SMA Motors Pty Ltd t/as Autos Auctions v Smith

NCAT Appeal Panel|2022-04-26|Before: Blake AM

NCAT Procedural Direction 3 - Expert Evidence Category: Principal judgment Parties: SMA Motors Pty Ltd t/as Autos Auctions (Appellant) Lawrence Allan Smith (Respondent) Representation: Solicitors: DCE Lawyers (Appellant) Heffernan Legal (Respondent) File Number(s): 2022/00032941 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 20 January 2022 Before: M McCue, General Member File Number(s): MV 21/10191

Background

On 5 October 2018, Mr Smith (the respondent) purchased a used Jeep Grand Cherokee from SMA Motors Pty Ltd trading as Auto Auctions (the appellant), which showed 138,507 kms on the odometer (the Jeep). The purchase price was $29,385.00 plus a buyer's fee of $ 495.00, a total of $29,880. After allowing for the trade-in of $5,000 for Mr Smith's Kia Sorento, and a $1,000.00 deposit, $23,880 was paid by the respondent to the appellant on changeover.

Material before the Appeal Panel

In considering this internal appeal we have had regard to the following material: 1. the decision under appeal made 20 January 2022; 2. the respondent's original application to the CCD with attachments; 3. orders and directions made by the Appeal Panel on 4 February and 16 February 2022; 4. the following documents relied on by the appellant: 1. application for stay filed on 4 February 2022; 2. notice of appeal and attachments filed on 4 February 2022; 3. appellant's submissions dated 10 March 2022; 4. new evidence, being the affidavit of Laurie Morris (Mr Morris), an employee of the appellant, sworn 4 March 2022 and received 14 March 2022; 5. undated document entitled summary of facts prepared by Mr Morris and received on 14 March 2022; 6. expert report of Gregory Organ (Mr Organ) dated 15 June 2021 with annexures; 7. appellant's submissions in reply dated 5 April 2022 with annexures; 1. the following documents relied on by the respondent: 1. reply to appeal filed on 18 February 2022; 2. respondent's submissions dated 30 March 2022 with attached copies of the following evidence which was before the Tribunal in the original hearing including: 1. contract for the sale of the Jeep dated 5 October 2018 for the price of $29,880.00; 2. Form 5 notice under the Motor Dealers and Repairers Act 2013 (NSW) (the MD&R Act) relating to the Jeep; 3. letter from Heffernan Legal for the respondent to the appellant, dated 25 September 2019, seeking to have the Jeep repaired or a refund and return; 4. report from Stephen Clark (Mr Clark) dated 6 June 2021; 5. second report from Mr Clark dated 7 July 2021; 6. invoice from Northern Rivers Chrysler dated 31 December 2018; 1. new evidence relied on by the respondent consisting of: 1. affidavit of the respondent, sworn 25 March 2022; 2. affidavit of Robert Jacob Mulder (Mr Mulder) sworn 31 March 2022; 3. affidavit of Michael Heffernan (Mr Heffernan) sworn 30 March 2022 with attachments.

Outline of the decision under appeal

The Tribunal found that the appellant's sale of the Jeep was subject to the standard dealer guarantees pursuant to the provisions of the MD&R Act, and to the consumer guarantees under the ACL. The claim was made under s 263(4) of the ACL, with recovery action commenced against the appellant as a supplier in accordance with s 259(4) of the ACL.
The Tribunal provided lengthy and detailed reasons for decision at the end of which it summarised its findings, thus: "(1) There was a supply of goods in trade or commerce; (2) The respondent did not comply with the guarantee as to acceptable quality as set out in section 54 ACL; (3) There was a major failure; (4) The applicant has rejected the vehicle in accordance with s 259(3)(a); (5) The respondent is obliged to collect the goods from the applicant in accordance with s 263(3) at its own expense. (6) Mr Smith is entitled to a refund and damages pursuant to ss 263(4)(a)(i) and 259(4); (7) The amount of the refund is $ 29,880.00; (8) The amount of the damages occasioned by the consequential loss is $ 5,616.00 referenced as follows: (i) K Mart - Tyre and Auto Service - 27/12/2018 - $ 29.00 (ii) Service invoice Chrysler Northern Rivers - 31/12/2018 - $ 565.00 (iii) Diesel particulate filter clean - $ 650.00 (iv) Gemstar Auto repairs - 23 May 2019 - $ 3,400 (v) Gemstar Auto repairs - 5 June 2019 - $ 625.00 (vi) Avis Rental - pick up from Condell Park June 2019 - $ 347.00."

The appeal

Internal appeals may be made as of right on a question of law and otherwise with leave of the Appeal Panel: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
In the notice of appeal the appellant asserted ten errors of law, and also sought leave to appeal on the ground that the decision was not fair and equitable and was against the weight of evidence.
A question of law may include: 1. whether there was a failure to afford procedural fairness: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13]; 2. whether there has been a constructive failure to exercise jurisdiction by failing to address a material issue or by overlooking material evidence: Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [9] (Basten JA with Beazley JA at [1] agreeing); 3. whether an inference is drawn from facts that are not reasonably capable of supporting the inference: Whitehaven Coal Mining Limited v Pain [2018] NSWCA 229 at [29] (White JA with Emmett AJA at [65] Simpson AJA at [66] agreeing).
The "errors of law" relied on by the appellant in its submissions were nominated as: "1. Evidence not served on the appellant. 2. Jones & Dunkel inference. 3 The Tribunal has misinterpreted the appellant's evidence and given insufficient weight to the applicant's expert evidence. 4. Amount of $650 allowed in error. 5. Inferences that were not open to be drawn on the evidence. 6. Failing to give consideration to the use of the vehicle in determining the amount of compensation. 7. Failing to give proper weight to the corrected service history of the vehicle. 8. Inference regarding the use of incorrect oil in the vehicle that was no open to be drawn on the evidence. 9. The Tribunal did not give sufficient weight to the service by the Jeep Chrysler Service Centre in Lismore. 10. Failure to apply the provisions of s 77 of the Motor Dealers and Repairers Act 2013."
The respondent agreed that the Tribunal had allowed an amount of $650 in error and the parties agreed that the Tribunal's orders should be amended accordingly. The appellant did not pursue point 10 and we have not dealt with it as a result.
While framed by the appellant as "errors of law" most of these raise concerns about issues of fact and require leave to appeal.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17 (Collins), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act may have been suffered where: "… there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance." (emphasis in original)
In Collins, the Appeal Panel at [77], without seeking to be exhaustive in any way, stated the authorities establish that: 1. if there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" within cl 12(1)(a) of Sch 4 of the NCAT Act; 2. the decision under appeal can be said to be "against the weight of evidence" within cl 12(1)(b) of Sch 4 of the NCAT Act where 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.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4 of the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b) of the NCAT Act.
In Collins, the Appeal Panel at [84(2)] stated as follows concerning exercise of that discretion: "(2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed… "
The Appeal Panel may decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and permit such fresh evidence to be given in the new hearing as it considers appropriate in the circumstances: s 80(3)(a) and (b) of the NCAT Act. Further, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including but not limited to any one or more of orders that the appeal is to be dismissed, the decision under appeal is to be varied, and the whole or any part of the case is to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel: s 81(1)(a), (b) and (e) of the NCAT Act.

The issues

We will address the issues raised in the appeal as follows: 1. Should further evidence be admitted on the appeal? 2. Was the appellant denied procedural fairness by the Tribunal's consideration of the second Clark report? 3. Was it open to the Tribunal to draw the Jones v Dunkel inference with respect to the appellant's failure to call Mr Lloyd? 4. Did the Tribunal draw other inferences that were not open on the evidence? 5. Did the Tribunal misquote or misunderstand Mr Organ's report? 6. Was the Tribunal's decision to prefer Mr Clark's evidence over that of Mr Organ unfair and inequitable or against the wight of the evidence? 7. Did the Tribunal fail to consider the respondent's use of the Jeep when assessing damages? 8. Disposition of the appeal.

Should further evidence be admitted on the appeal?

The first and second "errors of law" relied on by the appellant relate to the Tribunal considering and relying on the second expert report from Mr Clark dated 7 July 2021.
The appellant asserts that it was never served with this report and that it was not aware that it was among the materials before the Tribunal until the appellant received reasons for decision in which the report was referred to. The admission and consideration of the report by the Tribunal when the appellant had not seen it gives rise to a question of law as to whether the proceedings were procedurally unfair.
In support of its claim that the report was not served, the appellant seeks to rely on the affidavit of Mr Morris sworn 4 March 2022. Mr Morris is an employee of the appellant who represented it in the proceedings. He expresses the belief that the appellant did not receive the second report of Mr Clark, and says that there is no record of it being received by the appellant. It cannot be found at the appellant's premises despite his searches. He says that the first time he became aware of the existence of the second report was when he read of it in the Tribunal's reasons for decision. Mr Morris refers to the second report as being dated 21 June 2021, when it is dated 7 July 2021. There is no dispute that the second Clark report refers to the report of Mr Organ relied on by the appellant.
In Yuen v Thom [2016] NSWCATAP 243 the Appeal Panel discussed the varying nature of internal appeals under s 80 of the NCAT Act and the circumstances in which new evidence might be admitted on appeal, with respect to whether or not a question of law arose, as is the case here. The Appeal Panel said at [19] to [21]: "[19] The question then arises as to the nature of an appeal that is not being determined by way of a new hearing. Having regard to s 36 of the Act and that the guiding principle of the Act is to facilitate "the just, quick and cheap resolution of the real issues in the proceedings" and that this principle is to be employed when construing any provision of the Act (s 36(2)(b) of the Act), we have concluded that an appeal in the strict sense would be unduly constraining on the Tribunal and not facilitate the guiding principle. Having regard to the guiding principle, an appeal under s 80(1) (that is not to be determined by way of a new hearing) is one that would facilitate an Appeal Panel to "[avoid] errors which cannot be otherwise remedied by the application of the conventional appellate procedures" (CDJ v VAJ (No 1) (1998) 197 CLR 172; [1998] HCA 67 (at [109]) per McHugh, Gummow and Callinan JJ as extracted in Engelbrecht at [61]). This is an appeal that admits of the receipt of further evidence where applicable. This conclusion is supported by, s 38(1) which provides that the Tribunal may determine its own procedure, where the procedural rules do not otherwise make provision. Further still, sch 4, cl 12(1)(c) expressly contemplates the receipt of significant new evidence on an appeal (i.e., evidence that was not reasonably available at first instance) and it would not seem to be necessary to determine an appeal by way of new hearing in every case where an appeal was by leave due to the emergence of such significant new evidence. [20] The ability to receive further evidence is a hallmark of a rehearing (Engelbrecht at [60]). Accordingly, we are satisfied that in an appeal that is not being determined by way of a new hearing, the Appeal Panel would conduct an appeal akin to a rehearing, with the ability to receive further evidence. [21] An appeal on a question of law would rarely warrant the receipt of new evidence. There may nevertheless be circumstances where the particular question of law warrants the receipt of additional evidence to prove the error. In Clements v Independent Indigenous Advisory Committee (2003) 131 FCR 28 at [13], in the context of an appeal on a question of law under s 44 of the Administrative Appeals Tribunal Act 1975, it was stated that it is generally inapposite to receive new evidence on an appeal on a question of law. However, an exception may be made where the evidence is necessary to prove the circumstances to prove a breach of procedural fairness; and so, the receipt of evidence that was not before the decision maker may be appropriate (such as evidence that a hearing notice was not received: see, for example, Re Anasis; Ex parte Total Australia Ltd (1985) 11 FCR 127 at 129).
In Ros v Commissioner of Police [2020] NSWCATAP 70 the Appeal Panel constituted by the President and Deputy President Westgarth said this about new evidence on an appeal, at [32] to [33): "[32] There was a discussion of the issues dealing with the nature of internal appeals relevant to the receipt of further evidence in Yuen v Thom [2016] NSWCATAP 243 at [14]-[22]. Receiving further evidence on an appeal was further discussed in Lettau v Artwork Transport Pty Ltd [2017] NSWCATAP 14 affirming Yuen v Thom. We adopt the analysis in these cases. As such, having regard to the guiding principles under s 36 of the NCAT Act, the appeal in this case (which is not by way of a new hearing) is one akin to a rehearing, with the ability to receive further evidence if appropriate. [33] There are a number of other authorities which set out the principles on which the Appeal Panel might consider an application for admission of further evidence. Generally speaking, the further evidence sought to be admitted would have to relate to the Tribunal's decision at first instance and have been evidence which was relevant at the time to that decision (BCL v NSW Trustee and Guardian [2014] NSWCATAP 18 at [26]-[28]). Whether it is likely the further evidence would have produced a different result at the Tribunal is relevant: BCL v NSW Trustee and Guardian [2014] NSWCATAP 18 at [26]-[28]; Mielczarek v Commissioner of Fair Trading [2016] NSWCATAP 217; Building Professionals Board v Hans [2008] NSWADTAP 13. Any potential prejudice to the other party upon the receipt of further evidence is also relevant: Lettau v Artwork Transport Pty Ltd at [25]. Whether the further evidence would allow the Appeal Panel to consider whether, with the benefit of hindsight, it has been demonstrated that serious injustice has resulted or will, in fact, result from the exercise of the Tribunal's discretion, may also be relevant: ZNX v ZNY [2020] NSWCATAP 41 at [25]."
The fact that new evidence may be necessary to prove a breach of procedural fairness was highlighted by the Appeal Panel in Bui v DB Homes Australia Pty Ltd [2017] NSWATAP 218 at [26]: "[26] Receiving new evidence on an appeal was discussed in Lettau v Artwork Transport Pty Ltd [2017] NSWCATAP 14 affirming Yuen v Thom [2016] NSWCATAP 243. Appeals on questions of law rarely warrant the receipt of new evidence: Yuen v Thom at [20] - [21]; Clements v Independent Indigenous Advisory Committee (2003) 131 FCR 28 at [13]. However, an exception may be made where the evidence is necessary to prove the circumstances to prove a breach of procedural fairness: Re Anasis; Ex parte Total Australia Ltd (1985) 11 FCR 127 at 129. Whether it is likely the new evidence would have produced a different result at the Tribunal is relevant: BCL v NSW Trustee and Guardian [2014] NSWCATAP 18 at [26]-[28]; Mielczarek v Commissioner of Fair Trading [2016] NSWCATAP 217. Any potential prejudice to the other party upon the receipt of the new evidence is also relevant: Lettau v Artwork Transport Pty Ltd at [25]."
In the light of these authorities we were satisfied that we should consider Mr Morris' affidavit as it is provides evidence that the Tribunal had before it and considered the second report from Mr Clark, when that report had not been served on, and its contents were not known to, the appellant. If accepted, Mr Morris' evidence points to there being a denial of procedural fairness to the appellant which arguably merits a remittal and rehearing.
The respondent, however, disputes Mr Morris' evidence that the appellant was not served with Mr Clark's second report, and seeks to rely on the following evidence, which has not been previously filed, to demonstrate that the second report was served on the appellant: 1. affidavit of the respondent, sworn 25 March 2022 - Mr Smith relevantly says that he arranged for Mr Clark to prepare a second report responding to the report the appellant had provided from Mr Organ. He collected it from Mr Clark on 7 July 2021. The next day he went with his friend Robert Mulder to deliver copies of the report to NCAT at Liverpool and to the appellant. Mr Mulder delivered the reports, while Mr Smith drove. Mr Smith's ability to walk at the time was restricted, which is why he could not deliver the documents himself. They arrived at NCAT first where Mr Smith remained in the car, while Mr Mulder delivered the report. They then drove to Woodville where Mr Mulder entered the appellant's premises to serve the report and returned having done so; 2. affidavit of Mr Mulder sworn 31 March 2022 - Mr Mulder confirms he assisted Mr Smith to serve some documents on 8 July 2012. The first was delivered to NCAT in Liverpool. Due to COVID personal delivery was not possible and the document was dropped in a receiving box. The second delivery was to Auto Auctions for Mr Morris. He told the person at reception that he had a document for Mr Morris. That person (whose name he cannot remember) confirmed that they worked for Auto Auctions and could take the document. He left the document with reception and returned to the car; 3. affidavit of Mr Heffernan sworn 30 March 2022 with attachments - Mr Heffernan says that he asked the NCAT Registry to confirm by email what documents it had received on 8 July 2022. That email attaches all document received which included the report from Mr Clark dated 7 July 2021.
We considered these three affidavits relevant to the issue of whether the appellant was given procedural fairness by the Tribunal with respect to Mr Clark's second report. To not admit them into evidence before the Appeal Panel, when we have agreed to admit Mr Morris' affidavit on the same issue, would deny the respondent procedural fairness on appeal. We determined to admit them into evidence before the Appeal Panel.

Was the appellant denied procedural fairness by the Tribunal's consideration of the second Clark report?

In considering whether or not the Tribunal denied the appellant procedural fairness with respect to Mr Clark's second report, the respondent drew our attention to the following submission made by Mr Morris during the initial hearing at 1:30:30, when he said: "So this is not DPF (sic) related. The blown head gasket, which both the experts and we agree, both experts have said that. Its 21,000K's since the car was sold."
It is important to understand that the Mr Organ and Mr Clark (who have mechanical expertise) provided reports but did not give evidence to the Tribunal. The Tribunal only had written reports from them before it. Mr Clark's second report made mention of a head gasket failure, principally in response to Mr Organ's report. Mr Clark's first report did not specifically mention the head gasket, although it did state that the Jeep had failed a Tee-Kay (TK) test, which is indicative of a head or head gasket problem. Indeed, Mr Organ relied on the report of the Tee-Kay test from Mr Clark to conclude that there had been a head gasket failure.
The respondent argued that this submission from Mr Morris pointed to the appellant having been aware of Mr Clark's second report at the time of the hearing. It was said that his submission that both experts agreed that the head gasket had blown was inconsistent with the assertion made by Mr Morris in his statement that he had not seen Mr Clark's second report. We do not accept this. The fact that there was a problem with the head or head gasket was evident from the result of the Tee-Kay test reported in Mr Clark's first report.
We find the evidence presented by the respondent with respect to the service of Mr Clark's second report persuasive. Each of the statements are consistent with each other and point to the report being served on the appellant and filed with the Tribunal.
Service occurred by leaving a copy of the second Clark report at the place of business of the appellant in accordance rule 13(2)(c)(ii) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules). On the balance of probabilities we find that the appellant was served with the second report from Mr Clark on 8 July 2021.
It follows that we are satisfied that that the second report from Mr Clark was properly among the material before the Tribunal. The appellant's claim that it was denied procedural fairness as a consequence of not being served with this report must fail. Similarly, the claim that the appellant may have suffered an injustice because the hearing was not fair and equitable as a result of the admission of Mr Clark's second report must fail.

Was it open to the Tribunal to draw the Jones v Dunkel inference?

In its decision, at [35] the Tribunal set out evidence given by the respondent concerning his purchase of the Jeep from the appellant: "[35] Mr Smith said at that time, the respondent's representative, Matt Lloyd, allegedly gave some account for the functionality of the PDF (sic) system, suggesting that it required an "emission burn-off". Mr Smith gave evidence that Mr Lloyd further said: "a long drive should sort it out", though raised no specific concerns with the applicant about the DPF issue at that time."
Later in its reasons the Tribunal commented on the fact that the appellant had produced no evidence from Mr Lloyd: "[132] The tribunal notes that Mr Matt Lloyd provided no statement challenging Mr Smith's evidence about the issue with the DPF at the initial inspection when the dash light came on and the following was noted that the attendant "warning message" was that: Exhaust filter 100% full see your dealer [133] The respondent provided no evidence that Mr Lloyd was not available to provide a statement of evidence or that the "in house" records relating to the last two services that Auto Auctions conducted were not available to challenge Mr Smith's evidence. [134] Jones v Dunkel [1959] HCA 8 and reiterated in the Court of Appeal decision RHG Mortgage Ltd v Ianni [2015] NSWCA 56 found that: where an uncalled witness is a person presumably able to put the true complexion on the facts relied on by a party as the ground for any inference favourable to that party. [123] There are three conditions that apply to satisfy that inference being drawn: (1) first, whether the uncalled witness would be expected to be called by one party rather than the other; (2) secondly, whether his or her evidence would elucidate the matter; (3) thirdly, whether his or her absence is unexplained. [124] In those circumstances, it is open for the tribunal to draw an inference aligned with the principals enunciated in Jones v Dunkel that any statement made by … would not be favourable to the respondent's case."
The appellant submits that the Tribunal was wrong to draw a Jones v Dunkel inference in circumstances where it did not take issue with the evidence of the respondent relating to discussions about the diesel particulate filter (DPF) during the pre-purchase test drive and discussions. There was therefore no need to draw an adverse inference, as the discussion about the DPF was not disputed. The inference which the Tribunal found it could draw was that Mr Lloyd's evidence about the conversation was not favourable to his employer's case. Given that the appellant (his employer) did not dispute the respondent's version of these events, the appellant says the Tribunal should not have drawn the adverse inference.
We accept that whether the Tribunal was entitled to draw an inference in accordance with the principles in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 raises a question of law.
There is nothing in the decision which indicates that during the hearing before the Tribunal the appellant accepted the respondent's evidence regarding his discussion with Mr Lloyd concerning the DPF at the time of sale. If that is the case, then it was open to the Tribunal Member to draw the inference she did. If, to the contrary, the appellant had accepted the respondent's evidence as to the conversation about the DPF, then there would be no place for drawing an adverse inference. The following extract from Cross on Evidence at [1215] was quoted with approval in by Gleeson CJ and McHugh J in Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121; [2000] HCA 18 at [51]: "[T]he rule [in Jones v Dunkel] only applies where a party is 'required to explain or contradict' something. What a party is required to explain or contradict depends on the issues in the case as thrown up in the pleadings and by the course of evidence in the case. No inference can be drawn unless evidence is given of facts 'requiring an answer'."
The reality is that the Tribunal accepted the uncontested evidence of the respondent with respect to the sales discussion with Mr Lloyd regarding the DPF. The appellant says it did not challenge that evidence but accepted it. Whether that acceptance was expressly communicated to the Tribunal Member is unclear. The appellant does not contest or take issue with the evidence on appeal. It was clearly open to the Tribunal to reach that view it did, irrespective of whether or not it drew an adverse inference, due to there being no evidence from Mr Lloyd.
The drawing of the adverse inference in those circumstances does not give rise to a material error of law which would merit our intervention on appeal. We do not think the Tribunal's conclusion was against the weight of evidence or led to a result that was unfair or inequitable.

Did the Tribunal draw other inferences that were not open on the evidence?

The Jeep concerned had been purchased by the appellant, for its own use, as a new vehicle on 2 November 2015.
At paragraphs [60] to [63] of the decision the Member outlined the evidence with respect to its service history: "[60] Initially, Mr Smith submitted that there had been a paucity of services conducted during the time the Jeep was registered in the name of the respondent, Auto Auctions. The applicant's manual contained stamps for two services only; (1) one conducted on 20 March 2018, at odometer reading, 122,356 kms; and (2) a further service conducted on 14 May 2018 at odometer reading of 133,420 kms. [61] The Warranty Handbook further provided that the recommended service maintenance schedule should be conducted at the following kilometres: 10,000; 20,000; 40,000; 60,000; 80,000; 100,000; 120,000; 140,000. [62] At the time of the sale, the tribunal noted the odometer reading was 138,507 kms. After further enquiry made at the Jeep customer service team, Mr Smith confirmed that the following additional services had been conducted at Suttons Waitara during the respondent's ownership of the Jeep. (1) 20 Feb 2016 - 10 km service completed; (2) 8 April 2016 - 2 tyres changed no service; (3) 29 September 2016 - 40 km service completed (4) 11 April 2017 - 80 km service completed. [63] The two services conducted "in house" at Auto Auctions were around 10 kms (sic - 10,000) apart. Given the service history of the vehicle, the tribunal remarks that this was somewhat uncharacteristic. The service history of the Jeep suggests that it had been a "work horse" around the respondent's yard. However, after the service on 14 May 2018, the Jeep appears to have had little use at the respondent's enterprise, having an odometer reading of only 5,000 km travelled over a period of nearly 5 months at the time of the sale."
When sold to the respondent in October 2018 the Jeep was less that three years old, with an odometer reading of 138,507. It had travelled an average of 46,000 kilometres a year and had not been regularly serviced in accordance with the manufacturers recommendations. In those circumstances we think it was clearly open to the Tribunal Member of conclude from the evidence - rather the infer as suggested by the appellant's submissions - that the Jeep had been hard used. Used as a "workhorse" was the expression used by the Tribunal, although we think the words "around the respondent's yard" more of a descriptor of the enterprise, than a geographical location.
We think the conclusion or inference that the Jeep was used as a workhorse by the appellant, meaning it was hard used, was open on the evidence before the Tribunal and was apt. There is no error of law in the Tribunal reaching this conclusion.
The suggestion from the appellant that the term work-horse was pejorative does not raise a question of law.
We are not persuaded that the Tribunal's conclusion that the Jeep was used as a workhorse was against the weight of the evidence, nor that it led to a conclusion that was unfair or inequitable.

Did the Tribunal misquote or misunderstand Mr Organ's report?

At paragraph [84] of the decision the Tribunal wrote: "[84] Mr Clark's opinion was that head gaskets do not fail for "no reason" (as suggested by Mr Organ, the respondent's expert). The tribunal will address matters raised in the Organ report later in the award. Mr Clark's view was that there is always a fault elsewhere to cause the head gasket failure."
The appellant says that Mr Organ never used the words "no reason" while Mr Clark did. This is correct. However, a reading of the reports indicates that Mr Organ did not suggest a direct cause for the head gasket failure, which led Mr Clark in his second report to observe that: 'There is always a fault elsewhere to cause this head gasket to fail. In my opinion, and going on the poor service history, the incorrect oil used by persons other than Mr Smith and the ongoing issues with this vehicle stemming from the date the car was taken for a test drive around 25 September 2018 when the DPF light was brought to the attention of Austo Auctions, it is my opinion these are contributing factors to the head gasket failure.'
At paragraph [84] of the decision, the Member quoted Mr Clark's conclusion about Mr Organ's report. This was an accurate summary of Mr Organ's report which stated that the head gasket on the Jeep had failed. While his report did discuss possible causes that required further investigation, it did not attributed the failure to any specific cause(s), whereas Mr Clark's reports did.
We do not accept that the Tribunal misquoted evidence or failed to understand Mr Organ's report. There is no question of law arising.

Was the Tribunal's decision to prefer Mr Clark's evidence over that of Mr Organ unfair and inequitable or against the weight of the evidence?

During the course of discussion at the hearing of the appeal an issue arose as to whether Mr Clark's reports were sufficient. There was some discussion about whether Mr Clark had failed to discuss the head gasket failure in his first report, but acknowledged it in his second report (after Mr Organ had attributed the Jeep's condition to a head gasket failure).
An expert report to which the Tribunal's NCAT Procedural Direction 3 - Expert Evidence applies is required to explain any change of opinion - see cl 22 of the Direction. Mr Clark when writing his reports had apparently read some other "experts code of conduct" and agreed to be bound by it. NCAT Procedural Direction 3, however, does not apply to proceedings of this type in Consumer and Commercial Division of the Tribunal: see cl 11. As a result, persons giving reports are not expected to understand and follow all the requirement set out in the Experts Code of Conduct, although their reports will nonetheless be subject to examination and rigour.
Mr Clark in his first report said he had found following on his inspection of the Jeep that: 1. oil had entered the cooling system of the Jeep; 2. there was a knocking noise evident from the upper valve train on the left hand bank of the engine; 3. the Jeep failed a TK head check instantly; 4. the Exhaust Gas Recirculation (EGR) Valve was "extremely dirty" and the valve was not seated correctly, "causing an internal boost leak".
A TK head test checks the integrity of the head and head gasket of a motor. Mr Organ found that excessive combustion gases from a TK test is more likely to be associated with internal damage to the head gaskets. While Mr Clark did not conclude there was necessarily a head gasket problem, that was a possible consequence of the Jeep failing the TK head check. Mr Clark concluded that, "This engine will require to be stripped down and inspected to see further damage and what will be required to be repaired."
Mr Clark went on to attribute these problems to DPF issues consequent on the EGR Valve not operating properly, the use of incorrect oil in the Jeep, and poor servicing. Later, he observed that the current faults "may have existed at the date of purchase."
Mr Organ' report concluded: "Basically, the most probable cause/reason for the failure is the head gasket, which can happen anytime and that failure being 21,374kms after the purchase which is not covered under the terms and conditions of sale." Importantly he relied on the result on the TK test performed by Mr Clark (see para 1.15) to conclude that "… the result is more likely with internal damage to the head gasket." There is no indication in his report that Mr Organ examined the Jeep or tested it himself.
In his second report, responding to Mr Organ's report, Mr Clark restated his earlier conclusions and wrote: "Every issue relating to the customer Mr Laurie Smith relating to this vehicle has been an issue regarding, and relating to, the DPF. … Not once in any of the documents supplied to me by Mr Smith has the cause of the soot accumulation been rectified only the DPF has been repaired/replaced. That is the source of DPF problem has not been addressed. In my opinion this vehicle has ongoing issues with fuelling, boost or EGR (Exhaust Gas Recirculation), or a combination of these, causing DPF failure. The attempted, but unsuccessful, regen of the vehicle, as referred to in the K-Mart Service Centre in Ballina invoice of 27 December 2019, and the use of incorrect oil as noted at the Northern Rivers Jeep Dealer at Lismore on 31 December 2018, would have been a major contributing factor for failure as well as the extremely poor service history as noted in the Service Booklet of Austo Auctions. In regard to the blown head gasket referred to in the report of Gregory Organ dated 15 June 2021, it is my expert opinion that head gaskets do not fail for any reason" Read in context this was not a change of mind on Mr Clark's part, but a restatement of his views together with a response to Mr Organ's report.
It is plain from reading the decision that the Tribunal paid close regard to the contents of all the reports before it. The Member had clear regard to the additional service history of the Jeep when owned by the appellant and discovered by the respondent (see [62]). The Member concluded that, at [86]: "Auto Auctions, had not adhered to the manufacturer's recommended service schedule during the life of its ownership of the Jeep."
The appellant submits that the Tribunal failed to give sufficient weight to the additional services disclosed by the evidence, and suggest that they should have led the Tribunal to reject Mr Clark's opinion as it was based on the conclusion that the Jeep had a poor service history. It was clear from the evidence, however, that services had been missed. It was open to the Member to conclude that the recommended service schedule for the Jeep was not adhered to. This did not throw Mr Clark's conclusion that the Jeep had a poor service history into doubt, but was consistent with it, although the extent of services missed was moderated by the Member's findings.
The Member expressly noted Mr Organ's opinion that a head gasket problem can arise at any time, that this one was diagnosed 21,274km after purchase, and that Mr Organ had rejected the suggestion that it was associated with the condition of the Jeep at the time of sale.
The appellant also argued that the Tribunal gave undue weight to Mr Clark's first report because it relied on a conclusion that incorrect oil had been put in the Jeep at the service before its 150,000km service. That was its last service by the appellant. The 150,000km service was done on 31 December 2018, by Northern Rivers Chrysler, after the respondent had purchased the Jeep from the appellant. This was the first service since that purchase, apart from a visit to Kmart Tyre & Auto Service in Ballina, four days before, with DPF problems, when the respondent was referred to a dealer for service. Northern Rivers Chrysler's invoice, which was given to the respondent, contains the flowing typed note: "DPF service displayed Scanned vehicle found fault code stored regen DPF and oil viscosity to low. Carried out service and the performed regen. Cleared fault codes all ok." Beside that typed note were two hand written notes, in different hand writing: "- incorrect weighted oil used at last service." "Code shown wrong one."
The appellant says that the authors of the hand written notes were not called and that there is no evidence as to why the mechanic "assumed" the wrong oil had been used, or as to why the handwritten notes were added. The Tribunal should therefore have rejected Mr Clark's first report as it was based on the conclusion that the wrong oil had been used. This is a matter that was not argued before the Tribunal at hearing and therefore cannot be agitated on appeal. It is well established that a party is bound by the conduct of their case and cannot raise new arguments on appeal: Coulton v Holcombe (1986) 162 CLR 1 at 7; [1986] HCA 33; Bartel v Ryan [2018] NSWCATAP 231 at [25]; Palm Homes Pty Ltd v Kav's Constructions Pty Ltd [2015] NSWCATAP 113 at [27].
The appellant also argued that the Tribunal did not give the fact that Northern Rivers Chrysler reported that it had "Cleared fault codes all ok," sufficient weight when making its determination. The appellant asserted that this report, together with the fact that the Jeep did not ultimately fail until "eight months and 13,000km later" should have led the Tribunal to reject Mr Clark's first report. It is not clear that this was argued before the Tribunal. In any case there was no evidence before the Tribunal that clearing existing fault codes meant the Jeep was defect free.
In our view it was clearly open to the Member on the evidence before her to accept Mr Clark's theory about underlying DPF problems form the date of purchase leading to the ultimate failure. This was consistent with the evidence relating to the Jeep's condition from the time of purchase onwards. No error of law is apparent in the Tribunal doing so. The Tribunal explained why it preferred Mr Clark's opinion.
It cannot be said that the Tribunal's acceptance of Mr Clark's report, in preference to Mr Organ's report, was against the weight of evidence or that the decision was not fair and equitable as a consequence. The conclusions reached by the Tribunal were in accordance with the evidence which it preferred and were findings open to it on that evidence. The preponderance of evidence, from the EPG warning light appearing at the time of sale, through a series of services and complaints, till the eventual failure of the Jeep, was consistent with that conclusion.

Did the Tribunal fail to consider the respondent's use of the Jeep when assessing damages?

The respondent was seeking a money order to enforce his right to a refund of the purchase price of the Jeep. The appellant says that the Tribunal should have applied a discount for the fact that the Jeep had travelled 21,274km since purchase.
The Tribunal found that respondent was entitled to a full refund on the basis that: 1. the Jeep was not of acceptable quality, due to DPF problems, poor service history, and use of incorrect oil, when it was supplied by the appellant, in the course of business, to the respondent, as a consumer, in breach of the consumer guarantee of acceptable quality in s 54 of the ACL; 2. the failure by the appellant as supplier to comply with consumer guarantee as to acceptable quality was a major failure in that the respondent, as a reasonable consumer, would not have acquired the goods if he had been fully acquainted with the nature and extent of the failure (see s 260 ACL); 3. as a consequence s 259(3) of the ACL provided: If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. 1. the respondent had given notice of rejection to the appellant seeking a refund or repairs; 2. the appellant had neither repaired nor refunded the purchase price of the Jeep; 3. the respondent had elected to claim a refund, with the consequence that s 263 provided, inter alia, that: (4) The supplier must, in accordance with an election made by the consumer: (a) refund: (i) any money paid by the consumer for the goods; and (ii) an amount that is equal to the value of any other consideration provided by the consumer for the goods.
Section 263(4) of the ACL provided the respondent with an election to chose between a refund or replacement of the Jeep. He chose a refund. There is nothing in the ACL which suggests that a refund may be diminished or discounted for benefits the consumer may have gained while the Jeep was in his possession. In Juwayed & Anor v Marten [2022] SASC 6 Auxiliary Justice Bochner explained, at [32]: "[32] … The imperative terms of the statutory obligation under s 263(4)(a) do not authorise any abatement or adjustment of the amount paid on account of depreciation, or any use of the goods by the consumer: cf, Consumer Rights Act 2015 (UK), s 24(8), which, subject to qualifications, authorises a reduction of a refund to a consumer who rejects goods to take account of the use of the goods by the consumer."
As a consequence, there was no need for the Tribunal to consider the respondent's use of the Jeep or whether any value should be attributed to it. The respondent's entitlement was to a refund, without deduction. No question of law arises. In the light of the clear wording of s 263(4) of the ACL it cannot be said that the decision to order a full refund was not fair and equitable, or was against the weight of the evidence.

Disposition of the Appeal

It follows from the above that, with one exception, the appeal fails, with leave to appeal being refused in all respects.
That exception relates to the parties' agreement that the Tribunal was mistaken when it ordered the appellant to pay the respondent $650 for a diesel particulate clean. That $650 was included in the total order of $35,496 which the appellant was ordered to pay the respondent. It should be deducted from that amount, and the order amended so that the amount to be paid is $34,846.
It will also be necessary to discharge the stay order made on 16 February 2022 and to reinstate order 2 made by the Tribunal in its original form to ensure the Jeep reverts to the appellant's ownership.

Costs

We note that both parties have indicated they seek an order for costs, if successful. Only the respondent has succeeded in any meaningful way.
Section 60(1), (2) and (5)(b) of the NCAT Act relevantly provide that each party to an appeal is to pay the party's own costs and the Tribunal may award costs in relation to an appeal only if it is satisfied that there are special circumstances warranting an award of costs.
In proceedings commenced in the Consumer and Commercial Division, by reason of the operation of s 35 when read with par (a) of the definition of "procedural rules" and the definition of "Tribunal rules" in s 4(1) of the NCAT Act, s 60 is subject to the NCAT Rules.
Rule 38 of the NCAT Rules provides: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if - (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000.
Rule 38A of the NCAT Rules provides: 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of - (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
For the purpose of r 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57].
We are satisfied that the amount in dispute in the appeal exceeded $30,000 and accordingly that r 38A of the NCAT Rules rather than s 60 of the NCAT Act applies to the appeal.
As the respondent has been successful in the appeal, it is entitled to an order for costs in its favour. It follows that the appellant should pay the costs of the appeal of the respondent as agreed or assessed.
However, in case either party wishes to make an application to vary this order, we have decided to make procedural directions to accommodate such an application.

Orders

We make the following orders: 1. By consent the appeal is allowed only to the extent that amount the Tribunal ordered the appellant to pay the respondent in order 1 made 20 January 2022 is varied from $35,496 to $34,846. 2. Otherwise the appeal is dismissed. 3. Leave to appeal is refused. 4. The stay order made 16 February 2022 is discharged. 5. Order 2 of the orders made by the Tribunal on 20 January 2022, as varied on 16 February 2002, is further varied to read: Simultaneously with order 1, the respondent, S.M.A Motors Pty Ltd trading as Auto Auctions, is to collect the Jeep from the applicant, at no charge to the applicant, and to do all things necessary to revest the title of the Jeep in the respondent, pursuant to the ACL. 1. Subject to the outcome of any costs application pursuant to order (7) below, the appellant is to pay the costs of the appeal of the respondent as agreed or assessed. 2. Any application for costs, together with submissions and evidence in support, are to be lodged with the Appeal Registry and given to the respondent within 14 days. 3. Any evidence and submissions in reply are to be given to the Appeal Registry and the appellant within 14 days thereafter. 4. Submissions on costs are not to exceed 2,000 words in length, be double spaced, and are to address whether the Appeal Panel can determine the issue of costs without a hearing on the basis of the materials provided by the parties.

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: 31 August 2022

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