Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Barlow v General Japanese Spares Pty Ltd [2018] NSWCATAP 247 Hearing dates: 2 October 2018 Date of orders: 17 October 2018 Decision date: 17 October 2018 Jurisdiction: Appeal Panel Before: S Westgarth, Deputy President R Perrignon, Senior Member Decision: (1) The appeal is upheld; (2) Orders 2 and 3 made on 14 June 2018 are set aside and in their place the following orders are made; (3) The respondent is to perform such work as is necessary to rectify defects in the engine so as to make the engine reasonably fit for purpose in accordance with the warranty and such work is to be completed within two months of the engine being made available to the respondent for collection from the Ultra Tune premises at Totness, and after completion of the repair work, the engine is to be returned by the respondent to such premises; and (4) If the appellants form the opinion that order 3 has not been complied with, they may request the proceedings to be relisted before the Consumer and Commercial Division of the Tribunal for the purposes of considering whether the Tribunal should make an order for compensation to the appellants for the costs of the warranty work being conducted by another repairer, and in any event, the application is remitted to the Consumer and Commercial Division of the Tribunal for a hearing as to the appellants' claim for compensation for the expenses incurred by reason of the breach of warranty. Catchwords: APPEALS – inadequate reasons – fresh evidence SALE OF GOODS – conditions and warranties - terms of express warranty – buyer's remedies for breach Legislation Cited: Civil and Administrative Tribunal Act 2013 Fair Trading Act 1987 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Texts Cited: Nil Category: Principal judgment Parties: Rachelle Barlow (Appellant) Gary Barlow (Appellant) General Japanese Spares Pty Ltd (Respondent) Representation: Self-represented File Number(s): AP 18/31047 Publication restriction: Unrestricted Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 14 June 2018 Before: D Ash, General Member File Number(s): MV 18/02274 REASONS FOR DECISION Introduction 1. This is an appeal from a decision published on 14 June 2018 in the Consumer and Commercial Division of the Tribunal. The appellants purchased an engine from the respondent. In determining the issues raised in the application, the Tribunal was exercising its jurisdiction under the Fair Trading Act 1987 (NSW) (FT Act). 2. We will refer to the decision under appeal as the "Decision". The Tribunal made the following orders: 1. Pursuant to s 79 N(b) of the FT Act, the respondent is to perform work in order to rectify a defect in the engine identified in the respondent's tax invoice no 17519 dated 5 June 2017; 2. Pursuant to s 79 R(2) of the FT Act, the respondent is to pay for any parts reasonably necessary to perform the work and the applicants (now appellants) are to pay the reasonable cost of freight for delivery of the engine to the respondent's premises and for redelivery to them, and of labour relating to the work. 1. With the orders referred to above, the Tribunal included a notation that the "order is limited to defects known on or before 5 December 2017, being the 6-month period under the warranty, and includes the cause of the oil leak the subject of the claim". The Decision at first instance 1. The Decision may be summarised as follows: 1. On 5 June 2017 the appellants purchased an engine including turbo from the respondent for $7,450.00 including freight for delivery to an Ultra Tune franchise in South Australia. That company had been retained by the appellants to install the engine; 2. Prior to 5 June 2017 there was correspondence about the nature and extent of the warranty. The "last email" from one of the appellants said: "I thought you said the core part of the engine had six months as it was a recon, and the other bits like the turbo, fuel pump and injector parts had three months. Can you please confirm. Thanks". 1. After the engine was paid for and delivered, the respondent sent an invoice wherein the warranty stated, in summary, that the engine is sold with three months parts only warranty. No labour charges will be covered. Freight and labour charges will not be covered under the warranty; 2. The respondent's director gave evidence to the effect that there was a six month parts only warranty on the engine and a three months parts only warranty on the turbo and that the invoice was a standard form invoice which should have been amended to reflect this. The Decision states that the Tribunal accepted the respondent director's evidence, noting that the language of the first appellants' email in context is consistent with it; 3. In late November 2017, the vehicle in which the engine had been installed broke down; 4. With respect to the appellants' claim that there was a breach of the consumer guarantee under the Australian Consumer Law (ACL) that the engine be of acceptable quality and that the breach was a major failure, the Tribunal found that the evidence failed to support the appellants' case. The Decision referred to a report from Ultra Tune dated 28 December 2017 upon which the appellants relied; 5. The Tribunal found that the report was insufficient to allow a conclusion that the engine when supplied had a "defect hidden or patent, which was causing or was likely to cause in an unreasonably short period of time, excessive blow-by which in turn would cause oil leak". In coming to that conclusion, the Tribunal stated that the issue was whether the report was evidence of the state and condition of the engine as at the date of supply and decided that the evidence was insufficient. Accordingly, there was no breach of the consumer guarantee; and 6. The Decision then dealt with the express warranty and found that the evidence supported the making of an order "in terms of the express warranty". Grounds of Appeal 1. A Notice of Appeal was lodged on 12 July 2018. The Grounds of Appeal may be summarised as follows: 1. The engine suffered a major defect and the appellants claim a right to a refund/replacement; 2. To the extent that the evidence is deficient, the appellants state that they offered to "get a more detailed report and was advised at the Tribunal that was not necessary"; 3. The Tribunal should make an order to make the respondent pay back lost amounts for the faulty engine; and 4. The Decision was against the weight of evidence. Reply 1. The respondent opposes the appeal and has filed a Reply to Appeal. In essence, the respondent says that the car in which the engine had been installed had been driven over 10,000km after the engine was supplied and that the engine when supplied (albeit after a replacement turbo had been provided by the respondent) was in good condition. Submissions 1. Both the appellants and the respondent have provided written submissions. It is not necessary for the purposes of explaining the reasons for our decision to set out those submissions, except to the extent of the summaries set out in the following two paragraphs. 2. The appellants' submissions include submissions to the following effect: 1. The appellants described in detail the losses and expenses they have incurred as a result of the engine being faulty and in prosecuting this application; 2. The appellants rely upon a statement from Darrell Johns dated 6 July 2018 and an email from David Want of Ultra Tune dated 9 July 2018 as further evidence that the engine was faulty when supplied; and 3. When the engine was purchased, the appellants were not told that the warranty was for parts only. The submissions included copies of an email exchange between the parties dated 1 June 2017. The first email (from the appellants to the respondent) is set out in the Decision and the second email is the reply from the respondent and is not referred to in the Decision It was not clear whether that email (the text of which we will set out later in these reasons) was tendered at the hearing at first instance. Mrs Barlow (who appeared for herself and Mr Barlow) said that the second email was part of her evidence at the hearing at first instance. The respondent did not contradict Mrs Barlow. 1. The respondent's submissions were to the effect that the engine was in "very good condition" when purchased and had been driven over 10,000km by the appellants. The respondent also submitted that the engine was sold with a six months parts only warranty as communicated "verbally and in writing on the invoice". Determination 1. This appeal concerns an internally appealable decision brought under the provisions of s 80 of the Civil and Administrative Tribunal Act 2013 (NCAT Act). That provides that an appeal may be brought as of right on any question of law, or with leave of the Appeal Panel on other grounds (s 80(2)). In addition, the other grounds (for which leave is required) are regulated by the provisions of cl 12 of Sch 4. In summary, cl 12 provides that the Appeal Panel may grant leave only if the Appeal Panel is satisfied that the appellants may have suffered a substantial miscarriage of justice because of one or more of the three matters described in cl 12(1)(a), (b) or (c). 2. At the hearing of the appeal, one of the appellants (Mrs Barlow) submitted that the email exchange on 1 June 2017 recorded the agreement concerning the warranty. The first email, dated 1 June 2017 is set out below: "Hi Nizar, I thought you said the core part of the engine had 6 months as it was a recon, and the other bits like the turbo, fuel pump and injector parts had 3 months. Can you please confirm. Thanks. Kind regards Rachelle Barlow". 1. The email response from the respondent also dated 1 June 2017 states: "YES CORRECT 6 months warranty on for the reco engine and 3 months on turbo, diesel pump and it will all be on the invoice". 1. As stated above, the Decision does not acknowledge the respondent's reply and only refers to the first email. The Decision states that the representative of the respondent gave evidence to the effect that the invoice (which was dated 5 June 2017) contained an error in limiting the engine warranty to three months only. In the Decision it was found that the warranty period was six months in the light of the respondent's evidence, but there is no explanation as to the basis for limiting the warranty to parts only in light of the earlier exchange of emails of 1 June 2017. 2. In our view, the Decision displays an error of law by failing to provide adequate reasons for a critical issue in dispute, namely whether the warranty was limited to parts only. The exchange of emails of 1 June 2017 contains no such limitation. The appellants submitted (and the respondent did not disagree) that the invoice was provided after payment of the purchase price. The invoice was not an accurate record of the agreement between the parties. 3. By not considering the email from the respondent of 1 June 2017, the Tribunal has not provided adequate reasons. This constitutes an error of law: see Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. 4. In addition, the reasoning in the Decision was against the weight of evidence in that it: 1. Did not acknowledge or deal with the email response from the respondent dated 1 June 2017; and 2. Relied on the oral evidence of the respondent's director without regard to the conflicting evidence contained in the respondent's email of 1 June 2017. 1. The principles relevant to the granting of leave in the context of considering cl 12 of Sch 4 have been set out in Collins v Urban [2014] NSWCATAP 17. Those principles may be summarised as follows: 1. Ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; or 3. 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; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. 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. 1. In our view, an injustice which is reasonably clear has occurred. Accordingly, it is appropriate to grant leave, even though unnecessary in light of our findings that the Decision displays an error of law. 2. We find that the terms of the warranty agreed between the parties is described in the email exchange of 1 June 2017. Accordingly, it is necessary to uphold the appeal. Given our finding as to the terms of the warranty, we are able to make orders in substitution for the orders under appeal. Our power to do so in contained in s 81(1)(d) of the NCAT Act. In our view, the effect of the warranty offered by the respondent and accepted by the appellants is that the respondent is contractually required to take redelivery of the engine at the Ultra Tune premises and then undertake at its expense, the work necessary to put the engine in reasonable working condition. 3. In formulating the proposed orders, we do not see that there is any basis for requiring the appellants to deliver the engine to the respondent. The terms of the agreement between the parties required the respondent to deliver the engine to the Ultra Tune premises in Burret Way Totness, South Australia. In our view, it follows that the engine should be made available there for the respondent to collect to perform it obligations under the warranty. 4. In addition, it is necessary to say that in our view that the Member's decision with respect to the claim for breach of a consumer guarantee under the Australian Consumer Law (ACL) does not, in our respectful view, display an error and there is no basis for supporting the appellants' contention that the Decision was in error in that regard. The Decision was based upon the evidence contained in an Ultra Tune report dated 28 December 2017. That report did not address the condition of the vehicle at the time of purchase. During the appeal, the appellants sought to introduce fresh evidence in the form of a report from Darrell Johns dated 6 July 2018 and a further report from Ultra Tune dated 9 July 2018. 5. During the hearing of the appeal, Mrs Barlow stated that she had relied entirely on the Ultra Tune report of 28 December 2017 because at an earlier directions hearing, a Tribunal Member said that that report was enough and that there was no need to obtain any further report. There was no other evidence before us of such a conversation. 6. Fresh evidence may only be relied upon if it was not reasonably available at the first instance hearing (see cl 12 of Sch 4 of the NCAT Act). Apart from the decision by Mrs Barlow not to obtain any further evidence, no other reason was given and it is clear that the fresh reports could have been obtained earlier had they been asked for. 7. The policy reason behind prohibiting the tender of fresh evidence unless it was not reasonably available at the earlier hearing is to avoid the prospect of cases continuing, without being finalised, as parties develop or improve upon the state of their evidence. In our view, the further reports should not be allowed as they are not reports which were not reasonably available at the first instance hearing. 8. In any event, we regard the two fresh reports as insufficient to support the claim that the engine was not fit for purpose or of acceptable quality at the time of supply. The report from Mr Johns described the damage to the engine but does not say that the engine was defective at the time it was supplied. The report from Mr Went of Ultra Tune date 9 July 2018 states that "it appears there has been an issue internally for the engine to fail after it has been reconditioned only 11,000km ago". The report also inconsistently states that the vehicle was "in good order when we last inspected it with no oil usage". In our view, the reports are insufficient to justify a conclusion that the engine when supplied was not in conformity with the consumer guarantee. 9. The appellants made claims for reimbursement of expenses they incurred by reason of the engine breaking down. The Decision did not address those claims. The appropriate order is for the application to be remitted to the Consumer and Commercial Division of the Tribunal for a hearing on whether there should be an order for reimbursement of expenses incurred by reason of the respondent's breach of warranty. The appellants also made claims for costs associated with prosecuting the application and the appeal. Generally, such costs are not able to be claimed unless special circumstances exist: see s 60 of the NCAT Act. Orders 1. Accordingly, the Appeal Panel makes the following orders: 1. The appeal is upheld; 2. Orders 2 and 3 made on 14 June 2018 are set aside and in their place the following orders are made; 3. The respondent is to perform such work as is necessary to rectify defects in the engine so as to make the engine reasonably fit for purpose in accordance with the warranty and such work is to be completed within two months of the engine being made available to the respondent for collection from the Ultra Tune premises at Totness, and after completion of the repair work, the engine is to be returned by the respondent to such premises; and 4. If the appellants form the opinion that order 3 has not been complied with, they may request the proceedings to be relisted before the Consumer and Commercial Division of the Tribunal for the purposes of considering whether the Tribunal should make an order for compensation to the appellants for the costs of the warranty work being conducted by another repairer, and in any event, the application is remitted to the Consumer and Commercial Division of the Tribunal for a hearing as to the appellants' claim for compensation for the expenses incurred by reason of the breach of warranty. ********** 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: 17 October 2018