Tang t/as Better Aquariums v Karatasoulis

Notice of Appeal and submissions

1. The appellant filed a notice of appeal on 19 February 2018, having received notice of the original decision on 25 January 2018. The Appeal was filed in time.
2. The grounds of appeal can be summarised as follows: 1. The Tribunal was in error in dismissing the claim against the retailer; 2. The amount awarded by the Tribunal does not take into account the cost of the appellant to manufacture a fish tank of this type and unfairly imposes upon the appellant an obligation to pay the "retail margin" added by the retailer as part of the sale price to the consumer; 3. The consumer had not proven that the appellant was the manufacturer of the tank, in particular because no tax invoice was provided evidencing the purchase of the fish tank from the appellant by the retailer; 4. The claim was out of time; 5. The "tank did not suddenly form the defect" claimed by the consumer and he would have known about that issue well inside the three-year period found by the Tribunal; and 6. The Tribunal failed to take account of the fact that the tank was not installed on the required foam base and was placed outdoors for which the tank was not designed.
3. In relation to the orders which the appellant said the Appeal Panel should make, the appellant said the retailer should be liable to the consumer and the retailer should pursue any liability it may have against the appellant separately, subject to proving the tank was manufactured by the appellant. Otherwise, the claim against the appellant should be dismissed as being out of time.
4. The appellant also sought leave to appeal on the basis that the decision was not fair and equitable or was against the weight of evidence. The issues raised were similar to those set out above. However, the appellant also said that the Tribunal "did not provide us a fair opportunity to present our case and admits in the Notice of Order to only 'Briefly Reviewing' our submissions, along with being unwilling to consider the affidavit of our witnesses who attended on the hearing date in January". It would appear that this evidence was also described as "new evidence" for which leave to appeal was sought.
5. At the hearing of the appeal, Mr S Morris appeared for Mr Tang. Mr Morris was apparently a friend or an associate of Mr Tang.
6. The Tribunal identified the documents which it had been provided in connection with the appeal. These documents included some extracts of the sound recording. However, the whole of the sound recording was not provided. The appellant indicated that it did not wish to subsequently provide the sound recording, which had apparently been delayed in its provision by the Tribunal nor did the appellant wish to provide any further typed transcript of the proceedings at first instance. Accordingly, the Appeal Panel will determine the appeal limited to the material which has been provided in written form and on the basis of the oral submissions received.
7. The Appeal Panel also identified that the appellant was incorrectly named both in the appeal proceedings and in the proceedings at first instance. The appellant confirmed that he was a sole trader, not carrying on business as a company, and that his business name was registered. Consequently, by consent, the Appeal Panel made orders to amend the name of the appellant in the proceedings at first instance and on appeal to "Let Leng Tang trading as Better Aquariums".
8. At the hearing of the appeal, Mr Morris confirmed that the appellant essentially raised three grounds of appeal. These were that: 1. The original claim was out of time; 2. The consumer had not proven that the appellant had manufactured the fish tank; 3. The decision was not fair and equitable in that no liability was imposed on the retailer.
9. In relation to the proceedings being out of time, the appellant said that the fish tank was manufactured some time prior to when it was sold in December 2013. Consequently, any defect must have existed at this time and any claim has been made more than three years after the manufacture of the fish tank. The appellant also said that the consumer must have known of the problem with the sealant prior to April 2017.
10. In making this last submission, Mr Morris for the appellant accepted that there was no evidence that the problem with the sealant had manifested itself earlier than April 2017.
11. In relation to the identity of the manufacturer of the fish tank, the appellant said that no invoice had been produced by the consumer or retailer to prove that it was the supplier. The appellant referred to various tax legislation requiring a tax invoice be issued and said that in the absence of such an invoice, the Tribunal was wrong to conclude the appellant was the manufacturer. The appellant also put this submission on the basis that it was not fair and equitable he should be found liable in the absence of the invoice being produced.
12. In relation to the liability of the retailer and the appellant, the appellant made submissions concerning the written warranties which had been provided. The Appeal Panel noted in relation to these submissions that the consumer guarantees could not be excluded and, in so far as a party tried to shorten the period for which it might be liable, such a provision would be void or inoperable as against the consumer.
13. The appellant also said that the Tribunal should have made an order against both respondents. In relation to this submission, the Appeal Panel indicated that the consumer had not appealed the orders made, the issue on appeal being whether the Tribunal was correct to make an award against the appellant in the amount of $900.00.
14. Each of the respondents provided submissions in response, including in writing and at the hearing.
15. In relation to the issue of when the consumer first became aware of the defects in the tank, the consumer's evidence before the Tribunal was that he first discovered the problem in April 2017. He referred to photographic evidence provided in the appeal papers and said that gravel at the bottom of the fish tank prevented him making any observations of the defective sealant at an earlier time.
16. In relation to the identity of the appellant as manufacturer of the fish tank, the consumer said there was a sticker on the fish tank with the appellant's name. While no photograph was taken of the sticker, there was evidence of the fact of the sticker given at the original hearing.
17. In relation to the award of $900.00, the consumer said that this was less than the cost of replacing the tank and less than his original purchase price. The consumer accepted that no invoice for the cost of the replacement tank was before the Tribunal.
18. As to the submission that an order should have been made against both the retailer and the appellant, the consumer did not seek such an order nor did he suggest there was any error by the Tribunal.
19. The retailer made submissions through its director, Mr Rumoong.
20. In relation to the appellant being the manufacturer of the tank, the retailer relied on the oral evidence provided at the Tribunal. While the retailer said there was an invoice for the tank, the retailer accepted that the invoice was not in evidence before the Tribunal in the proceedings at first instance.
21. The appellant provided submissions in reply through Mr Morris.
22. These submissions essentially reiterated earlier submissions and were to the effect that the Tribunal improperly weighed the evidence which was before it, particularly concerning the identity of the manufacturer.
23. In relation to the evidence referred to in the transcript provided by the consumer at time mark 38:35- 38:57 (consumer's written submissions page 17), the appellant said that the statement made by Mr Ben Franks (the representative of the appellant at the proceedings at first instance) to the effect that it was "opted" not to have strip glass "to protect the inside silicon" was not an admission by the appellant that it had supplied the tank. Rather it was evidence concerning the manner in which the tank could have been manufactured to protect the silicon sealant.

Consideration

1. This appeal raises questions of law and questions for which leave is required. In so far as leave is required, Sch 4 cl 12 of the Civil and Administrative Tribunal Act, 2013 (NSW) (NCAT Act) applies. The appellant must show it may have suffered a substantial miscarriage of justice. The principles applicable to the grant of leave are set out in the decision of Collins v Urban [2014] NSWCATAP 17.
2. As indicated above, the appellant asserted in its Notice of Appeal that he had been denied an opportunity to present evidence at the original hearing. If this had occurred, it may constitute an error of law. However, the problem with this submission is that the appellant has not placed before the Tribunal the whole sound recording or a transcript of the whole of the proceedings to prove what happened at the hearing. Further, it was accepted during the hearing of the appeal that directions had been made prior to the hearing at first instance requiring all parties to file and serve evidence before the hearing. It was not suggested by the appellant that the evidence which he said was excluded by the Tribunal had been provided prior to the hearing in accordance with the Tribunal's directions.
3. In these circumstances, we are not satisfied that the appellant has been denied an opportunity to present relevant evidence and, to the extent that any evidence was excluded as not having been served in accordance with the Tribunal's directions for preparation for hearing, we are not satisfied this decision was wrong. Accordingly, this ground of appeal fails.
4. In relation to whether the application was commenced in time, the Appeal Panel drew to the attention of the parties the decision of the Appeal Panel in Sacks v Hammoud [2016] NSWCATAP 225. In that case the Tribunal said at [59] that in the case of a claim against the supplier for a failure to comply with a consumer guarantee under the ACL, the cause of action first accrues "when the alleged damage became known or could have become known with reasonable diligence. The appellant did not challenge this statement of the law".
5. The same principle would be applicable in the case of a claim against the manufacturer for a failure to comply with the guarantee under section 54 of the ACL. This view is supported by a consideration of s 273 of the ACL which provides that an action against a manufacturer may be brought at any time within three years after the day on which the affected person first became aware, or ought reasonably to have become aware, that the guarantee has not been complied with.
6. As stated above, the appellant accepted that there was no evidence before the Tribunal at first instance which showed the problem with the sealant manifested itself earlier than April 2017.
7. In these circumstances, we are satisfied that the proceedings were commenced within 3 years from when "the cause of action giving rise to the claim first accrued" as that expression is used in s 79L(1)(a) of the Fair Trading Act, 1987 (NSW) (FT Act). Consequently, the Tribunal had jurisdiction to determine this dispute.
8. The next issue is whether the Tribunal was correct to conclude that the appellant was the manufacturer of the fish tank.
9. On page 2 of its reasons, the Tribunal referred to oral reasons given during the hearing and said: Some submissions were rejected, particularly [the appellant's] submission that it was not proven that his firm manufactured the tank, and his submission that the tank may be wrongly installed, and his submission that the tank was not designed or the materials were not suitable, to be used outdoors. Again, there was simply no evidence to support these points.
10. As noted above, the sound recording was not provided to the Appeal Panel, nor did the appellant seek leave to provide to the Appeal Panel, after the hearing of the appeal, the sound recording and a typed copy of what was said at the original hearing. However, the oral reasons to which the Tribunal was referring in its written reasons are found in the transcript provided by the consumer at time mark 46:25 and following (consumer's submission p18).
11. It is clear from the submissions made by the parties, including the appellant that there was evidence before the Tribunal to the following effect: 1. The retailer gave oral evidence that it purchased the fish tank from the appellant; 2. The consumer gave evidence that the fish tank had a sticker on it identifying the appellant; 3. The appellant said the retailer should provide an invoice and without this invoice it could not be proved that the appellant manufactured the fish tank and supplied it to the retailer.
12. It is clear from the oral reasons to which we have referred above that the Tribunal accepted the retailer obtained a quotation from the appellant for the manufacture and supply of the fish tank, that the consumer agreed to the price offered by the retailer and that the tank was subsequently delivered. In this regard, at time mark 49:00, the Tribunal rejected the submissions made by Mr Franks on behalf of the appellant and accepted the evidence of the consumer and the evidence of Mr Rumoong for the retailer.
13. This evidence included the evidence from the consumer that there was a sticker on the tank bearing the name of the appellant: see time mark at 52:55-53. In such a case, under section 7 of the Australian Consumer Law, it is presumed, unless the contrary is established, that the person caused or permitted the name to be applied to the goods thereby deeming the person to be the manufacturer for the purposes of the ACL.
14. In our view, the absence of any invoice for the purchase of the fish tank by the retailer from the appellant is not a reason to reject the evidence otherwise provided to the Tribunal to the effect that the appellant manufactured and supplied the fish tank to the retailer who in turn sold the tank to the consumer. There is no error of law arising from the decision made by the Tribunal on this aspect of the claim.
15. Further, while the appellant asserted that the decision was against the weight of the evidence, and therefore leave to appeal should be granted, in our view this submission should not be accepted. Objectively, there was separate evidence from each of the consumer and the retailer identifying the appellant as the manufacturer of the fish tank. This evidence included the sticker on the tank and the process of acquisition by the retailer from the appellant. There is no reason to conclude there was any collusion between the consumer and the retailer or any fabrication of evidence. There is no reason to conclude the appellant may have suffered a substantial miscarriage of justice.
16. Accordingly, we reject this ground of appeal.
17. The next two issues were whether the Tribunal erred in rejecting the submission that the tank may be wrongly installed, and that the tank was not designed or the materials were not suitable, to be used outdoors. The appellant submitted that it led evidence that the tank was not properly installed and was not designed for external use.
18. As referred to above, on page 2 of its reasons the Tribunal stated, "there was simply no evidence to support these points". The Tribunal went on to state, "there is no evidence as to the base. Mr Karatasoulis states the installation position was purpose built and was expensive. It appears a workmanlike construction in the photographic evidence. For those reasons I reject this submission of the second respondent."
19. The Tribunal explained the position as follows in its written reasons "orders were made for the service of evidence by all parties. The applicant complied, serving his bundle of evidence within the time directed. Neither respondent served any evidence, and they confirmed that today." Nothing has been placed before the Appeal Panel to establish that evidence on these matters was before the Tribunal from the appellant which was ignored or overlooked.
20. Absent any evidence from the appellant, we are not satisfied that the Tribunal erred in rejecting the appellant's submissions as to the installation being unsuitable or the tank not being designed for external use and we reject this ground of appeal.
21. The next matter to deal with is the submission that the Tribunal ought to have made an order in favour of the consumer against both the retailer and the respondent. As indicated above, the consumer did not appeal the order dismissing his claim against the retailer. In substance, the appellant's complaint is that the retailer bears some of the responsibility and should have been made to contribute to any award of damages made payable by the appellant.
22. Pursuant to s 79P(a) of the FT Act the Tribunal had power to make "an order that requires a respondent to pay to another respondent a specified amount of money". That is, an order for contribution between respondents can be made in resolving an applicant's claim. In making any order, s79U provides "the Tribunal must be satisfied that the orders will be fair and equitable to all parties to the claim".
23. In the present case, the Tribunal found that "there was a serious issue with the silicon seal in the tank and that [the consumer] needed a new tank".
24. Having found the appellant was the manufacturer of the tank, the fault arising from the lack of durability arose solely from the failure of the silicon seal. This was a manufacturing problem, not a problem arising from the conduct of the retailer. The Tribunal rejected any suggestion that the installation of the tank otherwise gave rise to the problem with the silicon seals.
25. On this analysis, the responsibility for the breach of the consumer guarantee rests solely with the manufacturer, not with the retailer. It follows that the manufacturer should be held liable for the loss and damage arising in consequence of the defect. By section 274 of the ACL, had the retailer been found liable to pay damages to the consumer, the appellant would have been liable to indemnify the retailer in that regard. No error is established in the Tribunal declining to make any order that the retailer contribute to the award of damages made against the appellant.
26. The last issue to deal with is the amount awarded by the Tribunal.
27. The Tribunal accepted breach required the replacement of the tank. The Tribunal accepted that the replacement cost was in excess of $900.00. The Tribunal had evidence that the original tank cost $1285.00. Against the background of this evidence, it was open to the Tribunal to conclude that this evidence, when considered as a whole, was sufficient to establish a loss of at least $900.00. In this regard, and particularly having regard to the size of this claim, the observations of the High Court in Commonwealth of Australia v Amann Aviation Pty Ltd 104 ALR 1 at [11]-[12] are relevant, namely that some degree of estimation is required and the Tribunal must do the best it can. Similarly, the observations of the Appeal Panel in Khan v Kang [2014] NSWCATAP 48 are apposite.
28. The appellant complained that the result of this order was that he was made responsible for the margin which the retailer placed on the fish tank in its resale agreement with the consumer. Here, the appellant says that if it sold the tank, the wholesale price would have been $750 including GST. Therefore, the amount of the award is excessive.
29. This submission has two problems.
30. Firstly, the loss to be assessed is that suffered by the consumer. This loss must be determined by reference to the cost to the consumer to restore his position to where it would have been but for a breach of the consumer guarantee. As the Tribunal found, this involves assessing what is the amount which the consumer incurred to replace the fish tank. As is clear from the reasons, this is precisely what the Tribunal determined in awarding $900.00.
31. Secondly, the approach advocated by the appellant presupposes that the retailer should be deprived of its margin in circumstances where it sold a product which was defective. This is despite the fact the retailer did not know of and was not responsible for the defect. There is no reason in logic why the Tribunal should take such an approach. As stated above, the responsibility for the defect rests solely with the appellant.

Orders

1. It follows from what we have said above that the appeal should be dismissed. Accordingly, the Appeal Panel makes the following order: 1. Leave to appeal is refused and the appeal is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar

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

Amendments 05 June 2018 - Correct text uploaded to replace text incorrectly placed on Caselaw. 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: 05 June 2018