Civil and Administrative Tribunal New South Wales Medium Neutral Citation: ADM Packaging Automation Pty Ltd v EST Group Pty Ltd [2022] NSWCATAP 322 Hearing dates: 19 September 2022 Date of orders: 12 October 2022 Decision date: 11 October 2022 Jurisdiction: Appeal Panel Before: The Hon D A Cowdroy, AO KC, Principal Member D G Charles, Senior Member Decision: 1. Pursuant to s 41 of the Civil and Administrative Tribunal Act 2013 NSW, extend the time for the lodgement of this appeal to 20 July 2022. 2. Leave to appeal refused. 3. Appeal dismissed. Catchwords: CONSUMER CLAIM – application of the Australian Consumer Law – breach of consumer guarantees - whether Tribunal decision was against the weight of evidence – leave to appeal refused Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Fair Trading Act 1987 (NSW) Competition and Consumer Act 2010 (Cwth) Civil and Administrative Tribunal Rules 2014 (NSW) Cases Cited: Collins v Urban [2014] NSWCATAP 17 Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 SZSSC v Minister of Immigration and Border Protection (2014) FCA 863 Dranichnikov v Minister of Immigration and Multicultural Affairs [2003) HCA 26 Torbey Investments Corporation Pty Ltd v Ferrara [2017) NSWCA 9 Texts Cited: Nil Category: Principal judgment Parties: ADM Packaging and Automation Pty Ltd (Appellant) EST Group Pty Ltd (Respondent) Representation: Counsel: C Marshall (Appellant) Solicitors: Wright Lawyers (Appellant) Respondent (Self represented) File Number(s): 2022/00211942 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 20 June 2022 Before: E Sarofim, General Member File Number(s): GEN 21/41762 REASONS FOR DECISION Introduction, Background Facts, & Overview of the Matters in Dispute 1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 20 June 2022, in the proceedings constituted by file no. GEN 21/41762 (Decision). 2. The Notice of Appeal was lodged on 20 July 2022, the appellant, ADM Packaging Automation Pty Ltd, having received the Decision on 21 June 2022. 3. The Tribunal proceedings concerned a dispute between on the one hand, the supplier of goods, being the appellant in this appeal, and on the other hand, the consumer, EST Group Pty Ltd trading as Pure Products, who acquired the goods, being the respondent in this appeal, and the applicant in the Tribunal proceedings. The goods supplied were an auger filler and stand-up packaging and stamping machine. Relevantly, the machine included a printer which would print dates on the packaging of the consumer's products. 4. The consumer's application for orders in the Tribunal proceedings was made under the "Australian Consumer Law" which came into force in New South Wales on 1 January 2011 (referred to as the ACL NSW). The ACL NSW replaced the provisions of the Fair Trading Act 1987 NSW (FT Act) which had previously implied conditions and warranties into consumer supply contracts. The repealed provisions of the FT Act were replaced with the text of Schedule 2 to the Commonwealth Competition and Consumer Act 2010 referred to as the "Australian Consumer Law". For New South Wales the text of Schedule 2 to the Commonwealth Act was made applicable as a law of New South Wales; the said text is referred to as the ACL NSW, and the ACL NSW is a part of the FT Act: see s 28 and s 32 of the FT Act. 5. The respondent brought the Tribunal proceedings because it said the goods did not comply with the consumer guarantees as to acceptable quality and fitness for purpose: see s 54 and s 55 of the ACL NSW. Specifically, the consumer's case in the Tribunal proceedings was that the printer did not correctly print the use-by/expiry date on plastic packaging, and that the machine failed to recognise and insert the plastic scoop. 6. The appellant's position (as the respondent in the Tribunal proceedings) was that static electricity was the cause of the printing difficulties experienced by the consumer, and that the source of the static electricity was an outside source, such as the consumer's packaging or the environment in which the machine did its work, as opposed to the machine itself. 7. The consumer (as the applicant in the Tribunal proceedings) contested these contentions in the appellant's case. The consumer submitted that it was not clear whether static electricity existed, that more investigation was required, and that in any case, it had evidence to show that static electricity was not an issue in the defects it complained of. The consumer further submitted that the appellant had not notified it about any potential issue with static electricity before payment for, and delivery of, the goods. These matters were also put in the Reply to Appeal filed on 2 August 2022. The Tribunal's Decision 1. The Tribunal found that in or about May 2020 the consumer (the respondent in this appeal) approached the appellant to acquire an auger filler and stand-up packaging and stamping machine capable of filling bags of various sizes with free flow powder; that the process of the consumer for which the filler and machine was required involved inserting a plastic scoop and printing the use-by date, barcode and other information on the packaging; and that the consumer paid the appellant an amount of $210,694 as per Tax Invoice bearing date 21 May 2020 for delivery of the goods. 2. The consumer complained that the goods were partly defective and sought replacement, or compensation. as follows: 1. Cost of new printer - $25,135. 2. Static control solution - $770. 3. Scoop sensor - $99. 1. The Tribunal found it had jurisdiction to hear and determine the parties' dispute pursuant to Part 6A of the FT Act. Specifically, the Tribunal was satisfied that: 1. The claim arose from the supply of goods or services by the appellant to the consumer and constituted a claim by the consumer for payment of a specified sum of money (FT Act, s 79F). 2. The goods and services to which the claim related were supplied in NSW (s 79K, FT Act). 3. The claim was made within the time allowed in s 79L of the FT Act. 4. The applicant in the Tribunal proceedings, the consumer, was a "consumer" as defined in s 3(1) of the ACL NSW, and also within the meaning of s 79D of the FT Act. 5. The claim of the applicant in the Tribunal proceedings was a "consumer claim" with the meaning of s 79D of the FT Act. 6. The appellant (as respondent in the Tribunal proceedings) was a supplier of goods as defined in the ACL NSW. 7. The rights, including that goods and services supplied to a consumer comply with the consumer guarantees, and the remedies, available for non-compliance with the guarantees (as provided for in the ACL NSW), applied to the facts and circumstances of the case, while also acknowledging, as was referred to earlier, that the ACL NSW does not of itself confer jurisdiction on the Tribunal to hear such actions and to provide such remedies, but rather that it is s 28 and s 32 of the FT Act which incorporates the provisions of the ACL NSW and thereby enables the Tribunal to hear and determine the parties' disputes in accordance with the rights and remedies provided for in Schedule 2 of the Commonwealth legislation. 1. Having considered the parties' evidence and submissions, the Tribunal found that the printer and scoop sensor were not of acceptable quality within the meaning of s 54 of the ACL NSW (Decision, [67]); that in relation to the printing and scoop defects complained of, the goods were not fit for their disclosed purpose, within the meaning of s 55 of the ACL NSW (Decision, [68]); and that s 260 of the ACL NSW, which identifies a "major failure" of goods, also applied (Decision, [79]). 2. On the available evidence, the Tribunal determined that: 1. The consumer had a statutory right to a remedy when its supplier or the manufacturer of goods failed to comply with one of the consumer guarantees in the ACL NSW. 2. The appellant's refusal to deal with the consumer was contrary to law as evidenced by the parties' communications in a chain of emails. 3. The appellant's principal, Mr Fakhry, did not attend on site to view the defects in the goods as reported to him by the consumer. 4. In the time leading up to the supply of the goods in 2020, the consumer had gone to great lengths to share with its supplier, the appellant, as much information about the consumer's site and the relevant product environment for the goods which were to be supplied (Decision, [69]). 5. It was not satisfied that static electricity issues, as advocated by the supplier of the goods (the appellant), caused the printing difficulties experienced by the consumer, or that the consumer's set-up at its premises partly contributed to the failures and defects observed (Decision, [70]). 6. In the circumstances, the consumer's claim for compensation in respect of a replacement printer and a replacement scoop sensor should be allowed. 1. Based on those findings, the Tribunal ordered the appellant to pay $25,234 comprising $25,135 for a replacement printer and $99 for a replacement scoop sensor, such payment to be made to the consumer on before 10 July 2022. Scope and Nature of Internal Appeals 1. Internal appeals 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. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that an appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel stated at [84] that 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. Evidence and Submissions 1. In deciding the appeal, we have had regard to the appellant's Notice of Appeal, and the respondent's Reply to Appeal, and to the parties' documents, which were provided to the Appeal Panel in multiple bundles, and which included written submissions for the appeal, a transcript of the Tribunal proceedings, and the documents and other evidence available for the Tribunal proceedings. 2. Both parties augmented the written material with further oral submissions made during the appeal hearing. 3. The appellant acknowledged that the filing of its Notice of Appeal was one day after the last day for the filing of an appeal: see rule 25 (4) (c) of the Civil and Administrative Tribunal Rules 2014 NSW, which allows 28 days from receipt of the Decision in which to file an appeal. The appellant submitted that its lateness in filing the appeal was due to a clerical error on the part of its solicitors, and it sought an extension of time pursuant to s 41 of the NCAT Act. 4. In the appellant's written submissions for the appeal dated 25 August 2022, the appellant's counsel clarified that the appellant does not press its appeal in relation to the scoop sensor claim, i.e., the appeal is concerned solely with the consumer's claim of $25,135 for a replacement printer. 5. The appellant accepted there is no question of law arising in the appeal and accordingly that a grant of leave is required pursuant to s 80 (2) (b) of the NCAT Act. The appellant originally relied on cl 12 (1) (a) (that the decision was not fair and equitable) and cl 12 (1) (b) (that the decision was against the weight of the evidence). However, the appellant subsequently relied on cl 12 (1) (b); and did not otherwise rely upon cl 12 (1) (a) except to this extent: that it would follow the Decision is not fair and equitable, if it be established that the Decision was reached against the weight of the evidence. 6. The appellant disputed that the evidence before the Tribunal established that the printer was not of acceptable quality, and unfit for purpose, for four (4) reasons: 1. That the evidence "strongly supported" the conclusion that any malfunctions which occurred with the printer were caused by higher levels of static electricity in the consumer's production environment. 2. That the static electricity is an issue which can affect any inkjet printer. 3. That the inkjet printer supplied by the appellant to the consumer was not defective because it was affected by static electricity and that in any case, the machine had been supplied subject to a written warranty, which stated, relevantly: "film and product static issues" and "dust accumulation and dust penetration damage" are excluded from the warranty. 4. That the consumer did not take reasonable steps to prevent the printer from malfunctioning. 1. The issues for determination in the appeal are: 1. Whether, as a preliminary matter, an extension of time should be granted to bring the appeal, given that the appeal was brought outside the time (28 days) for the appellant to bring the appeal. 2. Whether there was a failure by the Tribunal to consider properly, or at all, the issue of "static electricity in the printer". 3. Whether the failure of the machine was in fact caused by static electricity. 4. The extent that the appellant as supplier of the goods attempted to honour its warranty obligations and whether such attempts were considered properly, or at all, by the Tribunal in its Decision. 5. Whether the Tribunal considered properly, or at all, other factors bearing upon the impracticality of the appellant rectifying the printer including restrictions during the COVID 19 pandemic Consideration Extension of time 1. The principles concerning the grant of extension of time in which to bring an appeal pursuant to s 41 of the NCAT Act are discussed in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [18] – [22]. 2. The respondent opposed an extension of time. Having heard the parties' competing submissions, and applying the relevant principles, we determined that the consumer had not demonstrated any real prejudice if an extension of time (of one day, as sought by the appellant) is granted. 3. Accordingly, we make an order extending the time in which to bring the appeal to 20 July 2022. Whether leave to appeal should be granted 1. The appellant's principal contention was that static electricity was the cause of the malfunction in the printer. It referred to the fact that technicians had examined the printer even though at no stage did the appellant's principal, Mr Fakhry, examine the equipment once it had been installed in the consumer's premises. 2. In respect of the claim that static electricity was the cause of the malfunction, the Tribunal stated, relevantly, at [70] of the Decision: As to the issue and evidence relating to static, there is no clear path with contradictory aspects. But when weighing up the evidence actually before it, the Tribunal cannot be satisfied that the static issues meant the machine supplied is not of an acceptable quality, specific features of the Applicant's set up are not partly contributing to the failures and defects observed. 1. When the defects became known, the appellant arranged for opinions to be provided by an entity known as Digital Ink Technologies Pty Ltd (Digital Ink), which supplied the machine to the appellant. No inspection was made of the equipment, but the appellant relied upon an email of Digital Ink sent to the consumer on 12 January 2021, which stated: There are a host of environmental factors that can affect the print ability of our printers and cartridges, we can't control everything unfortunately. You have been experiencing static electricity build up due to the plastic pouch substrate and combination with powder/dust particles in your facility. 1. However, there was no evidence to establish that any, or any proper, investigative process had been followed by Digital Ink to support a belief that static electricity was present. No report was provided to this effect. 2. A representative from another entity known as Auto-ID Labelling Solutions (Auto-ID) also visited the consumer's premises and inspected the machine. This is reported in an email sent by the Operations Director of Digital Ink, Andrew Mahoney (Mr Mahoney) to the parties on 27 October 2020. In that email, Mr Mahoney reported that the representative from Auto-ID had "identified that there is a high level of static electricity that is being produced within the machine environment that is causing the printing quality to drop over time", and that "loose protein dust material" was "increasing static electricity". No report was provided to substantiate the observations of Auto-ID's representative. 3. Another organisation, SMC Corporation (Australia) Pty Ltd (SMC Australia), by its State Manager, Mr Rod Ryan, considered in an email sent to the parties on 13 November 20202, that: … in regards to the print head it would be of benefit to recheck the static inside the machine when running with powder to confirm static from the powder and the print head even though it [sic] fairly obvious that the powder is the issue but a sound check would be recommended. 1. Testing by SMC Australia as reported to the parties in an email sent to them on 7 December 2020 by Mr Rob Santori of SMC Australia, asserted that the measure of static electricity inside some of the powder products used by the consumer was "out of measure", and furthermore, that: The conclusion is the raw product from Fonterra has a very high concentration of static and Pure Products has the powder falling on the components located under the hopper even after ADM fixed the hopper. The raw product is carrying static and creating issues with the printing unit. 1. Despite these assertions, no report was provided by SMC Australia. 2. On the other hand, the consumer instructed Static Control Solutions Pty Ltd (Static Control Solutions) to report on the defects. Terry Edgtton (Mr Edgtton) of Static Control Solutions undertook the investigation by visiting the consumer's premises during February 2021. Having considered the various theories being advanced, Mr Edgtton concluded, relevantly, in his report dated 9 February 2022: I feel the issue is more of a dust or ink issue than just a static problem. The assessment of both theories was inconclusive due to lack of testing. 1. We consider that there was no clear identification of the issue which caused the printing labels to be defective. Whilst the appellant submitted that the machine would work satisfactorily for a few hours and then it would require wiping or cleaning to provide a satisfactory result, the consumer emphasised that it was required to comply with statutory requirements on its labels stating the expiry date of the product and that to cease production and wipe the machine was wholly unsatisfactory. 2. In our opinion, the reasons given for the Decision under appeal are detailed and comprehensive, and demonstrate that the Tribunal had a very clear understanding of the issues and the evidence before it. 3. A failure to consider an important aspect such as, a failure to deal with a succinctly and clearly articulated argument (see Griffiths J in SZSSC v Minister of Immigration and Border Protection (2014) FCA 863 at 75 – 82; or a failure to have regard to an essential element of a party's case constitutes a constructive failure to exercise a function conferred on the decision maker: see also Dranichnikov v Minister of Immigration and Multicultural Affairs [2003) HCA 26; 77; Torbey Investments Corporation Pty Ltd v Ferrara [2017) NSWCA 9 at 63. 4. In our view, there is no such failure in this case. 5. Notwithstanding the detailed and careful oral and written submissions of the appellant's counsel, we do not consider that any error exists in the Tribunal's finding that there was "no clear path with contradictory aspects" (Decision, [70]) concerning the cause of the failure of the printing machine. Such a finding was clearly open to the Tribunal when the only expert report in existence relating to the failure cast significant doubt on whether static electricity was the cause of the problem. 6. We further observe that the exclusion of static electricity from the appellant's written warranty to the consumer does not override the necessity for the appellant to provide equipment which was suitable for its purpose. We are satisfied that the consumer made every attempt to make known to the appellant the purpose for which the equipment was required and that the appellant had visited the applicant's site several times to see the operation of the consumer's processes and had taken samples. Such investigations took place before the order for the equipment was made. Further, the appellant, who states that it has been in the business of supplying machines for 30 years, might be expected to have the expertise required to know what was suitable for the contract for the supply of the equipment. The Tribunal had noted that the appellant represented to the consumer that its fillers could be adapted to suit existing packaging machinery and modified to suit different applications. In fact, in the events which occurred, the equipment provided was faulty from the outset. 7. In these circumstances, we consider that the Tribunal was justified in its finding that the provisions of the ACL NSW applied including the guarantee as to the acceptable quality of the machine, under s 54 of the ACL NSW and the guarantee as to the fitness for the disclosed purpose, under s 55 of the ACL NSW. 8. As regards any attempt to rectify the machine, the Tribunal noted that the appellant's principal did not visit the site to examine the defects complained of by the consumer. Further, the Tribunal took account of the email chain wherein the appellant made it plain that it was relying upon the exclusion contained in its written warranty on the basis that it was a static electricity issue and indicated in those circumstances, that it would not assist the consumer. At no stage was a comprehensive report commissioned by the appellant to establish the precise nature of the cause of the defect. Whilst restrictions in consequence of the COVID 19 pandemic may have made it awkward, there is no evidence to suggest that the restrictions made it impossible for investigations of that kind to be carried out. 9. In respect of the remedy, which was claimed by the consumer, we observe that the appellant does not challenge the finding of the Tribunal that the appellant should be reimbursed for the cost of the scoop sensor of $99. Irrespective, the appellant claimed that it had made an offer to take back the printer. Nevertheless, when such "offer" is scrutinised, it is apparent that it was wholly speculative in that there was no sum of money offered to the consumer for the return of the equipment. That is, the appellant never offered to refund the monies paid by the consumer for the defective printer. In these circumstances, we do not consider that the Tribunal made an error in allowing the claim for the new printer in the amount of $25,135 and in the amount of $99 for the scoop sensor. 10. We are satisfied that the findings of the Tribunal in its Decision were not against the weight of the evidence; nor were the Tribunal's findings not fair and equitable. We find that the appellant has not been deprived of a significant possibility or of a chance which was "fairly open", as referred to in Collins v Urban at [76] – [79]. Therefore, we do not find that the appellant has suffered a substantial miscarriage of justice or may have suffered a substantial miscarriage of justice. 11. Moreover, even if the considerations of cl 12 of Sch4 of the NCAT Act were satisfied which, in our opinion, they were not, we would not have been inclined to grant leave pursuant to s 80(2)(b) of the NCAT Act, because there is no issue of principle involved, no question of public importance, no reasonably clear injustice, and there is no clear mistake or error in the Tribunal's fact‑finding process: see Collins v Urban at [84]. Conclusion and Orders 1. For those reasons, leave to appeal is refused and the appeal must be dismissed. 2. We make the following orders: 1. Pursuant to s 41 of the Civil and Administrative Tribunal Act 2013 NSW, extend the time for the lodgement of this appeal to 20 July 2022 2. Leave to appeal refused. 3. Appeal dismissed. ********** 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: 12 October 2022