Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Jaynick Pty Ltd v Farrawell [2020] NSWCATAP 55 Hearing dates: 11 February 2020 Date of orders: 24 March 2020 Decision date: 24 March 2020 Jurisdiction: Appeal Panel Before: G Curtin SC, Senior Member J Currie, Senior Member Decision: Appeal dismissed Catchwords: CONSUMER LAW – consumer guarantees – acceptable quality – reasonably fit for purpose – question of fact – no question of principle Legislation Cited: Australian Consumer Law, ss 54, 56, 259, 263 Civil and Administrative Tribunal Act 2013 (NSW), s 80(2)(b), Sch 4 cl 12 Cases Cited: New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Category: Principal judgment Parties: Jaynick Pty Ltd (Appellant) Myles Farrawell (Respondent) Representation: N Ames (director of the Appellant) Respondent in person File Number(s): AP 19/53519 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 01 November 2019 Before: M Eftimiou, General Member File Number(s): GEN 19/38536 REASONS FOR DECISION 1. This is an appeal from a decision of the Tribunal ordering the appellant to pay the respondent $3,000 and for the respondent to return to the appellant the secondhand marine outboard motor about which the parties' dispute is centred. 2. For the reasons that follow the appeal should be dismissed. Background 1. In January 2019, the respondent agreed to purchase from the appellant a rebuilt secondhand 90HP Yamaha marine outboard motor for the sum of $3,000. 2. The motor was collected from the appellant on 13 March 2019 and stopped working on 22 March 2019. 3. The respondent returned the motor to the appellant on five subsequent occasions due to it being hard to start, having a problem with the choke switch and faulty gearboxes. Finally, the motor seized and no longer works. 4. The respondent sought a refund from the appellant, but this request was refused. 5. The respondent therefore commenced proceedings in the Tribunal seeking a refund of his $3,000. The respondent was successful in those proceedings. The Tribunal's Decision 1. The respondent's case was that the motor was not of "acceptable quality" within the meaning of that term in s 54 of the Australian Consumer Law ("ACL"), nor reasonably fit for the purpose of being used as an marine outboard motor in contravention of s 56 of the ACL. 2. There was no dispute that the motor had seized, or had had earlier problems. In this case the essential factual dispute was about why it had seized. The respondent alleged that the motor seized because it had been fitted with a secondhand crankshaft that was extremely worn. The appellant alleged that the motor had seized because oil had not been added to the petrol supply for the motor thereby depriving the pistons of the necessary lubrication. 3. There was no dispute that if the motor seized because it had been fitted with a secondhand crankshaft that was extremely worn, then the guarantees provided by ss 54 and 56 of the ACL were breached and the respondent was, in the circumstances, entitled to reject the motor, return it to the appellant and receive a refund (as found by the Tribunal and as provided by ss 259 and 263 of the ACL). 4. Therefore, the real issue in dispute in the Tribunal below was the cause of the motor seizing, and it is from that factual finding that this appeal arises. 5. In determining this issue the Tribunal heard evidence from the respondent to the effect of what is set out at [3] – [6] above. 6. The Tribunal heard evidence from Mr Ames, a director of the appellant. 7. The Tribunal received expert evidence by way of two reports from Mr Grant Perry, of the Sydney Outboard Service Centre. 8. In his first report dated 16 September 2019, Mr Perry said the motor was fitted with new pistons in the number 1 and 2 cylinders, but the number 3 cylinder was a used piston. He examined the damage and said that in his experience the damage sustained to the piston skirt of the number 3 cylinder was consistent with an engine "lean out" situation. This situation occurs, he said, when a motor/cylinder "is not supplied with enough fuel and or oil to the affected cylinder causing it to seize in the cylinder bore". He said "starved of fuel" was the common phrase for this condition. 9. He said he could not determine whether the motor seized because it had been starved of lubrication or because the lower crankshaft ball bearing was extremely worn which allowed for excessive movement and therefore would cause flakes of metal to be discharged into the lower crankshaft and number 3 piston area. 10. Mr Perry also examined the crankshaft and found it to have an excessive amount of surface rust attached to it. He said that this was normally consistent with water entering a motor but found no other traces of rust anywhere inside the motor or fuel system. In his opinion this latter fact made it difficult to suggest water (entering the motor) as the cause of the rust. 11. Subsequently, Mr Perry conducted a "more thorough and extensive test of the engine" and produced a report dated 29 September 2019. 12. In his further examination Mr Perry tested the fuel system to determine whether fuel starvation was the cause of the damage. He concluded that the fuel system was not faulty. 13. He then said that in his earlier inspection (as he reported in his first report) he had found a failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. He said that as this was the only fault he could find with this motor, and because that fault was directly related to the damaged cylinder, he could only assume that this fault was the cause of the motor's failure. General Observations About the Appeal 1. Mr Ames, the director of the appellant representing it on this appeal, is not legally trained. This fact does not entitle the appellant to any favourable treatment of course, not least because the respondent is not legally trained either, but it is some explanation for how we have approached the resolution of this appeal. 2. With no disrespect to Mr Ames, it also explains why the appellant approached this appeal as simply a second chance to argue the appellant's case rather than, as the law requires, seeking to show that the Tribunal made some relevant legal error in its decision based upon the evidence given to the Tribunal below (subject to the limited occasions when further evidence may be adduced on appeal, none of which arise on this appeal). 3. The law says that an appellant had a right to appeal on a question of law, or to seek permission to appeal on any other ground - s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the "NCAT Act"). 4. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a number of recognised questions of law. Those included: 1. whether there had been a failure to provide proper reasons; 2. whether the Tribunal identified the wrong issue or asked the wrong question; 3. whether a wrong principle of law had been applied; 4. whether there was a failure to afford procedural fairness; 5. whether the Tribunal had failed to take into account relevant (i.e., mandatory) considerations; 6. whether the Tribunal took into account an irrelevant consideration; 7. whether there was no evidence to support a finding of fact; and 8. whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. The law says that 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 Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the 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. The appellant identifies 13 statements contained in the Tribunal's reasons with which it disagrees. None directly address any of the matters we have set out at [24] and [25] above. However, we have examined the materials with which we have been provided to see whether any of those recognised grounds of appeal, or grounds for seeking leave to appeal, may exist in this case. 2. Unfortunately that task was hindered by the fact that the appellant chose not to provide a copy of the sound recording of the hearing before the Tribunal below – which it was directed to do on 10 December 2019 - notwithstanding it sought to refer to that evidence in its submissions on this appeal. 3. The final observation we make is that on the appeal Mr Ames sought to tell us what happened i.e. to give evidence of the relevant events. That is not allowable on appeal (subject to the exception referred to at [25(3)] above). The only evidence that we are allowed to examine on this appeal is the evidence given to the Tribunal below, and the appellant chose not to provide the sound recording of the oral evidence given. The consequence of that is that several of the grounds of appeal must fail because we do not have the recording of the evidence relevant to those grounds. 4. In all of the circumstances, and because our reasons can be shortly stated, we shall explain why each of the thirteen statements identified by the appellant, if we call them grounds of appeal for convenience, do not amount to a successful appeal. Ground 1 1. The appellant refers to the findings made by the Tribunal that: 1. the respondent collected the motor on 13 March 2019, and it stopped working on 22 March 2019; 2. the respondent returned the motor to the appellant on five occasions and it is now seized and not working. 1. The appellant submits these findings were factually wrong. It submits, for example, that the first time it was aware of a problem was on 19 July. The appellant then alleges a number of other facts which, it submits, contradict the findings made by the Tribunal. 2. As the appellant has not provided the sound recording of the oral evidence referred to in this ground, we are unable to determine whether any error was made by the Tribunal. Ground 2 1. The appellant refers to the finding made by the Tribunal that the appellant alleged the motor failed because the respondent failed to "put oil in the piston". 2. The appellant submits that that was not its case. Its case was that oil was not added to the fuel (which would then be fed to the cylinders in which the pistons were contained). 3. Whilst the appellant's submission accords with our understanding of the operation of two-stroke motors, we do not think the Tribunal, on a fair reading of its reasons, meant something other than that submitted by the appellant. The language is a little loose, but it is clear, we think, that when the Tribunal said "put oil in the piston" it meant putting oil in the petrol which would then be fed to the cylinders. This was the evidence given by the respondent (recorded in the Tribunal's reasons). Ground 3 1. The appellant refers to that part of Mr Perry's second report that we have summarised at [20] above. The appellant asks, "how can a tribunal member make a conclusion based on an assumption?" 2. Mr Perry's "assumption" was not an assumption of fact, but was how he expressed his process of reasoning that, having ruled out the other potential cause, and noting that the fault was directly related to the damaged cylinder, reasoned that the damage must have been caused by the failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. 3. In other words, it was not an assumption, but a process of elimination. There were two suggested causes, one was ruled out, which meant it had to be the other cause. Ground 4 1. The appellant submits that Mr Perry was a lifelong friend of the respondent's father and submits that he could not give an independent assessment. 2. We do not have the sound recording but infer from the Tribunal's reasons that there was no cross-examination of Mr Perry to the effect that he was biased, or his opinions were influenced by his friendship with the respondent's father. 3. The Tribunal recorded that the appellant called no independent expert opinion of its own, and relied upon the evidence of its director, Mr Ames, someone even less "independent" than Mr Perry. 4. We can see no error in the Tribunal's acceptance Mr Perry's opinion. Ground 5 1. The appellant refers to the observation made by the Tribunal that the appellant had not explained why it had not sought access to the motor for inspection through the Tribunal. 2. The appellant's submission is that it should not have to deal with the respondent because of the less than friendly relations between them. 3. That is no answer to the observation made by the Tribunal. The parties had a dispute about the cause of the motor seizing. That dispute was to be settled by the Tribunal based on the evidence the parties chose to present. The most obvious evidence to present was an independent expert's opinion based upon an inspection of the motor. The appellant could have gained access to the motor for that purpose through the Tribunal but chose not to do so. Ground 6 1. The appellant refers to the Tribunal's observation that the appellant submitted the motor was out of its three-month warranty (when returned, on the appellant's version, on 19 July 2019) and the appellant's submission that it disputed it agreed to put new parts in the motor. 2. The guarantees provided by the ACL override any warranty provided by the appellant in the sense that the warranty is void to the extent it purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying the guarantees provided in ss 54 and 56 of the ACL. Put another way, the guarantees provided by ss 54 and 56 are in addition to the three-month warranty. 3. Whether new parts were used or not, the Tribunal found that the motor was not of "acceptable quality" within the meaning of that term in s 54 of the ACL, nor reasonably fit for the purpose of being used as an marine outboard motor per s 56. Those findings did not depend on whether new or used parts being used. Ground 7 1. The appellant challenges the Tribunal's statement that s 54 of the ACL applies to consumer sales and overrides the three-month warranty. 2. No submissions were made in relation to this ground, and, in our opinion, the Tribunal's statements were correct. Ground 8 1. The appellant challenges the Tribunal's finding that the motor was not fit for purpose. 2. The appellant submits that the damage observed by Mr Perry could only occur through lack of lubrication. That submission is incorrect. The evidence of Mr Perry, given to, and accepted by, the Tribunal, was that the damage could be (and was) caused by the failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. 3. The Tribunal rejected Mr Ames' evidence that lack of lubrication caused the damage, having accepted the respondent's evidence that he put oil in the petrol and having accepted Mr Perry's evidence. No error has been identified in relation to those findings and none is apparent to us. Ground 9 1. The appellant challenges the Tribunal's finding that the motor was defective, and placed weight on Mr Perry's evidence that the damage was caused by the installation of a secondhand crankshaft that was found to be extremely worn. 2. The appellant is correct to the extent that the Tribunal's recitation of Mr Perry's opinion is not entirely accurate in terms of the words and expressions used by Mr Perry. Mr Perry's opinion was that the damage was caused by the failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. That opinion did include the fact that the crankshaft was secondhand and that the bearing was extremely worn, and so the Tribunal was not inaccurate in that respect. 3. The law requires the Tribunal's reasons to be read fairly and as a whole, passages should not be read in isolation from others to which they may be related, the reasons should not be inspected with a fine tooth comb attuned to identifying error and there should be a tolerance for looseness of language or unhappy phrasing - New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 per Bell P, with whom Ward JA agreed, at [77]. 4. Applying those principles to the Tribunal's reasons, the passage identified by the appellant is really an example of looseness of language. Read as a whole, the Tribunal clearly accepted Mr Perry's opinion, as expressed at the end of his second report, that the damage was caused by the failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. Ground 10 1. The appellant refers to the Tribunal's statement that the appellant disputed it installed a secondhand camshaft (sic) (crankshaft?) but was unable to produce any evidence that the crankshaft was new, and that the appellant stated that all parts of the motor were new except the piston. 2. The appellant submits that the respondent knew the motor was a secondhand motor. 3. This ground does not contain any ground of appeal. The Tribunal statement referred to simply states what the appellant's case was. There was no dispute the motor was not a new motor, but even secondhand motors can be of unacceptable quality and be not reasonably fit for purpose under the ACL, which is what the Tribunal found. Ground 11 1. The appellant refers to the Tribunal's acceptance of the respondent's evidence that he put oil in the petrol and that the Tribunal was not satisfied the damage was caused by the failure to put oil in the petrol. 2. The appellant submits that there is a difference between fuel starvation and lack of lubrication, and that in two-stroke motors pistons are lubricated by oil in the fuel. 3. Whilst the appellant's submission accords with our understanding of two-stroke motors, the appellant's case was that the damage was caused by a failure to put oil in the petrol. The appellant did not suggest fuel starvation was the cause, and Mr Perry ruled that possibility out after his testing revealed no faults in the fuel supply to the motor. Rather, Mr Perry said that the damage was caused by the failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. 4. Therefore, the contest was between the cause identified by Mr Perry, and the alleged failure by the respondent to add oil to the fuel. But the Tribunal heard evidence from the respondent that he added oil to the fuel and accepted that evidence. That then eliminated lack of oil as a potential cause. The appellant has not identified any error in relation to that finding nor can we see any error. Ground 12 1. The appellant refers to the acceptance of Mr Perry's opinion and the rejection of Mr Ames' opinion (that the damage was caused by a lack of oil in the fuel). 2. The appellant asks, rhetorically, why his 30 years in the marine industry and 40 years of business were not considered sufficient experience. 3. The appellant's submission, with no disrespect, misses the point. Mr Perry's opinion was accepted because he was independent, and because the hypothesis advanced by the appellant was rejected after the respondent's evidence of putting oil in the fuel was accepted. Mr Ames' opinion was not independent and suffered from the flaw that the Tribunal accepted the evidence that oil was added to the fuel. Ground 13 1. The appellant refers to the Tribunal's finding that the carburettor was defective and points out that Mr Perry found the carburettor was not defective. 2. The appellant's submission is correct, the Tribunal erred in finding the carburettor was defective. 3. However, that wrong finding had no effect on the Tribunal's ultimate conclusion. It is clear from a fair reading of the Tribunal's decision that the central fact concerned the damage observed by Mr Perry which he said was caused by the failed lower main bearing which had been discharging metal fragments into the number 3 (damaged) cylinder area. 4. Put another way, reading the Tribunal's reasons fairly and as a whole, the same result would have resulted even if the Tribunal found there was no fault with the carburettor. Conclusion 1. The appeal is 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: 24 March 2020