This appeal concerns the purchase by the appellant of a watercraft device known as a Yamaha Jet Seascooter Pro (watercraft) from the respondent. The purchase was made online on 14 December 2021. The price was $1989.26.
The watercraft is a battery-powered propeller driven device capable of propelling a swimmer.
The watercraft was provided by the appellant to her son as a Christmas present in December 2021. The appellant says the device was used on two occasions, at the beach. The first occasion was 25 December 2021 and then again in early January 2022. When the appellant's son again sought to use the watercraft at the end of January or early February 2022 the device would not operate as the propeller would not rotate.
The watercraft was not returned to the respondent until October 2023. In part this was because the appellant travelled overseas in February 2022 and did not return to Australia until February 2023. Apparently, the return of the goods to the respondent was also delayed because there was a dispute about who would pay for its return.
The respondent denied it was responsible for the defect in the goods, contending the "rotor" was corroded because the appellant had failed to properly clean and maintain the watercraft.
The appellant commenced proceedings in the Tribunal, originally numbered GEN 23/51426, on 16 November 2023. In the application, the appellant sought an order that the respondent pay her $1929.26, being the purchase price of goods. The application stated "… it has been the propeller seizing to the rotor after only two uses that has caused the irreversible damage to the [watercraft]". The claim was made under ss 54 and 55 of the Australian Consumer Law (NSW) (ACL).
Initially, the proceedings were listed for hearing and an order made in favour of the appellant in the amount claimed. However, that order was set aside because the respondent did not appear at the hearing.
Following the set aside, both parties appeared at a subsequent hearing in consequence of which the appellant's claim was dismissed by order dated 28 February 2024 (decision). The Tribunal provided reasons for its decision (reasons).
The appellant appeals the decision.
[2]
Notice of Appeal, Reply to Appeal and hearing of the appeal
On 4 April 2024, the appellant filed a Notice of Appeal. The notice was dated 12 March 2024.
The notice of appeal was filed out of time. However, an extension of time was sought because the notice had been posted from overseas, the appellant saying "it may not arrive to the Tribunal within the time limit due to postal delays outside the appellant's control".
The grounds of appeal were as follows:
1. The decision was not fair and equitable. Three bases were put forward under this challenge:
1. the reasons referred to the burden of proof being "beyond reasonable doubt". The burden of proof should have been "on the balance of probabilities".
2. The respondent provided 17 pages of new evidence which the appellant only received at first instance. The appellant says "she was only given a few minutes to review it".
3. As to the evidence from the respondent, this included new statements, previously unseen photographs and "a timeline with the solutions which are either partial or untrue". In addition, insofar as evidence was provided in the nature of expert evidence, this was subjective, nonfactual and/or not independent expert evidence.
1. The decision was against the weight of evidence. Here the appellant accepts that the watercraft "still had saltwater left on it causing the corrosion". However, the appellant says that there was evidence as to the cleaning method being adopted which met the requirements for care and maintenance contained in the documents at the time of purchase. The Tribunal also failed to have regard to the evidence of Mr Thornley, who is said to have presented evidence being "proof of the respondent admitting to these types of [watercraft] rusting and [the respondent] having sometimes problems trying to remove the propellers when this happens". In short, the appellant says the watercraft was maintained in accordance with the instructions provided with it.
2. There is significant new evidence that was not reasonably available at the time of the hearing. This evidence is contained in emails attached to the appellant's submissions in reply being an email from "Tom" from Aqua toys, a company located in the United Kingdom.
The respondent filed a Reply to Appeal dated 19 April 2024. The reply can be summarised as follows:
1. As to the decision being not fair and equitable:
1. the Tribunal applied the correct test, being "on the balance of probabilities".
2. As to the submission of new evidence, there were no new facts to those provided in earlier documents, the information being "reformatted as requested by NCAT" photographs included in the bundle had already been sent to the appellant when "corresponding after an assessment and for the initial hearing on 4th of December"
3. at the hearing on 28 February 2024, the appellant accepted the documents being an email to her as stated in the reasons.
4. There were no untruthful statements made concerning the time of first contact, the respondent accepting that first contact concerning the problems may have occurred in February 2022 although no records had been kept of this fact. Otherwise, the respondent denies any allegation that it lied about photographs concerning like watercraft of a similar age which it used as a comparison.
1. As to the decision being against the weight of evidence, the respondent said:
1. the evidence provided by the appellant was not extensive. "The only proof that the unit in their opinion was not fit for use were the three statements by her husband, son and a friend and two Google reviews from units sold overseas".
2. The substantive dispute concerned whether the watercraft was maintained according to the manual. In this regard the respondent said the watercraft "was so corroded that the motor was fused to the propeller shaft". Of this the respondent said "in our experience, the corrosion must have come from not properly washing/soaking the machine in freshwater after use".
1. At the hearing of the appeal, the respondent objected to the appellant being permitted to rely on the new evidence from Aqua toys.
Following a call over, the parties filed evidence and submissions in support of their respective positions. However, not all evidence of the hearing at first instance was submitted to the Appeal Panel.
The hearing of the appeal occurred on 27 June 2024. The appellant appeared by telephone. The respondent was represented by Mr Hochgrebe, who appeared by AVL.
During the hearing we drew to the parties attention the following matters:
1. the appeal was filed out of time;
2. the requirements concerning an application for leave to appeal;
3. the appellant appeared to raise a question as to whether she had been afforded procedural fairness (because of the late provision of the respondent's document at the original hearing);
4. there may be an issue concerning who bore the onus of proof having regard to the s 54(6) of the ACL, in circumstances where the respondent was asserting the damage to the goods occurred by reason of the appellant's failure to maintain;
5. the respondent had raised at the original hearing and was seeking to maintain its position that, in any event, the appellant has failed to mitigate her loss because the watercraft was not returned to it for a period well in excess of one year after the issue of the defect was first raised.
We also noted to the parties that we were not provided with a transcript of the proceedings at first instance. Having drawn the significance of this matter to the attention of the appellant, she did not seek an adjournment or the opportunity to provide this material after the conclusion of the hearing. Rather she accepted we should finalise this appeal on the basis of the material already submitted.
[3]
Consideration
There is right of appeal on a question of law. Otherwise leave to appeal is required: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). As this is an appeal against a decision made in the Consumer and Commercial Division of this Tribunal, leave to appeal may only be granted if the appellant demonstrates she may have suffered a substantial miscarriage of justice because the decision was not fair and equitable, against the weight of evidence, or there was significant new evidence not reasonably available at the time of the original hearing: Sch 4 cl 12(1) of the NCAT Act. As explained to the parties, the principles concerning the grant of leave was set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 (Collins).
As to whether leave should be granted in connection with new evidence, the decision of Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 deals with the meaning of the expression in Sch 4 cl 12(1)(c) and how it is to be applied.
[4]
Appeal out of time
The Notice of Appeal was received by the Registry on 4 April 2024. This is the date it was lodged for the purpose of determining whether it was filed in time.
Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (Rules) provides that an appeal must be lodged within 28 days from when the appellant was notified of the decision or given reasons for the decision (whichever is the later). According to the Notice of Appeal, the decision was received by the appellant on 1 March 2024. Consequently the appeal should have been filed by 29 March 2024. The appeal was therefore 6 days late.
We note the notice of appeal is dated 12 March 2024 and was posted from overseas. While there is no explanation as to why the appeal could not have been lodged by email, having regard to the fact the appeal was only late by 6 days, the appellant was overseas, and in the absence of any obvious prejudice to the respondent, we will extend time.
[5]
New evidence
As noted above, the appellant seeks to rely on correspondence from a company called Aqua Toys and a person called "Tom" and group called "Aqua Toys Sale Team". The appellant also refers to new photographs.
In our view, the appellant has not established this evidence was not reasonably available at the time of the original hearing as that expression is used in Sch 4 cl 12(1)(c) of the NCAT Act: see Al-Daouk at [19] and following. Consequently, leave to rely on this new evidence is refused.
[6]
Procedural fairness
One matter identified in the Notice of Appeal and at the hearing of the appeal that might raise a question of law is whether the appellant was denied procedural fairness.
At the hearing at first instance, the respondent relied on a bundle of documents that had not in fact been provided to the appellant prior to the hearing. It was said by the respondent that these documents were the same as those previously provided to the appellant. However, the documents had been reorganised in accordance with directions of the Tribunal.
The documents were sent to the appellant by email.
The appellant effectively says that what occurred amounted to a denial of procedural fairness. However, in the course of submissions to the Appeal Panel, she accepted that, having reviewed the bundle of documents, at the original hearing she agreed to proceed.
She now says on appeal that she did not realise there were new documents in the bundle. However, she did not suggest that the Tribunal acted in any matter which denied her an opportunity to consider the material from the respondent or to address that material at the original hearing.
In our view, these matters do not support a conclusion that the appellant was denied procedural fairness by the Tribunal or that she was not afforded a reasonable opportunity to be heard. As we indicated above, the appellant has not provided a transcript of the proceedings at first instance and there is no evidence that the hearing in some way miscarried. Further, there is no evidence that, if she experienced any difficulties during the hearing, she raised those matters with the Tribunal and/or was denied an appropriate adjournment.
This challenge fails.
[7]
Grounds of appeal and leave to appeal
It is convenient to deal with the remaining issues in this appeal together.
The claim by the appellant was that the respondent had contravened ss 54 and 55 of the Australian Consumer Law (NSW) (ACL). The appellant says the Tribunal applied the wrong standard of proof. Also, the appellant claims a refund of the purchase price for the watercraft was sought on the basis the Tribunal failed to have proper regard to the evidence of the appellant concerning the use and cleaning of the watercraft.
[8]
Legal principles
Sections 54 and 55 provide:
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.
…
(6) Goods do not fail to be of acceptable quality if:
(a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and
(b) they are damaged by abnormal use.
…
55 Guarantee as to fitness for any disclosed purpose etc.
(1) If:
(a) a person (the supplier ) 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 reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit.
(2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a) the consumer makes known, expressly or by implication, to:
(i) the supplier; or
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).
…
Section 54 is concerned with whether the goods are of acceptable quality at the time of supply. Section 54(2) specifies criteria by which acceptable quality is to be judged. The criteria are cumulative. Of these criteria, Lee J said in Williams v Toyota Motor Corporation Australia Limited (Initial Trial) [2022] FCA 344 (Williams) at [164]:
164 Despite the obscure drafting of other sections of the ACL, s 54 is relatively straightforward. The continued use of the conjunction "and" in s 54(2) makes clear that goods must possess all of the qualities listed in s 54(2), to the requisite standard, in order to comply with the guarantee of acceptable quality. Failure to possess any one of those qualities will result in a failure to comply with the guarantee: see Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702 (at 732 [142(d)-(f)] per Derrington J); Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 (at [25] per Wheelahan J)
As to the application of the test, which concerns the state of the goods at the time of supply, and events occurring after the supply, His Honour continued at [165]-[168]:
165 The question of whether the goods are of acceptable quality is to be answered by reference to the quality of the goods at the time of supply: Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715; (2021) 154 ACSR 235 (at 377 [606] per Perram J); Jayco (at [27]); Vautin (at 738 [170]-[171], 760 [263]). The applicable standard of "acceptable quality" is to be determined by reference to what the "reasonable consumer" would regard as acceptable, having regard to the matters in s 54(3). The relevant enquiry is necessarily objective: Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182 (at 199 [43] per Moore J, 205 [64] and 207 [72] per Branson J, with whom Jacobson J agreed at 209 [81]); Capic (at 265 [105]). As Wheelahan J explained in Jayco (at [26]):
The reasonable consumer sits with an array of other hypothetical persons who have been recruited by the law and by reference to whom objective standards are evaluated: see, Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49; 4 All ER 210 at [1]-[4] (Lord Reed JSC). Such a person has been described as an anthropomorphic conception of justice that is and must be the court itself: see Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3; [1956] AC 696 at 728 (Lord Radcliffe).
166 In determining whether the "reasonable consumer" would regard the goods as acceptable at the time of supply, one must assume that the construct is "fully acquainted with the state and condition of the goods (including any hidden defects of the goods)": s 54(2) of the ACL; see also Medtel (at 205-206 [65]-[70]). Thus, in the present case, the "reasonable consumer" is taken be fully acquainted with the nature of the Core Defect, including the ways in which it causes the Relevant Vehicles to malfunction when exposed to the High Speed Driving Pattern, and the class of consequences or symptoms associated with the Core Defect.
167 Although TMCA accepts that the question of whether the goods are of acceptable quality is to be assessed by reference to the quality of the goods at the time of supply, it submits that the determination of what was objectively reasonable for the consumer to expect is made taking into account all relevant information available at the time of trial. Relying on the reasoning in Medtel (at 200 [45], 203 [57], 206 [70], 209 [81]), TMCA submits that "the individual experience of each vehicle owner, affects the assessment".
168 The flaw in this proposition is that the state and condition of the vehicles at the time of supply is not determined by anything occurring after the time of supply. The fact that a defective product has continued to perform following the time of supply through to the time of trial does not defeat a finding that the product was defective at the time it was supplied. In Medtel, as Branson J (at 202 [54], with whom Jacobson J agreed at 209 [81]) explained, "the principal issue to be determined ... is whether a product which, at the time of trial, can be demonstrated to have performed, and to be continuing to perform, satisfactorily can nonetheless be found to be "not of merchantable quality" within the meaning of s 74D(1) of the Trade Practices Act 1974 (Cth)". Her Honour found (at 199 [41]) that the goods in issue - pacemakers - were not of merchantable quality at the time of supply, despite the fact that the applicant's pacemaker had not failed by the time of trial: see generally at 197-202 [36]-[52].
On appeal, the Full Court did not disagree with this analysis: see Toyota Motor Corporation Australia Limited v Williams [2023] FCAFC 50.
In respect of the observations of Lee J at [166]-[167], it is important to note that His Honours comments do not preclude evidence of matters occurring subsequent to the supply to found a claim that the goods lacked the qualities required by s 54(2) at the date of supply and are not of acceptable quality.
In this regard, in Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 (Jayco), Wheelahan J said at [27]:
The hypothetical question whether the reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply. However, the reference in s 54(2) to hidden defects has the consequence that for the purposes of determining that question, the reasonable consumer may be acquainted with information known at the time of trial: cf, Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182 at [70] (Branson J, Jacobson J agreeing). The standard of acceptable quality prescribed by s 54(2) is not absolute, or a standard of perfection. It is tempered by what a reasonable consumer would regard as acceptable having regard to the several matters in s 54(3). These matters render the standard of acceptable quality elastic, and context specific: Contact Energy Ltd v Jones [2009] NZHC 2631; [2009] 2 NZLR 830 at [95] (Miller J). The significance of the components of the guarantee of acceptable quality will therefore vary with the circumstances of each case.
For example, a subsequent failure which reveals a defect or the deterioration of the goods in a period of time or manner that demonstrates lack of durability is admissible to prove the breach of the guarantee in s 54: see eg Grehan & Anor v WestPoint Autos Qld Pty Ltd [2022] QCATA 65 and Bray V BCP Holdings Pty Ltd t/as Bundaberg Toyota [2024] QCAT 223.
The onus is on the claimant to prove a relevant contravention. However, the onus is on a supplier to prove any defence available to a supplier under 54(6): see eg Effem Foods Ltd v Nicholls [2004] NSWCA 332; (2004) ATPR 42-034 and the commentary in 2023 Miller's Australian Competition and Consumer Law Annotated, Russell V Miller, 45th Ed at [ACL. 54.60] Exceptions.
As to what evidence is required from a claimant to prove contravention, this depends on the factor or factors in s 54(2) which are relied upon to demonstrate lack of acceptable quality and the matters in s 54(3) which inform the "reasonable consumer" in the manner specified.
As to the requirement that goods be "durable", this term is not defined in the ACL. It should be given its ordinary English meaning. The Macquarie Dictionary, Macquarie Library 3rd ed defines durable domain:
having the quality of lasting or enduring, not easily worn out, decayed etc, of or relating to goods which will be good for some time, as opposed to those intended to be used or consumed immediately.
As is evident, the meaning has regard to both the physical characteristics of goods to withstand wear or damage and the period of time for which such resistance should last. Proof of such matters does not, necessarily, require the provision of expert evidence from a claimant. For example, an immediate failure arising from the operation of the device may be sufficient evidence to prove lack of durability. The matters in s 54(3) of the ACL will inform the reasonable consumer in s 54(2) of whether particular goods are durable.
In respect of s 55, Wheelahan J said in Jayco at [28]-[29]:
Fitness for purpose
28 Section 55 of the ACL provides for a guarantee that the goods are reasonably fit for any disclosed purpose, or for any purpose for which the supplier represents that they are reasonably fit. The meaning of "disclosed purpose" is the subject of s 55(2) -
(2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a) the consumer makes known, expressly or by implication, to:
(i) the supplier;
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).
29 There is some conceptual overlap between the statutory guarantees in s 54(1) and s 55(1) to the extent that any disclosed purposes or represented purposes that engage s 55(1) may also amount to common purposes for the objective standard of acceptable quality under s 54(2)(a): see, Jewson Ltd v Boyhan [2003] EWCA Civ 1030; [2004] 1 Lloyd's Rep 505 at [68], [71] (Clarke LJ), and at [77] (Sedley LJ).
However, while there is an "overlap", it is the purpose for which the goods are to be used which is relevant to determining a contravention of s 55. The fact the goods are not acceptable quality does not, necessarily, mean the goods are not fit for purpose.
[9]
Standard of proof challenge
The appellant says the Tribunal applied the wrong standard of proof, namely "beyond reasonable doubt". This expression was used at [24] of the reasons where the Tribunal said:
24. I am not satisfied the applicant has established beyond reasonable doubt that there was a defect with the Seascooter. I accept the evidence of the respondent who said he had many years' expertise with these types of vehicles and the type of corrosion shown was due to a failure to properly maintain the Seascooter. The respondent provided a letter from Stallion Sport Limited who manufacture the item who confirmed in their letter of 17 January 2017 the respondent's technician had over 20 years' experience.
What is the correct standard of proof is a question of law.
However, we do not accept that the Tribunal made an error by applying the wrong standard of proof. As is evident from the reasons, the Tribunal ultimately decided that the applicant had "failed to establish on the balance of probabilities [she was] entitled to the orders sought]: reasons at [31]. See also reasons at [23].
Having regard to the above, and considering the reasons as a whole, we are satisfied the reference to "beyond reasonable doubt" is an error in the text. This could have been corrected under s 63 of the NCAT Act. However, the matter was not drawn to the attention of the Member, hence no correction was made.
This challenge fails.
[10]
Was the watercraft of acceptable quality?
As to the substantive question of whether the goods were of acceptable quality, the appellant says that the watercraft was only used twice, that it was appropriately cleaned after use and, when set aside for a short period of time, corroded and became inoperable. The "timeline" on which the appellant relies, set out in her submissions in the appeal, is as follows:
14 December 2021 Purchase of the Yamaha Jet Pro Pod
25 December 2021 Pod used for the first time, run for soaked for one hour in freshwater. The User Manual instructs the user to follow either the former or the latter maintenance method, but we use both to ensure the Pod was properly flushed and free of saltwater and debris. Afterwards the Pod was dried with a cloth, put back in its box and keep in a dry, clean place in the house.
Early January 2022 The Pod was used a second time and the cleaning maintenance procedure followed as per above.
Later January/February 2022
Attempted to use the Pod for a third time. Noticed that the propeller was 'stuck' and would not move. Called Underwater Australasia, which told us to watch again a YouTube video, remove the propeller ourselves and clean underneath. We tried to do so but the propeller was impossible to remove. The Pod had failed and could not be used after this point. No request from UA was made to us on that telephone call for a follow-up email. At this point in time we had to leave Sydney due to family reasons. The Pod was cleaned and kept in its box in Sydney.
February-October 2023
Return to Sydney and retaking of communications with Underwater Australasia. Exchange of emails regarding warranty, repairs and shipping of the Pod. Underwater Australasia acknowledges that the Pod is in very good condition, but claims the corrosion under the propeller, which has caused the Pod to file, has occurred due to us not soaking the Pod in freshwater after use, refusing to look at any evidence proving otherwise. They state the Pod is no longer under warranty (6 months) and suggest we buy another unit at full price.
The appellant's evidence included statements from herself, her son and her husband, as well as a copy of the user manual provided with the watercraft. Those statements together with one from a neighbour, Mr Ponzoni, were to the effect of the matters set out in the timeline above concerning the use and maintenance of the watercraft.
The user manual (appellants bundle (AB) attachment 3.3) stated:
Washing care
Method A: So the Seascooter in freshwater for a prox. One hour after every use to prevent salt-sand and chlorine crystal accumulation in the Seascooter
Method B: Switch the Seascooter on for approximately one minute in freshwater to flush the Seascooter and propeller components clear of any debris.
Visit our YouTube channels "Yamaha Seascooter" for video instruction.
To clean the Seascooter do not use detergents; only use a damp cloth to wipe the unit clean.
Use a cloth to dry the Seascooter and the battery compartment.
DO NOT leave the Seascooter in the water. Always take the unit out of the water when not in use.
Sand or Grid on Seals
Ensure that sand/grit does not get on the seals as correct maintenance and care is essential. To remove sand or Grid from the seals, rinse the seals in freshwater and apply fresh lubricant. If there is sand inside the Battery Housing, gently brush the sand from the unit taking care not to scratch the sealing surface.
We were not provided with a copy of the YouTube video referenced in the user manual.
The respondent's position was that the watercraft was not properly cleaned by the appellant or her son, the rotor head corroded and seized. Further, as the item was not returned for more than a year, it had degraded to a stage where it could not be repaired or and/or was uneconomical to do so. In this regard the respondent relied on a statement in the warranty which said:
This warranty does not cover any product that has been subject to misuse, negligence or accident, or that has been operated in a way contrary to the operating instructions as specified in the User Manual …
The appellant accepted that the cause of the problem was corrosion and that, by 2023, the device could not be repaired. The appellant did not challenge the finding of the Tribunal [27] to this effect, stating in her appeal submissions at paragraph 12.2:
The fact that the [watercraft] still had saltwater left on it causing the corrosion is accepted in point 27 of the Order. However, the evidence provided by RW Thorley Sierra's Statutory declaration, and Mr Ponzoni's have been ignored in favour of a photograph provided by the respondent carrying neither objective evidence of it being of a similar age Pod, nor how the Pod in the photograph has been maintained.
The appellant also said that the Tribunal failed to have regard to the statement of Mr Stephen Thorley, AB attachment 3.7. This evidence included evidence to the effect that, in an email dated 12 October 2023, the respondent's representative said removal of rotor was not necessary. This email was not provided to the Appeal Panel as part of the evidence in support of the appeal nor was it provided by the respondent in its reply material. However, the email was read to us by the appellant, without objection from the respondent.
The challenge on this aspect does not raise a question of law and requires leave to appeal. The appellant must show she may have suffered a substantial miscarriage of justice. That is, the appellant must show she "may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved": Collins at [78].
The Tribunal made the following findings in respect of the evidence before it:
24. I am not satisfied the applicant has established beyond reasonable doubt that there was a defect with the Seascooter. I accept the evidence of the respondent who said he had many years' expertise with these types of vehicles and the type of corrosion shown was due to a failure to properly maintain the Seascooter. The respondent provided a letter from Stallion Sport Limited who manufacture the item who confirmed in their letter of 17 January 2017 (sic- 2024) the respondent's technician had over 20 years' experience.
25. The applicant has not provided any evidence, other than some google reviews of an issue with this item. They are not sufficient evidence of a manufacturing defect or the good not being of acceptable quality or fit for purpose. I accept the respondent's evidence they are continuing to sell this item and they have not had any continuing issues as otherwise they would not supply the item to customers.
26. The applicant says the rotor needed to be removed after each use to properly clean the machine, however the respondent says in their email of 11 October 2023 that is not the case and it was not a requirement to remove the rotor. I prefer their evidence to that of a google review.
27. The applicant says the machine was cleaned in accordance with instructions and provided a statement from Rafael Thornley and Nicholas Ponzoni. However the evidence given by the respondent of the current condition of the machine and the comparable pictures provided of a similarly aged machine would indicate the machine had salt water left on it causing the corrosion. I prefer the respondent's evidence to that of the applicant about the cleaning of the product based on the visual evidence.
28. The other factor contributing to the issue is the length of time between when the problem was identified and when the Seascooter was eventually returned to the respondent. The original query about returning the Seascooter was in May 2023 and the respondent advised they need only return the Seascooter unit at their cost but not the battery or charger for them to inspect. The issue on the applicant's own evidence occurred in January or February 2022 only a couple of months after purchase.
29.The applicant said there was a dispute about who would pay for the return however that did not occur until approximately 18 months after purchase. The applicant wrote by email on 11 October 2023 to say they had been overseas and now wanted to return the item to have it inspected so that delay did not arise due to cost of return. Even if that were the case, the cost to return the item was $36 and the applicant eventually paid for the return.
30.If the Seascooter had been returned shortly after the problem arose, in February 2022 there may have been a way to easily resolve the issue or some other issue may have been apparent but it appears if there was an issue with the machine, the extent of the corrosion has obscured or overtaken any other issue there might be with the machine.
31. The applicant has failed to establish on the balance of probabilities they are entitled to the orders sought.
[11]
Orders
In light of our reasons, the following orders should be made:
1. Leave to appeal is refused and the appeal is dismissed.
[12]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 08 July 2024
In this appeal, the following facts are not in dispute:
1. The watercraft was purchased on 14 December 2021.
2. It was only used twice- the first time on 25 December 2021 and the second time in early January 2022.
3. After each use both method A and method B specified in the user's manual were used to clean the watercraft.
4. The cleaning processes adopted by the appellant or her son did not remove all saltwater.
5. At the end of January/ early February 2022, an attempt was made to use the watercraft for a third time. The propeller was stuck and would not move. At that time an attempt by the appellant or one of her family to remove the propeller in accordance with the YouTube instructional video referred to in the user manual but the propeller could not be removed.
6. The watercraft was not returned to the supplier until October 2023, more than 18 months after the watercraft failed to operate. By that time it was irreparable. This was because the rotor, to which the propeller was attached, had corroded.
There was no independent expert evidence provided by either party concerning the corrosion of the rotor. However, as noted in the previous paragraph, the appellant accepted that all saltwater was not removed by the cleaning process adopted by her son.
It was not suggested that the cleaning method for storage shown on the YouTube video was undertaken when the watercraft was set aside after second use. This video apparently shows how to remove the propeller. Rather, the only time an attempt was made to remove the propeller was when the appellant's son went to use the device at the end of January/early February 2022 and it was found to be inoperable. That attempt was unsuccessful.
There is no direct evidence the rotor had corroded at the time attempts were made to use the watercraft for a third time at the end of January/early February 2022 other than that the propeller would not move. From the photos we have been provided, it appears the propeller, unless removed, would have obscured a view of the rotor at that time. However, by the time the watercraft was provided to the respondent for inspection in October 2023 when the propeller was removed, the rotor had "fused to the motor core" due to corrosion which was described as "extensive": see Mr Hochgrebe's statement, respondent's bundle (RB) p 27.
There was evidence to the effect that the same model of Seascooter with one year of use did not exhibit similar signs of corrosion. This is some evidence (perhaps of little weight) that rotors in this type of watercraft would not corrode in a short period of time. This evidence was provided through the respondent's witness Mr Hochgrebe. Although he is not an independent expert, he "is an experienced service technician for the full range of Seascooters with over 15 years' experience".
Significantly, there was no evidence, other than the fact the propeller would not rotate after the watercraft had been unused for about a month, that would suggest that the rotor failed because it was made of material or constructed in a manner that meant it lacked the quality of durability. On the other hand, having regard to the appellant's concession that the cleaning process did not remove all seawater, there is evidence to support the conclusion that the corrosion was a consequence of the failure to properly clean the device by removing all seawater.
Of this last point, the appellant says that the cleaning method proposed in the user manual was inadequate to achieve the required outcome.
There was no evidence to support this conclusion other than, perhaps, that such an inference could be drawn from the fact the cleaning methods were employed and saltwater remained on the device.
In Carr v Baker (1936) 36 SR (NSW) 301. Sir Frederick Jordan said (at 306):
"The existence of a fact may be inferred from other facts when those facts make it reasonably probable that it exists; if they go no further than to show that it is possible that it may exist, then its existence does not go beyond mere conjecture. Conjecture may range from the barely possible to the quite possible."
In the present case, it is equally possible that the cleaning methods were not properly employed by the appellant's son. As such, we are not satisfied an inference should be drawn that the cleaning methods set out in the user manual were properly employed but those methods were inadequate to achieve the required results. In saying so, this is not a case where the watercraft was only unused for a short period of time (a day or two) or where the recommended cleaning method for longer term storage had been used.
In our view, the appellant has not established the watercraft was not fit for purpose, not acceptable in appearance and finish, had defects, was unsafe or was otherwise lacking in durability. There was no evidence to establish any relevant defect in the materials used or their suitability as part of the construction of the watercraft.
In the absence of evidence concerning the corrosive effects of seawater and the suitability and capacity of the materials used in the watercraft to resist such effects, the period of time from when the device was operated for a second time until it was next sought to be used at the end of January/early February 2022 was not so short to lead to a conclusion that the watercraft was not durable. Rather, in our view, a reasonable consumer fully acquainted with the goods would not regard the watercraft to have failed to be of acceptable quality in the circumstances where:
1. saltwater was admitted to remain in the watercraft which was set aside for an extended period; and
2. the cleaning method of removing the propeller, apparently shown on the YouTube video referred to in the user manual when the device is stored, was not undertaken by the appellant.
Having regards to the above, it could not be said "the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach": Collins at [77].
It follows leave to appeal should be refused.
Further, even if we had determined the appellant may have suffered a substantial miscarriage of justice, in the circumstances of this case we would have refuse leave for the following reasons.
First, the watercraft was not returned to the respondent at the time the appellant found it to be inoperable. Rather, the appellant went overseas in the goods were left unattended to for a period in excess of 12 months during which time, no doubt, the corrosive effects of seawater continued.
Secondly, any opportunity to repair the goods, which might have been available in February 2022, was lost because of the state of deterioration of the goods when presented to the appellant in October 2023.
Finally, by October 2023 the rejection period which may have entitled the appellant to reject the goods and require a refund had past: see s 259 and 262 of the ACL, the latter section setting out when a consumer is not entitled to notify a supplier that they reject the goods because of major failure.
These matters suggest that, by reason of delay, the appellant would not have been entitled to a remedy in any event.