Stellino v Bunnings Group Limited

NCAT Appeal Panel|2024-06-06

REASONS FOR DECISION

This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) against a decision of the Consumer and Commercial Division of the Tribunal.
The application to the Tribunal was brought by the appellant, Mr Stellino, against the respondent, Bunnings Group Limited (Bunnings).
The dispute relates to a pesticide product which Mr Stellino alleges caused damage to the exterior surfaces of his home. Mr Stellino commenced proceedings in the Tribunal in which he sought compensation in the sum of $13,680. The application was dismissed by the Tribunal and Mr Stellino now appeals against that decision.
For the reasons set out below, we have decided to allow the appeal, to set aside the order of the Tribunal dismissing the application, and to make an order that Bunnings pay Mr Stellino $13,460.

Background

The background to the appeal, which is based on the findings made in the Tribunal's decision, as well as information contained in documents filed in the appeal proceedings, and told to us during oral submissions, is as follows: 1. On 17 September 2023 Mr Stellino purchased from a Bunnings store in a suburb of Sydney, a bottle of a pesticide product called "Defender Home Defense Indoor + Outdoor Surface Spray" (the product). 2. The manufacturer of the product trades under the name Evergreen Garden Care Australia (Evergreen). 3. Shortly after purchasing the product Mr Stellino applied it to various outdoor surfaces of his home, following the instructions on the packaging. Before applying the product he consulted a "Safety Data Sheet" downloaded from Evergreen's website which contained information in relation to the product (the safety data sheet). 4. Approximately 24 hours later, he noticed what he describes as "chemical burns and staining" to the exterior painted eaves, cladding, window frames, brickwork and glass. 5. Mr Stellino tried unsuccessfully to remove the burn marks and staining himself. He subsequently arranged to have the glass professionally cleaned at a cost of $440 and has received quotations to repair the other surfaces for a total cost of $13240. 6. The house is approximately two years old and the exterior was recently newly painted with "Dulux Weathershield" paint. The window frames are made from powder coated aluminium. 7. Previously, Mr Stellino had two professional pest spray treatments carried out at the premises which did not result in any damage. 8. Mr Stellino has tested the product on other items (small pots). These tests yielded the same type of damage. 9. During the course of Mr Stellino's dealings with Bunnings, the product was referred to Evergreen which prepared a report on or about 20 October 2023 (the Evergreen report). The Evergreen report refers to tests conducted on a sample from the same batch of product as was purchased by Mr Stellino. The conclusion stated in the Evergreen report is that the tests were "unable to replicate the damage reported".

Tribunal proceedings and decision

The application to the Tribunal was lodged on 7 November 2023 and came before the Tribunal for a final hearing on 7 March 2024.
Mr Stellino's claim was brought under Part 6A of the Fair Trading Act 1987 (NSW) (the FTA). He sought compensation in the sum of $13,680 for an alleged breach by Bunnings of the guarantee as to acceptable quality in s 54 of the Australian Consumer Law 2010 (NSW), the text of which is set out in Sch 2 of the Competition and Consumer Act 2010 (Cth) (the ACL).
The evidence relied on by Mr Stellino at the hearing included: 1. photographs of the affected areas of the home; 2. the Evergreen report; 3. a copy of the safety data sheet; 4. copies of online reviews of the product; 5. oral evidence given by Mr Stellino; 6. quotations for repairs and cleaning; and 7. a video showing damage to the pots on which Mr Stellino had subsequently tested the product.
Bunnings did not tender any documentary evidence and did not rely on any witness testimony at the hearing. It relied only on the Evergreen report that had been tendered by Mr Stellino.
The Tribunal issued its decision on 12 March 2024, and dismissed Mr Stellino's claim in its entirety.
The Tribunal relevantly concluded: The Tribunal accepts that the consumer has used the product and that after he has used the product he has observed bubbling on eaves and like areas and staining on brickwork. … The Tribunal accepts that there is nothing to suppose that the home or its surfaces had anything wrong with them. But that really highlights a difficulty. If it is accepted that the product itself ought be checked using the same batch, it does not seem unreasonable that the paint or the brick should be checked in the same way. What is before the Tribunal is evidence that something happened to surfaces of the consumer's home soon after the product was applied. However, that does not complete a case. Assuming that the eave paint and the product have mixed together or reacted together to result in the eaves bubbling, that may mean one of at least three things, there is a problem with the product, there a problem with the eave paint, or there is a problem with both. Likewise for the bricks. It may or may not be that the supplier's report suffers from the issues raised by the consumer. But that cannot be determinative. There is still the issue referred to in in the previous paragraph. Nor does the consumer's replication determine the matter. It merely confirms the issue. The Tribunal is not satisfied that the evidence gets the consumer to where he needs to get to establish his case, ie that, preferably, there is a problem with the product, or that, alternatively, there is a problem with both the surface and the product. The Tribunal is not satisfied that this is a case where it is reasonable to infer what the evidence does not provide. The Tribunal is satisfied that a fair and equitable outcome is a dismissal of the claim.
Mr Stellino lodged a notice of appeal on 2 April 2024, which was within the time period prescribed in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules).

Scope and nature of internal appeals

To succeed in an appeal, the appellant must demonstrate either an error on a question of law, which, except in an appeal from an interlocutory decision, may be argued as of right; or that permission (that is, "leave") to appeal should be granted to bring the appeal: NCAT Act s 80(2).
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are constrained by 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: (a) the decision of the Tribunal under appeal was not fair and equitable; or (b) the decision of the Tribunal under appeal was against the weight of evidence; or (c) 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 v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 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.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
In Collins v Urban, the Appeal Panel said at [84] that 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.

Grounds of Appeal

We understand Mr Stellino seeks leave to appeal on the ground that he may have suffered a substantial miscarriage of justice because the decision was against the weight of evidence and because significant new evidence has arisen which was not reasonably available at the hearing.

New evidence

At the hearing both parties sought to rely on additional evidence. The evidence on which Mr Stellino sought to rely was a settlement offer made by Bunnings prior to the Tribunal hearing. The evidence on which Bunnings sought to rely was a further report prepared by Evergreen on or around 31 October 2023. We declined to allow either party to rely on the additional evidence for reasons delivered orally at the hearing. In substance, we did not consider the new evidence to be new, nor did we consider it to be evidence which was not reasonably available at the time the proceedings were being dealt with at first instance.

Weight of evidence

Mr Stellino says, in effect, that the Tribunal did not give adequate weight to the evidence that the damage was caused by the product.
Bunnings says that the Tribunal was correct to conclude that Mr Stellino failed to provide sufficient evidence to establish that the damage was caused by the product. It submits that the onus was on Mr Stellino to prove that the damage to the external surfaces was caused by the product rather than some other cause, and that he did not discharge this onus. It says that the only report relied on by Mr Stellino was the Evergreen report which did not support his claim. It says that the evidence did not establish that the damage may have been caused by a reaction with something else such as the previous pest sprays or some other problem with the surfaces.
A decision under appeal can be said to be against the weight of evidence 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: Collins v Urban at [77].
The Tribunal member accepted that there was "nothing to suppose that the home or its surfaces had anything wrong with them" before the product was applied. It also accepted that Mr Stellino had applied the product to the external surfaces of the home and that the surfaces had sustained damage shortly after the product was applied. The Tribunal then went on to consider whether the evidence established that the damage to the external surfaces was wholly or partially caused by the application of the product (as opposed to some other unrelated cause).
The Tribunal member said that the damage "may mean one of at least three things, there is a problem with the product, a problem with the eave paint, or there is a problem with both. Likewise for the bricks". The Tribunal member said "if it is accepted that the product itself ought to be checked using the same batch, it does not seem unreasonable that the paint or the brick should be checked in the same way" and concluded that there was insufficient evidence to conclude that the product caused or contributed to the damage.
We do not understand how the Tribunal reached this conclusion given the evidence which was before it and the other findings it had made. If, as the Tribunal accepted, the damage occurred after application of the product and there was nothing "wrong" with the home or its surfaces, this meant that the problem could only have resulted from the application of the product. This is consistent with the uncontested evidence which was before the Tribunal which, in our view, overwhelming points to the application of the product having caused or contributed to the damage. It included: 1. The evidence that the damage occurred not just to one type of surface but to multiple types of surfaces with different compositions (ie the paintwork, brickwork, glass and window frames); 2. The evidence that Mr Stellino was able to replicate the issue by applying the product to small pots; 3. The evidence that the house was new and had been recently painted; 4. The evidence that Mr Stellino followed the supplier's instructions when applying the product; and 5. The evidence that the exterior of the house had been professionally sprayed with a pesticide on two previous occasions with no resultant damage.
The only evidence which can be said to have supported Bunnings' position was the Evergreen report. However, the investigations carried out for the purpose of that report (which we note was prepared by the manufacturer and was not an independent report) did not involve the same bottle of product as had been used by Mr Stellino.
It is true that Mr Stellino did not rely on any expert report which supported his position. But the absence of an expert report does not of itself mean that the consumer cannot establish that a product is defective. Here, the lay evidence outlined above was in our view sufficient to establish that the damage to the home's surfaces resulted from the application of the product.
We do not consider Bunnings' submission that the damage may have resulted from a reaction with the surfaces or the previous pest sprays furthers its position. Even if that was the case, the damage would not have occurred if the product had not been applied, and the product did not come with warnings that it was incompatible with any surface or substance. To the contrary, the safety data sheet (which is discussed in further detail below), contained representations to the effect that there are no materials known to be incompatible with the product. The Tribunal does not appear to have taken account of those representations.
For all of these reasons, we are satisfied that the evidence which was before the Tribunal in its totality preponderated so strongly against the Tribunal's conclusion regarding the cause of the damage, that it can be said that the conclusion was not one that a reasonable Tribunal Member could reach.
For reasons which will be clear from our discussion later in these reasons, Mr Stellino's claim for compensation has substantial merit. There was thus a significant possibility that a different and more favourable result would have been achieved for Mr Stellino had the decision about the cause of the damage not been against the weight of evidence. Thus, applying the reasoning in Collins v Urban, we are satisfied that a substantial miscarriage of justice may have occurred.
We also think it would be unjust to allow the Tribunal's finding to stand as the error is plain and readily apparent and was central to the Tribunal's decision to dismiss the application, and because Mr Stellino's home has sustained widespread damage. Thus, we consider it appropriate to grant leave to appeal.
For these reasons we are exercising our discretion to grant leave to appeal and are allowing the appeal.

Disposition of the appeal

The next question to determine is whether the matter should be remitted to the Tribunal for reconsideration, or whether the Appeal Panel should substitute its own decision.
Section 81(1)(d) allows the Appeal Panel to quash or set aside the Tribunal's decision and to substitute another decision for it.
Under section 81(2) the Appeal Panel may exercise all the functions that are conferred or imposed by the Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
We are mindful that under s 36(1) of the NCAT Act, the Tribunal's guiding principle is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings".
Remitting the application to the Tribunal would involve considerable further delays for the parties. Taking this into account, as well as the relatively small size of the claim, the fact that the documentary evidence which was before the Tribunal is available to us, and the fact that Mr Stellino's evidence was effectively unchallenged by Bunnings, we are of the view that it is in accordance with the Tribunal's guiding principle to substitute our own decision on the basis of that evidence.

Consideration

The Tribunal's jurisdiction to hear and determine consumer claims is derived from Part 6A of the FTA.
The definition of "consumer claim" in s 79E of the FTA includes a claim by a consumer for the payment of a specified sum of money that arises from a supply of goods or services by a supplier to the consumer. It is not in issue that Mr Stellino is a consumer, that Bunnings is a supplier, and that Mr Stellino's claim is a consumer claim for the purposes of the FTA.
It is also not in issue that the claim was brought within the three-year time period prescribed by s 79L of the FTA, and that, as the product to which the claim relates was supplied in New South Wales, there is a sufficient nexus with New South Wales for the purposes of s 79K of the FTA.
Division 3 of Part 6A deals with the Tribunal's order making powers when determining consumer claims. Section 79N(a) states that in determining a claim wholly or partially in favour of a claimant, the Tribunal may, if it considers it appropriate, make an order that requires a respondent to pay to the claimant a specified amount of money.
There is therefore no issue as to the Tribunal's jurisdiction to hear and determine Mr Stellino's claim.
Mr Stellino's claim was that Bunnings was in breach of s 54 of the ACL. The ACL, which is a law of the Commonwealth, applies in New South Wales as part of the FTA: Part 3 of the FTA and, in particular ss 27 to 32.
Section 54 of the ACL relevantly provides: 54 Guarantee as to acceptable quality (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality. (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods.
The question of whether goods are of an acceptable quality is an objective test from the perspective of the reasonable consumer.
In Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 (Jayco) (Wheelahan J) said at [25]-[27]: Section 54 provides for a common standard of acceptable quality which goods are required to reach. It is necessary that goods have all the qualities referred to in s 54(2) in order to comply with the statutory standard: Vautin v By Winddown Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; 362 ALR 702 (Vautin) at [142] and [144] (Derrington J). The standards under s 54(2) include that goods will be fit for all purposes for which goods of that kind are commonly supplied. This general standard of fitness for purpose is not dependent upon the consumer communicating any intended purpose to the supplier, or relying upon the supplier's skill or judgement. And, in relation to the general standard, it does not suffice that the goods will be fit for only some of those purposes. The standard of acceptable quality in s 54(2) has as its reference point a construct, namely the objective standard of a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects of the goods. The reasonable consumer sits with an array of other hypothetical persons 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] AC 696 at 728 (Lord Radcliffe). 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 purpose of determining that question, the reasonable consumer may be acquainted with information known at the time of the trial: cf, Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182 at [70] (Branson J). 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] 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.
Here the product is a brand new bottle of pesticide intended to be applied on indoor and outdoor surfaces. For reasons expressed above, we are satisfied that the application of the product has caused damage to various external surfaces of Mr Stellino's home. In Capic v Ford Motor Company Of Australia Pty Ltd [2021] FCA 715 at [53] Perram J said: In an ordinary claim that goods are not of acceptable quality the question of why they are such is irrelevant. For example, if I buy a kettle and it does not work, it does not matter why it does not work. It is not of acceptable quality simply because it does not work. The applicant in such a case has no need to prove its design or componentry deficient, just that it does not work.
Applying this reasoning (which we note was not disturbed on appeal in Ford Motor Company of Australia Pty Ltd v Capic [2023] FCAFC 179), we do not think it necessary for Mr Stellino to establish any deficiency with the ingredients or composition of the product. The fact that a product intended to be applied to internal and external surfaces caused damage when applied in normal fashion to such surfaces is sufficient in our view to establish that the product was either not free from defects or not fit for all purposes for which goods of that kind are commonly supplied.
The next question to consider is whether a reasonable consumer would regard the identified issues with the product to be acceptable, having regard to the matters in s 54(3). We address each of these in turn below.

Section 54(3)(a): the nature of the goods

The goods are a retail pesticide product intended to be applied to indoor and outdoor surfaces in domestic settings.

Section 54(3)(b): the price paid for the goods

We do not know the price paid for the product although, as Mr Stellino has not sought a refund of the purchase price, we have assumed it was relatively inexpensive. However, given the nature of the product and the fact that the issue here is damage caused by the product (rather than, say, the efficacy of the product), we do not think that price is a significant element when applying the reasonable consumer test.

Section 54(3)(c): any statements made about the goods on any packaging or label on the goods

There is no evidence as to what statements are made on the packaging of the product. However, the name of the product ("Defender Home Defense Indoor + Outdoor Surface Spray Professional Grade Formula"), which we assume is included on the product label, represents that it is suitable for application on indoor and outdoor surfaces in domestic settings. We also note Mr Stellino's evidence that he applied the product in accordance with the instructions on the product's packaging.

Section 54(3)(d) any representation made about the goods by the supplier or manufacturer of the goods

The only evidence which was before the Tribunal which is relevant to this issue is the safety data sheet which relevantly states under the heading "Stability and reactivity": Reactivity - No information available Possibility of hazardous reactions - None under normal processing Incompatible materials - None known based on information supplied.
Under the heading "Recommended use of the chemical and restrictions on use" the safety data sheet states: Recommended use - Insecticide for use as described on the product label Uses advised against - No information available.
In our view these statements would give a reasonable consumer comfort that the product is appropriate for use on normal domestic surfaces such as paintwork, brickwork, aluminium window frames and the like.
We note that the reassurance provided by these statements would not be mitigated by the disclaimer included at the end of the safety data sheet. This is because the terms of the disclaimer focus on safety issues arising from the use of the product rather than the appropriateness of the product for use on different surfaces.

Section 54(3)(e) any other relevant circumstances relating to the supply of the goods

We are not aware of any other relevant circumstances relating to the supply of the product.
In conclusion, having regard to all of the above matters, we are satisfied that a reasonable consumer, fully acquainted with the state and condition of the product, would not regard the identified problems with the product to be acceptable.
Thus, there has been a breach of the consumer guarantee as to acceptable quality in s 54 of the ACL.
Sections 259-263 of the ACL contain remedial provisions against the supplier of goods if there has been a breach of the consumer guarantee in s 54.
We understand Mr Stellino to be relying on s 259(4) which provides: The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
Mr Stellino says the loss he has suffered is the cost to clean and repair the damage. The evidence of loss on which he relies are three quotations which total $13680 and comprise: 1. A quotation from Flash Window Cleaning for professional window cleaning of internal and external windows for $440; 2. A quotation from a licensed painter, Aldo de Lucia, for repainting the damaged paintwork for $7300; and 3. A quotation from "Worldwide Services" for high pressure cleaning and acid wash of the other affected areas for $5940.
We note that quotations are not necessarily insufficient evidence to prove quantum of loss. Each case should be considered on its own facts. There is no general rule that quotations cannot be relied upon to establish quantum of loss or damage: Hall v Hawkins [2015] NSWCATAP 197 at [79].
Here, Bunnings did not provide any evidence to refute Mr Stellino's evidence as to loss and thus the quotations relied upon by Mr Stellino are the only evidence available to us as to his alleged losses.
We are satisfied that the costs of repainting the damaged paintwork and professionally cleaning the other affected areas are reasonably foreseeable losses that a consumer would suffer as a result of the failure to comply with the consumer guarantee in s 54.
The window cleaning quote covers internal as well as external window cleaning. However, there was no evidence before the Tribunal that the product was applied by Mr Stellino internally, or that it affected the internal windows. Doing the best we can on the basis of the available evidence, we find that the cost to clean the external windows is half the amount quoted - being $220.
We are therefore satisfied that the total losses suffered by Mr Stellino because of the failure to comply with the consumer guarantee in s 54 are $13,460 and that Bunnings, as the supplier of the goods, is liable to compensate Mr Stellino for those losses.
Section 79U(1) of the FTA stipulates that when making any orders under Division 3 of Part 6A, "the Tribunal must be satisfied that the orders will be fair and equitable to all the parties to the claim". Section 79U(2) sets out various factors which the Tribunal is to take into consideration when determining whether or not to make an order under Division 3, if they are material to the particular circumstances of the case. We are not aware of any of those factors being relevant in the circumstances of this case. For all the reasons explained above, we are satisfied that an order for Bunnings to pay Mr Stellino compensation in the sum of $13,460 will be fair and equitable to both parties.

Conclusion

For these reasons we make the following orders: 1. Leave to appeal is granted. 2. The appeal is allowed. 3. The order made by the Tribunal on 12 March 2024 in 2023/00367880 is set aside and in substitution thereof the following order is made: Bunnings Group Limited is to pay Ben Graziano Stellino the sum of $13,460 within 14 days of the date of publication of these orders.

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: 28 June 2024

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