Wilson v Winnicott

Causes of Action under the ACL (NSW)

1. By operation of s 28 of the FTA, Schedule 2 of the Competition and Consumer Act 2010 (Cth) applies in NSW as the ACL (NSW). Part 3-2 of the ACL (NSW) confers on consumers acquiring goods or services various guarantees.
2. The application makes it clear that the breaches of the consumer guarantee provisions of the ACL (NSW) were possible causes of action available to the appellant, and in that regard the Tribunal erred in holding that those possible causes of action were definitely (as distinct from arguably) out of time without first making a finding about when time started to run in relation to any relevant causes of action under the ACL (NSW).
3. Considering the application made by the appellant, it would appear that the relevant guarantees are s 54 ACL (NSW) (a guarantee that the goods are of acceptable quality) and/or s 60 ACL (NSW) (the services are to be supplied with due skill and care). Section 259 then sets the action that can be taken against suppliers of goods and s 267 sets out the action that can be taken against suppliers of services.
4. The High Court case in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 518 dealt with the question of when a cause of action under s 82 of the Trade Practices Act 1974 (Cth), (now repealed) accrued, At [525] the majority (Mason CJ, Dawson, Gaudron and McHugh JJ) stated: By virtue of s.82(2) of the Act, the period of limitation begins to run at the time when the cause of action under s.82(1) accrues. As loss or damage is the gist of the statutory cause of action for which s.82(1) provides ((14) Elna Australia Pty. Ltd. v. International Computers (Australia) Pty. Ltd. [1987] FCA 230; (1987) 75 ALR 271, at p 279), the cause of action does not accrue until actualloss or damage is sustained.
5. In the recent case of Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 the Appeal Panel relevantly stated at [70] "When a cause of action arises requires relevant findings of fact. The Tribunal failed to make such findings because of its erroneous view of when the cause of action accrued. It also failed to have proper regard to the nature of the failure and whether the goods were rejected in the "rejection period" as
6. Similar to the error identified in the case of Barbour, the Tribunal in this matter failed to consider all the relevant causes of action and relevant facts and failed to apply the correct legal test.
7. It is necessary when approaching these preliminary matters and in relation to the ACL NSW, to ask the following questions: 1. What is the consumer guarantee that the applicant is relying on? 2. What is the relevant remedy that the applicant is relying on?
8. Once that is clarified, as is stated in Wardley, there needs to be a relevant assessment of the facts and findings made on the facts as to when the actual loss or damage was sustained. The Tribunal will then be in a position to determine whether the application was lodged within three years of the cause of action accruing.
9. I adopt the remaining paragraphs [101] - [106] of Senior Member Curtin SC's reasons as identified in his reasons below.
10. Curtin SC SM: This is an appeal from an order of the Tribunal dismissing the appellant's claim against the respondent.
11. The complete reasons of the Tribunal were: "The application is dismissed because the application was made more than three years after the cause of action arose. The application is out of time and the Tribunal does not have jurisdiction to hear and determine the application. The applicant is at liberty to commence proceedings in the Local Court of New South Wales if he so wishes."
12. The reference to the Tribunal not having jurisdiction is a reference to s 79L(1)(a) of the Fair Trading Act 1987 (NSW) ("FTA") which 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,
13. There is no dispute that that section is applicable, as the appellant's claim is one that falls within the definition of "consumer claim" set out in s 79E of the FTA. The issue before the Tribunal was whether the appellant's cause (or causes) of action first accrued more than three years before he lodged his claim in the Tribunal on 26 November 2020.
14. In its reasons, quoted above, the Tribunal did not identify the cause of action it was referring to. In my opinion there was at least one cause of action available to the appellant, which was arguably within time, but the Tribunal did not refer to it (at least explicitly), did not identify the relevant facts pertaining to that cause of action and when it might have first accrued and did not explain why, based on those facts, it considered that the cause of action first accrued more than three years before 26 November 2020.
15. The Appeal Panel has listened to the sound recording of the hearing. I am none the wiser about any of the matters I have just referred to by doing so. However, the sound recording does reveal that the Tribunal had a mistaken view as to the relevant applicable legal principles to apply in a case such as this.
16. For those reasons, as further explained below, this appeal must be upheld.

Background

1. The relevant background facts for this appeal are set out in the appellant's Application Form by which he commenced proceedings in the Tribunal on 26 November 2020.
2. I pause to note that in circumstances such as these, where the Tribunal in effect summarily dismissed the appellant's case at a conciliation hearing, the facts asserted by the appellant must be (or must have been) assumed to be correct. Of course, they may be contested by the respondent at any future hearing on the merits of the dispute. But when summarily dismissing a claim based on a limitation point without there being factual findings made on disputed facts, a Tribunal must make all factual assumptions in favour of the applicant (appellant in this case).
3. I also note the Appeal Panel's views in Wilson v Chan & Naylor; Wilson v Chan & Naylor Parramatta Pty Ltd atf Chan & Naylor Parramatta Trust [2018] NSWCATAP 311, with which I respectfully agree, that it is generally not appropriate to deal with jurisdictional issues on a summary basis. In that case the Appeal said at [71]: "However, in our view it is generally not appropriate to deal with jurisdictional issues on a summary basis. The Tribunal assessed the alleged facts for the purposes of considering the operation of s 79L of the FT Act by reference to the points of claim and responses to the request for particulars as well as the statutory declarations. In our view, all of the facts that may have been more developed and found at a final hearing were not necessarily before the Tribunal when it determined the applications on a summary basis. It is appropriate to repeat the warning offered by the High Court in Wardley Australia Ltd v Western Australia [1992] 175 CLR 514 at 553: 'We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.'"
4. The appellant's Application Form said: "Details of motor vehicle repair complaint: I have a 1970 kombi low light that i have been restoring, i had major work repairs done on the car in 2016, these repairs were done with a kombi restoration specialist kustom Kombis, i have just recently handed it over to a spray painter as it was ready for painting, or so i thought. The spray painter checked repairs done back in 2016 with another Kombi restoration business specialist he is associated with, and this specialist highlighted major problems with the 2016 repairs which are in serious breach of the Australian safety standard with respect to repairs, and the standard of these repairs. Although the repairs were done back in 2016, the defects have only come to light recently as i have not been able to continue the restoration until now. The main issues are, the welding of the new front nose cone of the Kombi and the fact that these areas are meant to have a full weld seam area, there are only spot welds found in most areas. This panel has also been filled in a number of areas with bog where metal panels should have been put in again welded for strength and in accordance with ASS. There are also A pillars that have been incorrectly strengthened again in accordance with ASS and 2 front valances under the car that should have a full seal weld for strength and integrity, these are again only spot welds. The other issue is the drivers side middle panel, the materials used are incorrect not only for the structural integrity of the panel but also safety and ability for materials to adhere to the surface, the panel is also warped out of shape due to materials used. Another issue is that a significant amount of bog has been used by him to rectify this panel making it impossible to put a window in. I am not a panel beater and so trusted that this business did the correct job, i paid for these repairs in good faith and when i picked up the car it appeared that all repairs had been done properly, however as i said i am not a panel specialist. I am asking for the order as i do not wish, under any circumstances to have mark or Kustom Kombis rectify their mistakes, i have the car at another licenced repairer who will now do the safety and rectification work and spray the car to complete the job. I am asking for this order as i now have to pay extra money to get the work done by mark at Kustom kombis, rectified and to Consumer standards, making the car safe."
5. There was also an allegation that the respondent was not appropriately licensed to undertake at least some of the work requested, a fact relevant to the cause of action to which I refer later in these reasons (as to whether any defect in the goods could be remedied by the respondent).
6. The salient facts which emerged from the Application Form were that: 1. the appellant owned a Kombi Lowlight motor vehicle which he was restoring over time when funds permitted; 2. a contract was entered into between the appellant and the respondent for the respondent to perform certain repair work on the appellant's vehicle; 3. the repair work was done in 2016; 4. the repair work (according to the respondent's quote dated 21 July 2016) included the supply of a rear cargo door, supply of a left door, supply of the driver's side middle panel, welding "all holes and repair dents", "fuel centre flap + repair", "replace dash fix electrical" and "repair front A pillars"; 5. the quote, which totalled $8,600 excl GST, was broken down into $1,600 for parts and $7,000 for labour; 6. there was expert opinion to the effect that some of the work performed was defective in that spot or tack welding rather than seam welding had been performed, welding had not been done in some areas in which it was required, tack welding of the indicator support had been done in four places whereas plug welding was required every 3 cm, the front nose had not been properly welded to the A pillars, the A pillars had not been welded correctly with the probable result that the windscreen would not fit, the front inner valance had not been adequately welded to the chassis members, the right middle panel had been tacked every 5 - 10 cm, and had not been attached to the side supports, which led to the panel flexing and warping; 7. there was expert opinion to the effect that as a result of those defects the vehicle was unsafe for Australian roads and required extensive rectification work; 8. the appellant had no expertise in motor vehicle repairs and did not become aware of the alleged deficiencies until advised by expert repairers in November 2020; 9. the appellant sought monetary compensation and did not desire to obtain an order from the Tribunal that the respondent rectify the allegedly defective work (and possibly no such order could be made if the respondent was not appropriately licensed).
7. In accordance with the Appeal Panel's pre-appeal directions the appellant provided a transcript of the relevant parts of the hearing on which he relied. I have listened to the whole of the sound recording and whilst the transcript provided was not verbatim, it is sufficiently accurate to be relied on and recounted here.
8. That transcript records the following exchanges (with some minor typographical corrections to aid understanding): "At 13.34-19.10 time in the recording, D Moss then asked me 'when did you first notice the defects?" I replied, when it was told to me by the licensed repairers. D Moss then replied, the tribunal only has jurisdiction for 3 years after the defects become apparent or ought to have become apparent, so this work was done back in 2016, so I think your application is out of time. I then replied, "when I first spoke to fair trading they said that its still in time because its' when I discovered the defects. Tribunal member D Moss then interrupted and said, "or when you should have discovered them, Mr Wilson, if the work was defective in 2016 you should have discovered it was defective in 2016 and you should have brought your application within 3 years ok so at least by 2019. I then replied, ''yes but I sent the car to Mark as what I considered he was a licensed vehicle repairer and I was under the assumption that all the work was done within the standards it had to be done by or within manufacturers standards all of the right welding done, I wasn't aware at that time like I didn't know that I then had to go and get another licensed vehicle repairer to check that work straight away, I just assumed that I when I took it to mark, who I assumed was a licensed vehicle repairer at that time, who is a Kombi specialist that he did all the work in accordance with standards required to do this work for registration, now I didn't have any idea. I took that car from Mark assuming that all the work he had done was within standards and limits that were acceptable, it is only now that we have got to the point where the car is ready to be painted that we discovered by Jared and my other vehicle repairer and they both stated that yes the work hadn't been done properly, now I didn't think at the time I had to go and get it checked at the time, I put my trust in Mark that he would do the job properly, so this is what I don't understand.' I then asked the question to D Moss whether she is saying I should have taken it to another licensed repairer to clarify the work. Her reply was, 'No I'm saying that if the work wasn't done properly in 2016 it should have been discovered that it wasn't done properly in 2016. You just can't put a car away for 4 years and then take it to someone else and they say the work was not done properly in 2016, it's not fair. [Note: The words "it's not fair" were delivered orally with emphasis by the Tribunal.] I then replied, 'but it's an ongoing project in my shed and now it's got to the stage of painting and this is when we discovered all of this stuff, I don't understand what you are asking me to do.' Tribunal member D Moss then interrupted again stating, 'what I'm telling you is that you need to go to court because they have a 6 year limit we have a 3 year limit, you need to go to local court and file a statement of claim …" (Emphasis mine)
9. It is apparent from what was said at the conciliation hearing by the Tribunal that the Tribunal considered the appellant's cause(s) of action accrued when the defective work was done or when the appellant "should have" discovered that that defective work was done. As to the latter, the Tribunal obviously considered that the appellant "should have" discovered the defective work was done reasonably contemporaneously with the doing of that work, although the Tribunal did not explain how a layperson with no motor vehicle repair expertise "should have" discovered that defective work.
10. In my opinion the Tribunal erred in applying that test to when the appellant's cause(s) of action accrued under the ACL (NSW) (hereafter referred to as the ACL).
11. A useful starting point is the judgment of Handley JA, with whom Powell and Giles JJA agreed, in Scarcella v Lettice (2000) 51 NSWLR 302; [2000] NSWCA 289. In that judgment His Honour said at [24]: "The general principle is that time runs from when the cause of action is complete, whether or not this is discovered or discoverable. The exceptions for latent defects in buildings, latent defects in title, and prospective and contingent losses are only apparent exceptions to this general rule." (Emphasis mine)
12. A cause of action in contract is complete when breach occurs (whether or not the breach was discovered or discoverable), but in most other causes of action they are complete (or first accrue) when damage is suffered even if the applicant/plaintiff is unaware of it - Scarcella at [15]. Thus, the Tribunal's reference to "should have been discovered" in the transcript is contrary to that general principle described by Handley JA.
13. In relation to building cases and latent defects, Halsbury's Laws of Australia, online edition, at [255-45] says as follows (and which I accept as accurately stating the law and which is consistent with Scarcella at [16]): "However, for loss caused by latent defects in buildings, time begins to run when the plaintiff becomes aware of the latent defect, or could discover with reasonable diligence the fact that damage has been sustained." (Emphasis mine)
14. That principle as to when loss occurs is also applied to latent defects in title that were not discoverable by normal conveyancing procedures, the reasoning being that economic loss was not suffered until the defect in title was discovered - Scarcella at [18]-[22]. It seems to me that the Tribunal's use of the expression "should have been discovered" is a reference to this principle's allowance for "could discover with reasonable diligence". If so, the Tribunal erred because this was not a latent defect building case, nor one involving a latent defect in title, or prospective or contingent losses of the kind referred to in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 518.
15. As far as I am aware, no superior court has extended the principle as to when loss occurs in the latent defect building and latent defect in title cases beyond those categories. Nor do I read Sacks v Hammoud [2016] NSWCATAP 140 as extending that principle beyond those categories.
16. In my opinion the decision of the Appeal Panel in Sacks v Hammoud [2016] NSWCATAP 140, properly read, is not authority for the proposition that all causes of action under s 267(4) of the ACL (irrespective of the type of loss suffered) accrue when the alleged damage became known or could have become known with reasonable diligence. In my view, the holding in Sacks is limited to latent defect building cases.
17. A little explanation is required.
18. It is important to recognise at the outset that Sacks was a building case. It involved the supply and installation of doors and windows by the respondent to residential premises owned by the appellant. The limitation point in issue arose out of the following facts. The doors and windows were supplied and installed in June 2011. In February 2013, during a torrential downpour, the appellant's home suffered water damage allegedly because of defects in the doors and windows. The appellant commenced proceedings in the Tribunal against the respondent in June 2015, being more than three years after the doors and windows were installed, but less than three years since the downpour. As mentioned earlier, under s 79L(1)(a) of the FTA the Tribunal has no jurisdiction where the cause of action relied on arose more than three years before the proceedings were commenced.
19. In Sacks, the appellant relied on four causes of action, including negligence and breach of statutory guarantees under the ACL. The Tribunal held that all of the causes of action relied on accrued more than three years before the appellant commenced his proceedings. The Tribunal decided that the cause(s) of action giving rise to Mr Sacks' claim first accrued when the windows and doors were installed (June 2011) and not, as contended by Mr Sacks, when the water damage became apparent (February 2013).
20. When considering the cause of action in negligence, the Appeal Panel referred to Scarcella and its holding that, in building cases involving latent defects, loss accrues when "the defects become manifest or are otherwise discovered" (became known or could have become known with reasonable diligence).
21. It is important to note that his Honour referred to knowledge of the "defect", not knowledge of the physical damage resulting from the defect, as being the critical factor in relation to when the cause of action accrued. That is because there is a difference between defects and physical damage - Cyril Smith & Associates Pty Ltd v The Owners-Strata Plan No 64970 [2011] NSWCA 181 per the Court (Bathurst CJ, Basten and Young JJA) at [16] (Basten JA delivered the Court's reasons).
22. It is also important to keep in mind that there is also a difference between loss or damage which is required to complete a cause of action, and physical damage to property. They are sometimes, but are not always, the same.
23. It is knowledge of a defect (not physical damage caused by the defect) which causes time to commence to run in a cause of action in negligence in a latent defect building case, as Scarcella and Cyril Smith attest.
24. Of course, knowledge of physical damage (as distinct from a defect) may put a homeowner on notice of inquiry as to its cause and if reasonable inquiry would have revealed the cause (being the defect), the underlying defect has become manifest (and thus time commences to run), even though it (the defect) did not in fact become known to the owner at that time - Cyril Smith at [15].
25. However, even where physical damage caused by a latent defect in a building has been suffered more than (the relevant limitation period) before the commencement of the litigation, the cause of action does not accrue until the link between the physical manifestation and the underlying defect is known or ought to have been known - Cyril Smith at [15].
26. In Sacks, that happened to be at the same time, namely in February 2013 when the appellant's home suffered water damage during the downpour - Sacks at [46].
27. In Sacks the Appeal Panel said at [47] that it applied the principles from Scarcella and Cyril Smith and held that: "…the determination of when the cause of action first accrued requires the Tribunal to make a factual finding about when the alleged damage was first discovered or with reasonable diligence could have been discovered."
28. By "damage" the Appeal Panel may have meant one of two things. First, it may have meant "defect" (as that is the thing about which knowledge is required) and substitution of the word "defect" for "damage" would, in substance, re-state the test for when the cause of action accrues in a latent defect building case as mentioned in Scarcella and Cyril Smith.
29. Second, the Appeal Panel may have meant the physical damage Mr Sacks observed after the downpour because, in the circumstances of that case, the link with the defect became known at the same time and thus there was no need to differentiate between the defect and the damage in that case.
30. But ultimately, the test for when a cause of action in negligence accrues in a latent defect building case is when the defect (as distinct from damage) is known or could have become known by reasonable diligence. The holding in Sacks at [47] would not be consistent with the authorities I have mentioned if it meant that the cause of action accrues when physical damage (as distinct from the defect) was first discovered or with reasonable diligence could have been discovered.
31. Therefore, I think the better reading of the holding in Sacks at [47] (and later in [59] which I address later in these reasons) is to read the word "damage" as "defect".
32. The Appeal Panel in Sacks then turned to the cause of action under the ACL. At [54] the Appeal Panel set out what it regarded as the elements of the cause of action. The Appeal said: "Mr Sacks may only take action under s 267(4) as against Mettco, in respect of the alleged failure to comply with the guarantee under s 60, if: (1) He is a "consumer" within the meaning of s 3 of the ACL NSW: s 267(1); (2) Mettco supplied, in trade or commerce, services to him: s 267(1)(a); (3) The guarantee under s 60 was not complied with because Mettco failed to render the subject services with due care and skill: s 267(1)(b); (4) He suffered loss or damage because of the failure to comply with the guarantee and it was reasonably foreseeable that he would suffer such loss or damage as a result of such a failure: s 267(4)."
33. At [56]-[59] the Appeal Panel addressed the last of those matters, namely when did the appellant suffer loss or damage under s 267(4) of the ACL.
34. The Appeal Panel cited Wardley and said at [57]-[58]: "[57] … Their Honours held at 526 that to determine when a person first suffers economic loss or damage in relation to such conduct it is necessary to have regard to the measure of damages that apply. That measure of damages was a "sum representing the prejudice or disadvantage the plaintiff has suffered as a consequence of altering his position under the inducement". They then went on at 526 to note that, as at common law, under the Trade Practices Act a plaintiff could only recover compensation for actual loss or damage as distinct from potential or likely damage. They said at 527 that while a plaintiff may suffer disadvantage immediately upon entering an agreement induced by a misrepresentation, "to compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust". [58] The gist of the action under s 267(4) of the ACL NSW is that the consumer has suffered loss or damage as a result of the failure to comply with a consumer guarantee."
35. The Appeal Panel then said, at [59], that applying "the above principles": "… the determination of when the cause of action first accrued required the Tribunal to make a factual finding about when the alleged damage became known or could have become known with reasonable diligence."
36. As I read the Appeal Panel's reasons, the "above principles" include those from Scarcella and Cyril Smith expressly mentioned earlier in the Appeal Panel's reasons. As damage is the gist of the action in negligence, and the Appeal Panel held that damage was the gist of the action under s 267(4) (at [58]), the Appeal Panel was saying that the same test for the accrual of the cause of action in negligence for a latent defect building case (when was loss suffered) would apply to the accrual of the cause of action under s 267(4) for a latent defect building case (keeping in mind the defect/physical damage dichotomy).
37. I do not read the Appeal Panel's reasons to hold that for cases not being latent defect building cases (or latent defect in title cases) brought under s 267 [for non-compliance with statutory guarantees under the ACL], the test for the accrual of the cause of action (when loss is suffered) is when the damage became known or could have become known with reasonable diligence.
38. My reading of the Appeal Panel's reasons is consistent with the fact that the passages from Wardley referred to by the Appeal Panel at [57] of its reasons does not support the holding by the Appeal Panel at [59], the language used by the Appeal Panel at [59] is identical to the language used at [47] of the reasons, and is consistent with the fact that no other authorities were cited which would support the broad proposition that no matter what the case (latent defect building case or otherwise), the cause of action for a failure to comply with a consumer guarantee under the ACL first accrues when the alleged damage was known, or could have become known with reasonable diligence.
39. In my view, and as I read the authorities and Sacks, the holdings in Sacks at [47] and [59] are limited to latent defect building cases and must be understood as if the word "defect" was substituted for the word "damage". For cases other than latent defect building cases, or latent defect in title cases, where damage is the gist of the action and the cause of action accrues upon the suffering of loss or damage, the principles outlined in cases such as Scarcella and Wardley (principally concerned with contracts and agreements) apply. That is, the loss occurs (the cause of action accrues) when damage is suffered whether or not the applicant/plaintiff is aware of it.
40. Therefore, in my view, the Tribunal in this case appears to have applied a principle of law which was not applicable to a case such as the present, not least because this was not a latent defect building case. In my view the Tribunal erred in doing so. It is also my view that the Tribunal fell into further error.
41. The use of the expression "it's not fair" by the Tribunal in the transcript is redolent of the application of palm tree justice, something s 79L of the FTA is not concerned with - see Yeldham J in Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 at 321.E, cited with approval by Hope JA, with whom Samuels and Clarke JJA agreed, in State Rail Authority of New South Wales v Consumer Claims Tribunal (1988) 14 NSWLR 473 at 477.C. This was not a case to be decided on what was regarded as "fair" in the eyes of the Tribunal but was to be decided by applying the correct legal principles to the facts of the case.
42. As I have mentioned, the Tribunal did not identify the cause of action it had in mind when it held that that cause of action first accrued more than three years before the appellant lodged his claim in the Tribunal.
43. Clearly the Tribunal's reasons are inadequate as they did not expose the reasons for resolving a point critical to the contest between the parties and therefore amounted to an error of law in that regard alone - see, generally, the requirements for reasons set out in Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 and especially at [58]. If a Tribunal is going to summarily dismiss an applicant's claim, then it should provide a sufficient explanation to the applicant (in its reasons) for doing so.
44. I do not wish to seem unduly harsh. I well understand the pressures on Tribunal members at first instance, including the limited time and even more limited resources available to them to deal with cases in which most parties are not legally represented (and thus members do not receive the benefit and assistance of submissions from legal practitioners). Nevertheless, something more than the brief reasons given by the Tribunal was required to meet the minimum acceptable standard for reasons in the circumstances of this case and the failure to do so amounted to an error of law.

Possible Cause of Action under the ACL

1. In addition, it was tolerably clear that breaches of the consumer guarantee provisions of the ACL were possible causes of action available to the appellant, and in that regard, for reasons I will now come to, the Tribunal erred in holding that those possible causes of action were (definitely as distinct from arguably) out of time without the Tribunal first making a finding whether the supply by the respondent was a supply of goods or a supply of services under the ACL.
2. I note, in relation to those provisions, that there was and is no dispute that the supply (whether it be of goods or services) was done in trade or commerce.
3. The significance of whether the respondent supplied goods or services lies in the fact that the accrual of a cause of action for breach of the consumer guarantees in relation to goods can be different to that in relation to services. In basic terms, the accrual of the cause of action for breach of the consumer guarantees in relation to services occurs at the date of breach (whether or not known to the consumer), but in relation to goods (where there is a major failure or where a failure to comply with the consumer guarantee cannot be remedied) the accrual of the cause of action for breach of the consumer guarantees may not occur until much later.
4. That is important in this case because of the restriction to the Tribunal's jurisdiction provided for in s 79L(1)(a) of the FTA, which limits the Tribunal to determining consumer claims where the cause of action accrues within three years of Tribunal proceedings being commenced.
5. In this case, proceedings were commenced more than three years after the supply, and so if the supply was a supply of services, the proceedings were out of time and the Tribunal had no jurisdiction. However, if the supply was a supply of goods, then the appellant had a case for arguing his cause of action for breach of certain consumer guarantees under the ACL did not accrue until shortly before he commenced proceedings in the Tribunal.
6. In this case the transaction seemed to include the supply of both goods and services. However, for reasons to which I will come, the ACL characterises a supply (as distinct from a transaction) as being one for goods, or services but not both.
7. I shall first explain why a cause of action for breach of consumer guarantees under the ACL in relation to goods (major failures or where a failure to comply with the consumer guarantee cannot be remedied) may arise later than at the time of breach. I shall then explain why, in my opinion, the supply in this case was a supply of goods rather than services (and why it could not be for both).

Consumer Guarantees in Relation to Goods

1. In relation to goods, and when the cause of action for breach of the consumer guarantees first accrues, the appellant arguably has a claim against the respondent for breach of the consumer guarantees provided for in ss 54 and 55 of the ACL.
2. If the failure to comply with those guarantees (assuming they were breached) couldn't be remedied or amounted to a "major failure" (as defined in the ACL) the appellant could have "rejected" the goods. A consumer is entitled to "reject" goods within the "rejection period". Section 262(2) of the ACL says, in relation to the "rejection period": (2) The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) 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.

Supply of Goods - Accrual of Cause of Action

1. In terms of when a cause of action under the ACL involving the rejection of goods first accrues, the Appeal Panels in Cairns v AHG Newcastle Pty Ltd [2020] NSWCATAP 103 and Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 both held that the cause of action accrues at the time of the rejection of the goods (assuming that falls within the "rejection period", and as distinct from the time of breach of the guarantee), as it is only then that the cause of action accrues and time begins to run under s 79L of the FTA.
2. As was said in Barbour at [79]: "Then, in order to comply with the time limitation under s 79L of the FTA, the consumer's claim to reject the vehicle on the basis of a breach of a guarantee of acceptable quality under s 54 of the ACL must have not occurred more than three years before the consumer lodged her claim in the Tribunal."
3. In relation to determining when the "rejection period" ended, the Appeal Panel in Barbour said at [83]: "From these cases it can be seen the following matters are relevant considerations in determining the rejection period for a major failure and when it has ended: (1) The rejection period commences at the time of supply; (2) The rejection period ends when it would be reasonable for the defect to become reasonably apparent; (3) The period of time must be reasonable having regard to the defect or defects. The test is objective but the actual experience of the consumer is relevant; (4) In determining the time in which a failure to comply becomes reasonably apparent regard must be had to the factors in s 262(2)(a)-(d) of the ACL (5) Matters affecting the length of the period and when a major failure may become reasonably apparent include (a) Whether the good are old or new. In the case of new goods it will usually be longer period; (b) Whether the goods are regularly inspected, whether an inspection process is customary and, if so, whether such inspections would be expected to reveal the failure; (c) Whether a reasonable consumer fully acquainted with the state and condition of the goods, would know the cause of the defect, what needed to be done to fix it and the cost of doing so; (d) Whether the supplier or repairer had identified a fault and carried out a repair which the consumer understood would rectify the fault; (e) Whether any subsequent testing or period of use was necessary and/or elapsed following any repair to see if it was successful; (f) Whether a failure, or a series of failures in combination with each other, might render the goods unfit or otherwise lead a reasonable consumer to conclude they would not have acquired the goods; (g) Whether a reasonable time has elapsed following the consumer becoming fully acquainted with the failure to make a decision about whether to reject the goods."
4. As can be seen from those considerations, the fact the appellant had no expertise in motor vehicle repairs was relevant to when the cause of action accrued, as was the time at which it was reasonable (taking into account that lack of expertise) for the defects to become apparent to him.
5. It is clear that the Tribunal did not apply its mind to those considerations in this case (assuming the supply was a supply of goods).
6. If the supply was a supply of goods then the situation faced by the Tribunal in this case was analogous to that faced by the Tribunal in Barbour. As the Appeal Panel said in that case at [84]: "It can readily be seen in the present case that the question of whether or not the Tribunal has jurisdiction involves complex issues of fact. It is alleged that the consumer purported to orally reject the goods between 3 May 2016 and prior to 17 March 2017. This period straddles the date which is three years before the filing of the application, namely 23 October 2016. A finding as to when this occurred may be relevant to the question of when the relevant cause of action for rejection first accrued and whether the rejection occurred within the "rejection period" as defined in s 262(2) of the ACL."
7. If the supply was a supply of goods the result would be that the Tribunal in this case fell into the same error as had the Tribunal in Barbour. The Appeal Panel in that case described it this way (and which I consider is equally applicable in this case on the assumption the supply was a supply of goods) at [70]: "When a cause of action arises requires relevant findings of fact. The Tribunal failed to make such findings because of its erroneous view of when the cause of action accrued. It also failed to have proper regard to the nature of the failure and whether the goods were rejected in the "rejection period" as prescribed by the ACL. Consequently, the failure of the Tribunal to consider the correct legal test in respect of whether or not the consumer's claim in question was brought within time constitutes an error of law."

Supply of Goods or Services?

1. The question whether the supply by the respondent to the appellant was a supply of goods or services (but not both) is determined by the terms of various provisions of the ACL.
2. The outcome seems to be that where a transaction includes the provision of both goods and services, it is treated as a supply of goods (and not a supply of services, and not a supply of goods accompanied by a supply of services).
3. This seems to be, as I read his Honour's judgment, what was held by Edelman J (as his Honour then was) in Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 at [126]-[157]. I have been unable to find any other authority on this point.
4. At the heart of his Honour's reasons are ss 11(c) and (d) of the ACL. Sections 11(c) and (d) of the ACL state that, in the ACL: (c) a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both; and (d) a reference to the supply or acquisition of services includes a reference to the supply or acquisition of services together with property or other services, or both …
5. Therefore, s 11(c) says that a reference in the ACL to the supply of goods includes a reference to the supply of goods together with services. In contradistinction, s 11(d) says that a reference in the ACL to the supply of services does not include a reference to the supply of services together with goods.
6. In Valve, Edelman J was required to determine whether computer gaming software (to put it over simplistically) was a supply of goods or services under the ACL. His Honour considered the terms of the ACL and determined that the supply was for goods even though not everything provided by Valve was the supply of a good. His Honour's decision was the subject of an unsuccessful appeal, but his Honour's conclusion that there had been a supply of goods and not services, and his Honour's holding as to the proper construction of the ACL in this regard, were not challenged on appeal.
7. The facts of that case were explained by his Honour at [1] as follows: "The respondent, Valve, is a company based in the State of Washington in the United States of America. Valve operates an online game distribution network known as Steam. The Steam online game distribution network contains approximately 4,000 video games with names ranging from "Plants vs Zombies GOTY Edition" to "Thirty Flights of Loving". Valve has more than 2 million Australian subscriber accounts. Many customers buy or download multiple games from Valve. Valve operates and controls a website (the Steam website), an online video game delivery platform (the "Steam Client"), and an online support assistance service known as "Steam Support" which is accessible from Steam or the Steam website."
8. In short, Valve argued that it supplied services to consumers, not goods. The more fulsome and nuanced submission by Valve was set out by his Honour at [6] as follows: "Thirdly, Valve submitted that it does not "supply goods" within the meaning in s 2(1) of the Australian Consumer Law. The definition of "goods" in the Australian Consumer Law includes "computer software". The core of the supply by Valve was computer software. Valve said that it provided a "service" (by a Licence Agreement) rather than "goods" and that its supply to consumers of software was part of its service. Valve also said that a licence agreement for a use of goods is a service not a supply of goods even though (i) the term "supply" is defined to include a hire and an agreement to hire and (ii) the Australian Consumer Law expressly provides that a reference to a supply of goods includes goods supplied with services."
9. His Honour commenced his analysis at [126] by setting out the definition of "goods" in the ACL, followed by the definition of "services". Importantly, his Honour pointed out that the definition of "services" ends with the qualification that "services": "… (do) not include rights or benefits being the supply of goods …"
10. At [130] his Honour said that it was possible for transactions to involve both a supply of goods and the provision (as distinct from supply) of services.
11. His Honour then said: "[131] Although it is possible for a contract for the provision of services also to include the "supply of goods", the effect of the exclusionary words at the end of the definition of services requires that the transaction first be characterised to determine whether it involves a "supply of goods". This is why s 11(c) provides that a reference to a supply of goods includes goods supplied with services but s 11(d) does not extend a reference to the supply of services to include a supply of goods. This is also why the Full Court of the Federal Court said, of the definitions, that an agreement could be one for services "unless the subscribers are to be characterised as the purchasers of 'goods'": ASX Operations at FCR 467; ALR 519; IPR 329. [132] If, properly characterised, the whole of the transaction involves the supply of goods then the exclusionary words in the definition of 'services' will mean that none of the supply will involve a service. This point was made by Wilson J in Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1986) 162 CLR 395 at 402; 68 ALR 376 at 381 (Castlemaine): 'The Act clearly contemplates that services may accompany the supply of goods in such a way as to constitute a single transaction properly described as a supply of goods. It follows that an act or series of acts, once characterized for the purposes of the Act as a supply of goods, cannot also be a supply of services: see Taperell, Vermeesch & Harland, Trade Practices and Consumer Protection, 3rd ed (1983), p 163. Thus a contract for the supply and fitting of a windscreen to a motor vehicle has been held to fall within a market in which persons supply goods rather than services: Cool & Sons Pty Ltd v O'Brien Glass Industries Ltd [(1981) 35 ALR 445, at p 460] (upheld on appeal [[1983] FCA 191; (1983) 48 ALR 625, at pp 635, 646)]. It may not always be easy to make the characterization, the task being to identify, from all the circumstances of the case, the precise legal obligation undertaken by the supplier of the goods.'" (Emphasis mine)
12. The passage from Wilson J's judgment in Castlemaine quoted with apparent approval, seems to have been, at least implicitly, applied by analogy by Edelman J to the ACL. It is noteworthy that in the preceding paragraph to that quoted by Edelman J, Wilson J said: "2. It seems to me that the appellant's submission based on s.4C of the Trade Practices Act 1974 (Cth), as amended, ("the Act") derives added support from the definition of "services" in s.4(1) of the Act. That definition, so far as material, reads: "'services' includes any rights (including rights in relation to, and interests in, ... personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, ... but does not include rights or benefits being the supply of goods ..."."
13. The point being that that definition of services in the TPA which excluded "rights or benefits being the supply of goods" is relevantly similar in terms to the definition of "services" in s 2 of the ACL which "does not include rights or benefits being the supply of goods".
14. Therefore, Edelman J held, at [132], that if one looks at the whole of the transaction between the parties and concludes that part of the transaction involved the supply of goods, then the whole of the supply will be treated as a supply of goods and will not be treated (in whole or in part) as the supply of services.
15. At [133] his Honour refers to the decision of the Full Federal Court in E v Australian Red Cross Society (1991) 31 FCR 299; 105 ALR 53 in which the Full Court held that what was supplied was services rather than goods under the terms of then then applicable Trade Practices Act 1974 (Cth) ("TPA").
16. At [134] his Honour then says, about the Full Court's reasoning: "Further, it might be doubted whether this reasoning would apply to the new Australian Consumer Law regime which does not require a contract to be divided into services and goods but requires an initial enquiry into whether the respondent has obtained "rights or benefits being the supply of goods". It might now be questioned whether the conclusion could be reached that there was no supply of goods if, in the course of treatment, the appellant had been given defective antibiotics. However, even if it were the case that the mere incidental provision of goods is not a supply of goods, as I explain below, the goods supplied in this case were a core part of the supply, not an incidental part." (Emphasis mine)
17. That passage, together with [132] conveys, as I understand it, that whilst a transaction may include the provision of both goods and services, the whole of the transaction will be treated as a supply of goods.
18. At [135] his Honour says that: "The starting point, therefore, is to determine whether part, or all, of a transaction involves a supply of goods."
19. In this case, the starting point then is, did part or all of the transaction between the appellant and the respondent involve the supply of goods?
20. In my opinion the answer to that question is "Yes" because the respondent's invoice says that part of the quote was for the supply of a rear cargo door, a left door and a driver's side middle panel. The quote, which totalled $8,600 excl GST, was broken down into $1,600 for parts and $7,000 for labour. Those parts are "goods" within the ACL definition of that term.
21. Therefore, as goods were supplied as part of the whole transaction then, per the holding in Valve, the whole of the supply is to be treated as a supply of goods.

Conclusion

1. If I am correct that in this case the supply was a supply of goods, it follows from what I have said at [72]-[78] above that the appellant's cause of action may not have accrued until shortly before he commenced his proceedings in the Tribunal. Whether that is so depends on a number of findings which have yet to be made, the principal finding required being a finding as to when the rejection period ended.

Decision

1. For all of those reasons this appeal must be upheld, and the matter remitted to the Tribunal.
2. Having said that, I wish to make clear that I am not finding that the appellant has a cause of action against the respondent, nor that any cause of action which might exist accrued less than three years before he lodged his claim in the Tribunal. Those matters are yet to be determined. I am only deciding that the Tribunal's decision dismissing his claim was erroneous, it should be set aside, and the case returned to the Tribunal.
3. Of course, the Tribunal was correct in observing that the relevant time period for the Local Court of NSW in relation to ACL consumer guarantee claims, whether the transaction was a supply of goods or services, is six years, and none of these problems would confront the appellant if he commenced proceedings against the respondent in that Court.
4. But the decision whether to pursue his claim against the respondent in the Tribunal (with its three-year limit) or the Local Court (with its six-year limit) is a matter for the appellant. Of course, there are other differences between the Tribunal and the Local Court for the appellant to consider including the generally cheaper cost of undertaking proceedings in the Tribunal, the prohibition against parties being legally represented in the Tribunal (unless permission is given otherwise) and the general rule in the Tribunal that parties pay their own costs of proceedings irrespective of the outcome. All of those considerations are matters for the appellant.

Costs

1. At the hearing of the appeal both parties asked for costs. However, after some exchange between us and the parties about what was recoverable as costs, each party withdrew his application.

Orders

1. I make the following orders: 1. Appeal upheld. 2. The decision of the Tribunal is set aside. 3. The matter is remitted to the Tribunal for hearing according to law.

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 July 2021