Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Wibberley v Aynat Investments Pty Ltd [2015] NSWCATCD 109 Hearing dates: 23 July 2015 Date of orders: 23 July 2015 Decision date: 22 September 2015 Jurisdiction: Consumer and Commercial Division Before: P Harris, General Member Decision: 1 The Tribunal orders that the respondent Aynat Investments Pty Ltd trading as Your Homemakers Furniture and bedding Shop [***] Tamworth NSW 2340 Australia is to carry out the following work on or before 14 August 2015 in a proper and workmanlike manner. The work is to restore the goods to their original condition less fair wear and tear. Details of work order: Complete repairs to the goods, being ID: 128125, SKU: Platinum 7PCE LHF Sofabed Suite-Licorice ("The Goods"); or alternatively at the respondent's election provide a full refund in the sum of $2,498.00 or replace the goods with a new version of the same goods. 2 The respondent's name: Your Homemaker Furniture and Bedding, is amended to Aynat Investments Pty Ltd trading as Your Homemakers Furniture and Bedding. Catchwords: Australian Consumer Law sections 54, 259, 260; consumer guarantees; acceptable quality; claim to reject goods where a major failure alleged; whether defects in purchased goods constitutes a major failure. Legislation Cited: Australian Consumer Law Category: Principal judgment Parties: Dex Wibberley (applicant) Aynat Investments Pty Ltd (respondent) Representation: File Number(s): GEN 15/12971 Publication restriction: Nil REASONS FOR DECISION Introduction 1. This matter was heard at Tamworth on 23 July 2015 and an order was made in favour of the respondent. The applicant has subsequently sought reasons for the decision. Factual background 1. This matter was an application for orders directing the return by the applicant of a lounge room suite/sofa bed to the respondent supplier and a refund of the $2,498.00 purchase price. 2. It was agreed facts between the parties that: 1. the respondent supplied the applicant with an SKU Platinum 7 piece Sofa lounge ("the goods") on 14 August 2014; 2. the purchase price paid by the applicant was $2,270.91 plus GST ($2,498.000 including GST); 3. The applicant approached the respondent on 22 November 2014 about the defects which the applicant claimed consisted of a sagging cushion on one recliner chair, pulled stitching on several sewn joins and a hole/rub mark on one console; and 4. a representative of the respondent inspected the goods on 28 November 2014, and accepted liability for repair of the recliner and replacement of the cushions; 5. the applicant informed the respondent on 21 January 2015 that he was rejecting the goods; and 6. the goods have remained in use by the applicant since the date of taking delivery. Application 1. The application to NCAT was lodged on 13 March 2014. 2. The Application to NCAT did not cite particular sections of legislation but generally sought orders that the goods be returned to the respondent supplier and that the applicant receive a full refund of the purchase price on the basis that the defects in the goods constituted a major defect, thereby entitling the applicant to elect to receive a refund. 3. The applicant also claimed an hourly rate for loss of income for time taken in the conduct of the Tribunal matter for an unspecified total and photograph printing costs. Jurisdiction 1. The Tribunal is a statutory body, established on 1 January 2014 by the Civil and Administrative Tribunal Act 2013 (NSW) section 7(2)(a) ('NCAT Act'). 2. Under Schedule 4 section 3 of the NCAT Act, the Tribunal's Consumer and Commercial Division has jurisdiction in relation to matters arising under the Australian Consumer Law (NSW). Onus and Standard of Proof 1. Section 38(2) of the Civil and Administrative Tribunal Act 2013 provides that "The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice". 2. Nevertheless, the Applicant in this matter bears the responsibility for persuading the Tribunal of the essential facts necessary to make out the relief sought. As was held in Kirkpatrick v Gresser (unreported, NSWSC, 13 May 1987, Foster J) …"Making due allowances for informalities of procedure I consider that the Tribunal must reach its decision upon the basis that the moving party bears the general onus of proof." Legislation 1. The Australian Consumer Law ("ACL") applied to the transaction. The applicant acquired the goods as a "consumer", within the meaning of section 3(1)(a)(i) of the ACL, because the goods cost less than $40,000.00. The respondent supplied the goods, in trade or commerce, because it is in the business of selling lounge suites. 2. The provisions of the ACL relevant to the application are sections 54, 259 and 260, the text of which sections is set out below. They relate to the condition of the goods and the potential remedies available to the applicant. 54 Guarantee as to acceptable quality (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality. (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods. (4) If: (a) goods supplied to a consumer are not of acceptable quality; (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.259 Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.(4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. (5) Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier. (6) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). (7) The consumer may take action under this section whether or not the goods are in their original packaging.As to the meaning of "major failure", section 2 says, "major failure: see sections 260 and 268". Section 268 is irrelevant to this case. Section 260 is as follows:260 When a failure to comply with a guarantee is a major failure A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) the goods depart in one or more significant respects: (i) if they were supplied by description—from that description; or (ii) if they were supplied by reference to a sample or demonstration model—from that sample or demonstration model; or (c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made;and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe.261 How suppliers may remedy a failure to comply with a guarantee If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement: (a) if the failure relates to title—by curing any defect in title; or (b) if the failure does not relate to title—by repairing the goods; or (c) by replacing the goods with goods of an identical type; or (d) by refunding: (i) any money paid by the consumer for the goods; and (ii) an amount that is equal to the value of any other consideration provided by the consumer for the goods. 262 When consumers are not entitled to reject goods (1) A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if: (a) the rejection period for the goods has ended; or (b) the goods have been lost, destroyed or disposed of by the consumer; or (c) the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or (d) the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them. (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. The Issues to be Determined 1. The issue to be determined was whether the defects in the lounge suite constituted a major failure of the goods, thereby entitling the applicant to reject the goods; or if not a major failure, whether the supplier failed to rectify any faults with a reasonable time. The respondent to the contrary submitted it had the right to repair the goods. The Applicant's case 1. The applicant's case, although not articulated as such, alleges that each of those guarantees was breached, and that in the words used by the ACL, that the goods had "failures". 2. He alleges that the failures are "major failures" which entitle him to reject the goods. 3. Alternatively he alleges that if any of the failures are not major failures, the respondent did not remedy the failures within a reasonable time, thus entitling him to reject the goods. 4. In order to identify the particular failures in the goods, in his claim the applicant identifies these things: 1. Sagged cushion in one recliner chair as at 22 November 2014; 2. Pulled stitching on several sewn joins as at 22 November 2014; 3. A hole/rub mark on one console as at 22 November 2014. 4. Two sagging recliners as at approximately 28 January 2015; 5. Both recliners had play in the back of them at 28 January 2015; and 6. Further wear, holes and sagging at 11 March 2015. 1. The applicant tendered 20 photographs of the lounge suite, eight dated 22 November 2014, two dated 15 February 2015, and ten dated 11 March 2015. Six of those photographs showed wear or damage to the goods that on the evidence did not exist at the date of delivery. The balance is inconclusive as to what they are attempting to show. For example, some of the photographs may show sagging cushions or merely cushions out of alignment through use. The photographs do not assist with identifying any possible cause of the wear or damage or with the overall condition of the suite. The applicant agreed the suite was still in use by his family. 2. The applicant also relied on a report from Mr Anthony Attard of Luv-a-Bear industries. The report does not state the expertise or qualifications of Mr Attard or attach photographs to relate his comments. It does state that he has been 25 years in "his trade" He states that holes have been caused by foam collapsing but does not give a cause of the foam collapse. His analysis of the recliner chairs is inconclusive. The report does not draw any conclusion as to the overall ongoing utility of the suite. Little weight should be given to this report. 3. The applicant also relied upon a report from Mr Rob Kahler of Rob Kahler Upholstery dated 12 May 2015. This report also does not describe the qualifications, expertise or experience of the author however I give greater weight to this report as it is identified as being authored by an upholsterer. The report does give reasons for seating foam breakdown, holes in the side of cushions, dacron wadding on footrest collapse, and dacron folding in placeson seats and backs. Stitching is loose on most seats and footrests. He describes material replacement cost at $451.00 incl GST and labour at $1,210 incl GST. The Respondent's case 1. The respondent admitted the transaction and that some warranty work was required to the goods, but denied that the goods had suffered "major failure". 2. The respondent relied on a copy of the tax invoice of 14 August 2014, a chronology of events signed by Ms Johnson, and a statement by Mr Todd Johnson, an employee of the respondent dated 28 May 2015. The statement of Mr Todd Johnson described that he had inspected the suite on 1 December 2014 and again on 28 January 2015. He disputes that the foam is faulty but rather believes that pocket springs in the seats where the casing has collapsed, caused the seat to lose shape. Mr Johnson states that the supplier had agreed to repair two recliner pieces required repair works and that 3 cushions would be replaced. 3. The respondent submitted that the failures are minor and can be rectified by repair of chairs and three cushion replacements which it agrees to arrange. Consideration of the issues 1. The remedy the applicant seeks is a refund, not repairs. To require this, the relevant failure must be 'major'. Under s 260(a), a failure is major if the reasonable consumer, fully acquainted with the nature of "the failure", would not have purchased the product. 2. There was no failure alleged at the time of supply, but rather the applicant made complaint to the respondent after 3 months of using the goods. Findings 1. The Tribunal finds: a. The Application Orders 1. The Application is dismissed because: having considered the material placed before it, the Tribunal is not satisfied (at the civil standard of proof) that the grounds required to make the orders sought have been established. P Harris General Member Civil and Administrative Tribunal of New South Wales 22 September 2015 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: 16 October 2015