Wilair Building Supplies v Brereton

Acceptable quality and the jurisdiction of the Tribunal

1. Section 54 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) creates a statutory guarantee as to 'acceptable quality' in relation to the supply of goods to a consumer in certain circumstances. It relevantly states: 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.
2. The terms of that provision are picked up and applied as a law of New South Wales as: 1. s 27 of the Fair Trading Act 1987 (NSW) defines the Australian Consumer Law text, relevantly, as including Schedule 2 to the Competition and Consumer Act 2010 (Cth). 2. By s 28, the Australian Consumer Law text, as in force from time to time, applies as a law of New South Wales, and may be referred to as the Australian Consumer Law (NSW) and, as so applying, forms part of the Fair Trading Act.
3. Finally, this Tribunal obtains jurisdiction to determine whether the timber supplied to Mr Brereton was or was not of acceptable quality as: 1. It has jurisdiction to deal with 'consumer claims' under section 7 of the Consumer Claims Act 1989 (NSW). Such claims are defined by s 3A of that Act. The relief sought below included such claims. 2. By s 74(3) of the Act ''The Tribunal may decide the matter of whether a person has suffered loss or damage because of the conduct of another person that constitutes a local contravention or a contravention of Chapter 2 or 3 of the ACL if that matter arises in connection with another matter the subject of proceedings in the Tribunal. In deciding the matter of loss or damage, the Tribunal may award such sum, and make such ancillary orders, as it thinks fit.'
4. In such circumstances, which including the current proceedings, the Tribunal had jurisdiction to grant the relief it did on the basis that it did.

Background

1. The matter was heard and determined below on 20 and 24 January 2014, and oral reasons were given on the latter date, to which reference will shortly be made.
2. An appeal was lodged on 28 March 2014. Following an unsuccessful attempt at mediating, the matter comes before us. We consider it can be appropriately dealt with on the papers. We have the benefit of detailed material filed by both parties.
3. Because the matter comes from a decision of the Consumer and Commercial Division, leave to appeal is required unless the matter concerns a question of law. Clause 12 to Schedule 4 of the Civil and Administrative Tribunals Act 2013 (NSW) ('the Act') provides: 12 Limitations on internal appeals against Division decisions (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).
4. The decision of this Tribunal in Collins v Urban [2014] NSWCATAP 17, constituted by members including the President, states that even where there may be a 'miscarriage of justice' on the basis of one of three matters in clause 12(1), there remains a residual discretion in the Appeal Panel as to whether to grant leave. Thus, it was said in Collins v Urban at [84]: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact…; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed,… (3) In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: [citations omitted].
5. We now turn to the grounds of appeal. We note that there are grounds of appeal listed in two separate pages attached to the Notice of Appeal. There are also asserted questions of law listed in the written submissions filed on behalf of the appellant dated 12 June 2014. We have considered them all. It is convenient first to deal with the asserted questions of law.

Ground 1 - a question of law

1. The first possible question of law is whether the order was 'inept' since it 'required payment of a sum of money before the period allowed for appealing the order had expired.' 'Inept' is not a legal term. Its dictionary meaning is 'out of place; absurd; silly, unskilful':- Concise Oxford English Dictionary.
2. Section 61 of the Act provides that 'a general decision [such as made here]… takes effect on the date on which it is given or such later date as may be specified in the decision.'
3. This ground of appeal wrongly assumes that it is an error of law for such an order to be made. To the contrary, it is open to the Tribunal, as in this case, to make an order assessing compensation and ordering that it be paid forthwith. It is then a matter for a prospective appellant to apply for a stay of that order, then or later: s 43. An appeal does not operate as an automatic stay.
4. There is thus no error of law in the order made on this ground.

Ground 2 - a question of law

1. The second question of law was whether a 'lack of reasons for the order was a denial of procedural fairness'.
2. In the grounds of appeal attached to the Notice of Appeal, it is further said that 'no relevant reason for the order' was given. We have been provided with the transcript of the hearing, including the reasons given. There is no doubt that reasons were given. They state as follows: I have given consideration to everything that has been put to me in relation to this particular matter being the documentation, the submissions, and all the oral evidence that has been put to me as well, and my findings are as follows. The evidence causes me to hold that the purchase of this timber was negotiated between the applicant, Mr Brereton, and the respondent directly. I note the statement of the builder, Warren Pitcon [Pitkin], which corroborates the applicant's position on this particular issue. The applicant states that the flooring was sold to him as a feature grade. He claims that during any negotiations, the wording of downgrade or reject were never discussed with him. The respondent has refuted the whole negotiation process with the applicant and claims the timber was sold to Pitcon [Pitkin] on the invoice as downgrade. The evidence does not support that the negotiations took place with Pitcon, and I am of the view as I said that the negotiations took place directly with the applicant. I am satisfied that the flooring was not described to the applicant at the time of ordering the timber as either downgrade or reject grade. Had the timber been so described to the applicant, then the applicant would have been in an informed position to decide whether to proceed to purchase the timber or not. The applicant argues that the timber is not of acceptable quality, which arises from the Australian Consumer Law s 54, in relation to all good [sic, goods] that are sold have to be of acceptable quality, and that the moisture content of the timber was probably in excess of 15% when it was sold. The applicant argues that the concrete slab was properly prepared… then dust sealed to allow the boards to be direct stuck to the actual floor. He says they were appropriately installed and finished by experienced tradespersons. He makes it clear that the boards have shrunk and have not swollen. This would point to a dry slab, not a slab with a high moisture content. The respondent argues that the problem is either that the slab had moisture in it, or that the floorboards had clumped on some edges. He claims that he recommended that the slab have a waterproof membrane applied before it is directly stuck. The evidence before me is that, and that is recommended in some publications. However, the evidence before me is that this slab is 32 years of age, and the house exhibited no moisture problems whatsoever. The evidence is also that the boards have shrunk and not swollen. Boards shrinking in my view is inconsistent with a moist slab. I do not accept the argument that the failure which I would describe as numerous and some large gaps in the timber flooring has occurred because of the moist slab. The argument of the board's clumping is heavily countered by the applicant in his evidence and also by the facts that the boards were individually glued and that the floor sander and polisher has extensive experience. On all the evidence before me, I do find that the flooring sold by the respondent is not of acceptable quality and therefore legal obligation rests with the respondent. I then have to measure compensation in these circumstances. I also accept on the evidence before me that to rectify the problem that exists, the floor has to be removed and a new floor installed. It cannot be repaired in any other way.
3. Although there does not appear to have been a request under s 62 of the Act for the provision of reasons, nevertheless it appears to us that the oral reasons given comply with the requirements for such a statement of reasons as set out in s 62(3) of the Act, which states: (3) A written statement of reasons for the purposes of this section must set out the following: (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, (c) the reasoning processes that lead the Tribunal to the conclusions it made.
4. It is evident from the short but sufficient reasons given that each of these three requirements has been met. It is not further explained by the appellant how the asserted 'lack of reasons' would give rise to a denial of procedural fairness, but, as the premise for the ground, which is 'lack of reasons', is not made out, so is the asserted consequence.
5. This ground of appeal is not made out.

Ground 3 - question of law

1. The third question of law is whether the level of compensation ordered was so high that 'no reasonably minded Tribunal would have ordered that compensation'.
2. This formulation apparently alludes to the test of 'manifest unreasonableness' discussed in Associated Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223. While this is a recognised question of law, as Lord Greene MR there said at 230, 'to prove a case of that kind would require something overwhelming.'
3. In Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10 at [152], Spigelman CJ (Beazley and Tobias JJA agreeing) said a decision is not unreasonable if it is 'a matter on which reasonable minds can differ'. In that case, the Chief Justice at [129] described manifest unreasonableness in a decision as one which is 'illogical, irrational or lacking a basis in findings or inferences of fact supported by logical grounds.'
4. In Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2010] NSWCA 145 at [104]-[109], Tobias JA noted the distinction between what an appeal court considered itself was unreasonable (which is not what this ground of appeal is concerned with), in contrast to a decision which the appeal court considered was so unreasonable that no reasonable body could have come to it, this connoting something shown to be irrational, absurd or improbable.
5. In Minister for Immigration and Citizenship v Li [2013] HCA 18 the plurality, Hayne, Kiefel and Bell JJ said: Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense.
6. Their Honours nevertheless made clear at [66] that there remains, in most discretions conferred by statute, an area for the decision-maker where there is a genuine and free discretion which may be exercised one way or another within the bounds of legal reasonableness, and in that regard the courts are not to undertake merits review of that exercise of discretionary power: see also New South Wales v Beck [2013] NSWCA 347.
7. The Tribunal below found that the only way to repair was to remove the defective floorboards and replace them. The evidence below as to the quantum of compensation ordered was contained in two quotes. The Tribunal noted that one quote was for $8,455 and the other was between $5,500 and $7,000. The Tribunal decided 'in view of all these figures in front of me' to determine as a fair and equitable amount, the sum of $7,000. Applying the law just noted, it is not manifestly unreasonable so as to amount to an error of law for a Tribunal which has two estimates from experts in evidence before it to order an amount which was within the range from one, and less than the quote of the other. This ground of appeal is thus not made out.
8. We then turn to the grounds of appeal which would require leave. In relation to the question of whether the decision is fair and equitable, or against the weight of evidence, there are the following additional grounds other than those we have already dealt with.

Ground 4 - question requiring leave

1. This ground states: The decision was not fair and equitable and was seen not to be fair or equitable, the Tribunal having omitted the reasoning for the order appealed against despite an express request by the appellant, the Tribunal do so, and despite the Tribunal member's statement that such reasoning would be given.
2. For the reasons stated above under Ground 2, reasons were given so the premise for this ground is not made out. As the ground is misconceived there is no basis for finding that it would be fair and equitable to grant leave nor that there has been a miscarriage of justice. We decline to grant leave for this ground.

Ground 5 - question requiring leave

1. This ground states 'The amount of compensation ordered would be excessive even had the appellant been liable, which is denied.'
2. For the reasons set out above, in relation to Ground 3, the amount of compensation awarded was not manifestly unreasonable, rather it was within the parameters of one quote tendered by the respondent and less than the other quote. The appellant does not describe why in those circumstances the amount of compensation is 'excessive' in such a way as amounts to a miscarriage of justice being not fair or equitable.
3. Even if we are wrong about this, applying the discretionary tests in Collins v Urban set out above we would decline to grant leave to appeal. In so deciding we have considered the statement, apparently made generally on the question of leave, by the appellant, that: Issues of fairness and injustice have been raised, and it is in the public interest for such issues to be resolved. The respondent was unrepresented before the Tribunal. The decision is of importance to the appellant since it could substantially increase the potential liability to other customers who have purchased similar flooring from them.
4. None of those matters, either individually or collectively, are sufficient to justify a favourable exercise of discretion in the circumstances of this case, in relation to this or any other ground seeking leave to appeal.

Ground 6 - question requiring leave

1. This ground states: The decision was against the weight of the evidence, particularly evidence tending to show (a) that any defect in the flooring occurred during the laying process, and (b) that the contract was between the appellant and Warren Pitcon [sic Pitkin], and not an oral contract between the appellant and Mr Brereton, the respondent, and was for downgraded timber.
2. In Collins v Urban the Appeal Panel stated at [77(2)] The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd [1991] HCA 23; (1991) 173 CLR 33 at [41]-[42], Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153].
3. To the extent this ground is co-extensive with the allegation of manifest unreasonableness, we reject it for the same reasons.
4. Further, there was evidence below: 1. in the form of an invoice from Boral Ltd showing the timber supplied by it to the appellant was 'reject flooring' although it was sold to the respondent as 'downgrade' quality; 2. in the form of a statement from Mr Pitkin that the respondent ordered the timber directly from the appellant; 3. in the form of evidence from both Mr Pitkin and carpenter and joiner Richard Oxland, that the flooring was sub-standard and that this defective quality caused the shrinking and need for replacement.
5. We consider all of this evidence to be at least plausible, including when viewed against the evidence in its entirety; evidently the Tribunal below regarded it as convincing. We therefore reject the submission that such findings were against the weight of evidence. We would not otherwise grant leave and reject this ground.

Ground 7 - question requiring leave

1. This ground states: There has been a clear injustice because the decision does not take account of the only written evidence as to the cause of any loss to the respondent in this appeal.
2. As we have just noted in relation to the preceding ground there was a quantity of written evidence as to the cause of the respondent's loss, namely the evidence of Mr Pitkin and Mr Oxland. Thus, the premise of the ground is not made out. We decline to grant leave on this ground.

Conclusion

1. In conclusion we decline to grant leave on any ground and reject the grounds raised as of right.

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: 14 January 2015