Tudor v Smart Buy Auto's Pty Ltd

The first instance decision

1. The Tribunal dismissed the application.
2. In short reasons for decision the Tribunal wrote: Mr Tudor saw the vehicle, a 2010 Audi Q7, advertised and came to Sydney to inspect it. He had originally intended to have it looked at by an Audi dealer before purchase but when this was not possible because of insurance reasons, conducted his own inspection and test drive. He says he was assured that the car had no oil leaks and agreed on the price of $28000. He took delivery the same day and drove the car back to his home on the Gold Coast. It seems that no problems were experienced on the drive home and soon after he had the car inspected for registration in Queensland. The inspection seems to have revealed an oil leak. He was advised to have the engine washed down before the car would be accepted for registration in Queensland. This was done and vehicle was subsequently registered. Mr Tudor then proceeded to investigate fixing the oil leak and called upon the seller to compensate him for the cost of repairs. Applicant's case. Mr Tudor stated that he was assured that there were no leaks and purchased the car on that basis. He says that his enquiries have uncovered a leak and that he should be compensated. His investigations are said to have revealed that only Audi dealers are equipped to effect the repairs and that the quoted cost is over $10500. Formal quotes were furnished in support of the amount claimed. Analysis There is no warranty under the Motor Dealers Act for a vehicle which has travelled more than 160000km. This Audi's odometer showed about 190000 at the time of sale and was alleged to have covered some 16000 more kms since. There is a series of photos which show the leak.. The pictures show only a tiny drop of oil at the site of might be the leak although some surrounding components have a oil film and have collected road dirt. … Mr Tudor can only succeed if it can be shown that the car was not fit for purpose or not of merchantable quality in accordance with the modern formulations of those consumer guarantees under ss54 and 55 of the Australian Consumer Law. It must be kept in mind that the subject of the sale was a motor vehicle nearly 10 years old which had 190000km on its speedo and the law must be applied with that in mind. Mr Tudor complains of an oil leak. However the evidence satisfies me of the following: The oil leak was so minor that it did not manifest itself on a 1000km journey from Sydney to the Gold Coast. Mr Tudor did not deny the proposition put to him by Mr Hamsi (sic) for the Smart Buy Autos that in the 16000 kms travelled since purchase, no oil has ever been added although the oil has been changed at normal service intervals. The oil leak was so slight that it was not detected or not thought significant during the roadworthy inspection. The Queensland inspector passed the car as fit for registration after surface oil was washed from the engine. The only damage suffered by Mr Tudor is that a drop of oil might fall on his garage floor from time to time.

The notice of appeal

1. In his notice of appeal the appellant asserted that the Tribunal had been wrong in dismissing his claim. He argued that the vehicle had been sold in an unroadworthy condition as a result of the oil leak, and that the guarantees imposed by s 54 and s 55 of the Australian Consumer Law (the ACL), which could not be excluded, had been breached. He relied on the oral representation from the respondent's salesman that the vehicle did not have any oil leaks.
2. The appellant also sought leave to appeal on the ground that the decision was not fair and equitable and was against the weight of the evidence. In cases where leave to appeal is sought with respect to the decisions of the Consumer Claims Division (CCD) clause 12 of Schedule 4 of the NCAT Act relevantly provides that - (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). Note. Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.
3. For a discussion of these provisions see Collins v Urban [2014] NSWCATAP 17 at [77-79].

The reply to the Appeal

1. The reply to the appeal supported the decision of the Tribunal, emphasising the minor nature of the oil leak (if any).

Is there an error of law in the Tribunal's decision?

1. With respect to questions of law the Appeal Panel explained in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 6 that: 11. … an appeal to the Appeal Panel lies as a matter of right on a question of law. The notice of appeal does not articulate in express terms any question of law. It is necessary that a question of law be stated with precision, as an appellant's right to appeal arises from the question of law. Additionally, the question of law is the subject matter of the appeal: see for instance Hartnett v Migration Agents Registration Authority [2004] FCA 50 at [50]; in relation to appeals to the Federal Court of Australia, from the Administrative Appeals Tribunal, which lie only on "questions of law"; and Edyp v Brazbuild Pty Ltd [2011] NSWCA 218 at [35] in relation to s 67 of the Consumer, Trader and Tenancy Tribunal Act (2001) (NSW) where appeals to the District Court lay only where that Tribunal had decided a question with respect to a matter of law. 12. In circumstances where the appellants are not legally represented, it is apposite for the Tribunal to approach the issue by looking at the grounds of appeal generally. It is necessary for the Appeal Panel to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations that might arise to the respondent.
2. Similarly, in the present case the notice of appeal does not precisely articulate a claimed error of law. In Prendergast the Appeal Panel, at [13], identified the following as possible questions of law: 1. whether there has been a failure to provide proper reasons; 2. whether the Tribunal identified the wrong issue or asked the wrong question; 3. whether a wrong principle of law had been applied; 4. whether there was a failure to afford procedural fairness; 5. whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. whether the Tribunal took into account an irrelevant consideration; 7. whether there was no evidence to support a finding of fact; and 8. whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. Central to the appellant's argument are the provisions of s 54 and 55 of the ACL and his submission that the Tribunal failed to properly apply them when dismissing his claim.
4. Section 54 of the ACL implies a consumer guarantee of acceptable quality into the supply of goods to a consumer. It 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.
5. Section 55 of the ACL provides a consumer guarantee of fitness for any disclosed purpose: 55 Guarantee as to fitness for any disclosed purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit. (2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that: (a) the consumer makes known, expressly or by implication, to: (i) the supplier; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or (b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii). (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.
6. The Tribunal expressly identified these sections of the ACL as those relied on by the appellant. There was and is no dispute that the appellant was a consumer within the meaning of s 3 of the ACL, or that the vehicle was supplied to him by the respondent in trade or commerce as part of an ordinary sale.
7. A reading of the Tribunal's decision shows that the Tribunal knew that the appellant was relying on s 54 and s 55 of the ACL. The Tribunal, however, did not consider their application in any detail. It made no finding with respect whether there was a guarantee that the vehicle was of acceptable quality, and as to whether or not that guarantee had been breached. The Tribunal did not use or consider the words of that statutory guarantee at all: i.e. that the vehicle should be of "acceptable quality, instead referring to the older, inapplicable, concept of "merchantable quality." At its heart the decision is singularly focussed on whether or not there was a defect (an oil leak) in the vehicle and its extent.
8. The Tribunal concluded that there was an oil leak and that it was "slight" and "minor". The only damage that the appellant might suffer was a drop of oil on "his garage floor from time to time." The Tribunal made no conclusive finding as to whether or not, in the circumstances, the vehicle was of acceptable quality under s 54 of the ACL. If, due to the oil leak, the Tribunal found the vehicle was not of acceptable quality, it would then have had to ask what damage, if any, the appellant had sustained.
9. In dismissing the application the Tribunal had regard to the age of the vehicle, its price, the odometer reading at the time of the sale and at the hearing (16,000km later), and the fact that that it had not required additional oil since purchase. The Tribunal did not make the finding required by s 54(2) as to whether, at the time of sale, the vehicle was free from defects, as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects) would regard as acceptable having regard to the matters in s 54(3).
10. Despite there being evidence relevant to the following matters, the Tribunal did not consider or make findings with respect to: 1. the appellants submission that the vehicle was not fit for purpose under s 54(2) because at the time of sale it had an oil leak which rendered it unroadworthy; 2. the appellant's evidence that he was told by the respondent's salesman that the vehicle did not have any oil leaks during negotiations leading to the sale (a relevant matter under s 54(3)); and 3. whether the appellant's inspection of the vehicle prior to the sale "ought reasonably to have revealed that the goods were not of acceptable quality" under s 54(7)(b).
11. Each of these are matters that the Tribunal was required to consider in determining whether or not there was a guarantee of acceptable quality under s 54 of the ACL, and, if so, whether it had been breached. They were matters concerning which the parties had placed evidence before the Tribunal, which it should have considered. By not doing so the Tribunal failed to take into account considerations it was required to take into account by s 54 of the ACL.
12. The failure to do so constitutes an error of law. Whether or not the respondent's salesman had represented that the vehicle had no oil leaks, and whether or not the appellant's inspection of the vehicle ought reasonably to have revealed that the vehicle was not of acceptable quality are matters that, on the evidence, were live issues before the Tribunal. They needed to be determined for the Tribunal to be able to decide whether or not: 1. there was, in the circumstances of the sale, a guarantee that the vehicle was of acceptable quality under s 54 of the ACL; and 2. that guarantee has been breached.
13. Similarly, under s 55 of the ACL, there was a live issue as to whether or not the vehicle was fit for a disclosed purpose. Once again the Tribunal did not consider whether: 1. the appellant had made known, either expressly or by implication, the purpose for which he required the vehicle; and 2. if so, whether the vehicle was fit for purpose.
14. That this was a live issue was clear from the appellant's reliance on s 55 and his insistence that the presence of the oil leak meant the vehicle was unroadworthy and therefore not fit for purpose.
15. Despite expressly stating that the appellant was relying on s 55 the Tribunal did not consider many of the matters which s 55 required that it have regard to. It did not consider: 1. whether the purpose for which the vehicle was purchased was made known to the respondent, either expressly or by implication; and, 2. whether, in the circumstances, the slight oil leak found by the Tribunal made it unroadworthy and, and therefore, unfit for that purpose as submitted by the appellant. Once again this is an error of law, with the Tribunal failing to have regard to the statutory considerations in s 55 of the ACL.
16. We think it clear that there was evidence before the Tribunal which, if accepted, might have led it to conclude, in the circumstances, that the minor defect found by the Tribunal resulted in the vehicle not being of acceptable quality. It is equally possible that the Tribunal might have concluded that there was, in the circumstances, no guarantee under s 54 and 55 of the ACL. If the Tribunal had turned its attention to those provisions of the ACL the outcome may have been different. The errors of law made by the Tribunal in failing to properly consider the application of those provisions are material: see Australian Broadcasting Tribunal v Bond [1990] HCA 33 at [80]; (1990) 170 CLR 321 per Mason CJ.

Conclusion

1. We have concluded that as a consequence of the errors of law we have identified that the appeal should be allowed and that the claim should be remitted for a new hearing before the CCD constituted by a different Member with further evidence allowed. We do not consider it feasible to determine the outstanding issues ourselves given the sparsity of relevant material concerning those issues.
2. As we have identified errors of law which merit a new hearing we see no benefit in considering whether (in the absence of such errors) we would have granted the appellant leave to appeal.

Orders

1. The Appeal Panel makes the following orders: 1. Appeal allowed. 2. The decision of the Tribunal the subject of appeal is set aside and the appellant's claim is remitted for reconsideration by the Tribunal, differently constituted, with fresh evidence allowed.

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. 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 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: 06 June 2019