Volkswagen Group Australia Pty Ltd v Saad

Background

1. The background to the appeal, which is based on information contained in documents filed in the appeal proceedings and told to us during oral submissions, is as follows: 1. The respondent purchased the vehicle brand new from a Volkswagen dealership (Liverpool Volkswagen) in May 2018. Liverpool Volkswagen was not a party to the Tribunal proceedings. 2. The purchase price of the vehicle was $55389.62. 3. In around May 2020 the respondent presented the vehicle to another dealership (Sutherland Volkswagen) after having received notification of a recall. 4. It was common ground that the recall involved the sunroof but did not relate to the sunroof seals. The recall necessitated replacement of components of the LED background lighting on the vehicle's sunroof. 5. The evidence before the Tribunal as to what occurred when Sutherland Volkswagen carried out this repair, or the circumstances which led up to the repair, was scant. Neither party presented any documentation in this regard. 6. In the application to the Tribunal the respondent stated that prior to the recall he had "never experienced any issues with the sunroof. There have since been various issues with the sunroof which has [sic] resulted in extensive damage to the interior of the car". 7. The respondent first observed water leaking into the vehicle through the sunroof at some point between 18 May 2020 and 4 September 2020. On 4 September 2020 he presented the vehicle to Sutherland Volkswagen with complaints of water ingress. 8. The vehicle has continued to experience water ingress through the sunroof since that time despite repairs being conducted to the vehicle. Although there was some dispute about the dates of each repair, it was common ground that Sutherland Volkswagen has replaced the vehicle's sunroof seals on at least two occasions since the respondent first complained of water ingress - on 4 September 2020 and on 5 March 2021. 9. Sutherland Volkswagen's invoice relating to the 4 September 2020 repair states: "Inspected and confirmed customer concerns. Inspected and found sunroof seal to be the cause of water entry and requiring renewal. Removed and replaced sunroof seal and all damaged components as per DISS. Replaced all components and retested finding all OK." On the same invoice, under the heading "Amount", appears the word "Warranty" and next to the heading "Total amount including GST" the invoice states "Total invoice 0.00". 10. Sutherland Volkswagen is a third party dealership and was not a party to the Tribunal proceedings. 11. Another dealership (Sydney City Volkswagen) has also attempted to repair the vehicle. On 16 April 2021 Sydney City Volkswagen carried out repairs, including to the sunroof. Sydney City Volkswagen was not a party to the Tribunal proceedings. 12. The appellant is the Australian agent for the manufacturer of the vehicle which itself does not have a place of business in Australia. The appellant imports and distributes Volkswagen vehicles into Australia.

Submissions and evidence

1. In deciding the appeal we have had regard to the following: 1. The Notice of Appeal lodged on 26 November 2021; 2. The Reply to Appeal lodged on 15 December 2021; 3. A folder lodged by the appellant on 13 January 2022 containing documents, further written submissions and a copy of the transcript of the hearing; 4. Further written submissions lodged by the respondent on 7 February 2022 together with attached documents; 5. The appellant's submissions in reply lodged on 16 February 2022; 6. The procedural directions made at call over; 7. The Tribunal's Notice of Order and reasons for decision dated 2 November 2021; 8. The application to the Tribunal dated 7 July 2021; and 9. The oral submissions made by the parties during the hearing.

Tribunal proceedings and decision

1. The application to the Tribunal was lodged on 7 July 2021 and was listed for a 90 minute final hearing on 2 November 2021. The Tribunal's orders and reasons for decision were published on the day of the hearing.
2. In his application Mr Saad sought an order that the appellant "fix or replace faulty vehicle or parts to the approximate value of $65000 replace my vehicle or pay out".
3. In other words, Mr Saad sought in the alternative either (a) repair of the vehicle; (b) replacement of the vehicle; or (c) that the vehicle be returned and he receive a full refund.
4. The Tribunal considered the claim within the framework of the consumer guarantees contained in the ACL. No other potential causes of action were identified or considered by the Tribunal.
5. The Tribunal said at [14]: There are four Issues. Firstly, is the Applicant a Consumer for the purposes of the legislation? Secondly, does the Tribunal have jurisdiction to hear this matter. Thirdly, is there a breach of the consumer guarantees of Acceptable Quality (ss 54 of the ACL) and the Fitness for any disclosed pourpose [sic] (ss 55 of the ACL). Finally what is the remedy available for the Applicant?
6. The Tribunal concluded that Mr Saad was a consumer, that the Tribunal had jurisdiction to hear the matter under Part 6A of the Fair Trading Act 1987 (NSW) ('the FT Act'); that there had been a failure to comply with the consumer guarantees in ss 54 and 55 of the ACL; and that the manufacturer was responsible for the failure to comply.
7. The Tribunal made orders that the appellant, as manufacturer, carry out the following repairs to the vehicle: 1 Replace airbags, seat belts and the internal wiring looms and any other water affected electronic safety advice; 2 Replace all carpets, underfelts and seat trims; 3 Replace water seals in the sunroof.
8. It is common ground that the repairs ordered by the Tribunal to the vehicle are extensive and likely to be of considerable expense.
9. It is not apparent why the Tribunal, when making its decision, focused only on the consumer guarantees contained in ss 54 and 55 of the ACL and not on other causes of action which may have been available to Mr Saad (some of which are canvassed below). There is nothing in the application or documents lodged in the Tribunal by Mr Saad which refers to the ACL or to the consumer guarantees in ss 54 and 55, and the transcript of the Tribunal hearing reveals that neither the Tribunal member nor the parties made any mention of those consumer guarantees during the hearing.
10. As will be explained in further detail below, the consumer guarantees in ss 54 and 55 of the ACL relate to the condition of goods at the time they were supplied to the consumer.
11. It appears to us, having reviewed the transcript, that whether or not Mr Saad was alleging a breach of those guarantees, he was also alleging that: 1. The repairs done by Sutherland Volkswagen in May 2020 resulted in damage to the waterproofing of the sunroof; 2. The repairs done by Sutherland Volkswagen in September 2020 were inadequate to repair the vehicle; and 3. Volkswagen Australia Group was responsible for those repairs (or the inadequacy of the repairs).
12. We refer in particular to the following extract from the transcript of the hearing during which Mr Saad cross-examined the appellant's witness Ms O'Connor (who represented the appellant at the hearing and gave evidence) (at T 10.16-36): Mr Saad: Okay. You said it: the sunroof seal was not installed properly by Volkswagen; correct or incorrect? Ms O'Connor: That's Sutherland Volkswagen, yes. But I'm not from Sutherland Volkswagen. Mr Saad: Yes. Ok. So there we go.
13. Later Mr Saad said (at T 11.41-46): The faulty roof seal, even the one that was apparently not installed properly, what does that have to do with me? What does that have to do with me, if one of your guys didn't install the roof seal properly?
14. Shortly thereafter the parties had the following exchange (at T 12.19-34): Mr Saad: No matter how you look at it, the faulty roof seal is from Volkswagen. The faulty maintenance is from Volkswagen. Okay. Ms O'Connor: It does seem like Sutherland Volkswagen - Mr Saad: Yes, Volkswagen - Ms O'Connor: Only Volkswagen Group Australia (indistinct). I can't comment on work that is carried out - Mr Saad: It's not - that's not my problem … that's not my problem.
15. Mr Saad was not legally represented and did not clearly articulate the legal causes of action on which his claim was founded. That is not unusual in the Consumer and Commercial Division of the Tribunal.
16. However, whilst he did not explicitly say so, Mr Saad appears to have been suggesting that the repairs were done by Sutherland Volkswagen on the appellant's behalf as agent; and that the appellant was therefore responsible for any damage caused to the vehicle during the course of those repairs or due to the inadequacy of those repairs.
17. The fact that Sutherland Volkswagen's invoice for repairs carried out in September 2020 indicates that the respondent was not charged for those repairs and that the repairs were carried out under warranty suggests that the appellant may have had some involvement with, or responsibility for, those repairs pursuant to its obligations under the manufacturer's warranty.
18. The Tribunal made a finding that the vehicle had a manufacturer's warranty of three years but otherwise did not address these alternative submissions, or indeed any other potential causes of action which might have been available to the respondent. The Tribunal focussed solely on the consumer guarantees in ss 54 and 55 and, for the reasons explained later in these reasons, misapplied those provisions and the applicable remedial regime.

Notice of Appeal

1. The Notice of Appeal was lodged on 26 November 2021, which is within the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules). The appeal has therefore been lodged within time.

Grounds of Appeal

1. Internal appeals from decisions of the Tribunal may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80 (2) of the NCAT Act.
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of 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. The grounds of appeal raised by the appellant are as follows: 1. The Tribunal failed to provide adequate reasons for determining that the alleged failure to the vehicle's sunroof was attributable to the appellant. 2. The Tribunal denied the appellant procedural fairness by failing to address the respondent's argument that the alleged failure to the vehicle's sunroof seals was caused by a third party not named in the proceedings. 3. The Tribunal incorrectly identified the issue of the appellant's liability as being whether there was evidence of water ingress at the time of the vehicle's examination by the respondent's expert. 4. The Tribunal erred in its application of sections 54 and 55 of the ACL. 5. The Tribunal denied the Appellant procedural fairness in determining that the appellant opted not to cross-examine the respondent's expert, in circumstances where the respondent had not made that expert available for cross-examination. 6. The Tribunal denied the appellant procedural fairness in determining that the appellant had had "many opportunities" to provide its own expert report in circumstances where the respondent had refused to make the vehicle available to the appellant for inspection.
4. All of these grounds involve questions of law. Leave to appeal under Cl. 12 of Sch. 4 of the NCAT Act, which deals with appealable errors other than errors of law, is not a matter for consideration.
5. Grounds 1 and 4 raise the most salient issues in this appeal and accordingly we have limited our consideration to those grounds.
6. We have not addressed the other grounds of appeal because it is unnecessary do so.

Legislative framework

1. As the Tribunal's conclusions focussed on the consumer guarantees contained in ss 54 and 55 of the ACL, and the remedies available for a failure to comply with the consumer guarantees, it is helpful to set out excerpts of the relevant provisions.
2. By reason of ss 28 and 32 of the Fair Trading Act 1987 (NSW), the ACL is a law of New South Wales.

Consumer guarantees

1. Section 54 relevantly provides: 54 Guarantee as to acceptable quality (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality. (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods. …
2. Section 55 relevantly provides: 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.
3. "Supply" is defined in s 2 of the ACL as follows: supply, when used as a verb, includes: (a) in relation to goods-supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and (b) in relation to services-provide, grant or confer; and, when used as a noun, has a corresponding meaning and supplied and supplier have corresponding meanings. Note: Section 5 deals with when a donation is a supply.
4. "Manufacturer" is defined in s 7 of the ACL as follows: 7 Meaning of manufacturer (1) [Definition: manufacturer] A manufacturer includes the following: … (b) a person who holds himself or herself out to the public as the manufacturer of the goods; … (e) a person who imports goods into Australia if: (i) the person is not the manufacturer of the goods; (ii) at the time of the importation, the manufacturer of the goods does not have a place of business in Australia. … (3) [Deemed importation of goods] If goods are imported into Australia on behalf of the person, the person is taken for the purposes of paragraph (1) (e), to have imported the goods into Australia.

Remedies

1. The remedies in the ACL available for a breach of the consumer guarantees in Chapter 3 Part 3-2 Division 1 are set out in Chapter 5 Part 5-4 of the ACL (ss 259-277 of the ACL).
2. Importantly, the majority of the remedies are against "suppliers" of goods and services; rather than against "manufacturers" of goods.
3. Division 1 of Part 5-4 is headed "Actions against suppliers" and is divided into Subdivision A and Subdivision B. Subdivision A is headed "Actions against suppliers of goods" and Subdivision B is headed "Actions against suppliers of services". Division 2 of Part 5-4 is headed "Action for damages against manufacturers of goods". Division 3 is headed "Miscellaneous".
4. For present purposes Subdivision A of Division 1, and Division 2 of Part 5-4 are most relevant. Subdivision A of Division 1 contains ss 259 - 266. Section 259 is in the following terms: 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. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time - the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (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. (6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). (7) The consumer may take action under this section whether or not the goods are in their original packaging.
5. Section 260 deals with when a failure to comply with a consumer guarantee is a "major failure"; s 261 addresses how a supplier may comply with a requirement to remedy a failure to comply; s 262 sets out time limits for rejection of goods under s 259; and ss 263 - 266 contain various other miscellaneous provisions regarding the remedies available against suppliers.
6. Division 2 of Part 5-4 contains ss 271-273. Section 271 provides as follows: 271 Action for damages against manufacturers of goods (1) If: (a) the guarantee under section 54 applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. (2) Subsection (1) does not apply if the guarantee under section 54 is not complied with only because of: (a) an act, default or omission of, or any representation made by, any person other than the manufacturer or an employee or agent of the manufacturer; or (b) a cause independent of human control that occurred after the goods left the control of the manufacturer; or (c) the fact that the price charged by the supplier was higher than the manufacturer's recommended retail price, or the average retail price, for the goods. (3) If: (a) a person supplies, in trade or commerce, goods by description to a consumer; and (b) the description was applied to the goods by or on behalf of the manufacturer of the goods, or with express or implied consent of the manufacturer; and (c) the guarantee under section 56 applies to the supply and it is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. (4) Subsection (3) does not apply if the guarantee under section 56 is not complied with only because of: (a) an act, default or omission of any person other than the manufacturer or an employee or agent of the manufacturer; or (b) a cause independent of human control that occurred after the goods left the control of the manufacturer. (5) If: (a) the guarantee under section 58 or 59(1) applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. (6) If an affected person in relation to goods has, in accordance with an express warranty given or made by the manufacturer of the goods, required the manufacturer to remedy a failure to comply with a guarantee referred to in subsection (1), (3) or (5): (a) by repairing the goods; or (b) by replacing the goods with goods of an identical type; then, despite that subsection, the affected person is not entitled to commence an action under that subsection to recover damages of a kind referred to in section 272(1)(a) unless the manufacturer has refused or failed to remedy the failure, or has failed to remedy the failure within a reasonable time. (7) The affected person in relation to the goods may commence an action under this section whether or not the goods are in their original packaging.
7. Section 272 sets out the nature of the damages that an "affected person" is entitled to recover against manufacturers, and s 273 sets out time limits for bringing actions against manufacturers. Section 274 states that a manufacturer is liable to indemnify a supplier who liable to pay damages to a consumer under s 259 (4) in certain circumstances.

CONSIDERATION OF GROUNDS OF APPEAL

1. As explained earlier in these reasons, it is necessary for us to consider only the first and fourth grounds of appeal raised by the appellant.

Ground 1 - Adequacy of reasons

1. The first ground of appeal is that the Tribunal failed to provide adequate reasons for determining that the alleged failure to the vehicle's sunroof was attributable to the appellant.

Submissions

1. The appellant referred to the points of defence which it lodged in the proceedings and to submissions made by its representative at the hearing, both of which made the point that the repairs complained of by the respondent were carried out by a third party (i.e. a Volkswagen dealer) and not by the appellant.
2. The appellant submitted that the Tribunal member failed to explain why the leaks in the vehicle's sunroof constituted a breach of the consumer guarantees under ss 54 and 55 of the ACL attributable to the appellant, who was the Australian agent for the manufacturer of the vehicle, despite the fact that the respondent's complaints related to repairs done by a third party.
3. The appellant also said that its submissions in relation to ground 2 are relevant to ground 1. In this regard it says that the Tribunal denied the appellant procedural fairness by failing to address its argument that the alleged failure to the vehicle's sunroof seals was caused by a third party not named in the proceedings.
4. The respondent did not give detailed arguments but submitted that the reasons of the Tribunal were adequate.

The Tribunal's Decision

1. In its reasons for decision the Tribunal outlined some of the evidence of the respondent (at [9]), of the respondent's expert (at [11]-[12]) and of the appellant (at [13]). The Tribunal went on to describe its understanding of the relevant issues, of the Tribunal's jurisdiction and of the relevant legal principles (at [14]-[32]).
2. In the penultimate section of the decision, under the heading "Consideration", the Tribunal set out some further observations. It stated at [33]-[38]: 33. The Tribunal is satisfied with the Expert Evidence and accepts the same. The Respondent opted not to cross examine the evidence [sic]. There is no other expert evidence presented to counter the findings and recommendations of the Expert. 34. The Tribunal is satisfied that a Brand New Motor vehicle should be able to withstand water ingress. At paragraph [28] of the expert evidence it is stated that a small amount of water is sufficient to cause water ingress at the time of examination. 35. The manufacturer is responsible for the Consumer Guarantee that the vehicle is of acceptable quality and fit for purpose. 36. It is reasonable to expect a vehicle to be water proof. A failure is an indication of a breach of the warranty. 37. However, the Applicant gave evidence that he was willing to provide an opportunity initially to fix the minor water leak. Moreover, from the evidence of the expert it appears that even though the solution is not economical, the vehicle can be fixed. 38. Moreover, there is no evidence that the vehicle was rejected.
3. In the final section of the decision under the heading "Conclusion" the Tribunal said: 39. The Tribunal is satisfied on the balance of probabilities the vehicle is not of acceptable quality or fit for purpose under the consumer guarantee provisions of the ACL. 40. However, the Tribunal is also not satisfied on the balance of probabilities the vehicle has a "major failure" within the meaning of s 260 (a) of the ACL. 41. Accordingly, there is no right to a refund or replacement under ss 259-263 of the ACL. 42. I hold that the failure of the vehicle is a minor failure that requires to be fixed by the manufacturer.

Ground 1 - Consideration

1. Although the decision runs over several pages its analysis of the key issues is unfortunately lacking in several respects.
2. The NSW Court of Appeal in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 (per Bell P) helpfully set out the principles relevant to adequacy of reasons at [66] - [77]. They are summarised as follows: 1. The function of the appeal court is to determine not the optimal level of detail required in reasons for a decision but rather the minimum acceptable standard. 2. The quantity (or detail) of reasons, necessary for those reasons to be adequate may vary both with the nature of the decision maker, i.e. whether or not it is a court or tribunal, and, if the latter, possibly the type of tribunal, and the nature of the question being decided. 3. As to the quality of reasons, it is generally accepted that the sheer volume of work undertaken by tribunals is such that a perhaps more relaxed standard of review of reasons is appropriate than may be the case when an appellate court is hearing an appeal from another court. 4. Even in the less formal setting of a tribunal there are certain minimum characteristics that a Tribunal's reasons must possess. These are supplied, in relation to the Tribunal, by s 62(3) of the NCAT Act which, requires there to be set out in reasons (when requested by a party): 1. the findings on material questions of fact, referring to the evidence or other material on which those findings were based, 2. the Tribunal's understanding of the applicable law, and 3. the reasoning processes that lead the Tribunal to the conclusions it made. 1. At least a basic explanation of the fundamental reasons which led the Tribunal to its conclusion is necessary. 2. It is not necessary for a judge to detail each factor which he or she has found to be relevant or irrelevant. Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient if the inference as to what is found is appropriately clear. 3. Reasons need not be elaborate. 4. Expression of conclusions in a certain sequence does not indicate a failure to consider the evidence as a whole. 5. The court should not read passages from the reasons for decision in isolation from others to which they may be related. 6. The reasons must be read fairly and as a whole. 7. The reasons recorded ought not to be inspected with a fine tooth-comb attuned to identifying error. 8. There should be a degree of tolerance for looseness in the language of the Tribunal, unhappy phrasing of the tribunal's thoughts or verbal slips.
3. Applying these principles, we are satisfied that the Tribunal has failed to give adequate reasons. While the reasons contain an overview of the evidence and an explanation of the Tribunal's understanding of the law, they contain few material findings of fact, and no meaningful explanation of the reasoning process as to how the Tribunal applied the law to the factual context.
4. Significantly, the Tribunal made no findings as to the genesis of the defective sunroof seals and did not explain how the evidence showed that the goods were not of acceptable quality or fit for purpose at the time of supply. In its conclusion the Tribunal said "It is reasonable to expect a vehicle to be water proof. A failure is an indication of a breach of the warranty" and then proceeded directly to consider available remedies under ss 259-262 of the ACL for failure to comply with the consumer guarantees under ss 54 and 55 of the ACL, without a clear conclusion that there had been a breach of the consumer guarantees, and without making any findings as to how the evidence showed that the vehicle had not been sufficiently waterproof at the time of supply.
5. This is a critical omission because whether there was a breach of ss 54 or 55 depends on the condition of the vehicle at the time it was supplied to the respondent, which occurred in May 2018.
6. As Perram J said in Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715 ('Capic') at [606]: The language of s 54(1) suggests that the guarantee applies at the time of supply of vehicles. The issue is therefore whether the vehicles were of acceptable quality at the time of supply.
7. The same analysis applies to the interpretation of the language of s 55.
8. Claims against a manufacturer made under s 54 in relation to motor vehicles will usually involve an allegation that there was something inherent in the condition of the vehicle at the time of supply that made the vehicle not of acceptable quality, including the risk of future mechanical failure. As Perram J stated in Capic at [612]: I accept that not every inherent risk of failure will have the consequence that goods are not of acceptable quality. The conclusion in any particular case will be a function of the nature of the feared failure and the extent of the risk of its occurrence, measured against the consumer's reasonable expectations of how the product ought to behave. Sometimes the failure will be trivial or the risk insubstantial and in such cases the claim may fail. Further than this, at least in principle, seems dangerous to go.
9. Here the evidence that the waterproofing issue may have existed at the time of supply in May 2018, or that there was an inherent risk of future failure, was equivocal at best. Moreover, there was evidence that the damage to the seals may have occurred at a later date due to the actions of Sutherland Volkswagen (i.e. after the recall repair in May 2020).
10. The evidence to this effect included the respondent's assertion that the water ingress had not occurred until after the May 2020 repair, the expert's evidence that "the repairs were completed at a sub-standard level", and evidence given by the respondent's witness Ms O'Connor (which was not disputed by the respondent), to the effect that the water ingress occurred because Sutherland Volkswagen did not install the sunroof seals properly. During evidence in chief at T 9.32-37 Ms O'Connor said: One of the seals seems to have been fitted by Sutherland Volkswagen - who I note are not joined on the claim - and they have been fitted incorrectly. This is obviously a workmanship concern and it's not something I can comment on because I'm not from Sutherland Volkswagen, I'm from the manufacturer.
11. The appellant submitted that as the water ingress issue had not occurred until after the vehicle had been repaired in May 2020 by Sutherland Volkswagen (a third party repairer), the logical conclusion was that the issue was therefore the fault of that third party, rather than an inherent manufacturing fault.
12. Whilst this evidence and submissions were very briefly alluded to by the Tribunal (at [13]), the Tribunal did not engage with them. It did not explain why, despite this evidence, it was satisfied that the vehicle was nonetheless not of acceptable quality or fit for purpose in breach of ss 54 and/or 55 of the ACL against the manufacturer.
13. Further, while the Tribunal said that it accepted the evidence of the respondent's expert Mr Alessi, that "there are deficiencies regarding the seals fitted to the vehicle" Mr Alessi's report did not directly address the cause or timing of those deficiencies.
14. The cause and timing of the waterproofing issue were critical matters in these proceedings and yet the Tribunal has not set out in its reasons its findings in relation to these material questions of fact.
15. We are therefore satisfied that the Tribunal has failed to give adequate reasons for decision. A failure to provide adequate reasons is an error of law.

Ground 4 - application of ss 54 and 55 and the remedial regime

1. The fourth ground of appeal is that the Tribunal erred in its application of sections 54 and 55 of the ACL and of the corresponding remedial regime in Part 5-4.

Submissions

1. The submissions made by the appellant in relation to this ground are as follows: 1. The appellant is not a supplier of goods under the ACL but rather is a "manufacturer" as defined in s 7 of the ACL and the remedies to which the Tribunal refers under s 259 are not available against the appellant. 2. The Tribunal's application of s 259 of the ACL, which relates to 'suppliers' of goods, reflects the Tribunal's conflation of the appellant with third party dealerships. 3. Section 271 of the ACL (NSW) provides for "affected persons" to claim for damages against manufacturers of goods. The consumer guarantee of reasonable fitness for a disclosed purpose in s 55 is not a guarantee which allows an affected person to make a claim against the manufacturer. 4. A work order is not a remedy available against a manufacturer. 5. A work order in this instance was outside the jurisdiction of the Tribunal.
2. The respondent's submissions essentially supported the decision at first instance for the reasons given by the Tribunal.

The Tribunal's Decision

1. In paragraphs [19]-[25] of the decision, the Tribunal set out an overview of ss 54 and 55 of the ACL and of the remedies available under ss 259. It stated: 19. The relevant consumer guarantee provisions in this matter are: 20. Section 54-Guarantee that goods are of acceptable quality. 21. Section 55-Guarantee for fitness for any disclosed purpose. 22. There are three potential causes of action under Section 259 of the ACL. 23. First, if the failure to comply with a guarantee can be remedied and is not a major failure, and the supplier fails or refuses to remedy the matter within a reasonable time the consumer may "by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied": ACL s 259(2)(b)(i). [59] of Barbour v Autosports Five Dock Pty Ltd. 24. Second, if the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may "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": ACL s 259(3)(b). [60] of Barbour v Autosports Five Dock Pty Ltd. 25. Sections 259-263 of the ACL-If goods are not of acceptable quality; have a "major failure"; the consumer rejects the goods within a reasonable period of time; and the goods are returned or made available for collection by the supplier or goods or manufacturer, the consumer is entitled to a refund or replacement of the goods.
2. The Tribunal went on to discuss in general terms some of the authorities which deal with ss 259 - 263 before reaching its conclusions which have been extracted above.
3. In summary, the Tribunal concluded that there had been a breach of the consumer guarantees in ss 54 and 55, that failure to comply with the consumer guarantees was not a "major failure" within the meaning of s 260 of the ACL, that there was no evidence that the respondent had "rejected" the vehicle, that the respondent was not entitled to a refund or replacement under ss 259-263 of the ACL, and that a work order was appropriate.
4. Such a remedial outcome may have been available against the supplier of the vehicle. However, the supplier of the vehicle was not a party to the proceedings. The salient issue is whether the remedial outcome was available against the manufacturer of the vehicle.

Application of ss 54 and 55 and the remedial regime

1. For the following reasons we are of the view that the Tribunal has erred in its application of the remedial regime which applies when there has been a breach of the consumer guarantees in ss 54 and 55 of the ACL.
2. In short, the Tribunal has erroneously applied the remedies in ss 259-264 which are contained in Division 1 of Part 5-4 of the ACL. These remedies are available against suppliers, but not against manufacturers, of goods.
3. Wheelahan J helpfully summarised the operation of Division 1 in Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 (Jayco) as follows at [35]: A supplier is liable to a consumer to remedy a failure to comply with a guarantee of acceptable quality or fitness for purpose within a reasonable time, or for compensation where the supplier refuses or fails to comply with the requirement to remedy the failure. If the failure to comply with the guarantee cannot be remedied, or is a major failure, the consumer may reject the goods. If the consumer rejects the goods, the supplier must, in accordance with an election made by the consumer, refund any money paid by the consumer for the goods, or replace the rejected goods with goods of the same type and of similar value, if such goods are reasonably available to the supplier.
4. Notably, where there has been a failure to comply with a consumer guarantee, the ability of the consumer under Division 1 to demand remedy of the failure or, in certain circumstances, to reject the goods and demand a refund or replacement, is only available against "suppliers".
5. In this case it was common ground that the appellant is the Australian agent for the manufacturer of the vehicle, which does not itself have a place of business in Australia, and therefore the appellant is the "manufacturer" for the purposes of the ACL: s 7(1)(e).
6. As manufacturer, the appellant supplies vehicles to Volkswagen dealerships. The respondent's vehicle was acquired by the respondent from such a dealership (Volkswagen Liverpool) and not from the appellant, and therefore it is Volkswagen Liverpool, rather than the appellant, which is the supplier of the vehicle for the purposes of s 259.
7. Whilst a manufacturer will usually be a "supplier" in the sense that it supplies goods to retailers and other third parties, the remedial provisions in s 259 will only be available to consumers against the person who supplied the relevant goods to the consumer. This is because s 259(1)(a) states that a consumer may take action under the section if a person (ie "the supplier") "supplies, in trade or commerce, goods to the consumer" (emphasis added).
8. The remedies available against manufacturers in Division 2 of Part 5-4 are quite different to those available against suppliers in Division 1.
9. In Capic, Perram J explained in some detail the differences between the available remedies. At [701] he said: Where the manufacturer has not given any express warranties then it would appear to follow that the consumer could not require the manufacturer to remedy any failure to comply with the acceptable quality guarantee pursuant to such an express warranty … the statute imposes no obligation by itself on a manufacturer to repair or replace goods which do not comply with the guarantee of acceptable quality. The only direct statutory right is the consumer's right to claim damages under s 271(1) for breach of the guarantee under s 54(1).
10. In Jayco at [48] Wheelahan J said: The practical and useful remedy of the right of rejection of the goods given by the ACL will in most cases be exercisable only against the supplier, and not against a manufacturer if the manufacturer did not supply the goods to the consumer.
11. It follows therefore that the regime in Division 1 whereby a consumer may demand a supplier to remedy a failure to comply with a breach of a consumer guarantee, or in certain circumstances to provide a refund or replacement, does not apply to the appellant as the appellant was not the supplier of the vehicle to the respondent.
12. By proceeding on the basis that the respondent's available remedies fell within the regime contained in Division 1, rather than Division 2, and by considering the respondent's remedies in that context, the Tribunal has therefore misapplied the relevant provisions of the ACL.
13. Moreover, the Tribunal erred when it said at [35] "The manufacturer is responsible for the Consumer Guarantee that the vehicle is of acceptable quality and fit for purpose." Section 271 of the ACL sets out remedies available against manufacturers when there has been a failure to comply with specified consumer guarantees. The guarantee as to fitness for purpose in s 55 is not one of the guarantees specified. There is nothing in the ACL which imposes on a manufacturer obligations regarding a breach of the guarantee of fitness for purpose in s 55 of the ACL.

Power of Tribunal to make work orders against manufacturers

1. Whilst the errors identified above in applying the ACL are in themselves a sufficient basis on which to uphold the appeal, we will also make observations in relation to the appellant's assertion that the Tribunal had no power to make a work order against the appellant.
2. The appellant is correct that the remedies available against manufacturers in Division 2 of Part 5-4 as a result of a breach of a consumer guarantee are different to those available against suppliers and are limited to claims for damages. Division 2 does not contain a direct mechanism for a consumer to require a manufacturer to repair or replace goods. In Capic at [703] Perram J summarised the position as follows: The point for present purposes is that it is the supplier who stands in the firing line first and must under Division 1 repair or replace the goods unless the failure to comply with the s 54 guarantee cannot be remedied or is a major failure. No such direct statutory obligation rests on the manufacturer unless it has given an express warranty that it will repair or replace the goods. This it may do but is not required to do. But if it decides to do so the express warranty so proffered is given statutory force by s 59(1) and by s 271(5) the consumer may sue the manufacturer for failing to comply with its own express warranty. Although the remedial provisions with respect to suppliers are complex, by contrast there is no corresponding machinery in the case of manufacturers and the repair/replacement process happens under the auspices of whatever the express warranty provides for (backed up by s 59(1) and s 271(5)).
3. We will deal further with the guarantee in s 59 below.
4. Although the ACL contains no direct mechanism to compel a manufacturer to repair or replace goods, it is also relevant to consider Part 6A of the FT Act and its interplay with the ACL.
5. It is Part 6A of the FT Act which gives the Tribunal jurisdiction to hear and determine "consumer claims", as defined in s 79E of the Act. It also empowers the Tribunal to make various kinds of remedial orders.
6. Section 79N of the FT Act states as follows: 79N Orders in favour of claimant (cf CC Act 1998, s 8 (1)) In determining a consumer claim wholly or partly in favour of a claimant, the Tribunal may, subject to this Division, make any one or more of the following orders that it considers appropriate - (a) an order that requires a respondent to pay to the claimant a specified amount of money, (b) an order that requires a respondent to perform specified work in order to rectify a defect in goods or services to which the claim relates, (c) an order that requires a respondent to supply to the claimant specified services other than work, (d) in the case of a claim for relief from payment of money - an order declaring that a specified amount of money is not due or owing by the claimant to a respondent, (e) an order that requires a respondent to deliver to the claimant goods of a specified description, (f) an order that requires a respondent to return to the claimant specified goods which are in the possession or under the control of that respondent, whether the property in the goods has passed or not, (g) an order that requires a respondent to replace goods to which the claim relates, (h) an order that requires a respondent to refund all or part of the purchase price of specified goods that are in the possession (or under the control) of the claimant and the claimant to return all or part of those goods to the respondent (whether the property in the goods has passed or not).
7. As the Appeal Panel said in Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 (Lam) at [164] when discussing Part 6A of the FT Act and its predecessor, the Consumer Claims Act 1998 (NSW): The CC Act, and now Pt 6A of the FT Act, do not, of themselves, create any causes of action. They are predicated upon the existence of causes of action that arise independently from them. The cause of action may be founded upon contract, tort, debt, statute or any other sufficient basis in law. All that is required is that the cause of action is available under New South Wales law to the consumer at the relevant time and provides a legitimate legal basis for the consumer to make a claim of a type listed in s 3A(1)(a) to (e) of the CC Act, or the corresponding definition in Pt 6A, against the supplier. If there is such a claim and the other requirements in relation to jurisdiction are met, the Tribunal then has power to make orders of the types listed in s 8 (now ss 79N, 79O and 79P of the FT Act), having regard to the legal entitlements of the parties under the causes of action upon which the claims are based.
8. It is clear therefore from s 79N(b) of the FT Act that the Tribunal has power to make a work order in order to "rectify a defect in goods or services to which the claim relates". The question is whether the Tribunal has power to make a work order against a manufacturer where there has been a failure to comply with the consumer guarantee in s 54, even though the ACL does not itself provide a direct mechanism for a consumer to require a manufacturer to repair goods.
9. This issue was touched on in Lam where the Appeal Panel expressed the view that the Tribunal may supplement (our emphasis) the forms of relief available under the ACL by making additional types of orders as set out in s 79N. It said at [165]: Given the width of the types of orders available under s 8 of the CC Act, it appears that the legislature intended and, since the enactment of ss 79N, 79O and 79P of the FT Act, intends that the orders that can be made by the Tribunal in respect of a consumer claim should be flexible so as to be fair and equitable as between the parties at the same time as being in accordance with law. For example, a consumer who was entitled to damages for breach of contract might, in an appropriate case, obtain an order that the supplier provide a replacement for the defective services or perform work, even where the usual remedy available at common law would be damages. Especially since the re-enactment of these provisions in October 2015, in our view the proper construction of the ACL NSW and the CC Act, and now Pt 6A of the FT Act, is that a similar approach can be taken where the consumer claim is based on a failure to comply with a consumer guarantee. In other words, whilst the ACL NSW establishes the foundational causes of action to claim certain relief, the CC Act, and Pt 6A, provide not only a means of obtaining such relief by the making of corresponding orders under s 8(1) or s 79N, they also allow the Tribunal to supplement those forms of relief in appropriate cases by making additional types of orders, as set out in s 8(1) or s 79N. This approach is consistent with, and gives proper recognition and effect to, the remedial and beneficial nature and purpose of both statutes. It also promotes the objects of Pt 6A of the FT Act set out in s 79B namely: "to provide for remedies for, and the straightforward resolution of, disputes concerning the supply of goods and services to consumers" as it would the similar objects of the CC Act set out in s 2A (quoted above).
10. However, Lam did not directly discuss the provisions of Division 2 of Part 5-4 of the ACL (which apply to manufacturers), and the comments regarding the ambit of the Tribunal's remedial powers under Part 6A of the FT Act are obiter dicta.
11. We accept that the Tribunal has remedial powers under Part 6A of the FT Act, and it is the provisions of the FT Act that give the Tribunal jurisdiction to hear and determine a consumer claim.
12. In our view, the comments in Lam should be construed on the basis that the Tribunal has remedial powers under Part 6A of the FT Act that engage with causes of action outside the ACL (e.g. contract and tort); and has remedial powers that "supplement" the ACL remedial powers.
13. However, we do not think that the Tribunal's remedial powers under the FT Act extend to permitting a work order against a manufacturer where the sole cause of action is breach of the consumer guarantee of acceptable quality in s 54 of the ACL. Our reasons for this are as follows: 1. The consumer guarantees under the ACL, and the remedies for breach of those guarantees, arise by force of the statute. 2. A cause of action for breach of s 54 is only available against manufacturers because Division 2 of Part 5-4 of the ACL says so. It permits actions to be brought against manufacturers for breaches of certain guarantees relating to the supply of goods, including the guarantee in s 54. Absent Division 2, manufacturers would have no liability for a breach of s 54. 3. Under Division 2 the remedies available against manufacturers for breach of s 54 are limited to damages. 4. There is nothing in Division 2 (or elsewhere) which entitles a consumer to require a manufacturer to carry out repairs as a result of a breach of s 54. 5. A work order against a manufacturer where there has been a breach of s 54 would therefore be inconsistent with the consumer's legal entitlements under the ACL. 6. Whilst the obiter dicta in Lam suggests that the Tribunal may supplement the forms of relief available under the ACL by making additional types of orders as set out in s 79N, we do not think this reasoning extends to relief that goes beyond, or is inconsistent with, what the manufacturer can be obliged to do under the ACL when the applicable cause of action is breach of the consumer guarantee under s 54 of the ACL . As the Appeal Panel said in Lam at [164] when exercising its powers under s 79N the Tribunal is to "have regard to the legal entitlements of the parties under the causes of action upon which the claims are based".
14. For these reasons, we are of the view that where the sole cause of action against a manufacturer is the guarantee of acceptable quality in s 54, the Tribunal does not have power to make a work order against the manufacturer either under Division 2 of Part 5-4 of the ACL, or under Part 6A of the FT Act, because such an order would be inconsistent with the consumer's legal entitlements under the cause of action on which the claim is based.
15. There is no difficulty with the Tribunal making a repair order against a supplier of goods under s 79N (b) of the FT Act when breach of s 54 of the ACL is established. For example, a consumer may establish against a supplier that goods are not of acceptable quality, but fail to establish that the failure is a "major failure" or that if there is a "major failure" the goods have been rejected within a reasonable period of time after supply in respect of the remedial provisions under ss 259-262 of the ACL.
16. In such circumstances, an order for repairs can be made against the supplier of the goods under s 79N (b) of the FT Act, even if that was not the primary remedy sought by the consumer (see, for example, Pate v Neich Holdings Pty Ltd t/as Sydney vehicle Sales [2018] NSWCATCD 16 (Pate) at [76]-[90]).
17. In Pate, the Tribunal referred to the power under s 232 of the ACL to grant an injunction. That power includes dealing with breaches of Chapter 3 of the ACL, which includes the consumer guarantee provisions under Part 3-2. However, on the basis of the same principles identified by Perram J in Capic at [702]-[704], s 232 of the ACL cannot extend to overriding the remedial provisions under ss 271-272 of the ACL if the claim is brought only against a manufacturer and the cause of action is breach of s 54 of the ACL, (irrespective of whether the Tribunal is a "court" for the purpose of s 232 (1) of the ACL).
18. It is important to point out here that given that the causes of action, and remedies, which are available under the ACL against suppliers are different to, and generally broader than, those available against manufacturers, it is critically important when instituting proceedings for breach of consumer guarantees, for consumers to be sure to identify the correct respondent or respondents and to consider whether, in addition to, or instead of, instituting proceedings against the manufacturer, it may also be appropriate for the supplier and/or the repairer (as appropriate) to be joined as respondents.

Other causes of action

1. We pause here to note that there are several further potential causes of action against the appellant, including under the ACL, which were not considered or determined by the Tribunal.
2. One of these is the consumer guarantees relating to provision of services. It appears that Sutherland Volkswagen conducted repairs to the sunroof by reason of the appellant's manufacturer's warranty. In that regard, it is arguable that Sutherland Volkswagen was acting as the agent of the manufacturer to give effect to the provisions of the manufacturer's warranty. Provision of the repairs involved the provision of services. It appears, on the evidence of the manufacturer, that the services were not provided with due care and skill, because the manufacturer blames the work performed by Sutherland Volkswagen as the cause of the water ingress.
3. If services are not performed with due care and skill, that is a breach of the consumer guarantee under s 60 of the ACL which provides: If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill.
4. If Sutherland Volkswagen was the agent of the manufacturer, then arguably the appellant, as manufacturer, is vicariously liable for the failure by Sutherland Volkswagen to provide services with due care and skill and is the "supplier" of services pursuant to the ACL. If so, Mr Saad would then have potential remedies against the appellant under s 267 and/or s 268 of the ACL; or in the alternative under s 79N of the FT Act (including, if appropriate, an order for repair under s 79N (b) of the FT Act).
5. Section 61 may also be relevant. It provides a guarantee that services will be reasonably fit for any purpose for which the services are being acquired and which are made known by the consumer, either expressly or by implication.
6. Another cause of action which was not considered by the Tribunal is s 59 of the ACL. Section 59 contains a consumer guarantee that manufacturers and suppliers will comply with any 'express warranty' given by them. Presumably this would include Volkswagen's three year manufacturer's warranty which was referenced in the Tribunal's decision.
7. If a manufacturer has given an express warranty that it will repair or replace defective goods, and the manufacturer refuses or fails to comply with the terms of that warranty, it will be in breach of the consumer guarantee in s 59 and the consumer may sue the manufacturer for damages under s 271(5) of the ACL. Arguably where there has been a failure by a manufacturer to comply with an express warranty, the Tribunal may also, in appropriate circumstances, make an order for repairs under s 79N (b) of the FT Act. In our view, applying the reasoning in Lam, such an order, which would be supplementary to the remedial regime in the ACL, would be appropriate provided it is consistent with the consumer's entitlements under the terms of the manufacturer's express warranty.
8. Depending on the legal mechanism by which the respondent acquired the benefit of the appellant's three year warranty, including whether there was privity of contract, the respondent may also have a claim against the appellant for breach of contract for which remedies are available under s 79N of the FT Act.
9. Further, if the respondent succeeds in a claim against the manufacturer for breach of s 54 of the ACL, by reason of s 271(1) and s 272 of the ACL he may be entitled to claim damages, including for the cost of repairing the vehicle if "…it was reasonably foreseeable that the affected person would suffer loss or damage as a result of such a failure". However, this would be dependent on matters including: (a) the respondent proving breach of s 54 of the ACL against the manufacturer; and (b) providing sufficient evidence of the repairs required and the cost of such repairs.
10. No issue regarding breach of s 59, s 60 or s 61 of the ACL, or breach of contract, were raised at the Tribunal hearing or on appeal, and the terms of the three year warranty were not made available to the Appeal Panel. Accordingly, these are not matters in relation to which it is appropriate for the Appeal Panel to make its own findings under s 81 (1) (d) of the NCAT Act.
11. The respondent may also have causes of action, including under the ACL, against the "supplier" of the vehicle, or against the dealer who inadequately repaired the vehicle (if the dealer was not acting in the capacity of agent of the manufacturer). However, those third parties were not named as respondents in the Tribunal proceedings and therefore it would be inappropriate for us to comment any further in this regard.

Additional issue - time limit in section 79L

1. The appeal raises another issue and that is whether the application to the Tribunal was brought within time. This was not raised as a ground of appeal but as the matter is being remitted to the Tribunal for redetermination it is appropriate to make some brief observations in this connection.
2. The Tribunal's jurisdiction to hear a consumer claim is governed by s 79L of the FT Act. Section 79L relevantly provides that: (1) The Tribunal does not have jurisdiction to hear and determine a consumer claim if any of the following apply - (a) the cause of action giving rise to the claim first accrued more than 3 years before the date on which the claim is lodged …
3. A cause of action "first accrues" when facts which constitute the elements of the relevant cause of action crystallise or combine so that all the elements necessary to entitle a person to make a consumer claim are present: Sacks v Hammoud [2016] NSWCATAP 225 at [34]. Put another way, a cause of action accrues when damage is suffered, whether or not the applicant/plaintiff is aware of it: Wilson v Winnicott [2021] NSWCATAP 211 at [10] and [57]: See also Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 (Barbour) at [64]-[68].
4. The limitation period in s 79L of the FT Act is not to be confused with the more limited "rejection period" under s 262(2) of the ACL which applies where a consumer wishes to reject goods and receive a refund or replacement, due to a failure to comply with a consumer guarantee. The rejection period is defined as being the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the failure to comply with the consumer guarantee to become apparent having regard to: (a) the type of goods; and (b) the use to which a consumer is likely to put them; and (c) the length of time for which it is reasonable for them to be used; and (d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.
5. A consumer may not notify a supplier that it rejects goods under s 259 if the rejection period has ended: s 262(1)(a).
6. In its reasons for decision the Tribunal stated at [17]: The Tribunal proceedings are also within the 3 year period from the cause of action to file proceedings in the Tribunal under s 79L of the FTA as the applicant only became reasonably aware that the faults in the vehicle were of sufficient duration and severity to reject the goods after the issue in September 2020.
7. The Tribunal appears to be conflating the "rejection period" under s 262 of the ACL with the three year limitation period in s 79L of the FT Act. The rejection period is however only relevant to determining whether a consumer is precluded from giving notice to a supplier that it rejects goods as a result of a failure to comply with a consumer guarantee. It has no relevance to other types of remedies against suppliers and does not apply at all to claims against manufacturers.
8. For example, where a consumer has served a notice on a supplier rejecting goods, a cause of action for compensation under s 259(4) will accrue upon service of the rejection notice because it is at that point that property in the goods reverts to the supplier under s 263(6) and the relevant loss is suffered: Barbour at [74]. If the rejection period has ended, no such cause of action will have accrued because the consumer had no right to reject the goods.
9. Conversely, an action to recover compensation for any reduction in value of goods under s 259(3)(b) does not require notice of rejection of the goods to be given to the supplier. Such an action arises upon a breach of the guarantee which constitutes a major failure and the suffering of relevant damage: Barbour at [75]. The rejection period is not relevant in such circumstances. Similarly, the rejection period is not relevant to any of the remedies available against manufacturers in Division 2 of Part 5-4.
10. In this instance the Tribunal appears to have been under the misapprehension that the three year limitation period commenced when the rejection period - which was irrelevant in this instance - ended, rather than when the cause of action first accrued.
11. The important point is that it is necessary, when determining whether a claim has been brought within time for the purposes of s 79L of the FT Act, for the Tribunal first to identify clearly the cause or causes of action on which the consumer relies. If the claim relates to a breach of a consumer guarantee under the ACL, this will involve identifying which guarantee, and which applicable remedy, the consumer is relying upon. Once the cause or causes of action have been identified, the Tribunal must make then make relevant findings of fact to determine when the relevant loss or damage was sustained.
12. These matters will need to be considered when the matter is remitted to the Tribunal for redetermination.

Conclusion

1. The conclusions we have reached can be summarised as follows: 1. The guarantee as to acceptable quality in s 54 of the ACL and the guarantee as to fitness for purpose in s 55 of the ACL apply at the time of supply of the goods. 2. The Tribunal concluded that there had been a failure to comply with these guarantees but its reasons for decision did not include any factual findings as to the cause or timing of the waterproofing issue, including whether it subsisted, or there was an inherent risk of future failure, at the time of supply of the vehicle in May 2018. The Tribunal's reasons for decision were inadequate. 3. The remedies set out in Division 1 of Part 5-4 of the ACL apply to suppliers of goods but not manufacturers. By considering the available remedies against the manufacturer within the context of Division 1 the Tribunal misapplied the remedial regime. 4. Division 2 of Part 5-4 of the ACL sets out the remedial regime available against manufacturers where there has been a breach of the consumer guarantees relating to goods. 5. There is no remedy available against manufacturers for a breach of the consumer guarantee in s 55 of the ACL as to fitness for purpose. 6. The remedies available against manufacturers under Division 2 of Part 5-4 for breach of consumer guarantees relating to goods are limited to damages. Whilst the Tribunal may, in certain circumstances, supplement the remedies available under the ACL with the types of remedies listed in s 79N of Part 6A of the FT Act (per Lam at [165]), including, relevantly, orders for repairs, the remedial powers of the Tribunal do not extend to allow a work order to be made against a manufacturer where the only cause of action against the manufacturer is breach of the consumer guarantee in s 54. 7. There may have been other remedies available against the manufacturer under the ACL which were not considered by the Tribunal. These potentially include a claim for damages under ss 271 and 272 of the ACL (if a breach of s 54 is established), remedies for breach of the guarantees in s 60 and 61 which relate to the supply of services (if the repairs were carried out under warranty and the manufacturer was vicariously liable for them) and, depending on the terms of the manufacturer's warranty, for breach of the guarantee in s 59 that a manufacturer will comply with the terms of any express warranty. There may also have been a claim in contract depending on the terms of the manufacturer's warranty and the mechanism by which the manufacturer became bound by it. 8. The respondent may also have claims, including under the ACL, against the supplier of the vehicle, or against the dealer which inadequately repaired the vehicle (if the dealer was not acting as agent of the manufacturer when it carried out the repairs). 9. When making a claim regarding defective goods a consumer should consider whether the appropriate respondent is the manufacturer, the supplier of the goods and/or the repairer of the goods. This will depend on the cause of action on which the consumer relies, and the remedy which he or she seeks. 10. There are limitation issues which will need to be considered when the matter is remitted to the Tribunal. When determining whether a claim has been brought within time for the purposes of s 79L of the FT Act, the Tribunal must first clearly identify the cause or causes of action on which the consumer relies. If the claim relates to a breach of a consumer guarantee under the ACL, this will involve identifying which guarantee, and which applicable remedy, the consumer is relying upon. Once the cause or causes of action have been identified, the Tribunal must then make relevant findings of fact to determine when the relevant loss or damage was sustained.

Next steps

1. Given the confusion surrounding the applicable causes of action and limitation periods, the absence of crucial findings of fact and the possibility that other parties may need to be joined to the proceedings, we are of the view that justice is best served by remitting the whole matter to the Tribunal for reconsideration.
2. Appropriate directions will need to be made at the first directions hearing to ensure Mr Saad correctly identifies the cause or causes of action, the facts relied upon and the order or orders sought. If Mr Saad seeks leave to join the supplier or the repairer he will need to identify the relevant cause or causes of action against such parties.

Orders

1. We make the following orders: 1. The appeal is allowed. 2. The decision under appeal is quashed. 3. The matter is remitted to the Tribunal, differently constituted, with leave for the parties to adduce such further evidence and join further parties as the Tribunal thinks fit.

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: 19 May 2022