Sheedy v Alveco Pty Ltd

[2021] NSWCATCD 162

NCAT Consumer and Commercial|2020-12-09

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At a glance

Source facts

Court

NCAT Consumer and Commercial

Decision date

2020-12-09

Source

Original judgment source is linked above.

Judgment (24 paragraphs)

[1]

Introduction

This application is a renewal application filed by the applicant consumers (Mr and Mrs Sheedy) in respect of a caravan (the caravan) which they purchased in October 2018 from the first respondent (Concorde Motor Homes) for a purchase price of $64,330.00 (the purchase price). The caravan was manufactured by the second respondent (Cosy Cabs).
On 5 December 2019 Mr and Mrs Sheedy filed an application in the Tribunal, seeking a full refund of the purchase price, on the basis that there had been a major failure to comply with the Australian Consumer Law guarantees that the caravan be of satisfactory quality and fit for purpose. Mr and Mrs Sheedy complained that the caravan was faulty. Their principal complaints concerned the floor which they said was soft and required replacement.
On 28 January 2020, following conciliation in the Tribunal, an order was made by consent as follows ("the original order"): 1. By consent, the Tribunal orders that the respondent(s): COSY CAB CARAVANS Pty Ltd 26 Grasslands Avenue CRAIGLEBURN VIC 3064 Australia is to carry out the following work on or before 29-Mar-2020 in a proper and workmanlike manner. Details of Work order: Arrange for the caravan to be transported from xxxxx Road, Branxton and sent to the Cosy Cab factory in Melbourne. They will Inspect, advise in writing the proposed repairs, and repair the floor of the caravan with all due care and skill. They will then return the caravan to Concorde Motor Homes and Caravans for collection. 2. The respondent's name COSY CAB CARAVANS, is amended to COSY CAB CARAVANS Pty Ltd. 3. By consent, the applicant may seek to leave to renew these proceedings in the event these orders are not compiled with by the other party. 4. By consent, the respondent is granted leave to renew these proceedings.
The caravan was transported to Melbourne. Certain works were carried out on the caravan, and it was returned in accordance with the orders.
It appears that the name of the respondent Cosy Cab Caravans Pty Ltd in the original orders was incorrect but no issue has been taken in respect of that matter. The respondent Cosy Sara Pty Ltd t/as Cosy Cab Caravans accepts that it is the correct respondent, and the naming of the respondent as Cosy cab Caravans Pty Ltd in the original orders was thus an error.

[4]

The law - renewals

Clause 8 of Schedule 4 to the Civil and Administrative Tribunal Act 2013 provides as follows: 8 RENEWAL OF PROCEEDINGS IN RESPECT OF CERTAIN DIVISION DECISIONS (1) If the Tribunal makes an order in exercise of a Division function in proceedings, the Tribunal may, when the order is made or later, give leave to the person in whose favour the order is made to renew the proceedings if the order is not complied with within the period specified by the Tribunal. (2) If an order has not been complied with within the period specified by the Tribunal, the person in whose favour the order was made may renew the proceedings to which the order relates by lodging a notice with the Tribunal, within 12 months after the end of the period, stating that the order has not been complied with. (3) The provisions of this Act apply to a notice lodged in accordance with subclause (2) as if the notice were a new application made in accordance with this Act. (4) When proceedings have been renewed in accordance with this clause, the Tribunal-- (a) may make any other appropriate order under this Act or enabling legislation as it could have made when the matter was originally determined, or (b) may refuse to make such an order. (5) This clause does not apply if-- (a) the operation of an order has been suspended, or (b) the order is or has been the subject of an internal appeal.
The operation of Clause 8 has been considered by the Appeal panel in a number of cases, including in Blessed Sydney Constructions Pty Ltd v Vasudevan [2018] NSWCATAP 98: Construction of cl 8(4)(a) - consideration 26. The Appeal Panel has held that cl 8 of Sch 4 is an additional, simple and practical method of enforcing, and promoting timely compliance with, Tribunal orders - Johnson v Dibbin; Gatsby v Gatsby [2018] NSWCATAP 45 at [83]. 27. The renewal procedure is often used where there has been non-compliance with an order requiring work to be done or repairs to be made. In the context of orders requiring work to be done in performance of a contract, cl 8 of Sch 4 can be seen as analogous to the power that a Court with equitable jurisdiction has to make alternative orders, including awarding damages, where there has been non-compliance with an order for specific performance of a contract. As to these powers see Spry ICF, The Principles of Equitable Remedies 9th Ed 2014 (Law Book Co, Sydney) (Spry) at pp 329-30 and 677-8. The High Court also touched upon these issues in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; [1988] HCA 11 (Sunbird) at 260-1 as did the Court of Appeal in Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201 at [53]; [2007] NSWCA 104, quoting a passage from Riltang Pty Ltd v L Pty Ltd [2004] NSWSC 977 at [51]. 28. By cl 8(2), cl 8 is engaged "[i]f an order has not been complied with within the period specified by the Tribunal". In those circumstances, "the person in whose favour the order was made may renew the proceedings". 29. "When proceedings have been renewed", the Tribunal has the powers set out in cl 8(4)(a) and (b). The Tribunal may: (1) "make any other appropriate order under this Act or enabling legislation as it could have made when the matter was originally determined" - par (a), or (2) refuse to make such an order - par (b). 30. The present appeal does not concern the Tribunal refusing to make any order, within par (b). 31. In the light of the terms in which cl 8(4)(a) is expressed, the Tribunal can make an order within par (a) if the following criteria are satisfied: (1) the order is "other" than the order originally made; (2) the order is "appropriate"; (3) the order is one that the Tribunal "may make … under [the NCAT] Act or enabling legislation"; (4) the order is one "as [the Tribunal] could have made when the matter was originally determined".
The threshold issue is whether the order has been complied with. If it has not, the Tribunal can make any other appropriate order which it could have made at the time the original order was made.

[12]

Discussion

The obligation which Cosy Cabs had under the order was to "inspect, advise in writing the proposed repairs, and repair the floor of the caravan with all due care and skill". They complied with the obligations to collect the caravan, inspect it and to advise the applicants in writing of the proposed repair.
There is no dispute that Cosy Cabs did not remove or repair the original flooring but added support underneath it. I am not satisfied that in doing so Cosy Cabs has repaired the floor. I have regard to the dictionary definition of "repair" (Macquarie): " to restore to a good or sound condition after decay or damage; mend: to repair a clock. 2. to restore or renew by any process of making good, strengthening, etc.: repair a broken constitution.
The flooring of the caravan has not been repaired, but left in place and supported by additional ply. If the only issue was one of support for the floor of the caravan, this method of repair might be acceptable as a means of strengthening the floor, but I do not accept that the only purpose of the repair was to strengthen the floor. The delaminating ply in the existing flooring presents other issues. These include the lipping observed by Mr Imber and reported on in his original report. These issues have not been addressed by the rectification method adopted by Cosy Cabs.
In this regard I note that whilst Mr Filavio O'sughrue states that he has had 9 years' experience in the caravan industry, he does not say that he has any technical qualifications. He says that he has worked with qualified technicians, and has recommended this method because it is a method which has been used by other caravan sellers to deal with flooring issues.
I give considerable weight to Mr Stocker's evidence that the method used has not rectified the flooring issues. He stated that in his view the problems with the flooring will continue. This evidence was given against his company's own interests, and was given openly and honestly. Mr Stocker apparently has considerable experience in selling caravans, including Cosy Cabs caravans.
I am therefore satisfied that the method used to address the flooring issues does not amount to a repair of the floor. Accordingly Mr and Mrs Sheedy were entitled to renew these proceedings, and the Tribunal has jurisdiction to determine them.

[13]

What orders should the Tribunal now make?

The orders which can be made on a renewal application include any appropriate order which could have been made when the matter was originally determined. Thus it is necessary to first determine what orders could have been made when the matter was originally determined. This will involve a consideration of the applicants' consumer rights against both Concorde Motor Homes and Cosy Cabs.
These rights were been succinctly explained in the Federal Court case Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 ("ACCC v Jayco) 35 A supplier is liable to a consumer to remedy a failure to comply with a guarantee of acceptable quality or fitness for purpose within a reasonable time, or for compensation where the supplier refuses or fails to comply with the requirement to remedy the failure. If the failure to comply with the guarantee cannot be remedied, or is a major failure, the consumer may reject the goods. If the consumer rejects the goods, the supplier must, in accordance with an election made by the consumer, refund any money paid by the consumer for the goods, or replace the rejected goods with goods of the same type and of similar value, if such goods are reasonably available to the supplier. 53 Division 2 of Part 5-4 of the ACL provides for a consumer to take action for damages against a manufacturer of goods in relation to a failure to comply with certain statutory guarantees. Under s 271 of the ACL, an affected person has a direct cause of action against the manufacturer, relevantly in respect of a failure to comply with the statutory guarantee under s 54 as to acceptable quality, and under s 59 in relation to a failure to comply with a manufacturer's warranty. The term affected person is defined by s 2 as meaning - (a) a consumer who acquires the goods; or (b) a person who acquires the goods from the consumer (other than for the purpose of re-supply); or (c) a person who derives title to the goods through or under the consumer. 54 In relation to a manufacturer's liability for non-compliance with the statutory guarantee under s 54 of the ACL, s 271(1) and (2) provide - 271 Action for damages against manufacturers of goods (1) If: (a) the guarantee under section 54 applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. (2) Subsection (1) does not apply if the guarantee under section 54 is not complied with only because of: (a) an act, default or omission of, or any representation made by, any person other than the manufacturer or an employee or agent of the manufacturer; or (b) a cause independent of human control that occurred after the goods left the control of the manufacturer; or (c) the fact that the price charged by the supplier was higher than the manufacturer's recommended retail price, or the average retail price, for the goods. 55 In relation to the statutory guarantee under s 59 of compliance with a manufacturer's express warranty, s 271(5) and (6) provide that a consumer may recover damages from the manufacturer if there is non-compliance with the guarantee - (5) If: (a) the guarantee under section 58 or 59(1) applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. (6) If an affected person in relation to goods has, in accordance with an express warranty given or made by the manufacturer of the goods, required the manufacturer to remedy a failure to comply with a guarantee referred to in subsection (1), (3) or (5): (a) by repairing the goods; or (b) by replacing the goods with goods of an identical type; then, despite that subsection, the affected person is not entitled to commence an action under that subsection to recover damages of a kind referred to in section 272(1)(a) unless the manufacturer has refused or failed to remedy the failure, or has failed to remedy the failure within a reasonable time. A supplier's remedies against a manufacturer 56 As part of the scheme, the ACL also provides that a manufacturer of goods is liable to indemnify a supplier of goods for damages payable to a consumer, or for costs incurred as a result of a failure to comply with statutory guarantees, relevantly including the guarantees relating to acceptable quality and fitness for a purpose that the consumer made known to the manufacturer.

[14]

Has there been a breach of the consumer guarantees in the ACL?

Mr and Mrs Sheedy's claim is that the fact that the caravan has a faulty floor means that there has been a failure to comply with the consumer guarantee that the goods will be of acceptable quality. In this regard s 54 of the ACL 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.
Cosy Cabs make a number of submissions: 1. The caravan was of acceptable quality at the time of handover because the consumers inspected it and the caravan: "did not fail acceptable quality" 1. As the caravan had a 12 month guarantee, the consumers: "Cannot reasonably expect the caravan to be in good condition as a new caravan after 12 months" 1. In respect of durability, having been given a 12 month guarantee: "reasonable consumers would have regarded 12 months as a reasonable period of time" 1. The caravan is made of wood and cannot be expected to last as long as a car. 2. The applicants have caused the caravan to be of unacceptable quality by failing to take reasonable steps (appropriate servicing, proper maintenance and storage). 3. The caravan is fit for purpose because the applicants were able to use it for a 9 week holiday: "The soft and splitting of the floorboards has not affected the functionality of the caravan".
I do not accept these submissions. The caravan was purchased as a new caravan for a purchase price of $64,330.00. A caravan is expected to be of acceptable quality for its lifetime, a period of much more than 12 months. The fact that the caravan is made of wood does not mean that it can be expected to last only 12 months. Furthermore, a consumer is not expected to detect every defect at handover as some defects might only become apparent after some use. In addition, there is no evidence that the applicants caused or contributed to the delamination of the floor, and no evidence that they delayed in any way in reporting the issues.
I am satisfied that the caravan when supplied was not of acceptable quality because it was not free from defects, it was not acceptable in appearance and finish, and the emergence of issues in respect of the floor over the first 12 months of its use means that it was not as durable as a consumer would expect of goods for which a price of more than $64,000 was paid.

[15]

Were the applicants entitled to reject the caravan?

Section 259 of the ACL provides 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. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement within a reasonable time - the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (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 the 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. (4) 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. (5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier. (6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). (7) The consumer may take action under this section whether or not the goods are in their original packaging.
A consumer may reject the goods if there is a failure to comply with a guarantee that cannot be remedied, or a major failure to comply with a guarantee. In relation to what constitutes a major failure to comply with a guarantee, s 260 of the ACL provides - 260 When a failure to comply with a guarantee is a major failure 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 (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 of 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; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe.
Cosy Cabs submits that the test is whether the caravan is fit for use as a caravan: Further this is not a case of a major defect within the meaning of section 160 of the ACL. There is no suggestion that the structural safety of the caravan has been compromised. It remains fit for its purpose as a caravan and was certified as such by an authorised RTA inspector on 9 March 2020.
However whether the caravan is structurally safe is not the test. I must consider whether a reasonable consumer would have purchased the caravan if that consumer knew that the floor would develop soft spots, caused apparently because the ply used in the floor is faulty. I am not satisfied that a reasonable consumer would have done so.
I note that the test is an objective test. Whilst I accept that Mr and Mrs Sheedy give evidence that they would not have purchased the caravan, that is not necessarily conclusive. Rather I must consider what a reasonable consumer would do.
Again, the decision in ACCC v Jayco is of particular relevance: 38 The text of s 260(a) of the ACL directs attention to the question whether the goods would not have been acquired by the reasonable consumer, fully acquainted with the nature and extent of the failure, and not to the different question whether an individual consumer acted reasonably in rejecting the goods. In my view, for the purposes of evaluating whether a failure is a major failure for the purposes of s 260(a), a reasonable consumer who purchases an RV is to be taken to have some degree of tolerance for certain types of failure. This is owing to at least three features. 39 First, the legislation assumes that not every failure to comply with a guarantee will be a major failure. Section 259(2) of the ACL expressly contemplates that some failures to comply with statutory guarantees can be remedied within a reasonable time. Further, s 260(a) requires that consideration be given to the nature and extent of the failure in determining whether the reasonable consumer would not have acquired the goods, thereby indicating that the mere existence of any failure is not sufficient. Section 260(c) contemplates that goods that are substantially unfit for a common purpose might easily, and within a reasonable time, be remedied so as to make them fit for purpose, in which case there is no major failure on account of unfitness for a common purpose. Likewise, s 260(d), which relates to unfitness for a disclosed purpose, also contemplates that the goods might be remedied easily, and within a reasonable time, so as to make them fit for purpose. 40 Second, the nature of the goods is relevant. RVs, like many substantial consumer items such as motor vehicles, yachts, and even bicycles, are manufactured from a range of component parts, many of which may be capable of easy replacement or repair in the event of some fault. Some of the accessories, such as air conditioning units, televisions, or microwave ovens, may be manufactured by specialist suppliers of electrical appliances, and installed in the RV by the manufacturer or the supplier of the RV. Many of the component parts are designed for mechanical movement. RVs are intended to be towed. The process of towing will subject the RVs to stresses and flex. RVs will necessarily be exposed to weather. They are designed to be lived in, and otherwise to be used. Lids will be raised, and lowered. Doors will be opened, and shut. Drawers will be pulled out, and pushed in. RVs will be used by families with children, who sometimes lack fine motor skills when handling equipment. Surfaces may become scratched or chipped though normal use. An appliance installed in an RV, if found to be faulty, might be able to be easily repaired or replaced by a specialist supplier. Fuses may blow. Sometimes, just as in a household, the cause of an isolated occurrence of a blown fuse may not be apparent. Screws might have to be tightened. Doors might have to be straightened. These things are inherent in the nature of the goods. The reasonable consumer will tolerate some faults or breakages, and some need for adjustments of this type that are exposed by a period of initial use. The reasonable consumer will purchase an RV accepting that there is a reasonable prospect that some components of the RV may have to be adjusted, repaired, or replaced within a manufacturer's warranty period. Putatively, if a reasonable consumer was fully acquainted with the nature and extent of a failure to comply with a statutory guarantee at the time of purchase, the reasonable consumer might nonetheless proceed with the purchase on the basis that the supplier, or the manufacturer, will remedy the failure within a reasonable time. On the other hand, it does not follow that merely because a failure to comply with a statutory guarantee is capable of being remedied, that a reasonable consumer fully acquainted with the nature and extent of the failure would acquire the goods. Whether that is so will depend upon the circumstances of each case. 41 Third, the reasonable consumer will accept that the process of production of certain complex goods, such as RVs, can never be perfect. As I have mentioned, the Jayco RVs were subject to a manufacturer's warranty which had as an assumption that the RVs might suffer from some teething problems or defects from time to time for which the manufacturer would assume responsibility for repair. The Jayco handbook that was supplied with the RVs gave this advice to purchasers in its introduction - We recommend that you check your RV carefully as soon after you take delivery as you can ensuring that all items are working as they should and reporting any problems to your dealer for early rectification. 42 The introduction went on to state - Your first Service (1000kms or 3 months) after an initial running-in period is an ideal time for any minor adjustments to components to be made and for your Jayco dealer to answer any questions you may have. 43 It is not to be suggested that the existence of a manufacturer's warranty should operate to diminish the expectations of the reasonable consumer when it comes to questions of acceptable quality: Rogers v Parish (Scarborough) Ltd [1987] QB 933 at 945 (Mustill LJ). In particular, generally, a manufacturer's warranty should have no bearing on the question whether the goods comply with the statutory guarantee of acceptable quality. Rather, for the purposes of s 260(a) of the ACL, and evaluating whether a reasonable consumer would have acquired the goods, the existence and terms of the manufacturer's warranty are consistent with the reasonable consumer accepting that some complex goods might suffer some minor defects, expecting that they will be repaired under warranty, or in the exercise of remedies available under the ACL. As I have said, whether that is so in a particular case will depend upon the nature of the defect, and other circumstances. In those cases that are not clear-cut, the resolution of the issue will turn upon questions of fact, degree, and value judgment.
I am satisfied that the issue which has arisen in Mr and Mrs Sheedy's caravan floor is not an issue which a reasonable consumer would expect in a new caravan. In addition, the failure to comply with the guarantee cannot be remedied easily and within a reasonable time. Reinforcing the floor in the way Cosy Cabs has done has not remedied the defect in the floor and has not make the caravan of acceptable quality. I am satisfied that the defective floor is not the kind of issue which a reasonable consumer would expect to encounter in goods of this value. It is a major failure to comply with the consumer guarantee that the caravan will be of acceptable quality.
I am therefore satisfied that Mr and Mrs Sheedy were entitled to reject the caravan when they did in November 2019.

[17]