day she washed the car and noticed that it had marks on the paintwork. The marks of the paintwork got worse. The history of Ms Woollard's attempts to have the problems rectified have been referred to in some detail by the Tribunal Member. He said: "The applicant told the respondent that the paint protection was done and the marks appeared to have gone. In mid February 2006 the mark reappeared. They appear as black/brown in appearance and are rough to touch. The marks are all over the vehicle. She returned the vehicle on 14 March 2006 and arrangements were made for Mazda Australia to inspect it. On the advice of her insurer she had the vehicle inspected by the NRMA… On 30 March 2006 Mazda inspected the vehicle and took the view that it was "an outside influence" and was not a fault in manufacturer (sic). The respondent undertook to have the vehicle looked at attempt to rectify the problem (sic). On 3 April 2006 she took it to the respondent for this attention. The next day she picked up the vehicle and was given an invoice that the problem had been cause by an iron filing and would not appear again. The applicant was not satisfied as the marks remained. She was requested to return the vehicle again as Mazda Australia were to inspect the vehicle again. This did not happen and other methods were put forward to fix the problem that included buffing the car using a cutting compound." 13 The Tribunal Member stated: "…The Tribunal is satisfied that she reported the problem with the paint work the day after and has at all times maintained her dissatisfaction. The evidence discloses that this vehicle has more than 100 areas of paintwork that are affected by this problem. There have been attempts to remove it or improve the appearance of the paint finish but without success. To deal with the problem the recommendations are that the paintwork be stripped to bare metal and the vehicle painted or it be subjected to an oxcilic wash with appropriate finishing. It is the view of the Tribunal that when a person purchases a new car all parts of that car be new and with out flaw. Paint work is an important part of new vehicles as it can be reasonably expected that the vehicle has not been driven on a road and the paint work would not appear to be damaged from wear and tear. It is important to the presentation and appearance of the vehicle. The evidence shows that this vehicle does not have minor blemish to a panel that can be buffed but it has foreign particles set in the paint that reappear after polishing and over every horizontal panel." 14 The Tribunal Member concluded: "The applicant has made every attempt to deal with this matter but has had to resort to the Tribunal. This process has taken time and she has not had the enjoyment of a new vehicle. It is the finding of the Tribunal that this vehicle was not of merchantable quality at the time it was purchased and for these reasons the applicant is to return the vehicle to the respondent and the respondent is to replace it on or before 20 October 2006."

Merchantable quality 15 Penrith Mazda submitted that rather than applying the test of "merchantable quality" as required under s 19 of the Sale of Goods Act 1923 (NSW) (SGA), the Tribunal Member decided that s 19 requires that all parts of a new car must be "without flaw" and thus misconstrued the proper construction of the expression "merchantable quality" in s 19(2) of the SGA. According to Penrith Mazda the finding that "when a person purchases a new car all parts of that car be new and without flaw", meant that a seller of a motor vehicle is in effect liable for any and all defects in the motor vehicle, on some kind of strict or absolute liability basis. 16 Section 64(3) of the SGA provides a statutory definition of "merchantable quality" in relation to consumer sales. It reads: "Without limiting the meaning of the expression "merchantable quality", goods of any kind which are the subject of a contract for a consumer sale are not of merchantable quality if they are not as fit for the purpose or purposes for which goods of that kind are commonly bought as is reasonable to expect having regard to their price, to any description applied to them by the seller and to all other circumstances." 17 Penrith Mazda further submitted that the Tribunal Member erred by construing merchantable quality by reference to a much stricter standard than that required under s 19 of the SGA and had the Tribunal Member applied the correct test, there is every prospect that he would have concluded that the motor vehicle in question was of merchantable quality notwithstanding the marks on the paintwork. 18 Ms Woollard submitted that if she wanted to purchase a second hand car where the paintwork had already been redone she would have done so, for a lesser price. But she wanted a new car and it was the first new car she had ever owned. 19 Aside from the reference to a "new car without flaw" the Tribunal Member also stated that the paintwork is an important part of a new vehicle, the vehicle does not have a minor blemish to a panel that can be buffed but has foreign particles set to the paint that reappear after polishing over every horizontal panel. Earlier, the Tribunal Member referred to the car as having more than 100 areas of paintwork which have been affected by the problem. The Tribunal Member concluded that the vehicle was not of merchantable quality and was entitled to come to that view. There is no error of law.

The remedy 20 Penrith Mazda submitted that the Tribunal Member erred in finding that the necessary consequence of the vehicle not being of merchantable quality was that Ms Woollard was entitled to a replacement motor vehicle. Penrith Mazda's Counsel submitted that the Tribunal Member wrongly applied the relevant legal principle as to the question of Ms Woollard's entitlement to a particular remedy. At the Tribunal there were only two alternative remedies sought. Ms Woollard sought a replacement vehicle, Penrith Mazda sought that further remedial work be undertaken to the paintwork and this work had been recommended by various experts. 21 Penrith Mazda's Counsel referred to Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd [2003] VSC 275 at [173]-[174] where Dodds-Streeton J considered an appeal from the decision of an arbitration tribunal. His Honour stated: "[173] The issue of legal error is complicated by the doubt over the degree to which the Arbitral Tribunal appreciated the implications of its findings. However, I am satisfied that the Arbitral Tribunal failed to consider the issue of remedy for the breach it had implicitly identified according to established principles. I consider that once Anaconda's reading of the Interim Award be accepted, the relevant error of law is evident and obvious on the face of the Interim Award, rather than merely arguable. [174] I therefore conclude that the fifth autoclave decision is based on a manifest error of law on the face of the award within terms of s38(5)(b) of the Act. I am also satisfied that, having regard to all the circumstances, including the very large amounts of money at stake, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration, as required by s38(5)(a)." 22 However, s 8 of the Consumer Claims Act 1998 (NSW) sets out the relief the Tribunal may give. Section 8 reads: "Tribunal orders

(1) In determining a consumer claim wholly or partly in favour of a claimant, the Tribunal may, subject to this Part, make such one or more of the following orders as it considers appropriate: (a) an order that requires a respondent to pay to the claimant a specified amount of money,

(b) an order that requires a respondent to perform specified work in order to rectify a defect in goods or services to which the claim relates,

(c) an order that requires a respondent to supply to the claimant specified services other than work,

(d) in the case of a claim for relief from payment of money, an order declaring that a specified amount of money is not due or owing by the claimant to a respondent,

(e) an order that requires a respondent to deliver to the claimant goods of a specified description,

(f) an order that requires a respondent to return to the claimant specified goods which are in the possession or under the control of that respondent, whether the property in the goods has passed or not,

(g) an order that requires a respondent to replace goods to which the claim relates.

…" 23 Section 8(1)(g) gives the Tribunal Member power to order that Penrith Mazda replace the motor vehicle. As there had already been unsuccessful attempts to remedy the problems with the paintwork, the Tribunal Member was not obliged to order further work to be carried out on the paintwork. It was open to the Tribunal Member to make an order in accordance with s 8(1)(g) that the Mazda be replaced. There is no error of law. The appeal is dismissed. The orders of Tribunal Member McMillan dated 15 September 2006 are affirmed. The amended summons filed 30 October 2006 is dismissed. 24 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendants' costs as agreed or assessed.

(2) The orders of Tribunal Member McMillan dated 15 September 2006 are affirmed.

(3) The amended summons filed 30 October 2006 is dismissed. (4) The plaintiff is to pay the defendants' costs as agreed or assessed. **********

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