Taylor v Lay

Taylor v Lay - [2023] NSWCATAP 328 - NSWCATAP 2023 case summary — Zoe

[4]

Summary of the Decision

The relevant facts and findings made by the Tribunal may be summarised as follows: 1. The Respondent traded under the name "TessaBulls" and is certified as a breeder of bulldogs by the Royal NSW Canine Council Ltd. 2. On 26 April 2022, the Appellant purchased a British Bulldog puppy ('Bobby') from the Respondent for $6,000. Bobby was then 12 weeks old. Prior to the purchase the Respondent told the Appellant that all puppies from a previous litter and the current litter were healthy. 3. Two days after the purchase, Bobby displayed blood in his stools. The Respondent attributed this to stress/anxiety in a new environment and recommended a change of diet. 4. On 27 May 2022, Bobby was urgently admitted to a veterinarian hospital, showing signs of severe difficulty in breathing, and placed in an oxygen chamber. Bobby was initially diagnosed with pneumonia. The Respondent suggested that his pneumonia was caused by a viral or bacterial infection. 5. Bobby was also diagnosed with Brachycephalic Obstructive Airway Syndrome ('BOAS'). Bobby has a severe hypoplastic trachea of 5.5mm which equates to a thoracic inlet ratio of 10%. 6. BOAS is a congenital condition. Bobby has been hospitalised again since his first admission due to this condition. 7. On 7 June 2022, Bobby was admitted to the veterinary hospital after a choking incident and became oxygen dependant due to cyanosis (a bluish discolouration of the skin caused by inadequate oxygenation of the blood). 8. On 7 and 8 June 2022, the parties communicated by telephone and text and discussed compensation for past and future veterinary costs associated with the treatment of Bobby's health conditions. The Respondent offered to refund the purchase price of Bobby, take Bobby back into her care and pay 50% of the veterinary costs up to that date of $8,730.50. The Appellant declined the offer. 9. A few months later, Bobby was diagnosed dysplasia of the front left elbow and dysplasia of both hips. 10. Bobby is required to take daily anti-inflammatory medication, arthritis injections and joint supplements. 11. The Respondent contended that the trachea to thoracic ratio will improve as Bobby ages. The evidence from the veterinary records suggest that BOAS may improve with age and if not, Bobby's airway may require surgical procedures. 12. The Appellant contended that before listing Bobby for sale, the Respondent should have undertaken testing (including DNA tests) to ensure that Bobby was not suffering any congenital, genetic, or chronic health conditions. 13. The Respondent contended that she was unaware of any underlying health issues with the litter and Bobby in particular, and that the underlying health issues later displayed by Bobby months after birth, are extremely common in the English Bulldog breed. 14. The Respondent tendered a RSPCA "Factsheet" described as "Brachycephalic Obstructive Airway Syndrome" that relevantly stated: BOAS is a breed related disorder that means affected animals cannot breathe normally and this significantly compromises their welfare. Animals affected by brachycephaly (having a flat face) include dog breeds such as … British Bulldog … 1. In a letter dated 12 September 2022, veterinarian Jasmine Annan reported that on 21 April 2022, she had examined the Respondent's "litter of 8 British Bulldogs" for their "first puppy vaccination and microchipping. On physical exam, no abnormalities were detected. Hypoplastic trachea and hiatal hernias cannot be detected on a routine physical examination and require advanced diagnostic imaging to be diagnosed." 2. The relevant provisions of the Part 6A of the FTA relied upon by the Appellant are brought within the provisions of the consumer protection provisions of the Australian Consumer Law NSW ('ACL'). 3. The Appellant claimed, and the Tribunal accepted, that Bobby is a "good" (i.e. a tangible thing that is or may be the subject of trade or commerce) within the meaning of the ACL. The Appellant also claimed, and the Tribunal accepted, that at the time of the parties' transaction, the Appellant was a "consumer" and that the Respondent was acting, as a professional breeder, in "trade and commerce" within the meaning of the ACL. 4. The Appellant contended that the Respondent contravened s 18 of the ACL by making misleading and deceptive representations concerning the health of Bobby prior to his purchase. 5. The Tribunal found at [46] that the Respondent "did not have knowledge of Bobby having BOAS at the time of the purchase of him … [and] [o]n balance this claim is not proven, and the claim is dismissed." 6. The Appellant also claimed that the Respondent contravened s 54 of the ACL (guarantee of acceptable quality) because Bobby was not of an acceptable quality. 7. At [59], the Tribunal found that s 54 of the ACL required the Respondent to comply with the guarantee provisions of the ACL. Notwithstanding the finding about the Respondent's lack of knowledge of Bobby's breathing issues, the Tribunal found at [59] that contrary to s 54 of the ACL, "the breathing difficulties of Bobby and severe BOAS are defects in Bobby that had the [Appellant] been aware of or a reasonable consumer [been] aware of, the [Appellant] or a reasonable consumer would not have purchased Bobby." 8. The Tribunal found that the Appellant unreasonably refused to return Bobby and receive a refund of the purchase price when that offer was made by the respondent on 7 June 2022. Had the Appellant accepted the Respondent's offer, the Tribunal found that the Appellant would have avoided her claims for veterinary costs after the first veterinary hospital admission of Bobby on 24 May 2022 and a second hospital admission on 5 June 2022. The Tribunal therefore found that the Appellant failed to mitigate her loss. 9. The Tribunal also found at [68] that the Appellant's claim for veterinary costs incurred after 7 June 2022 and the claim for likely future veterinary costs were "too remote" and not in the "reasonable contemplation of the parties at the time of entering [into] the contract or reasonably foreseeable." 10. The Tribunal assessed damages by reference to the Respondent's offer to pay half of the Appellant's veterinary costs of $8,730.50 incurred up to the time the Respondent's offer was rejected by the Appellant. The Tribunal did not allow any amount by way of a refund of the purchase cost or the claim for veterinary costs after Bobby's second hospital admission on 5 June 2022 or for future costs. 11. The Tribunal allowed damages of $4,365.25 being half of the Appellant's claim for veterinary fees up to the date the Respondent's offer was rejected on 7 June 2022.
We have set out the above findings by the Tribunal in some detail because the essential facts found by the Tribunal are not in dispute, although there remains some dispute about the terms of the offer on 7 June 2022. With that proviso, the above summary provides a convenient factual basis for our consideration of the issues on this appeal since the Appellant did not provide a transcript and recording of the hearing required under Order 3(d) made on 28 July 2023 if "what happened at the hearing at first instance is being relied upon by the Appellant in the appeal …".

[8]

Hearing

The parties were given leave to be legally represented by orders made on 28 July 2023. The Appellant was legally represented.
At the commencement of the hearing, the Respondent did not appear. The Respondent was then contacted by telephone. The Respondent sought an adjournment because she had been incapacitated since the day prior to the hearing and had arranged to see her general practitioner in the afternoon of the hearing for blood tests. The Respondent said that she had been suffering from her present condition since December 2022.
The Appellant opposed an adjournment on the basis that her solicitor had travelled from Canberra for the hearing and that the first notice of the Respondent's incapacity preventing her from appearing in person was received the day before the hearing.
The Respondent said that she would have liked "to be there in person to finish it." The Respondent satisfied us that she was able to conduct her defence to the appeal by telephone. We explained to the Respondent that if she felt incapable of continuing with the hearing, then we could revisit her ongoing participation in the appeal by telephone. The Respondent said that she was "okay" with the hearing proceeding.
The Appellant did not object to the hearing of the appeal proceeding on that basis. In exercising our discretion to continue with the hearing with the Respondent participating by telephone, albeit in an incapacitated state, we had regard to the procedural history referred to in the Decision that the Appellant did not appear at the hearing initially listed on 11 November 2022 and the proceedings were reinstated by the Appellant. We accepted the Respondent's desire to "finish" these proceedings.
We also had regard to the "guiding principle" in s 36 of the Civil and Administrative Appeal Act 2013 (NSW) ('NCAT Act') to "facilitate the just, quick and cheap resolution of the real issues in the proceedings" and the discretion and flexibility afforded by adopting measures that are reasonably practicable in s 38 of the NCAT Act to ensure procedural fairness to the parties where the Respondent wanted to continue with the hearing of the appeal but was unable to attend in person.

[10]

Questions of law

In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13], the Appeal Panel set out a non-exclusive list of questions of law including whether there has been a failure to provide proper reasons, whether there was a failure to afford procedural fairness, and whether the Tribunal failed to take into account relevant (i.e. mandatory) considerations.
A question of law will also arise where there is a material failure by the Tribunal to respond to a "substantial, clearly articulated argument relying upon established facts" that may be characterised either as a failure to afford natural justice or as a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 at [24]-[25] (Gummow and Callinan JJ; Hayne J agreeing at [95]); DVE18 v Minister for Home Affairs (2020) 276 FCR 401 at [34]; followed by the Appeal Panel in Goncalves v Bora Developments Pty Ltd [2021] NSWCATAP 231 (Goncalves) at [9(2)].
The interpretation of a statute or contract is directed to the ascertainment of the document's actual and true meaning. When the document is properly construed, there is only one correct meaning. It is for this reason that the proper construction of a statute is a question of law: Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385; [2020] FCAFC 50 (Bianco Walling) at [66] (Flick, White and Perry JJ).
A question of law also arises where it involves consideration of whether a court or tribunal has identified or applied the relevant and correct legal test and whether the facts of a case "fall within a statute properly construed: Federal Commission of Taxation v Trail Brothers Steel & Plastics Pty Ltd [2010] FCAFC 94; (2010) 186 FCR 410 at [13].
The approach of courts where there is an appeal on a question of law is not to read a notice of appeal narrowly, and to address questions of law that are identified in the notice of appeal as a whole and perhaps also from surrounding circumstances: Fraser v Sperling [2017] VSCA 53 (Fraser) at [56] (Maxwell P, Santamaria and McLeish JJA); McSteen v Architects Registration Board of Victoria [2018] VSCA 96 (McSteen) at [32]-[34] (Maxwell P, Priest and McLeish JJA).
We are satisfied that the Appellant has raised a question of law in her challenge to the Tribunal's application of s 18 of the ACL to the facts, by its finding that the Respondent did not have knowledge of Bobby's congenital condition when making the representations about his health to the Appellant and accordingly did not contravene s 18 of the ACL.
We are also satisfied that the second ground of appeal contending a failure by the Tribunal to apply "well-established laws and principles" for the assessment of damages for a breach s 259(4) of the ACL and by wrongly assessing damages by reference to the principles of Hadley v Baxendale raises a question of law.

[11]

Leave to appeal

In the absence of any question of law on the other grounds raised by an appeal, the circumstances in which the Appeal Panel may grant leave to appeal from those parts of a decision made by the Tribunal in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the Civil and Administrative Tribunal Act 2013 (NSW) ('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. there was significant new evidence that was not reasonably available at the time the proceedings under appeal were being dealt with.
In the Appeal Panel's decision 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 may have been suffered where "there was a significant possibility", or "a chance that was fairly open", that a different and more favourable result would have been achieved for the appellant had the relevant circumstances in pars (a) or (b) of cl 12(1) not occurred or if the fresh evidence under par (c) of cl 12(1) 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 of the NCAT Act, the Appeal Panel must still consider and be further satisfied that it should exercise its discretion to grant leave to appeal.
In Collins, the Appeal Panel at [84(2)] stated that ordinarily in exercising that discretion, it is appropriate to grant leave to appeal only in certain matters. Those types of matters include issues of principle, questions of public importance, an injustice which is reasonably clear so that it would be unjust to allow the finding to stand, a factual error that was unreasonably arrived at and clearly mistaken, or where the Tribunal went about the fact finding process 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 Appellant requires leave to appeal on the other two grounds raised by the appeal that we have set out above. However, as we discuss, there is an obvious overlap in the issues raised by the challenge to the Tribunal's application of the principles of Hadley v Baxendale in assessing damages and the other questions raised on the appeal for which leave is required, namely the Tribunal's findings about remoteness of damage and mitigation of loss.
We are satisfied that in the exercise of our discretion, if we uphold either question of law raised by the appeal, we may need to reassess damages. If so, then we will also need to consider the Tribunal's findings discounting damages by reason of remoteness of damage and mitigation to be able to quantify the proper amount of damages to which the Appellant may be entitled.
Therefore, insofar as it may be necessary, we will grant leave to the Appellant to appeal the grounds of appeal other than on the questions of law raised in the Notice of Appeal.

[14]

Sections 54 and 259 of the ACL

The relevant guarantee provision requiring goods to be of an "acceptable quality" is s 54 in the ACL which 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. (4) If: (a) goods supplied to a consumer are not of acceptable quality; and (b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply; the goods are taken to be of acceptable quality. (5) If: (a) goods are displayed for sale or hire; and (b) the goods would not be of acceptable quality if they were supplied to a consumer; the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent. (6) Goods do not fail to be of acceptable quality if: (a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and (b) they are damaged by abnormal use. (7) Goods do not fail to be of acceptable quality if: (a) the consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and (b) the examination ought reasonably to have revealed that the goods were not of acceptable quality.
It was not in contention that at the relevant time, the Respondent was a "supplier of goods" to the Appellant as a "consumer" and that Bobby comes within the definition of a "good" or "goods" in the ACL.
For a breach of the guarantee provision under s 54, s 259 of the ACL (relevantly) provides: 259 Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3‑2 (other than sections 58 and 59(1)) is not complied with. … (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. (5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier.
We will consider the grounds of appeal in the same order that we have set out above.

[16]

Relevant legal principles

In York v Lucas (1985) 158 CLR 661 at 668 (Yorke v Lucas), the High Court (Mason ACJ, Wilson, Deane and Dawson JJ) held that a contravention of s 52 of the former Trade Practices Act 1974 (Cth) ('TPA'), which is the statutory predecessor of s 18 of the ACL, is governed not only by "the terms in which it [the misleading conduct] is created " but also by "the context in which it is found." That basic precept has remained unchanged by later decisions considering both s 52 of the TPA and s 18 of the ACL.
In Miller & Associates v BMW Australia [2010] HCA 31, French CJ and Keifel J held at [14]: 14. In determining whether there has been a contravention of s 52 of the Trade Practices Act it is necessary to determine 'whether in the light of all the relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive': citing Demagogue Pty v Ramensky [1992] FCA 557; 39 FCR 31 at [41].
In Butcher v Lachlan Elder Realty Pty Limited (2004) 281 CLR 592, McHugh J held at [109] in reference to a document that was said to be misleading or deceptive (the same principles can equally apply to oral representations): 109. The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 [TPA] has occurred, the task of the court is to examine the relevant course of conduct in light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.
In Choo v Zhang [2016] NSWCA 193 (Zang), Sackville AJA (McColl and Basten JJA agreeing) said in the context of misleading and deceptive conduct under s 18 of the ACL at [56] (omitting citations): 56. As French CJ pointed out in Campbell v Backoffice Investments Pty Ltd, the question of whether conduct is misleading or deceptive within the meaning of s 18(1) [ACL] is logically anterior to the question of whether a person has suffered loss or damage thereby. An answer to the first question generally requires consideration of whether the impugned conduct as a whole has a tendency to lead a person into error. Where the conduct involves dealings between individuals, as in the present case, characterisation of the conduct requires objective consideration of the circumstances and context of the impugned conduct, which may include the knowledge of the person to whom the conduct is directed.
At [58] of Zang, Sackville AJA said: 58. It is, however, important to appreciate that whether or not a person contravenes s 18(1) of the ACL is not necessarily answered simply by asking whether the person's conduct in fact misled someone else, although evidence to that effect might be significant. Misleading conduct may take many forms and is not confined to representations. But in a case where the impugned conduct was misleading or deceptive ordinarily must be determined by what a reasonable person in the position of the representee would have made of the representations, taking into account all relevant circumstances.
The Tribunal referred to the decision of the Appeal Panel in Forbes v Wan [2020] NSWCATAP 129 (at [70]), applying the decision of the High Court in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [24]-[33] that: … in considering whether the facts of a case disclosed misleading or deceptive conduct, a two-step analysis is required. The first step involves asking whether facts establish the conduct pleaded. The second step involves asking whether, as a question of fact, the conduct is false, misleading or deceptive or likely to mislead or deceive. It is necessary to have regard to the context in which the representation was made and to the relevant surrounding facts and circumstances.
These principles are not in dispute. The issues raised on the appeal concerns the application of these well-established principles to the particular facts of this case.
The Appellant contended that it was "unnecessary" for the Appellant to establish, and therefore the Tribunal erred, in having regard to the subjective intentions of the Respondent when making the representations about Bobby's health to establish liability under s 18 of the ACL.
The Appellant referred to Google Inc v Australian and Consumer Commission (2013) 249 CLR 435 (Google) at [6]-[9]) that held a contravention of s 18 of the ACL is to be determined by an objective test and that the "intention" of the person making the representation is not a necessary element in determining whether there has been a contravention of s 18: citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [55]-[57] and Google. We accept those principles as well-established and uncontroversial.
The Appellant challenged the Tribunal's reliance on Yorke v Lucas where the High Court held that being "involved" in a contravention of (then) s 52 of the TPA, requires that party to be an intentional participant and have the necessary intent based on the knowledge of the essential elements of the contravention. The Tribunal also referred to the decision of the NSW Court of Appeal, when considering Yorke v Lucas, where Young JA said in CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37 that the High Court in Yorke v Lucas held that "what was required to show liability under the section was that the person in question had knowledge of the essential elements of the contravention."

[18]

The representations: s 18 of the ACL

The Appellant's primary challenge to the Tribunal dismissing her claim under s 18 was on the basis that the Tribunal found that Respondent did not know, when making the representations about Bobby's health, that Bobby was suffering BOAS.
The Tribunal paraphrased the alleged representations in the Decision. The precise nature of the representation(s) at the time that they were made is critical when objectively construing the terms of the representation and having regard to "all relevant circumstances". The representations of which the Appellant complained are referred at [27] in her statement dated 16 August 2022 (at AB 24): [27] The condition [of Bobby's BOAS] was not disclosed by the respondent. When I purchased Bobby I was of the belief that he was healthy, free of any congenital conditions that would pose a threat to this [sic] life or result in me incurring considerable vet bills. (emphasis added)
The Appellant said in her statement at [26] (also at AB 24) that had she known that "Bobby had a congenital condition, I would not have purchased him from the respondent."
The following contention was advanced at [9(ii)] in the Appellant's submissions at AB 2: [9.ii] Here the evidence established that the respondent had made representations by text messages which are among the categories of communications [to which s 18 applies] … As a result, it is submitted that the respondent's conduct was within section 18 of the ACL, it applied to the respondent's conduct and it was unnecessary to establish that the respondent knew that her conduct was misleading."
The principles relied upon by the Appellant are not in contention. The question is what was objectively conveyed by the representation(s) when made in light of all relevant circumstances at that time. The Appellant's subjective understanding or "belief" of what the representations conveyed at the time they were made or that she may have subsequently interpreted about the representations with the benefit of hindsight, is not to the point.
At [4] of AB 21 in the Appellant's statement, the Appellant said the text exchanges occurred on 14 April 2022 via Instagram. The Respondent's statement at [4] (at RB 3) agrees with that date. The text exchanges relied upon by the Appellant are at AB 43. Relevantly, the pre-purchase text exchanges record the following: Appellant: … How many litters have you had? And health concerns with the parents? My biggest concern would be the nares [nostrils/nasal passage] and any problems. My other bulldog has had many issues and I can't go through it again? Respondent: … This litter is our second. Previous litter we actually kept one ourselves. We are still in contact with all the owners of our first litter. Also have previous owners coming back for their 2nd puppy. No issues, all doing really well. Parents are both healthy. Mum is 4 years old, after Christmas. Have no health issues with her or the dad.
All other texts in the Appellant's material post-date the purchase of Bobby and are not relevant to our consideration of the representations made pre-purchase and upon which the Appellant said she relied when purchasing Bobby.
The Appellant has not identified how the answers/representations by the Respondent were misleading or deceptive. At the time they were made, the representations were statements of existing fact that the Appellant has not proved to be false, misleading, or deceptive. The issue of knowledge or intent is not in those circumstances relevant in considering whether there has been a contravention of s 18 of the ACL. There is no evidence that Bobby's parents were unhealthy or suffering from BOAS. The Respondent's text answered the inquiries made by the Appellant and there is no evidence that they were false, recklessly indifferent to the truth or how they were misleading or deceptive.
The representations when properly construed are that Bobby's parents were healthy and that there were no issues with the "first litter." The representations were not in respect of a future matter that Bobby will not later display or suffer from symptoms of BOAS (especially given the known risks of this cognitive condition in such breeds). Rather, at the time the representations were made, the Respondent said that Bobby's parents did not have health issues and Bobby did not display any defects or symptoms of BOAS.
The factual and evidentiary foundation for the making of these representations was confirmed by veterinarian Jasmine Annan ('Ms Annas') in her letter dated 12 September 2022 which reported that on 21 April 2022 she had examined the Respondent's "litter of 8 British Bulldogs" for their "first puppy vaccination and microchipping. On physical exam, no abnormalities were detected. Hypoplastic trachea and hiatal hernias cannot be detected on a routine physical examination and require advanced diagnostic imaging to be diagnosed.
In the Appellant's claim for breach of s 18 of the ACL made at AB 10, the Appellant said that in respect of the texts, they "created a representation that the puppy would be free of any defects and [Bobby] would not be bought with a congenital condition." (emphasis in the original).
Objectively, the misrepresentations inferred and relied upon by the Appellant by the Respondent's texts are not the actual representations made by the Respondent. The first manifestation of any congenital condition such as BOAS was four weeks after the purchase of Bobby. There is no evidence or any suggestion that Bobby's BOAS or any other congenital condition was known before that time. No link has been established on the evidence between the "runny poos" two days after his purchase and the later diagnosed BOAS.
The evidence is that neither the Respondent nor the Appellant was aware of Bobby's congenital condition at the time of his purchase. This is corroborated by the RSPCA Pet Insurance that found that Bobby's condition was not identified until 24 May 2022 and therefore it was "within the 30 day waiting period" for cover under the policy taken out by the Appellant which would have expired on 28 May 2022 (AB 53-56). It is also corroborated by the veterinarian Jasmine Annan's report referred to above from her inspection of the litter on 21 April 2022 for their "first puppy vaccination and microchipping" and that on physical examination, "no abnormalities were detected".
As we understand matters, a congenital condition will not necessarily display itself on birth and there was no reasonable basis, on the evidence before us, since Bobby, his parents and the two litters appeared healthy, to find that the representations were false or misleading or deceptive. In this respect, the question of the Respondent's subjective state of mind or intent when making the representations, as the Tribunal found, is irrelevant.
One further matter raised by the Appellant, and that we can dispense with briefly, is that it was incumbent on the Respondent to have undertaken DNA testing of Bobby and his parents. We reject that submission (as did the Tribunal at [46]), for the following reasons: 1. Bobby's condition is congenital and not genetic. BOAS was not apparent or detectable by DNA testing at the time of the Appellant's purchase of Bobby. 2. The evidence has not established that Bobby's condition was genetic or that his parents had a genetic condition. 3. There was no requirement under the contract of sale, by law or for the Respondent as an accredited breeder, to perform DNA testing as a condition of sale; 4. The Respondent did not represent that such testing had been performed; 5. The Appellant did not request DNA testing as a precondition of purchase.
We find that when the first symptoms of Bobby's condition were manifest four weeks after his purchase, neither the Respondent nor the Appellant could have reasonably known that Bobby had a congenital condition, including BOAS.
The elbow and hip dysplasia were not diagnosed until about 25 November 2022 (AB 80) well after the purchase of Bobby.
The Respondent's representations were about a specific matter of which the Appellant sought an answer at the time of the purchase, and these have not been shown to be misleading or deceptive at that time, and there was no representation about a future matter that Bobby will be healthy and free of any congenital (or genetic) health issues after the purchase of Bobby.
We are of the view that the Tribunal did not err in finding that the Respondent's representations, when properly construed, were not misleading and/or deceptive in contravention of s 18 of the ACL at the time that they were made.
In our opinion, the Appellant's submissions misconstrue the above authorities and the Tribunal's application of them to the specific facts of this case. The Tribunal did not conclude that intention to mislead or deceive was not necessary to establish liability under s 18 of the ACL. The Tribunal correctly had regard to the Respondent's "knowledge of the essential elements" of the alleged misrepresentation: Yorke v Lucas. Having regard to all relevant circumstances at the time the representation was made, the Respondent did not have knowledge of Bobby's congenital condition and did not misrepresent the health condition of Bobby's parents or the health condition of the first or second litters. The Respondent was not asked if Bobby may have BOAS or any other congenital condition. Even if the Appellant had asked that question, on the matters established on the evidence, the Respondent's response would not have been materially different to the response that she provided to the effect that Bobby appears healthy and his parents were healthy.
The Tribunal, correctly in our view, found that the Respondent did not have the requisite knowledge of the essential elements of any misrepresentation, irrespective of intention, to find that the Respondent engaged in misleading and deceptive conduct in contravention of s 18 of the ACL. The fact that a representation in respect of a matter at the time the representation was made, (which was not a representation about a future matter), turned out to be wrong, is not of itself sufficient to establish a breach of s 18 of the ACL, even in the absence of any intention to mislead. The test requires consideration, having regard to all relevant circumstances at the time the representation was made, and not with the benefit of hindsight, whether the Respondent reasonably made the representation in accordance with her knowledge of the relevant facts and essential elements informing the making of that representation.
We are satisfied that the representations, when properly construed, were made on the basis of the knowledge then reasonably held by the Respondent in a direct answer to the Appellant's inquiries, and they were not made with any disregard or indifference to the matters which subsequently developed with Bobby's condition that was not then observable and was unknown to both parties at that time.
Therefore, since we are satisfied that the Tribunal approached these issues correctly, we do not need to consider whether the assessment of damages for contravention of s 18 of the ACL that might have been awarded under s 236 of the ACL was incorrect and contrary to established legal principles.

[20]

Relevant legal principles

The Tribunal was cognisant of the relevant legal principles for its consideration.
In considering the Respondent's breach of s 54, which is not challenged on this appeal, the Tribunal had regard to, and in our view, correctly applied the relevant legal principles. These authorities include APS Satellite Pty Ltd (formerly known as Sky Mesh Pty Ltd) v Ipstar Australia Pty Ltd [2016] NSWSC 1898 and Merk Sharp & Dohme (Australia) Pty v Peterson (2011) 196 FCR 145. The question of whether goods are of an acceptable quality is an objective test from the perspective of the reasonable consumer.
The Tribunal also had regard to the decisions of Prestige Auto Traders Australia Ltd v Bonnefin [2017] NSWSC 140 (N Adams J) at [132] and Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 162 (Jayco) (Wheelahan J) at [25]-[27].
The Tribunal [[58] set out the following from Jayco at [25]-[27]. … 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.
These principles are not in contention. As the Tribunal observed, in considering the question of acceptable quality, that s 54 of the ACL includes within the concept of the state and condition of the goods under consideration at the relevant time, "any hidden defects of the goods."
The Appellant raised two matters in challenging the Tribunal's award of damages for breach of s 54 of the ACL under s 259(4) of the ACL: 1. First, that the Tribunal wrongly assessed damages by applying the principles of Hadley v Baxendale. 2. Second, that the Tribunal incorrectly found that the Appellant failed to mitigate her loss.
As we have said, the first issue in relation to Hadley v Baxendale raises a question of law. The second issue in relation to the finding that the Appellant failed to mitigate her loss is a related issue and we will therefore consider these two issues separately.

[21]

Hadley v Baxendale, remoteness and foreseeability of loss and damage

The Appellant contended that by applying the principles of Hadley v Baxendale, the Tribunal erred in its assessment of the Appellant's claim for statutory damages under s 259(4) of the ACL.
A related aspect to this part of the appeal on a question of law was the Appellant's contention that the Tribunal erred in its application of the legal principles relating to remoteness of damage and foreseeability of loss.
In Wardley Australia Ltd v The State of Western Australia ("Rothwells Loans Case') (1992) 175 CLR 514 (Wardley), the High Court (Mason CJ, Dawson, Gaudron and McHugh JJ) at [13] held that the proper approach to the assessment of damages for breach of a statutory provision, in that case a breach of s 52 of the former TPA, was to apply "the common law measure of damages" as an "appropriate guide" as to what may be recoverable for a statutory breach.
The principle in Hadley v Baxendale referred to by the Tribunal at [64]-[66] mandates the proper approach to the measure of damages for breach of contract. Hadley v Baxendale requires an assessment of damages having regard to what could reasonably be supposed to have been in the contemplation of both parties, at the time the contract was made, as the probable result of any breach of the contract. We accept that by applying Hadley v Baxendale the Tribunal at [67]-[68] and [71] may be seen to have overly confined its approach to assessing statutory damages for a breach of a consumer guarantee provision of the ACL.
However, in our review of the Decision, it is apparent that the Tribunal did not solely approach its assessment of damages by applying Hadley v Baxendale. At [68] the Tribunal also had regard to whether future veterinary costs after the initial admission were "reasonably foreseeable" (using the words of s 259(4) of the ACL) or "too remote" (common law principles) as well as whether they were within the reasonable contemplation of the parties at the time of making their contract (Hadley v Baxendale). In addition to those considerations, the Tribunal also considered whether the Appellant failed to mitigate any loss.
It appears to us that the Tribunal approached the assessment of damages in a way that did not solely apply Hadley v Baxendale and may have applied it as a "guide" (Wardley) in considering what was "reasonably foreseeable" for a breach of s 54 of the ACL. We need not consider this question further because we have approached the assessment of the Appellant's loss differently to the Tribunal.

[22]

Assessment of the Appellant's damages

Section 259(3) of the ACL provides that a consumer who suffers loss or damage for breach of a guarantee provision of the ACL, may reject the goods or claim a reduction in the value of the goods. Section 259(4) provides that a consumer may also recover damages suffered if it was "reasonably foreseeable" that the consumer "would suffer" such loss or damage as a result of any breach of the consumer guarantee.
The question of foreseeability of loss must first be assessed at the time of the impugned transaction. Such an objective test, contrary to the approach of the Tribunal at [67], does not require evidence of what the parties may have reasonably contemplated as possible future damages (such as future veterinary fees) at the time of the sale of Bobby.
An objective assessment under s 259(4) requires the Tribunal to assess whether any loss claimed by the Appellant was reasonably foreseeable in the sense of whether that loss or damage was likely to "naturally result" from a breach of the guarantee provision of the ACL (irrespective of what may have been contemplated by the parties when the contract was entered into by applying Hadley v Baxendale).
Several scenarios arise, before considering the issue of mitigation, in that a breach of the ACL guarantee provision entitles the Appellant under s 259 to: 1. reject the goods (which may give rise to a right to a refund); 2. retain the goods and claim a reduction in their value; and/or 3. recover damages suffered if "reasonably foreseeable."
Without intending to be indifferent to the fact that Bobby is not a "good" in the usual sense of that word of being a materialistic thing or a product that is fungible, the remedies under the ACL apply as if Bobby was an inanimate good.
However, we accept that the Appellant's choices in exercising her rights under the ACL must also be considered, as urged upon us by the Appellant, in the context that Bobby is a family pet and had bonded with the Appellant's family.
The Tribunal described Bobby as a "Mastiff type which is classified as brachycephalic (short headed) breed [with] several common health problems associated with the type of breed such as Bobby's." That would seem to be uncontroversial.
The Appellant was clearly aware of this risk because as we have set out above, in her initial text of 16 April 2022 to the Respondent, she said: My biggest concern would be the nares and any problems. My other bulldog has had many issues and I can't go through it again:" (AB 43)
As a certified breeder of bulldogs, it is axiomatic that the Respondent must be taken to be on notice of these potential breed related disorders.
Both parties must be taken to have been aware that BOAS is "a breed related disorder" affecting dog breeds such as the British Bulldog: see "RSPCA Knowledgebase" at RB 35.
However, in assessing the relevance of these considerations, they would seem to balance each other out. The Respondent as a breeder must be taken to know of the risk that such a puppy sold to a consumer may not meet the quality provisions of the ACL guarantee provisions. That is a business risk the Respondent has willingly accepted.
The Appellant was also aware of the risks when purchasing this breed and elected to purchase another British Bulldog even after her unfortunate experience with her previous bulldog. The Respondent said in her statement that because of these risks, the Appellant sought to "prolong the sale:" [5] at RB 3.
That does not mean that the liability of the Respondent is any less to establish a breach of s 54 but it is important in the context of the choices made by the Appellant when exercising her rights and remedies available to her under the ACL.
The evidence suggests that the first time that the Appellant sought payment for any veterinary costs was after her pet insurance was declined on about 1 June 2022 (AB 53). The Tribunal [31] accepted the Respondent's evidence in her statement [15] (at RB 5) that her offer to pay 50% of the Appellant's veterinary costs was rejected because the Appellant had pet insurance. It would appear strange if that was the case, since the Appellant had claimed those costs from the Respondent.
The evidence is that in a telephone discussion on about 7 June 2022, the Respondent offered the Appellant a full refund of the $6,000 purchase price and to return Bobby to her care. That is not in contention. The parties however disagree on other aspects of the conversation. In a text on 8 June 2022 from the Appellant to the Respondent (AB 71), the Appellant relevantly stated: … thank you for your time on the phone yesterday. Here is a copy of Bobby's invoices … His bills to date total is [sic] $8,730.50. Thank you so much for agreeing to pay 50% and 50% of his upcoming bills for his condition. …
The Respondent's evidence at [15] of her statement (at RB 5) was that she had a further telephone conversation with the Appellant on the same date as her reply text on 13 June 2022 (also at AB 71) and relevantly stated in her subsequent text: When I last communicated with you on the phone, I stated it was best for myself & you also to seek advice from our partners on the matter. From my understanding no agreement was finalised. As you disagreed to a refund of Bobby my husband and I have decided to seek further advice on this matter as it's the first time this matter has occurred. At this time we're unsure of paying the funds of the vet costs, due to the misunderstanding on your end regarding your insurance policy. We believe this is a mistake on your end, and as [sic] of this we do not feel obligated to pay current or upcoming costs.
It is unclear but unlikely that there was a second telephone discussion on 13 June 2022. The Respondent's reference to the "last communication" was probably to the telephone discussion on 7 June 2022 which resulted in the text the next day from the Appellant to the Respondent: AB 71-72.
In any event, in the Respondent's statement at [15] (RB 4), she said that in her conversation with the Appellant, whether on 7 or 13 June 2022, the Respondent offered a refund, to take Bobby back "into her care" and to pay 50% of the Appellant's veterinary costs up to that date. The Appellant rejected the offer of a refund and to return Bobby to the Respondent.
On 8 June 2022, the Appellant sent a text to the Respondent that said the veterinary costs up to that time were $8,730.50: AB 71.
There was some confusion about the exact terms of the negotiations in relation to the veterinary costs. The Respondent's text of 8 June refers to a purported offer by the Respondent to also agreeing to pay 50% of the Appellant's future costs for Bobby's treatment. We observe that if the refund and return of Bobby was refused, and the respondent offered to pay 50% of veterinary costs already incurred, that it would be unlikely that there was any offer or agreement to pay future veterinary costs. The refund and return of Bobby would avoid the need to make an offer to pay the Appellant for Bobby's future veterinary costs.
We are of the view that the proper measure of damages is to be assessed without regard to the offer by the Respondent to pay 50% of the amount claimed. Rather, it is more appropriate to assess the Appellant's actual loss at the time the Respondent offered a full refund and the return of Bobby. In making that offer, the Respondent was complying with her obligations under s 261 of the ACL by which a supplier may seek to remedy a failure to comply with a consumer guarantee provision.
As we have set out above, the Appellant's evidence in her statement is that had she known about Bobby's congenital condition she "would not have purchased him from the respondent:" [26] at AB 24. The Appellant acquired Bobby with serious congenital defects, albeit unknown by both parties at the relevant time, and which s 54 refers to as "hidden defects." We are satisfied that the Respondent is liable to a refund of the full purchase price of $6,000 that accords with the Appellant's evidence that if she was aware of Bobby's "hidden" or unknown "defects," she would not have purchased Bobby (irrespective of her later decision to keep Bobby).
Even with a refund and the return of Bobby (or not), in our view, the breach of the guarantee of acceptable quality under the ACL obliges the Respondent to pay all of the veterinary costs up to the date that the Respondent offered to take Bobby back.
These costs already incurred by the Appellant directly and naturally flow from the breach of the guarantee before the Respondent's offer to take Bobby back and they were costs solely referrable to Bobby's previously unknown congenital condition. However, as we discuss below, the question of whether the Appellant is entitled to claim veterinary costs after that date is to be considered in the context of the principles pertaining to a party's obligation to mitigate loss.
Therefore, having regard to s 294(3) and (4) of the ACL where here has been a breach of a consumer guarantee provision of the ACL, we find that the Respondent is liable to refund the full purchase price of $6,000, and as we now discuss, all of the veterinary costs incurred by the Appellant up to and including 7 June 2022.

[23]

Quantum of the Appellant's claims

The evidence is that as at 7 June 2022, the veterinary fees incurred by the Appellant included $6,890 for the first hospital treatment in the period 24-26 May 2022. The Appellant provided a schedule of treatment expenses incurred at AB 18. The supporting invoices for that first period of treatment are at AB 73-75.
The Appellant also claimed $1,550.50 for the second hospital treatment for the period 5-7 June 2022 (based on the schedule of expenses at AB 18). The Discharge Instructions dated 14 June 2022 at AB 38 described this as a "choking episode" and the Animal Referral Hospital Records state that this caused Bobby to become cyanotic (at AB 42).
However, the only invoice in the AB referrable to the second hospitalisation for period of 5-7 June 2022 is an invoice dated 7 June 2022 of $304.50 (at AB 76). This 2 night hospitalisation is confirmed by the Case Summary Letter by Natalie Watson (at AB 61).
The Appellant's statement at [16] (AB 23) said that Bobby's hospitalisation for the 2 nights of 5 and 6 June 2022 totalled $1,550.50, being the amount identified in the schedule of expenses.
There is no evidentiary basis of which we are aware in the evidence for the Appellant's claim of $8,730.50 claimed in the Appellant's text of 7 June 2022 to the Respondent. Significantly, it was that amount of $8,730.50 that the Tribunal discounted by 50% to award damages of $4,365.25.
This does not seem to be just an error in calculation. The cost for the first hospitalisation of $6,890 plus the second hospitalisation claimed at $1,550 would be $8,440.50 and not the amount accepted by the Tribunal to allow the 50% deduction to award damages.
On the evidence in the AB, the correct amount of the claim put to the Respondent as at 7 June 2022 was $7,194.50. This was for the first hospital treatment $6,890 and the invoiced cost for the second treatment of $304.50.
We are not satisfied that we should allow $1,550.50 for the cost of the second hospitalisation in our assessment of the Appellant's entitlement to damages for Bobby's treatment costs up to 7 June 2022. There is no evidence for that amount. We accept it may have been an estimate or an error at the time because there is also a text from the Appellant to the respondent dated 7 June 2022 (at AB 44) (which appears to precede the telephone conversation on that date) that updates Bobby's costs of $6,890 with another $1,536 "for his current hospital trip." That total of $8,426 accords with another text, also apparently on 7 June 2022, in which the Appellant said that she "spent $8,426 on Bobby not including the $6k I paid to purchase him …due to an issue he was born with ..." (at AB 45). So, the Appellant's claim of $8,730.50 in her text the next day on 8 June 2022 (AB 71) is unsubstantiated in several respects.
We do not agree that the Tribunal should have discounted the veterinary costs up to 7 June 2022 by 50%, irrespective of whether there was an offer from the Respondent, and rejected by the Appellant, to refund the purchase price, take Bobby back and pay half of the veterinary costs to that date. In doing so the Tribunal erred in assessing damages in the manner required by the ACL.
Based on our reasons given above, we therefore allow all of the Appellant's veterinary costs up to 7 June 2022 in the revised total of $7,194.50.
For the reasons we discuss below, we do not allow the Appellant's claim for damages beyond 7 June 2022.

[24]

Failure to mitigate

H McGregor, McGregor on Damages, 16th ed, Sweet & Maxwell Ltd, UK, 1997 ('McGregor') at [283]-[288], provides a well-recognised statement of the principles of law concerning mitigation as follows: 1. The law disallows recovery of damages in respect of any loss that could have been avoided but which the plaintiff has failed to avoid through unreasonable action or inaction. 2. The plaintiff may recover loss or expense incurred in a reasonable attempt to mitigate. 3. The plaintiff may not recover loss in fact avoided, even though damages for that loss would have been recoverable because the efforts that went to mitigation went beyond what was required of the plaintiff under the first principle.
The pet insurance taken out by the Appellant on 28 April 2022 did not respond to Appellant's claim under the policy because it related to Bobby's tracheal disorder that first became apparent when Bobby was taken to the veterinary hospital on 24 May 2022. Since Bobby's BOAS was a pre-existing (congenital) condition, the claim was made within the 30 day waiting period under the policy and the claim was rejected. We accept that this was not through any fault of the Appellant.
The Appellant's primary submission in challenging the Tribunal's approach to mitigation was that the Tribunal "failed to take into account the fact that Bobby is a pet and how painful it would have been for the [Appellant] to return a companion animal with whom she had bonded, as no doubt Bobby had with her, her family, and their dog:" [16] at AB 5.
At the time of the conversation between the parties on 7 June 2022, the Appellant had clear choices to make, not all of them desirable, but nevertheless within the provisions of s 294 of the ACL which is what we are legally required to consider and apply.
The Tribunal found that on 7 June 2022 the Appellant refused the Respondent's offer: 1. To give a full refund of $6,000 purchase price; 2. to take Bobby back into her care; 3. to pay 50% of the veterinary costs then incurred by the Appellant for Bobby's hospitalisation and treatments.
The Respondent had care of Bobby for 12 weeks after his birth and before his purchase by the Appellant. On the evidence, the first sign of any congenital issue with Bobby was when he was 18 weeks of age. That was 4 weeks after his purchase. The Respondent's offer that the Appellant refused was therefore made 6 weeks after his purchase. The Appellant described "the 6 weeks we've had Bobby [as] gruelling and stressful financially and mentally that no-one should experience": [15] of statement at AB 23.
The emotional attachment to Bobby as part of the family should be considered in that context. Bobby's cognitive condition was known to the Appellant after the first hospital treatment. The Appellant's statement at [10]-[12] (AB 21-22), the Case Summary Letter at AB 59, and the Discharge Instructions ('DI') of Natalie Watson (AB 33), all record matters of which the Appellant said she was made aware during Bobby's first admission and assessment in the period 24 -26 May 2022.
The diagnosis identified a "severely hypoplastic trachea, hiatal hernia and +/- aspiration pneumonia:" (DI: AB 33). The DI further stated: Unfortunately, there is no specific treatment for a hypoplastic trachea. Whilst this may improve to some degree as Bobby grows, euthanasia is sadly recommended in many dogs with this condition dur [sic] to recurrent issues with breathing. A positive response has been seen in a small number of cases following surgically addressing the upper airways. Ideally, Brachycephalic Obstructive Airway Syndrome (BOAS) surgery is performed when dogs are more grown. (e.g. 8-12 months of age). Surgical correction of the upper airways in the future may resolve the hiatal hernia, however given the severity of the hypoplastic trachea, I am concerned that this will likely persist. Whilst it is present, Bobby is at risk of recurrent regurgitation episodes +/- aspiration pneumonia. Again, to avoid future additional surgical procedures, in ideal world, surgically addressing the hiatal hernia would be delayed until he is older +/- until BOAS of the upper airways are appropriately surgically addressed.
The Appellant was aware (AB 33) when she rejected the Respondent's offer to take Bobby back into her care that "euthanasia is sadly recommended in many dogs with this condition [BOAS]." The alternative was for Bobby to undergo surgery to his upper airways but the veterinary advice was that "given the severity of the hypoplastic trachea … this will likely persist." That advice also warned that while Bobby's BOAS persists, "Bobby is at risk of recurrent regurgitation episodes [and/or] aspiration pneumonia."
Also relevant to the Appellant's rejection of the Respondent's offer is that as at 7 June 2022, the Appellant was likely to have known that her pet insurance (rejected on 1 June 2022) would not cover any of Bobby's cognitive conditions, including BOAS and any future surgery to try and address his upper airway issues. The Appellant nonetheless took the risk of personally incurring those future costs by keeping Bobby after the Respondent's offer was rejected.
The Appellant made an informed decision to retain Bobby and not euthanise him knowing that future and extensive surgical and other treatments would be required throughout his lifetime and would not be covered by her pet insurance. That was no doubt an invidious choice, and no matter how reluctantly it was made, it was a decision made at the time of the rejection of the Respondent's offer with full knowledge of the financial consequences of her decision. That decision, unless the Respondent agreed to bear all or share some of those costs, was made independently or indifferently to the Respondent's offer and she should not be liable for them.
Given the Respondent's offer on 7 June 2022, from that date, we find that the Appellant failed to mitigate the loss that she now claims for costs beyond 7 June 2022, including what may otherwise be characterised as reasonably foreseeable costs associated with future surgical procedures and other treatments.
Such costs are contended by the Appellant to be reasonably foreseeable and therefore not too remote so that the Respondent should be liable for them. However, they were made known to Appellant as a cost that was most likely to be incurred by her, at the time when the Appellant made her election to reject the Respondent's offer, or not euthanise Bobby, and retain him in the knowledge that Bobby faced a future of treatments and expensive veterinary fees not covered by pet insurance.
These were matters within the control of the Appellant to evaluate and accept. It is not a question, as above, whether these further losses were reasonably foreseeable. The issue is that having been made aware of those treatment costs and future expenses, the Appellant made a fully informed election that would necessarily cause her to incur those costs when, under the ACL, she was offered her consumer rights of a refund and to return Bobby and a part payment of the foreseeable losses up to the date of the offer. The Appellant rejected all three components of the offer made by the Respondent. The Appellant could have accepted the refund and the return of Bobby and then challenged the Respondent's offer to only pay 50% of the veterinary costs up to 7 June 2022. We have found that the Appellant was actually entitled to all of her costs incurred up to that time. The relevant factor after 7 June 2022 is that by not accepting the refund and returning Bobby to the Respondent as offered, the Appellant elected to not avail herself of all of her available rights as a consumer under the ACL.
After the Appellant's refusal of all of her available consumer rights, it becomes not a question about what loss was reasonably foreseeable, but whether the Appellant refused to take reasonable measures required by law to mitigate that future loss. The Appellant simply sought to claim all those future costs against the Respondent who had already offered the Appellant the rights afforded the Appellant under the ACL, and that we have found justified a higher amount of damages than that found by the Tribunal.

[26]

Costs

Neither party challenged the costs order made by the Tribunal but the Appellant sought her costs of the appeal.
The principles that apply to a decision concerning the costs of an internal appeal from a decision of the Consumer and Commercial Division where the amount in the dispute at first instance was more than $30,000, invokes r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) ('NCAT Rules'). On appeal, pursuant to r 38A of the NCAT Rules, we are to apply the applicable first instance costs provisions when deciding whether to award costs in relation to an internal appeal.
Rule 38 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.
Even though we have allowed the appeal and increased the amount awarded the Appellant by the Tribunal from $4,365.25 to $13,194.50, we are still required on the appeal to approach an application for costs on the basis of r 38(2)(b) that "the amount claimed or in dispute in the proceedings is more than $30,000": Hanave Pty Ltd v Wine Nomad Pty Ltd: Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 at [41].
By reason of r 38A, "proceedings" includes an appeal. The amount in dispute in the appeal is $45,365.30.
Therefore, we find that r 38(2)(b) of the NCAT Rules apply.
The common law principles pertaining to costs is that a costs order is primarily to compensate a successful party and not punish an unsuccessful party, so that the "usual order" is that "costs follow the event": Oshlack v Richmond River Council (1998) 193 CLR 72 (Oshlack) (McHugh J) at [67]. The "event" used in that sense, refers to the outcome of the proceedings in terms of who may be regarded as the successful party. However, although r 38(2)(b) reflects to some extent the common law position, it is not the common law but r 38 and the relevant authorities having regard to the application of that Rule that we must consider.
In Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186, the Appeal Panel said at [206]: In the circumstances set out in r 38(2)(b) of the Rules, the Tribunal does not apply s 60 [of the NCAT Act] but rather has an unfettered discretion in relation to costs, although that discretion must be exercised judicially.
In Thompson v Chapman [2016] NSCATAP 6 (Thompson), when dealing with r 38(2)(b) of the NCAT Rules, the Appeal Panel said at [69] (omitting citations): The starting point in exercising such discretion is that the "usual order for costs is that a successful party should be entitled to an order for costs in their favour.
In Bonita v Shen [2016] NSWCATAP 159 (Bonita) at [58], the Appeal Panel observed that r 38 (2)(b) provides that the Tribunal "may" award costs and held that this provision "confers upon the Tribunal a power which may be exercised at the discretion of the Tribunal": referring to s 9 of the Interpretation Act 1987 (NSW). Even where r 38(2)(b) applies, a departure from the usual order is permissible: Bonita at [64] referring to Thompson.
As stated in Thompson, where there is a general discretion to award costs there is no absolute rule that the successful party must receive the costs. In Thompson, the Appeal Panel also said at [71]-[72]: 71 Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to be of the costs of an unsuccessful party: see Oshlack … per Gaudron and Gummow JJ at 88 and Kirby J at 121-123. 72 The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made; see for example Bostick Australia Pty Ltd v Liddiard (N0 2) [2009] NSWCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack … per Gaudron and Gummow JJ at 41-44.
The exercise of a discretion on costs will often depend upon matters of impression and evaluation: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [11]. In Golding v Vella (No 2) [2001] NSWSC 731, Barrett J (as his Honour then was), said at [8]: … it is unwise to be too technical about what is meant by "the event" or "issue" in this context … In particular one does not look at issues as if they were pleaders' issues, but approaches the matter with a broad brush.
It is within the broad and unfettered discretion of the Tribunal, acting judicially, to make no order as to costs, so that each party bears its own costs of the proceedings: Hogan v Trustee of the Roman Catholic Church (No 2) [2006] NSWSC 74 at [40]; Hans-Egon Bruno Bernard Metzner & Anor v Jacqueline Rita Metzner [2021] NSWSC 1565 at [17].
In light of the Appellant's limited success relative to the amount of her claim on the appeal, in the exercise of our discretion having regard to the authorities discussed above, we will make no order as to the costs of the appeal.

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Judgment (29 paragraphs)

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Cases Cited (38)